Kimball Electronics, Inc.KE
Kimball Electronics, Inc. Fair Value Disclosure
Fair Value
The Company categorizes assets and liabilities measured at fair value into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas level 3 generally requires significant management judgment. The three levels are defined as follows:
•Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.
•Level 2: Observable inputs other than those included in level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
•Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.
There were no changes in the inputs or valuation techniques used to measure fair values during fiscal year 2025.
Financial Instruments Recognized at Fair Value:
The following methods and assumptions were used to measure fair value:
| Financial Instrument | Level | Valuation Technique/Inputs Used | ||||||||||||
| Derivative Assets: Foreign exchange contracts | 2 | Market - Based on observable market inputs using standard calculations, such as time value, forward interest rate yield curves, and current spot rates, considering counterparty credit risk | ||||||||||||
| Trading securities: Mutual funds held in SERP | 1 | Market - Quoted market prices | ||||||||||||
| Derivative Liabilities: Foreign exchange contracts | 2 | Market - Based on observable market inputs using standard calculations, such as time value, forward interest rate yield curves, and current spot rates adjusted for Kimball Electronics’ non-performance risk | ||||||||||||
Recurring Fair Value Measurements:
As of June 30, 2025 and 2024, the fair values of financial assets and liabilities that are measured at fair value on a recurring basis using the market approach are categorized as follows:
| June 30, 2025 | |||||||||||||||||
| (Amounts in Thousands) | Level 1 | Level 2 | Total | ||||||||||||||
| Assets | |||||||||||||||||
| Derivatives: foreign exchange contracts | $ | — | $ | 3,017 | $ | 3,017 | |||||||||||
| Trading securities: mutual funds held in nonqualified SERP | 4,114 | — | 4,114 | ||||||||||||||
| Total assets at fair value | $ | 4,114 | $ | 3,017 | $ | 7,131 | |||||||||||
| Liabilities | |||||||||||||||||
| Derivatives: foreign exchange contracts | $ | — | $ | 1,910 | $ | 1,910 | |||||||||||
| Total liabilities at fair value | $ | — | $ | 1,910 | $ | 1,910 | |||||||||||
| June 30, 2024 | |||||||||||||||||
| (Amounts in Thousands) | Level 1 | Level 2 | Total | ||||||||||||||
| Assets | |||||||||||||||||
| Derivatives: foreign exchange contracts | $ | — | $ | 1,420 | $ | 1,420 | |||||||||||
| Trading securities: mutual funds held in nonqualified SERP | 5,445 | — | 5,445 | ||||||||||||||
| Total assets at fair value | $ | 5,445 | $ | 1,420 | $ | 6,865 | |||||||||||
| Liabilities | |||||||||||||||||
| Derivatives: foreign exchange contracts | $ | — | $ | 2,485 | $ | 2,485 | |||||||||||
| Total liabilities at fair value | $ | — | $ | 2,485 | $ | 2,485 | |||||||||||
We had no level 3 assets or liabilities as of June 30, 2025 and 2024, or any activity in level 3 assets or liabilities during fiscal years 2025, 2024, and 2023.
The nonqualified supplemental employee retirement plan (“SERP”) assets consist primarily of equity funds, balanced funds, bond funds, and a money market fund. The SERP investment assets are offset by a SERP liability which represents the Company’s obligation to distribute SERP funds to participants. See Note 10 - Employee Benefit Plans for further information regarding the SERP.
Non-Recurring Fair Value Measurements:
During fiscal year 2025, the land, building, and certain equipment of our Tampa facility, with a total carrying value of $6.9 million, met the criteria to be classified as Assets Held for Sale at June 30, 2025. The carrying value reflects the fair value, which was based on expected proceeds and the carrying value of the net assets to be disposed. We utilized level 3 inputs based on management’s best estimates and assumptions to estimate the fair value. See Note 4 - Restructuring Activities for additional information.
Financial Instruments Not Carried At Fair Value:
Financial instruments that are not reflected in the Consolidated Balance Sheets at fair value that have carrying amounts which approximate fair value include the following:
| Financial Instrument | Level | Valuation Technique/Inputs Used | ||||||||||||
| Notes receivable | 2 | Market - Price approximated based on the assumed collection of receivables in the normal course of business, taking into account non-performance risk | ||||||||||||
| Borrowings under credit facilities | 2 | Market - Based on observable market rates, taking into account Kimball Electronics’ non-performance risk | ||||||||||||
The carrying values of our cash deposit accounts, trade accounts receivable, and trade accounts payable approximate fair value due to their relatively short maturity and immaterial non-performance risk.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 22, 2025 | Showing above |
| 2024 | Aug 23, 2024 | |
| 2023 | Aug 24, 2023 | |
| 2022 | Aug 30, 2022 | |
| 2021 | Aug 27, 2021 | |
| 2020 | Aug 27, 2020 | |
| 2019 | Aug 27, 2019 | |
| 2018 | Aug 28, 2018 | |
| 2017 | Aug 29, 2017 | |
| 2016 | Aug 25, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.