ý
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2015
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____ TO ____.
|
Oregon
(State or jurisdiction of incorporation or organization)
|
93-0822509
(I.R.S. Employer Identification No.)
|
150 Avery Street
Walla Walla, Washington
(Address of Principal Executive Offices)
|
99362
(Zip Code)
|
Title of each class
Common Stock, no par value
Preferred Stock Purchase Right
|
Name of each exchange on which registered
The NASDAQ Global Market
|
Large accelerated filer
o
|
Accelerated filer
ý
|
Non-accelerated filer
o
(Do not check if a smaller reporting company.)
|
Smaller reporting company
o
|
|
|
PAGE
|
|
|
|
Item 1A
.
|
||
|
|
|
|
|
|
|
|
|
•
|
adverse changes in general economic conditions may adversely affect our customers, our business and results of operations;
|
•
|
ongoing uncertainty in the global economy may adversely affect our operating results;
|
•
|
variable economic conditions in the food processing industry, either globally or regionally, may adversely affect our sales;
|
•
|
significant investments in unsuccessful research and development efforts could materially adversely affect our business;
|
•
|
our existing and new products may not compete successfully in either current or new markets, which could result in the loss of market share and a decrease in our sales and profits;
|
•
|
the loss of any of our significant customers could reduce our sales and profitability;
|
•
|
competition may result in lower sales and prices for our products and services;
|
•
|
consolidation by our competitors could increase competition in the food processing equipment industry, and consolidation by our food processing industry customers could increase their purchasing power, both of which could reduce our sales and profitability;
|
•
|
customer sourcing initiatives and purchasing power may adversely affect our new equipment and aftermarket sales, which could result in reduced gross margins;
|
•
|
our sales and profits may vary widely from quarter to quarter and year to year due to the timing and size of major orders;
|
•
|
our operating results are seasonal and may further fluctuate due to severe weather conditions affecting the agricultural industry in various parts of the world;
|
•
|
the failure of our independent sales representatives to perform as expected could harm our net sales;
|
•
|
our international operations subject us to a number of risks that could adversely affect our sales, operating results and growth;
|
•
|
we have made, or may make, acquisitions or enter into distribution agreements or similar business relationships that could disrupt our operations and harm our operating results;
|
•
|
fluctuations in foreign currency exchange rates could result in unanticipated losses that could adversely affect our results of operations and financial position;
|
•
|
advances in technology by competitors may adversely affect our sales and profitability;
|
•
|
our expansion into new markets, increasingly complex projects and applications, and integrated product offerings could increase our cost of operations and reduce gross margins and profitability;
|
•
|
the failure of our suppliers to deliver quality products in a timely manner or our inability to obtain components for our products could adversely affect our operating results;
|
•
|
our dependence on certain suppliers may leave us temporarily without adequate access to raw materials, intellectual property or products;
|
•
|
the limited availability and possible cost fluctuations of materials used in our products could adversely affect our gross margins;
|
•
|
our products may suffer from defects leading to warranty claims;
|
•
|
information security breaches or business system disruptions may adversely affect our business;
|
•
|
our potential inability to attract and retain experienced management and other key personnel, or the loss of key management personnel, may adversely affect our business and prospects for growth;
|
•
|
our potential inability to protect our intellectual property, especially as we expand geographically, may adversely affect our competitive advantage;
|
•
|
intellectual property-related litigation expenses and other costs resulting from infringement claims asserted against us by third parties may adversely affect our results of operations and our customer relations; and
|
•
|
our financing agreements contain restrictive and financial covenants that may adversely affect us.
|
ITEM 1.
|
BUSINESS.
|
|
|
Fiscal Year Ended September 30,
|
|||||||||||||||||||
|
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
Automated inspection systems
|
|
$
|
37,529
|
|
|
36
|
%
|
|
$
|
55,829
|
|
|
47
|
%
|
|
$
|
59,336
|
|
|
43
|
%
|
Process systems
|
|
37,768
|
|
|
37
|
%
|
|
34,580
|
|
|
29
|
%
|
|
50,729
|
|
|
37
|
%
|
|||
Parts and service
|
|
27,628
|
|
|
27
|
%
|
|
27,849
|
|
|
24
|
%
|
|
26,718
|
|
|
20
|
%
|
|||
Net sales
|
|
$
|
102,925
|
|
|
100
|
%
|
|
$
|
118,258
|
|
|
100
|
%
|
|
$
|
136,783
|
|
|
100
|
%
|
|
|
Fiscal Year Ended September 30,
|
|||||||
|
|
2015
|
|
2014
|
|
2013
|
|||
Automated inspection systems
|
|
34
|
%
|
|
48
|
%
|
|
44
|
%
|
Process systems
|
|
26
|
%
|
|
16
|
%
|
|
28
|
%
|
Parts and service
|
|
40
|
%
|
|
36
|
%
|
|
28
|
%
|
Total gross margin
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Location
|
Manufacturing Facility
|
Products/Services Produced
|
Walla Walla, Washington
|
132,000 square feet
|
Automated Inspection Systems
Process Systems
Parts and Service
|
Redmond, Oregon
|
17,000 square feet
|
Process Systems
Parts and Service
|
Beusichem, The Netherlands
|
37,000 square feet
|
Process Systems
Automated Inspection Systems
Parts and Service
|
Hasselt, Belgium
|
13,000 square feet
|
Automated Inspection Systems
Parts and Service
|
ITEM 1A.
|
RISK FACTORS.
|
•
|
impair the financial condition of some of our customers and suppliers, thereby increasing customer bad debts or non-performance by suppliers;
|
•
|
adversely affect our ability to fund new product development necessary to meet future customer requirements;
|
•
|
negatively affect global demand for our customers' products, particularly in the food industry, which could result in a reduction of sales, underutilization of our production facilities, and a reduction in operating income and cash flows;
|
•
|
adversely affect our expansion plans, including possible acquisitions;
|
•
|
negatively affect our customers' ability to obtain financing, which could result in a reduction in sales, operating income and cash flows;
|
•
|
negatively affect our return on cash and cash equivalents;
|
•
|
make it more difficult or costly for us to obtain financing for our operations or investments;
|
•
|
negatively affect the results of our risk management activities if we are required to record losses related to financial instruments or experience counterparty failure;
|
•
|
result in charges for excess or obsolete inventory or require other asset write-downs; or
|
•
|
impair the financial viability of our insurers.
|
•
|
length of time and cost for development of these technologies and markets;
|
•
|
development of the technological capability to address the requirements and performance specifications of new and existing markets;
|
•
|
our ability to obtain new technology from third parties when we cannot cost-effectively develop these technologies ourselves;
|
•
|
our ability to manufacture our products in various geographies, which may affect our success in certain emerging markets;
|
•
|
our ability to design products for ease of manufacturability and service;
|
•
|
our ability to design and manufacture products for configurability, modularity and cost-effectiveness;
|
•
|
our ability to manufacture and sell our new products at sustainable gross margins;
|
•
|
product reliability issues related to both new technology and adaptation of existing products to operate in new or rugged operating environments at customer sites;
|
•
|
design or manufacturing flaws that may lead to increased product liability or warranty claims; and
|
•
|
failure to meet performance specifications, which could damage our profitability and the reputation of our products.
