First Quarter Revenue Up 8% Year-over-Year;

Growing Revenue Contribution from New Customers

Key Tronic Corporation (Nasdaq:KTCC), a provider of electronic manufacturing services (EMS), today announced its results for the quarter ended September 27, 2008.

For the first quarter of fiscal 2009, Key Tronic reported total revenue of $48.2 million, up 8% from $44.6 million in the same period of fiscal 2008. Net income for the first quarter of fiscal 2009 was $0.4 million or $0.04 per diluted share, up from $0.2 million or $0.02 diluted share for the same period of fiscal 2008.

“We are pleased with our performance for the first quarter, despite the challenging economic situation,” said Jack Oehlke, President and Chief Executive Officer. “As expected, we saw an increased contribution from new customer programs, offsetting the anticipated decline in some of our existing programs.

“As we move into the second quarter, the global economic situation is creating uncertainty and slowdowns among some of our customers. While most of our promising new customer programs continue to move into production and ramp up, some have reduced their forecasts for coming periods. Revenue from our new programs is now expected to grow at a slower rate than previously anticipated. In response, our flexible business model allows us to take immediate steps to reduce operating expenses in our manufacturing facilities.

“In the face of the challenging economic environment, we continue to believe that our sustained investment in our world-class facilities provides us with strong competitive advantages. Over the longer term, we expect to continue to successfully win new business and further diversify our customer portfolio across a wide range of industries.”

Business Outlook

For the second quarter of fiscal 2009, the Company expects revenue in the range of $42 million to $45 million, with earnings in the range of breakeven to $0.02 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 800-219-6110 or +1 303-262-2138. A 48-hour replay will be available by calling 800-405-2236 or +1 303-590-3000 (Reservation No. 11120242). 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 2009. 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
Chief Financial Officer
Ron Klawitter, 509-927-5295
or
StreetConnect
Investor Relations
Michael Newman, 206-729-3625