STRATTEC SECURITY CORPORATION Reports Fiscal Fourth Quarter Results
MILWAUKEE, Aug 5, 2010 (GlobeNewswire via COMTEX) --
STRATTEC SECURITY CORPORATION (Nasdaq:STRT) today reported operating results for the fiscal fourth quarter and year ended June 27, 2010.
Fiscal 2010 fourth quarter and full year net sales and income significantly improved over fiscal 2009. The year-over-year comparisons are dramatic, as the prior year fourth quarter and full year results were the Company's worst, reflecting widespread customer assembly plant shutdowns and bankruptcy filings by the Company's two largest customers, Chrysler and General Motors. Following the end of STRATTEC's fiscal 2009, the auto industry began making encouraging progress toward meaningful recovery. The positive trend continued throughout the Company's fiscal 2010, which subsequently fueled the Company's return to profitability.
Net sales for the Company's fourth quarter ended June 27, 2010 were $61.4 million, compared to net sales of $28.2 million for the prior year quarter ended June 28, 2009. Net income for the period was $853,000, compared to a net loss of $2.1 million in the prior year quarter. Diluted earnings per share for the period were $.26 compared to diluted loss per share of $.65 in the prior year quarter.
Sales to STRATTEC's largest customers overall increased in the current quarter compared to the prior year quarter levels primarily due to higher vehicle production volumes. Sales to Chrysler Group LLC were $21.9 million in the current quarter compared to $5.8 million in the prior year quarter. Sales to General Motors Company were $16.0 million compared to $8.4 million. Included in the current quarter sales to General Motors were $1.9 million of sales to Nexteer Automotive, formerly a unit of Delphi Corporation, which is now owned by General Motors. Sales to Ford Motor Company were $5.1 million compared to $3.8 million. In the current quarter, sales of $3.1 million to Hyundai/Kia were generated by the STRATTEC POWER ACCESS business.
Gross profit margins were 15.9 percent in the current quarter compared to 10.1 percent in the prior year quarter. The higher gross profit margin in the current year quarter was primarily the result of higher customer vehicle production volumes which increased overhead absorption of STRATTEC's manufacturing costs, offset by expense provisions for the Company's Economic Value Added (EVA(R)) incentive bonus plan. During the current quarter and fiscal year, the Company significantly exceeded its planned financial targets on which payouts under the incentive bonus plan are based. The Company's operating results, therefore, reflect incentive bonus expense provisions of $2.8 million in the current quarter and $5.2 million for the fiscal year ended June 27, 2010. These expenses affect both cost of goods sold and operating expenses. In the prior fiscal year, no bonuses were provided for or paid based upon fiscal 2009 financial performance. Also impacting the current quarter results were lower purchased raw material costs for zinc.
Operating expenses were $8.7 million in the current quarter, compared to $5.7 million in the prior year quarter. As referenced above, this increase was primarily the result of the incentive bonus expense incurred during fiscal 2010. Other factors offsetting the increase in operating expenses during the current year period included a $340,000 recovery of patent defense costs during the prior year quarter from a third party relating to outside legal costs expensed in previous reported periods and changes implemented in the prior year quarter with respect to the Company's U.S. salaried work force which included temporary reductions in wages and the Company 401(k) match, as well as several unpaid work furlough days.
For the fiscal year ended June 27, 2010, net sales were $208.0 million compared to net sales of $126.1 million in the prior year period. Net income was $3.4 million compared to a net loss of $6.1 million in the prior year period and diluted earnings per share were $1.04 compared to diluted loss per share of $1.86.
On August 4, 2010, STRATTEC SECURITY CORPORATION's Board of Directors declared a special dividend of $1.20 per share. The special dividend will be paid on October 29, 2010 to shareholders of record at the close of business on October 8, 2010. The Company believes that, with its return to profitability in fiscal 2010, the special dividend is a meaningful, appropriate, timely and tax efficient method of transferring economic value directly to its shareholders.
(EVA(R) is a registered trademark of Stern, Stewart & Co.)
STRATTEC designs, develops, manufactures and markets automotive Security Products, including mechanical locks and keys, electronically enhanced locks and keys, steering column and instrument panel ignition lock housings; and Access Control Products, including latches, power sliding side door systems, power lift gate systems, power deck lid systems, door handles and related products. These products are provided to customers in North America, and on a global basis through the VAST Alliance in which STRATTEC participates with WITTE Automotive of Velbert, Germany and ADAC Automotive of Grand Rapids, Michigan. STRATTEC's history in the automotive business spans over 100 years.
