5 unchanged sentences
When used herein, the words “expects,” “believes,” “anticipates” and other similar expressions are intended to identify forward-looking statements.
+Added: RISKS RELATED TO OUR BUSINESS AND STRATEGY
Our operations may be subject to certain risks.
34 unchanged sentences
Additionally, the financial strength of our customers and suppliers and their ability to obtain and rely on credit financing may affect their ability to fulfill their obligations to us and have an adverse effect on our financial results.
−Removed: Adverse macroeconomic conditions as a result of COVID-19 can affect our business.
−Removed: The conditions can affect the Company’s ability to predict and plan for future supply chain disruptions, fluctuations in customer demand and costs, and the ability to operate as there is uncertainty over future temporary closures.
+Added: Adverse macroeconomic conditions as a result of COVID-19 have and may continue to affect our business.
+Added: The conditions affect the Company’s ability to predict and plan for future supply chain disruptions, fluctuations in customer demand and costs, and the ability to operate as there is uncertainty over future temporary closures.
The majority of our sales come from a small number of customers and a decline in sales to any of these customers could adversely affect our business.
13 unchanged sentences
If demand for components outpaces supply, capacity delays could affect future operations.
−Removed: Delays in deliveries from suppliers or the inability to obtain sufficient quantities of components and raw materials could cause delays or reductions in shipment of products to our customers which could adversely affect our operating results and damage customer relationships.
−Removed: Key Tronic is working closely with its employees and key suppliers to ascertain delays attributable to the COVID-19 pandemic.
−Removed: Potential delays in production and extended transit times of critical parts may cause a shortage of components.
+Added: Delays in deliveries from suppliers or the inability to obtain sufficient quantities of components and raw materials have and may continue to cause delays or reductions in shipment of products to our customers which could adversely affect our operating results and damage customer relationships.
+Added: Key Tronic continues to work closely with its employees and key suppliers to ascertain delays attributable to the COVID-19 pandemic.
+Added: Delays in production and extended transit times of critical parts have and may continue to cause a shortage of components.
We operate in a highly competitive industry;
−Removed: if we are not able to compete effectively in the EMS industry, our business could be adversely affected.
+Added: if we are not able to compete effectively in the contract manufacturing industry, our business could be adversely affected.
Competitors may offer customers lower prices on certain high volume programs.
2 unchanged sentences
In addition, competitors can copy our non-proprietary designs and processes after we have invested in development of products for customers, thereby enabling such competitors to offer lower prices on such products due to savings in development costs.
−Removed: Cash and cash equivalents are exposed to concentrations of credit risk.
−Removed: We place our cash with high credit quality institutions.
−Removed: At times, such balances may be in excess of the federal depository insurance limit or may be on deposit at institutions which are not covered by insurance.
−Removed: If such institutions were to become insolvent during which time it held our cash and cash equivalents in excess of the insurance limit, it could be necessary to obtain other credit financing to operate our facilities.
−Removed: Our ability to secure and maintain sufficient credit arrangements is key to our continued operations.
−Removed: There is no assurance that we will be able to retain or renew our credit agreements in the future.
−Removed: In the event the business grows rapidly or there is uncertainty in the macroeconomic climate, additional financing resources could be necessary in the current or future fiscal years.
−Removed: There is no assurance that we will be able to obtain equity or debt financing at acceptable terms, or at all in the future.
−Removed: In addition, we have restrictive covenants with our financial institution which could impact how we manage our business.
−Removed: If we cannot meet our financial covenants, our borrowings could become immediately payable which could have a material adverse impact on our financial statements.
−Removed: For a summary of our banking arrangements, see Note 4 Long-Term Debt of the “Notes to Consolidated Financial Statements.”
Fluctuations in foreign currency exchange rates could increase our operating costs.
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The loss of key employees could have a material adverse effect on our business, operating results and financial condition.
−Removed: If we are unable to maintain our technological and manufacturing process expertise, our business could be adversely affected.
