Key Tronic (KTCC) 8-K Fourth Quarter and Year-end Results

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

Growing Revenue Contribution from New Customers:

Maintaining Profitability; Strengthening Balance Sheet; Winning New Business

Spokane Valley, WA — August 18, 2009 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter and year ended June 27, 2009.

For the fourth quarter of fiscal 2009, Key Tronic reported total revenue of $45.5 million, compared to $57.3 million in the same period of fiscal 2008. For the full year of fiscal 2009, total revenue was $184.9 million, compared to $204.1 million for fiscal 2008.

Net income for the fourth quarter of fiscal 2009 was $0.3 million or $0.03 per diluted share, compared to $2.6 million or $0.25 per diluted share for the same period of fiscal 2008. Results for the fourth quarter of fiscal 2009 included charges of approximately $0.7 million or $0.07 per diluted share for severance charges related to cost reduction efforts. For the full year of fiscal 2009, net income was $1.1 million or $0.11 per diluted share, compared to $5.6 million or $0.54 per diluted share for fiscal 2008.

“We successfully confronted the challenging global economic environment in the second half of fiscal 2009 by reducing our costs while ramping up our new customer programs, which allowed us to maintain our profitability and strengthen our balance sheet,” said Craig Gates, President and Chief Executive Officer. “Despite the current economic uncertainty, our strong financial position and string of 22 consecutive profitable quarters have helped us to win additional new programs and further diversify our customer portfolio across a wide range of industries. During the fourth quarter, we won new programs involving gaming technology, consumer medical devices, computer networking and HVAC control systems.

“As we move into fiscal 2010, we continue to focus on controlling operating expense and on leveraging the synergistic capabilities of our world-class facilities in Mexico, China and the US. We’re also taking steps to further increase the efficiency of our supply chain and new product introduction processes. Given our competitive advantages and the growing need for some potential customers to move forward with their outsourcing strategies, we’re strongly positioned to win new business in coming periods and grow our revenue and profits as the economy rebounds.”

Business Outlook

For the first quarter of fiscal 2010, the Company expects revenue in the range of $41 million to $44 million, with earnings in the range of $0.01 to $0.03 per share. In addition, the Company has a commitment letter from a bank for a new line of credit agreement which it expects to sign before August 22, 2009

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 800-762-8779 or +1 480-629-9770. A 48-hour replay will be available by calling 800-406-7325 or +1 303 590 3030 (Access Code: 4099852). 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 2010. 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)

	Fourth Quarters Ended					Twelve Months Ended
	June 27 2009			June 28 2008		June 27 2009		June 28 2008
Net sales	$	45,464		$	57,287	$	184,924	$	204,122
Cost of sales		42,819			51,263		171,744		187,302
Gross profit on sales		2,645			6,024		13,180		16,820
Operating expenses:
Research, development and engineering		515			679		2,266		2,676
Selling, general and administrative		1,833			2,410		8,366		8,261
Goodwill impairment		—			—		765		—
Gain on sale of real estate		—			—		—		(951	)
		2,348			3,089		11,397		9,986
Operating income		297			2,935		1,783		6,834
Interest expense		97			225		590		989
Income before income taxes		200			2,710		1,193		5,845
Income tax (benefit) provision		(87	)		112		130		261
Net income	$	287		$	2,598	$	1,063	$	5,584
Earnings per share:
Earnings per common share - basic	$	0.03		$	0.26	$	0.11	$	0.56
Weighted average shares outstanding - basic		10,066			10,024		10,059		9,997
Earnings per common share - diluted	$	0.03		$	0.25	$	0.11	$	0.54
Weighted average shares outstanding - diluted		10,074			10,187		10,075		10,267

KEY TRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	June 27 2009		June 28 2008
ASSETS
Current assets:
Cash and cash equivalents	$	729	$	2,879
Trade receivables		24,867		36,018
Inventories		32,291		37,927
Other		3,168		4,893
Total current assets		61,055		81,717
Property, plant and equipment - net		11,199		10,798
Other assets:
Restricted cash		124		39
Deferred income tax asset		4,611		4,210
Other		766		815
Goodwill		—		765
Total other assets		5,501		5,829
Total assets	$	77,755	$	98,344
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	18,703	$	29,497
Accrued compensation and vacation		3,198		4,388
Current portion of other long term obligations		359		470
Other		1,351		1,667
Total current liabilities		23,611		36,022
Long-term liabilities:
Revolving loan		2,412		12,348
Other long-term obligations		618		893
Total long-term liabilities		3,030		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		10,843		9,780
Accumulated other comprehensive income		912		—
Total shareholders’ equity		51,114		49,081
Total liabilities and shareholders’ equity	$	77,755	$	98,344