UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

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

For the Quarterly Period Ended March 31, ~~2020~~2021

☐ 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

MATTHEWS INTERNATIONAL CORPORATION

(Exact name of registrant as specified in its charter)


Pennsylvania						25-0644320
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer 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)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Class A Common Stock, $1.00 par value

MATW

Nasdaq Global Select Market

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.

Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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).

Yes ý No o

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.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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 ý

As of March 31, ~~2020,~~2021, shares of common stock outstanding were: Class A Common Stock ~~31,269,345~~31,656,210 shares.

PART I ‑ FINANCIAL INFORMATION

Item 1. Financial Statements

MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollar amounts in thousands)


		March 31, 2020						September 30, 2019							March 31, 2021				September 30, 2020
ASSETS	ASSETS									ASSETS
Current assets:	Current assets:									Current assets:
Cash and cash equivalents	Cash and cash equivalents			$	72,338			$	35,302	Cash and cash equivalents			$	46,980			$	41,334
Accounts receivable, net	Accounts receivable, net			294,587				318,756		Accounts receivable, net			292,703				295,185
Inventories, net	Inventories, net			186,919				180,274		Inventories, net			186,522				175,100
Other current assets	Other current assets			72,093				49,384		Other current assets			73,410				63,954

Total current assets	Total current assets			625,937				583,716		Total current assets			599,615				575,573

Investments	Investments			93,208				85,501		Investments			49,048				63,250

Property, plant and equipment, net	Property, plant and equipment, net			235,962				237,442		Property, plant and equipment, net			228,362				236,788
Operating lease right-of-use assets										Operating lease right-of-use assets			78,944				72,011
Deferred income taxes	Deferred income taxes			4,940				5,032		Deferred income taxes			3,457				3,757
Other assets				117,005				31,455
Goodwill	Goodwill			750,578				846,807		Goodwill			777,823				765,388
Other intangible assets, net	Other intangible assets, net			364,106				400,650		Other intangible assets, net			305,295				333,498
Other assets										Other assets			21,216				22,368

Total assets	Total assets			$	2,191,736			$	2,190,603	Total assets			$	2,063,760			$	2,072,633

LIABILITIES	LIABILITIES									LIABILITIES
Current liabilities:	Current liabilities:									Current liabilities:
Long-term debt, current maturities	Long-term debt, current maturities			$	26,077			$	42,503	Long-term debt, current maturities			$	4,274			$	26,824
Current portion of operating lease liabilities										Current portion of operating lease liabilities			24,458				23,942
Trade accounts payable	Trade accounts payable			89,650				74,558		Trade accounts payable			89,321				82,921
Accrued compensation	Accrued compensation			39,077				42,545		Accrued compensation			57,547				58,058
Accrued income taxes	Accrued income taxes			1,894				5,997		Accrued income taxes			2,764				3,612
Other current liabilities	Other current liabilities			165,604				114,276		Other current liabilities			145,906				121,511

Total current liabilities	Total current liabilities			322,302				279,879		Total current liabilities			324,270				316,868

Long-term debt	Long-term debt			939,753				898,194		Long-term debt			778,209				807,710
Operating lease liabilities										Operating lease liabilities			55,984				49,297
Accrued pension	Accrued pension			137,284				133,762		Accrued pension			150,995				149,848
Postretirement benefits	Postretirement benefits			19,926				19,963		Postretirement benefits			18,629				18,600
Deferred income taxes	Deferred income taxes			92,832				102,482		Deferred income taxes			83,861				78,911
Other liabilities	Other liabilities			88,437				37,087		Other liabilities			32,213				39,966
Total liabilities	Total liabilities			1,600,534				1,471,367		Total liabilities			1,444,161				1,461,200

SHAREHOLDERS' EQUITY	SHAREHOLDERS' EQUITY									SHAREHOLDERS' EQUITY
Shareholders' equity-Matthews:	Shareholders' equity-Matthews:									Shareholders' equity-Matthews:
Common stock	Common stock	$	36,334			$	36,334			Common stock	$	36,334			$	36,334
Additional paid-in capital	Additional paid-in capital	143,034				137,774				Additional paid-in capital	143,324				135,187
Retained earnings	Retained earnings	862,581				972,594				Retained earnings	848,254				859,002
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(248,495)				(228,361)				Accumulated other comprehensive loss	(224,493)				(240,719)
Treasury stock, at cost	Treasury stock, at cost	(203,307)				(200,235)				Treasury stock, at cost	(184,373)				(178,997)
Total shareholders' equity-Matthews	Total shareholders' equity-Matthews			590,147				718,106		Total shareholders' equity-Matthews			619,046				610,807
Noncontrolling interests	Noncontrolling interests			1,055				1,130		Noncontrolling interests			553				626
Total shareholders' equity	Total shareholders' equity			591,202				719,236		Total shareholders' equity			619,599				611,433

Total liabilities and shareholders' equity	Total liabilities and shareholders' equity			$	2,191,736			$	2,190,603	Total liabilities and shareholders' equity			$	2,063,760			$	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 March 31,						Six Months Ended March 31,							Three Months Ended March 31,				Six Months Ended March 31,
		2020		2019		2020		2019			2021		2020		2021		2020

Sales	Sales	$	374,800	$	391,400	$	739,744	$	765,577	Sales	$	417,154	$	374,800	$	803,811	$	739,744
Cost of sales	Cost of sales	(250,036)		(255,119)		(499,253)		(502,885)		Cost of sales	(276,143)		(250,036)		(537,302)		(499,253)

Gross profit	Gross profit	124,764		136,281		240,491		262,692		Gross profit	141,011		124,764		266,509		240,491

Selling expense	Selling expense	(33,182)		(34,352)		(65,445)		(69,381)		Selling expense	(32,360)		(33,182)		(63,155)		(65,445)
Administrative expense	Administrative expense	(68,399)		(68,156)		(138,864)		(135,259)		Administrative expense	(70,749)		(68,399)		(139,858)		(138,864)
Intangible amortization	Intangible amortization	(17,872)		(9,509)		(35,814)		(17,622)		Intangible amortization	(22,930)		(17,872)		(38,151)		(35,814)
Goodwill write-down	Goodwill write-down	(90,408)		—		(90,408)		—		Goodwill write-down	0		(90,408)		0		(90,408)

Operating (loss) profit		(85,097)		24,264		(90,040)		40,430
Operating profit (loss)										Operating profit (loss)	14,972		(85,097)		25,345		(90,040)

Investment (loss) income		(1,108)		2,091		191		739
Investment income (loss)										Investment income (loss)	969		(1,108)		2,046		191
Interest expense	Interest expense	(9,613)		(10,259)		(18,853)		(20,560)		Interest expense	(7,233)		(9,613)		(14,961)		(18,853)
Other deductions, net		(1,843)		(1,067)		(4,662)		(1,991)
Other income (deductions), net										Other income (deductions), net	(2,584)		(1,843)		(4,318)		(4,662)

(Loss) income before income taxes		(97,661)		15,029		(113,364)		18,618
Income (loss) before income taxes										Income (loss) before income taxes	6,124		(97,661)		8,112		(113,364)

Income tax benefit (provision)		11,066		165		16,463		(440)
Income tax (provision) benefit										Income tax (provision) benefit	(972)		11,066		(4,952)		16,463

Net (loss) income		(86,595)		15,194		(96,901)		18,178
Net income (loss)										Net income (loss)	5,152		(86,595)		3,160		(96,901)

Net losses attributable to noncontrolling interests		231		223		71		336
Net (income) loss attributable to noncontrolling interests										Net (income) loss attributable to noncontrolling interests	(163)		231		71		71

Net (loss) income attributable to Matthews shareholders		$	(86,364)	$	15,417	$	(96,830)	$	18,514
Net income (loss) attributable to Matthews shareholders										Net income (loss) attributable to Matthews shareholders	$	4,989	$	(86,364)	$	3,231	$	(96,830)

(Loss) earnings per share attributable to Matthews shareholders:
Earnings (loss) per share attributable to Matthews shareholders:										Earnings (loss) per share attributable to Matthews shareholders:
Basic	Basic	$	(2.77)	$	0.49	$	(3.11)	$	0.59	Basic	$	0.16	$	(2.77)	$	0.10	$	(3.11)

Diluted	Diluted	$	(2.77)	$	0.48	$	(3.11)	$	0.58	Diluted	$	0.16	$	(2.77)	$	0.10	$	(3.11)

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 March 31,																							Three Months Ended March 31,
		Matthews						Noncontrolling Interest								Total					Matthews				Noncontrolling Interest		Total
		2020		2019		2020		2019		2020		2019			2021		2020		2021		2020		2021		2020

Net (loss) income:		$	(86,364)	$	15,417	$	(231)	$	(223)	$	(86,595)	$	15,194
Net income (loss):														Net income (loss):	$	4,989	$	(86,364)	$	163	$	(231)	$	5,152	$	(86,595)
Other comprehensive income (loss) ("OCI"), net of tax:	Other comprehensive income (loss) ("OCI"), net of tax:													Other comprehensive income (loss) ("OCI"), net of tax:
Foreign currency translation adjustment	Foreign currency translation adjustment	(30,648)		134		1		19		(30,647)		153		Foreign currency translation adjustment	(8,898)		(30,648)		1		1		(8,897)		(30,647)
Pension plans and other postretirement benefits	Pension plans and other postretirement benefits	1,827		734		—		—		1,827		734		Pension plans and other postretirement benefits	2,255		1,827		0		0		2,255		1,827
Unrecognized loss on derivatives:
Unrecognized gain (loss) on derivatives:														Unrecognized gain (loss) on derivatives:
Net change from periodic revaluation	Net change from periodic revaluation	(4,305)		(1,356)		—		—		(4,305)		(1,356)		Net change from periodic revaluation	2,088		(4,305)		0		0		2,088		(4,305)
Net amount reclassified to earnings	Net amount reclassified to earnings	(137)		(664)		—		—		(137)		(664)		Net amount reclassified to earnings	567		(137)		0		0		567		(137)
Net change in unrecognized loss on derivatives		(4,442)		(2,020)		—		—		(4,442)		(2,020)
Net change in unrecognized gain (loss) on derivatives														Net change in unrecognized gain (loss) on derivatives	2,655		(4,442)		0		0		2,655		(4,442)
OCI, net of tax	OCI, net of tax	(33,263)		(1,152)		1		19		(33,262)		(1,133)		OCI, net of tax	(3,988)		(33,263)		1		1		(3,987)		(33,262)
Comprehensive (loss) income		$	(119,627)	$	14,265	$	(230)	$	(204)	$	(119,857)	$	14,061
Comprehensive income (loss)														Comprehensive income (loss)	$	1,001	$	(119,627)	$	164	$	(230)	$	1,165	$	(119,857)


		Six Months Ended March 31,																							Six Months Ended March 31,
		Matthews						Noncontrolling Interest								Total					Matthews				Noncontrolling Interest		Total
		2020		2019		2020		2019		2020		2019			2021		2020		2021		2020		2021		2020

Net (loss) income:		$	(96,830)	$	18,514	$	(71)	$	(336)	$	(96,901)	$	18,178
Net income (loss):														Net income (loss):	$	3,231	$	(96,830)	$	(71)	$	(71)	$	3,160	$	(96,901)
OCI, net of tax:	OCI, net of tax:													OCI, net of tax:
Foreign currency translation adjustment	Foreign currency translation adjustment	(19,537)		(12,430)		(4)		6		(19,541)		(12,424)		Foreign currency translation adjustment	8,157		(19,537)		(2)		(4)		8,155		(19,541)
Pension plans and other postretirement benefits	Pension plans and other postretirement benefits	3,554		1,463		—		—		3,554		1,463		Pension plans and other postretirement benefits	4,379		3,554		0		0		4,379		3,554
Unrecognized loss on derivatives:
Unrecognized gain (loss) on derivatives:														Unrecognized gain (loss) on derivatives:
Net change from periodic revaluation	Net change from periodic revaluation	(3,739)		(3,702)		—		—		(3,739)		(3,702)		Net change from periodic revaluation	2,441		(3,739)		0		0		2,441		(3,739)
Net amount reclassified to earnings	Net amount reclassified to earnings	(412)		(1,219)		—		—		(412)		(1,219)		Net amount reclassified to earnings	1,249		(412)		0		0		1,249		(412)
Net change in unrecognized loss on derivatives		(4,151)		(4,921)		—		—		(4,151)		(4,921)
Net change in unrecognized gain (loss) on derivatives														Net change in unrecognized gain (loss) on derivatives	3,690		(4,151)		0		0		3,690		(4,151)
OCI, net of tax	OCI, net of tax	(20,134)		(15,888)		(4)		6		(20,138)		(15,882)		OCI, net of tax	16,226		(20,134)		(2)		(4)		16,224		(20,138)
Comprehensive (loss) income		$	(116,964)	$	2,626	$	(75)	$	(330)	$	(117,039)	$	2,296
Comprehensive income (loss)														Comprehensive income (loss)	$	19,457	$	(116,964)	$	(73)	$	(75)	$	19,384	$	(117,039)

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 six months ended March 31, ~~2020~~2021 and ~~2019~~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, 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 — —
Cancellations of 17,509 shares of treasury stock — 1,171 — — (1,171) — —
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


	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

Shareholders' Equity
Common
Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
(Loss) Income Treasury
Stock Non-
controlling
Interests Total
Balance,
September 30, 2018 $ 36,334 $ 129,252 $ 1,040,378 $ (164,298) $ (173,315) $ 363 $ 868,714
Net income (loss) — — 3,097 — — (113) 2,984
Minimum pension liability — — — 729 — — 729
Translation adjustment — — — (12,564) — (13) (12,577)
Fair value of derivatives — — — (2,901) — — (2,901)
Total comprehensive loss (11,765)
Stock-based compensation — 3,647 — — — — 3,647
Purchase of 186,417 shares of treasury stock — — — — (7,751) — (7,751)
Issuance of 2,822 shares of treasury stock — (115) — — 115 — —
Cancellations of 19,433 shares of treasury stock — 891 — — (891) — —
Dividends, $0.20 per share — — (6,414) — — — (6,414)
Acquisition — — — — — 1,760 1,760
Cumulative tax adjustment for intra-entity transfers — — (4,176) — — — (4,176)
Balance,
December 31, 2018 $ 36,334 $ 133,675 $ 1,032,885 $ (179,034) $ (181,842) $ 1,997 $ 844,015
Net income (loss) — — 15,417 — — (223) 15,194
Minimum pension liability — — — 734 — — 734
Translation adjustment — — — 134 — 19 153
Fair value of derivatives — — — (2,020) — — (2,020)
Total comprehensive income 14,061
Stock-based compensation — 1,366 — — — — 1,366
Purchase of 143,092 shares of treasury stock — — — — (5,535) — (5,535)
Cancellations of 41 shares of treasury stock — 14 — — (14) — —
Dividends, $0.20 per share — — (6,446) — — — (6,446)
Balance,
March 31, 2019 $ 36,334 $ 135,055 $ 1,041,856 $ (180,186) $ (187,391) $ 1,793 $ 847,461


	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

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)


	Six Months Ended March 31,
	2021		2020
Cash flows from operating activities:
Net income (loss)	$	3,160	$	(96,901)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	62,530		58,250
Stock-based compensation expense	7,247		4,539
Deferred tax provision (benefit)	930		(6,155)
(Gain) loss on sale of assets, net	(511)		27


Unrealized (gain) loss on investments	(844)		70
Loss from equity-method investments	0		1,345
Goodwill write-down	0		90,408
Changes in working capital items	2,730		19,384
Decrease in other assets	2,556		5,587
Increase (decrease) in other liabilities	12,962		(1,107)