−Removed: The markets for our customers’ products are characterized by rapidly changing technology, evolving industry standards, frequent new product introductions and short product life cycles.
−Removed: The introduction of products embodying new technologies or the emergence of new industry standards can render existing products obsolete or unmarketable.
−Removed: Our success will depend upon our customers’ ability to enhance existing products and to develop and introduce, on a timely and cost-effective basis, new products that keep pace with technological developments and emerging industry standards and address evolving and increasingly sophisticated customer requirements.
−Removed: Failure of our customers to do so could substantially harm our customers’ competitive positions.
−Removed: There can be no assurance that our customers will be successful in identifying, developing and marketing products that respond to technological change, emerging industry standards or evolving customer requirements.
Start-up costs and inefficiencies related to new or transferred programs can adversely affect our operating results and such costs may not be recoverable if such new programs or transferred programs are canceled or don’t meet expected sales volumes.
15 unchanged sentences
The Company has been able to manage the arrival of components in an effort to control inventory levels of customers that have seen sharp decreases in demand, as a result of COVID-19.
−Removed: An adverse change in the interest rates for our borrowings could adversely affect our financial condition.
−Removed: We are exposed to interest rate risk under our revolving line of credit and term loan.
−Removed: We currently hedge a portion of our term loan with an interest rate swap.
−Removed: We have not historically hedged the interest rate on our credit facility;
−Removed: therefore, unless we do so, significant changes in interest rates could adversely affect our results of operations.
−Removed: Refer to the discussion in note 4, "Long-Term Debt" to the consolidated financial statements for further details of our debt obligations.
−Removed: We are also exposed to interest rate risk on our factoring activities.
Compliance or the failure to comply with current and future environmental and health laws or regulations could cause us significant expense.
We are subject to a variety of domestic and foreign environmental regulations relating to the use, storage, and disposal of materials used in our manufacturing processes.
+Added: In addition, increasing governmental focus on climate change may result in new environmental regulations that may negatively affect us, our vendors or our customers.
+Added: As a result, we may incur additional costs or obligations in complying with any new environmental and reporting requirements, as well as increased indirect costs resulting from our vendors or customers that get passed on to us.
If we fail to comply with any present or future regulations, we could be subject to future liabilities or the suspension of current manufacturing operations.
In addition, such regulations could restrict our ability to expand our operations or could require us to acquire costly equipment, substitute materials, or incur other significant expenses to comply with government regulations.
−Removed: To protect the health of its employees, the Company has implemented the recommendations of WHO and the CDC including wearing of face masks and shields, workstation arrangements to provide social distancing, temperature monitoring, enhanced worksite disinfection, spacing in cafeterias and break areas, contact management and other precautions.
−Removed: The Company is also in compliance with government regulations related to COVID-19.
−Removed: Our stock price is volatile.
−Removed: Holders of the common stock will suffer immediate dilution to the extent outstanding equity awards are exercised to purchase common stock.
−Removed: Our stock price may be subject to wide fluctuations and possible rapid increases or declines over a short time period.
−Removed: These fluctuations may be due to factors specific to us such as our stock's thinly traded nature, variations in quarterly operating results or changes in earnings estimates, or to factors relating to the EMS industry or to the securities markets in general, which, in recent years, have experienced significant price fluctuations.
−Removed: These fluctuations often have been unrelated to the operating performance of the specific companies whose stocks are traded.
−Removed: Due to inherent limitations, there can be no assurance that our system of disclosure and internal controls and procedures will be successful in preventing all errors, theft and fraud, or in informing management of all material information in a timely manner.
−Removed: Management does not expect that our disclosure controls and internal controls and procedures will prevent all errors or fraud.
−Removed: A control system is designed to give reasonable, but not absolute, assurance that the objectives of the control system are met.
−Removed: In addition, any control system reflects resource constraints and the benefits of controls must be considered relative to their costs.