|
•
|
unexpected changes in regulatory and certification requirements;
|
•
|
restrictive governmental actions (such as restrictions on the transfer or repatriation of funds and trade protection measures, including export duties and quotas, customs duties and tariffs, or trade barriers erected by either the United States or other countries where we do business);
|
•
|
currency restrictions and exchange rate fluctuations;
|
•
|
scrutiny of foreign tax authorities which could result in significant fines, penalties and additional taxes;
|
•
|
changes in import or export licensing requirements;
|
•
|
longer payment cycles;
|
•
|
transportation delays due to port shutdowns, capacity overloads, varying customs requirements and other factors beyond our control;
|
•
|
competitive pricing that we may experience internationally;
|
•
|
challenges in implementing cost effective operating and manufacturing strategies in varied geographic regions;
|
•
|
challenges in meeting customer requirements in different operating environments;
|
•
|
challenges in meeting customer needs in different regions due to regional differences in products and processes;
|
•
|
inability to globalize solutions for our global customers;
|
•
|
economic downturns, civil disturbances or political instability;
|
•
|
geopolitical turmoil, including terrorism or war;
|
•
|
difficulties and costs of staffing and managing geographically disparate operations;
|
•
|
more stringent employment regulations and local labor conditions;
|
•
|
laws and business practices favoring local companies;
|
•
|
limitations on our ability under local law to protect our intellectual property;
|
•
|
changes in domestic and foreign tax rates and laws; and
|
•
|
difficulty in obtaining sales representatives and servicing products in foreign countries, which may adversely affect sales in those countries.
|
•
|
significant potential expenditures of cash, stock, and management resources;
|
•
|
difficulty achieving the potential financial and strategic benefits of the acquisition or business relationship;
|
•
|
difficulties in integrating acquired operations or products, including the potential loss of key employees from the acquired business;
|
•
|
difficulties of integrating different technologies into products and markets due to technological challenges;
|
•
|
diversion of management's attention from our core business, including loss of management's focus on marketplace development;
|
•
|
assumption of product liabilities, including warranty costs, for third-party products;
|
•
|
increased costs due to required minimum purchase levels and commitments for payments to third parties;
|
•
|
difficulties and costs associated with evaluating and integrating the information systems and internal control systems of the acquired business;
|
•
|
reduction in our future operating results from amortization of intangible assets and possible future impairment of assets related to goodwill and other intangible assets resulting from an acquisition;
|
•
|
adverse effects on existing business relationships with suppliers and customers, including the potential loss of suppliers and customers of the acquired business;
|
•
|
assumption of liabilities, known and unknown, related to the acquired business in general, and litigation and other legal process involving the acquired business in particular, including intellectual property litigation risk;
|
•
|
entering geographic areas or distribution channels in which we have limited or no prior experience; and
|
•
|
those risks related to general economic and political conditions.
|
•
|
be expensive, time consuming and divert management attention away from normal business operations;
|
•
|
require us to pay monetary damages or enter into non-standard royalty and licensing agreements;
|
•
|
require us to modify our product sales and development plans; or
|
•
|
require us to satisfy indemnification obligations to our customers.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
Location
|
Purpose
|
Square
Feet
|
Owned or Leased
|
Lease Expires
|
Renewal Period
|
Walla Walla, Washington
|
Corporate office, manufacturing, research and development, sales and marketing, administration
|
173,000
|
Owned
|
n/a
|
n/a
|
Walla Walla, Washington
|
Customer Visitor Center, equipment demonstration facility
|
31,500
|
Leased
|
2020
|
One five-year renewal period
|
Redmond, Oregon
|
Manufacturing, research and development, sales, administration
|
19,000
|
Leased
|
2022
|
Two five-year renewal periods
|
Beusichem, The Netherlands
|
Manufacturing, sales and marketing, administration
|
45,000
|
Leased
|
2020
|
Five years
|
Beusichem, The Netherlands
|
Warehouse
|
11,000
|
Leased
|
2020
|
Five years
|
Hasselt, Belgium
|
Manufacturing, sales and marketing, research and development, administration
|
19,500
|
Leased
|
2016
|
Three years
|
ITEM 3.
|
LEGAL PROCEEDINGS.
|
ITEM 4.
|
MINE SAFETY DISCLOSURE.
|
ITEM 5.
|
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
|
Stock price by quarter
|
|
High
|
|
Low
|
||||
Fiscal year ended September 30, 2015
|
|
|
|
|
||||
First Quarter
|
|
$
|
14.10
|
|
|
$
|
12.25
|
|
Second Quarter
|
|
$
|
13.41
|
|
|
$
|
12.42
|
|
Third Quarter
|
|
$
|
13.30
|
|
|
$
|
12.55
|
|
Fourth Quarter
|
|
$
|
13.16
|
|
|
$
|
10.72
|
|
|
|
|
|
|
||||
Fiscal year ended September 30, 2014
|
|
|
|
|
||||
First Quarter
|
|
$
|
15.40
|
|
|
$
|
13.56
|
|
Second Quarter
|
|
$
|
14.74
|
|
|
$
|
10.75
|
|
Third Quarter
|
|
$
|
14.70
|
|
|
$
|
11.50
|
|
Fourth Quarter
|
|
$
|
13.25
|
|
|
$
|
11.95
|
|
Period
|
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
|
|||
July 1-31, 2015
|
|
377
|
|
|
$
|
12.70
|
|
|
—
|
|
|
August 1-31, 2015
|
|
109
|
|
|
12.03
|
|
|
—
|
|
|
|
September 1-30, 2015
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
|
486
|
|
|
$
|
12.55
|
|
|
—
|
|
429,202
(2)
|
(1)
|
Includes shares of restricted stock surrendered to satisfy tax withholding obligations by plan participants under our employee stock incentive plans. The shares were subsequently canceled.
|
(2)
|
We initiated a new stock repurchase program effective May 30, 2012. We were authorized to purchase up to 500,000 shares of our common stock under the program. The timing of any repurchases and the exact number of shares of common stock to be purchased will be determined by us and will depend on market conditions and other factors. The program does not incorporate a fixed expiration date.
|
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
||||||||||||
|
|
|
|
|
|
|
||||||||||||
Key Technology, Inc.
|
$
|
100.00
|
|
$
|
87.46
|
|
$
|
74.92
|
|
$
|
106.81
|
|
$
|
102.48
|
|
$
|
91.02
|
|
Russell Microcap Index
|
100.00
|
|
95.17
|
|
129.67
|
|
171.33
|
|
176.09
|
|
179.00
|
|
||||||
Peer Group
|
100.00
|
|
99.86
|
|
101.65
|
|
157.26
|
|
169.10
|
|
162.48
|
|
ITEM 6.
|
SELECTED FINANCIAL DATA.
