Methode Electronics (NASDAQ:METH)
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Methode Electronics, Inc. (Nasdaq:METH) today announced
operating results for the fiscal year 2007 first quarter ended July
31, 2006.
Methode reported first quarter fiscal year 2007 net sales of
$103.6 million and net income of $4.4 million, or $0.12 per share.
This compares with net sales of $94.0 million and net income of $4.7
million, or $0.13 per share, in the first quarter of the 2006 fiscal
year. Methode's fiscal 2007 first quarter sales increased ten percent
over the prior year's quarter. This increase is primarily due to
automotive switch sales in Europe and China, as well as sales of
sensor pads for a passive occupant detection system. In addition,
sales from our Power Distribution segment increased due to improved
domestic demand and sales from the new Shanghai operation.
As a percentage of net sales, cost of products sold was 81.1
percent in the first quarter of fiscal 2007 compared to 80.1 percent
in the first quarter of fiscal 2006. Increased raw material costs and
production inefficiencies in our Scotland and Shanghai operations
accounted for the gross margin decline in the quarter. Selling and
administrative expenses for the quarter were flat compared to the
comparable quarter last year, both at 13.3 percent of net sales.
For the first quarter, Methode's effective tax rate was 37.3
percent compared to 31.0 percent in the prior year's quarter. The
effective rate increased primarily due to the establishment of a
valuation allowance for potentially non-deductible stock-based
compensation.
Cash increased from fiscal 2006 year-end, primarily due to reduced
accounts receivable offset by increased inventory and lower accounts
payable. The reduction in accounts receivable and accounts payable was
the result of lower sequential quarterly sales. The increase in
inventory was primarily a result of Methode's European automotive
operations preparation for the anticipated annual August plant shut
down period. Shanghai automotive inventory also increased, mostly in
finished goods, as one of the larger General Motors programs reached
expected production volumes.
Donald W. Duda, President and Chief Executive Officer, said,
"Despite the harsh U.S. automotive environment, we maintained our
anticipated level of sales and contribution. We continue to monitor
the automotive production levels, especially due to the significant
cuts recently announced by Ford for the remainder of the calendar
year. We are adjusting our full-year sales forecast down, but are
maintaining our full-year income guidance."
Methode expects to achieve second quarter fiscal 2007 sales
between $105.0 million and $108.0 million and earnings per share in
the range of $0.09 to $0.11. For the full-year, fiscal 2007 sales are
expected to be between $420.0 million and $435.0 million and earnings
per share in the range of $0.40 to $0.48. The full-year earnings per
share range includes the previously announced expected business
reorganization charge of $0.06 to $0.08 for the 2007 fiscal year.
As previously announced, the Company will conduct a conference
call today led by its President and Chief Executive Officer, Donald W.
Duda, and Chief Financial Officer, Douglas A. Koman, at 10:00 a.m.
Central Time. Methode invites you to listen to the webcast of this
call by visiting the Company's website at www.methode.com and entering
the "Investor Relations" page and then clicking on the "Webcast" icon.
You may participate on the conference call by dialing 877-407-8031 for
domestic and 201-689-8031 for international callers. For those who
cannot listen to the live broadcast, a replay, as well as an MP3
download will be available shortly after the call. The call will be
available for seven days and can be accessed by dialing 877-660-6853
for domestic and 201-612-7415 for international callers, both using
the playback account number 286 and conference ID number 212110.
About Methode Electronics
Methode Electronics, Inc., globally designs, manufactures, and
markets component devices and subsystems worldwide for Original
Equipment Manufacturers (OEMs). Methode's components are found in the
primary end markets of the automotive, information processing and
networking equipment, voice and data communications systems, consumer
electronics, aerospace vehicles, rail and other transportation
industries and industrial equipment. Our products employ electrical,
electronic and opto-electronic technologies, such as sensors,
interconnects and controls. Further information can be found on
Methode's website, www.methode.com.
