Key Tronic Corporation Announces Fourth Quarter and Year End Results

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

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

quarter and year ended July 3, 2010.

For the fourth quarter of fiscal 2010, Key Tronic reported record

quarterly revenue of $61.9 million, up 20% from $51.7 million in the

previous quarter and up 36% from $45.5 million in the same period of

fiscal 2009. For the full year of fiscal 2010, total revenue was $199.6

million, up 8% from $184.9 million for fiscal 2009.

Net income for the fourth quarter of fiscal 2010 was $2.3 million or

$0.22 per diluted share, up from $0.3 million or $0.03 per diluted share

for the same period of fiscal 2009. For the full year of fiscal 2010,

net income was $8.7 million or $0.85 per diluted share, up from $1.1

million or $0.11 per diluted share for fiscal 2009.

The Company continued to maintain strong operating efficiencies during

the fourth quarter. For the fourth quarter of fiscal 2010, gross margin

was 11% and operating margin was 5%, up from 6% and 1%, respectively, in

the same period of fiscal 2009. For the full year of fiscal 2010, gross

margin was 10% and operating margin was 4%, up from 7% and 1%,

respectively, in fiscal 2009.

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

fiscal 2010, driven by increased demand from both new and longstanding

customers,” said Craig Gates, President and Chief Executive Officer, “We

began the year in the depths of the global recession and ended with the

highest quarterly revenue in Key Tronic’s history. We’ve remained

profitable for 26 consecutive quarters and significantly increased our

profitability in fiscal 2010 compared to recent years. As we grew our

business and brought many new programs into production, we controlled

our costs, maintained strong operating efficiencies and improved our new

product introduction processes.

“During the fourth quarter of fiscal 2010, we continued to diversify our

revenue base by winning a new program involving gaming technology and

two new programs for industrial safety equipment. To accommodate new

programs moving into production, we significantly expanded our

world-class production capacity in Mexico and China during the fourth

quarter. Similar to recent quarters, we also had approximately $4

million in order delays from a number of customers due to industry-wide

shortages in the global supply chain, which we expect to persist in

coming quarters.

“Moving into fiscal 2011, we have good business momentum, growing our

business faster than many of our peers. Recent forecasts predict

double-digit growth for the EMS market in coming years. 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 in fiscal 2011 and beyond.”

Business Outlook

For the first quarter of fiscal 2011, the Company expects to report

revenue in the range of $58 million to $61 million, and earnings in the

range of $0.17 to $0.20 per share. The Company’s forecast for the first

quarter of fiscal 2011 may be impacted by continuing supply chain issues

that could result in variances in its results as the world’s electronic

parts supply ramps up to meet demand.

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 877-941-2333 or +1

480-629-9723. A 48-hour replay will be available by calling 800-406-7325

or +1 303 590 3030 (Access Code: 4325641). 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 2011. 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;

shortages in the global 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

Chief Financial Officer

Ron Klawitter,

509-927-5295

or

StreetConnect

Investor Relations

Michael

Newman, 206-729-3625