EXHIBIT 99.1
FOR IMMEDIATE RELEASE
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| CONTACTS: | | Ron Klawitter | | Michael Newman | | |
| | | Chief Financial Officer | | Investor Relations | | |
| | | Key Tronic Corporation | | StreetConnect | | |
| | | (509) 927-5295 | | (206) 729-3625 | | |
KEY TRONIC CORPORATION ANNOUNCES FIRST QUARTER RESULTS
Strong Year-over-Year Earnings Improvement
Spokane, WA— November 1, 2005 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended October 1, 2005.
For the first quarter of fiscal 2006, Key Tronic reported total revenue of $44.3 million, compared to $48.8 million for the first quarter of fiscal 2005. Net income for the first quarter of fiscal 2006 was $702,000 or $0.07 per diluted share, up 166% from $266,000 or $0.03 per share for the first quarter of fiscal 2005.
“We anticipated a decline in our revenue in the first quarter based upon forecasts from existing customers and new programs have not ramped up rapidly enough to offset the decline,” said Jack Oehlke, President and Chief Executive Officer. “At the same time, our improved production efficiencies have resulted in solid margins and increased year-over-year operating income and earnings. We also strengthened our balance sheet by reducing current liabilities as a result of reducing accounts payable and paying off the remaining portion of the longstanding litigation settlement.”
“In the second quarter, we continue to pursue new programs and stay focused on improving operating efficiencies, controlling costs and maintaining profitability. We remain a strong competitor for winning new EMS business and we are well-positioned to capitalize on the long-term opportunities ahead.”
In the second quarter of fiscal 2006, the Company expects revenue in the range of $42 million to $46 million and earnings between $0.06 and $0.10 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 +1 303-262-2130. A 48-hour replay will be available by calling 800-405-2236 or +1 303-590-3000 (Reservation No. 11040056). 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 OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
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| | | First Quarters Ended
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| | | October 1
2005
| | September 27
2004
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Net sales | | $ | 44,250 | | $ | 48,774 |
Cost of sales | | | 40,398 | | | 45,226 |
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Gross profit on sales | | | 3,852 | | | 3,548 |
Operating expenses: | | | | | | |
Research, development and engineering | | | 662 | | | 705 |
Selling | | | 568 | | | 493 |
General and administrative | | | 1,652 | | | 1,668 |
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| | | | 2,882 | | | 2,866 |
Operating income | | | 970 | | | 682 |
Interest expense | | | 261 | | | 299 |
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Income before income taxes | | | 709 | | | 383 |
Income tax provision | | | 7 | | | 117 |
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Net income | | $ | 702 | | $ | 266 |
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Earnings per share: | | | | | | |
Earnings per common share - basic | | $ | 0.07 | | $ | 0.03 |
Weighted average shares O/S - basic | | | 9,696 | | | 9,677 |
Earnings per common share - diluted | | $ | 0.07 | | $ | 0.03 |
Weighted average shares O/S - diluted | | | 10,140 | | | 9,914 |
KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
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| | | October 1
2005
| | | July 2
2005
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ASSETS | | | | | | | | |
Current Assets: | | | | | | | | |
Cash and cash equivalents | | $ | 1,865 | | | $ | 1,463 | |
Trade receivables - net | | | 18,925 | | | | 24,191 | |
Inventories | | | 26,808 | | | | 29,712 | |
Other | | | 3,179 | | | | 3,482 | |
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Total current assets | | | 50,777 | | | | 58,848 | |
Property, plant and equipment, net | | | 10,452 | | | | 10,011 | |
Other Assets: | | | | | | | | |
Restricted cash | | | 2,073 | | | | 1,158 | |
Real estate | | | 1,693 | | | | 1,693 | |
Other - net | | | 762 | | | | 426 | |
Goodwill | | | 765 | | | | 765 | |
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Total other assets | | | 5,293 | | | | 4,042 | |
Total Assets | | $ | 66,522 | | | $ | 72,901 | |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
Current Liabilities: | | | | | | | | |
Current portion of long term obligations | | $ | 710 | | | $ | 735 | |
Accounts payable | | | 18,942 | | | | 25,475 | |
Accrued compensation and vacation | | | 3,360 | | | | 5,241 | |
Litigation settlement | | | — | | | | 812 | |
Other | | | 2,257 | | | | 3,579 | |
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Total current liabilities | | | 25,269 | | | | 35,842 | |
Long-Term Liabilities: | | | | | | | | |
Revolving loan | | | 10,920 | | | | 7,412 | |
Other | | | 1,952 | | | | 2,008 | |
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Total long-term liabilities | | | 12,872 | | | | 9,420 | |
Shareholders’ Equity: | | | | | | | | |
Common stock, no par value, authorized 25,000 shares; issued and outstanding 9,703 and 9,694 shares | | | 38,466 | | | | 38,426 | |
Retained deficit | | | (10,085 | ) | | | (10,787 | ) |
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Total shareholders’ equity | | | 28,381 | | | | 27,639 | |
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Total Liabilities and Shareholders’ Equity | | $ | 66,522 | | | $ | 72,901 | |
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