|
|
|
Fiscal Year Ended September 30,
|
|||||||||||||||||||
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|||||||||||
|
|
(in thousands, except per share data)
|
|||||||||||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net sales
|
|
$
|
102,925
|
|
|
$
|
118,258
|
|
|
$
|
136,783
|
|
|
$
|
115,174
|
|
|
$
|
116,328
|
|
|
Cost of sales
|
|
74,111
|
|
|
83,961
|
|
|
90,739
|
|
|
79,339
|
|
|
78,531
|
|
||||||
Gross profit
|
|
28,814
|
|
|
34,297
|
|
|
46,044
|
|
|
35,835
|
|
|
37,797
|
|
||||||
Operating expenses
|
|
36,185
|
|
|
42,309
|
|
|
40,213
|
|
|
34,867
|
|
|
35,310
|
|
||||||
Gain (loss) on disposition of assets
|
|
13
|
|
|
7
|
|
|
42
|
|
|
(15
|
)
|
|
4
|
|
||||||
Income (loss) from operations
|
|
(7,358
|
)
|
|
(8,005
|
)
|
|
5,873
|
|
|
953
|
|
|
2,491
|
|
||||||
Other income (expense)
|
|
(621
|
)
|
|
(242
|
)
|
|
(460
|
)
|
|
(359
|
)
|
|
(542
|
)
|
||||||
Earnings (loss) from continuing operations before income taxes
|
|
(7,979
|
)
|
|
(8,247
|
)
|
|
5,413
|
|
|
594
|
|
|
1,949
|
|
||||||
Income tax (benefit) expense
|
|
(2,960
|
)
|
|
(2,834
|
)
|
|
1,402
|
|
|
145
|
|
|
495
|
|
||||||
Net earnings (loss)
|
|
$
|
(5,019
|
)
|
|
$
|
(5,413
|
)
|
|
$
|
4,011
|
|
|
$
|
449
|
|
|
$
|
1,454
|
|
|
Earnings (loss) per share
|
– basic
|
|
$
|
(0.80
|
)
|
|
$
|
(0.86
|
)
|
|
$
|
0.69
|
|
|
$
|
0.08
|
|
|
$
|
0.27
|
|
|
– diluted
|
|
$
|
(0.80
|
)
|
|
$
|
(0.86
|
)
|
|
$
|
0.69
|
|
|
$
|
0.08
|
|
|
$
|
0.27
|
|
Cash dividends per share
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Shares used in per share calculation
|
– basic
|
|
6,295
|
|
|
6,295
|
|
|
5,836
|
|
|
5,390
|
|
|
5,311
|
|
|||||
|
– diluted
|
|
6,295
|
|
|
6,295
|
|
|
5,855
|
|
|
5,399
|
|
|
5,329
|
|
|||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cash and cash equivalents and short-term investments
|
|
$
|
7,726
|
|
|
$
|
9,741
|
|
|
$
|
17,601
|
|
|
$
|
23,755
|
|
|
$
|
28,754
|
|
|
Working capital
|
|
34,831
|
|
|
38,203
|
|
|
42,338
|
|
|
44,136
|
|
|
42,484
|
|
||||||
Property, plant and equipment, net
|
|
14,799
|
|
|
16,652
|
|
|
17,259
|
|
|
18,370
|
|
|
19,433
|
|
||||||
Total assets
|
|
97,546
|
|
|
98,345
|
|
|
114,624
|
|
|
86,354
|
|
|
94,405
|
|
||||||
Current portion of long-term debt
|
|
705
|
|
|
804
|
|
|
871
|
|
|
364
|
|
|
345
|
|
||||||
Long-term debt, less current portion
|
|
5,149
|
|
|
4,733
|
|
|
5,612
|
|
|
4,833
|
|
|
5,197
|
|
||||||
Shareholders' equity
|
|
62,737
|
|
|
68,168
|
|
|
73,125
|
|
|
59,430
|
|
|
58,774
|
|
ITEM 7.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
•
|
Revenue recognition
|
•
|
Allowances for doubtful accounts
|
•
|
Valuation of inventories
|
•
|
Long-lived assets
|
•
|
Allowances for warranties
|
•
|
Accounting for income taxes
|
Comparison of Fiscal 2015 to Fiscal 2014
|
|
|
|
|
|
|
|
|
|||||||
|
|
Fiscal Year Ended September 30,
|
|||||||||||||
|
|
2015
|
|
2014
|
|
Change $
|
|
Change %
|
|||||||
|
|
(in thousands)
|
|||||||||||||
Statement of Operations Data
|
|
|
|
|
|
|
|
|
|||||||
Net sales
|
|
$
|
102,925
|
|
|
$
|
118,258
|
|
|
$
|
(15,333
|
)
|
|
(13.0
|
)
|
Gross profit
|
|
28,814
|
|
|
34,297
|
|
|
(5,483
|
)
|
|
(16.0
|
)
|
|||
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Sales and marketing
|
|
17,037
|
|
|
18,721
|
|
|
(1,684
|
)
|
|
(9.0
|
)
|
|||
Research and development
|
|
9,560
|
|
|
11,564
|
|
|
(2,004
|
)
|
|
(17.3
|
)
|
|||
General and administrative
|
|
8,104
|
|
|
10,286
|
|
|
(2,182
|
)
|
|
(21.2
|
)
|
|||
Amortization
|
|
1,484
|
|
|
1,738
|
|
|
(254
|
)
|
|
(14.6
|
)
|
|||
Total operating expense
|
|
36,185
|
|
|
42,309
|
|
|
(6,124
|
)
|
|
(14.5
|
)
|
|||
Gain (loss) on disposition of assets
|
|
13
|
|
|
7
|
|
|
6
|
|
|
85.7
|
|
|||
Income (loss) from operations
|
|
(7,358
|
)
|
|
(8,005
|
)
|
|
647
|
|
|
(8.1
|
)
|
|||
Other income (expense)
|
|
(621
|
)
|
|
(242
|
)
|
|
(379
|
)
|
|
156.6
|
|
|||
Income tax expense (benefit)
|
|
(2,960
|
)
|
|
(2,834
|
)
|
|
(126
|
)
|
|
4.4
|
|
|||
Net earnings (loss)
|
|
$
|
(5,019
|
)
|
|
$
|
(5,413
|
)
|
|
$
|
394
|
|
|
(7.3
|
)
|
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Cash and cash equivalents
|
|
$
|
7,726
|
|
|
$
|
9,741
|
|
|
$
|
(2,015
|
)
|
|
(20.7
|
)
|
Accounts receivable
|
|
14,836
|
|
|
12,557
|
|
|
2,279
|
|
|
18.1
|
|
|||
Inventories
|
|
31,297
|
|
|
26,673
|
|
|
4,624
|
|
|
17.3
|
|
|||
Other Data
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Orders for year ended September 30
|
|
114,758
|
|
|
110,469
|
|
|
4,289
|
|
|
3.9
|
|
|||
Backlog at fiscal year end
|
|
30,746
|
|
|
18,075
|
|
|
12,671
|
|
|
70.1
|
|
|
|
|
|
Payments due by period (in thousands)
|
||||||||||||||||
Contractual Obligations
(1)
|
|
Total
|
|
Less than 1 year
|
|
1 – 3 years
|
|
4 – 5 years
|
|
After 5 years
|
||||||||||
Long-term debt
|
|
$
|
5,854
|
|
|
$
|
705
|
|
|
$
|
5,149
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest on long-term debt
(2)
|
|
886
|
|
|
338
|
|
|
548
|
|
|
—
|
|
|
—
|
|
|||||
Operating leases
|
|
4,251
|
|
|
1,019
|
|
|
1,667
|
|
|
1,136
|
|
|
429
|
|
|||||
Purchase obligations
(3)
|
|
118
|
|
|
118
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual cash obligations
|
|
$
|
11,109
|
|
|
$
|
2,180
|
|
|
$
|
7,364
|
|
|
$
|
1,136
|
|
|
$
|
429
|
|
(1)
|
We also have
$93,000
of contractual obligations related to uncertain tax positions for which the timing and amount of payment cannot be reasonably estimated due to the nature of the uncertainties and the unpredictability of jurisdictional examinations in relation to the statute of limitations.
