EX-99.1 2 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

Quarterly Revenue Up 57% Year-over-Year Drives Increased Earnings

Spokane, WA— January 31, 2005 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended January 1, 2005.

For the second quarter of fiscal 2005, Key Tronic reported total revenue of $51.2 million, up 57% from $32.6 million for the second quarter of fiscal 2004, and up 5% from $48.8 million in the previous quarter. For the first six months of fiscal 2005, total revenue was $100.0 million, up 49% from $67.2 million in the same period of fiscal 2004.

Net income for the second quarter of fiscal 2005 was $490,000 or $0.05 per share, up from a net loss of $287,000 or ($0.03) per share for the second quarter of fiscal 2004, and up from net income of $266,000 or $0.03 per share for the previous quarter. For the first six months of fiscal 2005, net income was $756,000 or $0.08 per share, up from a net loss of $267,000 or ($0.03) per share for the same period of fiscal 2004

“We are pleased with our continued revenue and earnings growth in the second quarter,” said Jack Oehlke, President and Chief Executive Officer. “Our growth was primarily driven by increased production on programs for established customers involving gaming technology and specialty printer accessories and components. During the quarter, we added to our printed circuit board capacity to address the needs of those customers.”

“While we see a seasonal slow down in a few existing programs, we have a new consumer product program getting underway in the third quarter and we expect our new program with a medical technology customer to begin production in the fourth quarter. As a result, we anticipate that our performance in the second half of fiscal 2005 will be roughly comparable to the first half, as we continue to control our costs, retain our high-quality customer service and competitiveness, and maintain our profitability. Over the longer term, the trend towards outsourced EMS continues to look very positive and we are well-positioned to capitalize on that opportunity.”

In the third quarter of fiscal 2005, the Company expects revenue to be approximately flat to down 5% in the second quarter and earnings in the range of $0.02 to $0.05 per share.

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 +1 303-262-2131. A 48-hour replay will be available by calling 800-405-2236 or +1 303-590-3000 (Reservation No. 11020367). 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, China and Ireland. 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 2005. 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, customers or suppliers; 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
		January 1 2005				December 27 2003				January 1 2005				December 27 2003
Net sales		$	51,226			$	32,567			$	100,000			$	67,219
Cost of sales			47,235				29,895				92,461				61,192
Gross profit on sales			3,991				2,672				7,539				6,027
Operating expenses:
Research, development and engineering			708				589				1,413				1,288
Selling			528				278				1,022				725
General and administrative			1,848				1,730				3,516				3,495
Total operating expenses			3,084				2,597				5,951				5,508
Operating income			907				75				1,588				519
Interest expense			308				265				607				522
Other (income) expense			(11	)			(13	)			(13	)			(19	)
Income (loss) before income taxes			610				(177	)			994				16
Income tax provision			120				110				238				283
Net income (loss)		$	490			$	(287	)		$	756			$	(267	)
Earnings (loss) per share:
Earnings (loss) per common share - basic and diluted		$	0.05			$	(0.03	)		$	0.08			$	(0.03	)
Weighted average shares O/S - basic			9,681				9,673				9,679				9,673
Weighted average shares O/S - diluted			9,966				9,673				9,942				9,673

KEY TRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

		January 1 2005				July 3 2004
ASSETS
Current Assets:
Cash and cash equivalents		$	1,093			$	600
Trade receivables - net			26,937				24,439
Inventories			30,387				27,848
Other			2,454				1,833
Total current assets			60,871				54,720
Property, plant and equipment, net			10,445				11,131
Other Assets:
Restricted cash			1,013				705
Other - net			595				617
Goodwill - net			765				765
Total other assets			2,373				2,087
Total Assets		$	73,689			$	67,938
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current portion of long term obligations		$	422			$	606
Accounts payable			26,011				24,354
Accrued compensation and vacation			3,682				4,015
Litigation settlement			1,795				925
Other			1,854				1,352
Total current liabilities			33,764				31,252
Long-Term Liabilities:
Revolving loan			14,930				10,851
Litigation settlement			—				1,536
Other			991				1,065
Total long-term liabilities			15,921				13,452
Shareholders’ Equity:
Common stock, no par value, authorized 25,000 shares; issued and outstanding 9,681 and 9,676 shares			38,411				38,397
Retained deficit			(14,407	)			(15,163	)
Total shareholders’ equity			24,004				23,234
Total Liabilities and Shareholders’ Equity		$	73,689			$	67,938