Reading time ( words)
Key Tronic Corporation was awarded $6.7 million following the conclusion of a previously disclosed arbitration proceeding, which the Company commenced in the second quarter of fiscal year 2017.
This award resolves a dispute with a former customer involving approximately $9 million in inventory purchased and approximately $1 million in outstanding accounts receivables and other related fees and costs that the Company believed to be reimbursable.
The company has determined this award to be a “subsequent event” to its fiscal year 2018. This event, including all related disposal fees, will result in an approximately $3.4 million one-time adverse impact to fiscal year 2018 net income, with additional disclosures included in the Company’s annual report on Form 10-K for the fiscal year ended June 30, 2018. For the fourth quarter of fiscal year 2018, the Company with the inclusion of the impact of this event is expected to report a net loss of approximately $2.1 million and a net loss of $1.3 million for the full fiscal year 2018.
Collection of the arbitration award is expected to be cash positive for the Company as the inventory has been previously paid for.
About Key Tronic
Key Tronic is a leading contract manufacturer offering value-added design and manufacturing services from its facilities in the United States, Mexico and China. The Company provides its customers full engineering services, materials management, worldwide manufacturing facilities, assembly services, in-house testing, and worldwide distribution. Its customers include some of the world's leading original equipment manufacturers.