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

THIRD QUARTER RESULTS

Year-to-Date Earnings Up 64%; Several New Customer Wins

Spokane, WA—May 2, 2006 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended April 1, 2006.

For the third quarter of fiscal 2006, Key Tronic reported total revenue of $45.6 million, compared to $45.4 million for the previous quarter and $49.7 million for the third quarter of fiscal 2005. For the first nine months of fiscal 2006, total revenue was $135.2 million, compared to $149.7 million in the same period of fiscal 2005.

Net income for the third quarter of fiscal 2006 was $917,000 or $0.09 per diluted share, compared to $1.0 million or $0.10 per diluted share in the previous quarter and $852,000 or $0.09 per share for the third quarter of fiscal 2005. For the first nine months of fiscal 2006, net income was $2.6 million or $0.26 per diluted share, up 64% from $1.6 million or $0.16 per share for the same period of fiscal 2005.

“We had another solid quarter with strong operating efficiencies and continued year-over-year earnings growth, despite the challenge of helping our customers meet the new European Directive on the restriction of the use of hazardous substances in electrical and electronic equipment (RoHS),” said Jack Oehlke, President and Chief Executive Officer. “During the third quarter, we won new business for programs involving industrial tools, networking equipment, specialty printers, scientific instruments and security surveillance devices which we expect to contribute revenue in the next fiscal year. In coming periods, we anticipate that most of the RoHS conversion effort will be behind us and believe Key Tronic is well-positioned to continue to grow profitably and win new business.”

In the fourth quarter of fiscal 2006, the Company expects revenue in the range of $46 million to $50 million and earnings between $0.07 and $0.12 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 800-366-7417 or +1 303-262-2125. A 48-hour replay will be available by calling 800-405-2236 or +1 303-590-3000 (Reservation No. 11057943). 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 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 2006. 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 EARNINGS

(In thousands, except per share amounts)

(Unaudited)

		Third Quarters Ended							Nine Months Ended
		April 1 2006			April 2 2005				April 1 2006			April 2 2005
Net sales		$	45,567		$	49,726			$	135,177		$	149,726
Cost of sales			41,590			45,676			$	123,248			138,137
Gross profit on sales			3,977			4,050				11,929			11,589
Operating expenses:
Research, development and engineering			698			713				2,030			2,126
Selling			529			556				1,587			1,578
General and administrative			1,559			1,724				4,865			5,240
Total operating expenses			2,786			2,993				8,482			8,944
Operating income			1,191			1,057				3,447			2,645
Interest expense			274			296				810			903
Other (income) expense			—			—				—			(13	)
Income before income taxes			917			761				2,637			1,755
Income tax provision (benefit)			—			(91	)			—			147
Net income		$	917		$	852			$	2,637		$	1,608
Earnings per share:
Earnings per common share - basic		$	0.09		$	0.09			$	0.27		$	0.17
Weighted average shares O/S - basic			9,705			9,687				9,701			9,682
Earnings per common share - diluted		$	0.09		$	0.09			$	0.26		$	0.16
Weighted average shares O/S - diluted			10,064			9,901				10,074			9,922

KEY TRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

		April 1 2006				July 2 2005
ASSETS
Current Assets:
Cash and cash equivalents		$	1,791			$	1,463
Trade receivables - net			23,373				24,191
Inventories			30,419				29,712
Other			3,520				3,482
Total current assets			59,103				58,848
Property, plant and equipment, net			10,103				10,011
Other Assets:
Restricted cash			946				1,158
Real estate			1,693				1,693
Other - net			847				426
Goodwill			765				765
Total other assets			4,251				4,042
Total Assets		$	73,457			$	72,901
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	22,001			$	25,475
Accrued compensation and vacation			3,687				5,241
Current portion of long term obligations			689				735
Litigation settlement			—				812
Other			3,602				3,579
Total current liabilities			29,979				35,842
Long-Term Liabilities:
Revolving loan			11,366				7,412
Other			1,772				2,008
Total long-term liabilities			13,138				9,420
Shareholders’ Equity:
Common stock, no par value, authorized 25,000 shares; issued and outstanding 9,709 and 9,694 shares			38,489				38,426
Retained deficit			(8,149	)			(10,787	)
Total shareholders’ equity			30,340				27,639
Total Liabilities and Shareholders’ Equity		$	73,457			$	72,901