MILWAUKEE, Jan. 27, 2011 (GLOBE NEWSWIRE) -- STRATTEC SECURITY CORPORATION (Nasdaq:STRT) today reported operating results for the fiscal second quarter ended December 26, 2010.
Net sales for the Company's second quarter ended December 26, 2010 were $61.2 million, compared to net sales of $52.5 million for the second quarter ended December 27, 2009. Net income for the period was $1.2 million, compared to net income of $844,000 in the prior year quarter. Diluted earnings per share for the period were $.37 compared to diluted earnings per share of $.26 during the prior year quarter. The higher sales and profitability for the quarter were primarily the result of increased customer production volumes.
For the six months ended December 26, 2010, net sales were $121.1 million compared to net sales of $93.7 million during the prior year period. Net income during the current year period was $2.7 million compared to net income of $1.8 million during the prior year period and diluted earnings per share were $.80 compared to diluted earnings per share of $.55.
Sales to STRATTEC's largest customers overall increased in the current quarter compared to the prior year quarter levels. Sales to Chrysler Group LLC were $17.6 million in the current quarter compared to $16.5 million in the prior year quarter. Sales to General Motors Company were $16.3 million compared to $12.3 million. Sales to Ford Motor Company were $6.1 million compared to $5.2 million. However sales to Hyundai/Kia decreased to $3.4 million compared to $4.3 million in the prior year quarter.
Gross profit margins were 16.3 percent in the current quarter compared to 14.6 percent in the prior year quarter. The higher gross profit margin in the current year quarter was primarily the result of favorable customer vehicle production volumes, offset by an unfavorable Mexico Peso to U.S. dollar exchange rate affecting the Company's operations in Mexico. The prior year quarter included a significant amount of premium freight costs and overtime incurred during the months of October and November 2009 to meet significantly increased production requirements from the Company's largest customers as they rebuilt retail inventories following the U.S. Government's "Cash for Clunkers" program that ended in August 2009.
Operating expenses were $8.3 million in the current quarter, compared to $7.5 million in the prior year quarter. The increase in operating expenses during the current quarter was primarily attributed to higher spending for new product development. Additionally, expenses in the prior year period were lower due to temporary actions implemented with respect to the U.S. salaried work force to help conserve cash during the recession. These actions included reductions in wages and the Company 401(k) match.
Included in the prior year quarter results were the following non-recurring items:
- A $505,000 curtailment loss to immediately recognize the prior service cost associated with freezing STRATTEC's defined benefit retirement plan effective December 31, 2009;
- A $223,000 impairment charge to write off the goodwill recorded as part of the acquisition of STRATTEC POWER ACCESS in November 2008;
- A $1,125,000 favorable adjustment to an environmental reserve resulting from a re-evaluation of the potential remaining cost to satisfy outstanding environmental remediation issues at the Milwaukee production facility dating back to 1985; and
- A $201,000 recovery of the allowance for doubtful accounts recorded in the third quarter of fiscal 2009, relating to Chrysler LLC's bankruptcy filing on April 30, 2009.
STRATTEC designs, develops, manufactures and markets automotive Access Control Products, including mechanical locks and keys, electronically enhanced locks and keys, steering column and instrument panel ignition lock housings, 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.
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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 (including fluctuations in the cost of raw materials). 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.
CONTACT: Pat Hansen Senior Vice President and Chief Financial Officer 414-247-3435 www.strattec.com