KEY TRONIC CORP 10-K

Item 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk We are subject to the risk of fluctuating interest rates in the normal course of business. Our major market risk relates to our secured debt. Our asset-based senior secured revolving credit facility, and equipment financing facility are secured by substantially all of our assets. The interest rates applicable to our asset-based senior secured revolving credit facility fluctuate with SOFR rates. There was outstanding $115.4 million in borrowings under our asset-based senior secured revolving credit facility and $9.9 million outstanding on our equipment financing facil ities as of July 1, 2023. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Capital Resources and Liquidity”in this Annual Report on Form 10-K and Note 4 “Long-Term Debt” of the “Notes to Consolidated Financial Statements” for additional information regarding our revolving credit facility and term loans. Foreign Currency Exchange Risk A significant portion of our operations are in foreign locations. As a result, transactions occur in currencies other than the U.S. dollar. Exchange rate fluctuations among other currencies used by us directly and indirectly affect our financial results. We may use Mexican peso forward contracts to hedge future foreign currency fluctuations for a portion of our Mexican peso denominated expenses. There were no foreign currency forward contracts outstanding as of July 1, 2023. For additional information regarding our derivative instruments, please refer to Note 10 “Derivative Financial Instruments” of the “Notes to Consolidated Financial Statements.” 25