Key Tronic (KTCC) 8-K Key Tronic Corporation Announces First Quarter 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 FIRST QUARTER RESULTS

Record Quarterly Revenue Up 10% Year-over-Year;

Continued Growth in Revenue Contribution from New Programs;

More New Customer Wins and Revenue Diversification

Spokane Valley, WA — November 1, 2011 — Key Tronic Corporation (Nasdaq: KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended October 1, 2011.

For the first quarter of fiscal 2012, Key Tronic reported total revenue of $69.8 million, up 10% from $63.3 million in the same period of fiscal 2011. Net income for the first quarter of fiscal 2012 was $1.2 million or $0.12 per diluted share, compared to $1.7 million or $0.17 per diluted share for the same period of fiscal 2011.

For the first quarter of fiscal 2012, gross margin was 7% and operating margin was 2%, compared to 9% and 4%, respectively, in the same period of fiscal 2011. As projected, gross margins were impacted this quarter by expenses associated with several steep new program ramps, as well as product mix changes. For the coming quarter, given its anticipated growth and product mix, the Company expects to see its gross margins in the range of 7% to 8%.

“We’re very pleased with our strong growth in revenue for the first quarter of fiscal 2012, driven by the production ramp up for new programs from both new and longstanding customers,” said Craig Gates, President and Chief Executive Officer, “During the quarter, we achieved the highest quarterly revenue in Key Tronic’s history and continued to diversify our future revenue base by winning new programs involving industrial processing equipment, medical devices, military equipment, educational displays and consumer products.

“Moving into the second quarter, we expect continued strong revenue growth and increased earnings. We also see more potential customers recognizing the competitive advantages of our EMS services based in North America. With our unique combination of world-class engineering, global logistics and cost-effective production, we’re increasingly well positioned to continue to capture market share and capitalize on emerging opportunities.”

Business Outlook

For the second quarter of fiscal 2012, the Company expects to report revenue in the range of $75 million to $80 million, and earnings in the range of $0.15 to $0.20 per diluted 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 877-941-8609 or +1 480-629-9818. A 48-hour replay will be available by calling 800-406-7325 or +1 303 590 3030 (Access Code: 4476291). 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 2012. 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 availability of parts from the supply chain, 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 INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended
	October 1, 2011		October 2, 2010
Net sales	$	69,761	$	63,340
Cost of sales		64,756		57,370
Gross profit on sales		5,005		5,970
Operating expenses:
Research, development and engineering		956		914
Selling, general and administrative		2,434		2,432
Total operating expenses		3,390		3,346
Operating income		1,615		2,624
Interest expense		103		72
Income before income taxes		1,512		2,552
Income tax provision		265		810
Net income	$	1,247	$	1,742
Earnings per share:
Earnings per common share - basic	$	0.12	$	0.17
Weighted average shares outstanding - basic		10,418		10,296
Earnings per common share - diluted	$	0.12	$	0.17
Weighted average shares outstanding - diluted		10,446		10,403

KEY TRONIC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	October 1, 2011			July 2, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	347		$	1,232
Trade receivables		48,277			40,350
Inventories		46,728			41,554
Deferred income tax asset		4,689			3,900
Other		3,432			4,549
Total current assets		103,473			91,585
Property, plant and equipment - net		14,757			14,917
Other assets:
Deferred income tax asset		4,947			4,219
Other		516			1,643
Total other assets		5,463			5,862
Total assets	$	123,693		$	112,364
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	32,568		$	26,149
Accrued compensation and vacation		3,726			4,436
Current portion of other long-term obligations		771			761
Other		3,107			1,932
Total current liabilities		40,172			33,278
Long-term liabilities:
Revolving loan		11,339			6,000
Deferred income tax liability		1,040			1,542
Other long-term obligations		5,911			3,521
Total long-term liabilities		18,290			11,063
Shareholders’ equity:
Common stock, no par value ( in thousands) - shares authorized 25,000; issued and outstanding 10,447 and 10,399 shares, respectively		41,288			41,014
Retained earnings		26,516			25,269
Accumulated other comprehensive (loss) income		(2,573	)		1,740
Total shareholders’ equity		65,231			68,023
Total liabilities and shareholders’ equity	$	123,693		$	112,364