STRATTEC SECURITY CORPORATION Reports Fiscal First Quarter Results
Net sales for the Company's first quarter ended September 28, 2008 were $34.7 million, compared to net sales of $42.7 million for the prior year quarter ended September 30, 2007. Net income for the period was $38,000, compared to net income of $2.4 million in the prior year quarter. Diluted earnings per share for the period were $.01 compared to diluted earnings per share of $.69 in the prior year quarter. The lower sales and net income for the quarter can be attributed primarily to the significant decline in our customers' production schedules. That decline is a direct result of the economic crisis in North America and other major markets in the rest of the world. The lack of credit available to consumers and vehicle dealerships has now outstripped the cost of gasoline as the primary negative driver in new vehicle sales. We expect to experience reduced sales levels and operating results for the remaining three quarters of our fiscal year based on these issues.
Sales to STRATTEC's largest customers overall decreased in the current quarter compared to the prior year quarter levels. Sales to Chrysler LLC were $7.1 million in the current quarter compared to $10.6 million in the prior year quarter due to a combination of lower vehicle production volume and reduced component content in the products we supply. Sales to General Motors Corporation were $12.3 million compared to $12.5 million due to the positive impact of the takeover of certain passenger car lockset production from another supplier, offset by lower vehicle production volumes for trucks and SUV's. Sales to Delphi Corporation were $2.0 million compared to $4.0 million due primarily to lower production volumes. Sales to Ford Motor Company were $2.3 million compared to $5.5 million due to lower Ford vehicle production volumes.
Gross profit margins were 15.7 percent in the current quarter compared to 19.6 percent in the prior year quarter. The lower gross profit margin in the current year quarter compared to the prior year quarter were primarily the result of our customers' reduced vehicle production volumes which lowered overhead absorption of our manufacturing costs.
Operating expenses were $6.0 million in the current quarter, compared to $5.8 million in the prior year quarter.
During the first quarter, the Company repurchased 173,038 STRATTEC SECURITY CORPORATION shares under the Company's stock repurchase program at a cost of $5,714,000.
At the Company's 2008 Annual Meeting held on October 7, 2008, STRATTEC Shareholders re-elected both Michael J. Koss and David R. Zimmer to the Company's Board of Directors for an additional three-year term.
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 Automotive of Grand Rapids, Michigan. The Company's history in the automotive business spans 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.
STRATTEC SECURITY CORPORATION
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Results of Operations
(In Thousands except per share amounts)
(Unaudited)
First Quarter Ended
Sept. 28, 2008 Sept. 30, 2007
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Net Sales $ 34,731 $ 42,739
Cost of Goods Sold 29,289 34,345
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Gross Profit 5,442 8,394
Engineering, Selling &
Administrative Expenses 5,952 5,793
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(Loss) Income from Operations (510) 2,601
Interest Income 318 913
Interest Expense -- --
Other Income, Net 223 308
Minority Interest (182) 49
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(151) 3,871
(Benefit) Provision for Income
Taxes (189) 1,452
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Net Income $ 38 $ 2,419
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Earnings Per Share:
Basic $ 0.01 $ 0.69
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Diluted $ 0.01 $ 0.69
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Average Basic
Shares Outstanding 3,332 3,519
Average Diluted
Shares Outstanding 3,340 3,525
Other
Capital Expenditures $ 5,316 $ 1,746
Depreciation & Amortization $ 1,380 $ 1,738
STRATTEC SECURITY CORPORATION
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Condensed Balance Sheet Data
(In Thousands)
Sept. 28, 2008 June 29, 2008
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(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 41,058 $ 51,501
Receivables, net 21,899 23,518
Inventories 10,625 10,269
Other current assets 19,123 17,978
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Total Current Assets 92,705 103,266
Deferred Income Taxes 3,684 3,684
Investment in Joint Venture 3,861 3,642
Prepaid Pension Cost 655 758
Other Long Term Assets 24 27
Property, Plant and Equipment, Net 33,920 30,336
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$ 134,849 $ 141,713
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 15,126 $ 15,974
Other 17,430 16,965
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Total Current Liabilities 32,556 32,939
Borrowings Under Line of Credit
Facility -- --
Accrued Pension and Post Retirement
Obligations 12,212 12,389
Minority Interest 1,134 953
Shareholders' Equity 242,520 242,843
Accumulated Other Comprehensive Loss (17,948) (17,495)
Less: Treasury Stock (135,625) (129,916)
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Total Shareholders' Equity 88,947 95,432
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$ 134,849 $ 141,713
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STRATTEC SECURITY CORPORATION
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Condensed Cash Flow Statement Data
(In Thousands)
(Unaudited)
First Quarter Ended
Sept. 28, 2008 Sept. 30, 2007
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Cash Flows from Operating Activities:
Net Income (Loss) $ 38 $ 2,419
Adjustment to Reconcile Net Income
(Loss) to Cash Used in Operating
Activities:
Minority Interest 186 (61)
Depreciation and Amortization 1,380 1,738
Stock Based Compensation Expense 128 313
Change in Operating Assets/
Liabilities (771) (3,419)
Other, net (113) (218)
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Net Cash Provided by Operating
Activities 848 772
Cash Flows from Investing Activities:
Investment in Joint Ventures (125) --
Additions to Property, Plant and
Equipment (5,316) (1,746)
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Net Cash Used in Investing
Activities (5,441) (1,746)
Cash Flow from Financing Activities:
Purchase of Common Stock (5,714) --
Dividends Paid (521) (4,050)
Loan from Minority Interest 375 --
Contribution from Minority Interest -- 349
Exercise of Stock Options and
Employee Stock Purchases 10 7
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Net Cash Used in Financing
Activities (5,850) (3,694)
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Net Decrease in Cash & Cash
Equivalents (10,443) (4,668)
Cash and Cash Equivalents:
Beginning of Period 51,501 65,491
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End of Period $ 41,058 $ 60,823
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SOURCE: STRATTEC SECURITY CORPORATION
STRATTEC SECURITY CORPORATION
Pat Hansen, Senior Vice President and
Chief Financial Officer
414-247-3435
www.strattec.com