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
SECOND QUARTER RESULTS
Growing Revenue Contribution from New Customers:
Improved Year-over-Year Operating Efficiencies
Spokane Valley, WA— January 29, 2009 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended December 27, 2008.
For the second quarter of fiscal 2009, Key Tronic reported total revenue of $47.0 million, compared to $50.8 million in the same period of fiscal 2008. For the first six months of fiscal 2009, total revenue was $95.2 million, compared to $95.4 million in the same period of fiscal 2008.
Net income for the second quarter of fiscal 2009 was $0.1 million or $0.01 per diluted share, compared to $1.6 million or $0.16 per diluted share for the same period of fiscal 2008. For the first six months of fiscal 2009, net income was $0.5 million or $0.05 per diluted share, compared to $1.8 million or $0.18 per diluted share for the same period in fiscal 2008.
Results for the second quarter of fiscal 2009 included a charge of approximately $0.8 million or $0.08 per diluted share for goodwill impairment as required under Statement of Financial Accounting Standards No. 142 regarding Goodwill and Other Intangibles. Results for the second quarter of fiscal 2008 included a gain of approximately $1.0 million or $0.09 per diluted share from the sale of a facility.
“We are pleased with our operating performance for the second quarter, which was in line with our forecasts,” said Jack Oehlke, President and Chief Executive Officer. “While the global economic situation continues to create slowdowns among some of our existing programs, we saw an increased revenue contribution from new customer programs. In the third quarter, we expect more of our promising new customer programs to move into production.
“Moving into the second half of fiscal 2009, the pipeline of prospective new programs remains robust despite the challenging economic environment. Our world-class facilities and unique set of capabilities continue to give us strong competitive advantages. In coming periods, we expect to win new business and further diversify our customer portfolio across a wide range of industries.”
Business Outlook
For the third quarter of fiscal 2009, the Company expects revenue in the range of $42 million to $46 million, with earnings in the range of breakeven to $0.02 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 800-219-6110 or +1 303-262-2130. A 48-hour replay will be available by calling 800-405-2236 or +1 303-590-3000 (Reservation No. 11124551). 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 future of the global economic environment and its impact on our customers and suppliers, 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)
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| | | Second Quarters Ended | | | Six Months Ended | |
| | | December 27
2008 | | December 29
2007 | | | December 27
2008 | | December 29
2007 | |
Net sales | | $ | 46,990 | | $ | 50,824 | | | $ | 95,227 | | $ | 95,374 | |
Cost of sales | | | 43,174 | | | 47,317 | | | | 88,004 | | | 88,805 | |
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Gross profit on sales | | | 3,816 | | | 3,507 | | | | 7,223 | | | 6,569 | |
Operating expenses: | | | | | | | | | | | | | | |
Research, development and engineering | | | 592 | | | 641 | | | | 1,218 | | | 1,318 | |
Selling, general and administrative | | | 2,056 | | | 1,872 | | | | 4,193 | | | 3,770 | |
Goodwill impairment | | | 765 | | | — | | | | 765 | | | — | |
Gain on sale of real estate | | | — | | | (951 | ) | | | — | | | (951 | ) |
| | | | | | | | | | | | | | |
| | | 3,413 | | | 1,562 | | | | 6,176 | | | 4,137 | |
Operating income | | | 403 | | | 1,945 | | | | 1,047 | | | 2,432 | |
Interest expense | | | 180 | | | 241 | | | | 362 | | | 510 | |
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Income before income taxes | | | 223 | | | 1,704 | | | | 685 | | | 1,922 | |
Income tax provision | | | 117 | | | 68 | | | | 171 | | | 103 | |
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Net income | | $ | 106 | | $ | 1,636 | | | $ | 514 | | $ | 1,819 | |
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Earnings per share: | | | | | | | | | | | | | | |
Earnings per common share - basic | | $ | 0.01 | | $ | 0.16 | | | $ | 0.05 | | $ | 0.18 | |
Weighted average shares outstanding - basic | | | 10,065 | | | 10,013 | | | | 10,053 | | | 9,971 | |
Earnings per common share - diluted | | $ | 0.01 | | $ | 0.16 | | | $ | 0.05 | | $ | 0.18 | |
Weighted average shares outstanding - diluted | | | 10,073 | | | 10,341 | | | | 10,081 | | | 10,321 | |
KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| | | | | | | |
| | | December 27
2008 | | | June 28
2008 |
ASSETS | | | | | | | |
Current assets: | | | | | | | |
Cash and cash equivalents | | $ | 1,507 | | | $ | 2,879 |
Trade receivables | | | 29,502 | | | | 36,018 |
Inventories | | | 37,551 | | | | 37,927 |
Other | | | 4,343 | | | | 4,893 |
| | | | | | | |
Total current assets | | | 72,903 | | | | 81,717 |
Property, plant and equipment - net | | | 10,306 | | | | 10,798 |
Other assets: | | | | | | | |
Restricted cash | | | 525 | | | | 39 |
Deferred income tax asset | | | 4,200 | | | | 4,210 |
Other | | | 757 | | | | 815 |
Goodwill | | | — | | | | 765 |
| | | | | | | |
Total other assets | | | 5,482 | | | | 5,829 |
Total assets | | $ | 88,691 | | | $ | 98,344 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | |
Current liabilities: | | | | | | | |
Accounts payable | | $ | 22,486 | | | $ | 29,497 |
Accrued compensation and vacation | | | 2,556 | | | | 4,388 |
Current portion of other long term obligations | | | 450 | | | | 470 |
Revolving loan | | | 10,995 | | | | — |
Other | | | 1,936 | | | | 1,667 |
| | | | | | | |
Total current liabilities | | | 38,423 | | | | 36,022 |
Long-term liabilities: | | | | | | | |
Revolving loan | | | — | | | | 12,348 |
Other long-term obligations | | | 728 | | | | 893 |
| | | | | | | |
Total long-term liabilities | | | 728 | | | | 13,241 |
Shareholders’ equity: | | | | | | | |
Common stock, no par value - share authorized 25,000; issued and outstanding 10,066 and 10,024 shares, respectively | | | 39,359 | | | | 39,301 |
Retained earnings | | | 10,294 | | | | 9,780 |
Accumulated other comprehensive income | | | (113 | ) | | | — |
| | | | | | | |
Total shareholders’ equity | | | 49,540 | | | | 49,081 |
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Total liabilities and shareholders’ equity | | $ | 88,691 | | | $ | 98,344 |
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