Key Tronic (KTCC) 8-K Expecting Strong Revenue and Earnings Growth in Second Half of Fiscal 2008

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

FIRST QUARTER RESULTS

Growing Revenue Contribution from New Customers;

Expecting Strong Revenue and Earnings Growth in Second Half of Fiscal 2008

Spokane Valley, WA— October 30, 2007 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended September 29, 2007.

For the first quarter of fiscal 2008, Key Tronic reported total revenue of $44.6 million, compared to $55.5 million in the same period of fiscal 2007. Net income for the first quarter of fiscal 2008 was $0.2 million or $0.02 per diluted share, compared to $1.4 million or $0.14 per diluted share for the same period of fiscal 2007.

“As anticipated, we saw slower demand from a number of our established customers in the first quarter of fiscal 2008, while our new programs contributed a growing portion of our revenue,” said Jack Oehlke, President and Chief Executive Officer. “We expect both our established customers and our new customer programs to drive strong revenue and earnings growth in the second half of fiscal 2008.”

“By the end of the fiscal year, we expect to have over 10 new customer programs generating significant revenue streams. We anticipate having a more diversified customer portfolio and a less concentrated revenue base, spanning a wider range of industries. As we continue to execute our long-term strategic plan, we believe Key Tronic is successfully expanding its market presence and becoming more competitive in pursuit of new business as well as maintaining strong relationships with our established customers. We are excited about our progress and our potential for profitable growth in coming periods.”

Business Outlook

For the second quarter of fiscal 2008, the Company expects revenue in the range of $45 million to $48 million, with earnings in the range of $0.03 to $0.06 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 atwww.keytronic.com under “Investor Relations” or by calling 800-218-0713 or +1 303-262-2211. A 48-hour replay will be available by calling 800-405-2236 or +1 303-590-3000 (Reservation No. 11098605). 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 OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	First Quarters Ended
	September 29 2007		September 30 2006
Net sales	$	44,550	$	55,512
Cost of sales		41,488		50,218
Gross profit on sales		3,062		5,294
Operating expenses:
Research, development and engineering		677		893
Selling		330		520
General and administrative		1,568		2,064
		2,575		3,477
Operating income		487		1,817
Interest expense		269		333
Income before income taxes		218		1,484
Income tax provision		35		65
Net income	$	183	$	1,419
Earnings per share:
Earnings per common share—basic	$	0.02	$	0.14
Weighted average shares outstanding—basic		9,928		9,842
Earnings per common share—diluted	$	0.02	$	0.14
Weighted average shares outstanding—diluted		10,328		10,458

KEY TRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	September 29 2007		June 30 2007
ASSETS
Current Assets:
Cash and cash equivalents	$	904	$	3,386
Trade receivables—net		26,592		30,383
Inventories		34,077		32,346
Other		7,307		6,532
Total current assets		68,880		72,647
Property, plant and equipment, net		11,128		11,248
Other Assets:
Restricted cash		130		509
Deferred income tax asset—net		3,500		3,500
Other—net		645		719
Goodwill		765		765
Total other assets		5,040		5,493
Total Assets	$	85,048	$	89,388
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	24,960	$	24,104
Accrued compensation and vacation		3,161		3,713
Current portion of long term obligations		349		344
Other		3,122		3,264
Total current liabilities		31,592		31,425
Long-Term Liabilities:
Revolving loan		8,857		13,081
Other		1,049		1,638
Total long-term liabilities		9,906		14,719
Shareholders’ Equity:
Common stock, no par value, authorized 25,000 shares; issued and outstanding 9,971 and 9,921 shares		39,171		39,048
Retained earnings		4,379		4,196
Total shareholders’ equity		43,550		43,244
Total Liabilities and Shareholders’ Equity	$	85,048	$	89,388