Item 9A. Controls and Procedures
Item 9A: CONTROLS AND PROCEDURES
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Evaluation of Disclosure Controls and Procedures
It is the responsibility of our management to establish, maintain, and monitor disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) are recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission rules and forms. Additionally, these disclosure controls include controls and procedures that are designed to accumulate and communicate the information required to be disclosed to our Company’s Chief Executive Officer and Chief Financial Officer, allowing for timely decisions regarding required disclosures.
As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(f). Based on our assessment, we believe that as of July 1, 2023, the Company’s disclosure controls and procedures are effective based on that criteria.
Management’s Report on Internal Control over Financial Reporting
Our management has the responsibility to establish and maintain adequate internal controls over our financial reporting, as defined in Rule 13a-15(f) under the Securities and Exchange Act of 1934. Our internal controls are designed to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our external financial statements in accordance with generally accepted accounting principles (GAAP).
Due to inherent limitations of any internal control system, management acknowledges that there are limitations as to the effectiveness of internal controls over financial reporting and therefore recognize that only reasonable assurance can be gained from any internal control system. Accordingly, our internal control system may not detect or prevent material misstatements in our financial statements and 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.
Under the supervision and participation of management, including the Chief Executive Officer and Chief Financial Officer, we have performed an assessment of the effectiveness of our internal controls over financial reporting as of July 1, 2023. This assessment was based on the criteria established in Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment, we believe that as of July 1, 2023, the Company’s internal control over financial reporting is effective based on that criteria.
Changes in Internal Control over Financial Reporting
There have been no significant changes in our internal controls over financial reporting during our fourth fiscal quarter ended July 1, 2023 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)).
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Item 9B: OTHER INFORMATION
None
Item 9C: DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
Item 10: DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors of the Registrant
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 2023 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 2023 fiscal year (the “2023 Proxy Statement”).
Executive Officers of the Registrant
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:
Information under the caption “Delinquent Section 16(a) Reports” in the Company’s 2023 Proxy Statement is incorporated herein by this reference.
Code of Conduct
The Board of Directors has adopted a written Code of Conduct which applies to its directors and employees, including its executive officers. The Code of Conduct is available on the Company’s website at www.keytronic.com . The Company intends to disclose on its website any amendments to or waivers of the Code of Conduct.
Item 11: EXECUTIVE COMPENSATION
Information appearing under the caption “Executive Compensation” in the Company’s 2023 Proxy Statement is incorporated herein by this reference.
Item 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth the aggregate information for the Company’s equity compensation plans in effect as of July 1, 2023.
EQUITY COMPENSATION PLAN INFORMATION
Plan category Number of securities to
be issued upon exercise
of outstanding options,
warrants, and rights
(a) Weighted-average
exercise price of
outstanding options,
warrants, and rights
(b) Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a)
(c)
Equity compensation plans approved by security holders (1)
626,250 $ 6.41 853,084
Equity compensation plans not approved by security holders — $ — —
Total 626,250 $ 6.41 853,084
(1) Included are the 1,200,000 shares subject to the 2010 Plan, the issuance of which were approved by the shareholders at the 2010 Annual Meeting. During the 2015 Annual Meeting, an additional 1,000,000 shares were approved. As a result of the shareholder approval, the Company made the decision to amend the cash-settled SARs granted during fiscal year 2010 to stock-settled SARs effective October 21, 2011.
Information under the caption “Beneficial Ownership of Securities” in the Company’s 2023 Proxy Statement is incorporated herein by this reference.
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Item 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information appearing under the caption “Related Person Transactions” and “Directors’ Independence” in the Company’s 2023 Proxy Statement is incorporated herein by this reference.
Item 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES
Our independent registered public accounting firm is Moss Adams LLP , Seattle, Washington , Auditor Firm ID: 659 .
Information appearing under the caption “Principal Accountant Fees and Services” in the Company’s 2023 Proxy Statement is incorporated herein by this reference.
PART IV
Item 15: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) 1. FINANCIAL STATEMENTS
Page in Form 10-K
FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (Moss Adams, LLP)
26
Consolidated Balance Sheets
28
Consolidated Statements of Income
29
Consolidated Statements of Comprehensive Income
30
Consolidated Statements of Cash Flows
31
Consolidated Statements of Shareholders’ Equity
32
Notes to Consolidated Financial Statements
35
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3. EXHIBITS
Exhibit No. Description
3.1 Articles of Incorporation
3.2 Bylaws, as amended
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
10.2* Description of Employment Contact of Craig D. Gates, incorporated by reference to the Company’s 1998 Proxy Statement, pages 10 and 11
10.3* Addenda to Employment Contract of Craig D. Gates, incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q for the quarter ended January 1, 2000
10.4* Addenda to Employment Contract of Craig D. 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. 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. 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
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
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
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
10.12* Summary of Incentive Compensation Plan Performance Goals and Target Payments for Fiscal Year 2024 and Fiscal Years 2024 – 2026 Long Term Incentive Plan Performance Measures and Awards incorporated by reference to the Company’s Form 8-K filed August 17, 2023
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10.13 Announcement that the Company has signed a letter of intent to lease a new facility in Da Nang, Vietnam
10.14 Stock Purchase Agreement, dated September 3, 2014, by and among the Company, CDR Manufacturing Inc. and the sellers signatory thereto, incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed on September 9, 2014
10.15 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
10.16 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
10.17 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
10.18 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
23.1 Consent of Independent Registered Public Accounting Firm - Moss Adams LLP, submitted herewith
31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer, submitted herewith
31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer, submitted herewith
32.1 Section 1350 Certification of Chief Executive Officer, submitted herewith
32.2 Section 1350 Certification of Chief Financial Officer, submitted herewith
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH XBRL Taxonomy Extension Schema Document **
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document **
101.DEF XBRL Taxonomy Extension Definition Linkbase Document **
101.LAB XBRL Taxonomy Extension Label Linkbase Document **
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document **
104 Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extention information contained in Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB and 101.PRE)
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* Management contract or compensatory plan or arrangement
** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities and Exchange Act of 1934, as amended and otherwise are not subject to liability under those sections.
Item 16: FORM 10-K SUMMARY
None
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22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: September 26, 2023
KEY TRONIC CORPORATION
By: /s/ Craig D. Gates
Craig D. Gates, President and Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
/s/ Craig D. Gates September 26, 2023
Craig D. Gates Date
Director and President and Chief Executive Officer
(Principal Executive Officer)
/s/ Brett R. Larsen September 26, 2023
Brett R. Larsen Date
Executive Vice President of Administration, Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)
/s/ Ronald F. Klawitter September 26, 2023
Ronald F. Klawitter, Director Date
/s/ James R. Bean September 26, 2023
James R. Bean, Director Date
/s/ Subodh K. Kulkarni September 26, 2023
Subodh K. Kulkarni, Director Date
/s/ Yacov A. Shamash September 26, 2023
Yacov A. Shamash, Director Date
/s/ Patrick Sweeney September 26, 2023
Patrick Sweeney, Director and Chairman of the Board Date
58