EX-99.1 3 dex991.htm PRESS RELEASE, DATED AUGUST 20, 2003

Press Release, dated August 20, 2003

Exhibit 99.1

FOR IMMEDIATE RELEASE

CONTACTS:		Ron Klawitter		Michael Newman
		Chief Financial Officer		Investor Relations
		Key Tronic Corporation		StreetConnect
		(509) 927-5295		(206) 729-3625

KEY TRONIC CORPORATION

ANNOUNCES FOURTH QUARTER AND YEAR-END RESULTS

Sequential Growth in Revenue and Earnings

Spokane, WA—August 20, 2003—Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter and year ended June 28, 2003.

For the fourth quarter of fiscal 2003, Key Tronic reported total revenue of $35.7 million, compared to $30.6 million in the previous quarter and $43.9 million for the fourth quarter of fiscal 2002. For fiscal year 2003, total revenue was $130.9 million, compared to $175.6 million in fiscal 2002. While the Company benefited from a surge in production volume from its largest single customer in the fourth quarter, its revenue level throughout fiscal 2003 was adversely impacted by uncertainty created by the litigation that was settled during the year.

Net income for the fourth quarter of fiscal 2003 was $551,000 or $0.06 per share, up from $306,000 or $0.03 per share per share in the previous period and from a net loss of $3.2 million or ($0.33) per share in the fourth quarter of fiscal 2002. Net income for fiscal 2003 was $13.4 million or $1.39 per share, up from a net loss of $25.4 million or ($2.62) per share for fiscal 2002. The results include income of $12.2 million ($1.26 per share) from the litigation settlement in fiscal 2003 and an expense of $24.7 million ($2.55 per share) for the litigation judgment and a related tax charge in fiscal 2002.

“Despite the challenging economic environment and the disruption caused by the litigation, we are very pleased with our success in streamlining operations and improving profitability during fiscal 2003,” said Jack Oehlke, President and Chief Executive Officer. “After reaching a settlement of the litigation in the second quarter, we once again began to gradually book new business from both new and existing customers. In the fourth quarter, we established new customer relationships involving consumer electronics and plastics, and specialty printers and components.”

“Our ability to offer an exceptional range of capabilities, competitive pricing, global logistics and responsive customer service continues to help us win new business. In the first and second quarters of fiscal 2004, we expect revenue in the range of $31 million to $34 million and breakeven bottomline results. In the second half of fiscal 2004, however, we anticipate growing revenue as a number of our new programs move from the design and development stage into full production.”

Key Tronic will host a conference call to discuss its financial results at 2:00 PM Pacific (5:00 PM Eastern) on August 20, 2003. A broadcast of the conference call will be available at www.keytronic.com under “News/Financial Reports” or by calling 800-218-0204 or +1 303-205-0066 (Reservation No. 544645). A 48-hour replay will be available by calling 800-405-2236 or +1 303-590-3000 (Reservation No. 544645). A replay will also be available on the Company’s Web site.

About Key Tronic

Key Tronic is a leading contract manufacturer offering value-added design and manufacturing services from its facilities in the United States, Mexico, Ireland and China. The Company provides its customers full engineering services, materials management, worldwide manufacturing facilities, assembly services, in-house testing, and worldwide distribution. Its customers include some of the world’s leading original equipment manufacturers. For more information about Key Tronic visit: www.keytronic.com.

Some of the statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all passages containing verbs such as ‘aims, anticipates, believes, estimates, expects, hopes, intends, plans, predicts, projects or targets’ or nouns corresponding to such verbs. Forward-looking statements also include other passages that are primarily relevant to expected future events or that can only be fully evaluated by events that will occur in the future. Forward-looking statements in this release include, without limitation, the Company’s statements regarding its expectations with respect to quarterly revenue and earnings during fiscal 2004. There are many factors, risks and uncertainties that could cause actual results to differ materially from those predicted or projected in forward-looking statements, including but not limited to the accuracy of customers’ forecasts; success of customers’ programs; timing of new programs; success of new-product introductions; technology advances; changes in pricing policies by the Company, its competitors or customers; and the other risks and uncertainties detailed from time to time in the Company’s SEC filings.

KEY TRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

		Fourth Quarters Ended
		June 28 2003				June 29 2002
Net sales		$	35,664			$	43,933
Cost of sales			31,473				40,257
Gross profit on sales			4,191				3,676
Operating expenses:
Research, development and engineering			704				700
Selling			682				635
General and administrative			1,758				1,983
Total operating expenses			3,144				3,318
Operating income			1,047				358
Interest expense			266				228
Litigation judgment expense			—				3,214
Other (income) loss			(1	)			(2	)
Income before income taxes			782				(3,082	)
Income tax provision			231				102
Net income		$	551			$	(3,184	)
Earnings per share:
Earnings (loss) per common share—basic and diluted		$	0.06			$	(0.33	)
Weighted average shares O/S—basic			9,673				9,673
Weighted average shares O/S—diluted			9,714				9,673

KEY TRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

		Twelve Months Ended
		June 28 2003				June 29 2002
Net sales		$	130,894			$	175,591
Cost of sales			115,936				160,606
Gross profit on sales			14,958				14,985
Operating expenses:
Research, development and engineering			2,913				2,554
Selling			2,250				2,793
General and administrative			7,183				8,414
Total operating expenses			12,346				13,761
Operating income			2,612				1,224
Interest expense			1,026				1,314
Litigation (settlement) judgment			(12,186	)			20,214
Other (income)			(237	)			(358	)
Income (loss) before income taxes			14,009				(19,946	)
Income tax provision			600				5,416
Net income (loss)		$	13,409			$	(25,362	)
Earnings per share:
Earnings (loss) per common share—basic and diluted		$	1.39			$	(2.62	)
Weighted average shares O/S—basic and diluted			9,673				9,673

KEY TRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

		June 28 2003				June 29 2002
ASSETS
Current Assets:
Cash and cash equivalents		$	956			$	1,205
Restricted cash			1,142				280
Trade receivables—net			17,078				20,978
Inventories			24,151				18,395
Other			2,050				2,588
Total current assets			45,377				43,446
Property, plant and equipment at cost			86,469				85,286
Less accumulated depreciation			74,487				73,054
Total property, plant and equipment			11,982				12,232
Other Assets:
Other—net			1,001				996
Goodwill—net			765				765
Total other assets			1,766				1,761
Total assets		$	59,125			$	57,439
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current portion of long term obligations		$	730			$	228
Accounts payable			13,145				14,409
Accrued compensation and vacation			4,213				2,803
Litigation settlement			1,124				293
Other			3,240				3,172
Total current liabilities			22,452				20,905
Long-Term Liabilities:
Revolving loan			9,864				6,475
Litigation settlement			2,593				19,186
Other			1,096				1,162
Total long-term liabilities			13,553				26,823
Shareholders’ Equity:
Common stock, no par value, authorized 25,000 shares; issued and outstanding 9,673 and 9,673 shares			38,393				38,393
Retained deficit			(15,273	)			(28,682	)
Total shareholders’ equity			23,120				9,711
Total Liabilities and Shareholders’ Equity		$	59,125			$	57,439