Forward-Looking Statements
Certain statements in this press release dated September 7, 2006,
containing information on Methode's first quarter period for fiscal
2007, and offering guidance for its second quarter and full year
reporting periods for fiscal 2007, are forward-looking statements that
are subject to certain risks and uncertainties. The Company's results
will be subject to many of the same risks that apply to the
automotive, computer and telecommunications industries, such as
general economic conditions, interest rates, consumer spending
patterns and technological change. Other factors, which may result in
materially different results for future periods, include market
growth; operating costs; currency exchange rates and devaluations;
delays in development, production and marketing of new products; and
other factors set forth from time to time in the Company's Form 10-K
and other reports filed with the Securities and Exchange Commission.
The forward-looking statements in this press release are subject to
the safe harbor protection provided under the securities law. All
information in this press release is as of September 7, 2006. Methode
undertakes no duty to update any forward-looking statement to conform
the statement to actual results or changes in the Company's
expectations.
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Methode Electronics, Inc.
Summary Statement of Income (Unaudited)
(In thousands, except per share data)
Three Months Ended
July 31,
2006 2005
--------- ---------
Net sales $103,571 $93,983
Other income 184 225
Cost of products sold 83,960 75,254
Selling and administrative expenses 13,752 12,537
Income from operations 6,043 6,417
Interest, net 819 500
Other income (expense), net (68) (95)
Income before income taxes and cumulative effect
of accounting change 6,794 6,822
Income taxes 2,535 2,115
Income before cumulative effect of accounting
change 4,259 4,707
Cumulative effect of accounting change 101 -
Net income 4,360 4,707
Basic and Diluted Earnings per Common Share:
Income before cumulative effect of accounting
change $0.12 $0.13
Net income 0.12 0.13
Average Number of Common Shares Outstanding:
Basic 36,334 36,229
Diluted 36,538 36,457
Note -- Certain amounts in fiscal 2006 have been
reclassified to conform to the
classification in fiscal 2007.
Methode Electronics, Inc.
Summary Balance Sheet
(In thousands)
July 31, April 30,
2006 2006
----------- -----------
(Unaudited)
Cash $ 92,094 $ 81,646
Accounts receivable -- net 60,762 74,223
Inventories 51,002 45,681
Other current assets 13,614 19,722
----------- -----------
Total Current Assets 217,472 221,272
Property, plant and equipment -- net 87,533 90,497
Goodwill -- net 28,893 28,893
Intangible assets -- net 16,485 17,540
Other assets 16,218 16,381
----------- -----------
Total Assets $ 366,601 $ 374,583
=========== ===========
Accounts payable $ 31,955 $ 41,581
Other current liabilities 30,354 32,622
----------- -----------
Total Current Liabilities 62,309 74,203
Other liabilities 8,364 8,671
Shareholders' equity 295,928 291,709
----------- -----------
Total Liabilities and Shareholders' Equity $ 366,601 $ 374,583
=========== ===========
Methode Electronics, Inc.
Summary Statement of Cash Flows (Unaudited)
(In thousands)
Three Months Ended
July 31,
2006 2005
-------- ---------
Operating Activities:
Net income $ 4,360 $ 4,707
Provision for depreciation 4,601 4,400
Amortization of intangibles 1,265 1,300
Amortization of stock awards and stock options 761 495
Other 5,484 (4,359)
-------- ---------
Net Cash Provided by Operating Activities 16,471 6,543
Investing Activities:
Purchases of property, plant and equipment (1,949) (5,718)
Proceeds from sale of building 800 1,712
Acquisitions of businesses (2,678) (5,038)
Acquisitions of technology licenses - (2,102)
Other (590) (585)
-------- ---------
Net Cash Used in Investing Activities: (4,417) (11,731)
Financing Activities:
Options exercised 141 550
Dividends (1,865) (1,868)
Repurchase of common stock (2) (664)
-------- ---------
Net Cash Used in Financing Activities (1,726) (1,982)
Effect of foreign exchange rate changes on cash 120 (2,393)
-------- ---------
Increase (Decrease) in Cash and Cash Equivalents 10,448 (9,563)
Cash and cash equivalents at beginning of period 81,646 87,142
-------- ---------
Cash and Cash Equivalents at End of Period $92,094 $ 77,579
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