2001 STRATTEC Annual Report 8 COMPANY DESCRIPTION CYCLICAL NATURE OF THE BUSINESS The manufacturing of components used in automobiles is driven by the normal peaks and valleys associated with the automotive industry. Typically, the months of July and August are relatively slow as summer vacation shutdowns and model year changeover occur at the automotive assembly plants. September volumes increase rapidly as the new model year begins. This volume strength continues through October and into early November. As the holiday and winter seasons approach, the demand for automobiles slows. March usually brings a major sales and production increase, which then continues through most of June. This results in our first fiscal quarter (ending in September) sales and operating results typically being our weakest, with the remaining quarters being more consistent. The underlying philosophy of our business, and the means by which we measure our performance, is Economic Value Added (EVA ® ). Simply stated, economic value is created when our business enterprise yields a return greater than the cost of capital we and our shareholders have invested in STRATTEC. The amount by which our return exceeds the cost of our capital is EVA ® . In line with this philosophy, EVA ® bonus plans are in effect for our associates and our outside directors as an incentive to help positively drive the business. STRATTEC's significant market share is the result of an eight-decade-long commitment to creating quality products and systems that are responsive to changing needs. As technologies advance and markets grow, STRATTEC retains that commitment to meeting and exceeding the expectations of our customers, and providing economic value to our shareholders. ECONOMIC VALUE COMMITMENT GLOBAL PARTNERS 1 2 5 3 4 6 1. STRATTEC – Milwaukee, Wisconsin 4. WiTTE – Nejdek, Czech Republic 2. STRATTEC de Mexico – Juarez, Mexico 5. IFER – Sao Paulo, Brazil 3. WiTTE – Velbert, Germany 6. ZU YIH – Fuzhou, China