|
(2)
|
Includes the effect of the interest-rate swap agreement that fixes the interest rate at
6.20%
.
|
(3)
|
Purchase obligations are commitments to purchase certain materials and supplies which will be used in the ordinary course of business.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
|
•
|
Translation adjustments of $
(1.7) million
, net of income tax, were recognized as a component of comprehensive income as a result of converting the Euro denominated balance sheets of our European subsidiaries into U.S. dollars, and to a lesser extent, the Australian dollar balance sheet of our Australian subsidiary and Peso balance sheets of our Mexican subsidiaries.
|
•
|
Foreign exchange losses of $
155,000
, net of the effects of forward contracts settled during the year, were recognized in the other income and expense section of the consolidated statement of operations as a result of conversion of Euro and other foreign currency denominated receivables, intercompany loans, and cash carried on the balance sheet of the U.S. operations, as well as the result of the conversion of other non-functional currency receivables, payables and cash carried on the balance sheets of the European, Australian, and Mexican operations.
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|
Title
|
Page
|
|
Report of Independent Registered Public Accounting Firm
|
32
|
|
Report of Independent Registered Public Accounting Firm
|
33
|
|
Consolidated Balance Sheets at September 30, 2015 and 2014
|
34
|
|
Consolidated Statements of Operations for the three years ended September 30, 2015
|
36
|
|
Consolidated Statements of Comprehensive Income for the three years ended September 30, 2015
|
37
|
|
Consolidated Statements of Shareholders' Equity for the three years ended September 30, 2015
|
38
|
|
Consolidated Statements of Cash Flows for the three years ended September 30, 2015
|
39
|
|
Notes to Consolidated Financial Statements
|
41
|
|
Supplementary Data
|
61
|
|
KEY TECHNOLOGY, INC. AND SUBSIDIARIES
|
||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||||||
THREE YEARS ENDED SEPTEMBER 30, 2015
|
|
|
|
|
|
|
||||||
(In thousands)
|
|
|
|
|
|
|
||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
||||||
Net earnings (loss)
|
|
$
|
(5,019
|
)
|
|
$
|
(5,413
|
)
|
|
$
|
4,011
|
|
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
||||
Reclassification from Other comprehensive income
|
|
4
|
|
|
—
|
|
|
—
|
|
|||
Gain on disposition of assets
|
|
(13
|
)
|
|
(7
|
)
|
|
(42
|
)
|
|||
Foreign currency exchange (gain) loss
|
|
155
|
|
|
(105
|
)
|
|
146
|
|
|||
Depreciation and amortization
|
|
5,266
|
|
|
5,346
|
|
|
4,868
|
|
|||
Share based payments
|
|
1,485
|
|
|
1,445
|
|
|
1,276
|
|
|||
Excess tax benefit from share based payments
|
|
(16
|
)
|
|
(41
|
)
|
|
(40
|
)
|
|||
Deferred income taxes
|
|
(2,459
|
)
|
|
(33
|
)
|
|
(3,421
|
)
|
|||
Deferred rent
|
|
12
|
|
|
14
|
|
|
(5
|
)
|
|||
Bad debt expense
|
|
23
|
|
|
163
|
|
|
2
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|||||
Trade accounts receivable
|
|
(2,772
|
)
|
|
4,701
|
|
|
(5,511
|
)
|
|||
Inventories
|
|
(5,732
|
)
|
|
548
|
|
|
3,665
|
|
|||
Prepaid expenses and other current assets
|
|
470
|
|
|
240
|
|
|
(628
|
)
|
|||
Income taxes receivable
|
|
2,807
|
|
|
(2,802
|
)
|
|
241
|
|
|||
Patents
|
|
—
|
|
|
—
|
|
|
(135
|
)
|
|||
Accounts payable
|
|
4,881
|
|
|
(462
|
)
|
|
(123
|
)
|
|||
Accrued payroll liabilities and commissions
|
|
(198
|
)
|
|
(3,295
|
)
|
|
3,698
|
|
|||
Accrued customer support and warranty costs
|
|
113
|
|
|
(618
|
)
|
|
863
|
|
|||
Income taxes payable
|
|
(10
|
)
|
|
(444
|
)
|
|
367
|
|
|||
Other accrued liabilities
|
|
58
|
|
|
(708
|
)
|
|
556
|
|
|||
Customers' deposits
|
|
1,184
|
|
|
(2,244
|
)
|
|
(1,090
|
)
|
|||
Other
|
|
(287
|
)
|
|
(1
|
)
|
|
71
|
|
|||
Cash provided by (used in) operating activities
|
|
(48
|
)
|
|
(3,716
|
)
|
|
8,769
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
||||
Proceeds from sale of property
|
|
12
|
|
|
25
|
|
|
77
|
|
|||
Purchases of property, plant, and equipment
|
|
(2,067
|
)
|
|
(3,107
|
)
|
|
(2,468
|
)
|
|||
Cash paid for the acquisition of Visys, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(11,607
|
)
|
|||
Cash used in investing activities
|
|
(2,055
|
)
|
|
(3,082
|
)
|
|
(13,998
|
)
|
|||
|
|
|
|
|
|
(Continued)
|
|
1.