−Removed: Inherent limitations of a control system may include:
−Removed: judgments in decision making may be faulty, breakdowns can occur simply because of error or mistake and controls can be circumvented by collusion or management override.
−Removed: Due to the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.
−Removed: If we do not manage our growth effectively, our profitability could decline.
−Removed: Our business is experiencing growth which can place considerable additional demands upon our management team and our operational, financial and management information systems.
−Removed: Our ability to manage growth effectively requires us to continue to implement and improve these systems;
−Removed: avoid cost overruns;
−Removed: maintain customer, supplier and other favorable business relationships during possible transition periods;
−Removed: continue to develop the management skills of our managers and supervisors;
−Removed: and continue to train, motivate and manage our employees.
−Removed: Our failure to effectively manage growth could have a material adverse effect on our results of operations.
If our manufacturing processes and services do not comply with applicable statutory and regulatory requirements, or if we manufacture products containing design or manufacturing defects, demand for our services may decline and we may be subject to liability claims.
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However, if our customers are responsible for the defects, they may not, or may not have resources to, assume responsibility for any costs or liabilities arising from these defects, which could expose us to additional liability claims.
+Added: If we do not manage our growth effectively, our profitability could decline.
+Added: Our business is experiencing growth which can place considerable additional demands upon our management team and our operational, financial and management information systems.
+Added: Our ability to manage growth effectively requires us to continue to implement and improve these systems;
+Added: avoid cost overruns;
+Added: maintain customer, supplier and other favorable business relationships during possible transition periods;
+Added: continue to develop the management skills of our managers and supervisors;
+Added: and continue to train, motivate and manage our employees.
+Added: Our failure to effectively manage growth could have a material adverse effect on our results of operations.
Energy price increases may negatively impact our results of operations.
6 unchanged sentences
In addition, any increase in our product prices may reduce our future customer orders and profitability.
−Removed: Disruptions to our information systems, including security breaches, losses of data or outages, could adversely affect our operations.
+Added: TECHNOLOGY RISKS
+Added: Our operations are subject to cyberattacks that could have a material adverse effect on our business.
+Added: We are increasingly dependent on digital technologies and services to conduct our operations.
+Added: We use these technologies for internal purposes, including data storage, processing and transmissions, as well as in our interactions with vendors and customers.
+Added: Digital technologies and services are subject to the risk of cybersecurity incidents and some incidents can remain undetected for a period of time.
+Added: We routinely monitor our systems for cyber threats and have processes in place to detect and remediate vulnerabilities.
+Added: Nevertheless, we have experienced attempted security breaches, such as phishing emails and other targeted attacks.
+Added: We expect that our operations will continue to be subject to cyber threats, and any future cybersecurity incident could significantly disrupt our operations.
+Added: Cybersecurity incidents could also result in the misappropriation of proprietary or confidential information of the Company or that of its customers, employees, vendors or customers.
+Added: We expect to incur costs in the future to mitigate against cybersecurity incidents as threats are expected to continue to become more persistent and sophisticated.
+Added: If our systems for protecting against cybersecurity incidents prove not to be sufficient, we could be adversely affected by, among other things, loss of or damage to intellectual property, proprietary or confidential information, or employee, vendor or customer data;
+Added: interruption of our business operations;
+Added: and increased costs to prevent, respond to or mitigate cybersecurity incidents.
+Added: These risks could harm our reputation and our relationships with employees, vendors and customers and may result in claims or enforcement actions and investigations against us.
+Added: Disruptions to our information systems, including losses of data or outages, could adversely affect our operations.
We rely on information technology networks and systems to process, transmit and store electronic information.
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Any of these systems may be susceptible to outages due to fire, floods, power loss, telecommunications failures, terrorist attacks and similar events.
−Removed: Despite the implementation of network security measures, our systems and those of third parties on which we rely may also be vulnerable to computer viruses, break-ins and similar disruptions.
