UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 29, 2003
Commission File Number
Number 0-11559
KEY TRONIC CORPORATION
| Washington |
91-0849125 | |
| (State of Incorporation) |
(I.R.S. Employer Identification No.) |
North 4424 Sullivan
Spokane, Washington 99216
(509) 928-8000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨.
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x.
At May 8, 2003, 9,672,580 shares of Common Stock, no par value (the only class of common stock), were outstanding.
KEY TRONIC CORPORATION
| Page No. | ||||
| PART I. |
FINANCIAL INFORMATION: |
|||
| Item 1. |
Financial Statements: |
|||
| 3 | ||||
| 4 | ||||
| Consolidated Balance Sheets – March 29, 2003 (Unaudited) and June 29, 2002 |
5 | |||
| 6 | ||||
| 7-11 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
12-16 | ||
| Item 3. |
16 | |||
| Item 4. |
16 | |||
| PART II. |
OTHER INFORMATION: |
|||
| Item 1. |
17 | |||
| Item 2. |
Changes in Securities and Use of Proceeds* |
|||
| Item 3. |
Defaults upon Senior Securities* |
|||
| Item 4. |
Submission of Matters to a Vote of Security Holders* |
|||
| Item 5. |
Other Information* |
|||
| Item 6. |
17 | |||
| 17 | ||||
| 18-19 | ||||
* Items are not applicable
2
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements
KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Third Quarters Ended |
|||||||
| March 29, 2003 |
March 30, 2002 |
||||||
| (in thousands, except per share amounts) |
|||||||
| Net sales |
$ |
30,645 |
$ |
46,515 |
| ||
| Cost of sales |
|
26,867 |
|
42,215 |
| ||
| Gross profit on sales |
|
3,778 |
|
4,300 |
| ||
| Operating expenses: |
|||||||
| Research, development and engineering |
|
725 |
|
606 |
| ||
| Selling |
|
646 |
|
690 |
| ||
| General and administrative |
|
1,799 |
|
2,237 |
| ||
| Total operating expenses |
|
3,170 |
|
3,533 |
| ||
| Operating income |
|
608 |
|
767 |
| ||
| Interest expense |
|
262 |
|
400 |
| ||
| Other (income) expense |
|
26 |
|
(114 |
) | ||
| Income before income tax provision |
|
320 |
|
481 |
| ||
| Income tax provision |
|
14 |
|
82 |
| ||
| Net income (loss) |
$ |
306 |
$ |
399 |
| ||
| Earnings per share – basic and diluted: |
$ |
0.03 |
$ |
0.04 |
| ||
| Weighted average shares outstanding – basic |
|
9,673 |
|
9,673 |
| ||
| Weighted average shares outstanding – diluted |
|
9,675 |
|
9,673 |
| ||
See accompanying notes to consolidated financial statements.
3
KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Nine Months Ended |
||||||||
| March 29, 2003 |
March 30, 2002 |
|||||||
| (in thousands, except per share amounts) |
||||||||
| Net sales |
$ |
95,230 |
|
$ |
131,658 |
| ||
| Cost of sales |
|
84,463 |
|
|
120,350 |
| ||
| Gross profit on sales |
|
10,767 |
|
|
11,308 |
| ||
| Operating expenses: |
||||||||
| Research, development and engineering |
|
2,209 |
|
|
1,853 |
| ||
| Selling |
|
1,569 |
|
|
2,158 |
| ||
| General and administrative |
|
5,425 |
|
|
6,431 |
| ||
| Total operating expenses |
|
9,203 |
|
|
10,442 |
| ||
| Operating income |
|
1,564 |
|
|
866 |
| ||
| Interest expense |
|
759 |
|
|
1,094 |
| ||
| Litigation settlement |
|
(12,186 |
) |
|
17,000 |
| ||
| Other income |
|
(236 |
) |
|
(364 |
) | ||
| Income (loss) before income tax provision |
|
13,227 |
|
|
(16,864 |
) | ||
| Income tax provision |
|
368 |
|
|
5,315 |
| ||
| Net income (loss) |
$ |
12,859 |
|
$ |
(22,179 |
) | ||
| Earnings (loss) per share – basic and diluted: |
$ |
1.33 |
|
$ |
(2.29 |
) | ||
| Weighted average shares outstanding – basic and diluted |
|
9,673 |
|
|
9,673 |
| ||
See accompanying notes to consolidated financial statements.
4
KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| March 29, 2003 |
June 29, 2002 |
|||||||
| (in thousands) |
||||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
553 |
|
$ |
1,205 |
| ||
| Restricted cash |
|
580 |
|
|
280 |
| ||
| Trade receivables, less allowance for doubtful accounts of $107 and $444 |
|
15,505 |
|
|
20,978 |
| ||
| Inventories |
|
21,803 |
|
|
18,395 |
| ||
| Other |
|
1,965 |
|
|
2,588 |
| ||
| Total current assets |
|
40,406 |
|
|
43,446 |
| ||
| Property, plant and equipment – at cost |
|
85,785 |
|
|
85,286 |
| ||
| Less: Accumulated depreciation |
|
73,885 |
|
|
73,054 |
| ||
| Total property, plant and equipment |
|
11,900 |
|
|
12,232 |
| ||
| Other assets: |
||||||||
| Other (net of accumulated amortization of $507 and $240) |
|
1,098 |
|
|
996 |
| ||
| Goodwill |
|
765 |
|
|
765 |
| ||
| Total assets |
$ |
54,169 |
|
$ |
57,439 |
| ||
| Liabilities and shareholders’ equity |
||||||||
| Current liabilities: |
||||||||
| Current portion of long-term obligations |
$ |
867 |
|
$ |
228 |
| ||
| Accounts payable |
|
10,412 |
|
|
14,409 |
| ||
| Accrued compensation and vacation |
|
3,868 |
|
|
2,803 |
| ||
| Litigation settlement – short-term |
|
1,065 |
|
|
293 |
| ||
| Other |
|
3,598 |
|
|
3,172 |
| ||
| Total current liabilities |
|
19,810 |
|
|
20,905 |
| ||
| Long-term liabilities: |
||||||||
| Revolving loan – long-term |
|
7,528 |
|
|
6,475 |
| ||
| Litigation settlement – long-term |
|
3,117 |
|
|
19,186 |
| ||
| Other |
|
1,144 |
|
|
1,162 |
| ||
| Total long-term liabilities |
|
11,789 |
|
|
26,823 |
| ||
| Total liabilities |
|
31,599 |
|
|
47,728 |
| ||
| Commitments and contingencies (Note 7) |
||||||||
| Shareholders’ equity: |
||||||||
| Common stock, no par value – shares authorized 25,000; issued and outstanding 9,673 and 9,673 |
|
38,393 |
|
|
38,393 |
| ||
| Accumulated deficit |
|
(15,823 |
) |
|
(28,682 |
) | ||
| Total shareholders’ equity |
|
22,570 |
|
|
9,711 |
| ||
| Total liabilities and stockholders’ equity |
$ |
54,169 |
|
$ |
57,439 |
| ||
See accompanying notes to consolidated financial statements.
5
KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended |
||||||||
| March 29, 2003 |
March 30, 2002 |
|||||||
| (in thousands) |
||||||||
| Increase (decrease) in cash and cash equivalents: |
||||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ |
12,859 |
|
$ |
(22,179 |
) | ||