form8k.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
__________________
 

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): April 21, 2016
 


STRATTEC SECURITY CORPORATION
(Exact name of registrant as specified in charter)

Wisconsin
(State or other jurisdiction of incorporation)

0-25150
 
39-1804239
(Commission File Number)
 
(I.R.S. Employer I.D. Number)

3333 West Good Hope Road
Milwaukee, WI
 
 
53209
(Address of Principal Executive Offices)
 
(Zip Code)

(414) 247-3333
(Registrant's telephone number; including area code)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
 
 
 

 
 

 


Section 2 – Financial Information

Item 2.02.  Results of Operations and Financial Condition.
 
On April 21, 2016, STRATTEC SECURITY CORPORATION issued a press release (the "Press Release") announcing results for the fiscal 2016 third quarter ended March 27, 2016.  A copy of the Press Release is attached as Exhibit 99.1 to this report.  The attached Exhibit 99.1 is furnished pursuant to Item 2.02 of Form 8-K.
 
The information in this Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing.
 
 
Section 9 - Financial Statements and Exhibits
 
Item 9.01.  Financial Statements and Exhibits.
 
(d)    Exhibits
 
99.1 -- Press Release of STRATTEC SECURITY CORPORATION, issued April 21, 2016.


 
 
 
 
 
 
 

 
 
 
 
 



SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

STRATTEC SECURITY CORPORATION
Date: April 21, 2016
By: _/s/ Patrick J. Hansen_____________________
       Patrick J. Hansen, Senior Vice President and
       Chief Financial Officer
 
 
 
 
 
 
 
 




 


ex99-1from8k21april2016.htm
Exhibit 99.1


FOR RELEASE AT 3:00 PM CST

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


STRATTEC SECURITY CORPORATION
REPORTS FISCAL 2016 THIRD QUARTER OPERATING RESULTS

Milwaukee, Wisconsin – April 21, 2016 -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal third quarter ended March 27, 2016.

Net sales for the Company’s third quarter ended March 27, 2016 were $94.0 million, compared to net sales of $88.8 million for the third quarter ended March 29, 2015.  Net income for the current year quarterly period was $1.9 million, compared to net income of $4.4 million in the prior year quarter.  Diluted earnings per share for the current year quarterly period were $.52 compared to diluted earnings per share of $1.20 in the prior year quarter.
 
 
 
 
1

 

For the nine months ended March 27, 2016, the Company’s net sales were $293.1 million compared to net sales of $313.0 million in the prior year nine month period.  Net income during the current year nine month period was $8.6 million compared to net income of $19.5 million in the prior year nine month period.  Diluted earnings per share were $2.35 for the nine month period ended March 27, 2016 compared to diluted earnings per share of $5.33 during the nine month period ended March 29, 2015. The lower net sales and net income for the year to date period was anticipated and was primarily attributed to a $34 million decrease in incremental service parts sales to General Motors to support a recall campaign for service parts that were shipped during the prior year period. Those incremental sales did not continue during the current year nine month period ended March 27, 2016.

Net sales to each of our customers or customer groups in the current year quarter and prior year quarter were as follows (in thousands):
 
 
 
 
   
Three Months Ended
 
    March 27, 2016     March 29, 2015  
             
Fiat Chrysler Automobiles
  $ 27,188     $ 26,151  
General Motors Company
    18,670       17,015  
Ford Motor Company
    13,860       10,951  
Tier 1 Customers
    14,198       18,637  
Commercial and Other OEM Customers
    12,415       10,380  
Hyundai / Kia
    7,717       5,683  
TOTAL
  $ 94,048     $ 88,817  

Sales to Fiat Chrysler Automobiles in the current year quarter increased slightly. During the current year quarter, Fiat Chrysler Automobiles temporarily shutdown production at its Sterling Heights, Michigan and Toluca, Mexico assembly plants which are primarily responsible for production of the Chrysler 200 and Dodge Journey.  This shutdown reduced our sales by $4.5 million during the current year quarter.  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 between the current year quarter and the prior year quarter of $6.5 million. Increased sales to General Motors Company in the current year quarter related primarily to a sales concession recorded during 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 decreased in the current quarter due to lower production volume on passenger cars for which we supply  driver control and door handle components. 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 increased sales to Hyundai / Kia in the current year quarter were principally due to higher vehicle production volumes on the Kia Sedona minivan for which we supply components.
 