Other operating activities, net	1,422		(9,452)

Net cash provided by operating activities	92,182		65,995

Cash flows from investing activities:
Capital expenditures	(15,819)		(19,082)
Acquisitions, net of cash acquired	(13,100)		0
Proceeds from sale of assets	2,065		181
Proceeds from sale of investments	15,000		0
Investments and advances	0		(9,637)



Net cash used in investing activities	(11,854)		(28,538)

Cash flows from financing activities:
Proceeds from long-term debt	249,833		942,692
Payments on long-term debt	(303,781)		(921,359)

Purchases of treasury stock	(4,486)		(2,351)
Dividends	(13,979)		(13,183)
Acquisition holdback and contingent consideration payments	(1,556)		(1,739)
Other financing activities	(1,484)		(3,475)

Net cash (used in) provided by financing activities	(75,453)		585

Effect of exchange rate changes on cash	771		(1,006)

Net change in cash and cash equivalents	5,646		37,036
Cash and cash equivalents at beginning of year	41,334		35,302
Cash and cash equivalents at end of period	$	46,980	$	72,338

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)~~

Six Months Ended
March 31,
2020 2019
Cash flows from operating activities:
Net (loss) income $ (96,901) $ 18,178
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization 58,250 40,276
Stock-based compensation expense 4,539 5,013
Deferred tax benefit (6,155) (3,176)
Loss (gain) on sale of assets, net 27 (128)
Loss on divestiture — 4,465
Unrealized loss on investments in mutual funds
70 230
Loss from equity-method investments 1,345 576
Goodwill write-down 90,408 —
Changes in working capital items 19,384 (17,552)
Decrease (increase) in other assets 5,587 (406)
(Decrease) increase in other liabilities (1,107) 937
Other operating activities, net (9,452) (3,124)
Net cash provided by operating activities 65,995 45,289
Cash flows from investing activities:
Capital expenditures (19,082) (19,170)
Acquisitions, net of cash acquired — (11,525)
Proceeds from sale of assets 181 462
Proceeds from divestiture — 8,254
Investments and advances (9,637) (11,488)
Net cash used in investing activities (28,538) (33,467)
Cash flows from financing activities:
Proceeds from long-term debt 942,692 181,594
Payments on long-term debt (921,359) (167,327)
Purchases of treasury stock (2,351) (13,286)
Dividends (13,183) (12,860)
Acquisition holdback and contingent consideration payments (1,739) (2,050)
Other financing activities (3,475) (1,436)
Net cash provided by (used in) financing activities 585 (15,365)
Effect of exchange rate changes on cash (1,006) (299)
Net change in cash and cash equivalents 37,036 (3,842)
Cash and cash equivalents at beginning of year 35,302 41,572
Cash and cash equivalents at end of period $ 72,338 $ 37,730

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

~~MATTHEWS INTERNATIONAL CORPORATION AND SUBSIDIARIES~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

March 31, ~~2020~~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 consists of brand management, pre-media services, printing plates and cylinders, engineered products, imaging services, digital asset management, merchandising display systems, and marketing and design 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 North America, Europe, Asia, 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 and Rule 10-01 of Regulation 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 six months ended March 31, ~~2020~~2021 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, ~~2020.~~2021. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, ~~2019.~~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:

~~Issued~~Adopted

In August 2018, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20), which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. ~~This ASU is effective for the Company beginning in interim periods starting in fiscal year 2021.~~ 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.~~statements and the Form 10-K disclosures for the year ended September 30, 2021 will reflect the adoption of this ASU.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), which provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each report date. Subsequently, the 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 new guidance. ~~These ASUs are effective for the Company beginning in interim periods starting in fiscal year 2021.~~ The adoption of these ASUs ~~are not expected to have a~~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)

~~Adopted~~

~~In December 2019,~~The following table summarizes the ~~FASB issued ASU No. 2019-12, Income Taxes (Topic 740) which simplifies~~activity for the ~~accounting~~accounts receivable allowance for ~~income taxes. The amendments in this update remove certain exceptions to~~doubtful accounts for the general principles in Topic 740 and also simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The amendments in this ASU will be applied using different approaches depending on what the specific amendment relates to and, for public entities, are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company early adopted this ASU in the quartersix months ended March 31, ~~2020. The adoption~~2021:



	Accounts Receivable Allowance for Doubtful Accounts
Balance at October 1, 2020	$	9,618
Current period expense / (deductions)	(621)
Translation and other adjustments (1)	(216)
Balance at March 31, 2021	$	8,781

(1) Includes the impact of ~~this ASU had no significant impact on the Company's consolidated financial statements, but modifies the methodology to assess certain tax principles in Topic 740 prospectively.~~

~~In August 2018, the FASB issued ASU No. 2018-13,~~ ~~Fair Value Measurement (Topic 820), Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements including the consideration of costs~~foreign currency fluctuations and ~~benefits. The adoption of this ASU in the first quarter ended December 31, 2019 had no impact on the Company's consolidated financial statements.~~

~~In August 2017, the FASB issued ASU No. 2017-12,~~ ~~Derivatives and Hedging (Topic 815)~~, which provides new guidance intended to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The adoption of this ASU in the first quarter ended December 31, 2019 had no 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 and recognize associated lease assets and liabilities. This ASU requires lessees to recognize assets and liabilities that arise from financing and operating leases on the Consolidated Balance Sheet. Subsequently, the FASB issued several ASUs that address implementation issues and correct or improve certain aspects of the new lease guidance, including ASU 2017-13, ~~Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842),~~ ~~ASU 2018-01,~~ ~~Leases (Topic 842) Land Easement Practical Expedient for Transition to Topic 842, ASU 2018-10,~~ ~~Codification Improvements to Topic 842, Leases, ASU 2018-11,~~ ~~Leases (Topic 842): Targeted Improvements,~~ ~~ASU 2018-20,~~ ~~Leases (Topic 842): Narrow-Scope Improvements for Lessors,~~ ~~and ASU 2019-01,~~ ~~Leases (Topic 842): Codification Improvements. These ASUs do~~amounts determined not change the core principles in the lease guidance outlined above. ASU No. 2018-11 provides an additional transition method to adopt ASU No. 2016-02. Under the transition method, an entity initially applies the new leases standard at the adoption date versus at the beginning of the earliest period presented and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.The Company adopted the standard using the transition method as of October 1, 2019. Under this approach, the Company recognized and recorded right-of-use ("ROU") assets and related lease liabilities on the Consolidated Balance Sheet of approximately $80 million with no impact to retained earnings. Reporting periods prior to October 1, 2019 continue to be ~~presented in accordance with previous lease accounting guidance under GAAP. As part~~collectible (including direct write-offs), net of the adoption, the Company elected the package of practical expedients permitted under the transition guidance which includes the ability to carry forward historical lease classification. Refer to Note 8, “Leases,” for a further discussion.recoveries.

Note 3. Revenue Recognition

The Company delivers a variety of products and services through its business segments. The SGK Brand Solutions segment delivers brand management, pre-media services, printing plates and cylinders, engineered products, and imaging services for consumer goods and retail customers, merchandising display systems, and marketing and design services primarily to the consumer goods and retail industries. The Memorialization segment produces and delivers 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 delivers marking and coding equipment and consumables, industrial automation products and order fulfillment systems for identifying, tracking, picking and conveying consumer and industrial products for the warehousing and industrial industries.

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

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

~~Note 3. Revenue Recognition (continued)~~

The Company disaggregates revenue from contracts with customers by geography, as it believes geographic regions best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Disaggregated sales by segment and region for the three and six months ended March 31, ~~2020~~2021 and ~~2019~~2020 were as follows:


		SGK Brand Solutions						Memorialization						Industrial Technologies						Consolidated							SGK Brand Solutions				Memorialization				Industrial Technologies		Consolidated
		Three Months Ended March 31,						Three Months Ended March 31,						Three Months Ended March 31,						Three Months Ended March 31,							Three Months Ended March 31,				Three Months Ended March 31,				Three Months Ended March 31,		Three Months Ended March 31,
		2020		2019		2020		2019		2020		2019			2020		2019				2021		2020		2021		2020		2021		2020		2021		2020
North America	North America	$	75,448	$	79,170	$	152,253	$	151,441	$	32,380	$	30,988		$	260,081	$	261,599	North America		$	66,282	$	75,448	$	190,253	$	152,253	$	32,260	$	32,380	$	288,795	$	260,081
Central and South America	Central and South America	1,360		1,480		—		—		—		—			1,360		1,480		Central and South America		1,319		1,360		0		0		0		0		1,319		1,360
Europe	Europe	83,015		96,070		7,637		8,606		7,453		7,035			98,105		111,711		Europe		89,190		83,015		12,662		7,637		7,013		7,453		108,865		98,105
Australia	Australia	2,937		2,901		1,929		2,129		—		—			4,866		5,030		Australia		3,456		2,937		2,542		1,929		0		0		5,998		4,866
Asia	Asia	10,095		11,030		—		—		293		550			10,388		11,580		Asia		10,777		10,095		0		0		1,400		293		12,177		10,388
Total Sales	Total Sales	$	172,855	$	190,651	$	161,819	$	162,176	$	40,126	$	38,573		$	374,800	$	391,400	Total Sales		$	171,024	$	172,855	$	205,457	$	161,819	$	40,673	$	40,126	$	417,154	$	374,800


		SGK Brand Solutions						Memorialization						Industrial Technologies						Consolidated							SGK Brand Solutions				Memorialization				Industrial Technologies		Consolidated
		Six Months Ended March 31,						Six Months Ended March 31,						Six Months Ended March 31,						Six Months Ended March 31,							Six Months Ended March 31,				Six Months Ended March 31,				Six Months Ended March 31,		Six Months Ended March 31,
		2020		2019		2020		2019		2020		2019			2020		2019				2021		2020		2021		2020		2021		2020		2021		2020
North America	North America	$	151,678	$	158,752	$	296,298	$	294,734	$	60,679	$	58,702		$	508,655	$	512,188	North America		$	136,684	$	151,678	$	360,577	$	296,298	$	59,895	$	60,679	$	557,156	$	508,655
Central and South America	Central and South America	3,196		2,697		—		—		—		—			3,196		2,697		Central and South America		2,694		3,196		0		0		0		0		2,694		3,196
Europe	Europe	165,428		186,588		15,466		16,764		14,379		13,372			195,273		216,724		Europe		170,999		165,428		23,102		15,466		13,004		14,379		207,105		195,273
Australia	Australia	5,939		5,860		4,460		4,564		—		—			10,399		10,424		Australia		6,937		5,939		5,052		4,460		0		0		11,989		10,399
Asia	Asia	21,494		22,054		—		—		727		1,490			22,221		23,544		Asia		21,850		21,494		0		0		3,017		727		24,867		22,221
Total Sales	Total Sales	$	347,735	$	375,951	$	316,224	$	316,062	$	75,785	$	73,564		$	739,744	$	765,577	Total Sales		$	339,164	$	347,735	$	388,731	$	316,224	$	75,916	$	75,785	$	803,811	$	739,744

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 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.~~

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

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

~~Note 4. Fair Value Measurements (continued)~~



			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:


		March 31, 2020														September 30, 2019															March 31, 2021				September 30, 2020
		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:	Assets:																	Assets:
Derivatives⁽¹⁾	Derivatives⁽¹⁾	$	—	$	777	$	—	$	777	$	—	$	845	$	—	$	845	Derivatives (1)	$	0	$	471	$	0	$	471	$	0	$	0	$	0	$	0
Equity and fixed income mutual funds	Equity and fixed income mutual funds	—		22,892		—		22,892		—		22,986		—		22,986		Equity and fixed income mutual funds	0		25,455		0		25,455		0		24,610		0		24,610
Life insurance policies	Life insurance policies	—		4,054		—		4,054		—		4,030		—		4,030		Life insurance policies	0		4,626		0		4,626		0		4,621		0		4,621
Total assets at fair value	Total assets at fair value	$	—	$	27,723	$	—	$	27,723	$	—	$	27,861	$	—	$	27,861	Total assets at fair value	$	0	$	30,552	$	0	$	30,552	$	0	$	29,231	$	0	$	29,231

Liabilities:	Liabilities:																	Liabilities:
Derivatives⁽¹⁾	Derivatives⁽¹⁾	$	—	$	6,809	$	—	$	6,809	$	—	$	1,379	$	—	$	1,379	Derivatives (1)	$	0	$	3,376	$	0	$	3,376	$	0	$	7,792	$	0	$	7,792
Total liabilities at fair value	Total liabilities at fair value	$	—	$	6,809	$	—	$	6,809	$	—	$	1,379	$	—	$	1,379	Total liabilities at fair value	$	0	$	3,376	$	0	$	3,376	$	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.	⁽¹⁾Interest rate swaps are valued based on observable market swap rates and are classified within Level 2 of the fair value hierarchy.																																	(1) Interest rate swaps are valued based on observable market swap rates and are classified within Level 2 of the fair value hierarchy.

Note 5. Inventories

Inventories consisted of the following:


		March 31, 2020		September 30, 2019			March 31, 2021		September 30, 2020
Raw materials	Raw materials	$	38,499	$	35,616	Raw materials	$	38,112	$	36,157
Work in process	Work in process	79,770		76,297		Work in process	75,206		70,128
Finished goods	Finished goods	68,650		68,361		Finished goods	73,204		68,815
		$	186,919	$	180,274		$	186,522	$	175,100

Note 6. Investments

Non-current investments consisted of the following:


		March 31, 2020		September 30, 2019			March 31, 2021		September 30, 2020
Equity and fixed income mutual funds	Equity and fixed income mutual funds	$	22,892	$	22,986	Equity and fixed income mutual funds	$	25,455	$	24,610
Life insurance policies	Life insurance policies	4,054		4,030		Life insurance policies	4,626		4,621
Equity-method investments		47,890		39,761
Cost-method investments		18,372		18,724
		$	93,208	$	85,501
Other (primarily cost-method) investments						Other (primarily cost-method) investments	18,967		34,019
							$	49,048	$	63,250

During the second quarter of fiscal ~~2020,~~2021, the Company ~~made additional investments~~received $15,000 for the full redemption of its senior preferred shares investment in a ~~non-consolidated subsidiary totaling $9,482 and continued to account for this non-controlling interest as an equity-method investment.~~

memorialization business.

119

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 7. Debt

Long-term debt at March 31, 2021 and September 30, 2020 consisted of the following:


	March 31, 2021		September 30, 2020
Revolving credit facilities	$	367,352	$	416,793
Securitization facility	97,590		67,700
Senior secured term loan	0		22,359
2025 Senior Notes	297,526		297,256

Other borrowings	12,022		20,742
Finance lease obligations	7,993		9,684
	782,483		834,534
Less current maturities	(4,274)		(26,824)
	$	778,209	$	807,710

The Company has a domestic credit facility with a syndicate of financial institutions that ~~was amended and restated in March 2020. The amended and restated loan agreement~~ includes a $750,000 senior secured revolving credit facility, which matures in March 2025, and a $35,000 senior secured amortizing term loan. The senior secured amortizing term loan ~~which matures~~was paid in ~~July~~full in March 2021. A portion of the revolving credit facility (not to exceed $350,000) can be drawn in foreign currencies. ~~The term loan requires scheduled quarterly principal payments through its maturity date.~~ 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% ~~(1.50%~~(1.25% at March 31, ~~2020)~~2021) based on the Company's secured leverage ratio. The secured leverage ratio is defined as net secured indebtedness divided by 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 0.30% (based on the Company's leverage ratio) of the unused portion of the revolving credit facility. The Company incurred debt issuance costs ~~of approximately $2,000~~ in connection with the ~~amended~~domestic credit facility. Unamortized costs were $2,481 and ~~restated agreement, which will be deferred~~$2,734 at March 31, 2021 and ~~amortized over the term of the facility.~~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 March 31, ~~2020~~2021 and September 30, ~~2019~~2020 were ~~$372,500~~$250,000 and ~~$325,638,~~$257,439, respectively. Outstanding Euro denominated borrowings on the revolving credit facility at March 31, ~~2020~~2021 and September 30, ~~2019~~2020 were ~~€125.0~~€97.0 million($113,764) and €117.0 million ($~~137,519) and €125.0 million ($136,470)~~137,188), respectively. There were 0 outstanding borrowings on the term loan as of March 31, 2021.Outstanding borrowings on the term loan at ~~March 31, 2020 and~~ September 30, ~~2019~~2020 were ~~$34,766and $53,497, respectively.~~$22,359. The weighted-average interest rate on the outstanding borrowings for the domestic credit facility (including the effects of interest rate swaps and Euro denominated borrowings) at March 31, ~~2020~~2021 and March 31, ~~2019~~2020 was ~~2.40%~~2.17% and ~~3.25%~~2.40%, respectively.

