United States securities and exchange commission logo
April 4, 2024
Ronald L.G. Tsoumas
Chief Financial Officer
Methode Electronics, Inc.
8750 West Bryn Mawr Avenue
Suite 1000
Chicago, Illinois 60631
Re: Methode
Electronics, Inc.
Form 10-K for the
fiscal year ended April 29, 2023
Form 10-Q for the
Quarter Ended January 27, 2024
File No. 001-33731
Dear Ronald L.G. Tsoumas:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments.
Please respond to this letter within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe a
comment applies to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to this letter, we may have additional comments.
Form 10-Q for the Quarter Ended January 27, 2024
Notes to the Financial Statements
Note 3. Acquisition and Disposition, page 11
1. We note from your
disclosure that in the three months ended January 27, 2024, you
finalized the purchase
price allocation of the Nordic Lights acquisition and $77.3 million
was allocated to the
customer relationships intangible asset with a weighted average
useful life of 20
years. We also note from your disclosure on page F-12 of your Form 10K
for the fiscal year
ended April 29, 2023, that you use the straight line method to amortize
this intangible asset.
Please explain to us how you estimated or determined the estimated
useful life for this
intangible asset. We note in many instances, customer relationships
may dissipate at a more
rapid rate in the earlier periods following a company's succession
to these relationships,
with the rate of attrition declining over time until relatively few
customers or contracts
remain who persist for an extended period. Under this pattern, a
significant amount of
cash flows derived from the acquired customer base may be
Ronald L.G. Tsoumas
Methode Electronics, Inc.
April 4, 2024
Page 2
recognized in earlier periods and then fall to a materially reduced
level in later years. In
this regard, please tell us what consideration was given to using an
accelerated method of
amortization for purposes of amortizing your customer relationship
intangibles to expense,
as it appears that this may result in a more systematic allocation of
the intangibles cost to
the periods benefited. Refer to ASC 350-30-35-3 and 35-6.
Form 10-K for the fiscal year ended April 29, 2023
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of operations
Interface
Net Sales, page 23
2. We note that in your discussion of the results of operations, you
discuss the amount of
customer cost recoveries affecting net sales on both a consolidated
and segment basis.
Please tell us, and revise to disclose, the nature of these customer
cost recoveries and how
you are accounting for them as part of your revenue recognition.
Critical Accounting Policies and Estimates , page 26
3. In future filings, please enhance your disclosures to provide
qualitative and quantitative
information necessary to understand the estimation uncertainty and the
impact your
critical accounting estimates have had or are reasonably likely to
have on your financial
condition and results of operations. In addition, discuss how much
each estimate and/or
assumption has changed over a relevant period and the sensitivity of
reported amounts to
the underlying methods, assumptions and estimates used. The
disclosures should
supplement, not duplicate, the description of accounting policies or
other disclosures in
the notes to the financial statements. Refer to Item 303(b)(3) of
Regulation S-K and SEC
Release No. 33-8350.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
Please contact Charles Eastman at 202-551-3794 or Claire Erlanger at
202-551-3301 with
any questions.
FirstName LastNameRonald L.G. Tsoumas Sincerely,
Comapany NameMethode Electronics, Inc.
Division of
Corporation Finance
April 4, 2024 Page 2 Office of
Manufacturing
FirstName LastName