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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0000719733-01-500016.txt : 20010515
<SEC-HEADER>0000719733-01-500016.hdr.sgml : 20010515
ACCESSION NUMBER:		0000719733-01-500016
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20010331
FILED AS OF DATE:		20010514

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			KEY TRONIC CORP
		CENTRAL INDEX KEY:			0000719733
		STANDARD INDUSTRIAL CLASSIFICATION:	COMPUTER PERIPHERAL EQUIPMENT, NEC [3577]
		IRS NUMBER:				910849125
		STATE OF INCORPORATION:			WA
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		
		SEC FILE NUMBER:	000-11559
		FILM NUMBER:		1633802

	BUSINESS ADDRESS:	
		STREET 1:		P O BOX 14687
		CITY:			SPOKANE
		STATE:			WA
		ZIP:			99216
		BUSINESS PHONE:		5099288000

	MAIL ADDRESS:	
		STREET 1:		P O BOX 14687
		CITY:			SPOKANE
		STATE:			WA
		ZIP:			99214
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>a10q4.htm
<DESCRIPTION>10Q FOR MARCH 31, 2001
<TEXT>

<HTML>
<HEAD>
<TITLE>Key Tronic Corporation - 10Q-Q4-2001</TITLE>
</HEAD>
<BODY BGCOLOR="FFFFFF" LINK=BLUE VLINK=PURPLE>
<A NAME="TOP">
<HR NOSHAD>

<P ALIGN="CENTER"><FONT SIZE=5 COLOR=#000080><B>SECURITIES AND EXCHANGE COMMISSION<BR></B></FONT><FONT SIZE=2>Washington, D.C. 20549</FONT></P>

<BR>
<BR>

<HR NOSHAD WIDTH="120">

<P ALIGN="CENTER"><FONT SIZE=5 COLOR=#000080><B>FORM 10-Q</B></FONT></P>

<HR NOSHAD WIDTH="120">

<BR>
<BR>

<P ALIGN="CENTER"><FONT SIZE=3><B>QUARTERLY REPORT UNDER SECTION 13 or 15(d)</B></FONT><BR><FONT SIZE=3><B>OF THE SECURITIES AND EXCHANGE ACT OF 1934</B></FONT></P>
<BR><BR>

<TABLE WIDTH="95%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
	<TD WIDTH="35%"ALIGN="LEFT"><FONT SIZE=2>Quarter Ended March 31, 2001<BR></FONT><FONT SIZE=2>&nbsp;</TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="22%"ALIGN="RIGHT"><FONT SIZE=2>Commission File Number
</FONT><FONT SIZE=2><BR>Number 0-11559</FONT></TD>
</TR>
</TABLE>

<BR>
<BR>

<P ALIGN="CENTER"><FONT SIZE=5><B>KEY TRONIC CORPORATION</B></FONT></P>

<BR>
<BR>

<TABLE WIDTH="95%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
	<TD WIDTH="35%" ALIGN="LEFT"><FONT SIZE=2>Washington<BR></FONT><FONT SIZE=2>(State of Incorporation)</TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="22%" ALIGN="RIGHT"><FONT SIZE=2>91-089125
</FONT><FONT SIZE=2><BR>(I.R.S. Employer</FONT><BR><FONT SIZE=2>Identification No.)</FONT></TD>
</TR>
</TABLE>
<BR>
<BR>

<HR NOSHAD WIDTH="120">

<P ALIGN="CENTER"><FONT SIZE=2>North 4424 Sullivan Road<BR></FONT><FONT SIZE=2>Spokane, Washington 99216</FONT><BR><FONT SIZE=2>(509) 928-8000</FONT></P>
<BR>
<BR>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 / &nbsp; X &nbsp; / No / &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/.</P>
<BR><BR>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At May 9, 2001, 9,672,580 shares of Common Stock, no par value (the only class of common stock), were outstanding.</P>

<P ALIGN="CENTER"><FONT SIZE=1>Page 1</FONT></P>
<BR><BR>
<BR><BR><BR>

<P ALIGN="CENTER"><FONT SIZE=2><B>KEY TRONIC CORPORATION</B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>Index</FONT></P>
<A NAME="INDEX">