The Company has $300,000 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. 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 Company incurred direct financing fees and costs in connection with the 2025 Senior Notes. Unamortized costs were ~~$3,014~~$2,474 and ~~$3,284~~$2,744 at March 31, ~~2020~~2021 and September 30, ~~2019,~~2020, respectively.

The Company has a $115,000 accounts receivable securitization facility (the "Securitization Facility") with certain financial ~~institutions. The Securitization Facility,~~institutions which ~~had a maturity date of April 2020, was amended~~matures in ~~March 2020 to extend the maturity date until~~ March 2022. 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 March 31, ~~2020~~2021 and September 30, ~~2019~~2020 were ~~$103,190~~$97,590 and ~~$93,950,~~$67,700, respectively. At March 31, ~~2020~~2021 and ~~2019,~~2020, the interest rate on borrowings under this facility was ~~1.74%~~0.86% and ~~3.24%~~1.74%, respectively.

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

March 31, 2020 September 30, 2019
Pay fixed swaps - notional amount $ 350,000 $ 293,750
Net unrealized loss
$ (6,032) $ (534)
Weighted-average maturity period (years) 2.8 1.9
Weighted-average received rate 0.99 % 2.02 %
Weighted-average pay rate 1.32 % 1.41 %

1210

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 7. Debt (continued)

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


	March 31, 2021			September 30, 2020
Pay fixed swaps - notional amount	$	250,000		$	312,500
Net unrealized loss	$	(2,905)		$	(7,792)
Weighted-average maturity period (years)	2.7			2.6
Weighted-average received rate	0.11		%	0.15		%
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 loss, net of unrealized gains, of ~~$6,032 ($4,554~~ $2,905($2,194after tax) at March 31, ~~2020~~2021 and an unrealized loss ~~net~~ of ~~unrealized gains, of $534~~$7,792 ($~~403~~5,884 after tax) at September 30, ~~2019,~~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 March 31, ~~2020,~~2021, a loss (net of tax) of approximately $~~2,129~~1,772 included in AOCI is expected to be recognized in earnings over the next twelve months.

At March 31, ~~2020~~2021 and September 30, ~~2019,~~2020, the interest rate swap contracts were reflected in the Consolidated Balance Sheets as follows:


Derivatives	Derivatives	March 31, 2020		September 30, 2019		Derivatives	March 31, 2021		September 30, 2020
Current assets:	Current assets:					Current assets:
Other current assets	Other current assets	$	—	$	548	Other current assets	$	78	$	0
Long-term assets:	Long-term assets:					Long-term assets:
Other assets	Other assets	777		297		Other assets	393		0
Current liabilities:	Current liabilities:					Current liabilities:
Other current liabilities	Other current liabilities	(2,821)		(484)		Other current liabilities	(2,425)		(3,164)
Long-term liabilities:	Long-term liabilities:					Long-term liabilities:
Other liabilities	Other liabilities	(3,988)		(895)		Other liabilities	(951)		(4,628)
Total derivatives	Total derivatives	$	(6,032)	$	(534)	Total derivatives	$	(2,905)	$	(7,792)

The (losses) gains recognized on derivatives were as follows:


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

			Three Months Ended March 31,																							Six Months Ended March 31,				Three Months Ended March 31,	Six Months Ended March 31,
			2020		2019		2020					2019									2021			2020			2021	2020
Interest rate swaps	Interest rate swaps	Interest expense	$	182	$	880	$	546	$	1,615	Interest rate swaps		Interest expense		$	(751)	$	182	$	(1,654)		$	546

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 7. Debt (continued)

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

Derivatives in Cash Flow Hedging Relationships

Amount of Loss

Recognized in AOCI on Derivatives

Location of Gain Reclassified From AOCI into Income (Effective Portion*)

Amount of Gain

Reclassified from

AOCI into Income

(Effective Portion*)

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*)

March 31, 2020

March 31, 2019

March 31, 2020

March 31, 2019

March 31, 2021

March 31, 2020

March 31, 2021

March 31, 2020

Interest rate swaps

(3,739)

(3,702)

Interest expense

412

1,219

Interest rate swaps

2,441

(3,739)

Interest expense

(1,249)

412

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

The Company, through certain of its European subsidiaries, has a credit facility with a European bank, which is guaranteed by Matthews. The maximum amount of borrowing available under this facility is €~~35.0~~25.0 million ($~~38,505).~~ 29,321), which includes €8.0 million ($9,383) for bank guarantees. The credit facility matures in December ~~2020~~2021 andthe Company intends to continue to extend this facility. Outstanding borrowings under the credit facility totaled ~~€14.2~~€3.1 million ($~~15,622)~~3,587) and ~~€12.8~~€18.9 million ($~~14,024)~~22,166) at March 31, ~~2020~~2021 and September 30, ~~2019,~~2020, respectively. The weighted-average interest rate on outstanding borrowings under this facility at March 31, 2021 and 2020 was2.25%and ~~2019 was~~ 1.25%.

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

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

~~Note 7. Debt (continued)~~

respectively.

The Company’s German subsidiary, Matthews Europe GmbH, had €15.0 million ($16,376 at September 30, 2019) of senior unsecured notes with European banks. The notes matured in November 2019 at which point they were paid. The weighted-average interest rate on the notes at March 31, 2019 was 1.40%.

Finance lease liabilities included as a component of debt totaled $5,248 and $3,631 at March 31, 2020 and September 30, 2019, respectively. See Note 8, "Leases" for further discussion on the Company's lease obligations. Other debt totaled $395 at September 30, 2019. The weighted-average interest rate on other debt was 5.50% at March 31, 2019.

The Company uses certain foreign currency debt instruments as net investment hedges of foreign operations. Currency lossesof ~~$2,528~~$4,852 (net of income taxes of ~~$820)~~$1,575) and ~~$3,320~~currency losses of $4,377 (net of income taxes of ~~$1,077)~~$1,420), which represent effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at March 31, ~~2020~~2021 and September 30, ~~2019,~~2020, respectively.

~~In September 2014, a claim was filed by a customer seeking to draw upon a letter of credit issued by the Company of £8,570,000 ($10,607~~at March 31, 2020) with respect to a performance guarantee on an environmental solutions 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 "U.K. Court"). Pursuant to this action, an order was issued by the U.K. Court in January 2015 requiring that, upon receipt by the customer, the funds were to be remitted by the customer to the U.K. 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 U.K. Court as ordered. On June 14, 2016, the U.K Court ruled completely in favor of Matthews following a trial on the merits. However, the ongoing dispute involves litigation in multiple foreign jurisdictions because the contract between the parties includes a venue clause requiring the venue for any litigation to be in the United Kingdom, while the enforcement of any final judgment is required to be executed in Saudi Arabia. The Company continues to pursue a trial on the merits in Saudi Arabia which is now scheduled to conclude in calendar year 2020. It is necessary to obtain an equivalent favorable ruling in the courts of Saudi Arabia to effectively enforce the judgment and commence collection efforts. The Company remains confident regarding the pending trial on the merits in Saudi Arabia and expects to be in a position to enforce the judgment and initiate collection efforts following completion of that trial. However, as the customer has neither yet remitted the funds nor complied with the final, un-appealed orders of the U.K. Court, it is possible the resolution of this matter could have an unfavorable financial impact on Matthews’ results of operations. The Company’s level of success in recovering funds from the customer will depend upon a number of factors including a successful completion of the pending trial on the merits in Saudi Arabia, the availability of recoverable funds, and the subsequent level of cooperation from the Saudi Arabian government to enforce a potential judgment against the customer. 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 March 31, 2020 and September 30, 2019. The Company will continue to assess the accounting and collectability related to this matter as facts and circumstances evolve.

As of March 31, 2020, the market value of the Company's 2025 Senior Notes was approximately 10% less than the carrying value. The fair value of the Company's remaining long-term debt, including current maturities, approximated the carrying value included in the Consolidated Balance Sheets. As of2021 and September 30, ~~2019,~~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 March 31, ~~2020.~~2021.

~~Note 8. Leases~~

The Company’s lease portfolio includes various contracts for real estate, vehicles, information technology and other equipment. At contract inception, a lease exists if the contract conveys the right to control an identified asset for a period of time in exchange for consideration. Control is considered to exist when the lessee has the right to obtain substantially all of the economic benefits from the use of an identified asset, as well as the right to direct the use of that asset. If a contract is considered to be a lease, the Company recognizes a lease liability based on the present value of the future lease payments, and a corresponding right-of-use asset. As a majority of the Company’s leases do not provide an implicit interest rate within the lease, an incremental borrowing rate is used to determine the ROU asset and lease liability which is based on information available at the commencement date. Options to purchase, extend or terminate a lease are included in the ROU asset and lease liability when it is reasonably certain an option will be exercised. Renewal options are most prevalent in the Company’s real estate leases. In general, the Company has not included renewal options for leases in the ROU asset and lease liability because

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

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

~~Note 8. Leases (continued)~~

the likelihood of renewal was not determined to be reasonably certain. In addition, leases may include variable lease payments, for items such as maintenance and utilities, which are expensed as incurred as variable lease expense.

There are two types of leases, operating leases and finance leases. Lease classification is determined at lease commencement. Leases not meeting the finance lease criteria are classified as operating leases. Effective October 1, 2019, ROU assets and corresponding lease liabilities are recorded on the Consolidated Balance Sheet. ROU assets for operating leases are classified in other assets, and ROU assets for finance leases are classified in property, plant and equipment, net on the Consolidated Balance Sheet. For operating leases, short-term lease liabilities are classified in other current liabilities, and long-term lease liabilities are classified in other liabilities on the Consolidated Balance Sheet. For finance leases, short-term lease liabilities are classified in long-term debt, current maturities, and long-term lease liabilities are classified in long-term debt on the Consolidated Balance Sheet. Leases with an initial lease term of twelve months or less have not been recognized on the Consolidated Balance Sheet. Reporting periods prior to October 1, 2019 continue to be presented in accordance with previous lease accounting guidance under GAAP.

~~The following table presents the balance sheet and lease classification for the Company's lease portfolio:~~

~~Balance Sheet Classification~~

~~Lease Classification~~

~~March 31, 2020~~

~~Non-current assets:~~

~~Property, plant and equipment, net~~

~~Finance~~

~~3,194~~

~~Other assets~~

~~Operating~~

~~79,563~~

~~Total lease assets~~

~~82,757~~

~~Current liabilities:~~

~~Long-term debt, current maturities~~

~~Finance~~

~~1,077~~

~~Other current liabilities~~

~~Operating~~

~~26,098~~

~~Non-current liabilities:~~

~~Long-term debt~~

~~Finance~~

~~4,171~~

~~Other liabilities~~

~~Operating~~

~~54,295~~

~~Total lease liabilities~~

~~85,641~~

Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense, while the expense for finance leases is recognized as depreciation expense and interest expense using the interest method of recognition. On the cash flow statement, payments for operating leases are classified as operating activities. Payments for finance leases are classified as a financing activity, with the exception of the interest component of the payment which is classified as an operating activity.

~~The following table presents the components of lease cost:~~

Three months ended March 31, 2020 Six months ended March 31, 2020
Finance lease cost:
Amortization of ROU assets $ 222 $ 351
Interest on lease liabilities 43 77
Operating lease cost 6,835 13,098
Variable lease cost 1,457 2,882
Sublease income (212) (399)
Total lease cost $ 8,345 $ 16,009

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

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

~~Note 8. Leases (continued)~~

~~Supplemental information regarding the Company's leases follows:~~



				~~Six months ended March 31, 2020~~
~~Cash paid for finance and operating lease liabilities:~~
	~~Operating cash flows from finance leases~~	$	77
	~~Operating cash flows from operating leases~~	$	~~15,589~~
	~~Financing cash flows from finance leases~~	$	~~331~~
~~ROU assets obtained in exchange for new finance lease liabilities~~				$	~~2,011~~
~~ROU assets obtained in exchange for new operating lease liabilities~~				$	~~9,284~~

		~~March 31, 2020~~
~~Weighted-average remaining lease term - finance leases (years)~~				~~5.67~~
~~Weighted-average remaining lease term - operating leases (years)~~				~~3.84~~
~~Weighted-discount rate - finance leases~~				~~3.32~~		%
~~Weighted-discount rate - operating leases~~				~~3.04~~		%

The Company elected the practical expedient to not separate lease components from non-lease components for all asset classes. In addition, the Company elected the practical expedient to utilize a portfolio approach for certain equipment asset classes, primarily information technology, as the application of the lease model to the portfolio would not differ materially from the application of the lease model to the individual leases within the portfolio.

~~Maturities of lease obligations by fiscal year were as follows as of March 31, 2020:~~

Operating Leases Finance Leases
2020 (remainder) $ 14,881 $ 647
2021 25,080 1,122
2022 17,199 1,008
2023 11,063 800
2024 7,650 386
Thereafter 9,555 2,100
Total future minimum lease payments 85,428 6,063
Less: Interest 5,035 815
Present value of lease liabilities: $ 80,393 $ 5,248

Note 9.8. Share-Based Payments

The Company maintains an equity incentive plan (the "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 2017 Equity Incentive Plan, which has a ~~ten-year~~ten-year term, the maximum number of shares available for grants or awards is an aggregate of 1,700,000. At March 31, ~~2020,~~2021, there were 1,700,000 shares reserved for future issuance under the 2017 Equity Incentive Plan. ~~558,200~~1,064,910 restricted share units have been granted under the 2017 Equity Incentive Plan and are outstanding as of March 31, ~~2020.~~2021. The 2017 Equity Incentive plan is administered by the Compensation Committee of the Board of Directors.

With respect to 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.

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

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

~~Note 9. Share-Based Payments (continued)~~

With respect to the 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 performance thresholds. ~~Approximately thirty-eight percent~~Such performance thresholds include adjusted earnings per share, return on invested capital, appreciation in the market value of the ~~shares~~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)

For the three-month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, stock-based compensation cost totaled ~~$2,508~~$4,001 and ~~$1,366,~~$2,508, respectively. For the six-month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, stock-based compensation cost totaled $7,247 and $4,539, and $5,013, respectively. The stock-based compensation cost that was recognized for retirement-eligible employees was $625 for the three-month period ended March 31, 2020, and $938 and $1,849 for the six-month periods ended March 31, 2020 and 2019, respectively. The associated future income tax benefit recognized for stock-based compensation was ~~$614~~$738 and ~~$335~~$614 for the three-month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$793~~$976 and ~~$870~~$793 for the six-month periods ended March 31, 2021 and 2020, ~~and 2019,~~ respectively.

