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.

SOURCE: Key Tronic Corporation

Key Tronic Corporation 
Chief Financial Officer 
Ron Klawitter, 509-927-5295 
or 
StreetConnect 
Investor Relations 
Michael Newman, 206-729-3625

"In the first quarter of fiscal 2010, we continued to successfully meet the challenges of the global recession by reducing our costs while ramping up our new customer programs and further diversifying our customer portfolio across a wide range of industries," said Craig Gates, President and Chief Executive Officer. "Despite the macro-economic uncertainty, we remain strongly positioned to win new business and currently expect to see growth in the second half of the year, driven by increased production levels of our new programs for both new and longstanding customers.

"Our strong financial position and 23 quarters of consecutive profitability continue to help us to win new programs even in this current recession. During the first quarter, we won new programs involving specialty printers and data storage systems. At the same time, we continue to focus on controlling operating expense, down 17% from the first quarter of fiscal 2009. We've also taken important steps to further strengthen the capabilities of our world-class facilities in Mexico, China and the US, as well as the efficiency of our supply chain and new product introduction processes."

Business Outlook

For the second quarter of fiscal 2010, the Company expects revenue in the range of $38 million to $43 million, with earnings in the range of $0.02 to $0.05 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 at www.keytronic.com under "Investor Relations" or by calling 877-941-9205 or +1 480-629-9835. A 48-hour replay will be available by calling 800-406-7325 or +1 303 590 3030 (Access Code: 4167953). 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)
                                               First Quarters Ended
                                               September 26   September 27
                                               2009           2008
Net sales                                      $      41,309  $      48,237
Cost of sales                                         38,634         44,830
Gross profit on sales                                 2,675          3,407
Operating expenses:
Research, development and engineering                 562            626
Selling, general and administrative                   1,736          2,137
Total operating expense                               2,298          2,763
Operating income                                      377            644
Interest expense                                      46             182
Income before income taxes                            331            462
Income tax provision                                  36             54
Net income                                     $      295     $      408
Earnings per share:
Earnings per common share - basic              $      0.03    $      0.04
Weighted average shares outstanding - basic           10,066         10,040
Earnings per common share - diluted            $      0.03    $      0.04
Weighted average shares outstanding - diluted         10,082         10,212

KEY TRONIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                                                                  September 26   June 27
                                                                  2009           2009
ASSETS
Current assets:
Cash and cash equivalents                                         $      1,832   $     729
Trade receivables                                                        25,276        24,867
Inventories                                                              30,101        32,291
Other                                                                    2,638         3,168
Total current assets                                                     59,847        61,055
Property, plant and equipment - net                                      11,166        11,199
Other assets:
Restricted cash                                                          -             124
Deferred income tax asset                                                4,576         4,611
Other                                                                    720           766
Total other assets                                                       5,296         5,501
Total assets                                                      $      76,309  $     77,755
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable                                                  $      20,195  $     18,703
Accrued compensation and vacation                                        2,824         3,198
Current portion of other long term obligations                           284           359
Other                                                                    1,721         1,351
Total current liabilities                                                25,024        23,611
Long-term liabilities:
Revolving loan                                                           -             2,412
Other long-term obligations                                              596           618
Total long-term liabilities                                              596           3,030
Shareholders' equity:
Common stock, no par value - share authorized 25,000; issued and         39,362        39,359
outstanding 10,069 and 10,066 shares, respectively
Retained earnings                                                        11,138        10,843
Accumulated other comprehensive income                                   189           912
Total shareholders' equity                                               50,689        51,114
Total liabilities and shareholders' equity                        $      76,309  $     77,755

SOURCE: Key Tronic Corporation

Key Tronic Corporation 
Chief Financial Officer 
Ron Klawitter, 509-927-5295 
or 
StreetConnect 
Investor Relations 
Michael Newman, 206-729-3625

Expected next investor conference call information:
Conference Call Date: 10/27/2009
Conference Call Time (ET): 5:00 PM
Conference Call URL: http://www.stct.com/ktcc/ktccnew/corporate/event_calendar2.html

Expected next investor conference call information:
Conference Call Date: 10/27/2009
Conference Call Time (ET): 5:00 PM
Conference Call URL: http://www.stct.com/ktcc/ktccnew/corporate/event_calendar2.html