<DIV ALIGN="CENTER"><TABLE WIDTH="78%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
	<TD WIDTH="11%"ALIGN="LEFT"><FONT SIZE=2></FONT><BR><FONT SIZE=2><B>Part I.</B></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="77%" ALIGN="LEFT"><FONT SIZE=2><BR></FONT><BR><FONT SIZE=2><B>FINANCIAL INFORMATION</B></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="8%" ALIGN="CENTER"><FONT SIZE=2><B>Page No.</B></FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="11%"><FONT SIZE=2><B>&nbsp;&nbsp;</B></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;&nbsp;</B></FONT></TD>
	<TD WIDTH="77%"><FONT SIZE=2><B>&nbsp;&nbsp;</B></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;&nbsp;</B></FONT></TD>
	<TD WIDTH="8%" VALIGN="TOP"><FONT SIZE=2><B>&nbsp;&nbsp;</B></FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;<BR>Item 1.</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="77%"><FONT SIZE=2>&nbsp;<BR><A HREF="#CONSOLIDATED BALANCE SHEETS">Consolidated Balance Sheets - March 31, 2001 (Unaudited) and July 1, 2000</A></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;&nbsp;</B></FONT></TD>
	<TD WIDTH="8%" VALIGN="TOP"><FONT SIZE=2>&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;3-4</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="77%"><FONT SIZE=2>&nbsp;<BR><A HREF="#CONSOLIDATED STATEMENTS OF INCOME">Consolidated Statements of Income (Unaudited) Third Quarters Ended March 31, 2001 and April 1, 2000</A></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;&nbsp;</B></FONT></TD>
	<TD WIDTH="8%" VALIGN="TOP"><FONT SIZE=2>&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;5</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="77%"><FONT SIZE=2>&nbsp;<BR><A HREF="#CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)">Consolidated Statements of Income (Unaudited) Three Quarters Ended March 31, 2001 and April 1, 2000</A></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;&nbsp;</B></FONT></TD>
	<TD WIDTH="8%" VALIGN="TOP"><FONT SIZE=2>&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;6</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="BOTTOM">
	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="77%"><FONT SIZE=2>&nbsp;<BR><A HREF="#CONSOLIDATED STATEMENTS OF CASH FLOWS">Consolidated Statements of Cash Flows (Unaudited) Third Quarters Ended March 31, 2001 and April 1, 2000</A></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;&nbsp;</B></FONT></TD>
	<TD WIDTH="8%" VALIGN="TOP"><FONT SIZE=2>&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;7</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;<BR>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="77%"><FONT SIZE=2>&nbsp;<BR><A HREF="#NOTES TO CONSOLIDATED FINANCIAL STATEMENTS">Notes to Consolidated Financial Statements</A></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;&nbsp;</B></FONT></TD>
	<TD WIDTH="8%" VALIGN="TOP"><FONT SIZE=2>&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;8-9</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;<BR>Item 2.</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="77%"><FONT SIZE=2>&nbsp;<BR><A HREF="#MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS">Management's Discussion and Analysis of Financial Condition and Results of Operations</A></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;&nbsp;</B></FONT></TD>
	<TD WIDTH="8%" VALIGN="TOP"><FONT SIZE=2>&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;10-14</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="11%"><FONT SIZE=2><B>&nbsp;&nbsp;</B></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;&nbsp;</B></FONT></TD>
	<TD WIDTH="77%"><FONT SIZE=2><B>&nbsp;&nbsp;</B></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;&nbsp;</B></FONT></TD>
	<TD WIDTH="8%" VALIGN="TOP"><FONT SIZE=2><B>&nbsp;&nbsp;</B></FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="11%"ALIGN="LEFT"><FONT SIZE=2><B>Part II.<BR></B></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="77%" ALIGN="LEFT"><FONT SIZE=2><B><A HREF="#OTHER INFORMATION">OTHER INFORMATION</A><BR></B></FONT></B></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="8%" ALIGN="CENTER"><FONT SIZE=2><B><BR></B></FONT></TD>
<TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;<BR>Item 1.</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="77%"><FONT SIZE=2>&nbsp;<BR><A HREF="#LEGAL PROCEEDINGS">Legal Proceedings</A></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;&nbsp;</B></FONT></TD>
	<TD WIDTH="8%" VALIGN="TOP"><FONT SIZE=2>&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;15</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;<BR>Item 4.</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="77%"><FONT SIZE=2>&nbsp;<BR><A HREF="#SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS">Submission of Matters to a Vote of Security Holders</A></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;&nbsp;</B></FONT></TD>
	<TD WIDTH="8%" VALIGN="TOP"><FONT SIZE=2>&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;15</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;<BR>Item 5.</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="77%"><FONT SIZE=2>&nbsp;<BR><A HREF="#OTHER EVENTS">Other Events</A></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;&nbsp;</B></FONT></TD>
	<TD WIDTH="8%" VALIGN="TOP"><FONT SIZE=2>&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;15</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;<BR>Item 6.</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="77%"><FONT SIZE=2>&nbsp;<BR><A HREF="#EXHIBITS AND REPORTS ON FORM 8-K">Exhibits and Reports on Form 8-K</A></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;&nbsp;</B></FONT></TD>
	<TD WIDTH="8%" VALIGN="TOP"><FONT SIZE=2>&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;15</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="11%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="77%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;&nbsp;</B></FONT></TD>
	<TD WIDTH="8%" VALIGN="TOP"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
</TR>
</TABLE>

<P ALIGN="CENTER"><FONT SIZE=1>Page 2</FONT></P>

<A NAME="CONSOLIDATED BALANCE SHEETS">

<P ALIGN="CENTER"><FONT SIZE=2><B>KEY TRONIC CORPORATION AND SUBSIDIARIES</B><BR></FONT><FONT SIZE=2><B>CONSOLIDATED BALANCE SHEETS</B></FONT><BR><FONT SIZE=2>(in thousands)</FONT></P>

<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
	<TD WIDTH="65%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TD>
	<TD WIDTH="2%" <FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="25%" COLSPAN=2 ALIGN="RIGHT"><FONT SIZE=2><B>March 31,<BR>2001</B></FONT><HR NOSHAD><FONT SIZE=2>(Unaudited)</TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="25%" COLSPAN=2 ALIGN="RIGHT"><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;July 1,<BR>2000</B></FONT><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="99%" COLSPAN=7 ALIGN="LEFT"><FONT SIZE=2><B>Assets</B></FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Current assets:</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>2,483</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,013</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Trade receivables, less allowance for doubtful accounts of $381 and $855</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>28,506</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>34,008</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Inventories</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>24,374</FONT></TD>

	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>22,720</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Real estate held for sale</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,733</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,843</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Deferred income tax asset -- current, net</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>860</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>889</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Customer tooling</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>542</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,748</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Other</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>7,337</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>6,565</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>65,835</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>68,786</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Property, plant and equipment - at cost</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>101,464</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>103,175</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;less accumulated depreciation</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>84,040</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>81,825</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total property, plant and equipment</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>17,424</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>21,350</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Other assets:</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Deferred income tax asset, net</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>3,657</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>3,627</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Other (net of accumulated amortization of $1,093 and $964)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>550</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,031</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Goodwill (net of accumulated amortization of $863 and $767)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>925</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,021</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>88,391</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>95,815</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="99%" COLSPAN=7 ALIGN="LEFT"><FONT SIZE=2>See accompanying notes to consolidated financial statements.</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>

<A HREF="#INDEX">Return to Index.</A>

<P ALIGN="CENTER"><FONT SIZE=1>Page 3</FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B></B><BR></FONT><FONT SIZE=2><B></B></FONT><BR><FONT SIZE=1></B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>KEY TRONIC CORPORATION AND SUBSIDIARIES</B></FONT><BR><FONT SIZE=2><B>CONSOLIDATED BALANCE SHEETS</B></FONT><BR><FONT SIZE=2>(in thousands)</FONT></P>

<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
	<TD WIDTH="65%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15" COLSPAN=2 ALIGN="RIGHT"><FONT SIZE=2><B>March 31,<BR>2001</B></FONT><HR NOSHAD><FONT SIZE=2>(Unaudited)</TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;July 1, <BR>2000</B></FONT><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="99%" COLSPAN=7 ALIGN="LEFT"><FONT SIZE=2><B>LIABILITIES AND SHAREHOLDERS' EQUITY</B></FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Current liabilities:</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Current portion of long-term obligations</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>13,398</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,105</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Accounts payable</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>23,640</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>24,315</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Accrued compensation and vacation</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>3,006</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,303</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Accrued taxes other than income taxes</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,069</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,146</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Interest payable</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>32</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>54</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Deferred sales proceeds</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>3,077</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Other</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>2,732</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,735</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>46,954</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>31,658</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Long-term obligations, less current portion</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,272</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>17,555</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Commitments and contingencies (Notes 2 and 3)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Shareholders' equity:</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Common stock, no par value, authorized 25,000 shares; issued and outstanding 9,673 and 9,641 shares</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>38,393</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>38,304</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Retained earnings</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,527</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>8,053</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Accumulated other comprehensive income</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>245</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>245</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' equity</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>40,165</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>46,602</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>88,391</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>95,815</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="99%" COLSPAN=7 ALIGN="LEFT"><FONT SIZE=2>See accompanying notes to consolidated financial statements.</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>