−Removed: If we or our vendors are unable to prevent such outages and breaches, our operations could be disrupted.
+Added: If we or our vendors are unable to prevent such outages, our operations could be disrupted.
+Added: If we are unable to maintain our technological and manufacturing process expertise, our business could be adversely affected.
+Added: The markets for our customers’ products are characterized by rapidly changing technology, evolving industry standards, frequent new product introductions and short product life cycles.
+Added: The introduction of products embodying new technologies or the emergence of new industry standards can render existing products obsolete or unmarketable.
+Added: Our success will depend upon our customers’ ability to enhance existing products and to develop and introduce, on a timely and cost-effective basis, new products that keep pace with technological developments and emerging industry standards and address evolving and increasingly sophisticated customer requirements.
+Added: Failure of our customers to do so could substantially harm our customers’ competitive positions.
+Added: There can be no assurance that our customers will be successful in identifying, developing and marketing products that respond to technological change, emerging industry standards or evolving customer requirements.
+Added: RISKS RELATED TO CAPITAL AND FINANCING
+Added: Cash and cash equivalents are exposed to concentrations of credit risk.
+Added: We place our cash with high credit quality institutions.
+Added: At times, such balances may be in excess of the federal depository insurance limit or may be on deposit at institutions which are not covered by insurance.
+Added: If such institutions were to become insolvent during which time it held our cash and cash equivalents in excess of the insurance limit, it could be necessary to obtain other credit financing to operate our facilities.
+Added: Our ability to secure and maintain sufficient credit arrangements is key to our continued operations.
+Added: There is no assurance that we will be able to retain or renew our credit agreements in the future.
+Added: In the event the business grows rapidly or there is uncertainty in the macroeconomic climate, additional financing resources could be necessary in the current or future fiscal years.
+Added: There is no assurance that we will be able to obtain equity or debt financing at acceptable terms, or at all in the future.
+Added: In addition, we have restrictive covenants with our financial institution which could impact how we manage our business.
+Added: If we cannot meet our financial covenants, our borrowings could become immediately payable which could have a material adverse impact on our financial statements.
+Added: For a summary of our banking arrangements, see Note 4 Long-Term Debt of the “Notes to Consolidated Financial Statements.”
+Added: An adverse change in the interest rates for our borrowings could adversely affect our financial condition.
+Added: We are exposed to interest rate risk under our revolving line of credit and term loan.
+Added: We currently hedge a portion of our term loan with an interest rate swap.
+Added: We have not historically hedged the interest rate on our credit facility;
+Added: therefore, unless we do so, significant changes in interest rates could adversely affect our results of operations.
+Added: Refer to the discussion in note 4, “Long-Term Debt” to the consolidated financial statements for further details of our debt obligations.
+Added: In addition, the U.K.’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021, though the ICE Benchmark Administration, the administrator of LIBOR, announced that it would consider ceasing the publication of the one-week and two-month U.S.
+Added: dollar LIBOR settings at the end of 2021 and phase out the remaining U.S.
+Added: dollar LIBOR settings by June 30, 2023.
+Added: The transition from LIBOR to a new replacement benchmark is uncertain at this time and the consequences of such developments cannot be entirely predicted but could result in an increase in the cost of our borrowings, which could adversely affect our financial condition.
+Added: Our stock price is volatile.
+Added: Our stock price has and may continue to be subject to wide fluctuations and possible rapid increases or declines over a short time period.
+Added: These fluctuations may be due to factors specific to us such as our stock's thinly traded nature, variations in quarterly operating results, changes in earnings estimates, or the Audit Committee's internal investigation, or to factors relating to the contract manufacturing industry or to the securities markets in general, which, in recent years, have experienced significant price fluctuations.
+Added: These fluctuations often have been unrelated to the operating performance of the specific companies whose stocks are traded.
+Added: In addition, holders of our common stock will suffer immediate dilution to the extent outstanding equity awards are exercised to purchase common stock.
