Exhibit 99.1

FOR RELEASE AT 3:00 PM CDT

Contact:  Pat Hansen
Senior Vice President and
Chief Financial Officer
414-247-3435
www.strattec.com

STRATTEC SECURITY CORPORATION
REPORTS FISCAL 2016 FOURTH QUARTER AND FULL YEAR
 OPERATING RESULTS
 
Milwaukee, Wisconsin – August 11, 2016-- STRATTEC SECURITY CORPORATION (“STRATTEC” or the “Company”) (NASDAQ:STRT) today reported operating results for the fiscal fourth quarter and year ended July 3, 2016.

Fourth Quarter
 
Net sales for the fourth quarter ended July 3, 2016 were $108.3 million, compared to net sales of $98.4 million for the fourth quarter ended June 28, 2015. The 2016 fiscal fourth quarter was a 14 week period while fiscal 2015’s fourth quarter was the typical 13 week period. The impact of the additional week of customer shipments during the current year quarter increased sales by approximately $7.5 million. Net income was $584,000 in the current year quarter compared to $1.2 million in the prior year quarter. Diluted earnings per share for the 2016 fourth quarter were $0.16 compared to $0.33 in the prior year quarter.
 

Both the current and prior fiscal year fourth quarters had certain items that negatively impacted our operating results. The lower net income for the current year quarter was primarily attributed to STRATTEC’s one third share ($2 million pre-tax or $1.26 million after tax) of a $6 million non-cash impairment charge related to Vehicle Access Systems Technology LLC’s (“VAST LLC”) investment in Minda VAST Access Systems joint venture in India. STRATTEC owns a one third interest in VAST LLC.  STRATTEC’s one third share of the impairment charge reduced its earnings per share in the current quarter by $0.35.

In comparing the current year quarter net income to the prior year quarter, the net income for the prior year quarter was impacted by an $8.5 million provision we recorded during the prior year fourth quarter to increase our customer warranty reserves for expected warranty payments to be settled in future periods and a combination of operating losses and impairment write-downs related to STRATTEC Advanced Logic, LLC, our biometric joint venture, which totaled $1.4 million.  These two items were partially offset by the reversal of $3.7 million of incentive bonus plan provisions we recorded in previous quarters during fiscal year 2015. In total these items reduced the prior year quarter pre-tax income by $6.2 million and reduced our diluted earnings per share by $1.11.

Net sales to each of our customers in the current year quarter and prior year quarter were as follows (in thousands):
 
   
Three Months Ended
 
   
July 3, 2016
   
June 28, 2015
 
             
Fiat Chrysler Automobiles
 
$
28,331
   
$
25,980
 
General Motors Company
   
21,765
     
20,145
 
Ford Motor Company
   
15,745
     
13,451
 
Tier 1 Customers
   
19,711
     
18,674
 
Commercial and Other OEM Customers
   
14,426
     
10,894
 
Hyundai / Kia
   
8,369
     
9,282
 
TOTAL
 
$
108,347
   
$
98,426
 
 
Sales to Fiat Chrysler Automobiles in the current year quarter increased primarily due to higher Chrysler Pacifica minivan production.  During the prior year quarter, Fiat Chrysler implemented a temporary shutdown of its Windsor, Canada assembly plant to re-tool for production of the new Chrysler Pacifica minivan. The negative effect of that shutdown last year was partially offset by increased service sales during the prior year quarter in comparison to the current year quarter. These two items reflected a reduction in sales to Fiat Chrysler Automobiles in the prior year quarter by $5.4 million in comparison to the current year quarter. In addition, during the current year quarter, Fiat Chrysler Automobiles reduced production of the Chrysler 200 and Dodge Journey due to reduced sales demand for these vehicles. The lower production for these two vehicles reduced sales in the current year quarter in comparison to the prior year quarter by $2.9 million. Increased sales to General Motors Company in the current year quarter related to one additional week of sales in comparison to the prior year quarter. Increased sales to Ford Motor Company in the current year quarter were attributed primarily to higher vehicle production volumes and content on models for which we supply components, in particular for components we supply for F-150 pick-up trucks.  Sales to Tier 1 Customers increased in the current quarter due to the extra week of sales in comparison to the prior year quarter. Sales to Commercial and Other OEM Customers during the current year quarter increased in comparison to the prior year quarter. These customers primarily represent purchasers of vehicle access control products, such as latches and fobs, that have been developed in recent years to complement our historic core business of locks and keys.  The decreased sales to Hyundai / Kia in the current year quarter were principally due to lower vehicle production volumes on the Kia Sedona minivan for which we supply components.   During the prior year quarter, production of the Sedona was elevated to fill the retail pipeline of the new redesigned model of this vehicle.
 

