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STRATTEC SECURITY CORPORATION Reports Fiscal 2013 Third Quarter Results

Stocks in this article: STRT

Gross profit margins were 17.7 percent in the current year quarter compared to 18.5 percent in the prior year quarter.  The reduction in gross profit margin in the current year quarter were impacted by a less favorable product sales mix, an unfavorable Mexico Peso to U.S. Dollar exchange rate affecting our operations in Mexico, and higher expense provision for our frozen defined benefit pension plan. These negative items were partially offset by the benefits of higher production volumes and a lower provision for bonuses earned under our incentive bonus plans.  

Normal operating expenses (excluding the $2.1 million settlement charge) as a percent of net sales in the current year quarter decreased to 10.7% from 12.3% in comparison to the prior year quarter. The major contributor to the decrease was a lower provision for our incentive bonuses.  

STRATTEC is a partner in VAST LLC, a global alliance of companies involved in the design and manufacture of automotive access products. As reported in our prior earnings releases, VAST's operations in China incurred start-up costs associated with a new product line. We anticipate these start-up costs and the resulting losses to continue over the remainder of the current fiscal year.

Included in Other (Expense) Income in the current year quarter compared to the prior year quarter were the following items (in thousands of dollars):

  March 31, April 1,
  2013 2012
Foreign Currency Transaction Loss ($987) ($698)
Net Realized and Unrealized Gain on Mexican Peso Option Contracts 77 1,126
Rabbi Trust Gain 103 161
Other 48 73
  ($759) $662

On April 5, 2013, the Company acquired 51% ownership in NextLock, LLC, a newly formed company which will introduce a new generation of biometric security products based upon the designs of Actuator Systems LLC, our partner and owner of the remaining 49% of NextLock. Frank Krejci, President & CEO commented: "We are excited that this investment will be part of our strategy to grow and diversify our technology, products and markets within the broad definition of Access System Technology, particularly focused on security and motion control." 

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