<A HREF="#INDEX">Return to Index.</A>

<P ALIGN="CENTER"><FONT SIZE=1>Page 4</FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B></B><BR></FONT><FONT SIZE=2><B></B></FONT><BR><FONT SIZE=2></B></FONT></P>

<A NAME="CONSOLIDATED STATEMENTS OF INCOME">

<P ALIGN="CENTER"><FONT SIZE=2><B>KEY TRONIC CORPORATION AND SUBSIDIARIES</B><BR></FONT><FONT SIZE=2><B>CONSOLIDATED STATEMENTS OF INCOME</B><BR></FONT><FONT SIZE=2>(Unaudited)</FONT></P>

<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="99%" COLSPAN=7 ALIGN="RIGHT"><FONT SIZE=2>Third Quarters Ended&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR>
	<TD WIDTH="65%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TD>
	<TD WIDTH="2%" <FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><FONT SIZE=2><B>March 31,<BR> 2001</B></FONT><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><FONT SIZE=2><B>April 1,<BR> 2000</B></FONT><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="99%" COLSPAN=7 ALIGN="RIGHT"><FONT SIZE=2>(in thousands, except per share amounts)</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="64%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="64%"><FONT SIZE=2>Net sales</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>32,228</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>34,342</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65"><FONT SIZE=2>Cost of sales</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>34,297</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>33,779</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Gross margin</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(2,069)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>563</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Operating expenses:</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Research, development and engineering</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>745</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>666</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Selling</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,093</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,257</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>General and administrative</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>2,334</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,942</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Loss from operations </FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(6,241)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(3,302)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Interest expense</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>460</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>495</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Other income</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(139)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(43)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Loss before income tax provision</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(6,562)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(3,754)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Income tax provision (benefit)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>173</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(25)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Net loss</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(6,735)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(3,729)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE FONT SIZE=4></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE FONT SIZE=4></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Loss per share:</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="64%"><FONT SIZE=2>Loss per common share - basic and diluted</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(.70)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(.39)</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="99%" COLSPAN=7 ALIGN="LEFT"><FONT SIZE=2>See accompanying notes to consolidated financial statements.</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>

<A HREF="#INDEX">Return to Index.</A>

<P ALIGN="CENTER"><FONT SIZE=1>Page 5</FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B></B><BR></FONT><FONT SIZE=2><B></B></FONT><BR><FONT SIZE=2></B></FONT></P>

<A NAME="CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)">

<P ALIGN="CENTER"><FONT SIZE=2><B>KEY TRONIC CORPORATION AND SUBSIDIARIES</B><BR></FONT><FONT SIZE=2><B>CONSOLIDATED STATEMENTS OF INCOME</B><BR></FONT><FONT SIZE=2>(Unaudited)</FONT></P>

<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="99%" COLSPAN=7 ALIGN="RIGHT"><FONT SIZE=2>Three Quarters Ended&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR>
	<TD WIDTH="65%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TD>
	<TD WIDTH="2%" <FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><FONT SIZE=2><B>March 31,<BR> 2001</B></B></FONT><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><FONT SIZE=2><B>April 1,<BR> 2000</B></FONT><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="99%" COLSPAN=7 ALIGN="RIGHT"><FONT SIZE=2>(in thousands, except per share amounts)</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="64%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="64%"><FONT SIZE=2>Net sales</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>136,028</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>117,402</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65"><FONT SIZE=2>Cost of sales</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>128,307</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>107,532</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Gross margin</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>7,721</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>9,870</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Operating expenses:</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Research, development and engineering</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>2,125</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,413</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Selling</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>3,835</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>5,035</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>General and administrative</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>6,984</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>6,430</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Loss from operations</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(5,223)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(4,008)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Interest expense</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,692</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,482</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Other income</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(846)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(202)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Loss before income tax provision</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(6,069)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(5,288)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Income tax provision</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>457</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>64</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Net loss</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(6,526)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(5,352)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE FONT SIZE=4></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE FONT SIZE=4></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Loss per share:</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="64%"><FONT SIZE=2>Loss per common share - basic and diluted</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(.68)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(.56)</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="99%" COLSPAN=7 ALIGN="LEFT"><FONT SIZE=2>See accompanying notes to consolidated financial statements.</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>

<P ALIGN="CENTER"><FONT SIZE=1>Page 6</FONT></P>

<A HREF="#INDEX">Return to Index.</A>

<A NAME="CONSOLIDATED STATEMENTS OF CASH FLOWS">

<P ALIGN="CENTER"><FONT SIZE=2><B>KEY TRONIC CORPORATION AND SUBSIDIARIES</B></BR></FONT><FONT SIZE=2><B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B></BR></FONT><FONT SIZE=2>(Unaudited)</FONT></P>

<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="99%" COLSPAN=7 ALIGN="RIGHT"><FONT SIZE=2>Three Quarters Ended&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TD>
	<TD WIDTH="2%" <FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><FONT SIZE=2><B>March 31,<BR>2001</B></FONT><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><FONT SIZE=2><B>April 1,<BR>2000</B></FONT><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="99%" COLSPAN=7 ALIGN="RIGHT"><FONT SIZE=2>(in thousands)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="99%" COLSPAN=7 ALIGN="LEFT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="99%" COLSPAN=7 ALIGN="LEFT"><FONT SIZE=2>Increase (decrease) in cash and cash equivalents:</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="99%" COLSPAN=7 ALIGN="LEFT"><FONT SIZE=2>Cash flows from operating activities:</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="64%"><FONT SIZE=2>&nbsp;&nbsp;Net loss</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(6,526)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(5,352)</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Adjustments to reconcile net loss to cash provided by operating activities:</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65"><FONT SIZE=2>&nbsp;&nbsp;Depreciation and amortization</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>4,610</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>4,912</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;Provision for obsolete inventory</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>250</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(399)</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;Provision for doubtful receivables</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>463</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>132</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;Provision for warranty</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>220</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>322</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;Gain on disposal of assets</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(736)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(34)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;Deferred income taxes</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>121</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Changes in operating assets and liabilities:</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;Trade receivables</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>5,039</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,676</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;Inventories</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(1,904)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(132)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;Customer tooling</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,911</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,487</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;Other assets</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(1,558)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(1,047)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;Accounts payable</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(675)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>108</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;Accrued compensation and vacation</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>703</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(622)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;Deferred sales proceeds</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(252)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;Other liabilities</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>782</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(398)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Cash provided by operating activities</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>2,327</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>774</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Cash flows from investing activities:</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;Proceeds from sale of property and equipment</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,212</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>83</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;Proceeds from sale leaseback of real estate</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>4,030</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;&nbsp;Purchase of property and equipment</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(394)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(1,366)</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Cash provided by (used in) investing activities</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>4,848</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(1,283)</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Cash flows from financing activities:</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Proceeds from issuance of common stock</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>89</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>31</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Proceeds from long-term obligations</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>796</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Payments on long-term obligations</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(5,794)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Cash provided by (used in) financing activities</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(5,705)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>827</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Net increase in cash and cash equivalents</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,470</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>318</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Cash and cash equivalents, beginning of period</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,013</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,866</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>Cash and cash equivalents, end of period</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>2,483</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,184</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="65%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="14%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="99%" COLSPAN=7 ALIGN="LEFT"><FONT SIZE=2>See accompanying notes to consolidated financial statements.</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>