|
THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
|
2015
|
|
2014
|
||||
Beginning Balance
|
|
$
|
2,151
|
|
|
$
|
2,736
|
|
Warranty costs incurred
|
|
(3,604
|
)
|
|
(3,688
|
)
|
||
Warranty expense accrued
|
|
3,784
|
|
|
3,153
|
|
||
Translation adjustments
|
|
(76
|
)
|
|
(50
|
)
|
||
Ending balance
|
|
$
|
2,255
|
|
|
$
|
2,151
|
|
|
|
For the year ended September 30, 2015
|
|||||||||
|
|
Loss
|
|
Shares
|
|
Per-Share Amount
|
|||||
Basic EPS:
|
|
|
|
|
|
|
|||||
Net loss available to common shareholders
|
|
$
|
(5,019
|
)
|
|
6,295
|
|
|
$
|
(0.80
|
)
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|||||
Common stock options
|
|
—
|
|
|
—
|
|
|
|
|
||
Warrants
|
|
—
|
|
|
—
|
|
|
|
|||
Diluted EPS:
|
|
|
|
|
|
|
|||||
Net loss available to common shareholders plus assumed conversions
|
|
$
|
(5,019
|
)
|
|
6,295
|
|
|
$
|
(0.80
|
)
|
|
|
For the year ended September 30, 2014
|
|||||||||
|
|
Loss
|
|
Shares
|
|
Per-Share Amount
|
|||||
Basic EPS:
|
|
|
|
|
|
|
|||||
Net loss available to common shareholders
|
|
$
|
(5,413
|
)
|
|
6,295
|
|
|
$
|
(0.86
|
)
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|||||
Common stock options
|
|
—
|
|
|
—
|
|
|
|
|||
Warrants
|
|
—
|
|
|
—
|
|
|
|
|||
Diluted EPS:
|
|
|
|
|
|
|
|||||
Net loss available to common shareholders plus assumed conversions
|
|
$
|
(5,413
|
)
|
|
6,295
|
|
|
$
|
(0.86
|
)
|
|
|
For the year ended September 30, 2013
|
|||||||||
|
|
Earnings
|
|
Shares
|
|
Per-Share Amount
|
|||||
Basic EPS:
|
|
|
|
|
|
|
|||||
Net earnings available to common shareholders
|
|
$
|
4,011
|
|
|
5,836
|
|
|
$
|
0.69
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|||||
Common stock options
|
|
—
|
|
|
5
|
|
|
|
|||
Warrants
|
|
—
|
|
|
14
|
|
|
|
|||
Diluted EPS:
|
|
|
|
|
|
|
|||||
Net earnings available to common shareholders plus assumed conversions
|
|
$
|
4,011
|
|
|
5,855
|
|
|
$
|
0.69
|
|
|
|
For the year ended September 30,
|
|||||||
|
|
2015
|
|
2014
|
|
2013
|
|||
Common shares from:
|
|
|
|
|
|
|
|||
Assumed exercise of stock options
|
|
—
|
|
|
10,000
|
|
|
10,000
|
|
Warrants
|
|
250,000
|
|
|
250,000
|
|
|
—
|
|
2.
|
ACQUISITION
|
|
|
Amount
|
||
|
|
(in thousands)
|
||
Cash
|
|
$
|
13,200
|
|
Common shares of the Company issued (600,000)
|
|
7,327
|
|
|
Warrants issued (250,000)
|
|
727
|
|
|
Total
|
|
$
|
21,254
|
|
|
|
Amount
|
||
|
|
(in thousands)
|
||
Cash
|
|
$
|
1,593
|
|
Accounts receivable
|
|
668
|
|
|
Inventory
|
|
8,250
|
|
|
Property and equipment
|
|
299
|
|
|
Other assets
|
|
848
|
|
|
Intangible assets (identifiable)
|
|
11,400
|
|
|
Current liabilities, including current portion of long term debt
|
|
(5,609
|
)
|
|
Long term debt
|
|
(1,372
|
)
|
|
Deferred taxes
|
|
(3,794
|
)
|
|
Total identifiable net assets
|
|
12,283
|
|
|
Goodwill
|
|
8,971
|
|
|
|
|
$
|
21,254
|
|
|
|
Amount
|
|
Average Life
|
||
|
|
(in thousands)
|
|
(Years)
|
||
Developed technology
|
|
$
|
5,000
|
|
|
8
|
Patents
|
|
3,300
|
|
|
16
|
|
Non-compete agreements
|
|
1,600
|
|
|
3
|
|
Trade name
|
|
1,000
|
|
|
8
|
|
Customer relationships
|
|
500
|
|
|
4
|
|
|
|
$
|
11,400
|
|
|
|
|
|
|
||
|
|
Year Ended September 30,
|
||
|
|
2013
(unaudited)
|
||
Net sales
|
|
$
|
141,549
|
|
Net earnings
|
|
$
|
4,685
|
|
Pro forma net earnings per share
|
|
$
|
0.77
|
|
Pro forma weighted average shares outstanding
|
|
6,185
|
|
3.
|
GOODWILL AND OTHER INTANGIBLE ASSETS
|
|
|
Cost
|
|
Net Book Value
|
|
Amortization Life (Years)
|
|||||
Patents and developed technologies
|
|
$
|
17,435
|
|
|
$
|
5,297
|
|
|
3 to 16
|
|
Trademarks and trade names
|
|
858
|
|
|
581
|
|
|
8
|
|
||
Customer relationships
|
|
429
|
|
|
152
|
|
|
4
|
|
||
Non-compete agreements
|
|
1,373
|
|
|
191
|
|
|
3
|
|
||
|
|
|
|
|
|
|
|||||
|
|
$
|
20,095
|
|
|
$
|
6,221
|
|
|
|
Year Ended September 30,
|
(In thousands)
|
||
|
|
||
2016
|
$
|
1,035
|
|
2017
|
827
|
|
|
2018
|
751
|
|
|
2019
|
751
|
|
|
2020
|
751
|
|
|
Thereafter
|
2,106
|
|
|
Total
|
$
|
6,221
|
|
4.
|
TRADE ACCOUNTS RECEIVABLE
|
|
|
September 30,
|
||||||
|
|
2015
|
|
2014
|
||||
Trade accounts receivable
|
|
$
|
15,097
|
|
|
$
|
12,972
|
|
Allowance for doubtful accounts
|
|
(261
|
)
|
|
(415
|
)
|
||
Total trade accounts receivable, net
|
|
$
|
14,836
|
|
|
$
|
12,557
|
|
|
|
September 30,
|
||||||
|
|
2015
|
|
2014
|
||||
Purchased components and raw materials
|
|
$
|
14,291
|
|
|
$
|
10,321
|
|
Work-in-process and sub-assemblies
|
|
9,769
|
|
|
9,505
|
|
||
Finished goods
|
|
7,237
|
|
|
6,847
|
|
||
Total inventories
|
|
$
|
31,297
|
|
|
$
|
26,673
|
|
6.
