Exhibit 99.1
Contact: Pat Hansen
Senior Vice President and
Chief Financial Officer
414-247-3435
www.strattec.com
STRATTEC SECURITY CORPORATION
REPORTS FISCAL SECOND QUARTER RESULTS
Milwaukee, Wisconsin – January 17, 2008 -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal second quarter ended December 30, 2007.
Net sales for the Company’s second quarter ended December 30, 2007 were $39.9 million, compared to net sales of $37.9 million for the second quarter ended December 31, 2006. Net income for the period was $1.3 million, compared to $1.1 million in the prior year quarter. Diluted earnings per share for the period were $.38 compared to $.31 in the prior year quarter.
For the six months ended December 30, 2007, net sales were $82.6 million compared to net sales of $76.0 million in the prior year period. Net income was $3.7 million compared to net income of $1.8 million in the prior year period and diluted earnings per share were $1.06 compared to $.51.
Sales to STRATTEC’s largest customers overall were flat in the current quarter compared to the prior year quarter. Sales to General Motors Corporation in the current quarter were $11.9 million compared to $7.4 million in the prior year quarter due to higher product content on certain GM vehicles and the takeover of certain passenger car locksets production from another supplier. Sales to Chrysler LLC were $10.0 million compared to $14.3 million and sales to Delphi Corporation were $3.8 million compared to $4.2 million due to reduced component content and lower vehicle production volumes. Sales to Ford Motor Company were $4.4 million compared to $4.3 million. Sales during the current quarter were weaker than initially anticipated for the above four customers due to their production cut backs. Subsequently, these customers announced additional production cuts that will effect both our sales and profitability for the third fiscal quarter ending March 30, 2008.
Gross profit margins were 17.3% in the current quarter compared to 13.3% in the prior year quarter. The year-over-year increase in gross profit margins was primarily attributed to lower purchased material costs for zinc and brass along with price increases to recover the higher purchased raw material costs we experienced last year. In addition, the prior year quarter included a charge for severance and separation costs related to the move of service product assembly from Milwaukee, Wisconsin to Juarez, Mexico that reduced the gross profit margin by approximately 1%.
Operating expenses were $5.8 million in the current quarter, compared to $4.9 million in the prior year quarter. The increased spending is attributed to hiring additional engineering personnel along with costs associated with new product development.
The provision for income taxes in the current quarter was our normal 37% effective tax rate where as the prior year quarter included a State refund claim recovery that positively impacted earnings per share by $.09.
During the current quarter, the Company contributed $1.5 million to its Pension Fund and repurchased 25,500 STRATTEC SECURITY CORPORATION shares under the Company’s stock repurchase program at a cost of $1,146,000.
STRATTEC designs, develops, manufactures 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.
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)
(Unaudited)
Second Quarter Ended | Six Months Ended | |||||||||||||||
December 30, 2007 | December 31, 2006 | December 30, 2007 | December 31, 2006 | |||||||||||||
Net Sales | $ | 39,908 | $ | 37,913 | $ | 82,647 | $ | 75,963 | ||||||||
Cost of Goods Sold | 33,002 | 32,873 | 67,347 | 65,641 | ||||||||||||
Gross Profit | 6,906 | 5,040 | 15,300 | 10,322 | ||||||||||||
Engineering, Selling & | ||||||||||||||||
Administrative Expenses | 5,838 | 4,852 | 11,631 | 9,908 | ||||||||||||
Income from Operations | 1,068 | 188 | 3,669 | 414 | ||||||||||||
Interest Income | 814 | 905 | 1,727 | 1,827 | ||||||||||||
Interest Expense | - | - | - | - | ||||||||||||
Other Income, Net | 158 | 121 | 466 | 149 | ||||||||||||
Minority Interest | 69 | - | 118 | - | ||||||||||||
2,109 | 1,214 | 5,980 | 2,390 | |||||||||||||
