13 unchanged sentences
Based on our assessment, we believe that as of July 2, 2022, the Company’s internal control over financial reporting is effective based on that criteria.
−Removed: The effectiveness of the Company's internal control over financial reporting as of July 3, 2021 has been audited by BDO USA LLP, an independent registered public accounting firm, as stated in their report which is included herein.
+Added: The effectiveness of the Company's internal control over financial reporting as of July 2, 2022 has been audited by Moss Adams LLP, an independent registered public accounting firm, as stated in their report which is included herein.
Changes in Internal Control over Financial Reporting
−Removed: As previously disclosed, in January 2021, the Company determined that improper accounting resulted in an understatement of cost of goods sold and an overstatement of inventory during the fourth quarter of fiscal year 2020 and the first six months of fiscal year 2021.
−Removed: Subsequent to the matter identified in January 2021, additional inventory accounting errors unrelated to the investigation were also identified by management.
−Removed: As a result, we previously disclosed a material weakness in internal control over financial reporting as of December 26, 2020 and April 3, 2021, in our Quarterly Reports on Form 10-Q for such periods.
−Removed: The material weakness related to the design and operating effectiveness of certain controls over the accounting for inventory as well as the Company’s monitoring activities as it pertained to accounting for inventory at its domestic facilities.
−Removed: During the third and fourth quarters of fiscal year 2021, management implemented, and continues to implement, the following actions to remediate the material weakness and help prevent reoccurrence:
−Removed: • Implemented a control design enhancement by incorporating an additional level of review related to significant balance sheet accounts for each of our production facilities in Arkansas, Minnesota and Mississippi (the “East Locations”);
−Removed: • implemented additional controls requiring management to (i) analyze certain inventory balances and the related revenue recognized in each period in each of our East Locations, and (ii) review manual journal entries recorded at our East Locations to ensure proper accounting treatment;
−Removed: • implemented changes in reporting structures for finance and accounting personnel in the Company’s domestic production facilities and East Division;
−Removed: • provided enhanced training to financial and operational personnel related to accounting principals generally accepted in the United States, with an emphasis in inventory and the ASC 606 revenue recognition standard;
−Removed: • implementing a system upgrade to simplify the process for determining the cost of inventory items and providing related training to employees regarding the new system functionality;
−Removed: • continue to provide additional training to control owners performing certain controls over the accounting for inventory;
−Removed: • continue to enhance the design of our monitoring control activities, specifically financial and operational oversight, at each facility.
−Removed: During the fourth quarter of fiscal year 2021, we completed our testing of operating effectiveness of the remedial actions implemented and found that our controls are designed and operating effectively.
−Removed: As a result, we concluded that the material weakness has been remediated as of July 3, 2021.
−Removed: Except for the remediation actions with respect to the material weakness described above, there have been no significant changes in our internal controls over financial reporting during our fourth fiscal quarter ended July 3, 2021 that have materially affected, or are reasonable likely to materially affect, the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)).
+Added: There have been no significant changes in our internal controls over financial reporting during our fourth fiscal quarter ended July 2, 2022 that have materially affected, or are reasonable likely to materially affect, the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)).
Report of Independent Registered Public Accounting Firm
−Removed: Shareholders and Board of Directors
+Added: To the Shareholders and the Board of Directors of
Key Tronic Corporation
−Removed: Spokane Valley, Washington
Opinion on Internal Control over Financial Reporting
−Removed: We have audited Key Tronic Corporation’s (the “Company’s”) internal control over financial reporting as of July 3, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).
−Removed: In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 3, 2021, based on the COSO criteria.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of July 3, 2021 and June 27, 2020, the related consolidated statements of income (loss), comprehensive income (loss), shareholders’ equity, and cash flows for each of the three years in the period ended July 3, 2021, and the related notes and schedule and our report dated September 16, 2021 expressed an unqualified opinion thereon.
+Added: We have audited Key Tronic Corporation’s (the “Company”) internal control over financial reporting as of July 2, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
+Added: In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 2, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet of Key Tronic Corporation as of July 2, 2022, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”) and our report dated September 14, 2022 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
−Removed: The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Item 9A, Management’s Report on Internal Control over Financial Reporting”.
