SPOKANE, WA -- Electronic manufacturing services firm Key Tronic Corp. reported December quarter revenue of $49.8 million, up 10% year-over-year.

Net income slipped from $1 million a year ago to was $300,000 for the December quarter, including a one-time charge of $940,000 for inventory and receivables reserves related to a customer bankruptcy.
First-half revenue is up 18% to $105.3 million, the company said. Net income is flat at $1.7 million.

"During the second quarter of 2007, our new customer programs began to contribute to our revenue, but not enough to offset reduced demand from certain existing customers," said Jack Oehlke, president and chief executive. "In particular, the unanticipated bankruptcy of one customer had a negative impact on our profitability. In the third quarter, we expect to see a seasonal slowdown among some of our consumer products customers, but the revenue contribution from our new programs should nearly double from the second quarter."

Key Tronic will build an SMT production facility at its Spokane Valley headquarters, where it will build low-volume and highly specialized PCBs for domestic programs.

The company expects to close the sale of its vacant facility in Las Cruces, NM, by the end of the current quarter.

Key Tronic guided for $42 million to $47 million in March quarter sales, with lower seasonal demand from some existing customers partially offset by increased revenue from new programs.