Provision for Income Taxes | 786 | 120 | 2,238 | 555 | ||||||||||||
Net Income | $ | 1,323 | $ | 1,094 | $ | 3,742 | $ | 1,835 | ||||||||
Earnings Per Share: | ||||||||||||||||
Basic | $ | 0.38 | $ | 0.31 | $ | 1.07 | $ | 0.51 | ||||||||
Diluted | $ | 0.38 | $ | 0.31 | $ | 1.06 | $ | 0.51 | ||||||||
Average Basic | ||||||||||||||||
Shares Outstanding | 3,506 | 3,539 | 3,513 | 3,568 | ||||||||||||
Average Diluted | ||||||||||||||||
Shares Outstanding | 3,512 | 3,542 | 3,518 | 3,571 | ||||||||||||
Other | ||||||||||||||||
Capital Expenditures | $ | 2,728 | $ | 1,377 | $ | 4,474 | $ | 2,292 | ||||||||
Depreciation & Amortization | $ | 1,758 | $ | 1,768 | $ | 3,496 | $ | 3,517 |
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STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
December 30, 2007 | July 1, 2007 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 60,242 | $ | 65,491 | ||||
Receivables, net | 20,090 | 26,890 | ||||||
Inventories | 10,726 | 7,166 | ||||||
Other current assets | 13,308 | 13,017 | ||||||
Total Current Assets | 104,366 | 112,564 | ||||||
Deferred Income Taxes | 2,420 | 2,117 | ||||||
Investment in Joint Ventures | 3,201 | 2,813 | ||||||
Prepaid Pension Cost | 6,948 | 4,385 | ||||||
Other Long Term Assets | 35 | 41 | ||||||
Property, Plant and Equipment, Net | 27,479 | 26,526 | ||||||
$ | 144,449 | $ | 148,446 |
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts Payable | $ | 12,524 | $ | 16,575 | ||||
Other | 16,049 | 14,906 | ||||||
Total Current Liabilities | 28,573 | 31,481 | ||||||
Borrowings Under Line of Credit Facility | - | - | ||||||
Accrued Pension and Postretirement Obligations | 13,639 | 13,431 | ||||||
Minority Interest | 775 | 574 | ||||||
Shareholders’ Equity | 243,755 | 244,119 | ||||||
Accumulated Other Comprehensive Loss | (14,333 | ) | (14,341 | ) | ||||
Less: Treasury Stock | (127,960 | ) | (126,818 | ) | ||||
Total Shareholders’ Equity | 101,462 | 102,960 | ||||||
$ | 144,449 | $ | 148,446 |
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STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
(Unaudited)
Second Quarter Ended | Six Months Ended | |||||||||||||||
December 30, 2007 | December 31, 2006 | December 30, 2007 | December 31, 2006 | |||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||
Net Income | $ | 1,323 | $ | 1,094 | $ | 3,742 | $ | 1,835 | ||||||||
Adjustment to Reconcile Net Income to | ||||||||||||||||
Cash Provided by Operating Activities: | ||||||||||||||||
Minority Interest | (87 | ) | - | (148 | ) | - | ||||||||||
Depreciation | 1,758 | 1,768 | 3,496 | 3,517 | ||||||||||||
Stock Based Compensation Expense | 179 | 186 | 492 | 379 | ||||||||||||
Change in Operating Assets/Liabilities | 19 | 852 | (3,400 | ) | 986 | |||||||||||
Other, net | (124 | ) | 33 | (342 | ) | 132 | ||||||||||
Net Cash Provided by Operating Activities | 3,068 | 3,933 | 3,840 | 6,849 | ||||||||||||
Cash Flows from Investing Activities: | ||||||||||||||||
Investment in Joint Ventures | - | (100 | ) | - | (100 | ) | ||||||||||
Additions to Property, Plant and Equipment | (2,728 | ) | (1,377 | ) | (4,474 | ) | (2,292 | ) | ||||||||
Proceeds from Sale of Property, Plant and Equipment | - | - | - | 21 | ||||||||||||
Net Cash Used in Investing Activities | (2,728 | ) | (1,477 | ) | (4,474 | ) | (2,371 | ) | ||||||||
Cash Flow from Financing Activities: | ||||||||||||||||
Purchase of Common Stock | (1,146 | ) | (596 | ) | (1,146 | ) | (3,922 | ) | ||||||||
Dividends Paid | (31 | ) | - | (4,081 | ) | - | ||||||||||
Contribution from Minority Interest | - | - | 349 | - | ||||||||||||
Loan from Minority Interest | 250 | - | 250 | - | ||||||||||||
Exercise of Stock Options and Employee Stock Purchases | 6 | 8 | 13 | 17 | ||||||||||||
Net Cash Used in Financing Activities | (921 | ) | (588 | ) | (4,615 | ) | (3,905 | ) | ||||||||
Net Increase (Decrease) in Cash & Cash Equivalents | (581 | ) | 1,868 | (5,249 | ) | 573 | ||||||||||
Cash and Cash Equivalents: | ||||||||||||||||
Beginning of Period | 60,823 | 64,417 | 65,491 | 65,712 | ||||||||||||
End of Period | $ | 60,242 | $ | 66,285 | $ | 60,242 | $ | 66,285 |
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