<P ALIGN="CENTER"><FONT SIZE=1>Page 7</FONT></P>

<A HREF="#INDEX">Return to Index.</A>

<A NAME="NOTES TO CONSOLIDATED FINANCIAL STATEMENTS">

<P ALIGN="CENTER"><FONT SIZE=2><B>KEY TRONIC CORPORATION AND SUBSIDIARIES</B></FONT><BR><FONT SIZE=2><B>NOTES TO FINANCIAL STATEMENTS</B></FONT><BR><FONT SIZE=2>(Unaudited)</FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The interim financial statements are unaudited but, in the opinion of management, reflect all adjustments of a normal and recurring nature necessary for a fair presentation of results of
operations for such periods. The results of operations for any interim period are not necessarily indicative of results for the full year. These financial statements should be read in conjunction with the financial statements and notes thereto contained
in the Company's annual report for the year ended July 1, 2000.</P>

<HR NOSHAD>

<P ALIGN="LEFT"><FONT SIZE=2><B>1.&nbsp;&nbsp;&nbsp;&nbsp;INVENTORIES</B></FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><FONT SIZE=2><B>March 31, 2001</B><BR></FONT><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;July 1, 2000</B><BR></FONT><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="99%" COLSPAN=8 ALIGN="RIGHT"><FONT SIZE=2>(in thousands)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finished Goods</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="3%"<FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>10,600</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="3%"<FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>8,378</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Work-in-process</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>2,512</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Raw materials and supplies</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>14,119</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>14,179</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reserve for obsolescence</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(2,650)</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(2,349)</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><HR NOSHAD></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>24,374</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>22,720</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>

<P ALIGN="LEFT"><FONT SIZE=2><B>2.&nbsp;&nbsp;&nbsp;&nbsp;COMMITMENTS</B></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amount of firm commitments to contractors and suppliers for capital expenditures was approximately $540,000 at March 31, 2001.</P>

<BR>

<P ALIGN="LEFT"><FONT SIZE=2><B>3.&nbsp;&nbsp;&nbsp;&nbsp;LONG-TERM OBLIGATIONS</B></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-term obligations consist of:</P>

<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><FONT SIZE=2><B>March 31, 2001</B><BR></FONT><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;July 1, 2000</B><BR></FONT><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="99%" COLSPAN=8 ALIGN="RIGHT"><FONT SIZE=2>(in thousands)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Note payable</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="3%"<FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="3%"<FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>3,307</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revolving line</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>13,248</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>15,735</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>701</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>0</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred compensation obligation</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>721</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>618</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><HR NOSHAD></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>14,670</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>19,660</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Less current portion</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(13,398)</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>(2,150)</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><HR NOSHAD></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><HR NOSHAD></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,272</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>17,555</FONT></TD>
</TR>
<TR VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The revolving loan has been classified as current, since the 5 year contract with General Electric Capital Corporation (GECC) expires on July 31, 2001. The revolving loan will continue to be classified as
current until a new agreement is reached. The Company was out of compliance with two loan covenants at March 31, 2001. The Company received a waiver and amendment to the credit agreement from the lender that decreased the maximum borrowing base from $25.8
million to $20.0 million and increased the applicable interest rate by 2%.</P>

<P ALIGN="LEFT"><FONT SIZE=2><B>5.&nbsp;&nbsp;&nbsp;&nbsp;SUPPLEMENTAL CASH FLOW INFORMATION</B></FONT></P>

<P ALIGN="RIGHT"><FONT SIZE=2>Three Quarters Ended&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>

<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><FONT SIZE=2><B>March 31, 2001</B><BR></FONT><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="15%" COLSPAN=2 ALIGN="RIGHT"><FONT SIZE=2><B>April 1, 2000</B><BR></FONT><HR NOSHAD></TD>
	<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="99%" COLSPAN=8 ALIGN="RIGHT"><FONT SIZE=2>(in thousands)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
	<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest payments</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="3%"<FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,747</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="3%"<FONT SIZE=2>$</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>1,383</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax payments</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>489</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2>309</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="66%" COLSPAN=2><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
</TR>
</TABLE>
<A HREF="#INDEX">Return to Index.</A>

<P ALIGN="CENTER"><FONT SIZE=1>Page 8</FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2><B>6.&nbsp;&nbsp;&nbsp;&nbsp;INCOME TAXES</B></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The income tax provision for the third quarter of fiscal year 2001 was $173,000 versus a provision of $24,500 for the third fiscal quarter of the prior year. The $173,000 provision for the
third quarter of fiscal year 2001 is the result of provisions on the earnings of foreign subsidiaries. The $24,500 provision for the third quarter of fiscal year 2000 was net of $176,000 in tax benefits on losses of both domestic and foreign operations.
The Company has tax loss carryforwards of approximately $34.4 million that expire in varying amounts in the years 2006 through 2020.</P>

<P ALIGN="LEFT"><FONT SIZE=2><B>7.&nbsp;&nbsp;&nbsp;&nbsp;EARNINGS PER SHARE</B></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic EPS is computed by dividing income available to common shareholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period.
Diluted EPS is computed by dividing income available to common shareholders by the weighted-average number of common shares and common share equivalents outstanding during the period. Key Tronic uses the treasury stock method in calculating the dilutive
effect of common stock equivalents. </P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because of the dilutive nature of outstanding options and warrants, the current quarter's and three quarter's loss creates an antidilutive effect. Therefore, the weighted average diluted
shares equals the basic weighted average shares. </P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There were no adjustments to the income available to common shareholders for the third quarters and three quarters ended March 31, 2001 and April 1, 2000. The following table presents the
Company's calculations of weighted average shares outstanding (number of shares):</P>

