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STRATTEC SECURITY CORPORATION Reports Fiscal Second Quarter Results

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.

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 (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.

STRATTEC SECURITY CORPORATION
Results of Operations
(In Thousands except per share amounts)
(Unaudited)
         
    Second Quarter Ended  Six Months Ended
  December 26, 2010 December 27, 2009 December 26, 2010  December 27, 2009
         
Net Sales $61,212 $52,540 $121,061 $93,721
         
Cost of Goods Sold 51,239 44,887 100,935 79,270
         
Gross Profit 9,973 7,653 20,126 14,451
         
Engineering, Selling &        
Administrative Expenses 8,318 7,455 16,483 13,654
         
Impairment Charge -- 223  -- 223
         
Environmental -- (1,125)  -- (1,125)
         
Recovery of Bad Debts -- (201)  -- (421)
         
Income from Operations 1,655 1,301 3,643 2,120
         
Interest Income 25 19 48 42
         
Interest Expense (45) (59) (96) (115)
         
Other Income, Net 438 306 1,059 790
         
  2,073 1,567 4,654 2,837
         
Provision for Income Taxes 331 721 1,132 1,062
         
Net Income  1,742 846 3,522 1,775
         
Net Income Attributable        
 to Non-Controlling Interest (495) (2) (857) 12
         
Net Income Attributable to        
 STRATTEC SECURITY        
 CORPORATION $1,247 $844 $2,665 $1,787
         
Earnings Per Share:        
Basic  $0.38  $0.26  $0.81  $0.55
Diluted $0.37 $0.26 $0.80 $0.55
Average Basic        
 Shares Outstanding 3,286 3,272 3,283 3,269
         
Average Diluted        
 Shares Outstanding 3,329 3,272 3,314 3,271
         
Other        
 Capital Expenditures $1,706 $1,342 $3,482 $3,104
 Depreciation & Amortization $1,589 $1,827 $3,227 $3,578
 
STRATTEC SECURITY CORPORATION
     
Condensed Balance Sheet Data
(In Thousands)
     
  December 26, 2010 June 27, 2010
    (Unaudited)  
ASSETS    
Current Assets:    
Cash and Cash Equivalents $17,811 $21,867
Restricted Cash (A) -- 2,100
Receivables, Net 33,397 36,084
Inventories 22,415 17,086
Other Current Assets 14,798 12,871
Total Current Assets 88,421 90,008
Deferred Income Taxes 10,534 10,534
Loan to Joint Venture 1,500 1,500
Investment in Joint Venture 6,302 5,176
Other Long Term Assets 684 733
Property, Plant and Equipment, Net 37,539 37,051
  $144,980 $145,002
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current Liabilities:    
Accounts Payable $23,082 $21,192
Other 22,858 25,038
Total Current Liabilities 45,940 46,230
Borrowings Under Line of Credit Facility -- --
Accrued Pension and Post Retirement Obligations 22,868 22,982
Shareholders' Equity 241,115 242,115
Accumulated Other Comprehensive Loss (31,421) (31,941)
Less: Treasury Stock (136,029) (136,047)
Total STRATTEC SECURITY    
CORPORATION Shareholders' Equity 73,665 74,127
Non-Controlling Interest 2,507 1,663
Total Shareholders' Equity 76,172 75,790
  $144,980 $145,002
     
NOTE A: Represents a commercial guarantee by STRATTEC SECURITY CORPORATION relating to a promissory note issued by Vehicle Access Systems Technology, LLC (VAST, LLC). This guarantee was canceled in October 2010.
 
STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
  (Unaudited)
         
  Second Quarter Ended Six Months Ended
  December 26, 2010 December 27, 2009  December 26, 2010  December 27, 2009
         
Cash Flows from Operating Activities:        
Net Income $1,742 $846 $3,522 $1,775
Adjustment to Reconcile Net Income to        
Cash Provided by Operating Activities:        
Equity Earnings in VAST LLC Joint Venture (381) (383) (803) (479)
Depreciation and Amortization 1,589 1,827 3,227 3,578
Foreign Currency Transaction Loss 160 222 190 157
Stock Based Compensation Expense 156 98 298 204
Recovery of Doubtful Accounts -- (201) -- (421)
Deferred Tax Provision -- 3,258 -- 3,258
Curtailment Loss -- 505 -- 505
Impairment Charge -- 223 -- 223
Environmental -- (1,125) -- (1,125)
Change in Operating Assets/Liabilities 1,256 (289) (4,197) (1,540)
Other, net 11 (10) 17 22
         
Net Cash Provided by Operating Activities 4,533 4,971 2,254 6,157
         
Cash Flows from Investing Activities:        
Investment in Joint Ventures (150) (100) (150) (100)
Loan to Joint Venture -- (1,500) -- (1,500)
Restricted Cash 2,100 (2,100) 2,100 (2,100)
Purchase of Additional Interest in        
ADAC-STRATTEC LLC -- -- (22) --
Additions to Property, Plant and Equipment (1,706) (1,342) (3,482) (3,104)
Proceeds from Sale of Property, Plant        
 and Equipment  -- 10 -- 10
Net Cash Provided by (Used in) Investing Activities 244 (5,032) (1,554) (6,794)
         
Cash Flow from Financing Activities:        
Dividends Paid (3,989) -- (3,989) --
Repayment of Loan to Related Parties (250) -- (750) --
Exercise of Stock Options and         
Employee Stock Purchases 15 12 28 23
         
Net Cash Provided by (Used in) Financing Activities (4,224) 12 (4,711) 23
         
Effect of Foreign Currency Fluctuations on Cash (64) (165) (45) (134)
         
Net Increase (Decrease) in Cash & Cash Equivalents 489 (214) (4,056) (748)
         
Cash and Cash Equivalents:        
Beginning of Period 17,322 22,230 21,867 22,764
End of Period $17,811 $22,016 $17,811 $22,016
CONTACT: Pat Hansen
         Senior Vice President and
         Chief Financial Officer
         414-247-3435
         www.strattec.com

STRATTEC SECURITY CORPORATION Logo

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