+Added: The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.
Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
−Removed: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.
+Added: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB.
+Added: We conducted our audit in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
9 unchanged sentences
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
−Removed: /s/ BDO USA, LLP
−Removed: Spokane, Washington
+Added: /s/ Moss Adams LLP
+Added: Seattle, Washington
September 14, 2022
+Added: We have served as the Company’s auditor since 2021.
OTHER INFORMATION
+Added: DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
+Added: Not applicable.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors of the Registrant
−Removed: Information on the nominees for election as Directors of the Company is incorporated by reference from the Company’s definitive proxy statement for the 2021 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2021 fiscal year.
+Added: Information on the nominees for election as Directors of the Company is incorporated herein by reference from the Company’s definitive proxy statement for the 2022 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A under the Exchange Act no later than 120 days after the end of the Company’s 2022 fiscal year (the “2022 Proxy Statement”).
Executive Officers of the Registrant
−Removed: This information is included in a separate item captioned “Executive Officers of the Registrant” in Item 1 of Part 1 of this report pursuant to Instruction G(3) of Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K.
+Added: This information is included in a separate item captioned “Executive Officers of the Registrant” in Item 1 of Part 1 of this Annual Report on Form 10-K pursuant to Instruction G(3) of Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K and is incorporated herein by reference.
Compliance with Section 16(a) of the Exchange Act:
34 unchanged sentences
PRINCIPAL ACCOUNTANT FEES AND SERVICES
+Added: Our independent registered public accounting firm is Moss Adams LLP , Seattle, Washington , Auditor Firm ID:
Information appearing under the caption “Principal Accountant Fees and Services” in the Company’s 2022 Proxy Statement is incorporated herein by this reference.
3 unchanged sentences
FINANCIAL STATEMENTS
−Removed: Report of Independent Registered Public Accounting Firm
+Added: Report of Independent Registered Public Accounting Firm (Moss Adams, LLP)
+Added: Report of Independent Registered Public Accounting Firm (BDO USA, LLP) (BDO USA, LLP;
+Added: Spokane, Washington;
+Added: PCAOB ID#243)
Consolidated Balance Sheets
−Removed: Consolidated Statements of Income (Loss)
−Removed: Consolidated Statements of Comprehensive Income (Loss)
+Added: Consolidated Statements of Income
+Added: Consolidated Statements of Comprehensive Income
Consolidated Statements of Cash Flows
1 unchanged sentence
Notes to Consolidated Financial Statements
−Removed: Consolidated Valuation and Qualifying Accounts 70
−Removed: Other schedules are omitted because of the absence of conditions under which they are required, or because required information is given in the financial statements or notes thereto.
3.1 Articles of Incorporation
3.2 Bylaws, as amended
−Removed: 4.1 Description of the Compan y ’ s securities
−Removed: 10.1* Amended and Restated 1990 Stock Option Plan for Non-Employee Directors, as amended, incorporated by reference to the Company’s 1997 Proxy Statement dated October 10, 1997 (Proposal 2)
−Removed: 10.2* 1995 Executive Stock Option Plan, incorporated by reference to the Company’s 1995 Proxy Statement, pages 19-22 (Proposal 3)
−Removed: 10.3* 2000 Employee Stock Option Plan, incorporated by reference to the Exhibits to the Company’s Form 10-Q for the quarter ended January 1, 2000
−Removed: 10.4* Officers’ Employment Contracts, incorporated by reference to the Company’s 1998 Proxy Statement, pages 10 and 11
−Removed: 10.5* Addenda to Officers’ Employment Contracts, incorporated by reference to Exhibits to the Company’s Form 10-Q for the quarter ended January 1, 2000
−Removed: 10.6* Description of Retention Bonus Plan, incorporated by reference to the Exhibits to the Company’s 10-Q for the quarter ended December 28, 2002
−Removed: 10.7* Addenda to Officers’ Employment Contracts, incorporated by reference to Exhibits to the Company’s Form 10-K for the year ended June 29, 2002
−Removed: 10.8 Promise to execute a Purchase and Sale Agreement with Key Safety Systems de Mexico, S.A.
