EX-99.1 3 dex991.htm PRESS RELEASE

PRESS RELEASE

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

SECOND QUARTER RESULTS

Expecting Growth in the Third and Fourth Quarters

Spokane, WA—January 27, 2004—Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended December 27, 2003.

For the second quarter of fiscal 2004, Key Tronic reported total revenue of $32.6 million, compared to $34.7 million in the previous quarter and $30.6 million for the second quarter of fiscal 2003. For the first six months of fiscal 2004, total revenue was $67.2 million, up from $64.6 million in the same period of fiscal 2003. The net loss for the second quarter of fiscal 2004 was $287,000 or ($0.03) per share, compared to net income of $20,000 or $0.00 per share in the previous period and $74,000 or $0.01 per share for the second quarter of fiscal 2003.

“While our second quarter revenue was in line with our expectations and we continued to focus on controlling our costs, we are planning for growth in coming quarters and expanding our manufacturing capacity,” said Jack Oehlke, President and Chief Executive Officer. “We are beginning production on new programs involving consumer products, specialty printer accessories and gaming technology. In the third quarter, we expect revenue to grow between 10% and 20% sequentially. Due to start up costs associated with new projects, we expect near breakeven bottomline results in the third quarter. In the fourth quarter, we anticipate that increased production levels will drive continued growth in revenue and earnings.”

“In addition to gradual expansion of programs with existing customers, 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 second quarter, we established new customer relationships involving single-board computers, memory cards and printer accessories. We remain very excited about the emerging opportunities for growing our business.”

Key Tronic will host a conference call today to discuss its financial results at 2:00 PM Pacific (5:00 PM Eastern). A broadcast of the conference call will be available at www.keytronic.com under “Investor Relations” or by calling 800-218-0204 or +1 303-262-2050 (Reservation No. 562398). A 48-hour replay will be available by calling 800-405-2236 or +1 303-590-3000 (Reservation No. 562398). 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)

		Second Quarters Ended								Six Months Ended
		December 27 2003				December 28 2002				December 27 2003				December 28 2002
Net sales		$	32,567			$	30,552			$	67,219			$	64,586
Cost of sales			29,835				27,068				61,071				57,596
Gross profit on sales			2,732				3,484				6,148				6,990
Operating expenses:
Research, development and engineering			589				774				1,288				1,484
Selling			338				456				846				923
General and administrative			1,730				1,832				3,495				3,626
Total operating expenses			2,657				3,062				5,629				6,033
Operating income			75				422				519				957
Interest expense			265				260				522				497
Litigation settlement			—				—				—				(12,186	)
Other income			(13	)			(28	)			(19	)			(262	)
Income (loss) before income taxes			(177	)			190				16				12,908
Income tax provision			110				116				283				355
Net income (loss)		$	(287	)		$	74			$	(267	)		$	12,553
Earnings per share:
Earnings (loss) per common share - basic and diluted		$	(0.03	)		$	0.01			$	(0.03	)		$	1.30
Weighted average shares O/S - basic and diluted			9,673				9,673				9,673				9,673

KEY TRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

		December 27 2003				June 28 2003
ASSETS
Current Assets:
Cash and cash equivalents		$	869			$	956
Trade receivables - net			18,746				17,078
Inventories			21,695				24,151
Other			2,309				2,050
Total current assets			43,619				44,235
Property, plant and equipment, net			11,111				11,982
Other Assets:
Restricted cash			600				1,142
Other - net			898				1,001
Goodwill - net			765				765
Total other assets			2,263				2,908
Total Assets		$	56,993			$	59,125
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current portion of long term obligations		$	461			$	730
Accounts payable			14,948				13,145
Accrued compensation and vacation			2,845				4,213
Litigation settlement			800				1,124
Other			2,145				3,240
Total current liabilities			21,199				22,452
Long-Term Liabilities:
Revolving loan			9,719				9,864
Litigation settlement			2,171				2,593
Other			1,051				1,096
Total long-term liabilities			12,941				13,553
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			(15,540	)			(15,273	)
Total shareholders’ equity			22,853				23,120
Total Liabilities and Shareholders’ Equity		$	56,993			$	59,125