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
September 30,
|
||||||
|
|
2015
|
|
2014
|
||||
Land and land improvements
|
|
$
|
2,596
|
|
|
$
|
2,596
|
|
Buildings and improvements
|
|
8,938
|
|
|
9,205
|
|
||
Manufacturing equipment
|
|
13,479
|
|
|
13,108
|
|
||
Computer equipment and software
|
|
20,865
|
|
|
18,591
|
|
||
Office equipment, furniture and fixtures
|
|
2,514
|
|
|
2,461
|
|
||
Construction in progress
|
|
245
|
|
|
1,623
|
|
||
|
|
48,637
|
|
|
47,584
|
|
||
Accumulated depreciation
|
|
(33,838
|
)
|
|
(30,932
|
)
|
||
Total property, plant and equipment, net
|
|
$
|
14,799
|
|
|
$
|
16,652
|
|
7.
|
INVESTMENT IN PRODITEC
|
8.
|
FINANCING AGREEMENTS
|
Year Ended September 30,
|
(In thousands)
|
||
2015
|
$
|
705
|
|
2016
|
585
|
|
|
2017
|
4,564
|
|
|
Total
|
$
|
5,854
|
|
9.
|
DERIVATIVE INSTRUMENTS
|
10.
|
FAIR VALUE MEASUREMENTS
|
•
|
Level 1 – Quoted prices for identical instruments in active markets.
|
•
|
Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs or significant value-drivers are observable in active markets.
|
•
|
Level 3 – Model-derived valuations in which one or more significant inputs or significant value-drivers are unobservable.
|
|
|
Fair Value Measurements at September 30, 2015,
(in thousands) |
||||||||||||
Description
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total Assets/Liabilities at Fair Value
|
||||||
Derivatives:
|
|
|
|
|
|
|
|
|
||||||
Interest rate swap
|
|
—
|
|
|
$
|
(249,000
|
)
|
|
—
|
|
|
$
|
(249,000
|
)
|
Forward exchange contracts
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
11.
|
LEASES
|
Year Ending September 30,
|
|
Rental Payments
|
|
Rental Expense
|
||||
2016
|
|
$
|
1,019
|
|
|
$
|
1,027
|
|
2017
|
|
881
|
|
|
885
|
|
||
2018
|
|
786
|
|
|
786
|
|
||
2019
|
|
678
|
|
|
674
|
|
||
2020
|
|
459
|
|
|
450
|
|
||
Thereafter
|
|
428
|
|
|
392
|
|
||
Total
|
|
$
|
4,251
|
|
|
$
|
4,214
|
|
12.
|
CONTRACTUAL GUARANTEES AND INDEMNITIES
|
13.
|
INCOME TAXES
|
|
|
Year Ended September 30,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
(320
|
)
|
|
$
|
(2,643
|
)
|
|
$
|
4,381
|
|
Foreign
|
|
27
|
|
|
3
|
|
|
14
|
|
|||
State
|
|
—
|
|
|
(27
|
)
|
|
387
|
|
|||
|
|
(293
|
)
|
|
(2,667
|
)
|
|
4,782
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
Federal
|
|
(1,981
|
)
|
|
563
|
|
|
(2,180
|
)
|
|||
Foreign
|
|
(505
|
)
|
|
(628
|
)
|
|
(1,092
|
)
|
|||
State
|
|
(127
|
)
|
|
(107
|
)
|
|
(110
|
)
|
|||
|
|
(2,613
|
)
|
|
(172
|
)
|
|
(3,382
|
)
|
|||
Valuation reserves:
|
|
|
|
|
|
|
||||||
Federal
|
|
54
|
|
|
50
|
|
|
137
|
|
|||
Foreign
|
|
(104
|
)
|
|
(46
|
)
|
|
(135
|
)
|
|||
State
|
|
(4
|
)
|
|
1
|
|
|
—
|
|
|||
|
|
(54
|
)
|
|
5
|
|
|
2
|
|
|||
Total income tax expense (benefit)
|
|
$
|
(2,960
|
)
|
|
$
|
(2,834
|
)
|
|
$
|
1,402
|
|
|
|
September 30,
|
||||||
|
|
2015
|
|
2014
|
||||
Deferred tax asset:
|
|
|
|
|
||||
Reserves and accruals
|
|
$
|
4,041
|
|
|
$
|
3,891
|
|
Tax benefits of share-based payments
|
|
686
|
|
|
684
|
|
||
NOL and other carry forwards
|
|
2,036
|
|
|
711
|
|
||
Unrealized changes in value of derivatives to equity
|
|
70
|
|
|
69
|
|
||
Deferred tax liability:
|
|
|
|
|
||||
Accumulated depreciation
|
|
(610
|
)
|
|
(946
|
)
|
||
Intangible assets
|
|
(2,361
|
)
|
|
(3,287
|
)
|
||
Translation adjustment to equity
|
|
883
|
|
|
21
|
|
||
Net deferred tax asset
|
|
$
|
4,745
|
|
|
$
|
1,143
|
|
Net deferred tax:
|
|
|
|
|
||||
Current asset
|
|
$
|
3,972
|
|
|
$
|
3,809
|
|
Long-term asset
|
|
2,917
|
|
|
615
|
|
||
Long-term liability
|
|
(2,144
|
)
|
|
(3,281
|
)
|
||
Net deferred tax asset
|
|
$
|
4,745
|
|
|
$
|
1,143
|
|
|
|
Year Ended September 30,
|
|||||||
|
|
2015
|
|
2014
|
|
2013
|
|||
Statutory rates
|
|
(34.0
|
)%
|
|
(34.0
|
)%
|
|
34.0
|
%
|
Increase (reduction) in income taxes resulting from:
|
|
|
|
|
|
|
|||
Domestic production deduction
|
|
—
|
%
|
|
1.3
|
%
|
|
(6.5
|
)%
|
Research and development credit
|
|
(0.1
|
)%
|
|
(1.3
|
)%
|
|
(6.2
|
)%
|
Changes in tax law, R&D credit
|
|
(3.8
|
)%
|
|
—
|
%
|
|
(3.5
|
)%
|
State income taxes, net of federal benefit
|
|
(1.1
|
)%
|
|
(1.0
|
)%
|
|
3.4
|
%
|
Rate differential, surtax on taxable income levels
|
|
—
|
%
|
|
(0.5
|
)%
|
|
0.8
|
%
|
Differences in foreign effective tax rates
|
|
1.3
|
%
|
|
0.4
|
%
|
|
0.1
|
%
|
Non-deductible acquisition costs
|
|
—
|
%
|
|
—
|
%
|
|
2.5
|
%
|
Valuation reserve-Proditec
|
|
—
|
%
|
|
0.1
|
%
|
|
—
|
%
|
Meals and entertainment deduction limitation
|
|
0.7
|
%
|
|
0.8
|
%
|
|
1.2
|
%
|
Other permanent differences
|
|
(0.1
|
)%
|
|
(0.2
|
)%
|
|
0.1
|
%
|
Income tax combined effective rate
|
|
(37.1
|
)%
|
|
(34.4
|
)%
|
|
25.9
|
%
|
Balance at October 1, 2014
|
$
|
109
|
|
Additions based on tax positions related to the current period
|
5
|
|
|
Reductions for tax positions of prior periods
|
(21
|
)
|
|
Balance at September 30, 2015
|
$
|
93
|
|
14.
