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): October
19, 2006
|
STRATTEC
SECURITY CORPORATION
|
|
(Exact
name of registrant as specified in its
charter)
|
|
Wisconsin
|
|
(State
or other jurisdiction of
incorporation)
|
|
0-25150
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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
October 19, 2006, STRATTEC SECURITY CORPORATION issued a press release (the
"Press Release") announcing results for the fiscal first quarter ended October
1, 2006. 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.
(c) Exhibits
99.1
--
Press Release of STRATTEC SECURITY CORPORATION, issued October 19,
2006.
2
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:
October 26, 2006
BY
/s/
Patrick J.
Hansen
Patrick
J. Hansen, Senior Vice President
and
Chief
Financial Officer
3
EXHIBIT
99.1
FOR
RELEASE AT 3:00 CDT
Contact:
Pat Hansen
Senior
Vice President and
Chief
Financial Officer
414-247-3435
www.strattec.com
STRATTEC
SECURITY CORPORATION
REPORTS
FISCAL FIRST QUARTER RESULTS
Milwaukee,
Wisconsin - October 19, 2006 -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT)
today reported sales and operating results for the fiscal first quarter ended
October 1, 2006.
Net
sales
for the three months ended October 1, 2006 were $38.1 million compared to net
sales of $44.8 million for the three months ended October 2, 2005. Net income
for the period was $.7 million, compared to $1.7 million in the prior year
quarter. Diluted earnings per share for the period were $.21 compared to $.46
in
the prior year quarter.
The
significant change in sales and profitability for the current quarter compared
to last year is primarily the result of two factors. First, the Company’s four
largest customers have suffered dramatically declining sales over the past
several months, and have begun to reduce their production accordingly. This
affected the demand for the products we supply to them, reducing our sales
volumes for these customers by nearly 19% and hampering our production
efficiencies. Second, the cost of the main raw materials (zinc and brass) used
in our products has approximately doubled over the prior year, negatively
impacting our gross profit margins.
In
comparing results for the current and prior year quarters it should be noted
that the prior year included a $3.2 million ($2.02 million after tax) charge
to
increase the Company’s reserve for uncollectible trade accounts receivable
related to the October 2005 filing for Chapter 11 bankruptcy protection by
Delphi Corporation which reduced earnings per share by $.54. Further, the
prior
year quarter included a state refund claim recovery that positively impacted
prior year quarter earnings per share by $.13. The provision for income taxes
during the current quarter is our normal 37 percent effective tax
rate.
Sales
to
DaimlerChrysler in the current quarter compared to the prior year quarter levels
were $12.5 million compared to $14.6 million, and sales to General Motors
Corporation were $7.9 million compared to $8.2 million due to lower production
levels of the vehicles we supply. Sales to Delphi Corporation were $4.5 million
compared to $6.2 million due to a combination of lower levels of production
and
reduced component content. Sales to Ford Motor Company were $4.6 million
compared to $6.6 million, due to price reductions and lower vehicle production.
The full effect of these four customers’ announced production cuts will be felt
in our 2nd
fiscal
quarter ending December 31, 2006. Sales to Mitsubishi Motors Manufacturing
of
America, Inc. were $.7 million compared to $1.6 million as we wind down our
relationship with this customer. We previously announced that Mitsubishi would
cease to be a customer by the end of this calendar year. However, we now
anticipate that a modest level of sales will continue through February
2007.
Gross
profit margin was 13.9 percent in the current quarter compared to 21.8 percent
in the prior year quarter. As stated earlier, the decrease in gross profit
margin was primarily attributed to higher purchased material costs for zinc
and
brass that reduced gross profit margins by $2.3 million or approximately 6
percent from the prior year quarter. The remaining decrease was attributed
to
lower production.
Normal
operating expenses were $5.1 million in the current quarter, compared to $5.3
million in the prior year quarter.
During
the current quarter, the Company contributed $1.5 million to its Pension Fund
and repurchased 84,900 STRATTEC SECURITY CORPORATION shares under the Company’s
stock repurchase program at a cost of $3.3 million.
At
the
Company’s 2006 Annual Meeting held October 3, 2006, STRATTEC shareholders
elected Mr. David Zimmer to a two year term and re-elected Mr. Harold Stratton
and Mr. Robert Feitler to the Company’s Board of Directors for an additional
three-year term.
