MILWAUKEE, Aug. 4, 2009 (GLOBE NEWSWIRE) -- STRATTEC SECURITY CORPORATION (Nasdaq:STRT) today reported operating results for the fiscal fourth quarter ended June 28, 2009.
Net sales for the Company's fourth quarter ended June 28, 2009 were $28.2 million, compared to net sales of $38.6 million for the prior year quarter ended June 29, 2008. Net loss for the period was $2.1 million, compared to net loss of $907,000 in the prior year quarter. Diluted loss per share for the period was $.65 compared to diluted loss per share of $.26 in the prior year quarter. In both the current and prior year quarter, sales were significantly impacted by customer assembly plant shutdowns.
In the current quarter, our two largest customers, Chrysler LLC and General Motors Corporation, filed for Chapter 11 bankruptcy protection for their U.S. legal entities. Chrysler's filing occurred on April 30th, and General Motors filed on June 1st. Within days of its filing, Chrysler took the unusual step of shutting down all of its North American manufacturing facilities for the months of May and June. This development was on top of previously announced GM plant shutdowns idling a significant amount of its North American plant capacity for the purpose of reducing its retail inventory of new vehicles. May and June were therefore extremely slow sales months for STRATTEC, each nearly 45% below our April sales levels. This slowness extended into July, the first month of our next fiscal year.
The bankruptcy filings had little affect on our receivables with Chrysler and GM, as both Companies were able to continue making payments to suppliers for parts they had purchased prior to their bankruptcy filings. We increased our reserve for doubtful accounts at the end of our fiscal third quarter by $500,000 in anticipation of difficulties collecting on our outstanding receivables from Chrysler. While a majority of our receivables from both Chrysler and GM have been paid under normal terms, there remain some pre-bankruptcy receivable balances still outstanding. We expect these to be resolved or adequately accounted for through the reserve taken in the third quarter. Subsequently, both Companies emerged from bankruptcy and started to resume production in July.
During the prior year quarter, a strike by a major supplier to General Motors resulted in temporary closure of several vehicle plants we supplied during the months of April and May 2008. In addition, during the latter half of the prior year quarter, gasoline prices exceeded $4.00/gallon, which significantly changed consumer preferences away from larger vehicles causing our major customers to re-align their production schedules and mix, depressing our sales and production.
The sales decreases in the current quarter were experienced across all of our largest customers. Sales to Chrysler LLC were $5.8 million in the current quarter compared to $9.9 million in the prior year quarter. Included in the current quarter were $3.1 million of sales generated by STRATTEC POWER ACCESS, offset by a combination of lower vehicle production volume and reduced component content in the security products we supply. Sales to General Motors Corporation were $8.4 million compared to $10.4 million. Sales to Ford Motor Company were $3.8 million compared to $4.5 million, and sales to Delphi Corporation were $1.1 million compared to $3.3 million. For each of these three customers our decreased sales were a result of lower production volumes for the vehicles we supply.
Gross profit margins were 10.1 percent in the current quarter compared to 9.6 percent in the prior year quarter. The gross profit margins in both the current year quarter and prior year quarter were significantly impacted by our customers' reduced vehicle production volumes which lowered the absorption of our fixed manufacturing costs. The current quarter was favorably impacted by lower purchased material costs for both zinc and brass along with a favorable Mexico Peso to U.S. dollar exchange rate affecting the Company's operations in Mexico. During the prior year quarter, there were also two unusual items: a lump sum bonus paid to the Company's Milwaukee represented hourly workers resulting from a 4-year labor contract ratified in June, 2008; and the disposal of a customer-specific fixed asset that was no longer in service. Together these two unusual items increased the prior years quarter diluted loss per share by $.11.
Operating expenses were $5.7 million in the current quarter, compared to $6.2 million in the prior year quarter. The decreased spending is attributed to a $340,000 recovery of patent defense costs from a third party relating to outside legal costs expensed in previous reported periods. The current quarter also included the expense of STRATTEC POWER ACCESS engineering personnel that were hired at the end of our second fiscal quarter. These added costs were offset primarily by a 10% reduction in our U.S. salaried work force and reduced 401k match for salaried associates implemented in January 2009. During the latter half of the current quarter, we also implemented a salary reduction for our U.S. salaried associates and temporary work furloughs that had a modest positive effect on the quarter results. We anticipate these actions will have more of an effect on the upcoming quarter results.
Reflecting the deepest recession to impact the U.S. and global economies since the Great Depression, and the well-publicized difficulties in the U.S. auto industry of which STRATTEC is a part, net sales for the fiscal year ended June 28, 2009 were $126.1 million compared to net sales of $159.6 million in the prior fiscal year. Net loss was $6.1 million or diluted loss per share of $1.86 compared to net income of $2.8 million or diluted earnings per share of $.80 in the prior year.
During the current quarter, we changed our method for accounting for inventories from last-in, first out (LIFO) to first-in, first out (FIFO). Both the current and prior year reported information was retrospectively adjusted on a FIFO basis in accordance with Statement of Financial Accounting Standards No. 154.