<TABLE WIDTH="80%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
	<TD WIDTH="30%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TD>
 	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="13%" COLSPAN=2 ALIGN="right"><FONT SIZE=2><B>Weighted Avg. Shares</B><BR></FONT><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="13%" COLSPAN=2 ALIGN="right"><FONT SIZE=2><B>Adjustment for Potential</B><BR></FONT><FONT SIZE=2><B>Common Shares</B></FONT><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="13%" COLSPAN=2 ALIGN="right"><FONT SIZE=2><B>Total</B></FONT><HR NOSHAD></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR>
	<TD WIDTH="50%" ALIGN="LEFT"><FONT SIZE=2><U>For the Quarter Ended</U></FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="BOTTOM">
	<TD WIDTH="30%" COLSPAN=2><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="BOTTOM">
	<TD WIDTH="33%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>March 31, 2001</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="13%" COLSPAN=2 ALIGN="right"><FONT SIZE=2>9,672,580</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="13%" COLSPAN=2 ALIGN="right"><FONT SIZE=2>0</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="13%" COLSPAN=2 ALIGN="right"><FONT SIZE=2>9,672,580</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="BOTTOM">
	<TD WIDTH="30%" COLSPAN=2><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="BOTTOM">
	<TD WIDTH="33%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>April 1, 2000</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="13%" COLSPAN=2 ALIGN="right"><FONT SIZE=2>9,636,660</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="13%" COLSPAN=2 ALIGN="right"><FONT SIZE=2>118,136</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="13%" COLSPAN=2 ALIGN="right"><FONT SIZE=2>9,754,796</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="BOTTOM">
	<TD WIDTH="30%" COLSPAN=2><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
</TR>
<TR>
	<TD WIDTH="50%" ALIGN="LEFT"><FONT SIZE=2><U>For Three Quarters Ended</U></FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="BOTTOM">
	<TD WIDTH="30%" COLSPAN=2><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="BOTTOM">
	<TD WIDTH="33%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>March 31, 2001</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="13%" COLSPAN=2 ALIGN="right"><FONT SIZE=2>9,666,186</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="13%" COLSPAN=2 ALIGN="right"><FONT SIZE=2>189,579</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="13%" COLSPAN=2 ALIGN="right"><FONT SIZE=2>9,855,765</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="BOTTOM">
	<TD WIDTH="30%" COLSPAN=2><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="BOTTOM">
	<TD WIDTH="33%" COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>April 1, 2000</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="13%" COLSPAN=2 ALIGN="right"><FONT SIZE=2>9,634,913</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="13%" COLSPAN=2 ALIGN="right"><FONT SIZE=2>189,990</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="13%" COLSPAN=2 ALIGN="right"><FONT SIZE=2>9,824,903</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="BOTTOM">
	<TD WIDTH="30%" COLSPAN=2><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="2%"<FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="13%" ALIGN="RIGHT"><FONT SIZE=2></FONT></TD>
</TR>
</TABLE>

<P ALIGN="LEFT"><FONT SIZE=2><B>FORWARD-LOOKING STATEMENTS</B></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Quarterly Report contains forward-looking statements in addition to historical information. Forward-looking statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those reflected in the forward-looking statements. Risks and uncertainties that might cause such differences include, but are not limited to those outlined in "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Risks and Uncertainties That May Affect Future Results." Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management's opinions only as of the date hereof. The Company
undertakes no obligation to revise or publicly release the results of any revision to forward-looking statements. Readers should carefully review the risk factors described in other documents the Company files from time to time with the Securities and
Exchange Commission, including Quarterly Reports on Form 10-Q.</P>

<A NAME="MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS">

<P ALIGN="CENTER"><FONT SIZE=1>Page 9</FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2><B>Item 2.&nbsp;&nbsp;&nbsp;Management's Discussion and Analysis of Financial Condition and Results of Operations</B></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2><U>CAPITAL RESOURCES AND LIQUIDITY</U></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating activities provided $2.3 million of cash during the first three quarters of fiscal year 2001 versus $0.8 million cash provided by operating activities during the same period of
the prior year. The fiscal 2001 change in cash is due primarily to the Company's decreased accounts receivable. The decrease in accounts receivable are caused by lower than planned revenues for the quarter due in part because of decreased orders from one
of the Company's major customers.</P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the first three quarters of fiscal year 2001, $0.4 million was expended in capital additions versus $1.37 million spent in capital additions in the same period in the previous fiscal
year. The Company anticipates capital expenditures of approximately $0.2 million through the remainder of the current fiscal year ending June 30, 2001. Actual capital expenditures may vary from anticipated expenditures depending upon future results of
operations. See risks and uncertainties that may affect future results, pages 11-12. Capital expenditures are expected to be financed with internally generated funds. </P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has a financing agreement, which contains a revolving loan for up to $30 million. During the second quarter of fiscal year 1998, the company entered into an operating lease
arrangement with General Electric Capital Corporation (GECC) which reduced the borrowing limit by $4.2 million. The revolving loan agreement is secured by the assets of the corporation. The agreement contains financial covenants that relate to maximum
capital expenditures, minimum debt service coverage, minimum earnings before interest expense, income tax, depreciation, amortization, and maximum leverage percentages. In addition to these financial covenants, the financing agreement restricts
investments, disposition of assets, and payment of dividends. </P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The revolving loan with GECC covered an initial period of five years and expires on July 31, 2001. If debt service coverage is greater than 1.4, the applicable interest rate is two and
one-half percent (2.5%) in excess of the applicable LIBOR rate. If debt service coverage is less than or equal to 1.4, the applicable interest rate is two and three-quarters percent (2.75%) in excess of the applicable LIBOR rate. At March 31, 2001, the
Company had one LIBOR contract outstanding for $10 million. The LIBOR rate was 5.08375%, and the applicable interest rate was 7.83375%. LIBOR rates fluctuate on a daily basis. Interest on additional borrowing under the revolving loan is charged at a rate
equivalent to current prime rate plus .05%. At March 31, 2001, there was $13.2 million borrowed on the revolving loan and approximately $12.6 million available for use under the revolving loan. The Company is required to pay fees of .0375% on the unused
revolving loan balance. The revolving loan has been classified as current, since the 5 year contract with GECC expires on July 31, 2001. The revolving loan will continue to be classified as current until a new agreement is reached. The Company was out of
compliance with two loan covenants at March 31, 2001. The Company received a waiver and amendment to the credit agreement from the lender that decreased the maximum borrowing base from $25.8 million to $20.0 million and increased the applicable interest
rate by 2%.</P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The revolving loan balance has decreased $2.5 million since the Company's fiscal year end at July 1, 2000. This decrease can be attributed to payments made upon collection of significant
trade receivables.</P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On December 27, 2000, the Company sold two contiguous parcels of land and its corporate headquarters building in Spokane to Royal Hills Associates L.L.C. (RHA) for approximately $6 million
in cash. In connection with the sale, the Company entered into a 10-year lease agreement with RHA for one floor of the two-story building, which the Company will continue to occupy as its headquarters. The initial monthly rent is $30,875 plus allocated
expenses. Proceeds from the sale of these properties was used to pay off the Company's term loan with GECC in the amount of $2,702,000, and to pay down the Company's revolving line of credit (also with GECC) by $2.4 million. The sale resulted in a gain on
one parcel of land of approximately $650,000, which is included in other income.</P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the terms of the sale agreement, the Company has guaranteed rent on the second floor of the building for a period of one-year following the closing date of December 27, 2000. The
guaranteed rent is $31,250 per month plus allocated expenses. If RHA is successful in securing a tenant for the second floor prior to the end of the one-year rental guarantee period, the Company's obligation to make monthly rental guarantee payments will
cease when RHA begins receiving rental payments from the second-floor tenant.</P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the guidance of FASB Statement No. 66 <I>Accounting for Sale of Real Estate</I>, a seller-lessee cannot recognize any profit on the sale of an asset if it retains substantially all of
the benefits and risks incident to the property sold. As the Company's guaranteed rent provision for the second floor of the building, constitutes continuing involvement, no profit was recognized on the building or the land upon which it is built. A gain
was recognized on a separate parcel of land. This gain is included in other income.</P>

