CHICAGO, IL--(Marketwire - Aug 30, 2012) - Methode Electronics, Inc. (NYSE: [ MEI ]), a global developer of custom engineered and application specific products and solutions, today announced financial results for the Fiscal 2013 first quarter ended July 28, 2012.

First-Quarter Fiscal 2013
Methode's first-quarter Fiscal 2013 net sales grew $7.9 million, or 7.1 percent, to $118.7 million from $110.8 million in the same quarter of Fiscal 2012.

Net income increased $2.4 million to $3.9 million, or $0.10 per share, in the first quarter of Fiscal 2013 from net income of $1.5 million, or $0.04 per share, in the same period of Fiscal 2012. Year over year, Fiscal 2013 first-quarter net income benefitted from:

• higher overall sales volume;
• higher Other segment income of $2.0 million as a result of increased torque-sensing product sales;
• lower performance-based compensation and severance expense of $0.6 million;
• commodity pricing adjustments of $0.9 million in the Automotive segment; and
• lower legal expenses of $0.6 million.

Year-over-year, Fiscal 2013 first-quarter net income was negatively affected by:

• higher income tax expense of $0.4 million;
• higher selling and administrative expense of $0.4 million due to the acquisitions of Advanced Molding and Decoration (AMD); and
• higher costs of $0.2 million related to the design, development and engineering of a North American automotive program.

Consolidated gross margins as a percentage of sales were relatively flat at 18.0 percent in the Fiscal 2013 first quarter compared to 18.1 percent in the same period of Fiscal 2012. Gross margins decreased slightly as a result of higher design, development and engineering costs for a new automotive program scheduled to launch in late Fiscal 2013 and increased sales of automotive product that has higher prime cost due to the current high percentage of purchased content, partially offset by lower costs related to vendor production and delivery issues, the commodity price adjustment, a favorable product mix in the Interconnect segment, lower commodity pricing in the Power Products segment and increased sales and lower purchased content in the Other segment.

Selling and administrative expense decreased $1.4 million, or 7.5 percent, to $17.2 million in the Fiscal 2013 first quarter compared to $18.6 million in the prior-year first quarter due primarily to lower legal expense and lower salary, stock-based compensation, severance, travel and bad debt expenses, partially offset by higher expense related to the acquisitions of AMD. Selling and administrative expense as a percentage of net sales decreased to 14.5 percent for the Fiscal 2013 first quarter compared to 16.8 percent in the same period last year.

In the Fiscal 2013 first quarter, income tax expense was $0.4 million compared to no net tax expense for the Fiscal 2012 period. Income tax expense for the Fiscal 2013 period relates to income taxes on foreign profits. In the Fiscal 2012 period, a benefit of $1.1 million related to tax credits in Malta offset $1.1 million of tax expense on foreign profits.

First-Quarter Fiscal 2013 Segment Comparisons
Comparing the Automotive segment's first quarter of Fiscal 2013 to the same period of Fiscal 2012,

• Net sales increased 13.2 percent attributable to
  • a 114.5 percent sales improvement in North America due to higher demand for the Ford center console program and lead frame assembly products, which represented 52.4 percent of the increase, and to sales from the AMD acquisition; partially offset by
  • a 5.0 percent sales decrease in Europe primarily due to fluctuation in currency exchange rates; and
  • a 14.2 percent sales decrease in Asia attributable to lower sales of lead frame assembly products due to the planned partial transfer of this business to North America.
• Gross margins as a percentage of sales decreased to 13.2 percent from 14.8 percent due to higher design, development and engineering costs for new programs and new product launches, as well as the increased sales of automotive product that has higher prime cost due to the current high purchased content, partially offset by commodity pricing adjustments and lower costs related to vendor production and delivery issues.
• Income from operations increased 22.7 percent due to increased sales, the commodity pricing adjustments and lower selling and administrative expenses, partially offset by higher design, development and engineering costs and administrative expense due to the AMD acquisition.

Comparing the Interconnect segment's first quarter of Fiscal 2013 to the same period of Fiscal 2012,

• Net sales decreased 2.2 percent attributable to
• a 19.4 percent sales decline in Europe due primarily to the lack of sales to a financially distressed radio remote control distributor, as well as lower sensor product sales; and
• an 18.4 percent sales decline in Asia due to lower demand for radio remote control products and lower sales of legacy products due to the planned exit of a product line; partially offset by
• a 7.9 percent sales increase in North America due to higher appliance and data solutions products demand.
• Gross margins as a percentage of sales improved to 29.3 percent from 28.4 percent due primarily to higher sales of data solutions products partially offset by development costs for products scheduled to launch in the Fiscal 2013 second quarter.
• Income from operations increased 14.0 percent due to favorable sales mix and lower selling and administrative expenses.

Comparing the Power Products segment's first quarter of Fiscal 2013 to the same period of Fiscal 2012,

• Net sales decreased 5.5 percent attributable to
• a 7.0 percent sales decline in North America due to lower demand for cabling and heat sink products, partially offset by higher busbar demand;
• a $100,000 sales decline in Europe on a small base of business due to lower busbar demand; and
• flat sales in Asia.
• Gross margins as a percentage of sales improved to 16.5 percent from 15.6 percent due to favorable raw material commodity pricing and product mix in the North American business.
• Income from operations increased 50.0 percent due to favorable raw material commodity pricing and selling and administrative expenses offset by lower sales.