Gross profit margins were 14.0 percent in the current year quarter compared to 10.6 percent in the prior year quarter.  The increase in gross profit margin in the current year quarter was primarily attributed to the $8.5 million pre-tax warranty provision as discussed previously that occurred in the prior year quarter, which was offset by the reversal of expense provisions under our incentive bonus plans during the prior year quarter as compared to the current year quarter. Items also impacting gross margin during the current year quarter were higher costs associated with diversifying our product portfolio and agreed upon customer price reductions that became effective at the start of the new calendar year. Our gross margin was favorably impacted during the current year quarter by a higher Mexican Peso to U.S. Dollar exchange rate affecting our operations in Mexico.

Operating expenses were $11.5 million in the current year quarter and $8.0 million in the prior year quarter.  As a percent of net sales in the current year quarter operating expenses increased to 10.6% from 8.1% in comparison to the prior year quarter.  Overall, operating expenses were higher in the current year quarter primarily due to new product development costs associated with utilizing third party vendors for a portion of the development work and one additional week of operating expenses. The major contributor to the lower operating expenses during the prior year quarter was the reversal of $1.6 million expense provisions under our incentive bonus programs, as described above.
 
Included in Other (Expense) Income, Net in the current year quarter compared to the prior year quarter were the following items (in thousands of dollars):
 
   
July 3, 
2016
   
June 28, 
2015
 
Equity (Loss) Earnings of VAST LLC Joint Venture
 
$
(1,328
)
 
$
432
 
Equity Loss of STRATTEC Advanced Logic, LLC
   
(421
)
   
(1,082
)
Net Foreign Currency Transaction Gain (Loss)
   
(18
)
   
71
 
Other
   
124
     
101
 
   
$
(1,643
)
 
$
(478
)
 

The current year quarter equity loss in VAST LLC joint venture relates to STRATTEC’s share of the Minda VAST Access Systems impairment charge of $2 million previously discussed.

Full Year
 
For the fiscal year ended July 3, 2016, STRATTEC net sales were $401.4 million compared to net sales of $411.5 million during fiscal 2015.  Net income for fiscal 2016 was $9.1 million compared to net income of $20.7 million in the prior year period.  Diluted earnings per share for the current year were $2.51 compared to diluted earnings per share of $5.66 in the prior year.

The lower net sales and net income for the current year were anticipated and were primarily attributed to a $34 million decrease in incremental service parts sales to General Motors that were shipped during the prior year to support a recall campaign. Those incremental sales did not continue during the current year ended July 3, 2016.

Frank Krejci, President and CEO commented: “Even though we recognized a non-cash impairment charge during the current quarter on last year’s investment in India, I still believe it strategically strengthens our VAST global footprint for maintaining existing and winning new business throughout the rest of the world.
 
The other important item of note in the quarter was that we broke ground on our new painting and assembly facility in Leon, Mexico as part of our ADAC STRATTEC de Mexico joint venture with ADAC Automotive.  With new automotive assembly plants being built in Mid Mexico, and additional passenger car production migrating to Mexico from the U.S. and Canada we see significant growth opportunities for our partnership. Production at our new facility is expected to begin in mid-calendar year 2017”.
 