|
SHARE-BASED COMPENSATION PLANS
|
|
|
Year Ended September 30,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Cost of goods sold
|
|
$
|
31
|
|
|
$
|
218
|
|
|
$
|
200
|
|
Operating expenses
|
|
1,454
|
|
|
1,227
|
|
|
1,076
|
|
|||
Total share-based compensation expense
|
|
1,485
|
|
|
1,445
|
|
|
1,276
|
|
|||
Income tax benefit
|
|
531
|
|
|
516
|
|
|
455
|
|
Options
|
|
Number of Shares
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Term
|
|
Aggregate Intrinsic Value ($000)
|
|||||
Outstanding at October 1, 2014
|
|
10,000
|
|
|
$
|
9.64
|
|
|
—
|
|
|
—
|
|
Granted
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Exercised
|
|
(10,000
|
)
|
|
$
|
9.64
|
|
|
—
|
|
|
—
|
|
Forfeited or expired
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
Outstanding at September 30, 2015
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at September 30, 2015
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Service-Based Stock Awards
|
|
Number of Shares
|
|
Weighted-Average Grant Date Fair Value per Share
|
|||
Non-vested balance at October 1, 2014
|
|
271,278
|
|
|
$
|
12.66
|
|
Granted
|
|
84,108
|
|
|
$
|
12.78
|
|
Vested
|
|
(116,937
|
)
|
|
$
|
12.49
|
|
Forfeited
|
|
(5,600
|
)
|
|
$
|
12.95
|
|
Non-vested and expected to vest balance at September 30, 2015
|
|
232,849
|
|
|
$
|
12.77
|
|
Performance-Based Stock Awards
|
|
Number of Shares
|
|
Weighted-Average Grant Date Fair Value per Share
|
|||
Non-vested balance at October 1, 2014
|
|
231,218
|
|
|
$
|
13.57
|
|
Granted
|
|
65,284
|
|
|
$
|
13.02
|
|
Vested
|
|
—
|
|
|
$
|
—
|
|
Forfeited
|
|
(57,781
|
)
|
|
$
|
11.39
|
|
Non-vested balance at September 30, 2015
|
|
238,721
|
|
|
$
|
13.95
|
|
15.
|
STOCK REPURCHASE PROGRAM
|
16.
|
EMPLOYEE BENEFIT PLANS
|
17.
|
SEGMENT INFORMATION
|
|
|
Year Ended September 30,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Net sales by product category:
|
|
|
|
|
|
|
||||||
Automated inspection systems
|
|
$
|
37,529
|
|
|
$
|
55,829
|
|
|
$
|
59,336
|
|
Process systems
|
|
37,768
|
|
|
34,580
|
|
|
50,729
|
|
|||
Parts and service
|
|
27,628
|
|
|
27,849
|
|
|
26,718
|
|
|||
Total net sales by product category
|
|
$
|
102,925
|
|
|
$
|
118,258
|
|
|
$
|
136,783
|
|
|
|
Year Ended September 30,
|
||||||||||
|
|
2015
|
|
2014
|
|
2013
|
||||||
Net sales:
|
|
|
|
|
|
|
||||||
Domestic
|
|
$
|
51,954
|
|
|
$
|
61,421
|
|
|
$
|
75,423
|
|
International
|
|
50,971
|
|
|
56,837
|
|
|
61,360
|
|
|||
Total net sales
|
|
$
|
102,925
|
|
|
$
|
118,258
|
|
|
$
|
136,783
|
|
Long-lived assets:
|
|
|
|
|
|
|
||||||
Domestic
|
|
$
|
15,590
|
|
|
$
|
17,221
|
|
|
|
|
|
International
|
|
16,782
|
|
|
20,438
|
|
|
|
|
|||
Total long-lived assets
|
|
$
|
32,372
|
|
|
$
|
37,659
|
|
|
|
|
2015 Quarter Ended
|
|
December 31
|
|
March 31
|
|
June 30
|
|
September 30
|
|
Total
|
||||||||||
Net sales
|
|
$
|
20,091
|
|
|
$
|
21,581
|
|
|
$
|
30,810
|
|
|
$
|
30,443
|
|
|
$
|
102,925
|
|
Gross profit
|
|
5,476
|
|
|
5,705
|
|
|
9,237
|
|
|
8,395
|
|
|
28,814
|
|
|||||
Net earnings(loss)
|
|
(1,828
|
)
|
|
(1,947
|
)
|
|
295
|
|
|
(1,540
|
)
|
|
(5,019
|
)
|
|||||
Net earnings(loss) per share - basic
|
|
$
|
(0.29
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
0.05
|
|
|
$
|
(0.24
|
)
|
|
$
|
(0.80
|
)
|
Net earnings(loss) per share - diluted
|
|
$
|
(0.29
|
)
|
|
$
|
(0.31
|
)
|
|
$
|
0.05
|
|
|
$
|
(0.24
|
)
|
|
$
|
(0.80
|
)
|
2014 Quarter Ended
|
|
December 31
|
|
March 31
|
|
June 30
|
|
September 30
|
|
Total
|
||||||||||
Net sales
|
|
$
|
22,725
|
|
|
$
|
31,598
|
|
|
$
|
31,292
|
|
|
$
|
32,643
|
|
|
$
|
118,258
|
|
Gross profit
|
|
6,170
|
|
|
10,264
|
|
|
8,150
|
|
|
9,713
|
|
|
34,297
|
|
|||||
Net loss
|
|
(2,606
|
)
|
|
(697
|
)
|
|
(2,023
|
)
|
|
(88
|
)
|
|
(5,413
|
)
|
|||||
Net loss per share - basic
|
|
$
|
(0.42
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.32
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.86
|
)
|
Net loss per share - diluted
|
|
$
|
(0.42
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
(0.32
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.86
|
)
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|
ITEM 9A.
|
CONTROLS AND PROCEDURES.
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNACE.
|
ITEM 11.
|
EXECUTIVE COMPENSATION.
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
|
(a)
|
The following documents are filed as part of this report:
|
Reference is made to Part II, Item 8, for a listing of required financial statements filed with this report
|
31
|
|
Financial statement schedules are omitted because they are not applicable or the required information is included in the accompanying consolidated financial statements or notes thereto.
