Exhibit 99.1
FOR RELEASE AT 3:00 PM CDT
Contact: Pat Hansen
Senior Vice President and
Chief Financial Officer
414-247-3435
www.strattec.com
STRATTEC SECURITY CORPORATION
REPORTS FISCAL FOURTH QUARTER RESULTS
Milwaukee, Wisconsin – July 31, 2007 -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal fourth quarter ended July 1, 2007.
Net sales for the Company’s three months ended July 1, 2007 were $46.1 million, compared to net sales of $46.6 million for the three months ended July 2, 2006. Net income for the period was $3.4 million, compared to $4.0 million in the prior year quarter. Diluted earnings per share for the period were $.97 compared to $1.08 in the prior year quarter. During the prior year quarter, the Company received a $961,000 ($605,000 after tax) customer reimbursement for costs incurred related to a production capacity constraints that the Company had expensed during previous reporting periods. This reimbursement increased the prior year quarterly diluted earnings per share by $.17. In addition, both the current year quarter and the prior year quarter results included favorable income tax adjustments that increased diluted earnings per share by $.31 and $.22, respectively.
For the fiscal year ended July 1, 2007, net sales were $167.7 million compared to net sales of $181.2 million in the prior year period. Net income was $8.2 million compared to $12.5 million and diluted earnings per share were $2.30 compared to $3.35 in the prior year.
Sales to STRATTEC’s largest customers overall decreased in the current quarter compared to the prior year quarter levels. Sales to DaimlerChrysler Corporation were essentially flat between years at $15.4 million in the current quarter compared to $15.2 million in the prior year quarter. Sales to General Motors Corporation were $10.9 million compared to $8.3 million due to higher product content on certain GM vehicles and takeover of certain passenger car lockset production from another supplier. Sales to Delphi Corporation were $4.9 million compared to $6.7 million due primarily to reduced component content and lower production volumes. Sales to Ford Motor Company were $6.4 million compared to $7.0 million due to lower Ford vehicle production volumes. Sales to Mitsubishi Motor Manufacturing of America were $89,000 compared to $1.2 million due to the previously announced phase-out of this customer relationship.
Gross profit margins were 17.0 percent in the current quarter compared to 20.6 percent in the prior year quarter. The lower gross profit margins in the current year quarter compared to the prior year quarter were primarily the result of the customer reimbursement previously noted that favorably increased the prior year gross profit margin by 2.1%. The remaining decrease was attributed to lower overhead absorption of our manufacturing costs due to reduced production related to modest customer demand and a reduction in inventory between the current quarter compared to the prior year quarter.
Operating expenses were $5.3 million in the current quarter, compared to $5.8 million in the prior year quarter.
Provision for income taxes in both the current and previous year quarters were not our normal effective income tax rate of 37%. The current year quarter included a favorable adjustment primarily relating to foreign taxes that positively impacted diluted earnings per share by $.31 and the prior year quarter included a State refund claim recovery and a favorable foreign tax adjustment that increased diluted earnings per share by $.22.
During the fourth quarter, the Company repurchased 24,313 STRATTEC SECURITY CORPORATION shares under the Company’s stock repurchase program at a cost of $1,153,000. For the year ended July 1, 2007, a total of 126,213 shares were repurchased at a cost of $5,075,000.
STRATTEC designs, develops, manufacturers and markets mechanical locks and keys, electronically enhanced locks and keys, steering column and instrument panel ignition lock housings, latches and related access control products for North American automotive customers, and for global automotive manufacturers through the VAST Alliance in which it participates with WITTE Automotive of Velbert, Germany and ADAC Plastics, Inc. of Grand Rapids, Michigan. The Company’s history in the automotive business spans nearly 100 years.
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Certain statements contained in this release contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “intend,” “may,” “planned,” “potential,” “should,” “will,” and “would.” Such forward-looking statements in this release are inherently subject to many uncertainties in the Company’s operations and business environment. These uncertainties include general economic conditions, in particular, relating to the automotive industry, consumer demand for the Company’s and its customers’ products, competitive and technological developments, customer purchasing actions, foreign currency fluctuations, and costs of operations. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances occurring after the date of this release. In addition, such uncertainties and other operational matters are discussed further in the Company’s quarterly and annual filings with the Securities and Exchange Commission.