<P ALIGN="CENTER"><FONT SIZE=1>Page 10</FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company will recognize the deferred gain on sale over the 10 year lease agreement.</P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Real estate held for sale located in Cheney, Washington is carried at the lower of cost or net realizable value. In September of 1997, the Company signed a five year operating lease with a
local company for this property. The lease terms include an option to buy the property upon notice at any time during the course of the lease.</P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company believes that cash, cash equivalents, funds available under the line of credit, and internally generated funds can satisfy cash requirements for a period in excess of 12 months.
</P>

<P ALIGN="LEFT"><FONT SIZE=2><U>QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</U></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is subject to the risk of fluctuating interest rates in the normal course of business. The Company's major market risk relates to its secured debt. A portion of the Company's
accounts receivable and inventories are used as collateral for its term and revolving debt. The interest rates applicable to the Company's debt fluctuate with the LIBOR. Over the past fiscal quarter the highest LIBOR rate was 6.63750%. LIBOR rates
fluctuate on a daily basis.</P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company does not enter into derivative transactions or leveraged swap agreements.</P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although the Company has international operations, the functional currency for all active subsidiaries, is the U.S. dollar. The Company imports for its own use raw materials that are used
in its manufacturing operations. Such purchases are denominated in U.S. dollars and are paid under normal trade terms.</P>

<P ALIGN="LEFT"><FONT SIZE=2><U>NET SALES</U></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net sales for the fiscal 2001 third quarter ended March 31, 2001 were $32.2 million compared to $34.3 million for the third quarter of the previous year. For the three quarters ended March
31, 2001, sales were $136.0 million compared to $117.4 million for the same period of the previous year.</P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Keyboard shipments decreased 41% for the third quarter of fiscal year 2001 compared to the third quarter of 2000, while the average selling price remained fairly consistent. For the three
quarters ended March 31, 2001, unit shipments decreased approximately 46% over the same period of the prior year, while the average selling price increased 7%. The decrease in units shipped and increase in average selling price is due primarily to a more
significant drop in original equipment manufacturer (OEM) keyboard units than direct distribution units.</P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-keyboard revenue accounted for 70.0% of total revenue in the third quarter of fiscal 2001 versus 50.7% of total revenue in the third quarter of fiscal 2000. For the three quarters ended
March 31, 2001, non-keyboard revenue accounted for 74.9% of total revenue versus 47.8% of total revenue for the same time period of the prior fiscal year. The increase in non-keyboard revenue as a percentage of sales is a direct result of the company's
strategy to grow this part of its business.</P>

<P ALIGN="CENTER"><FONT SIZE=1>Page 11</FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2><U>COST OF SALES</U></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of sales were 106% of revenue in the third quarter of year 2001, compared to 98.4% for the third quarter of year 2000. Cost of sales were 94.3% of revenue for the three quarters ended
March 31, 2001 compared to 91.6% for the same period of the prior year. The cost of sales percentage increased in part as a result of lower sales volume than was planned for the quarter due to a slowdown of the overall economy. During the third quarter of
fiscal year 2001, additional emphasis was placed on material cost reductions through negotiations with major suppliers, as well as changes to product designs that were conducive to lower costs.</P>

<P ALIGN="LEFT"><FONT SIZE=2><U>RESEARCH, DEVELOPMENT AND ENGINEERING</U></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research, development and engineering (RD&E) expenses were $0.7 million in the third quarter of fiscal year 2001 and for the same period of fiscal year 2000. As a percentage of sales, RD&E
expenditures were 2.3% in the third quarter of year 2001, compared to 1.9% for the same period of the prior year. RD&E expenses were $2.1 million for the three quarters ended March 31, 2001, compared to $2.4 million for the same period of the prior year.
As a percentage of sales, RD&E expenditures were 1.6% for the current three quarters ended versus 2.1% for the same period of the prior fiscal year. The year to date decreases were primarily due to recovering the majority of engineering costs from customers
 .</P>

<P ALIGN="LEFT"><FONT SIZE=2><U>SELLING EXPENSES</U></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling expenses were $1.1 million in the third quarter of fiscal year 2001 compared to $1.3 million in the third quarter of fiscal year 2000. Selling expenses as a percentage of revenue
were 3.4% for the quarter compared to 3.7% in the same quarter of fiscal year 2000. For the three quarters ended March 31, 2001, selling expenses were $3.8 million compared to $5 million for the same period of the prior year. As a percentage of revenue
for the current three quarters ended, selling expenses were 2.8% compared to 4.3% for the same period of the prior fiscal year. These decreases can be attributed to reduced keyboard sales, which resulted in lower costs for volume incentive rebates and
cooperative advertising.</P>

