Methode Electronics, Inc. Reports Results for the Second Quarter of the 2007 Fiscal Year

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Methode Electronics (MM)	NASDAQ:METH	NASDAQ	Common Stock

Methode Electronics (NASDAQ:METH)
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Methode Electronics, Inc. (NASDAQ:METH), a global manufacturer of electronic component and subsystem devices, today announced operating results for the quarter ended October 31, 2006, which is the second quarter of the 2007 fiscal year. Methode reported net sales of $108.5 million and net income of $4.9 million, or $0.13 per share, in the second quarter of the 2007 fiscal year. This compares with net sales of $116.3 million and net income of $5.2 million, or $0.14 per share, in the second quarter of the 2006 fiscal year. Customer paid tooling sales in the second quarter of the 2007 fiscal year were $0.4 million compared to $5.2 million in the second quarter of the 2006 fiscal year. Included in net income in the 2006 fiscal year was a $3.2 million bad debt provision, $2.1 million net of tax, for receivables deemed impaired due to the bankruptcy of the U.S. subsidiaries of Delphi Corporation. In the first six months of the 2007 fiscal year, net sales were $212.1 million, compared to $210.3 million in the same period in the last fiscal year. Net income was $9.2 million in the first half of this fiscal year, or $0.25 per share, compared to $9.9 million, or $0.27 per share, in the first half of the 2006 fiscal year. Customer paid tooling sales in the first six months of the 2007 fiscal year were $0.4 million compared to $5.9 million in the 2006 fiscal year. Commenting on the results, Donald W. Duda, President and Chief Executive Officer for Methode stated, �As anticipated, we experienced a solid increase in our European automotive sales. This was offset by a steep decline in North American automobile output during Methode�s second quarter resulting in a 9.8 percent decline in sales in our automotive segment, excluding customer paid tooling sales, compared to last year�s second quarter.� Mr. Duda continued, �Methode�s power distribution segment reported increased sales during the second quarter both domestically and in Asia. We are especially pleased with the significant growth in this segment�s China business, which achieved profitability within its first year of operation.� Cost of products sold increased to 82.2 percent of net sales in the second quarter of the 2007 fiscal year from last fiscal year�s second quarter mark of 80.3 percent. This increase in cost of products sold is primarily in the automotive segment and is a result of production volume declines, contractual price reductions, inefficiencies in our Scotland facility and higher material costs. Selling and administrative expense was 12.2 percent and 12.7 percent in the second quarter and six-month period of the 2007 fiscal year, respectively, compared to 13.8 percent and 13.6 percent in the second quarter and first six months of the 2006 fiscal year. In the second quarter of the 2006 fiscal year, Methode reported a higher than normal selling and administrative expense due to the bad debt provision of $3.2 million, $2.1 million net of tax, for receivables deemed impaired due to the bankruptcy of the U.S. subsidiaries of Delphi Corporation, which represented 2.7 percent and 1.5 percent of net sales for the quarter and six-month period ended October 31, 2005, respectively. Excluding this charge, selling and administrative expenses as a percentage of net sales for the second quarter and six months ended October 31, 2006 increased, primarily as a result of higher stock-based compensation expense. On December 8, 2006, Methode intends to begin transferring all production lines in its Scotland facility to Malta. These lines produce automotive electronic components. Production in Malta is anticipated to commence after the New Year holiday. Total cost of the transfer is anticipated to be $2.2 million to $2.9 million, resulting in a reduction of $0.06 to $0.08 in earnings per share, to be incurred during the second half of the 2007 fiscal year. This is the business restructuring charge that was included in previous guidance. After the 2007 fiscal year, Methode anticipates that the annual savings of closing the Scotland facility and transferring production to Malta will be approximately $2.5 million. Methode expects to achieve sales between $102.0 million and $107.0 million, and earnings per share in the range of $0.06 to $0.09 in the quarter ending January 31, 2007, which is the third quarter of the 2007 fiscal year. Methode reiterates its previously announced guidance for sales between $420.0 million and $435.0 million, and earnings per share between $0.40 and $0.48, for the full fiscal year ending April 30, 2007. This estimated earnings per share range for the 2007 full fiscal year includes the announced business reorganization charge of $0.06 to $0.08 earnings per share. It is anticipated that a majority of this expense will be incurred in the third quarter with final costs to be reported in the fourth quarter of the 2007 fiscal year. Conference Call As previously announced, Methode will conduct a conference call led by its President and Chief Executive Officer, Donald W. Duda, and Chief Financial Officer, Douglas A. Koman, on Thursday, December 7, 2006 at 10:00 a.m. Central Time. Methode invites you to listen to the webcast of this call by visiting Methode�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 callers and 201-689-8031 for international. A telephone replay