−Removed: de C.V., incorporated by reference to the Exhibit to the Company’s Form 8-K filed April 26, 2005
−Removed: 10.9 Summary of material terms and conditions of the Purchase and Sale Agreement with Key Safety Systems de Mexico, S.A.
−Removed: de C.V., incorporated by reference to the Exhibit to the Company’s Form 8-K filed June 6, 2005
−Removed: 10.10* Summary of Key Tronic Corporation Long Term Incentive Compensation Plan, incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed September 27, 2005
−Removed: 10.11* Summary of Key Tronic Corporation Incentive Compensation Plan, incorporated by reference to Exhibit 10.23 to the Company’s Form 10-K for the year ended July 2, 2005
−Removed: 10.12* Summary of Incentive Compensation Plan Performance Goals and Target Payments for Fiscal Year 2007 and Fiscal Years 2007 – 2009 Long Term Incentive Plan Performance Measures and Awards incorporated by reference to the Company’s Form 8-K filed July 28, 2006
−Removed: 10.13 Summary of material terms and conditions of the Purchase and Sale Agreement with Todenko Mexico S.A.
−Removed: de C.V., incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed October 12, 2006
−Removed: 10.14 Summary of material terms and conditions of the Purchase and Sale Agreement with Todenko Mexico S.A.
−Removed: de C.V., incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed November 20, 2006
−Removed: 10.15 Summary of material terms and conditions of the Sale and Purchase Agreement with Adevco Corporation, incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed January 5, 2007
−Removed: 10.16 Summary of Second Amendment to Agreement of Sale and Purchase Agreement with Adevco Corporation, incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed April 11, 2007
−Removed: 10.17* Summary of Incentive Compensation Plan Performance Goals and Target Payments for Fiscal Year 2008 and Fiscal Years 2008-2010 Long Term Incentive Plan Performance Measures and Awards incorporated by reference to the Company’s Form 8-K filed July 27, 2007
−Removed: 10.18* Summary of Incentive Compensation Plan Performance Goals and Target payments for Fiscal Year 2009 and Fiscal Years 2009 – 2011 Long Term Incentive Plan Performance Measures and Awards incorporated by reference to the Company’s Form 8-K filed July 24, 2008
−Removed: 10.19* Summary of Incentive Compensation Plan Performance Goals and Target payments for Fiscal Year 2010 and Fiscal Years 2010 – 2012 Long Term Incentive Plan Performance Measures and Awards incorporated by reference to the Company’s Form 8-K filed July 23, 2009
−Removed: 10.20 Financing Agreement with Wells Fargo Bank, N.A., incorporated by reference to the Exhibits to the Company’s Form 8-K filed on August 24, 2009
+Added: 4.1 Description of the Company’s securities
10.1* 2010 Incentive Plan, incorporated by reference to Exhibit 10.36 to the Company’s Form 10-K for the year ended July 3, 2010
−Removed: 10.22* Employment Contract with Douglas G.
−Removed: Burkhardt, incorporated by reference to Exhibit 10.37 to the Company’s Form 10-K for the year ended July 3, 2010
−Removed: 10.23 Summary of material terms and conditions of the Purchase and Sale Agreement with Autopartes Y Arneses de Mexico S.A.
−Removed: de C.V., incorporated by reference to Exhibit 10.38 to the Company’s Form 10-K for the year ended July 3, 2010
−Removed: 10.24* Summary of Incentive Compensation Plan Performance Goals and Target Payments for Fiscal Year 2011 and Fiscal Years 2011 – 2013 Long Term Incentive Plan Performance Measures and Awards incorporated by reference to the Company’s Form 8-K filed July 23, 2010
−Removed: 10.25* Summary of Incentive Compensation Plan Performance Goals and Target Payments for Fiscal Year 2012 and Fiscal Years 2012 – 2014 Long Term Incentive Plan Performance Measures and Awards incorporated by reference to the Company’s Form 8-K filed August 2, 2011
+Added: 10.2* Description of Employment Contact of Craig D.
