What changed in this filing

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Item 9A. Controls and Procedures

2024-10-15 compared with 2023-09-26 · 61 added, 53 removed, 87 unchanged (57% of the section changed)

2 unchanged sentences

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.

Additionally, these disclosure controls include controls and procedures that are designed to accumulate and communicate the information required to be disclosed to our Chief Executive Officer and Chief Financial Officer, allowing for timely decisions regarding required disclosures.

Based on our assessment, we believe that as of June 29, 2024, the Company’s disclosure controls and procedures were not effective as a result of the material weaknesses in internal control over financial reporting discussed below.

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 management has the responsibility to establish and maintain adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Exchange Act.

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).

1 unchanged sentence

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.

This assessment was based on the criteria established in Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission.

Based on our assessment, management concluded that the Company's internal control over financial reporting was not effective as of June 29, 2024 due to the material weaknesses described below.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weaknesses have been identified:

The Company did not fully maintain components of the COSO framework, including elements of the control environment, risk assessment, control activities, and monitoring activities components, relating to:

(i) sufficiency of processes to identify and analyze risks to the achievement of objectives across the entity, (ii) sufficiency of competent personnel with appropriate levels of knowledge, experience, and training in accounting, and internal control matters to perform assigned responsibilities and have appropriate accountability for the design and operation of internal control over financial reporting;

(iii) sufficiency of procedures to select and develop control activities that contribute to the mitigation of risks, and (iv) performing ongoing evaluations to ascertain whether the components of internal control are present and functioning.

The entity level material weaknesses contributed to material weaknesses within the Company’s financial close and reporting processes as follows:

• The Company did not design and implement effective controls over the adoption of new accounting standards.

• The Company did not design and implement effective controls over the accounting for revenue recognition relating to cost recovery of material price variances.

These material weaknesses resulted in the restatement of our consolidated financial statements as of and for the years ended July 1, 2023 and July 2, 2022 and our unaudited consolidated statements of operations for the quarters ended March 30, 2024, December 30, 2023, September 30, 2023, April 1, 2023, December 31, 2022, October 1, 2022, April 2, 2022, January 1, 2022 and October 2, 2021, and revision of our unaudited consolidated balance sheets as of March 30, 2024, December 30, 2023, and September 30, 2023.

As a result of this determination, management has taken, and is in the process of taking, the following actions to remediate the identified material weaknesses in its internal control over financial reporting:

• Training related to the proper accounting for material price variances

• Enhancing closing process documentation related to material price variances

• Hiring of technical accounting finance staff with US GAAP knowledge and experience;

• Enhance closing process documentation related to adoption of new accounting standards

We will continue to assess the effectiveness of our controls and remediation efforts in connection with our future assessments of the effectiveness of internal control over financial reporting and disclosure controls and procedures.

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)).

There have been no significant changes in our internal control over financial reporting during our fourth fiscal quarter ended June 29, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)).

OTHER INFORMATION

During the fiscal year ended June 29, 2024, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as defined in Regulation S-K, Item 408.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

14 unchanged sentences

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

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.

Information under the captions “Beneficial Ownership of Securities” and "Equity Compensation Plan Information" in the Company’s 2024 Proxy Statement is incorporated herein by this reference.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

14 unchanged sentences

Notes to Consolidated Financial Statements

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.

3.1 Articles of Incorporation, incorporated by reference to Exhibit 3.1 to the Company’s Form 10-K for the year ended July 3, 2021 ,

3.2 Bylaws, as amended, incorporated by reference to Exhibit 3.2 to the Company’s Form 10-K for the year ended July 3, 2021

4.1 Description of the Company’s securities, incorporated by reference to Exhibit 4.1 to the Company’s Form 10-K for the year ended July 3, 2021

10.1* 2010 Incentive Plan, as amended and restated October 23, 2014, incorporated by reference to Appendix A to the Company’s 2014 Proxy Statement

10.2* Form of Restricted Stock Unit Grant Notice and Agreement, submitted herewith

10.3* Description of Employment Cont r act of Craig D.

Gates, incorporated by reference to the Company’s 1998 Proxy Statement, pages 10 and 11

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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* Consulting Agreement of Craig D.

Gates, dated June 20, 2024, submitted herewith

10.9* Employment Contract of Brett R.

Larsen, dated April 22, 2010, including the Amendment to Employment Contract, dated August 23, 2011, and the Amendment to Employment Contract, dated May 11, 2012, submitted herewith

10.10* Employment Contract of Anthony G.

Voorhees, dated August 3, 2022, submitted herewith

10.11* 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

3 unchanged sentences

10.15* 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

10.16* Summary of Incentive Compensation Plan Performance Goals and Target Payments for Fiscal Year 2025 and Fiscal Years 2025-2027 Long Term Incentive Plan Performance Measures and Awards, incorporated by reference to the Company’s Form 8-K filed on September 9, 2024

10.17 Announcement that the Company has signed a letter of intent to lease a new facility in Da Nang, Vietnam

2 unchanged sentences

10.19 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

10.20 First Amendment to Loan and Security Agreement, dated November 10, 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 10-K for the year ended July 2, 2022

10.21 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

10.22 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 to the Company’s Form 10-K for the year ended July 2, 2022

10.23 Fourth Amendment to Loan, Guaranty and Security Agreement, dated March 29, 2024, 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 May 13, 2024

10.24 Fifth Amendment to Loan, Guaranty and Security Agreement, dated September 27, 2024, 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 October 1, 2024

10.25 Sixth Amendment to Loan, Guaranty and Security Agreement, dated October 9, 2024, 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 October 10, 2024

21.1 Subsidiaries of Registrant, submitted herewith

4 unchanged sentences

32.2 Section 1350 Certification of Chief Financial Officer, submitted herewith

97.1 Policy Relating to Recovery of Erroneously Awarded Compensation, 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.

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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)

104 Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB and 101.PRE)

* Management contract or compensatory plan or arrangement

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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.

September 26, 2023

October 15, 2024

KEY TRONIC CORPORATION

Gates, President and Chief Executive Officer

Larsen, 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:

Gates September 26, 2023

Director and President and Chief Executive Officer

Larsen October 15, 2024

President and Chief Executive Officer

(Principal Executive Officer)

Larsen September 26, 2023

/s/ Anthony G.

Voorhees October 15, 2024

Voorhees Date

Executive Vice President of Administration, Chief Financial Officer and Treasurer

1 unchanged sentence

/s/ Ronald F.

Klawitter September 26, 2023

Klawitter, Director Date

Bean September 26, 2023

Klawitter October 15, 2024

Klawitter, Director and Chairman of the Board Date

Gates October 15, 2024

Gates, Director Date

Bean October 15, 2024

Bean, Director Date

/s/ Subodh K.

Kulkarni September 26, 2023

Kulkarni October 15, 2024

Kulkarni, Director Date

Shamash September 26, 2023

Shamash October 15, 2024

Shamash, Director Date

/s/ Patrick Sweeney September 26, 2023

Patrick Sweeney, Director and Chairman of the Board Date

/s/ Cheryl Beranek October 15, 2024

Cheryl Beranek, Director Date

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.

What changed 10-K

Item 9A. Controls and Procedures