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STRATTEC SECURITY CORPORATION
Results of Operations
(In Thousands except per share amounts)
Fourth Quarter Ended | Years Ended | |||||||||||||||
July 1, 2007 | July 2, 2006 | July 1, 2007 | July 2, 2006 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Net Sales | $ | 46,097 | $ | 46,551 | $ | 167,707 | $ | 181,197 | ||||||||
Cost of Goods Sold | 38,279 | 36,943 | 141,213 | 144,151 | ||||||||||||
Gross Profit | 7,818 | 9,608 | 26,494 | 37,046 | ||||||||||||
Engineering, Selling & | ||||||||||||||||
Administrative Expenses | 5,307 | 5,821 | 20,189 | 22,067 | ||||||||||||
Provision for Doubtful Accounts | - | - | - | 1,622 | ||||||||||||
Income from Operations | 2,511 | 3,787 | 6,305 | 13,357 | ||||||||||||
Interest Income | 905 | 830 | 3,611 | 2,563 | ||||||||||||
Interest Expense | - | - | - | - | ||||||||||||
Other Income (Expense), Net | 225 | 388 | 715 | 960 | ||||||||||||
Minority Interest | 50 | - | 75 | - | ||||||||||||
3,691 | 5,005 | 10,706 | 16,880 | |||||||||||||
Provision for Income Taxes | 257 | 1,040 | 2,523 | 4,403 | ||||||||||||
Net Income | $ | 3,434 | $ | 3,965 | $ | 8,183 | $ | 12,477 | ||||||||
Earnings Per Share: | ||||||||||||||||
Basic | $ | .97 | $ | 1.08 | $ | 2.30 | $ | 3.36 | ||||||||
Diluted | $ | .97 | $ | 1.08 | $ | 2.30 | $ | 3.35 | ||||||||
Average Basic | ||||||||||||||||
Shares Outstanding | 3,536 | 3,650 | 3,552 | 3,716 | ||||||||||||
Average Diluted | ||||||||||||||||
Shares Outstanding | 3,539 | 3,653 | 3,555 | 3,720 | ||||||||||||
Other | ||||||||||||||||
Capital Expenditures | $ | 2,103 | $ | 1,043 | $ | 5,748 | $ | 5,766 | ||||||||
Depreciation & Amortization | $ | 1,772 | $ | 1,766 | $ | 6,988 | $ | 7,155 |
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STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
July 1, 2007 | July 2, 2006 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 65,491 | $ | 65,712 | ||||
Receivables, net | 26,890 | 28,254 | ||||||
Inventories | 7,166 | 9,337 | ||||||
Other current assets | 13,017 | 10,468 | ||||||
Total Current Assets | 112,564 | 113,771 | ||||||
Deferred Income Taxes | 2,117 | - | ||||||
Investment in Joint Venture | 2,813 | 2,202 | ||||||
Prepaid Pension Cost (A) | 4,385 | 10,358 | ||||||
Other Long Term Assets | 41 | 197 | ||||||
Property, Plant and Equipment, Net | 26,526 | 27,764 | ||||||
$ | 148,446 | $ | 154,292 |
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts Payable | $ | 16,575 | $ | 17,701 | ||||
Other | 14,906 | 15,806 | ||||||
Total Current Liabilities | 31,481 | 33,507 | ||||||
Borrowings Under Line of Credit Facility | - | - | ||||||
Deferred Income Taxes | - | 4,266 | ||||||
Accrued Pension and Post Retirement Obligations (A) | 13,431 | 6,244 | ||||||
Minority Interest | 574 | - | ||||||
Shareholders’ Equity | 244,119 | 234,989 | ||||||
Accumulated Other Comprehensive Loss | (14,341 | ) | (2,958 | ) | ||||
Less: Treasury Stock | (126,818 | ) | (121,756 | ) | ||||
Total Shareholders’ Equity | 102,960 | 110,275 | ||||||
$ | 148,446 | $ | 154,292 |
(A)Includes $19.2 million of unrecognized pension and postretirement liabilities recorded at year end 2007 in accordance with SFAS No. 158 and $242,000 of additional minimum pension liability recorded during the fourth quarter of 2006. |
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STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
Fourth Quarter Ended | Years Ended | |||||||||||||||
July 1, 2007 | July 2, 2006 | July 1, 2007 | July 2, 2006 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||
Net Income | $ | 3,434 | $ | 3,965 | $ | 8,183 | $ | 12,477 | ||||||||
Adjustment to Reconcile Net Income to | �� | |||||||||||||||
Cash Used in Operating Activities: | ||||||||||||||||
Minority Interest | (50 | ) | - | (75 | ) | - | ||||||||||
Depreciation and Amortization | 1,772 | 1,766 | 6,988 | 7,155 | ||||||||||||
Deferred Income Taxes | (359 | ) | 350 | (359 | ) | 350 | ||||||||||
Stock Based Compensation Expense | 172 | 257 | 738 | 1,118 | ||||||||||||
Tax Benefit from Options Exercised | 10 | - | 23 | 61 | ||||||||||||
Provision for Doubtful Accounts | - | - | - | 1,622 | ||||||||||||
Change in Operating Assets/Liabilities | 685 | 1,148 | (5,609 | ) | (3,322 | ) | ||||||||||
Other, net | (50 | ) | (172 | ) | (95 | ) | (166 | ) | ||||||||
Net Cash Provided by Operating Activities | 5,614 | 7,314 | 9,794 | 19,295 | ||||||||||||
Cash Flows from Investing Activities: | ||||||||||||||||
Investment in Joint Ventures | - | (519 | ) | (100 | ) | (569 | ) | |||||||||
Additions to Property, Plant and Equipment | (2,103 | ) | (1,043 | ) | (5,748 | ) | (5,766 | ) | ||||||||
Proceeds from Sale of Property, Plant | ||||||||||||||||
and Equipment | - | - | 21 | 22 | ||||||||||||
Net Cash Used in Investing Activities | (2,103 | ) | (1,562 | ) | (5,827 | ) | (6,313 | ) | ||||||||
Cash Flow from Financing Activities: | ||||||||||||||||
Purchase of Common Stock | (1,153 | ) | (2,313 | ) | (5,075 | ) | (5,306 | ) | ||||||||
Contribution from Minority Interest | 375 | - | 649 | - | ||||||||||||
Reissue/Exercise of Stock Options | 139 | 9 | 238 | 1,086 | ||||||||||||
Net Cash Used in Financing Activities | (639 | ) | (2,304 | ) | (4,188 | ) | (4,220 | ) | ||||||||
Net Increase (Decrease) in Cash & Cash Equivalents | 2,872 | 3,448 | (221 | ) | 8,762 | |||||||||||
Cash and Cash Equivalents: | ||||||||||||||||
Beginning of Period | 62,619 | 62,264 | 65,712 | 56,950 | ||||||||||||
End of Period | $ | 65,491 | $ | 65,712 | $ | 65,491 | $ | 65,712 |
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