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

Fourth Quarter Revenue Up 17% Year-over-Year; Strong Gross Margins

Highest Revenue Since Executing EMS Strategy;

Continued Expansion and Diversification of Customer Base

Spokane Valley, WA— August 19, 2008 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the fourth quarter and year ended June 28, 2008.

For the fourth quarter of fiscal 2008, Key Tronic reported total revenue of $57.3 million, up 17% from $49.2 million in the same period of fiscal 2007. For fiscal 2008, total revenue was $204.1 million, up from $201.7 million for fiscal 2007.

Net income for the fourth quarter of fiscal 2008 was $2.6 million or $0.25 per diluted share, compared to $2.7 million or $0.26 per diluted share for the same period of fiscal 2007. Results for the fourth quarter of fiscal 2007 included the benefit of approximately $1.5 million or $0.14 per diluted share from the sale of a facility. For fiscal 2008, net income was $5.6 million or $0.54 per diluted share, up 7% from $5.2 million or $0.51 per diluted share for fiscal 2007.

“We are pleased with our performance for the fourth quarter and for the year,” said Jack Oehlke, President and Chief Executive Officer. “Our year-over-year revenue growth was driven by increased demand from new customer programs, which continue to ramp up. For the fourth quarter and for the year, we achieved the highest revenue since implementing our EMS strategy. In the fourth quarter, we saw very strong year-over-year revenue growth and the strongest gross margins we’ve seen in many years.

“During the fourth quarter, we continued to diversify our customer portfolio across a wide range of industries, winning new customers involved in telecommunications, industrial equipment, fuel cell technology and consumer products. During the year, we had 8 new customers contributing about 13% of our total revenue. In fiscal 2009, we expect 10 additional new customers to come on line. Together, we expect these 18 new customers to contribute approximately 40% of our revenue in fiscal 2009, offsetting the anticipated decline in demand from some of our existing customers.

“While the industry confronts the challenging economic environment, our sustained investment in our world-class facilities in Mexico provides us with strong competitive advantages in a time of rising labor, fuel and transportation costs. We believe Key Tronic is increasingly well-positioned to pursue and win new opportunities for profitable growth in fiscal 2009 and beyond.”

Business Outlook

For the first quarter of fiscal 2009, the Company expects revenue in the range of $45 million to $48 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 +1 303-262-2137. A 48-hour replay will be available by calling 800-405-2236 or +1 303-590-3000 (Reservation No. 11116514). 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 2009. 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							Twelve Months Ended
		June 28 2008			June 30 2007				June 28 2008				June 30 2007
Net sales		$	57,287		$	49,159			$	204,122			$	201,712
Cost of sales			51,263			44,704				187,302				184,042
Gross profit on sales			6,024			4,455				16,820				17,670
Operating expenses:
Research, development and engineering			679			695				2,676				3,162
Selling			549			437				1,650				1,776
General and administrative			1,861			1,616				6,611				7,387
Gain on sale of real estate			—			(1,465	)			(951	)			(1,465	)
Total operating expenses			3,089			1,283				9,986				10,860
Operating income			2,935			3,172				6,834				6,810
Interest expense			225			309				989				1,374
Income before income taxes			2,710			2,863				5,845				5,436
Income tax provision			112			139				261				206
Net income		$	2,598		$	2,724			$	5,584			$	5,230
Earnings per share:
Earnings per common share - basic		$	0.26		$	0.27			$	0.56			$	0.53
Weighted average shares O/S - basic			10,024			9,920				9,997				9,898
Earnings per common share - diluted		$	0.25		$	0.26			$	0.54			$	0.51
Weighted average shares O/S - diluted			10,187			10,302				10,267				10,342

KEY TRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

		June 28 2008			June 30 2007
ASSETS
Current Assets:
Cash and cash equivalents		$	2,879		$	3,386
Trade receivables - net			36,018			30,383
Inventories			37,927			32,346
Other			4,893			6,532
Total current assets			81,717			72,647
Property, plant and equipment, net			10,798			11,248
Other Assets:
Restricted cash			39			509
Deferred income tax asset - net			4,210			3,500
Other - net			815			719
Goodwill			765			765
Total other assets			5,829			5,493
Total Assets		$	98,344		$	89,388
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	29,497		$	24,104
Accrued compensation and vacation			4,388			3,713
Current portion of long term obligations			470			344
Other			1,667			3,264
Total current liabilities			36,022			31,425
Long-Term Liabilities:
Revolving loan			12,348			13,081
Other			893			1,638
Total long-term liabilities			13,241			14,719
Shareholders’ Equity:
Common stock, no par value, authorized 25,000 shares; issued and outstanding 10,024 and 9,921 shares			39,301			39,048
Retained earnings			9,780			4,196
Total shareholders’ equity			49,081			43,244
Total Liabilities and Shareholders’ Equity		$	98,344		$	89,388