+Added: RISKS RELATED TO OUR CONTROLS AND PROCEDURES AND THE INTERNAL INVESTIGATION
+Added: We identified a material weakness in our internal control over financial reporting and concluded that our disclosure controls and procedures were not effective as of December 26, 2020 and April 3, 2021.
+Added: If we fail to properly remediate any future deficiencies or material weaknesses or to maintain proper and effective internal controls, our business and financial condition could be materially adversely impacted.
+Added: As described in Item 9a, “Controls and Procedures,” of this Annual Report on Form 10-K, we concluded that our disclosure controls and procedures were not effective as of December 26, 2020 and April 3, 2021, due to the existence of a material weakness in our internal control over financial reporting.
+Added: While we have undertaken remediation efforts to address the identified deficiencies and have concluded that the material weakness was remediated as of July 3, 2021, we cannot provide assurance that we will be able to conclude that our controls will be effective in the future.
+Added: We also cannot assure you that additional significant deficiencies or material weaknesses in our internal control over financial reporting will not arise or be identified in the future.
+Added: We intend to continue our control remediation activities.
+Added: In doing so, we will continue to incur expenses and expend management time on compliance-related issues.
+Added: If additional deficiencies in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results.
+Added: Moreover, because of the inherent limitations of any control system, material misstatements due to error or fraud may not be prevented or detected on a timely basis, or at all.
+Added: If we are unable to provide reliable and timely financial reports in the future, our business and reputation may be further harmed.
+Added: Restated financial statements and failures in internal controls may also cause us to fail to meet additional reporting obligations, negatively affect investor confidence in our management and the accuracy of our financial statements and disclosures, or result in adverse publicity and concerns from investors, any of which could have a negative effect on the price of our common stock, subject us to regulatory investigations and penalties or stockholder litigation, and materially adversely impact our business, financial condition, results of operations and cash flows.
+Added: Matters relating to or arising from the subject of the Audit Committee’s internal investigation, including expenses and diversion of personnel and resources, regulatory investigations, and proceedings and litigation matters, could have an adverse effect on our business, results of operations and financial condition.
+Added: We have incurred, and may continue to incur, significant expenses related to legal, accounting and other professional services in connection with matters relating to or arising from the subject of the Audit Committee’s internal investigation.
+Added: As described in Item 9a, “Controls and Procedures,” of this Annual Report on Form 10-K, we have taken and continue to take a number of steps in order to remediate identified deficiencies in our internal control over financial reporting and attempt to reduce the risk of future recurrence.
+Added: The validation of the efficacy of these remedial steps will result in us incurring additional near term expenses, and to the extent these steps are not successful, we may incur significant additional time and expense.
+Added: In addition, we are cooperating with the Securities and Exchange Commission (the “SEC”) regarding matters related to the internal investigation.
+Added: The completion of the internal investigation will not automatically resolve the SEC’s inquiries.
+Added: If the SEC or any other regulator were to commence legal action against us, we could be required to pay significant penalties and become subject to injunctions, cease and desist orders or other remedies.
+Added: We can provide no assurances as to the outcome of any governmental inquiry or investigation.
+Added: Further, we, our officers and members of our board of directors could be named as defendants in lawsuits asserting claims arising out of the subject matter of the Audit Committee’s internal investigation.
+Added: As a result of any legal proceedings and any related indemnification requirements to our officers and directors, we could be required to pay monetary damages that may be in excess of our insurance coverage or may have additional penalties or other remedies imposed against us or our officers and directors.
+Added: All of these expenses, the delay in timely filing our periodic reports and the diversion of the attention of management and other personnel that has occurred and is expected to continue, could adversely affect our business, financial condition, results of operations and cash flows.
+Added: Due to inherent limitations, there can be no assurance that our system of disclosure and internal controls and procedures will be successful in preventing all errors, theft and fraud, or in informing management of all material information in a timely manner.