The transactions for restricted shares and restricted share units for the six months ended March 31, ~~2020~~2021 were as follows:


		Shares /Units	Weighted- average Grant-date Fair Value			Shares /Units	Weighted- average Grant-date Fair Value
Non-vested at September 30, 2019		615,635	$	49.61
Non-vested at September 30, 2020					Non-vested at September 30, 2020	750,322	$	40.88
Granted	Granted	296,000	35.29		Granted	499,050	30.06
Vested	Vested	(125,190)	64.50		Vested	(104,895)	56.11
Expired or forfeited	Expired or forfeited	(20,690)	65.01		Expired or forfeited	(36,667)	57.05
Non-vested at March 31, 2020		765,755	$	41.22
Non-vested at March 31, 2021					Non-vested at March 31, 2021	1,107,810	$	34.03

As of March 31, ~~2020,~~2021, the total unrecognized compensation cost related to unvested restricted stock was ~~$13,105~~$17,602 and is expected to be recognized over a weighted average period of 2.2 years.

The fair value of certain restricted share units that are subject to performance conditions 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 certain restricted share units granted during the six-month period ended March 31, 2021.


	Six Months Ended March 31, 2021

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

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 six months ended March 31, 2021 represents an estimate of the average period of time for restricted share units to vest.

The Company maintains the 2019 Director Fee Plan, the Amended and Restated 2014 Director Fee Plan and the 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 2019 Director Fee Plan, non-employee directors (except for the Chairman of the Board) each receive, as an annual retainer fee for fiscal ~~2020,~~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 ~~2020~~2021 paid to the 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 ~~30,374~~38,327 shares and share units had been deferred under the Director Fee Plans as of March 31, ~~2020.~~2021. Additionally, non-employee directors each receive an annual stock-based grant (non-statutory stock options, stock appreciation rights and/or restricted shares or units) with a value of $125 for fiscal ~~2020. 241,378~~2021. 271,807 restricted shares and restricted share units have been granted under the Director Fee Plans, ~~68,149~~98,578 of which were issued under the 2019 Director Fee Plan. ~~68,149~~74,639 restricted shares and restricted share units are unvested at March 31, ~~2020.~~2021.

1713

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note ~~10.~~9. Earnings Per Share Attributable to Matthews' Shareholders

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


		Three Months Ended March 31,						Six Months Ended March 31,							Three Months Ended March 31,				Six Months Ended March 31,
		2020		2019		2020		2019			2021		2020		2021		2020
Net (loss) income attributable to Matthews shareholders		$	(86,364)	$	15,417	$	(96,830)	$	18,514
Net income (loss) attributable to Matthews shareholders										Net income (loss) attributable to Matthews shareholders	$	4,989	$	(86,364)	$	3,231	$	(96,830)

Weighted-average shares outstanding (in thousands):	Weighted-average shares outstanding (in thousands):									Weighted-average shares outstanding (in thousands):
Basic shares	Basic shares	31,150		31,528		31,141		31,563		Basic shares	31,665		31,150		31,697		31,141
Effect of dilutive securities	Effect of dilutive securities	—		141		—		135		Effect of dilutive securities	418		0		337		0
Diluted shares	Diluted shares	31,150		31,669		31,141		31,698		Diluted shares	32,083		31,150		32,034		31,141

Anti-dilutive securities excluded from the dilution calculation were insignificant for the three and six months ended March 31, ~~2020 and 2019.~~2021.

Note ~~11.~~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 March 31,															Three months ended March 31,
		Pension						Other Postretirement							Pension				Other Postretirement
		2020		2019		2020		2019			2021		2020		2021		2020

Service cost	Service cost	$	2,170	$	2,000	$	64	$	61	Service cost	$	1,983	$	2,170	$	50	$	64
Interest cost *	Interest cost *	1,933		2,301		140		180		Interest cost *	1,546		1,933		94		140
Expected return on plan assets *	Expected return on plan assets *	(2,232)		(2,596)		—		—		Expected return on plan assets *	(2,762)		(2,232)		0		0
Amortization:	Amortization:									Amortization:
Prior service cost	Prior service cost	(47)		(46)		(23)		(49)		Prior service cost	(41)		(47)		(91)		(23)
Net actuarial loss (gain) *		2,386		1,100		—		(15)
Net actuarial loss *										Net actuarial loss *	3,023		2,386		0		0
Net benefit cost	Net benefit cost	$	4,210	$	2,759	$	181	$	177	Net benefit cost	$	3,749	$	4,210	$	53	$	181


		Six months ended March 31,															Six months ended March 31,
		Pension						Other Postretirement							Pension				Other Postretirement
		2020		2019		2020		2019			2021		2020		2021		2020

Service cost	Service cost	$	4,340	$	4,000	$	128	$	122	Service cost	$	4,196	$	4,340	$	100	$	128
Interest cost *	Interest cost *	3,866		4,602		280		360		Interest cost *	3,094		3,866		188		280
Expected return on plan assets *	Expected return on plan assets *	(4,464)		(5,192)		—		—		Expected return on plan assets *	(5,525)		(4,464)		0		0
Amortization:	Amortization:									Amortization:
Prior service cost	Prior service cost	(94)		(92)		(46)		(98)		Prior service cost	(58)		(94)		(182)		(46)
Net actuarial loss (gain) *		4,773		2,161		—		(30)
Net actuarial loss *										Net actuarial loss *	6,044		4,773		0		0
Net benefit cost	Net benefit cost	$	8,421	$	5,479	$	362	$	354	Net benefit cost	$	7,751	$	8,421	$	106	$	362

^*Non-service components of pension and postretirement expense are included in other income (deductions), net.

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. In ~~response~~April 2021, subsequent to ~~coronavirus disease 2019 ("COVID-19"),~~ the ~~federal government passed a modified relief bill, which provides additional funding measures associated with IRS regulations. In accordance with this bill,~~date of the balance sheet, the Company ~~is no longer required to make contributions for fiscal 2020~~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 during fiscal 2021.

1814

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note ~~11.~~10. Pension and Other Postretirement Benefit Plans (continued)

Contributions made and anticipated for fiscal year ~~2020~~2021 are as follows:


Contributions	Pension					Other Postretirement

Contributions during the six months ended March 31, ~~2020:~~2021:

Supplemental retirement plan	$	~~382~~408				$	—
Other postretirement plan	—					~~457~~228

Additional contributions expected in fiscal ~~2020:~~2021:
Principal retirement plan *	$	15,000				$	—
Supplemental retirement plan	$		~~500~~	497	$			—
Other postretirement plan	—					603			~~532~~

* Contribution was made in April 2021 (see above).

Note ~~12.~~11. Accumulated Other Comprehensive Income

The changes in AOCI by component, net of tax, for the three-month periods ended March 31, ~~2020~~2021 and ~~2019~~2020 were as follows:


		Post-retirement benefit plans			Currency translation adjustment		Derivatives			Total			Post-retirement benefit plans			Currency translation adjustment		Derivatives			Total
Attributable to Matthews:	Attributable to Matthews:											Attributable to Matthews:
Balance, December 31, 2019		$	(70,016)		$	(145,103)	$	(113)		$	(215,232)
Balance, December 31, 2020												Balance, December 31, 2020	$	(80,830)		$	(134,826)	$	(4,849)		$	(220,505)
OCI before reclassification	OCI before reclassification	—			(30,648)		(4,305)			(34,953)		OCI before reclassification	0			(8,898)		2,088			(6,810)
Amounts reclassified from AOCI	Amounts reclassified from AOCI	1,827		^(a)	—		(137)		^(b)	1,690		Amounts reclassified from AOCI	2,255		(a)	0		567		(b)	2,822
Net current-period OCI	Net current-period OCI	1,827			(30,648)		(4,442)			(33,263)		Net current-period OCI	2,255			(8,898)		2,655			(3,988)
Balance, March 31, 2020		$	(68,189)		$	(175,751)	$	(4,555)		$	(248,495)
Balance, March 31, 2021												Balance, March 31, 2021	$	(78,575)		$	(143,724)	$	(2,194)		$	(224,493)
Attributable to noncontrolling interest:	Attributable to noncontrolling interest:											Attributable to noncontrolling interest:
Balance, December 31, 2019		$	—		$	370	$	—		$	370
Balance, December 31, 2020												Balance, December 31, 2020	$	0		$	365	$	0		$	365
OCI before reclassification	OCI before reclassification	—			1		—			1		OCI before reclassification	0			1		0			1
Net current-period OCI	Net current-period OCI	—			1		—			1		Net current-period OCI	0			1		0			1
Balance, March 31, 2020		$	—		$	371	$	—		$	371
Balance, March 31, 2021												Balance, March 31, 2021	$	0		$	366	$	0		$	366


		Post-retirement benefit plans			Currency translation adjustment		Derivatives			Total			Post-retirement benefit plans			Currency translation adjustment		Derivatives			Total
Attributable to Matthews:	Attributable to Matthews:											Attributable to Matthews:
Balance, December 31, 2018		$	(37,147)		$	(147,524)	$	5,637		$	(179,034)
Balance, December 31, 2019												Balance, December 31, 2019	$	(70,016)		$	(145,103)	$	(113)		$	(215,232)
OCI before reclassification	OCI before reclassification	—			134		(1,356)			(1,222)		OCI before reclassification	0			(30,648)		(4,305)			(34,953)
Amounts reclassified from AOCI	Amounts reclassified from AOCI	734		^(a)	—		(664)		^(b)	70		Amounts reclassified from AOCI	1,827		(a)	0		(137)		(b)	1,690
Net current-period OCI	Net current-period OCI	734			134		(2,020)			(1,152)		Net current-period OCI	1,827			(30,648)		(4,442)			(33,263)
Balance, March 31, 2019		$	(36,413)		$	(147,390)	$	3,617		$	(180,186)
Balance, March 31, 2020												Balance, March 31, 2020	$	(68,189)		$	(175,751)	$	(4,555)		$	(248,495)
Attributable to noncontrolling interest:	Attributable to noncontrolling interest:											Attributable to noncontrolling interest:
Balance, December 31, 2018		$	—		$	454	$	—		$	454
Balance, December 31, 2019												Balance, December 31, 2019	$	0		$	370	$	0		$	370
OCI before reclassification	OCI before reclassification	—			19		—			19		OCI before reclassification	0			1		0			1
Net current-period OCI	Net current-period OCI	—			19		—			19		Net current-period OCI	0			1		0			1
Balance, March 31, 2019		$	—		$	473	$	—		$	473
Balance, March 31, 2020												Balance, March 31, 2020	$	0		$	371	$	0		$	371

^(a)Amounts were included in net periodic benefit cost for pension and other postretirement benefit plans (see Note ~~11)~~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 ~~12.~~11. Accumulated Other Comprehensive Income (continued)

The changes in AOCI by component, net of tax, for the six-month periods ended March 31, ~~2020~~2021 and ~~2019~~2020 were as follows:


		Post-retirement benefit plans			Currency translation adjustment		Derivatives			Total			Post-retirement benefit plans			Currency translation adjustment		Derivatives			Total
Attributable to Matthews:	Attributable to Matthews:											Attributable to Matthews:
Balance, September 30, 2019		$	(71,743)		$	(156,214)	$	(404)		$	(228,361)
Balance, September 30, 2020												Balance, September 30, 2020	$	(82,954)		$	(151,881)	$	(5,884)		$	(240,719)
OCI before reclassification	OCI before reclassification	—			(19,537)		(3,739)			(23,276)		OCI before reclassification	0			8,157		2,441			10,598
Amounts reclassified from AOCI	Amounts reclassified from AOCI	3,554		^(a)	—		(412)		^(b)	3,142		Amounts reclassified from AOCI	4,379		(a)	0		1,249		(b)	5,628
Net current-period OCI	Net current-period OCI	3,554			(19,537)		(4,151)			(20,134)		Net current-period OCI	4,379			8,157		3,690			16,226

Balance, March 31, 2020		$	(68,189)		$	(175,751)	$	(4,555)		$	(248,495)
Balance, March 31, 2021												Balance, March 31, 2021	$	(78,575)		$	(143,724)	$	(2,194)		$	(224,493)
Attributable to noncontrolling interest:	Attributable to noncontrolling interest:											Attributable to noncontrolling interest:
Balance, September 30, 2019		$	—		$	375	$	—		$	375
Balance, September 30, 2020												Balance, September 30, 2020	$	0		$	368	$	0		$	368
OCI before reclassification	OCI before reclassification	—			(4)		—			(4)		OCI before reclassification	0			(2)		0			(2)
Net current-period OCI	Net current-period OCI	—			(4)		—			(4)		Net current-period OCI	0			(2)		0			(2)
Balance, March 31, 2020		$	—		$	371	$	—		$	371
Balance, March 31, 2021												Balance, March 31, 2021	$	0		$	366	$	0		$	366


		Post-retirement benefit plans			Currency translation adjustment		Derivatives			Total			Post-retirement benefit plans			Currency translation adjustment		Derivatives			Total
Attributable to Matthews:	Attributable to Matthews:											Attributable to Matthews:
Balance, September 30, 2018		$	(37,876)		$	(134,960)	$	8,538		$	(164,298)
Balance, September 30, 2019												Balance, September 30, 2019	$	(71,743)		$	(156,214)	$	(404)		$	(228,361)
OCI before reclassification	OCI before reclassification	—			(12,430)		(3,702)			(16,132)		OCI before reclassification	0			(19,537)		(3,739)			(23,276)
Amounts reclassified from AOCI	Amounts reclassified from AOCI	1,463		^(a)	—		(1,219)		^(b)	244		Amounts reclassified from AOCI	3,554		(a)	0		(412)		(b)	3,142
Net current-period OCI	Net current-period OCI	1,463			(12,430)		(4,921)			(15,888)		Net current-period OCI	3,554			(19,537)		(4,151)			(20,134)
Balance, March 31, 2019		$	(36,413)		$	(147,390)	$	3,617		$	(180,186)
Balance, March 31, 2020												Balance, March 31, 2020	$	(68,189)		$	(175,751)	$	(4,555)		$	(248,495)
Attributable to noncontrolling interest:	Attributable to noncontrolling interest:											Attributable to noncontrolling interest:
Balance, September 30, 2018		$	—		$	467	$	—		$	467
Balance, September 30, 2019												Balance, September 30, 2019	$	0		$	375	$	0		$	375
OCI before reclassification	OCI before reclassification	—			6		—			6		OCI before reclassification	0			(4)		0			(4)
Net current-period OCI	Net current-period OCI	—			6		—			6		Net current-period OCI	0			(4)		0			(4)
Balance, March 31, 2019		$	—		$	473	$	—		$	473
Balance, March 31, 2020												Balance, March 31, 2020	$	0		$	371	$	0		$	371

^(a)Amounts were included in net periodic benefit cost for pension and other postretirement benefit plans (see Note ~~11)~~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 ~~12.~~11. Accumulated Other Comprehensive Income (continued)

Reclassifications out of AOCI for the three and six-month periods ended March 31, 2021 and 2020 were as follows:



	Amount reclassified from AOCI
Details about AOCI Components	Three Months Ended March 31, 2021		Six Months Ended March 31, 2021		Affected line item in the Statement of income

Postretirement benefit plans
Prior service credit (a)	$	132	$	240
Actuarial losses (a)	(3,023)		(6,044)
	(2,891)		(5,804)		Income before income tax (b)
	636		1,425		Income taxes
	$	(2,255)	$	(4,379)	Net income
Derivatives
Interest rate swap contracts	$	(751)	$	(1,654)	Interest expense
	(751)		(1,654)		Income before income tax (b)
	184		405		Income taxes
	$	(567)	$	(1,249)	Net income


		Amount reclassified from AOCI											Amount reclassified from AOCI
Details about AOCI Components	Details about AOCI Components	Three Months Ended March 31, 2020			Six Months Ended March 31, 2020		Affected line item in the Statement of income	Details about AOCI Components	Three Months Ended March 31, 2020		Six Months Ended March 31, 2020			Affected line item in the Statement of income

Postretirement benefit plans	Postretirement benefit plans							Postretirement benefit plans
Prior service (cost) credit		$	70	^(a)	$	140
Prior service credit (a)								Prior service credit (a)	$	70	$	140
Actuarial losses(a)	Actuarial losses(a)	(2,386)		^(a)	(4,773)			Actuarial losses(a)	(2,386)		(4,773)
		(2,316)		^(b)	(4,633)		Income before income tax		(2,316)		(4,633)			Income before income tax (b)
		489			1,079		Income taxes		489		1,079			Income taxes
		$	(1,827)		$	(3,554)	Net income		$	(1,827)	$	(3,554)		Net income
Derivatives	Derivatives							Derivatives
Interest rate swap contracts	Interest rate swap contracts	$	182		$	546	Interest expense	Interest rate swap contracts	$	182	$	546		Interest expense
		182		^(b)	546		Income before income tax		182		546			Income before income tax (b)
		(45)			(134)		Income taxes		(45)		(134)			Income taxes
		$	137		$	412	Net income		$	137	$	412		Net income

(a)

~~Reclassifications out of AOCI for the three and six-month periods ended March 31, 2019 were as follows:~~

Amount reclassified from AOCI

Details about AOCI Components Three Months Ended March 31, 2019 Six Months Ended
March 31, 2019 Affected line item in the Statement of income
Postretirement benefit plans
Prior service credit $ 95
^(a)
$ 190
Actuarial losses (1,085)
^(a)
(2,131)
(990)
^(b)
(1,941) Income before income tax
256
478 Income taxes
$ (734)
$ (1,463) Net income
Derivatives

Interest rate swap contracts $ 880
$ 1,615 Interest expense
880
^(b)
1,615 Income before income tax
(216)
(396) Income taxes
$ 664 $ 1,219 Net income

^(a)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. Actuarial losses are reported in other income (deductions), net. For additional information, see Note ~~11.~~10.