Gross profit margins were 15.4 percent in the current year quarter compared to 17.7 percent in the prior year quarter. The decrease in gross profit margin was attributed to a combination of product sales mix, 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. These negative items were offset by a favorable Mexican Peso to US dollar exchange rate affecting our Mexican operations.

Engineering, Selling and Administrative expenses as a percent of net sales in the current year quarter were 11.4% compared to 11.1% in 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.

 
2

 
Included in Other Income, Net in the current year quarter compared to the prior year quarter were the following items (in thousands of dollars):
 
     
March 27,
2016 
     
March 29,
2015 
 
                 
Equity Earnings of VAST LLC Joint Venture
  $ 211     $ 301  
Equity Loss of STRATTEC Advanced Logic
    (382 )     (508 )
Net Foreign Currency Realized and
               
               Unrealized Transaction Gain
    215       583  
Other
    29        115  
    $ 73     $ 491  
 
During the current year quarter STRATTEC contributed $3.0 million to its Defined Benefit Pension Trust to improve the overall funded status of the Plan.

Frank Krejci, President & CEO commented: “While overall sales levels remained strong, profits were impacted by product mix and following our strategy for long term growth. We are spending money now on design expenses for programs which we are excited to have recently been awarded.   This current activity will be very positive for earnings and strategic growth in the future. Attractive returns are also expected from recent investments to improve our efficiency and the quality processes within our operations. Lastly, our efforts to diversify continue to progress, but they are not yet contributing to the bottom line”.
 
 
 
3

 


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 105 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 customer product recall policies, foreign currency fluctuations, and fluctuations in our costs of operation (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.
 
 
 
4

 
 
 
 
 
STRATTEC SECURITY CORPORATION
Results of Operations
(In Thousands except per share amounts)
(Unaudited)
 
 
      Third Quarter Ended       Nine Months Ended  
      March 27, 2016       March 29, 2015       March 27, 2016       March 29, 2015  
Net Sales
  $ 94,048     $ 88,817     $ 293,072     $ 313,049  
                                 
Cost of Goods Sold
    79,527       73,066       243,442       250,789  
                                 
Gross Profit
    14,521       15,751        49,630       62,260   
                                 
Engineering, Selling &
                               
Administrative Expenses
    10,680       9,847       32,450       33,524  
                                 
Income from Operations
    3,841       5,904       17,180       28,736   
                                 
Interest Income
    4       61       19       126   
                                 
Interest Expense
    (51 )     (17 )     (95 )     (39 )
                                 
Other Income, Net
    73       491       76       3,171   
                                 
Income before Provision for Income
                               
   Taxes and Non-Controlling Interest
    3,867       6,439       17,180       31,994   
                                 
Provision for Income Taxes
    589       1,064       4,857       9,378   
                                 
Net Income
    3,278       5,375       12,323       22,616   
                                 
Net Income Attributable
                               
  to Non-Controlling Interest
    (1,389 )     (999 )     (3,758 )     (3,162 )
                                 
Net Income Attributable to
                               
  STRATTEC SECURITY
                               
    CORPORATION
  $ 1,889     $ 4,376     $ 8,565     $ 19,454  
 
                               
Earnings Per Share:
                               
Basic
  $ 0.53     $ 1.23     $ 2.39     $ 5.47   
Diluted
  $ 0.52     $ 1.20     $ 2.35     $ 5.33   
Average Basic
                               
  Shares Outstanding
    3,565       3,520       3,557       3,511   
                                 
Average Diluted
                               
  Shares Outstanding
    3,619       3,603       3,620       3,603   
                                 
Other
                               
Capital Expenditures
  $ 6,244     $ 4,696     $ 14,339     $ 21,651   
Depreciation & Amortization
  $ 2,528     $ 2,206     $ 7,603     6,467   
 
 
 
5

 
 

STRATTEC SECURITY CORPORATION

Condensed Balance Sheet Data
(In Thousands)
 