+Added: Gates, incorporated by reference to the Company’s 1998 Proxy Statement, pages 10 and 11
+Added: 10.3* Addenda to Employment Contract of Craig D.
+Added: Gates, incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q for the quarter ended January 1, 2000
+Added: 10.4* Addenda to Employment Contract of Craig D.
+Added: Gates, incorporated by reference to Exhibit 10.2 to the Company’s Form 10-K for the year ended June 29, 2002
10.5* Amendment to Employment Contract of Craig D.
−Removed: Gates, dated August 23, 2011;
−Removed: Klawitter, dated August 23, 2011 and of Douglas G.
−Removed: Burkhardt dated September 6, 2011;
−Removed: incorporated by reference to the Exhibits to the Company’s Form 10-K for the year ended July 2, 2011 filed on September 12, 2011
−Removed: 10.27 Second Loan Modification Agreement to the Credit Agreement with Wells Fargo Bank, N.A., incorporated by reference to the Exhibits to the Company’s Form 8-K filed on February 2, 2012
+Added: Gates, dated August 23, 2011 incorporated by reference to Exhibit 10.40 to the Company’s Form 10-K for the year ended July 2, 2011
10.6* Amendment to Employment Contract of Craig D.
−Removed: Gates, dated May 10, 2012, incorporated by reference to the Exhibits to the Company’s Form 10-Q filed on May 14, 2012
−Removed: 10.29* Amendment to Employment Contract of Douglas G.
−Removed: Burkhardt dated May 10, 2012;
−Removed: incorporated by reference to the Exhibits to the Company’s Form 10-Q filed on May 14, 2012
−Removed: 10.30* Summary of Incentive Compensation Plan Performance Goals and Target Payments for Fiscal Year 2013 and Fiscal Years 2013 – 2015 Long Term Incentive Plan Performance Measures and Awards incorporated by reference to the Company’s Form 8-K filed August 7, 2012
−Removed: 10.31* Summary of Incentive Compensation Plan Performance Goals and Target Payments for Fiscal Year 2014 and Fiscal Years 2014 – 2016 Long Term Incentive Plan Performance Measures and Awards incorporated by reference to the Company’s Form 8-K filed August 6, 2013
+Added: Gates, dated May 10, 2012, incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended March 31, 2012
10.7* Summary of Incentive Compensation Plan Performance Goals and Target Payments for Fiscal Year 2019 and Fiscal Years 2019 – 2021 Long Term Incentive Plan Performance Measures and Awards incorporated by reference to the Company’s Form 8-K filed August 2, 2018
−Removed: 10.33 Summary of material terms and conditions of the Stock Purchase Agreement with CDR Manufacturing and Amended and Restated Credit Agreement with Wells Fargo Bank, N.
−Removed: incorporated by reference to the Company’s Form 8-K filed September 9, 2014
10.8* Summary of Incentive Compensation Plan Performance Goals and Target Payments for Fiscal Year 2020 and Fiscal Years 2020 – 2022 Long Term Incentive Plan Performance Measures and Awards incorporated by reference to the Company’s Form 8-K filed July 30, 2019
−Removed: 10.35 First Amendment to Amended and Restated Credit Agreement with Wells Fargo Bank, National Association, incorporated by reference to the Company's Form 8-K filed August 11, 2015
−Removed: 10.36 Second Replacement Revolving Line of Credit Note with Wells Fargo Bank, National Association, incorporated by reference to the Company's Form 8-K filed August 11, 2015
10.9* Summary of Incentive Compensation Plan Performance Goals and Target Payments for Fiscal Year 2021 and Fiscal Years 2021 – 2023 Long Term Incentive Plan Performance Measures and Awards incorporated by reference to the Company’s Form 8-K filed July 27, 2020
10.10* Summary of Incentive Compensation Plan Performance Goals and Target Payments for Fiscal Year 2022 and Fiscal Years 2022 – 2024 Long Term Incentive Plan Performance Measures and Awards incorporated by reference to the Company’s Form 8-K filed August 13, 2021
−Removed: 10.39 Announcement of contract awarded with SkyBell Technologies, a global leader in patented Wi-Fi video doorbell technology incorporated by reference to the Company’s Form 8-K filed May 1, 2018
