UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 28, 2005
KEY TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
OREGON 0-21820 93-0822509
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
150 Avery Street
Walla Walla, Washington 99362
(Address of principal executive offices) (Zip Code)
(509) 529-2161
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review
(a) Restatement and Non-Reliance
In the course of completing audit procedures relating to the financial
statements of Key Technology, Inc. (the "Company") for the year ended September
30, 2005, the Company's independent registered public accounting firm, Grant
Thornton LLP ("Grant Thornton"), identified certain proposed adjustments in the
Company's financial statements for the year ended September 30, 2005. Upon
considering this information, the Company's management determined that
adjustments relating to lease accounting also affected the Company's interim
financial statements and other financial information for the quarters ended
March 31, 2005 and June 30, 2005, and the Audit Committee of the Board of
Directors of the Company authorized management to amend and restate the
financial statements and other financial information for these interim periods.
In light of the restatement, investors should no longer rely on the Company's
previously filed financial statements and other financial information for each
of the Company's fiscal quarters ended March 31, 2005 and June 30, 2005.
Background
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The Company has agreements with the Port of Walla Walla, Washington to lease two
operating facilities, the lease on one of which expires on December 31, 2005.
The Company has undertaken in 2005 to consolidate its operations into one
facility by the end of calendar 2005 and modified one of its leases to add
additional leased space and to extend the lease term through 2020. As a result
of the consolidation of facilities and expiration of the lease on one operating
facility, the Company reduced deferred rent credits over the remaining term of
the expiring lease beginning in the second quarter of fiscal 2005 and continuing
through the end of fiscal 2005.
However, management has subsequently concluded that (a) the accounting treatment
to be used for the deferred rent credits relating to the expiring lease is to
amortize the credits over the remaining term of the continuing operating
facility lease; (b) the Company's quarterly reports previously filed with
respect to the fiscal quarters ended March 31, 2005 and June 30, 2005 should be
restated; and (c) no reliance should be placed on the Company's previously
issued financial statements for the quarters ended March 31, 2005 and June 30,
2005.
As a result of these conclusions and the authorization by the Audit Committee,
the Company will file restated financial statements for the quarterly periods
ended March 31, 2005 and June 30, 2005 as amendments to its periodic reports
filed with the Securities and Exchange Commission as soon as practicable.
Accordingly, the previously issued financial statements for the quarterly
periods ended March 31, 2005 and June 30, 2005 should no longer be relied upon.
The effect of the restatement will be to increase rental expense for each of the
last three quarterly interim periods of 2005 and to reduce net earnings for such
interim periods and fiscal 2005 by approximately $360,000 before income taxes.
In addition, the adoption of the revised accounting treatment will be to reduce
rental expense in future periods during the existence of the continuing
operating facility lease.
The following table sets forth the effect of the restatement on the Company's
net earnings for the fiscal quarters ended March 31, 2005 and June 30, 2005:
Quarter ended
March 31, 2005 June 30, 2005
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Net earnings - as restated $ 62 $2,646
Net earnings - as reported $ 167 $2,709
Net earnings per share (basic) - as restated $0.01 $ 0.52
Net earnings per share (basic) - as reported $0.03 $ 0.53
Net earnings per share (diluted) - as restated $0.01 $ 0.51
Net earnings per share (diluted) - as reported $0.03 $ 0.52
The members of the Audit Committee discussed the above-referenced matters with
Grant Thornton and, subsequent to such discussion, reviewed the matters
discussed in this report.
A press release disclosing the restatements and certain other year-end
adjustments is attached to this Current Report on Form 8-K as Exhibit 99.1.
Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
99.1 Press release of Key Technology, Inc. dated December 28, 2005
SIGNATURES
Pursuant to the requirements 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.
KEY TECHNOLOGY, INC.
/s/ RONALD W. BURGESS
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Ronald W. Burgess
Senior Vice President and Chief
Financial Officer
Dated: December 28, 2005
EXHIBIT INDEX
Exhibit No. Description
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99.1 Press release of Key Technology, Inc. dated December 28, 2005