The STRATTEC SECURITY CORPORATION logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4700
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
Results of Operations
(In Thousands except per share amounts)
Fourth Quarter Ended Years Ended
June 27, June 28, June 27, June 28,
2010 2009 2010 2009
----------- ---------- ----------- ----------
(Unaudited) (Unaudited)
Net Sales $61,360 $28,219 $207,964 $126,097
Cost of Goods Sold 51,630 25,377 174,922 112,857
----------- ---------- ----------- ----------
Gross Profit 9,730 2,842 33,042 13,240
Engineering, Selling &
Administrative Expenses 8,665 5,684 29,939 25,480
Impairment Charge -- -- 223 --
Environmental -- -- (1,125) --
(Recovery) Provision
for
Doubtful Accounts -- -- (421) 500
----------- ---------- ----------- ----------
Income (Loss) from
Operations 1,065 (2,842) 4,426 (12,740)
Interest Income 28 38 86 731
Other Income (Expense),
Net 300 1 1,095 885
----------- ---------- ----------- ----------
1,393 (2,803) 5,607 (11,124)
Provision (Benefit) for
Income
Taxes 276 (506) 1,666 (4,222)
----------- ---------- ----------- ----------
Net (Loss) Income $ 1,117 $ (2,297) $ 3,941 $ (6,902)
=========== ========== =========== ==========
Net Income (Loss)
Attributed
to Non-Controlling
Interest 264 (179) 520 (780)
----------- ---------- ----------- ----------
Net Income (Loss)
Attributed
to STRATTEC SECURITY
CORPORATION $ 853 $ (2,118) $ 3,421 $ (6,122)
=========== ========== =========== ==========
Earnings (Loss) Per
Share:
Basic $0.26 ($0.65) $1.05 ($1.87)
=========== ========== =========== ==========
Diluted $0.26 ($0.65) $1.04 ($1.86)
=========== ========== =========== ==========
Average Basic
Shares Outstanding 3,275 3,262 3,271 3,280
Average Diluted
Shares Outstanding 3,296 3,266 3,280 3,284
Other
Capital Expenditures $1,958 $1,563 $6,903 $12,492
Depreciation &
Amortization $1,808 $1,736 $7,143 $6,264
STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
June 27, June 28,
2010 2009
----------- ----------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 21,867 $ 22,764
Restricted Cash (A) 2,100 --
Receivables, net 36,084 17,235
Inventories 17,086 16,589
Other current assets 12,871 15,970
----------- ----------
Total Current Assets 90,008 72,558
Deferred Income Taxes 10,534 13,143
Loan to Joint Venture 1,500 --
Investment in Joint Venture 5,176 4,483
Other Long Term Assets 733 1,069
Property, Plant and
Equipment, Net 37,051 36,936
----------- ----------
$ 145,002 $ 128,189
=========== ==========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts Payable $21,192 $11,369
Other 25,038 19,479
----------- ----------
Total Current
Liabilities 46,230 30,848
Borrowings Under Line of
Credit Facility -- --
Accrued Pension and Post
Retirement Obligations 22,982 24,784
Shareholders' Equity 242,115 238,601
Accumulated Other
Comprehensive Loss (31,941) (31,094)
Less: Treasury Stock (136,047) (136,089)
----------- ----------
Total STRATTEC SECURITY
CORPORATION
Shareholders' Equity 74,127 71,418
Non-Controlling Interest 1,663 1,139
----------- ----------
Total Shareholders' Equity 75,790 72,557
----------- ----------
$145,002 $128,189
=========== ==========
NOTE A: Represents a commercial guarantee by STRATTEC
SECURITY CORPORATION relating
to a promissory note issued by Vehicle Access Systems
Technology, LLC (VAST, LLC).
STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
Fourth Quarter Ended Years Ended
June 27, June 28, June 27, June 28,
2010 2009 2010 2009
----------- -------- ----------- --------
(Unaudited) (Unaudited)
Cash Flows from Operating Activities:
Net Income (Loss) $853 ($2,118) $3,421 ($6,122)
Adjustment to Reconcile Net Income
(Loss) to
Cash Provided (Used) in Operating
Activities:
Non-Controlling Interest 264 (179) 520 (780)
Equity Earnings in Joint Venture (369) (41) (1,008) (245)
Depreciation and Amortization 1,808 1,736 7,143 6,264
Foreign Currency Transaction Loss
(Gain) (42) 315 283 (918)
Deferred Income Taxes 170 (2,986) 3,428 (2,986)
Stock Based Compensation Expense 128 110 468 419
Provision (Recovery) for Doubtful
Accounts -- -- (421) 500
Curtailment Loss -- -- 505 --
Impairment Charge -- -- 223 --
Environmental -- -- (1,125) --
Change in Operating
Assets/Liabilities 5,737 5,195 (3,425) (3,024)
Other, net 18 48 53 56
----------- -------- ----------- --------
Net Cash Provided (Used) in Operating
Activities 8,567 2,080 10,065 (6,836)
Cash Flows from Investing Activities:
Investment in Joint Ventures -- (163) (100) (551)
Restricted Cash -- -- (2,100) --
Loan to Joint Venture -- -- (2,500) --
Proceeds from Repayment of Loan to
Joint Venture -- -- 1,000 --
Purchase of Delphi Power Products -- -- -- (4,931)
Additions to Property, Plant and
Equipment (1,958) (1,563) (6,903) (12,492)
Proceeds from Sale of Property,
Plant
and Equipment 11 8 21 8
----------- -------- ----------- --------
Net Cash Used in Investing Activities (1,947) (1,718) (10,582) (17,966)
Cash Flow from Financing Activities:
Purchase of Common Stock -- -- -- (6,214)
Dividends Paid -- -- -- (1,511)
Loan from Related Parties -- -- -- 2,175
Repayment of Loan to Related
Parties -- -- (225) --
Contribution from Non-Controlling
Interest -- -- -- 986
Excess Tax Benefits from Stock
Based Compensation 9 -- 9 --
Exercise of Stock Options and
Employee
Stock Purchases 39 10 72 40
----------- -------- ----------- --------
Net Cash Provided (Used) in Financing
Activities 48 10 (144) (4,524)
Foreign Currency Impact on Cash 1 (206) (236) 589
----------- -------- ----------- --------
Net Increase (Decrease) in Cash &
Cash Equivalents 6,669 166 (897) (28,737)
Cash and Cash Equivalents:
Beginning of Period 15,198 22,598 22,764 51,501
----------- -------- ----------- --------
End of Period $21,867 $22,764 $21,867 $22,764
=========== ======== =========== ========
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SOURCE: STRATTEC SECURITY CORPORATION
CONTACT: STRATTEC SECURITY CORPORATION Pat Hansen, Senior Vice President and Chief Financial Officer 414-247-3435 www.strattec.com