 
 
 
March 27, 2016
(Unaudited)
   
 June 28, 2015
 
 
ASSETS
           
Current Assets:
           
Cash and cash equivalents
  $ 23,158     $ 25,695  
Receivables, net
    55,606       58,807  
Inventories, net
    41,713       34,786  
Other current assets
    19,908       18,873  
Total Current Assets
    140,385       138,161  
Investment in Joint Ventures
    15,365       15,326  
Other Long Term Assets
    14,527       10,816  
Property, Plant and Equipment, Net
    77,009       71,126  
    $ 247,286     $ 235,429  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Current Liabilities:
               
Accounts Payable
  $ 29,400     $ 27,838  
Other
    30,707       36,897  
Total Current Liabilities
    60,107       64,735  
Accrued Pension and Post Retirement Obligations
    2,803       2,988  
Borrowings Under Credit Facility
    18,000       10,000  
 Deferred Income Taxes
    5,077       4,595  
Other Long-term Liabilities
    731       710  
Shareholders’ Equity
    312,080       303,073  
Accumulated Other Comprehensive Loss
    (29,686 )     (26,859 )
Less:  Treasury Stock
    (135,883 )                               (135,902 )
Total STRATTEC SECURITY
               
CORPORATION Shareholders’ Equity
    146,511       140,312  
Non-Controlling Interest
    14,057       12,089  
Total Shareholders’ Equity
    160,568       152,401  
    $ 247,286     $ 235,429  
     
               

 
 
6

 
 
STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
(Unaudited)
 
     Third Quarter Ended     Nine Months Ended  
    March 27, 2016      March 29, 2015     March 27, 2016      March 29, 2015  
Cash Flows from Operating Activities:
                       
Net Income
  $ 3,278     $ 5,375     $ 12,323     $ 22,616  
Adjustment to Reconcile Net Income to
                               
Cash Provided by Operating Activities:
                               
Equity Loss in  Joint Ventures
    171       207       486       138  
Depreciation and Amortization
    2,528       2,206       7,603       6,467  
Foreign Currency Transaction Gain
    (474 )     (583 )     (1,795 )     (3,004 )
Unrealized (Gain) Loss on Peso
                               
 Forward Contractors
    (267 )     -       600        
Stock Based Compensation Expense
    377       313       1,247       1,013  
Change in Operating Assets/Liabilities
    (371 )     (1,622 )     (12,002 )     (3,807 )
Other, net
    (44 )     15       (44 )     172  
                                 
Net Cash Provided by Operating Activities
    5,198       5,911       8,418       23,595  
                                 
Cash Flows from Investing Activities:
                               
Investment in Joint Ventures
    (1,500 )     -       (1,720 )     (384
Additions to Property, Plant and Equipment
    (6,244 )     (4,696 )     (14,339 )     (21,651 )
Proceeds from Sale of Property, Plant
                               
and Equipment
    76       -       76        -  
Other
    -       -       (150     (215 )
Net Cash Used in Investing Activities
    (7,668 )     (4,696 )     (16,133 )     (22,250 )
                                 
Cash Flows from Financing Activities:
                               
Borrowings Under Credit Facility
    15,000       7,500       20,500       9,000  
Repayment of Borrowings Under Credit Facility
    (7,000 )     -       (12,500 )     (500 )
Dividends Paid to Non-Controlling
                               
Interests of Subsidiaries
    -       -       (1,568 )     (882 )
Dividends Paid
    (465 )     (428 )     (1,397 )     (1,282 )
Exercise of Stock Options and
                               
Employee Stock Purchases
    25        20       609       734  
Net Cash Provided by Financing Activities
    7,560       7,092       5,644       7,070  
                                 
Effect of Foreign Currency Fluctuations on Cash
    145       (115 )     (466      (136 )
                                 
Net Increase in Cash & Cash Equivalents
    5,235       8,192       (2,537 )     8,279  
                                 
Cash and Cash Equivalents:
                               
Beginning of Period
    17,923       19,843       25,695        19,756  
End of Period
  $ 23,158      $ 28,035     $ 23,158     $ 28,035  
 
                               
 
 
7