10.11* Summary of Incentive Compensation Plan Performance Goals and Target Payments for Fiscal Year 2023 and Fiscal Years 2023 – 2025 Long Term Incentive Plan Performance Measures and Awards incorporated by reference to the Company’s Form 8-K filed August 4, 2022
−Removed: 10.41 Announcement of award of $6.7 million following the conclusion of a previously disclosed arbitration proceeding incorporated by reference to the Company's Form 8-K filed September 5, 2018
10.12 Announcement that the Company has signed a letter of intent to lease a new facility in Da Nang, Vietnam
−Removed: 10.43* Summary of Incentive Compensation Plan Performance Goals and Target Payments for Fiscal Year 2020 and Fiscal Years 2020 – 2022 Long Term Incentive Plan Performance Measures and Awards incorporated by reference to the Company’s Form 8-K filed July 30, 2019
−Removed: 10.44* Summary of Incentive Compensation Plan Performance Goals and Target Payments for Fiscal Year 2021 and Fiscal Years 2021 – 2023 Long Term Incentive Plan Performance Measures and Awards incorporated by reference to the Company’s Form 8-K filed July 27, 2020
−Removed: 10.45* Summary of Incentive Compensation Plan Performance Goals and Target Payments for Fiscal Year 2022 and Fiscal Years 2022 – 2024 Long Term Incentive Plan Performance Measures and Awards incorporated by reference to the Company’s Form 8-K filed August 13, 2021
+Added: 10.13 Stock Purchase Agreement, dated September 3, 2014, by and among the Company, CDR Manufacturing Inc.
+Added: and the sellers signatory thereto, incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed on September 9, 2014
10.14 Loan and Security Agreement, dated August 14, 2020, among the Company, Bank of America, N.A, and certain other parties, incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed August 17, 2020
+Added: 10.15 First Amendment to Loan and Security Agreement, dated November 10, 2020, among the Company, Bank of America, N.A, and certain other parties, submitted herewith
10.16 Second Amendment to Loan and Security Agreement, dated September 3, 2021, among the Company, Bank of America, N.A, and certain other parties, incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed September 10, 2021
+Added: 10.17 Third Amendment to Loan and Security Agreement, dated August 26, 2022, among the Company, Bank of America, N.A, and certain other parties, incorporated by reference to Exhibit 10.2, submitted herewith
21.1 Subsidiaries of Registrant, submitted herewith
−Removed: 23.1 Consent of Independent Registered Public Accounting Firm, submitted herewith
+Added: 23.1 Consent of Independent Registered Public Accounting Firm - Moss Adams LLP, submitted herewith
+Added: 23.2 Consent of Independent Registered Public Accounting Firm - BDO USA, LLP, submitted herewith
31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer, submitted herewith
10 unchanged sentences
* Management contract or compensatory plan or arrangement
−Removed: KEY TRONIC CORPORATION AND SUBSIDIARIES
−Removed: CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
−Removed: FISCAL YEARS ENDED JULY 3, 2021, JUNE 27, 2020, AND JUNE 29, 2019
−Removed: Fiscal Year Ended
−Removed: 2021 2020 2019
−Removed: (in thousands)
−Removed: Allowance for Obsolete Inventory
−Removed: Balance at beginning of year $ 1,968 $ 1,792 $ 1,458
−Removed: Provisions 753 136 91
−Removed: Dispositions ( 1,296 ) 40 243
−Removed: Balance at end of year $ 1,425 $ 1,968 $ 1,792
−Removed: Allowance for Doubtful Accounts
−Removed: Balance at beginning of year $ 609 $ 58 $ —
−Removed: Provisions (Recovery) 117 551 58
−Removed: Write-offs ( 451 ) — —
−Removed: Balance at end of year $ 275 $ 609 $ 58
FORM 10-K SUMMARY
10 unchanged sentences
Executive Vice President of Administration, Chief Financial Officer and Treasurer
−Removed: (Principal Financial Officer)
+Added: (Principal Financial Officer and Principal Accounting Officer)
/s/ Ronald F.
11 unchanged sentences
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.