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

FOURTH QUARTER AND YEAR END RESULTS

Continued Expansion of Customer Base

Spokane Valley, WA— August 21, 2007 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter and fiscal year ended June 30, 2007.

For the fourth quarter of fiscal 2007, Key Tronic reported total revenue of $49.2 million, compared to $47.2 million in the previous quarter and $52.5 million in the fourth quarter of fiscal 2006. For fiscal year 2007, total revenue was $201.7 million, up 7% from $187.7 million for fiscal 2006.

Net income for the fourth quarter of fiscal 2007 was $2.7 million or $0.26 per diluted share, which included a benefit from the Company’s sale of its former facility in Las Cruces, New Mexico, of approximately $1.5 million or $0.14 per diluted share. This compares to $7.1 million or $0.71 per diluted share for the fourth quarter of fiscal 2006, which included an income tax benefit of approximately $5.0 million or $0.50 per diluted share. For fiscal 2007, net income was $5.2 million or $0.51 per diluted share, compared to $9.8 million or $1.00 per diluted share for fiscal 2006.

“During the year, we saw our new programs contributing a growing portion of our revenue and we continued to win new business in a wide range of industries,” said Jack Oehlke, President and Chief Executive Officer. “In the fourth quarter, we won significant new customer programs involving data storage devices, networking equipment, specialty printers, industrial controllers and personal exercise equipment. We expect these new programs to begin contributing revenue in the second half of fiscal 2008.”

“During fiscal 2007, we continued to invest in our business, strengthen our balance sheet and improve our asset utilization. We purchased a new building to consolidate and expand our operations in Mexico, added a new SMT production facility in Spokane Valley and completed the sale of our Las Cruces facility. We are also pleased with our solid operational efficiency and improvements in our inventory management.”

“Moving into fiscal 2008, we believe Key Tronic continues to demonstrate its ability to provide a wide range of EMS services, involving electrical and mechanical engineering, precision plastic molding, worldwide logistics and more. As a result, we have become more competitive in pursuing opportunities with both existing and new customers, while we continue to focus on controlling costs and maintaining outstanding customer service. We feel well positioned for profitable growth in fiscal 2008 and beyond.”

Business Outlook

For the first quarter of fiscal 2008, the Company is seeing slower demand from a number of customers. As a result, the Company expects revenue in the range of $42 million to $45 million, with earnings in the range of $0.02 to $0.05 per share.

Conference Call

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 +1 303-262-2130. A 48-hour replay will be available by calling 800-405-2236 or +1 303-590-3000 (Reservation No. 11094043). 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 2008. 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; acquisitions or divestitures of operations or facilities; 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)

		Fourth Quarters Ended								Year Ended
		June 30 2007				July 1 2006				June 30 2007				July 1 2006
Net sales		$	49,159			$	52,522			$	201,712			$	187,699
Cost of sales			44,704				47,147			$	184,042				170,395
Gross profit on sales			4,455				5,375				17,670				17,304
Operating expenses:
Research, development and engineering			695				732				3,162				2,762
Selling			437				524				1,776				2,111
General and administrative			1,616				1,705				7,387				6,570
Gain on sale of real estate held for sale			(1,465	)			—				(1,465	)			—
Total operating expenses			1,283				2,961				10,860				11,443
Operating income			3,172				2,414				6,810				5,861
Interest expense, net			309				298				1,374				1,108
Income before income taxes			2,863				2,116				5,436				4,753
Income tax provision (benefit)			139				(5,000	)			206				(5,000	)
Net income		$	2,724			$	7,116			$	5,230			$	9,753
Earnings per share:
Earnings per common share - basic		$	0.27			$	0.73			$	0.53			$	1.00
Weighted average shares O/S - basic			9,920				9,724				9,898				9,707
Earnings per common share - diluted		$	0.26			$	0.71			$	0.51			$	0.97
Weighted average shares O/S - diluted			10,302				10,093				10,342				10,070

KEY TRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

		June 30 2007			July 1 2006
ASSETS
Current Assets:
Cash and cash equivalents		$	3,386		$	2,428
Trade receivables - net			30,383			29,003
Inventories			32,346			36,338
Other			6,532			3,416
Total current assets			72,647			71,185
Property, plant and equipment, net			11,248			9,807
Other Assets:
Restricted cash			509			874
Real estate			—			1,698
Deferred income tax asset - net			3,500			3,500
Other - net			719			866
Goodwill			765			765
Total other assets			5,493			7,703
Total Assets		$	89,388		$	88,695
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	24,104		$	31,228
Accrued compensation and vacation			3,713			4,477
Current portion of long term obligations			344			689
Other			3,264			3,088
Total current liabilities			31,425			39,482
Long-Term Liabilities:
Revolving loan			13,081			10,069
Other			1,638			1,596
Total long-term liabilities			14,719			11,665
Shareholders’ Equity:
Common stock, no par value, authorized 25,000 shares; issued and outstanding 9,921 and 9,750 shares			39,048			38,582
Retained earnings (deficit)			4,196			(1,034	)
Total shareholders’ equity			43,244			37,548
Total Liabilities and Shareholders’ Equity		$	89,388		$	88,695