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

2117

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note ~~13.~~12. Income Taxes

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 six months ended March 31, ~~2020~~2021 were an expense of $4,952, compared to a benefit of $16,463 ~~compared to an expense of $440~~ for the first six months of fiscal ~~2019.~~2020. The ~~differences~~difference between the Company’s consolidated income taxes for the first six months of fiscal ~~2020~~2021 versus the same period for fiscal ~~2019~~2020 primarily resulted from fiscal 2021 having consolidated pre-tax income while fiscal 2020 had a pre-tax loss. Additionally, fiscal 2021 included discrete tax expenses related to foreign operating losses, discrete tax benefits related to expirations 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 six-month effective tax 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 expirations 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 ~~2020 consolidated loss before income taxes, which reflected the goodwill write-down recorded during the second quarter of fiscal 2020 which was partially non-deductible.~~2021 effective tax rate. The Company’s fiscal 2020 ~~six month~~six-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, and discrete tax benefits recognized ~~during the current year. The Company’s~~in fiscal 2019 six month effective tax rate varied from the U.S. statutory tax rate of 21.0% primarily due to tax planning completed during the second quarter of fiscal 2019 that resulted in a discrete tax benefit.2020.

The Company had unrecognized tax benefits (excluding penalties and interest) of ~~$10,581~~ $10,351and ~~$15,526~~$10,483 on March 31, ~~2020~~2021 and September 30, ~~2019,~~2020, respectively, of which ~~$8,662~~$7,137 and ~~$11,417~~$7,066 would impact the annual effective rate at March 31, ~~2020~~2021 and September 30, ~~2019,~~2020, respectively. It is reasonably possible that the amount of unrecognized tax benefits could decrease by approximately ~~$3,073~~$7,606 in the next 12 months primarily due to the completion of 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 ~~$2,510~~$2,146 and ~~$2,880~~$2,172 at March 31, ~~2020~~2021 and September 30, ~~2019,~~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 March 31, ~~2020,~~2021, the tax years that remain subject to examination by major jurisdiction generally are:


United States – Federal			~~2016~~2017 and forward
United States – State			~~2015~~2016 and forward
Canada			~~2016~~2017 and forward
Germany			~~2015~~2019 and forward
United Kingdom			~~2018~~2019 and forward
~~Australia~~Singapore			~~2015~~2017 and forward
~~Singapore~~Australia			2016 and forward

Note ~~14.~~13. Segment Information

The Company manages its businesses under 3 segments: SGK Brand Solutions, Memorialization and Industrial Technologies. The SGK Brand Solutions segment consists of brand management, pre-media services, printing plates and cylinders, engineered products, 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 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 13. Segment Information (continued)

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 profit and loss.

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

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

~~Note 14. Segment Information (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 information about the Company's segments, including a reconciliation of adjusted EBITDA to net income.


		Three Months Ended March 31,						Six Months Ended March 31,							Three Months Ended March 31,				Six Months Ended March 31,
		2020		2019		2020		2019			2021		2020		2021		2020
Sales:	Sales:															Sales:
SGK Brand Solutions	SGK Brand Solutions	$	172,855	$	190,651	$	347,735	$	375,951	SGK Brand Solutions	$	171,024	$	172,855	$	339,164	$	347,735
Memorialization	Memorialization	161,819		162,176		316,224		316,062		Memorialization	205,457		161,819		388,731		316,224
Industrial Technologies	Industrial Technologies	40,126		38,573		75,785		73,564		Industrial Technologies	40,673		40,126		75,916		75,785
Consolidated Sales	Consolidated Sales	$	374,800	$	391,400	$	739,744	$	765,577	Consolidated Sales	$	417,154	$	374,800	$	803,811	$	739,744

Adjusted EBITDA:
SGK Brand Solutions $ 22,224 $ 29,370 $ 40,962 $ 56,721
Memorialization 35,193 34,965 65,286 65,286
Industrial Technologies 6,212 4,792 10,526 8,387
Corporate and Non-Operating (14,232) (12,939) (27,147) (27,725)
Total Adjusted EBITDA $ 49,397 $ 56,188 $ 89,627 $ 102,669
Acquisition costs ^(1)**
(660) (3,374) (2,608) (5,406)
ERP integration costs ^(2)**
(750) (1,805) (1,415) (3,982)
Strategic initiatives and other charges ^(3)**
(9,219) (2,112) (19,470) (2,112)
Loss on divestiture ⁽⁴⁾
— — — (4,465)
Joint Venture depreciation, amortization, interest expense and other charges ⁽⁵⁾
(1,462) — (2,259) —
Non-recurring / incremental COVID-19 costs ⁽⁶⁾
(663) — (663) —
Goodwill write-down⁽⁷⁾
(90,408) — (90,408) —
Stock-based compensation (2,508) (1,366) (4,539) (5,013)
Non-service pension and postretirement expense ⁽⁸⁾
(2,227) (970) (4,455) (1,901)
Depreciation and amortization ^*
(29,317) (21,050) (58,250) (40,276)
Interest expense (9,613) (10,259) (18,853) (20,560)
Net loss attributable to noncontrolling interests (231) (223) (71) (336)
(Loss) income before income taxes (97,661) 15,029 (113,364) 18,618
Income tax benefit (provision) 11,066 165 16,463 (440)
Net (loss) income $ (86,595) $ 15,194 $ (96,901) $ 18,178


Adjusted EBITDA:
SGK Brand Solutions	$	20,832	$	22,224	$	42,168	$	40,962
Memorialization	51,606		35,193		95,678		65,286
Industrial Technologies	5,809		6,212		9,302		10,526
Corporate and Non-Operating	(17,307)		(14,232)		(31,445)		(27,147)
Total Adjusted EBITDA	$	60,940	$	49,397	$	115,703	$	89,627

Acquisition related items (1)**	702		(742)		360		(2,221)
ERP integration costs (2)**	(216)		(750)		(359)		(1,415)
Strategic initiatives and other charges: (3)**
Workforce reductions and related costs	(1,792)		(1,387)		(8,818)		(3,649)
Other cost-reduction initiatives	(3,787)		(7,750)		(7,468)		(16,208)


Non-recurring / incremental coronavirus disease 2019 ("COVID-19") costs (4)	(1,572)		(663)		(2,696)		(663)
Goodwill write-down (5)	0		(90,408)		0		(90,408)
Joint Venture depreciation, amortization, interest expense and other charges (6)	0		(1,462)		0		(2,259)
Stock-based compensation	(4,001)		(2,508)		(7,247)		(4,539)
Non-service pension and postretirement expense (7)	(1,901)		(2,227)		(3,801)		(4,455)
Depreciation and amortization *	(35,179)		(29,317)		(62,530)		(58,250)
Interest expense	(7,233)		(9,613)		(14,961)		(18,853)
Net income (loss) attributable to noncontrolling interests	163		(231)		(71)		(71)
Income (loss) before income taxes	6,124		(97,661)		8,112		(113,364)
Income tax (provision) benefit	(972)		11,066		(4,952)		16,463
Net income (loss)	$	5,152	$	(86,595)	$	3,160	$	(96,901)

2319

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note ~~14.~~13. Segment Information (continued)


⁽¹⁾ Includes certain non-recurring ~~costs~~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 loss on the sale of a controlling interest in a subsidiary within the Memorialization segment.~~
⁽⁵⁾ 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.
⁽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⁾(5)Represents the goodwill write-down for two reporting units within the SGK Brand Solutions ~~segment (see Note 16, "Goodwill and Other Intangible Assets").~~segment.
⁽⁸⁾(6) 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.
(7) Non-service pension and postretirement expense includes interest cost, expected return on plan assets and amortization of actuarial 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. 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 ~~$21,785~~$26,740 and ~~$13,165~~$21,785 for the SGK Brand Solutions segment, ~~$4,839~~$5,709 and ~~$5,039~~$4,839 for the Memorialization segment, ~~$1,428~~$1,401 and ~~$1,559~~$1,428 for the Industrial Technologies segment, and ~~$1,265~~$1,329 and ~~$1,287~~$1,265 for Corporate and Non-Operating, for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. Depreciation and amortization was ~~$43,441~~$45,887 and ~~$24,607~~$43,441 for the SGK Brand Solutions segment, ~~$9,475~~$11,178 and ~~$10,058~~$9,475 for the Memorialization segment, ~~$2,870~~$2,842 and ~~$3,085~~$2,870 for the Industrial Technologies segment, and ~~$2,464~~$2,623 and ~~$2,526~~$2,464 for Corporate and Non-Operating, for the six months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

** Acquisition costs, ERP integration costs, and strategic initiatives and other charges were ~~$3,818~~$2,991 and ~~$2,808~~$3,818 for the SGK Brand Solutions segment, income of $335 and charges of $730 for the Memorialization segment, and charges of $2,437 and $5,813 ~~and $4,483~~ for Corporate and Non-Operating, for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were ~~$730 for the Memorialization segment and~~ $268 for the Industrial Technologies segment, for the three months ended March 31, 2020. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were ~~$7,264~~$10,346 and ~~$3,409~~$7,264 for the SGK Brand Solutions segment, $795 and $1,057 for the Memorialization segment, and $5,144 and $14,904 ~~and $8,091~~ for Corporate and Non-Operating, for the six months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were ~~$1,057 for the Memorialization segment and~~ $268 for the Industrial Technologies segment, for the six months ended March 31, 2020.

Note ~~15.~~14. Acquisitions ~~and Divestitures~~

Fiscal ~~2019:~~2021:

~~On November 1, 2018~~In January 2021, the Company acquired ~~80% ownership of Frost Converting Systems, Inc. (“Frost”)~~a memorialization business that produces and distributes cemetery products for a purchase price of ~~approximately $7,162 (net~~$13,100, subject to working capital adjustments. The preliminary purchase price allocation is not finalized as of ~~cash acquired and holdback amounts). Frost is a leading global supplier of high-performance rotary dies for embossing, creasing and cutting of paperboard packaging~~March 31, 2021 and is ~~included in~~subject to changes as the ~~Company's SGK Brand Solutions segment. The~~ Company ~~finalized the allocation of the purchase price~~obtains additional information related to ~~the Frost acquisition in the fourth quarter of fiscal 2019, resulting in an immaterial adjustment to certain working capital accounts.~~

~~During fiscal 2019, the Company completed small acquisitions in the Memorialization segment for a combined purchase price of $3,094 (net of cash acquired~~fixed assets and holdback amounts). The Company finalized the purchase price allocations related to these acquisitions in the first quarter of fiscal 2020, resulting in an immaterial adjustment to certain working capital accounts.

~~During fiscal 2019, the Company completed the sale of a 51% ownership interest in a small Memorialization business. Net proceeds from this sale totaled approximately $8,254,~~other assets, and the transaction resulted in the recognition of a $4,465 loss for the six months ended March 31, 2019, which is included as a component of administrative expenses. Immediately following the transaction, the Company retained a non-controlling interest in this business, which will be accounted for as an equity-method investment.liabilities.

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

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

Note ~~16.~~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, 2019 $ 395,704 $ 359,737 $ 91,366 $ 846,807
Additions during period — — — —
Divestiture during period — — — —
Translation and other adjustments (5,934) 32 81 (5,821)
Goodwill write-down (90,408) — — (90,408)
Net goodwill at March 31, 2020 $ 299,362 $ 359,769 $ 91,447 $ 750,578


	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		4,796		0		4,796

Translation and other adjustments	6,526		372		741		7,639



Net goodwill at March 31, 2021	$	318,263	$	366,850	$	92,710	$	777,823

The net goodwill balances at March 31, ~~2020~~2021 and September 30, ~~2019~~2020 included $178,732 ~~and $88,324~~ of accumulated impairment ~~losses, respectively.~~losses. Accumulated impairment losses at March 31, 2021 and September 30, 2020 were $173,732 and $5,000 for the SGK Brand Solutions and Memorialization segments, respectively. ~~Accumulated impairment losses at September 30, 2019 were $83,324~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited), Continued

(Dollar amounts in thousands, except per share data)

Note 15. Goodwill and ~~$5,000 for the SGK Brand Solutions and Memorialization segments, respectively.~~Other Intangible Assets (continued)

The Company performed its annual impairment review of goodwill and indefinite-lived intangible assets in the second quarter of fiscal ~~2020~~2021 (January 1, ~~2020)~~2021) and determined that the estimated fair values for all goodwill reporting units exceeded their carrying ~~values.~~values, therefore no impairment charges were necessary. The estimated fair ~~values for two~~value of the Company's Graphics Imaging reporting ~~units~~unit, within the SGK Brand Solutions segment, ~~(Graphics Imaging and Cylinders, Surfaces and Engineered Products)~~ exceeded ~~their~~the carrying ~~values~~value (expressed as a percentage of carrying value) by ~~less than 10% as of January 1, 2020.~~

On January 30, 2020, the World Health Organization declared an outbreak of COVID-19 to be a Public Health Emergency of International Concern, and subsequently recognized COVID-19 as a global pandemic on March 11, 2020. Widespread efforts have been deployed by multiple countries around the world to prevent the virus from spreading, including 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 second quarter of fiscal 2020, as they have been considered “essential” businesses at 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.