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 a unique strategic relationship with WITTE Automotive of Velbert, Germany and ADAC Automotive of Grand Rapids, Michigan.  Under this relationship, STRATTEC, WITTE and ADAC market each company's products to global customers under the “VAST” brand name.  STRATTEC’s history in the automotive business spans over 100 years.
 
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, changes in warranty provisions and customers’ product recall policies, 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
Condensed Results of Operations
(In Thousands, except per share amounts)

   
Fourth Quarter Ended
   
Years Ended
 
   
July 3, 2016
   
June 28, 2015
   
July 3, 2016
   
June 28, 2015
 
   
(Unaudited)
   
(Unaudited)
         
                         
Net Sales
 
$
108,347
   
$
98,426
   
$
401,419
   
$
411,475
 
Cost of Goods Sold
   
93,152
     
88,026
     
336,594
     
338,815
 
Gross Profit
   
15,195
     
10,400
     
64,825
     
72,660
 
                                 
Engineering, Selling & Administrative Expenses
   
11,467
     
8,010
     
43,917
     
41,534
 
Income from Operations
   
3,728
     
2,390
     
20,908
     
31,126
 
                                 
Interest Income
   
6
     
59
     
25
     
185
 
Interest Expense
   
(81
)
   
(32
)
   
(176
)
   
(71
)
Other (Expense) Income, Net
   
(1,643
)
   
(478
)
   
(1,567
)
   
2,693
 
Income before Provision for Income Taxes and Non-Controlling Interest
   
2,010
     
1,939
     
19,190
     
33,933
 
                                 
Provision for Income Taxes
   
211
     
4
     
5,068
     
9,382
 
                                 
Net Income
 
$
1,799
   
$
1,935
   
$
14,122
   
$
24,551
 
                                 
Net Income Attributable to Non-Controlling Interest
   
1,215
     
735
     
4,973
     
3,897
 
                                 
Net Income Attributable to STRATTEC SECURITY CORPORATION
 
$
584
   
$
1,200
   
$
9,149
   
$
20,654
 
                                 
Earnings Per Share:
                               
Basic
 
$
0.16
   
$
0.33
   
$
2.55
   
$
5.80
 
Diluted
 
$
0.16
   
$
0.33
   
$
2.51
   
$
5.66
 
Average Basic
                               
Shares Outstanding
   
3,565
     
3,525
     
3,559
     
3,515
 
                                 
Average Diluted
                               
Shares Outstanding
   
3,622
     
3,609
     
3,621
     
3,604
 
                                 
Other
                               
Capital Expenditures
 
$
9,157
   
$
4,446
   
$
23,496
   
$
26,097
 
Depreciation & Amortization
 
$
2,518
   
$
2,348
   
$
10,121
   
$
8,815
 
 

STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)

   
July 3, 2016
   
June 28, 2015
 
   
(Unaudited)
       
ASSETS
           
Current Assets:
           
Cash and cash equivalents
 
$
15,477
   
$
25,695
 
Receivables, net
   
63,726
     
58,807
 
Inventories, net
   
38,683
     
34,786
 
Other current assets
   
16,565
     
9,318
 
Total Current Assets
   
134,451
     
128,606
 
Investment in Joint Ventures
   
14,168
     
15,326
 
Other Long Term Assets
   
8,408
     
15,776
 
Property, Plant and Equipment, Net
   
85,149
     
71,126
 
   
$
242,176
   
$
230,834
 
                 
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Current Liabilities:
               
Accounts Payable
 
$
32,416
   
$
27,838
 
Other
   
31,799
     
36,897
 
Total Current Liabilities
   
64,215
     
64,735
 
Accrued Pension and Post Retirement Obligations
   
2,728
     
2,988
 
Borrowings Under Credit Facility
   
20,000
     
10,000
 
Other Long-term Liabilities
   
721
     
710
 
Shareholders’ Equity
   
312,876
     
303,073
 
Accumulated Other Comprehensive Loss
   
(37,673
)
   