<P ALIGN="LEFT"><FONT SIZE=2><U>GENERAL AND ADMINISTRATIVE</U></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative (G&A) expenses were $2.3 million in the third quarter of fiscal 2001 compared to $1.9 in the third quarter of fiscal 2000. As a percentage of revenue, G&A
expenses were 7.2% in the third quarter of fiscal year 2001 versus 5.7% in the same quarter of the prior year. For the three quarters ended March 31, 2001, G&A expenses were $7.0 million compared to $6.4 million for the same period of the prior year. As a
percentage of revenue G&A expenses for the first three quarters of fiscal 2001 were 5.1% versus 5.5% for the same period of the prior year.</P>

<P ALIGN="LEFT"><FONT SIZE=2><U>INTEREST</U></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense was $460,000 in the third quarter of fiscal 2001 compared to $495,000 for the third quarter of fiscal year 2000. For the three quarters ended March 31, 2001 and April 1,
2000 interest expense was $1,700,000 and $1,500,000 respectively. The level of debt has remained fairly consistent with daily operating expenses.</P>

<P ALIGN="LEFT"><FONT SIZE=2><U>INCOME TAXES</U></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The income tax provision for the third quarter of fiscal year 2001 was $173,000 versus a provision of $24,500 for the third fiscal quarter of the prior year. The $173,000 provision for the
third quarter of fiscal year 2001 is the result of provisions on the earnings of foreign subsidiaries. The $24,500 provision for the third quarter of fiscal year 2000 was net of $176,000 in tax benefits on losses of both domestic and foreign operations.
The Company has tax loss carryforwards of approximately $34.4 million that expire in varying amounts in the years 2006 through 2020.</P>

<P ALIGN="LEFT"><FONT SIZE=2><U>ESOP</U></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No contributions to the Employee Stock Ownership Plan (ESOP) were made during the third quarter of fiscal years 2001 and 2000.</P>

<P ALIGN="CENTER"><FONT SIZE=1>Page 12</FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2><U>BACKLOG</U></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's backlog at the end of third fiscal quarter of fiscal year 2001 was $8.7 million compared to $35 million at the end of fiscal year 2000 and $17.5 million at the end of the
third quarter of fiscal year 2000. The decrease in the backlog from fiscal year end is attributable in part to orders shipped in the first six months of fiscal 2001. The Company was unable to ship in the fourth quarter of fiscal 2000 due to component part
shortages.</P>

<P ALIGN="LEFT"><FONT SIZE=2><U>RISKS AND UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS</U></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The following risks and uncertainties could affect the Company's actual results and could cause results to differ materially from past results or those contemplated by the Company's forward-looking
statements. When used herein, the words "expects", "believes", "anticipates" and similar expressions are intended to identify forward-looking statements.</P>

<P ALIGN="LEFT"><FONT SIZE=2><U>Potential Fluctuations in Quarterly Results.</U>&nbsp;&nbsp;&nbsp;&nbsp;The Company's quarterly operating results have varied in the past and may vary in the future due to a variety of factors, including changes in overall
demand for computer products, success of customers' programs, timing of new programs, new product introductions or technological advances by the Company, its customers and its competitors and changes in pricing policies by the Company, its customers and
its competitors. For example, the Company relies on customers' forecasts to plan its business. If those forecasts are overly optimistic, the Company's revenues and profits may fall short of expectations. Conversely, if those forecasts are too
conservative, the Company could have an unexpected increase in revenues and profits.</P>

<P ALIGN="LEFT"><FONT SIZE=2><U>Competition.</U>&nbsp;&nbsp;&nbsp;&nbsp;The Electrical Manufacturing Services (EMS) and keyboard industries are intensely competitive. Most of the Company's principal competitors are headquartered in Asian countries that
have a low cost labor force. Those competitors may offer customers lower prices on certain high volume programs. This could result in price reductions, reduced margins and loss of market share, all of which would materially and adversely affect the
Company's business, operating results and financial condition. In addition, competitors can copy the Company's non-proprietary designs after the Company has invested in development of products for customers, thereby enabling such competitors to offer
lower prices on such products due to savings in development costs.</P>

<P ALIGN="LEFT"><FONT SIZE=2><U>Concentration of Major Customers.</U>&nbsp;&nbsp;&nbsp;&nbsp;At present, the Company's customer base is highly concentrated, and there can be no assurance that its customer base will not become more concentrated. Three of
the Company's EMS customers accounted for 38%, 9%, and 8% of net sales during fiscal 2000. In fiscal 1999, these same customers accounted for 24%, 13% and 11% of the Company's net sales. There can be no assurance that the Company's principal customers
will continue to purchase products from the Company at current levels. Moreover, the Company typically does not enter into long-term volume purchase contracts with its customers, and the Company's customers have certain rights to extend or delay the
shipment of their orders. The loss of one or more of the Company's major customers or the reduction, delay or cancellation of orders from such customers could materially and adversely affect the Company's business, operating results and financial condition.</P>

<P ALIGN="LEFT"><FONT SIZE=2><U>Capital Resources and Liquidity</U>&nbsp;&nbsp;&nbsp;&nbsp;The Company's revolving loan with GECC expires on July 31, 2001.  Discussions are underway with potential lenders to obtain a revolving credit facility to be
secured by inventory and accounts receivable to replace the GECC credit facility.  There can be no assurance that the Company's capital raising efforts, including obtaining a new credit facility will be successful.  Failure to raise sufficient capital in
a timely manner will have a material adverse impact on the Company's business, results of operations, liqudity and cash flows.</P>

<P ALIGN="LEFT"><FONT SIZE=2><U>Dependence on Key Personnel.</U>&nbsp;&nbsp;&nbsp;&nbsp;The Company's future success depends in large part on the continued service of its key technical, marketing and management personnel and on its ability to continue to
attract and retain qualified employees. The competition for such personnel is intense and there can be no assurance that the Company will be successful in attracting and retaining such personnel. The loss of key employees could have a material adverse
effect on the Company's business, operating results and financial condition.</P>

