Exhibit 99.1
FOR IMMEDIATE RELEASE
| CONTACTS: | | Ron Klawitter | | Michael Newman |
| | | Chief Financial Officer Key Tronic Corporation (509) 927-5295 | | Investor Relations StreetConnect (206) 729-3625 |
KEY TRONIC CORPORATION ANNOUNCES FIRST QUARTER RESULTS
Preparing for Growth in Second Half of Fiscal 2004
Spokane, WA—October 28, 2003—Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended September 27, 2003.
For the first quarter of fiscal 2004, Key Tronic reported total revenue of $34.7 million, compared to $35.7 million in the previous quarter and $34.0 million for the first quarter of fiscal 2003. Net income for the first quarter of fiscal 2004 was $20,000 or $0.00 per share, compared to $551,000 or $0.06 per share in the previous period and $12.5 million or $1.29 per share for the first quarter of fiscal 2003. Net income for the first quarter of fiscal 2003 included a benefit of $12.2 million or $1.26 per share from a litigation settlement, which related to a charge of $24.7 million or ($2.55) per share for a litigation judgment and associated tax expense in fiscal 2002.
“As we move into fiscal 2004, we are gradually booking new business, continuing to focus on controlling our costs and expanding our manufacturing capacity in preparation for future growth,” said Jack Oehlke, President and Chief Executive Officer. “Despite the worldwide economic challenges for our industry, we established new customer relationships in the first quarter involving specialty printer components and computer accessories.”
“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 expect revenue in the range of $31 million to $34 million, and near breakeven results. We anticipate growing revenue and earnings in the second half of fiscal 2004, when a number of our new programs move from the design and development stage into full production.”
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 800-218-0713 or +1 303-262-2050 (Reservation No. 554971). A 48-hour replay will be available by calling 800-405-2236 or +1 303-590-3000 (Reservation No. 554971). 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)
| | | First Quarters Ended
| |
| | | September 27
2003
| | | September 28
2002
| |
Net sales | | $ | 34,652 | | | $ | 34,034 | |
Cost of sales | | | 31,236 | | | | 30,528 | |
| | |
|
|
| |
|
|
|
Gross profit on sales | | | 3,416 | | | | 3,506 | |
Operating expenses: | | | | | | | | |
Research, development and engineering | | | 700 | | | | 710 | |
Selling | | | 508 | | | | 467 | |
General and administrative | | | 1,764 | | | | 1,794 | |
| | |
|
|
| |
|
|
|
Total operating expenses | | | 2,972 | | | | 2,971 | |
Operating income | | | 444 | | | | 535 | |
Interest expense | | | 258 | | | | 238 | |
Litigation settlement | | | — | | | | (12,186 | ) |
Other income | | | (7 | ) | | | (235 | ) |
| | |
|
|
| |
|
|
|
Income before income taxes | | | 193 | | | | 12,718 | |
Income tax provision | | | 173 | | | | 239 | |
| | |
|
|
| |
|
|
|
Net income | | $ | 20 | | | $ | 12,479 | |
| | |
|
|
| |
|
|
|
Earnings per share: | | | | | | | | |
Earnings per common share—basic and diluted | | $ | 0.00 | | | $ | 1.29 | |
Weighted average shares O/S—basic | | | 9,673 | | | | 9,673 | |
Weighted average shares O/S—diluted | | | 9,775 | | | | 9,673 | |
KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| | | September 27 2003
| | | June 29 2003
| |
ASSETS | | | | | | | | |
Current Assets: | | | | | | | | |
Cash and cash equivalents | | $ | 621 | | | $ | 956 | |
Trade receivables—net | | | 20,448 | | | | 17,078 | |
Inventories | | | 22,275 | | | | 24,151 | |
Other | | | 2,444 | | | | 2,050 | |
| | |
|
|
| |
|
|
|
Total current assets | | | 45,788 | | | | 44,235 | |
Property, plant and equipment at cost | | | 86,615 | | | | 86,469 | |
Less accumulated depreciation | | | 75,007 | | | | 74,487 | |
| | |
|
|
| |
|
|
|
Total property, plant and equipment | | | 11,608 | | | | 11,982 | |
Other Assets: | | | | | | | | |
Restricted cash | | | 759 | | | | 1,142 | |
Other—net | | | 957 | | | | 1,001 | |
Goodwill—net | | | 765 | | | | 765 | |
| | |
|
|
| |
|
|
|
Total other assets | | | 2,481 | | | | 2,908 | |
| | |
|
|
| |
|
|
|
Total Assets | | $ | 59,877 | | | $ | 59,125 | |
| | |
|
|
| |
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
Current Liabilities: | | | | | | | | |
Current portion of long term obligations | | $ | 600 | | | $ | 730 | |
Accounts payable | | | 15,898 | | | | 13,145 | |
Accrued compensation and vacation | | | 4,277 | | | | 4,213 | |
Litigation settlement | | | 823 | | | | 1,124 | |
Other | | | 2,225 | | | | 3,240 | |
| | |
|
|
| |
|
|
|
Total current liabilities | | | 23,823 | | | | 22,452 | |
Long-Term Liabilities: | | | | | | | | |
Revolving loan | | | 9,497 | | | | 9,864 | |
Litigation settlement | | | 2,370 | | | | 2,593 | |
Other | | | 1,047 | | | | 1,096 | |
| | |
|
|
| |
|
|
|
Total long-term liabilities | | | 12,914 | | | | 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 | | | (15,253 | ) | | | (15,273 | ) |
| | |
|
|
| |
|
|
|
Total shareholders’ equity | | | 23,140 | | | | 23,120 | |
| | |
|
|
| |
|
|
|
Total Liabilities and Shareholders’ Equity | | $ | 59,877 | | | $ | 59,125 | |
| | |
|
|
| |
|
|
|