In its assessment of the potential impacts of COVID-19 on the estimated future earnings and cash flows for the SGK Brand Solutions segment, and in light of the limited excess fair values for its two reporting units (discussed above), management determined that COVID-19 represents a triggering event, resulting in a re-evaluation of the goodwill for its reporting units within the SGK Brand Solutions segment (Graphics Imaging and Cylinders, Surfaces and Engineered Products), as of March 31, 2020. As a result of this interim assessment, the Company recorded a goodwill write-down totaling $90,408 during the fiscal 2020 second quarter. Subsequent to this write-down, the fair values of the two reporting units within the SGK Brand Solutions segment (Graphics Imaging and Cylinders, Surfaces and Engineered Products) approximated their carrying values at March 31, 2020. The fair values for these reporting units were determined using level 3 inputs (including estimates of revenue growth, EBITDA contribution and the discount rates) and a combination of the income approach using the estimated discounted cash flows and a market-based valuation methodology.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, ~~additional~~ goodwill write-downs may be necessary in future periods.

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

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

~~Note 16. Goodwill and Other Intangible Assets (continued)~~

The following tables summarize the carrying amounts and related accumulated amortization for intangible assets as of March 31, ~~2020~~2021 and September 30, ~~2019,~~2020, respectively.

Carrying
Amount Accumulated
Amortization Net
March 31, 2020:
Trade names $ 30,540 $ — * $ 30,540
Trade names 148,604 (43,474) 105,130
Customer relationships 373,413 (151,447) 221,966
Copyrights/patents/other 20,340 (13,870) 6,470
$ 572,897 $ (208,791) $ 364,106
September 30, 2019:

Trade names $ 30,540 $ — * $ 30,540
Trade names 148,628 (22,653) 125,975
Customer relationships 374,515 (137,330) 237,185
Copyrights/patents/other 20,463 (13,513) 6,950
$ 574,146 $ (173,496) $ 400,650


	Carrying Amount		Accumulated Amortization		Net
March 31, 2021:
Indefinite-lived trade names	$	30,540	$	—	$	30,540
Definite-lived trade names	148,934		(83,129)		65,805
Customer relationships	389,565		(186,391)		203,174
Copyrights/patents/other	20,831		(15,055)		5,776
	$	589,870	$	(284,575)	$	305,295

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

^{* Not subject to amortization}

The net change in intangible assets during the six months ended March 31, ~~2020~~2021 included the impact of foreign currency fluctuations during the period, additional amortization and ~~additional amortization.~~additions related to a memorialization acquisition. During the second quarter of fiscal 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 ~~$17,872~~$22,930 and ~~$9,509~~$17,872 for the three-month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. For the ~~six-month periods~~six month period ended March 31, ~~2020~~2021 and ~~2019,~~2020, amortization expense was ~~$35,814~~$38,151 and ~~$17,622,~~$35,814, respectively. Amortization expense is estimated to be ~~$35,674~~$45,840 for the remainder of fiscal ~~2020, $60,109 in~~ 2021, ~~$46,729~~$56,923 in 2022, ~~$27,797~~$40,484 in 2023, $35,062 in 2024 and ~~$26,177~~$19,737 in ~~2024.~~2025. The accelerated amortization related to the fiscal 2019 reduction in useful lives for certain discontinued trade names is scheduled to continue through the first quarter of fiscal 2022.

Note 16. Subsequent Event

On April 20, 2021, subsequent to the date of the balance sheet, 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.

2621

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

CAUTIONARY 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, ~~2019.~~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, ~~such as coronavirus disease 2019 ("COVID-19")~~ 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, ~~2019.~~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 Company manages its businesses under three segments: SGK Brand Solutions, Memorialization and Industrial Technologies. The SGK Brand Solutions segment consists of brand management, pre-media services, printing plates and cylinders, engineered products, 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 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.

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 profit and loss.

2722

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

The following table sets forth the sales and adjusted EBITDA for the Company's three reporting segments for the three and six-month periods ended March 31, ~~2020~~2021 and ~~2019.~~2020. Refer to Note ~~14,~~13, "Segment Information" in Item 1 - "Financial Statements" for the Company's financial information by segment.


		Three Months Ended March 31,						Six Months Ended March 31,							Three Months Ended March 31,				Six Months Ended March 31,
		2020		2019		2020		2019			2021		2020		2021		2020
Sales:	Sales:	(Dollar amounts in thousands)														Sales:	(Dollar amounts in thousands)
SGK Brand Solutions	SGK Brand Solutions	$	172,855	$	190,651	$	347,735	$	375,951	SGK Brand Solutions	$	171,024	$	172,855	$	339,164	$	347,735
Memorialization	Memorialization	161,819		162,176		316,224		316,062		Memorialization	205,457		161,819		388,731		316,224
Industrial Technologies	Industrial Technologies	40,126		38,573		75,785		73,564		Industrial Technologies	40,673		40,126		75,916		75,785
Consolidated Sales	Consolidated Sales	$	374,800	$	391,400	$	739,744	$	765,577	Consolidated Sales	$	417,154	$	374,800	$	803,811	$	739,744


Adjusted EBITDA:	Adjusted EBITDA:									Adjusted EBITDA:
SGK Brand Solutions	SGK Brand Solutions	$	22,224	$	29,370	$	40,962	$	56,721	SGK Brand Solutions	$	20,832	$	22,224	$	42,168	$	40,962
Memorialization	Memorialization	35,193		34,965		65,286		65,286		Memorialization	51,606		35,193		95,678		65,286
Industrial Technologies	Industrial Technologies	6,212		4,792		10,526		8,387		Industrial Technologies	5,809		6,212		9,302		10,526
Corporate and Non-Operating	Corporate and Non-Operating	(14,232)		(12,939)		(27,147)		(27,725)		Corporate and Non-Operating	(17,307)		(14,232)		(31,445)		(27,147)
Total Adjusted EBITDA ⁽¹⁾	Total Adjusted EBITDA ⁽¹⁾	$	49,397	$	56,188	$	89,627	$	102,669	Total Adjusted EBITDA (1)	$	60,940	$	49,397	$	115,703	$	89,627

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

~~Beginning~~Sales for the six months ended March 31, 2021 were $803.8 million, compared to $739.7 million for the six months ended March 31, 2020, representing an increase of $64.1 million. The increase in fiscal 2021 sales primarily reflected higher sales in the ~~second quarter~~Memorialization segment partially offset by lower sales in the SGK Brand Solutions segment. Changes in foreign currency exchange rates were estimated to have a favorable impact of $14.1 million on fiscal ~~2020,~~2021 consolidated sales ~~were unfavorably~~compared to a year ago. Fiscal 2021 sales continued to be impacted by the global outbreak of ~~COVID-19,~~coronavirus disease 2019 ("COVID-19"), which has caused some commercial ~~impact and business disruptions~~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 ~~second quarter of fiscal 2020,~~COVID-19 pandemic, management expects COVID-19 to ~~unfavorably~~continue to impact its sales and results of operations in the short-term ~~and for~~until the ~~remainder of fiscal 2020~~pandemic subsides (see "Forward Looking Information" below).

Sales for the six months ended March 31, 2020 were $739.7 million, compared to $765.6 million for the six months ended March 31, 2019, representing a decrease of $25.9 million. The decrease in fiscal 2020 sales primarily reflected lower brand sales and decreased sales of cylinders, surfaces and engineered products in Europe for the SGK Brand Solutions segment. These decreases were partially offset by increased North American casket and memorial revenues and higher sales of cremation and incineration equipment for the Memorialization segment, and increased product identification sales for the Industrial Technologies segment. Changes in foreign currency rates were estimated to have an unfavorable impact of $6.5 million on fiscal 2020 consolidated sales compared to a year ago.

In the SGK Brand Solutions segment, sales for the first six months of fiscal ~~2020~~2021 were ~~$347.7~~$339.2 million, compared to ~~$376.0~~$347.7 million for the first six months of fiscal ~~2019.~~2020. The decrease primarily resulted from lower retail-based sales ~~in the U.S., reflecting a significant~~(principally merchandising solutions and private label brand ~~client electing to transition their work internally during the fiscal 2019 first quarter, lower brand sales in the U.K.~~market sales), and ~~lower~~reduced sales of cylinders and surfaces ~~and engineered~~ products, ~~in Europe.~~all of which continued to be unfavorably impacted by COVID-19. These decreases were partially offset by ~~sales growth in the Asia-Pacific region and increased~~higher sales of ~~merchandising solutions.~~purpose-built engineered products (primarily in support of the automobile and energy storage industries). Changes in foreign currency exchange rates had ~~an unfavorable~~a favorable impact of ~~$5.1~~$10.4 million on the segment's sales compared to the prior year. Memorialization segment sales for the first six months of fiscal ~~2020~~2021 were ~~$316.2~~$388.7 million, compared to ~~$316.1~~$316.2 million for the first six months of fiscal ~~2019.~~2020. The ~~change~~increase in sales ~~primarily~~predominantly resulted from ~~improved price realization on caskets and memorial products, and higher sales of cremation and incineration equipment, partially offset by lower~~increased unit sales of caskets due to COVID-19. The segment also reported higher sales of bronze and granite memorial ~~products.~~products, mausoleums, and cremation equipment. The increase in sales also reflected improved price realization and benefits from a recently completed acquisition of a small cemetery products business. Changes in foreign currency exchange rates had ~~an unfavorable~~a favorable impact of ~~$711,000~~$2.3 million on the segment's sales compared to the prior year. Industrial Technologies segment sales were $75.9 million for the first six months of fiscal 2021, compared to $75.8 million for the first six months of fiscal ~~2020, compared to $73.6~~2020. The sales increase primarily reflected a $1.4 million ~~for~~favorable impact from

2823

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

~~the first six months of fiscal 2019. The increase reflected higher product identification sales,~~changes in foreign exchange rates, partially offset by lower ~~sales of~~product identification sales. Orders for warehouse automation ~~systems and decreased applied technologies sales. Changes in foreign currency exchange rates had an unfavorable impact of $658,000 on the segment's sales compared~~solutions remained strong, but access to ~~the prior year.~~job sites to complete these projects has been restricted due to COVID-19.

Gross profit for the six months ended March 31, ~~2020~~2021 was ~~$240.5~~$266.5 million, compared to ~~$262.7~~$240.5 million for the same period a year ago. Consolidated gross profit as a percent of sales was ~~32.5%~~33.2% and ~~34.3%~~32.5% for the first six months of fiscal ~~2020~~2021 and fiscal ~~2019,~~2020, respectively. The ~~decrease~~increase in gross profit primarily reflected ~~lower~~higher sales, ~~unfavorable changes in product mix, ongoing pricing pressures in~~benefits from the ~~brand market,~~realization of productivity improvements and ~~unfavorable changes in~~cost-reduction initiatives, and improved margins for cylinders ~~surfaces~~ and engineered products within the SGK Brand Solutions segment. These ~~declines~~improvements were partially offset by the ~~realization~~impact of ~~productivity improvements~~higher material and ~~acquisition synergies, primarily~~transportation costs, particularly in the Memorialization segment. Gross profit also included acquisition integration costs and other charges primarily in connection with cost-reduction initiatives totaling ~~$4.4~~$10.7 million and ~~$1.3~~$4.4 million for the six months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

Selling and administrative expenses for the six months ended March 31, ~~2020~~2021 were ~~$204.3~~$203.0 million, compared to ~~$204.6~~$204.3 million for the first six months of fiscal ~~2019.~~2020. Consolidated selling and administrative expenses, as a percent of sales, were ~~27.6%~~25.3% for the six months ended March 31, ~~2020,~~2021, compared to ~~26.7%~~27.6% for the same period last year. The decrease in selling and administrative expenses reflected benefits from ongoing cost-reduction initiatives, and reduced travel and entertainment ("T&E") costs resulting from the COVID-19 pandemic, partially offset by increased performance-based compensation compared to fiscal 2020. Selling and administrative expenses also included acquisition integration and related systems-integration costs, and other charges primarily in connection with cost-reduction initiatives totaling ~~$21.5~~$8.3 million in fiscal ~~2020,~~2021, compared to ~~$10.2~~$19.2 million in fiscal 2019. These increases in selling and administrative expenses were offset by the impact of lower sales in fiscal 2020, and benefits from ongoing cost-reduction initiatives. Fiscal 2019 selling and administrative expenses also included a $4.5 million loss recognized on the sale of a controlling interest in a Memorialization business.2020. Intangible amortization for the six months ended March 31, ~~2020~~2021 was ~~$35.8~~$38.2 million, compared to ~~$17.6~~$35.8 million for the six months ended March 31, ~~2019.~~2020. The increase in intangible amortization ~~primarily~~ reflected ~~$17.2~~$5.1 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 $16.5 million and $18.7 million for the six months ended March 31, 2021 and March 31, 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 (Graphics Imaging and Cylinders, Surfaces and Engineered Products). ~~Refer to Note 16, "Goodwill and Other Intangible Assets" in Item 1 - "Financial Statements" for further details.~~

Adjusted EBITDA was $115.7 million for the six months ended March 31, 2021 and $89.6 million for the six months ended March 31, ~~2020 and $102.7 million for the six months ended March 31, 2019.~~2020. Adjusted EBITDA for the SGK Brand Solutions segment was ~~$41.0~~$42.2 million for the first six months of fiscal ~~2020~~2021 compared to ~~$56.7~~$41.0 million for the same period a year ago. The ~~decrease~~increase in segment adjusted EBITDA primarily reflected benefits from cost-reduction initiatives, reduced T&E costs resulting from COVID-19, and improved margins for cylinders and engineered products. These increases were partially offset by the impact of lower sales and increased performance-based compensation compared to fiscal 2020. Memorialization segment adjusted EBITDA was $95.7 million for the first six months of fiscal 2021 compared to $65.3 million for the first six months of fiscal 2020. The increase in segment adjusted EBITDA primarily reflected the impact of higher sales, benefits from productivity initiatives and lower ~~sales, unfavorable changes in product mix, ongoing pricing pressures, and a decline in margins for cylinders, surfaces and engineered products. These decreases were~~T&E costs, partially offset by the impact of ~~sales growth in the Asia-Pacific region~~higher material and ~~benefits from cost-reduction initiatives. Memorialization segment adjusted EBITDA was $65.3 million for both the first six months of~~transportation costs and increased performance-based compensation compared to fiscal 2020 and the first six months of fiscal 2019. Memorialization segment adjusted EBITDA reflected improved price realization on caskets and memorial products, and the favorable impact of acquisition synergies and other productivity initiatives, offset by lower margins on sales of cremation and incineration products.2020. Adjusted EBITDA for the Industrial Technologies segment for the six months ended March 31, ~~2020~~2021 was ~~$10.5~~$9.3 million, compared to ~~$8.4~~$10.5 million for the same period a year ago. Industrial Technologies segment adjusted EBITDA primarily reflected the impact of ~~higher~~lower product identification sales, increased performance-based compensation expense and higher product development costs, partially offset by ~~the impact of lower sales of warehouse automation systems~~benefits from cost-reduction initiatives and ~~decreased applied technologies sales.~~reduced T&E costs.

Investment income was $2.0 million for the six months ended March 31, 2021 and $191,000 for the six months ended March 31, ~~2020 compared to $739,000~~2020. Investment income for ~~the six months ended March 31, 2019. The change~~both periods primarily reflected ~~decreases~~changes in the value of investments (primarily marketable securities) held in trust for certain of the Company's benefit plans. Interest expense for the first six months of fiscal ~~2020~~2021 was ~~$18.9~~$15.0 million, compared to ~~$20.6~~$18.9 million for the same period last year. The decrease in interest expense reflected ~~lower average interest rates and~~ a decrease in average borrowing levels and lower average interest rates in the current fiscal year. Other income (deductions), net, for the six months ended March 31, ~~2020~~2021 represented a decrease in pre-tax income of ~~$4.7~~$4.3 million, compared to a decrease in pre-tax income of ~~$2.0~~$4.7 million for the same period last year. Other income (deductions), net includes the non-service components of pension and postretirement expense, which totaled ~~$4.5~~$3.8 million and ~~$1.9~~$4.5 million for the six months ended March 31, 2021 and 2020, ~~and 2019,~~ respectively. ~~Refer to Note 11, "Pension and Other Postretirement Benefit Plans" in Item 1 - "Financial Statements" for further details.~~ 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.