<P ALIGN="LEFT"><FONT SIZE=2><U>Litigation.</U>&nbsp;&nbsp;&nbsp;&nbsp;The Company currently has fifteen lawsuits by computer keyboard users which are in state or federal courts in New York. These suits allege that specific keyboard products manufactured
by the Company were sold with manufacturing, design and warning defects which caused or contributed to injury. The alleged injuries are not specifically identified but are referred to as repetitive stress injuries (RSI) or cumulative trauma disorders
(CTD). These suits seek compensatory damages and some seek punitive damages. It is more likely than not that compensatory damages, if awarded, will be covered by insurance; however, the likelihood that punitive damages, if awarded, will be covered by
insurance is remote. A total of 123 lawsuits have been dismissed in California, Connecticut, Florida, Illinois, Kansas, Kentucky, Maryland, Massachusetts, Michigan, New Jersey, New York, Pennsylvania and Texas.</P>

<P ALIGN="CENTER"><FONT SIZE=1>Page 13</FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2><U>Technological Change and New Product Risk.</U>&nbsp;&nbsp;&nbsp;&nbsp;The market for the Company's products and services is characterized by rapidly changing technology, evolving industry standards, frequent new product
introductions and relatively short product life cycles. The introduction of products embodying new technologies or the emergence of new industry standards can render existing products obsolete or unmarketable. The Company's success will depend upon its
ability to enhance its existing products and services and to develop and introduce, on a timely and cost-effective basis, new products and services that keep pace with technological developments and emerging industry standards and address evolving and
increasingly sophisticated customer requirements. Failure to do so could substantially harm the Company's competitive position. There can be no assurance that the Company will be successful in identifying, developing, manufacturing and marketing products
that respond to technological change, emerging industry standards or evolving customer requirements.</P>

<P ALIGN="LEFT"><FONT SIZE=2><U>Dilution and Stock Price volatility.</U>&nbsp;&nbsp;&nbsp;&nbsp;As of March 31, 2001, there were outstanding options and warrants for the purchase of approximately 2,000,000 shares of common stock of the Company (Common
Stock), of which options and warrants for approximately 1,400,000 shares were vested and exercisable. Holders of the Common Stock will suffer immediate and substantial dilution to the extent outstanding options and warrants to purchase the Common Stock
are exercised. The price of the Company's Common Stock may be subject to wide fluctuations and possible rapid increases or declines over a short time period. These fluctuations may be due to factors specific to the Company such as variations in quarterly
operating results or changes in analysts' earnings estimates, or to factors relating to the computer industry or to the securities markets in general, which, in recent years, have experienced significant price fluctuations. These fluctuations often have
been unrelated to the operating performance of the specific companies whose stocks are traded.</P>

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<P ALIGN="CENTER"><FONT SIZE=1>Page 14</FONT></P>

<A NAME="OTHER INFORMATION">
<HR NOSHAD WIDTH="120">
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<TR VALIGN="TOP">
	<TD WIDTH="11%"ALIGN="LEFT"><FONT SIZE=2><B>Part II.</B> <BR></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="77%" ALIGN="LEFT"><FONT SIZE=2><B>OTHER INFORMATION</B><BR></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2></FONT></TD>
	<TD WIDTH="8%" ALIGN="CENTER"><FONT SIZE=2><BR></FONT></TD>
</TR>
<A NAME="LEGAL PROCEEDINGS">
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;<BR>Item 1.</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="77%"><FONT SIZE=2>&nbsp;<BR>Legal Proceedings</FONT><BR><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="8%" VALIGN="TOP"><FONT SIZE=2>&nbsp;<BR></FONT></TD>
</TR>
<A NAME="SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS">
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	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;<BR>Item 4.</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="77%"><FONT SIZE=2>&nbsp;<BR>Submission of Matters to a Vote of Security Holders</FONT><BR><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="8%" VALIGN="TOP"><FONT SIZE=2>&nbsp;<BR></FONT></TD>
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<A NAME="OTHER EVENTS">
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;<BR>Item 5.</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="77%"><FONT SIZE=2>&nbsp;<BR>Other Events</FONT><BR><FONT SIZE=2></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="8%" VALIGN="TOP"><FONT SIZE=2>&nbsp;<BR></FONT></TD>
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<A NAME="EXHIBITS AND REPORTS ON FORM 8-K">
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	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;<BR>Item 6.</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="77%"><FONT SIZE=2>&nbsp;<BR>Exhibits and Reports on Form 8-K</FONT><BR><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Exhibits<BR></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</FONT></TD>

	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="8%" VALIGN="TOP"><FONT SIZE=2>&nbsp;<BR></FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="11%"><FONT SIZE=2>&nbsp;<BR></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR></FONT></TD>
	<TD WIDTH="77%"><FONT SIZE=2>&nbsp;<BR><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Reports on Form 8-K<BR></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="8%" VALIGN="TOP"><FONT SIZE=2>&nbsp;<BR></FONT></TD>
</TR>
</TABLE>

<A HREF="#INDEX">Return to Index.</A>

<BR>
<BR>

<HR NOSHAD WIDTH="120">

<BR>
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<P ALIGN="CENTER"><FONT SIZE=2><B>SIGNATURES</B></FONT></P>

<P ALIGN="LEFT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.</P>

<BR>
<BR>

<P ALIGN="CENTER"><FONT SIZE=2><B>KEY TRONIC CORPORATION</B></FONT></P>

<BR>
<BR>

<DIV ALIGN="CENTER"><TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
	<TD WIDTH="49%"ALIGN="LEFT"><FONT SIZE=2>/s/ Jack W. Oehlke</FONT><BR><FONT SIZE=2>Jack W. Oehlke</FONT><BR><FONT SIZE=2>Director, President and</FONT><BR><FONT SIZE=2>Chief Executive Officer</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="22%"ALIGN="CENTER"><FONT SIZE=2>May 14, 2001</FONT><FONT SIZE=2><BR>Date</FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="11%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>

	<TD WIDTH="77%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
	<TD WIDTH="8%" VALIGN="TOP"><FONT SIZE=2><B>&nbsp;<BR>&nbsp;</B></FONT></TD>
</TR>
<TR BGCOLOR="WHITE" VALIGN="TOP">
	<TD WIDTH="49%"ALIGN="LEFT"><FONT SIZE=2>/s/ Ronald F. Klawitter</FONT><BR><FONT SIZE=2>Ronald F. Klawitter</FONT><BR><FONT SIZE=2>Principal Financial Officer</FONT><BR><FONT SIZE=2>(Principal Accounting Officer)</FONT></TD>
	<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
	<TD WIDTH="22%"ALIGN="CENTER"><FONT SIZE=2>May 14, 2001</FONT><FONT SIZE=2><BR>Date</FONT></TD>
</TR>
</TABLE>

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<P ALIGN="CENTER"><FONT SIZE=1>Page 15</FONT></P>

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