+Added: Management does not expect that our disclosure controls and procedures and internal controls over financial reporting will prevent all errors or fraud.
+Added: A control system is designed to give reasonable, but not absolute, assurance that the objectives of the control system are met.
+Added: In addition, any control system reflects resource constraints and the benefits of controls must be considered relative to their costs.
+Added: Inherent limitations of a control system may include:
+Added: judgments in decision making may be faulty, breakdowns can occur simply because of error or mistake and controls can be circumvented by collusion or management override.
+Added: Due to the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.
+Added: LEGAL AND ACCOUNTING RISKS
We are involved in various legal proceedings.
3 unchanged sentences
Accordingly, the resolution or adjudication of such disputes, even those encountered in the ordinary course of business, could have a material effect on our business, consolidated financial conditions and results of operations.
−Removed: Our levels of insurance coverage may not be sufficient for potential damages, claims or losses.
−Removed: We have various forms of business and liability insurance which we believe are appropriate based on the needs of companies in our industry.
−Removed: As a result, not all of our potential business risks or potential losses would be covered by our insurance policies.
−Removed: If we sustain a significant claim or loss which is not covered by insurance, our net income could be negatively impacted.
Changes in securities laws and regulations will increase our costs and risk of noncompliance.
−Removed: We are required to file as an accelerated filer.
−Removed: As such, we are subject to additional requirements contained in the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act) and more recently the Dodd-Frank Act.
+Added: We are subject to additional requirements contained in the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act) and more recently the Dodd-Frank Act.
The Sarbanes-Oxley and Dodd-Frank Acts required or will require changes in some of our corporate governance, securities disclosure and compliance practices.
6 unchanged sentences
In addition, the costs associated with noncompliance with additional securities laws and regulations could also impact our business.
+Added: Changes in financial accounting standards may affect our reported financial condition or results of operations as well increase costs related to implementation of new standards and modifications to internal controls.
+Added: Our consolidated financial statements are prepared in conformity with accounting standards generally accepted in the United States, or U.S.
+Added: These principles are subject to amendments made primarily by the Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC).
+Added: A change in those policies can have a significant effect on our reported results and may affect our reporting of transactions which are completed before a change is announced.
+Added: Changes to accounting rules or challenges to our interpretation or application of the rules by regulators may have a material adverse effect on our reported financial results or on the way we conduct business.
+Added: GENERAL RISKS
+Added: Our levels of insurance coverage may not be sufficient for potential damages, claims or losses.
+Added: We have various forms of business and liability insurance which we believe are appropriate based on the needs of companies in our industry.
+Added: As a result, not all of our potential business risks or potential losses would be covered by our insurance policies.
+Added: If we sustain a significant claim or loss which is not covered by insurance, our net income could be negatively impacted.
We may encounter complications with acquisitions, which could potentially harm our business.
11 unchanged sentences
These and other factors could harm our ability to achieve anticipated levels of profitability at acquired operations or realize other anticipated benefits of an acquisition, and could adversely affect our consolidated business and operating results.
−Removed: Changes in financial accounting standards may affect our reported financial condition or results of operations as well increase costs related to implementation of new standards and modifications to internal controls.
−Removed: Our consolidated financial statements are prepared in conformity with accounting standards generally accepted in the United States, or U.S.
−Removed: These principles are subject to amendments made primarily by the Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC).
−Removed: A change in those policies can have a significant effect on our reported results and may affect our reporting of transactions which are completed before a change is announced.
−Removed: Changes to accounting rules or challenges to our interpretation or application of the rules by regulators may have a material adverse effect on our reported financial results or on the way we conduct business.
−Removed: In addition, the continued convergence of U.S.
−Removed: GAAP and International Financial Reporting Standards (“IFRS”) creates uncertainty as to the financial accounting policies and practices we will need to adopt in the future.
UNRESOLVED STAFF COMMENTS
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.