|
(3)
|
Articles of Incorporation and Bylaws
|
(3.1)
|
Registrant’s Restated Articles of Incorporation of Key Technology, Inc. (as of May 6, 2008) (filed as Exhibit 3.1 to the Form 10-Q filed with the Securities and Exchange Commission on May 9, 2008 and incorporated herein by reference)
|
(3.2)
|
Registrant’s Amended and Restated Bylaws (as amended through May 13, 2009) (filed as Exhibit 3.2 to the Form 10-K filed with the SEC on December 9, 2011 and incorporated herein by reference)
|
(4)
|
Instruments defining the rights of security holders, including indentures
|
(4.1)
|
Registrant’s Second Amended and Rested Rights Agreement, dated as of November 13, 2007, between the Registrant and American Stock Transfer & Trust Company (filed as Exhibit 10.1 to the Form 8-K filed with the Securities and Exchange Commission on November 19, 2007 and incorporated herein by reference)
|
(4.2)
|
Registrant’s Amendment No. 1 to Second Amended and Restated Rights Agreement, dated as of November 13, 2007, between the Registrant and American Stock Transfer & Trust Company (attached hereto as Exhibit 4.2)
|
(10)
|
Material contracts
|
(10.1)*
|
Restated 1996 Employee Stock Purchase Plan (including Amendment No. 1) (filed as Exhibit 10.1 to the Form 10-Q filed with the Securities and Exchange Commission on May 12, 2006 and incorporated herein by reference)
|
(10.2)*
|
2003 Restated Employees’ Stock Incentive Plan (as approved by the shareholders of the Company on February 6, 2008) (filed as Exhibit 10.1 to the Form 8-K filed with the Securities and Exchange Commission on April 28, 2008 and incorporated herein by reference)
|
(10.3)*
|
Form of Restricted Stock Bonus Agreement (Continued Employment Vesting) (filed as Exhibit 10.11 to the Form 10-K filed with the Securities and Exchange Commission on December 11, 2009 and incorporated herein by reference)
|
(10.4)*
|
Form of Restricted Stock Bonus Agreement (Performance Vesting) (filed as Exhibit 10.12 to the Form 10-K filed with the Securities and Exchange Commission on December 11, 2009 and incorporated herein by reference)
|
(10.5)*
|
Form of Restricted Stock Bonus Agreement (Three-Year Performance Vesting) (filed as Exhibit 10.13 to the Form 10-K filed with the Securities and Exchange Commission on December 11, 2009 and incorporated herein by reference)
|
(10.6)*
|
2010 Equity Incentive Plan (as approved by the shareholders of the Company on February 11, 2011) (filed as Appendix A to the Company’s Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on January 3, 2011 and incorporated herein by reference)
|
(10.7)
|
Share Purchase Agreement dated February 24, 2013 between Key Technology, Inc., Key Technology Holdings USA LLC and Visys N.V. (filed as Exhibit 10.1 to the Form 8-K filed with the Securities and Exchange Commission on February 28, 2013 and incorporated herein by reference)
|
(10.8)
|
Credit Agreement between Visys NV and KBC Bank NV, dated October 7, 2004 (filed as Exhibit 10.2 to the Form 10-Q filed with the Securities and Exchange Commission on May 9, 2013 and incorporated herein by reference)
|
(10.9)
|
Revolving Credit, Term Loan and Security Agreement dated July 20, 2015, between Key Technology, Inc. and PNC Bank, National Association (filed as Exhibit 10.1 to the Form 8-K filed with the Securities and Exchange Commission on July 23, 2015 and incorporated herein by reference)
|
(10.10)
|
Amendment No. 1 to Loan Agreement, dated September 18, 2015, between Key Technology, Inc. and PNC Bank, National Association (attached hereto as Exhibit 10.10)
|
(14)
|
Registrant’s amended Code of Business Conduct and Ethics, dated February 4, 2014 (filed as Exhibit 14.1 to the Form 8-K filed with the Securities and Exchange Commission on February 10, 2014 and incorporated herein by reference)
|
(21)
|
List of Subsidiaries
|
(23.1)
|
Consent of Independent Registered Public Accounting Firm
|
(31.1)
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
(31.2)
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
(32.1)
|
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
(32.2)
|
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
(101)
|
The following materials from Key Technology, Inc.’s Annual Report on Form 10-K for the year ended September 30, 2015, formatted in XBRL (eXtensible Business Reporting Language); (i) Consolidated Balance Sheets at September 30, 2015 and September 30, 2014, (ii) Consolidated Statements of Operations for the three years ended September 30, 2015, (iii) Consolidated Statements of Comprehensive Income for the three years ended September 30, 2015; (iv) Consolidated Statements of Shareholders’ Equity for the three years ended September 30, 2015, (v) Consolidated Statements of Cash Flows for the three years ended September 30, 2015, and (vi) Notes to Consolidated Financial Statements for the three years ended September 30, 2015.
|
|
KEY TECHNOLOGY, INC.
|
|
|
|
|
|
By:
|
/s/ John J. Ehren
|
|
|
John J. Ehren
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
By:
|
/s/ Jeffrey T. Siegal
|
|
|
Jeffrey T. Siegal
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
/s/ Charles H. Stonecipher
|
|
December 11, 2015
|
Charles H. Stonecipher, Chairman
|
|
|
|
|
|
/s/ John E. Pelo
|
|
December 11, 2015
|
John E. Pelo, Director
|
|
|
|
|
|
/s/ Richard Lawrence
|
|
December 11, 2015
|
Richard Lawrence, Director
|
|
|
|
|
|
/s/ Michael L. Shannon
|
|
December 11, 2015
|
Michael L. Shannon, Director
|
|
|
|
|
|
/s/ Donald A. Washburn
|
|
December 11, 2015
|
Donald A. Washburn, Director
|
|
|
|
|
|
/s/ John J. Ehren
|
|
December 11, 2015
|
John J. Ehren, Director
|
|
|
|
|
|
/s/ Frank L. A. Zwerts
|
|
December 11, 2015
|
Frank L. A. Zwerts, Director
|
|
|
|
|
|
/s/ Paul J. Wolf
|
|
December 11, 2015
|
Paul J. Wolf, Director
|
|
|
4.2
|
Registrant's Amendment No. 1 to Second Amended and Restated Rights Agreement, dated as of November 13, 2007, between the Registrant and American Stock Transfer & Trust Company
|
10.10
|
Amendment No. 1 to Loan Agreement, dated September 18, 2015, between Key Technology, Inc. and PNC Bank, National Association
|
21
|
List of Subsidiaries
|
23.1
|
Consent of Independent Registered Public Accounting Firm
|
31.1
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2
|
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1
|
Certification pursuant to 18 U.S. C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2
|
Certification pursuant to 18 U.S. C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101
|
The following materials from Key Technology, Inc.’s Annual Report on Form 10-K for the year ended September 30, 2015, formatted in XBRL (eXtensible Business Reporting Language); (i) Consolidated Balance Sheets at September 30, 2015 and September 30, 2014, (ii) Consolidated Statements of Operations for the three years ended September 30, 2015, (iii) Consolidated Statements of Comprehensive Income for the three years ended September 30, 2015, (iv) Consolidated Statements of Shareholders’ Equity for the three years ended September 30, 2015, (v) Consolidated Statements of Cash Flows for the three years ended September 30, 2015, and (vi) Notes to Consolidated Financial Statements for the three years ended September 30, 2015.*
*Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto 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, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
|
·
|
Key Technology Holdings USA LLC (Oregon)
|
·
|
Suplusco Holding B.V. (the Netherlands)
|
·
|
Key Technology B.V. (the Netherlands)
|
·
|
Visys N.V. (Belgium)
|
·
|
Key Technology Australia Pty Ltd. (Australia)
|
·
|
Productos Key Mexicana S. de R.L. de C.V. (Mexico)
|
·
|
Administracion Key Mexicana S. de R.L. de C.V. (Mexico)
|
·
|
Key Technology (Shanghai) Trading Co. Ltd. (China)
|