Delphi Litigation Update
In August 2012, the Company and the various Delphi parties agreed to settle all Delphi related litigation matters. In addition to resolving all claims between the parties, the Company will assign certain patents to Delphi and enter into to a non-compete with respect to the related technology. In exchange, the Company will receive a payment of $20.0 million, half of which will be paid in October 2012 and half of which will be paid in January 2013. The Company expects to record the entire gain in the second quarter of fiscal 2013.

Guidance
Methode reiterates its full-year Fiscal 2013 sales guidance of $495 to $525 million. However, the Company increased its Fiscal 2013 earnings per share guidance to $0.66 to $0.81 due to higher than expected first-quarter profitability coupled with the expected absence of Delphi related legal fees beginning in the third quarter of this fiscal year. This guidance excludes the settlement with Delphi, which the Company expects to be recorded as a gain during the second quarter of Fiscal 2013. The launch of a user interface panel for a large laundry program, along with the launch of multiple automotive programs in Europe in the second and third quarters, is expected to improve second and third-quarter sales and earnings sequentially. Additionally, the launch of the General Motors center console program in the fourth quarter is anticipated to make that quarter the Company's strongest in sales and earnings for Fiscal 2013.

Management Comments
President and Chief Executive Officer Donald W. Duda said, "First-quarter sales remained strong in our Automotive segment, while we continued to experience softness in our Interconnect and Power Products segments. We anticipate softness in these two segments to continue into the next quarter, particularly for the Interconnect segment, which will experience OEM-driven lower than anticipated volume in the new laundry platform in the second quarter. However, first-quarter earnings above our original expectations contributed to an improved earnings outlook for Fiscal 2013."

Mr. Duda concluded, "While we remain cautious about the macroeconomic environment in Europe in the near term, the growth we foresee in our businesses through several major launches this fiscal year in our Automotive and Interconnect segments continues to set the stage for margin and earnings improvement for Fiscal 2013 and beyond."

Conference Call
The Company will conduct a conference call and Webcast to review financial and operational highlights 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.

To participate in the conference call, please dial (877) 407-8031 (domestic) or (201) 689-8031 (international) at least five minutes prior to the start of the event. A simultaneous Webcast can be accessed through the Company's Web site, [ www.methode.com ], by selecting the Investor Relations page, and then clicking on the "Webcast" icon.

A replay of the conference call, as well as an MP3 download, will be available shortly after the call through September 13 by dialing (877) 660-6853 (domestic) or (201) 612-7415 (international) and providing Account number 286 and Conference ID number 398940. On the Internet, a replay will be available for 30 days through the Company's Web site, [ www.methode.com ], by selecting the Investor Relations page and then clicking on the "Webcast" icon.

About Methode Electronics, Inc.
Methode Electronics, Inc. (NYSE: [ MEI ]) is a global manufacturer of component and subsystem devices with manufacturing, design and testing facilities in China, Egypt, Germany, India, Italy, Lebanon, Malta, Mexico, the Philippines, Singapore, Switzerland, the United Kingdom and the United States. We are a global designer and manufacturer of electronic and electro-mechanical devices. We design, manufacture and market devices employing electrical, radio remote control, electronic, wireless, sensing and optical technologies. Our business is managed on a segment basis, with those segments being Automotive, Interconnect, Power Products and Other. Our components are found in the primary end markets of the aerospace, appliance, automotive, construction, consumer and industrial equipment markets, communications (including information processing and storage, networking equipment, wireless and terrestrial voice/data systems), rail and other transportation industries. Further information can be found on Methode's Web site [ www.methode.com ].

Forward-Looking Statements
This press release contains certain forward-looking statements, which reflect management's expectations regarding future events and operating performance and speak only as of the date hereof. These forward-looking statements are subject to the safe harbor protection provided under the securities laws. Methode undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in Methode's expectations on a quarterly basis or otherwise. The forward-looking statements in this press release involve a number of risks and uncertainties. The factors that could cause actual results to differ materially from our expectations are detailed in Methode's filings with the Securities and Exchange Commission, such as our annual and quarterly reports. Such factors may include, without limitation, the following: (1) dependence on a small number of large customers, including two large automotive customers; (2) dependence on the automotive, appliance, computer and communications industries; (3) further downturns in the automotive industry or the bankruptcy of certain automotive customers; (4) ability to compete effectively; (5) customary risks related to conducting global operations; (6) dependence on the availability and price of raw materials; (7) dependence on our supply chain; (8) ability to keep pace with rapid technological changes; (9) ability to improve gross margin due to a variety of factors, (10) ability to avoid design or manufacturing defects; (11) ability to protect our intellectual property; (12) ability to withstand price pressure; (13) the usage of a significant amount of our cash and resources to launch new North American automotive programs; (14) location of a significant amount of cash outside of the U.S.; (15) currency fluctuations; (16) ability to successfully benefit from acquisitions and divestitures; (17) ability to withstand business interruptions; (17) income tax rate fluctuations; (19) ability to implement and profit from newly acquired technology; and (20) the future trading price of our stock.