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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Weaker Sales, Price Pressure Blamed For Key Tronic Loss

From Staff Reports

Last month’s prediction by Key Tronic Corp. officials that the company would suffer a third-quarter loss proved true as the Spokane-based computer keyboard manufacturer announced a loss of $966,000 Wednesday.

That translates to a loss of 11 cents per share, on sales of $41.2 million for the quarter ended March 31. For the same period a year earlier, Key Tronic earned $1.4 million, or 14 cents per share, on sales of $53.2 million.

The loss would have been worse without a one-time $1.4 million payment to Key Tronic from an insurance settlement during the quarter.

Fred Wenninger, Key Tronic’s president and chief executive officer, said the loss and reduced revenues had been expected, based on “forecasts of inventory adjustments from several of our major computer OEM (original equipment manufacturers) customers.”

“A major negative contributor this quarter was a $952,000 loss from our operations in Europe as a result of pricing pressure,” Wenninger added. Expenses related to launching new products were another factor, he said.

Wenninger said the company projects another loss in the current quarter, but expects to return to profitability during the first quarter of fiscal 1997.

For the first three quarters of fiscal 1996, Key Tronic had earnings of $374,000, or 13 cents per share, on sales of $158 million. That compares with earnings of $591,000, or 25 cents per share, on sales of $147 million during the first three quarters of fiscal 1995.

Pegasus Gold Inc.

Spokane-based Pegasus earned a small profit in the first quarter of 1996, after posting a loss during the same period last year.

For the three months that ended March 31, Pegasus earned $13,000. That compares with a loss of $1.8 million, or 5 cents a share, for the first quarter of 1995.

Higher gold prices and lower expenses helped the mining company improve its performance, Pegasus said Wednesday.

The company raised $92 million in January through issuing stock and Pegasus completed the placement of a $150 million revolving credit package last week. The cash will go toward development of the company’s various mines in Montana, elsewhere in the United States and in Australia.

Pegasus also received encouraging news on its Zortman Extension project located in north central Montana. The final Environmental Impact Statement released in late March appears acceptable to the company, and Pegasus will likely begin construction in May.

Pegasus continues to negotiate with state and federal regulators as well as Indian tribes in Montana over water quality issues around the mine. Encouraging progress has been made on the suits, the company said Wednesday.

Pegasus received $428 per ounce of gold in the first quarter of 1996 compared with $400 an ounce the same time last year, which helped profits despite a 20 percent drop in gold production.

The company continues to invest in projects that will greatly increase gold production in coming years.

Sterling Financial Corp.

Earnings at Sterling took a step backward in the quarter ended March 31 despite increases in net interest income and loan production.

The parent of Sterling Savings Association reported net income for the quarter fell to $1.9 million from $2.6 million, or 25 cents per share from 34 cents per share.

For the first nine months of the company’s fiscal year, earnings were $5.1 million vs. $7.5 million, or 68 cents vs. $1.03 per share.

Sterling said the downturn reflected the absence of any gain on the sale of mortgage-servicing rights, which earned the company $1.8 million in the January-March period of 1995, and $4.4 million during the nine-month period.

Chairman Harold Gilkey said the thrift countered by shifting more of its focus from mortgage lending to commercial and consumer lending.

Net interest income for the quarter inched upward to $9.2 million from $9.1 million in 1995, but slipped slightly to $26.2 million from $27 million in the nine-month period.

Loan production for the quarter climbed to $159.1 million from $123.9 million.

Assets dropped to $1.50 billion from $1.57 billion, and return on assets also dipped, to .50 percent from .65 percent.

, DataTimes