Key Tronic (KTCC) risk factors, FY2024 10-K

Other

1. 01RISKS AND UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS

RISKS RELATED TO OUR BUSINESS AND STRATEGY

1. 02Our operations may be subject to certain risks
2. 03Our operations in certain foreign locations receive favorable income tax treatment in the form of tax credits or other incentives. In the event that such tax incentives are not extended, are repealed, or we no longer qualify for such programs, our taxes may increase, which would reduce our net income
3. 04We may experience fluctuations in quarterly results of operations
4. 05We are exposed to general economic conditions, which could have a material adverse impact on our business, operating results and financial condition
5. 06The majority of our sales come from a small number of customers, and a decline in sales to any of these customers could adversely affect our business
6. 07Our inability to enforce contracts with, or the bankruptcy or insolvency of, any of our principal customers could adversely affect our business
7. 08We depend on a limited number of suppliers for certain components that are critical to our manufacturing processes. A shortage of these components or an increase in their price could interrupt our operations and result in a significant change in our results of operations
8. 09We operate in a highly competitive industry; if we are not able to compete effectively in the contract manufacturing industry, our business could be adversely affected
9. 10Fluctuations in foreign currency exchange rates have increased and could continue to increase our operating costs
10. 11Our success will continue to depend to a significant extent on our key personnel and our ability to execute our management succession plans
11. 12Start-up costs and inefficiencies related to new or transferred programs can adversely affect our operating results and such costs may not be recoverable if such new programs or transferred programs are canceled or don’t meet expected sales volumes
12. 13Customers may change production timing and demand schedules which makes it difficult for us to schedule production and capital expenditures and to maximize the efficiency of our manufacturing capacity
13. 14Compliance or the failure to comply with current and future environmental and health laws or regulations could cause us significant expense
14. 15If our manufacturing processes and services do not comply with applicable statutory and regulatory requirements, or if we manufacture products containing design or manufacturing defects, demand for our services may decline and we may be subject to liability claims
15. 16If we do not manage our growth effectively, our profitability could decline
16. 17Energy price increases may negatively impact our results of operations

TECHNOLOGY RISKS

1. 18Our operations are subject to cyberattacks that have had and could have a material adverse effect on our business
2. 19Disruptions to our information systems, including losses of data or outages, could adversely affect our operations
3. 20If we are unable to maintain our technological and manufacturing process expertise, our business could be adversely affected

RISKS RELATED TO CAPITAL AND FINANCING

1. 21Our failure to comply with the covenants in our credit arrangements could materially and adversely affect our financial condition
2. 22Our ability to secure and maintain sufficient credit arrangements is key to our continued operations
3. 23Adverse changes in the interest rates of our borrowings could adversely affect our financial condition
4. 24Cash and cash equivalents are exposed to concentrations of credit risk
5. 25Our stock price is volatile

RISKS RELATED TO OUR CONTROLS AND PROCEDURES AND THE INTERNAL INVESTIGATION

1. 26If we fail to maintain proper and effective internal controls, our business and financial condition could be materially adversely impacted
2. 27Due to inherent limitations, there can be no assurance that our system of disclosure and internal controls and procedures will be successful in preventing all errors, theft and fraud, or in informing management of all material information in a timely manner
3. 28Matters relating to or arising from the subject of the Audit Committee’s internal investigation, including expenses and diversion of personnel and resources, regulatory investigations, and proceedings and litigation matters, could have an adverse effect on our business, results of operations and financial condition

LEGAL AND ACCOUNTING RISKS

1. 29We have restated certain of our prior consolidated financial statements, which has resulted in unanticipated costs and may lead to additional risks and uncertainties, including loss of investor confidence, regulatory action or litigation
2. 30We are involved in various legal proceedings
3. 31Changes in securities laws and regulations will increase our costs and risk of noncompliance
4. 32Changes in financial accounting standards may affect our reported financial condition or results of operations as well as increase costs related to implementation of new standards and modifications to internal controls

GENERAL RISKS

1. 33Our levels of insurance coverage may not be sufficient for potential damages, claims or losses
2. 34We may encounter complications with acquisitions, which could potentially harm our business