(26,859
)
Less:  Treasury Stock
   
(135,871
)
   
(135,902
)
Total STRATTEC SECURITY
               
CORPORATION Shareholders’ Equity
   
139,332
     
140,312
 
Non-Controlling Interest
   
15,180
     
12,089
 
Total Shareholders’ Equity
   
154,512
     
152,401
 
   
$
242,176
   
$
230,834
 
 

STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)

   
Fourth Quarter Ended
    Years Ended  
   
July 3, 2016
   
June 28, 2015
   
July 3, 2016
   
June 28, 2015
 
   
(Unaudited)
   
(Unaudited)
         
                         
Cash Flows from Operating Activities:
                       
Net Income
 
$
1,799
   
$
1,935
   
$
14,122
   
$
24,551
 
Adjustment to Reconcile Net Income to Cash (Used in) Provided by Operating Activities:
                               
Equity Loss in Joint Ventures
   
1,749
     
650
     
2,235
     
788
 
Depreciation and Amortization
   
2,518
     
2,348
     
10,121
     
8,815
 
Foreign Currency Transaction Gain
   
(764
)
   
(71
)
   
(2,559
)
   
(3,075
)
Unrealized Loss on Peso Contracts
   
289
     
-
     
889
     
-
 
Deferred Income Taxes
   
3,027
     
(3,330
)
   
3,027
     
(3,330
)
Stock Based Compensation Expense
   
378
     
310
     
1,625
     
1,323
 
Change in Operating Assets/Liabilities
   
(9,508
)
   
5,733
     
(21,510
)
   
1,926
 
Other, net
   
311
     
289
     
268
     
461
 
                                 
Net Cash (Used in) Provided by Operating Activities
   
(201
)
   
7,864
     
8,218
     
31,459
 
                                 
Cash Flows from Investing Activities:
                               
Investment in Joint Ventures
   
-
     
(4,000
)
   
(1,720
)
   
(4,384
)
Additions to Property, Plant and Equipment
   
(9,157
)
   
(4,446
)
   
(23,496
)
   
(26,097
)
Other
   
25
     
(99
)
   
(49
)
   
(314
)
Net Cash Used in Investing Activities
   
(9,132
)
   
(8,545
)
   
(25,265
)
   
(30,795
)
                                 
Cash Flows from Financing Activities:
                               
Borrowings Under Credit Facility
   
6,000
     
-
     
26,500
     
9,000
 
Repayments Under Credit Facility
   
(4,000
)
   
(1,000
)
   
(16,500
)
   
(1,500
)
Dividends Paid
   
(467
)
   
(429
)
   
(1,865
)
   
(1,711
)
Dividends Paid to Non-Controlling Interest Of Subsidiaries
   
-
     
-
     
(1,568
)
   
(882
)
Exercise of Stock Options and Employee Stock Purchases, Including Excess Tax Benefits From Stock Based Compensation
   
34
     
186
     
643
     
920
 
                                 
Net Cash Provided by (Used in) Financing Activities
   
1,567
     
(1,243
)
   
7,210
     
5,827
 
                                 
Foreign Currency Impact on Cash
   
85
     
(416
)
   
(381
)
   
(552
)
                                 
Net (Decrease) Increase in Cash & Cash Equivalents
   
(7,681
)
   
(2,340
)
   
(10,218
)
   
5,939
 
                                 
Cash and Cash Equivalents:
                               
Beginning of Period
   
23,158
     
28,035
     
25,695
     
19,756
 
End of Period
 
$
15,477
   
$
25,695
   
$
15,477
   
$
25,695
 
 
 


The following information was filed by Strattec Security Corp (STRT) on Thursday, August 11, 2016 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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