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 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 28, June 29, June 28, June 29,
2009 2008 2009 2008
----------- ----------- ----------- -----------
(Unaudited) (Note A) (Unaudited) (Note A)
Net Sales $ 28,219 $ 38,567 $ 126,097 $ 159,642
Cost of Goods Sold 25,377 34,867 112,857 134,875
----------- ----------- ----------- -----------
Gross Profit 2,842 3,700 13,240 24,767
Engineering, Selling
& Administrative
Expenses 5,684 6,222 25,480 23,962
Provision for
Doubtful Accounts -- -- 500 --
----------- ----------- ----------- -----------
(Loss) Income from
Operations (2,842) (2,522) (12,740) 805
Interest Income 38 405 731 2,749
Other Income
(Expense), Net 1 (178) 885 230
Minority Interest 187 (146) 801 (76)
----------- ----------- ----------- -----------
(2,616) (2,441) (10,323) 3,708
(Benefit) Provision
for Income Taxes (498) (1,534) (4,201) 927
----------- ----------- ----------- -----------
Net (Loss) Income $ (2,118) $ (907) $ (6,122) $ 2,781
=========== =========== =========== ===========
(Loss) Earnings
Per Share:
Basic $ (0.65) $ (0.26) $ (1.87) $ 0.80
=========== =========== =========== ===========
Diluted $ (0.65) $ (0.26) $ (1.86) $ 0.80
=========== =========== =========== ===========
Average Basic
Shares Outstanding 3,262 3,449 3,280 3,487
Average Diluted
Shares Outstanding 3,266 3,457 3,284 3,494
Other
Capital Expenditures $ 1,563 $ 2,443 $ 12,492 $ 10,930
Depreciation &
Amortization $ 1,736 $ 1,669 $ 6,264 $ 6,830
NOTE A: Prior year balances have been restated to reflect the
change from LIFO to FIFO accounting for inventories.
STRATTEC SECURITY CORPORATION
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Condensed Balance Sheet Data
(In Thousands)
June 28, 2009 June 29, 2008
------------- -------------
(Unaudited) (Note A)
ASSETS
Current Assets:
Cash and cash equivalents $ 22,764 $ 51,501
Receivables, net 17,235 23,518
Inventories 16,589 14,314
Other current assets 15,970 16,441
------------- -------------
Total Current Assets 72,558 105,774
Deferred Income Taxes 13,143 3,684
Investment in Joint Venture 4,483 3,642
Prepaid Pension Cost -- 758
Other Long Term Assets 1,069 27
Property, Plant and Equipment,
Net 36,936 30,336
------------- -------------
$ 128,189 $ 144,221
============= =============
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities:
Accounts Payable $ 11,369 $ 15,974
Other 19,479 16,965
------------- -------------
Total Current Liabilities 30,848 32,939
Borrowings Under Line of Credit
Facility -- --
Accrued Pension and Post
Retirement Obligations 24,784 12,389
Minority Interest 1,139 953
Shareholders' Equity 238,601 245,351
Accumulated Other Comprehensive
Loss (31,094) (17,495)
Less: Treasury Stock (136,089) (129,916)
------------- -------------
Total Shareholders' Equity 71,418 97,940
------------- -------------
$ 128,189 $ 144,221
============= =============
NOTE A: Prior year balances have been restated to reflect the
change from LIFO to FIFO accounting for inventories.
STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
Fourth Quarter Ended Years Ended
June 28, June 29, June 28, June 29,
2009 2008 2009 2008
----------- ----------- ----------- -----------
(Unaudited) (Note A) (Unaudited) (Note A)
Cash Flows from
Operating Activities:
Net (Loss) Income $ (2,118) $ (907) $ (6,122) $ 2,781
Adjustment to
Reconcile Net (Loss)
Income to Cash
Provided (Used) in
Operating Activities:
Minority Interest (180) 136 (780) 25
Depreciation and
Amortization 1,736 1,669 6,264 6,830
Foreign Currency
Transaction Loss
(Gain) 315 243 (918) 320
Deferred Income
Taxes (2,986) 622 (2,986) 622
Stock Based
Compensation
Expense 110 125 419 741
Provision for
Doubtful Accounts -- -- 500 --
Change in
Operating Assets/
Liabilities 5,195 (6,006) (3,024) (7,104)
Other, net 8 20 (189) (398)
----------- ----------- ----------- -----------
Net Cash Provided
(Used) in Operating
Activities 2,080 (4,098) (6,836) 3,817
Cash Flows from
Investing Activities:
Investment in
Joint Ventures (163) -- (551) --
Purchase of Delphi
Power Products -- -- (4,931) --
Additions to
Property, Plant
and Equipment (1,563) (2,443) (12,492) (10,930)
Proceeds from Sale
of Property, Plant
and Equipment 8 -- 8 --
----------- ----------- ----------- -----------
Net Cash Used in
Investing Activities (1,718) (2,443) (17,966) (10,930)
Cash Flow from
Financing Activities:
Purchase of Common
Stock -- (775) (6,214) (3,109)
Dividends Paid -- (524) (1,511) (5,133)
Loan from Minority
Interest -- 250 2,175 1,050
Contribution from
Minority Interest -- -- 986 349
Exercise of Stock
Options and
Employee Stock
Purchases 10 9 40 30
----------- ----------- ----------- -----------
Net Cash Provided
(Used) in Financing
Activities 10 (1,040) (4,524) (6,813)
Foreign Currency
Impact on Cash (206) (48) 589 (64)
----------- ----------- ----------- -----------
Net Increase
(Decrease) in Cash
& Cash Equivalents 166 (7,629) (28,737) (13,990)
Cash and Cash
Equivalents:
Beginning of Period 22,598 59,130 51,501 65,491
----------- ----------- ----------- -----------
End of Period $ 22,764 $ 51,501 $ 22,764 $ 51,501
=========== =========== =========== ===========
NOTE A: Prior year balances have been restated to reflect the
change from LIFO to FIFO accounting for inventories.