2924

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

~~quarter of~~fiscal 2021 having consolidated pre-tax income while fiscal 2020 ~~which~~had a pre-tax loss. Additionally, fiscal 2021 included discrete tax expenses related to foreign operating losses, discrete tax benefits related to expirations of uncertain tax liabilities, a net operating loss (“NOL”) carryback to tax years where the U.S. federal statutory rate was ~~partially non-deductible.~~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 six-month effective tax 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 expirations 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 ~~six month~~six-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, and discrete tax benefits recognized ~~during the current year. The Company’s~~in fiscal 2019 six month effective tax rate varied from the U.S. statutory tax rate of 21.0% primarily due to tax planning completed during the second quarter of fiscal 2019 that resulted in a discrete tax benefit.2020.

Net losses attributable to noncontrolling interests were $71,000 for the six months ended March 31, ~~2020, compared to net losses of $336,000 for~~2021 and the ~~same period a year ago.~~six months ended March 31, 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.

3025

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
March 31, Six Months Ended
March 31,
2020 2019 2020 2019
(Dollar amounts in thousands)
Net (loss) income $ (86,595) $ 15,194 $ (96,901) $ 18,178
Income tax (benefit) provision (11,066) (165) (16,463) 440
(Loss) income before income taxes (97,661) 15,029 (113,364) 18,618
Net losses attributable to noncontrolling interests 231 223 71 336
Interest expense 9,613 10,259 18,853 20,560
Depreciation and amortization ^*
29,317 21,050 58,250 40,276
Acquisition costs ^(1)**
660 3,374 2,608 5,406
ERP integration costs ^(2)**
750 1,805 1,415 3,982
Strategic initiatives and other charges ^(3)**
9,219 2,112 19,470 2,112
Loss on divestiture ⁽⁴⁾
— — — 4,465
Joint Venture depreciation, amortization, interest expense and other charges ⁽⁵⁾
1,462 — 2,259 —
Non-recurring / incremental COVID-19 costs ⁽⁶⁾
663 — 663 —
Goodwill write-down⁽⁷⁾
90,408 — 90,408 —
Stock-based compensation 2,508 1,366 4,539 5,013
Non-service pension and postretirement expense ⁽⁸⁾
2,227 970 4,455 1,901
Total Adjusted EBITDA $ 49,397 $ 56,188 $ 89,627 $ 102,669


	Three Months Ended March 31,				Six Months Ended March 31,
	2021		2020		2021		2020
	(Dollar amounts in thousands)
Net income (loss)	$	5,152	$	(86,595)	$	3,160	$	(96,901)
Income tax provision (benefit)	972		(11,066)		4,952		(16,463)
Income (loss) before income taxes	6,124		(97,661)		8,112		(113,364)
Net (income) loss attributable to noncontrolling interests	(163)		231		71		71
Interest expense	7,233		9,613		14,961		18,853
Depreciation and amortization *	35,179		29,317		62,530		58,250
Acquisition related items (1)**	(702)		742		(360)		2,221
ERP integration costs (2)**	216		750		359		1,415
Strategic initiatives and other charges: (3)**
Workforce reductions and related costs	1,792		1,387		8,818		3,649
Other cost-reduction initiatives	3,787		7,750		7,468		16,208


Non-recurring / incremental COVID-19 costs (4)	1,572		663		2,696		663
Goodwill write-down (5)	—		90,408		—		90,408
Joint Venture depreciation, amortization, interest expense and other charges (6)	—		1,462		—		2,259
Stock-based compensation	4,001		2,508		7,247		4,539
Non-service pension and postretirement expense (7)	1,901		2,227		3,801		4,455
Total Adjusted EBITDA	$	60,940	$	49,397	$	115,703	$	89,627


⁽¹⁾ Includes certain non-recurring ~~costs~~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 loss on the sale of a controlling interest in a subsidiary within the Memorialization segment.~~
⁽⁵⁾ 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.
⁽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⁾(5)Represents the goodwill write-down for two reporting units within the SGK Brand Solutions ~~segment (see Note 16, "Goodwill and Other Intangible Assets" in Item 1 - "Financial Statements").~~segment.
⁽⁸⁾(6) 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.
(7) Non-service pension and postretirement expense includes interest cost, expected return on plan assets and amortization of actuarial 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. 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 ~~$21.8~~$26.7 million and ~~$13.2~~$21.8 million for the SGK Brand Solutions segment, ~~$4.8~~$5.7 million and ~~$5.0~~$4.8 million for the Memorialization segment, ~~$1.4~~$1.4 million and ~~$1.6~~$1.4 million for the Industrial Technologies segment, and ~~$1.3~~$1.3 million and ~~$1.3~~$1.3 million for Corporate and Non-Operating, for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. Depreciation and amortization was ~~$43.4~~$45.9 million and ~~$24.6~~$43.4 million for the SGK Brand Solutions segment, ~~$9.5~~$11.2 million and ~~$10.1~~$9.5 million for the Memorialization segment, ~~$2.9~~$2.8 million and ~~$3.1~~$2.9 million for the Industrial Technologies segment, and ~~$2.5~~$2.6 million and $2.5 million for Corporate and Non-Operating, for the six months ended March 31, 2021 and 2020, ~~and 2019,~~ respectively.

** Acquisition costs, ERP integration costs, and strategic initiatives and other charges were ~~$3.8~~$3.0 million and ~~$2.8~~$3.8 million for the SGK Brand Solutions segment, income of $335,000 and ~~$5.8~~charges of $730,000 for the Memorialization segment, and charges of $2.4 million and ~~$4.5~~$5.8 million for Corporate and Non-Operating, for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were ~~$730,000 for the Memorialization segment and~~ $268,000 for the Industrial Technologies segment, for the three months ended March 31, 2020. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were ~~$7.3~~$10.3 million and ~~$3.4~~$7.3 million for the SGK Brand Solutions segment, $795,000 and ~~$14.9~~$1.1 million for the Memorialization segment, and $5.1 million and ~~$8.1~~$14.9 million for Corporate and Non-Operating, for the six months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. Acquisition costs, ERP integration costs, and strategic initiatives and other charges were ~~$1.1 million for the Memorialization segment and~~ $268,000 for the Industrial Technologies segment, for the six months ended March 31, 2020.

3126

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 $92.2 million for the first six months of fiscal 2021, compared to $66.0 million for the first six months of fiscal ~~2020,~~2020. Fiscal 2021 operating cash flow reflected improved earnings compared to ~~$45.3 million for~~a year ago, as well as the ~~first six months of fiscal 2019.~~Company's continued focus on working capital management. Operating cash flow for both periods principally included net income (loss) ~~income~~ adjusted for deferred taxes, depreciation and amortization, stock-based compensation expense, net ~~losses~~gains (losses) related to investments, non-cash pension expense, other non-cash adjustments, and changes in working capital items. Net changes in working capital items ~~resulted in a source of working capital of approximately~~increased operating cash flow by $2.7 million and $19.4 million in fiscal ~~2020, reflecting decreases in accounts receivable, increases in accounts payable,~~2021 and ~~changes in other accounts.~~Net changes in working capital items resulted in a use of working capital of approximately $17.6 million in fiscal 2019, reflecting a decrease in accrued compensation, an increase in inventory, and changes in other accounts (including increased amounts recognized in excess of billings for certain customer projects). The favorable movements in working capital in fiscal 2020, ~~primarily reflected enhanced accounts receivable collection efforts and effective management of trade accounts payable, as the Company has been focusing its efforts on cash management.~~respectively.

Cash used in investing activities was ~~$28.5 millionfor the six months ended March 31, 2020, compared to $33.5~~$11.9 million for the six months ended March 31, ~~2019.~~2021, compared to cash used in investing activities of $28.5 million for the six months ended March 31, 2020. Investing activities for the first six months of fiscal 2021 reflected capital expenditures of $15.8 million, acquisitions payments (net of cash acquired) totaling $13.1 million, proceeds from the sale of investments of $15.0 million, and proceeds from the sale of assets of $2.1 million. Investing activities for the first six months of fiscal 2020 primarily reflected capital expenditures of $19.1 million and investments and advances of $9.6 million. Investing activities for the first six months of fiscal 2019 primarily reflected capital expenditures of $19.2 million, acquisition payments (net of cash acquired or received from sellers) totaling $11.5 million, proceeds of $8.3 million from the divestiture of a controlling interest in a small Memorialization business, and investments and advances of $11.5 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 ~~$41.9~~$38.6 million for the last three fiscal years. Capital spending for fiscal ~~2020~~2021 is currently estimated to be approximately $40million. The Company expects to generate sufficient cash from operations to fund all anticipated capital spending projects.

Cash used in financing activities for the six months ended March 31, 2021 was $75.5 million, primarily reflecting repayments, net of proceeds, on long-term debt of $53.9 million, treasury stock purchases of $4.5 million, dividends of $14.0 million to the Company's shareholders, and $1.6 million of holdback and deferred payments related to acquisitions from prior years. Cash provided byfinancing activities for the six months ended March 31, 2020 was~~$585,000,~~ $585,000, primarily reflecting proceeds, net of repayments, on long-term debt of $21.3 million, treasury stock purchases of $2.4 million, dividends of $13.2 million to the Company's shareholders, $1.7 million of holdback and contingent consideration payments related to acquisitions from prior years, and payment of deferred financing fees of $2.0 million (see below). Cash used in financing activities for the six months ended March 31, 2019 was $15.4 million, primarily reflecting proceeds, net of repayments, on long-term debt of $14.3 million, treasury stock purchases of $13.3 million, dividends of $12.9 million to the Company's shareholders and $2.1 million of holdback and contingent consideration payments related to fiscal 2018 acquisitions.million.

The Company has a domestic credit facility with a syndicate of financial institutions that ~~was amended and restated in March 2020. The amended and restated loan agreement~~ includes a $750.0 million senior secured revolving credit facility, which matures in March 2025, and a $35.0 million senior secured amortizing term loan. The senior secured amortizing term loan ~~which matures~~was paid in ~~July~~full in March 2021. A portion of the revolving credit facility (not to exceed $350.0 million) can be drawn in foreign currencies. ~~The term loan requires scheduled quarterly principal payments through its maturity date.~~ 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% ~~(1.50%~~(1.25% at March 31, ~~2020)~~2021) based on the Company's secured leverage ratio. The secured leverage ratio is defined as net secured indebtedness divided by 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 0.30% (based on the Company's leverage ratio) of the unused portion of the revolving credit facility. The Company incurred debt issuance costs ~~of approximately $2.0 million~~ in connection with the ~~amended~~domestic credit facility. Unamortized costs were $2.5 million and ~~restated agreement, which will be deferred~~$2.7 million at March 31, 2021 and ~~amortized over the term of the facility.~~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 $35.0 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 March 31, ~~2020~~2021 and September 30, ~~2019~~2020 were ~~$372.5~~$250.0 million and ~~$325.6~~$257.4 million, respectively. Outstanding Euro denominated borrowings on the revolving credit facility at March 31, ~~2020~~2021 and September 30, ~~2019~~2020 were ~~€125.0~~€97.0 million ($~~137.5~~113.8 million) and ~~€125.0~~€117.0 million ($~~136.5~~137.2 million), respectively. There were no outstanding borrowings on the term loan as of March 31, 2021. Outstanding borrowings on the term loan at ~~March 31, 2020 and~~ September 30, ~~2019~~2020 were ~~$34.8 million and $53.5 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 and Euro denominated borrowings) at March 31, 2021 and 2020 was 2.17% and ~~2019 was~~ 2.40% ~~and 3.25%~~, respectively.

3227

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

The Company has $300.0 million 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. 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 Company incurred direct financing fees and costs in connection with the 2025 Senior Notes. Unamortized costs were ~~$3.0~~$2.5 million and ~~$3.3~~$2.7 million at March 31, ~~2020~~2021 and September 30, ~~2019,~~2020, respectively.

The Company has a $115.0 million accounts receivable securitization facility (the "Securitization Facility") with certain financial ~~institutions. The Securitization Facility,~~institutions which ~~had a maturity date of April 2020, was amended~~matures in ~~March 2020 to extend the maturity date until~~ March 2022. 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 March 31, ~~2020~~2021 and September 30, ~~2019~~2020 were ~~$103.2~~$97.6 million and ~~$94.0~~$67.7 million, respectively. At March 31, ~~2020~~2021 and ~~2019,~~2020, the interest rate on borrowings under this facility was ~~1.74%~~0.86% and ~~3.24%,~~1.74% respectively.

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


		March 31, 2020			September 30, 2019				March 31, 2021			September 30, 2020
Pay fixed swaps - notional amount	Pay fixed swaps - notional amount	$	350,000		$	293,750		Pay fixed swaps - notional amount	$	250,000		$	312,500
Net unrealized loss	Net unrealized loss	$	(6,032)		$	(534)		Net unrealized loss	$	(2,905)		$	(7,792)
Weighted-average maturity period (years)	Weighted-average maturity period (years)	2.8			1.9			Weighted-average maturity period (years)	2.7			2.6
Weighted-average received rate	Weighted-average received rate	0.99		%	2.02		%	Weighted-average received rate	0.11		%	0.15		%
Weighted-average pay rate	Weighted-average pay rate	1.32		%	1.41		%	Weighted-average pay rate	1.34		%	1.34		%

The fair value of the interest rate swaps reflected an unrealized loss, net of unrealized gains, of ~~$6.0~~$2.9 million~~($4.6~~ ($2.2 million after tax) at March 31, ~~2020~~2021 and an unrealized loss ~~net~~ of ~~unrealized gains, of $534,000~~$7.8 million ($~~403,000~~5.9 million after tax) at September 30, ~~2019. The net unrealized loss~~ 2020 thatis included in shareholders' equity as part of accumulated other comprehensive income (loss) ("AOCI"). Assuming market rates remain constant with the rates at March 31, ~~2020,~~2021, a loss (net of tax) of approximately ~~$2.1~~$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. The maximum amount of borrowing available under this facility is €~~35.0~~25.0 million ($~~38.5~~29.3 million)., which includes €8.0 million ($9.4 million) for bank guarantees. The credit facility matures in December ~~2020~~2021 and the Company intends to continue to extend this facility. Outstanding borrowings under the credit facility totaled ~~€14.2~~€3.1 million ($~~15.6~~3.6 million) and ~~€12.8~~€18.9 million ($~~14.0~~22.2 million) at March 31, ~~2020~~2021 and September 30, ~~2019,~~2020, respectively. The weighted-average interest rate on outstanding borrowings under this facility at March 31, 2021 and 2020 was 2.25% and ~~2019 was~~ 1.25%, respectively.

The ~~Company’s German subsidiary, Matthews Europe GmbH, had €15.0~~Company uses certain foreign currency debt instruments as net investment hedges of foreign operations. Currency losses of $4.9 million ~~($16.4~~(net of income taxes of $1.6 million) and currency losses of $4.4 million ~~at September 30, 2019)~~(net of ~~senior unsecured notes with European banks. The notes matured in November 2019 at~~income taxes of $1.4 million), which ~~point they~~represent effective hedges of net investments, were ~~paid. The weighted-average interest rate on the notes~~reported as a component of AOCI within currency translation adjustment at March 31, ~~2019 was 1.40%.~~2021 and September 30, 2020, respectively.