of the call will be available for seven days, by dialing 877-660-6853 for domestic callers and 201-612-7415 for international, both using the playback account number 286 and conference ID number 221527. About Methode Electronics Methode Electronics, Inc. is a global manufacturer of electronic component and subsystem devices. Methode designs, manufactures and markets devices employing electrical, electronic, wireless, sensing and optical technologies. Methode�s components are found in the primary end markets of the automotive, communications (including information processing and storage, networking equipment, wireless and terrestrial voice/data systems), aerospace, rail and other transportation industries; and the consumer and industrial equipment markets. Further information can be found at Methode�s website www.methode.com. Forward-Looking Statements Certain statements in this press release dated December 7, 2006, containing information for Methode�s second quarter reporting period for the 2007 fiscal year and offering guidance for Methode�s third quarter and full year reporting periods for the 2007 fiscal year, are forward-looking statements that are subject to certain risks and uncertainties. Methode�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 include Delphi Corporation�s bankruptcy petition; other significant customer bankruptcy filings; restructuring, operational improvement and cost reduction programs currently under review by Methode; the current macroeconomic environment, including higher petroleum and copper prices affecting material and components used by Methode; potential manufacturing plant shut-downs by automotive customers and significant fluctuations in the demand for certain automobile models. In addition, 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 Methode�s Form 10-K and other reports filed with the Securities and Exchange Commission may also effect Methode�s results. 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 December 7, 2006. Methode undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in Methode�s expectations. Methode Electronics, Inc. Financial Highlights (In thousands, except per share data, unaudited) � Three Months EndedOctober 31, 2006� 2005� � Net sales $108,516� $116,285� Other income 151� 333� Cost of products sold 89,244� 93,419� Selling and administrative expenses 13,277� 16,084� Income from operations 6,146� 7,115� Interest, net 904� 507� Other, net 393� 189� Income before income taxes 7,443� 7,811� Income taxes 2,555� 2,570� Net income 4,888� 5,241� Basic and Diluted Earnings per Common Share $0.13� $0.14� Average Number of Common Shares outstanding: Basic 36,275� 36,262� Diluted 36,495� 36,489� � � Six Months EndedOctober 31, 2006� 2005� � Net sales $212,087� $210,268� Other income 335� 557� Cost of products sold 173,203� 168,672� Selling and administrative expenses 27,030� 28,621� Income from operations 12,189� 13,532� Interest, net 1,723� 1,007� Other, net 325� 94� Income before income taxes and cumulative effect of accounting change 14,237� 14,633� Income taxes 5,090� 4,685� Income before cumulative effect of accounting change 9,147� 9,948� Cumulative effect of accounting change 101� -� Net income 9,248� 9,948� Basic and Diluted Earnings per Common Share: Income before cumulative effect of accounting change $0.25� $0.27� Net income 0.25� 0.27� Average Number of Common Shares outstanding: Basic 36,298� 36,244� Diluted 36,516� 36,471� � Note - Certain amounts in fiscal 2006 have been reclassified toconform to the classification in fiscal 2007. � Methode Electronics, Inc. Summary Balance Sheets (In thousands) � October 31, April 30, 2006� 2006� (Unaudited) Cash $ 95,406� $ 81,646� Accounts receivable - net 66,393� 74,223� Inventories 47,937� 45,681� Other current assets 13,581� 19,722� Total Current Assets 223,317� 221,272� � Property, plant and equipment - net 86,127� 90,497� Goodwill - net 30,125� 28,893� Intangible assets - net 15,324� 17,540� Other assets 16,663� 16,381� Total Assets $ 371,556� $ 374,583� � Accounts and notes payable $ 32,319� $ 41,581� Other current liabilities 31,369� 32,622� Total current liabilities 63,688� 74,203� � Other liabilities 8,651� 8,671� Shareholders' equity 299,217� 291,709� Total Liabilities and Shareholders' Equity $ 371,556� $ 374,583� Methode Electronics, Inc. Summary Statements of Cash Flows (Unaudited) (In thousands) � Six Months Ended October 31, 2006� 2005� Operating Activities: Net income $ 9,248� $ 9,948� Provision for depreciation 9,294� 8,820� Amortization of intangibles 2,426� 2,753� Amortization of restricted stock awards 1,466� 1,004� Provision for losses on accounts receivable 84� 3,150� Changes in operating assets and liabilities 2,940� (4,322) Other 1,129� 84� � Net Cash Provided by Operating Activities 26,587� 21,437� Investing Activities: Purchases of property, plant and equipment (5,022) (11,621) Proceeds from sale of building 800� 1,712� Acquisitions of businesses (2,678) (5,127) Acquisitions of technology licenses -� (2,402) Other (631) (199) � Net Cash Used in Investing Activities: (7,531) (17,637) Financing Activities Options exercised 187� 598� Dividends (3,732) (3,736) Purchase of common stock (1,926) (664) � Net Cash Used in Financing Activities (5,471) (3,802) � Effect of foreign exchange rate changes on cash 175� (2,498) � Increase (Decrease) in Cash and Cash Equivalents 13,760� (2,500) � Cash and cash equivalents at beginning of period 81,646� 87,142� � Cash and Cash Equivalents at End of Period $ 95,406� $ 84,642�

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