Key Tronic Corporation Announces Second Quarter Results

Key Tronic Corporation (Nasdaq:KTCC), a provider of electronic

manufacturing services (EMS), today announced its results for the

quarter ended December 26, 2009. The results exceeded the sales and

earnings estimates announced in the Company’s revised guidance on

December 2, 2009.

For the second quarter of fiscal 2010, Key Tronic reported total revenue

of $44.8 million, compared to $41.3 million in the previous quarter and

$47.0 million in the same period of fiscal 2009. For the first six

months of fiscal 2010, total revenue was $86.1 million, compared to

$95.2 million in the same period of fiscal 2009.

Net income for the second quarter of fiscal 2010 was $1.7 million or

$0.17 per diluted share, up from $0.3 million or $0.03 per diluted share

in the previous quarter and up from $0.1 million or $0.01 per diluted

share for the same period of fiscal 2009. For the first six months of

fiscal 2010, net income was $2.0 million or $0.19 per diluted share, up

from $0.5 million or $0.05 per diluted share for the same period of

fiscal 2009.

A favorable sales mix in the second quarter of fiscal 2010 resulted in

unusually high gross margins of 11% and operating margins of 4%, up from

8% and 1%, respectively, in the same period of fiscal 2009.

“We’re very pleased with our strong sequential growth in revenue and

earnings during the second quarter of fiscal 2010, driven by increased

demand from both new and longstanding customers,” said Craig Gates,

President and Chief Executive Officer, “We’ve remained profitable for 24

consecutive quarters by continuing to control our costs, enhance our

operating efficiencies and improve our inventory management. We’ve also

strengthened our balance sheet, added square footage in our world-class

facilities in Mexico and China, and increased the efficiency of our

supply chain and new product introduction processes.

“During the second quarter of fiscal 2010, we won new programs involving

telecommunications, industrial, specialty printer, gaming and financial

transaction equipment. Our continued success in diversifying our revenue

base across a wide range of industries make us confident that our

profitable growth trends are sustainable in coming periods.”

Business Outlook

For the third quarter of fiscal 2010, the Company expects to report both

sequential and year-over-year growth, with revenue in the range of $44

million to $47 million, and earnings in the range of $0.15 to $0.20 per

share. The Company also expects to see continued sequential growth in

the fourth quarter of fiscal 2010.

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 877-941-6010 or +1

480-629-9772. A 48-hour replay will be available by calling 800-406-7325

or +1 303 590 3030 (Access Code: 4197912). 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

Ron Klawitter, Chief Financial Officer

509-927-5295

or

StreetConnect

Michael

Newman, Investor Relations

206-729-3625