~~Finance lease liabilities included as a component of debt totaled$5.2 million~~and $3.6 million at March 31, 2020 and September 30, 2019, respectively. See Note 8, "Leases" in Item 1 - "Financial Statements" for further discussion on the Company's lease obligations. Other debt totaled $395,000 at September 30, 2019. The weighted-average interest rate on other debt was 5.5% at March 31, 2019. The Company was in compliance with all of its debt covenants as of March 31, 2020.

3328

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

The Company uses certain foreign currency debt instruments as net investment hedges of foreign operations. Currency losses of $2.5 million (net of income taxes of $820,000) and $3.3 million (net of income taxes of $1.1 million), which represent effective hedges of net investments, were reported as a component of AOCI within currency translation adjustment at March 31, 2020 and September 30, 2019, respectively.

In September 2014, a claim was filed by a customer seeking to draw upon a letter of credit issued by the Company of £8.6 million ($10.6 million at March 31, 2020) with respect to a performance guarantee on an environmental solutions 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 "U.K. Court"). Pursuant to this action, an order was issued by the U.K. Court in January 2015 requiring that, upon receipt by the customer, the funds were to be remitted by the customer to the U.K. 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 U.K. Court as ordered. On June 14, 2016, the U.K Court ruled completely in favor of Matthews following a trial on the merits. However, the ongoing dispute involves litigation in multiple foreign jurisdictions because the contract between the parties includes a venue clause requiring the venue for any litigation to be in the United Kingdom, while the enforcement of any final judgment is required to be executed in Saudi Arabia. The Company continues to pursue a trial on the merits in Saudi Arabia which is now scheduled to conclude in calendar year 2020. It is necessary to obtain an equivalent favorable ruling in the courts of Saudi Arabia to effectively enforce the judgment and commence collection efforts. The Company remains confident regarding the pending trial on the merits in Saudi Arabia and expects to be in a position to enforce the judgment and initiate collection efforts following completion of that trial. However, as the customer has neither yet remitted the funds nor complied with the final, un-appealed orders of the U.K. Court, it is possible the resolution of this matter could have an unfavorable financial impact on Matthews’ results of operations. The Company’s level of success in recovering funds from the customer will depend upon a number of factors including a successful completion of the pending trial on the merits in Saudi Arabia, the availability of recoverable funds, and the subsequent level of cooperation from the Saudi Arabian government to enforce a potential judgment against the customer. 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 March 31, 2020 and September 30, 2019. The Company will continue to assess the accounting and collectability related to this matter as facts and circumstances evolve.

The Company has a stock repurchase program. Under the current authorization, the Company's Board of Directors has authorized the repurchase of a total of 5,000,000 shares of Matthews' common stock under the program, of which ~~639,000~~370,445 shares remain available for repurchase as of March 31, ~~2020.~~2021. 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.

The Company is currently evaluating the Coronavirus Aid, Relief, and Economic Security Act (commonly referred to as the CARES Act) and other similar economic relief initiatives that have been enacted in response to COVID-19. The Company expects to utilize certain provisions allowing for the deferral of payments for certain taxes, primarily U.S. payroll taxes, which are estimated to be approximately $9.0 million for the remainder of fiscal 2020.

Consolidated working capital of the Company was ~~$303.6~~$275.3 million at March 31, ~~2020,~~2021, compared to ~~$303.8~~$258.7 million at September 30, ~~2019.~~2020. Cash and cash equivalents were ~~$72.3~~$47.0 million at March 31, ~~2020,~~2021, compared to ~~$35.3~~$41.3 million at September 30, ~~2019.~~2020. The Company's current ratio was ~~1.9 and 2.1~~1.8 at March 31, ~~2020~~2021 and September 30, ~~2019, respectively.~~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 ~~non-operating former manufacturing sites acquired through corporate acquisitions and the disposal of~~ certain materials at ~~non-owned waste management facilities.~~operating and non-operating sites. The Company is currently performing environmental assessments and remediation at ~~these~~certain sites, as ~~appropriate.~~

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

applicable.

~~ACQUISITIONS AND DIVESTITURES:~~

ACQUISITIONS:

Refer to Note ~~15, "Acquisitions and Divestitures"~~14, "Acquisitions" in Item 1 - "Financial Statements" for further details on the Company's ~~acquisitions~~acquisitions.

SUBSEQUENT EVENT:

On April 20, 2021, subsequent to the date of the balance sheet, 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 ~~divestitures.~~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.

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 synergy ~~benefits and share repurchases.~~benefits.

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 global footprint of this segment, currency fluctuations can also be a significant factor. For the Memorialization segment, North America death rates, the cremation trend, and price realization impact sales growth for the Company's bronze and granite memorials, caskets and cremation and incineration-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 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 achieve through at least fiscal 2022. The Company's recent strategic review has also resulted in improvements to the commercial structure within the SGK Brand Solutions ~~segment, including the consolidation of several of the segment's trade names. As a result, the amortization of these intangible assets will significantly increase in fiscal 2020 through fiscal 2022.~~segment.

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

On January 30, 2020, the World Health Organization declared an outbreak of COVID-19 to be a Public Health Emergency of International Concern, and subsequently recognized COVID-19 as a global pandemic onin March ~~11,~~ 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.~~actions. Substantially all of the Company’s operations have remained open during the ~~second quarter of fiscal 2020,~~COVID-19 pandemic, as they have been considered “essential” businesses atduring this time. However, the Company has experienced some commercial impact and bu~~siness~~business disruptions in certain segments and geographic locations as a result of COVID-19.

Considerable ~~judgement~~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 ~~unfavorable sales~~ impacts in the short-term, ~~primarily~~potentially due to customer business disruptions, supply chain disruptions, facilities shut-downs, weaker global economic conditions, and ~~potential~~ customer project delays. Additionally, recent price increases for certain raw materials are expected to impact the Company's results for the remainder of fiscal 2021. Longer-term financial impacts will depend on global economic conditions eventually resulting from COVID-19.Management expects each of its businesses to experience ~~increased~~some level of financial volatility in the short-term, but currently anticipates its core businesses will return to a more normalized future state ~~once the~~as COVID-19 ~~pandemic~~ subsides.

CRITICAL ACCOUNTING POLICIES:

The preparation of financial statements in conformity with generally accepted accounting principles 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, ~~2019.~~2020.

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

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, ~~2019.~~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 operating results and financial condition.

In its assessment of the potential impacts of COVID-19 on the estimated future earnings and cash flows for the SGK Brand Solutions segment, and in light of the limited excess fair values for its two reporting units (discussed above), management determined that COVID-19 represents a triggering event, resulting in a re-evaluation of the goodwill for its reporting units within the SGK Brand Solutions segment (Graphics Imaging and Cylinders, Surfaces and Engineered Products), as of March 31, 2020. As a result of this interim assessment, the Company recorded a goodwill write-down totaling $90.4 million during the fiscal 2020 second quarter. Subsequent to this write-down, the fair values of the two reporting units within the SGK Brand Solutions segment (Graphics Imaging and Cylinders, Surfaces and Engineered Products) approximated their carrying values at March 31, 2020. The fair values for these reporting units were determined using level 3 inputs (including estimates of revenue growth, EBITDA contribution and the discount rates) and a combination of the income approach using the estimated discounted cash flows and a market-based valuation methodology.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, ~~additional~~ 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 March 31, ~~2020,~~2021, and the effect such obligations are expected to have on its liquidity and cash flows in future periods.


		Payments due in fiscal year:																				Payments due in fiscal year:
		Total		2020 Remainder		2021 ⁽¹⁾ to 2022		2023 to 2024		After 2024			Total		2021 Remainder		2022 (1) to 2023		2024 to 2025			After 2025
Contractual Cash Obligations:	Contractual Cash Obligations:	(Dollar amounts in thousands)																			Contractual Cash Obligations:	(Dollar amounts in thousands)
Revolving credit facilities	Revolving credit facilities	$	525,640	$	—	$	15,622	$	—	$	510,018	Revolving credit facilities	$	367,352	$	—	$	3,587	$	363,765		$	—
Securitization Facility	Securitization Facility	103,190		—		103,190		—		—		Securitization Facility	97,590		—		97,590		—			—
Senior secured term loan		34,766		6,250		28,516		—		—

2025 Senior Notes	2025 Senior Notes	391,486		7,875		31,500		31,500		320,611		2025 Senior Notes	376,276		7,875		31,500		31,500			305,401

Finance lease obligations⁽²⁾	Finance lease obligations⁽²⁾	6,063		647		2,130		1,186		2,100		Finance lease obligations (2)	8,703		1,905		4,147		897			1,754
Non-cancelable operating leases⁽²⁾	Non-cancelable operating leases⁽²⁾	85,428		14,881		42,279		18,713		9,555		Non-cancelable operating leases (2)	84,435		13,667		40,508		20,509			9,751
Other	Other	9,218		1,507		5,766		953		992		Other	30,114		11,900		10,231		2,105			5,878

Total contractual cash obligations	Total contractual cash obligations	$	1,155,791	$	31,160	$	229,003	$	52,352	$	843,276	Total contractual cash obligations	$	964,470	$	35,347	$	187,563	$	418,776		$	322,784

⁽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 ~~$15.6~~$3.6 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 March 31, ~~2020,~~2021, the weighted-average interest rate was ~~2.40%~~2.17% on the Company's domestic credit facility, ~~1.74%~~0.86% on the Company's Securitization Facility and ~~1.25%~~2.25% on the credit facility through the Company's European subsidiaries.

~~Item 2. Management's Discussion and 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. In response to COVID-19, the federal government passed a modified relief bill, which provides additional funding measures associated with IRS regulations. In accordance with this bill, the Company is no longer required to make contributions for fiscal 2020 to its principal retirement plan. During the six months ended March 31, ~~2020~~2021 contributions of ~~$382,000~~$408,000 and ~~$457,000~~$228,000 were made under the supplemental retirement plan and postretirement plan, respectively. In April 2021, subsequent to the date of the balance sheet, the Company contributed $15.0 million to its principal retirement plan. 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 ~~$500,000~~$497,000 and ~~$532,000~~$603,000 under the supplemental retirement plan and postretirement plan, respectively, for the remainder of fiscal ~~2020.~~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 March 31, ~~2020,~~2021, the Company had unrecognized tax benefits, excluding penalties and interest, of approximately ~~$10.6~~$10.4 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.

3731

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in the Company’s market risk during the three and six months ended March 31, ~~2020.~~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, ~~2019.~~2020.

Item 4. Controls and 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 March 31, ~~2020.~~2021. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, ~~2020,~~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.

There have been no changes in the Company's internal controls over financial reporting that occurred during the fiscal quarter ended March 31, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

3832

PART II ‑ OTHER INFORMATION

Item 1. Legal Proceedings

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

~~Except as set forth below, there~~There have been no material changes in our risk factors from those disclosed in Part I, Item 1A to our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019, except as disclosed below.~~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, ~~2019,~~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.

Pandemics or similar outbreaks may cause unfavorable economic or market conditions which could impact demand patterns and/or disrupt global supply chains and production operations. Collectively, these outcomes could materially and adversely affect the Company’s business, results of operations and financial condition. Pandemics or similar outbreaks, such as coronavirus disease 2019 (“COVID-19”), could adversely affect the economies of developed and emerging markets, potentially resulting in an economic downturn that could affect customers’ demand for the Company’s products and services, as well as the Company's ability to access capital at acceptable interest rates. The spread of pandemics or similar outbreaks may also disrupt the Company’s manufacturing and production operations, as well as its distribution systems, which include import and export for delivery of the Company’s products to its customers. These factors could materially and adversely affect the Company’s business, financial condition and results of operations.

Due to the uncertainty relating to a pandemic or similar outbreak, the Company, its customers or its suppliers may be required, or believe that it is advantageous, to take precautionary measures intended to minimize the risk of a virus or disease spreading to employees, customers, and the communities in which they operate, and these measures could negatively impact the Company’s business. Further, if the scope and severity of an outbreak, such as COVID-19, worsens and the Company’s contingency plans prove ineffective, its global operations could potentially experience disruptions, such as temporary closure of facilities or delays or suspensions in product offerings and services, which may materially and adversely affect the Company’s business, financial condition and results of operations.

Item 2. 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 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 ~~639,458~~370,445 shares remain available for repurchase as of March 31, ~~2020.~~2021.

The following table shows the monthly fiscal ~~2020~~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 2019 9,800 $ 35.87 9,800 702,512
November 2019 38,425 35.02 38,425 664,087
December 2019 3,879 38.10 3,879 660,208
January 2020 750 37.04 750 659,458
February 2020 — — — 659,458
March 2020 20,000 23.91 20,000 639,458
Total 72,854 $ 32.27 72,854


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






Total	168,291	$	26.65	168,291

Item 3. Defaults Upon Senior Securities

Not Applicable.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

Not Applicable.

4033

Item 6. Exhibits and Reports on Form 8-K

(a)

Exhibits

Exhibit No.

Description

Method of Filing

~~10.1~~ 3.1

Restated Articles of Incorporation*

Exhibit Number 3.1 to the Annual Report on Form 10-K for the year ended September 30, 1994 (filed in paper format)

3.2

~~Third Amended and~~ Restated ~~Loan Agreement~~By-laws of Matthews International Corporation, as amended January 8, 2021*

~~Incorporated by reference from~~ Exhibit Number ~~10.1~~3.1 to the Current Report on Form 8-K filed on ~~March 30, 2020~~January 14, 2021

10.1

First Amendment to Third Amended and Restated Loan Agreement

Filed herewith

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- 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

4134

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:	~~May 8, 2020~~April 30, 2021	By: /s/ Joseph C. Bartolacci
		Joseph C. Bartolacci, President
		and Chief Executive Officer


Date:	~~May 8, 2020~~April 30, 2021	By: /s/ Steven F. Nicola
		Steven F. Nicola, Chief Financial Officer
		and Secretary

4235


		Three months ended March 31, 2020				Six months ended March 31, 2020
Finance lease cost:
	Amortization of ROU assets	$	222			$	351
	Interest on lease liabilities	43				77
Operating lease cost				6,835				13,098

Variable lease cost				1,457				2,882
Sublease income				(212)				(399)
Total lease cost				$	8,345			$	16,009


	Operating Leases		Finance Leases
2020 (remainder)	$	14,881	$	647
2021	25,080		1,122
2022	17,199		1,008
2023	11,063		800
2024	7,650		386
Thereafter	9,555		2,100
Total future minimum lease payments	85,428		6,063
Less: Interest	5,035		815
Present value of lease liabilities:	$	80,393	$	5,248



	Amount reclassified from AOCI
Details about AOCI Components	Three Months Ended March 31, 2019			Six Months Ended March 31, 2019		Affected line item in the Statement of income

Postretirement benefit plans
Prior service credit	$	95	^(a)	$	190
Actuarial losses	(1,085)		^(a)	(2,131)
	(990)		^(b)	(1,941)		Income before income tax
	256			478		Income taxes
	$	(734)		$	(1,463)	Net income
Derivatives
Interest rate swap contracts	$	880		$	1,615	Interest expense
	880		^(b)	1,615		Income before income tax
	(216)			(396)		Income taxes
	$	664		$	1,219	Net income


	Carrying Amount		Accumulated Amortization			Net
March 31, 2020:
Trade names	$	30,540	$	—	*	$	30,540
Trade names	148,604		(43,474)			105,130
Customer relationships	373,413		(151,447)			221,966
Copyrights/patents/other	20,340		(13,870)			6,470
	$	572,897	$	(208,791)		$	364,106

September 30, 2019:
Trade names	$	30,540	$	—	*	$	30,540
Trade names	148,628		(22,653)			125,975
Customer relationships	374,515		(137,330)			237,185
Copyrights/patents/other	20,463		(13,513)			6,950
	$	574,146	$	(173,496)		$	400,650