2
STRATTEC
designs, develops, manufacturers and markets mechanical locks and keys,
electronically enhanced locks and keys, steering column and instrument panel
ignition lock housings, latches and related access control products for North
American automotive customers, and for global automotive manufacturers through
the VAST Alliance in which it participates with WITTE Automotive of Velbert,
Germany and ADAC Plastics, Inc. of Grand Rapids, Michigan. The Company’s history
in the automotive business spans nearly 100 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, foreign currency
fluctuations, and costs of operations. 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.
3
STRATTEC
SECURITY CORPORATION
Results
of Operations
(In
Thousands except per share amounts)
|
First
Quarter Ended
|
|
||||||
|
|
|
October
1, 2006
|
|
October
2, 2005
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|||
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(Unaudited)
|
|||||||
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Net
Sales
|
$
|
38,050
|
$
|
44,793
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|||
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Cost
of Goods Sold
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32,768
|
35,019
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|||||
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Gross
Profit
|
5,282
|
9,774
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|||||
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Engineering,
Selling & Administrative Expenses
|
5,056
|
5,285
|
|||||
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Provision
for Doubtful Accounts
|
-
|
3,200
|
|||||
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Income
from Operations
|
226
|
1,289
|
|||||
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Interest
Income
|
922
|
489
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|||||
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Other
Income, Net
|
28
|
40
|
|||||
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Income
Before Provision for Income Taxes
|
1,176
|
1,818
|
|||||
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Provision
for Income Taxes
|
435
|
78
|
|||||
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Net
Income
|
$
|
741
|
$
|
1,740
|
|||
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Earnings
Per Share:
|
|||||||
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Basic
|
$
|
.21
|
$
|
.
46
|
|||
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Diluted
|
$
|
.21
|
$
|
.
46
|
|||
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Average
Basic Shares Outstanding
|
3,598
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3,746
|
|||||
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Average
Diluted Shares Outstanding
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3,600
|
3,754
|
|||||
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Other:
|
|||||||
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Capital
Expenditures
|
$
|
915
|
$
|
1,580
|
|||
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Depreciation
& Amortization
|
$
|
1,749
|
$
|
1,824
|
|||
4
STRATTEC
SECURITY CORPORATION
Condensed
Balance Sheet Data
(In
Thousands)
|
October
1, 2006
|
|
July
2, 2006
|
|
||||
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ASSETS
|
|||||||
|
Current
Assets:
|
|||||||
|
Cash
and Cash Equivalents
|
$
|
64,417
|
$
|
65,712
|
|||
|
Receivables,
Net
|
19,815
|
25,357
|
|||||
|
Inventories
|
8,309
|
9,337
|
|||||
|
Other
Current Assets
|
10,670
|
10,468
|
|||||
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Total
Current Assets
|
103,211
|
110,874
|
|||||
|
Investment
in Joint Ventures
|
2,272
|
2,202
|
|||||
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Prepaid
Pension Obligations
|
8,725
|
7,602
|
|||||
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Other
Long Term Assets
|
193
|
197
|
|||||
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Property,
Plant and Equipment, Net
|
26,946
|
27,764
|
|||||
|
$
|
141,347
|
$
|
148,639
|
||||
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LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|||||||
|
Current
Liabilities:
|
|||||||
|
Accounts
Payable
|
$
|
13,236
|
$
|
17,701
|
|||
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Other
|
11,085
|
11,825
|
|||||
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Total
Current Liabilities
|
24,321
|
29,526
|
|||||
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Borrowings
Under Line of Credit
|
-
|
-
|
|||||
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Deferred
Income Taxes
|
4,266
|
4,266
|
|||||
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Accrued
Postretirement Obligations
|
4,667
|
4,572
|
|||||
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Shareholders’
Equity
|
235,928
|
234,989
|
|||||
|
Accumulated
Other Comprehensive Loss
|
(2,757
|
)
|
(2,958
|
)
|
|||
|
Less:
Treasury Stock
|
(125,078
|
)
|
(121,756
|
)
|
|||
|
Total
Shareholders’ Equity
|
108,093
|
110,275
|
|||||
|
$
|
141,347
|
$
|
148,639
|
||||
5
STRATTEC
SECURITY CORPORATION
Condensed
Cash Flow Statement Data
(In
Thousands)
|
First
Quarter Ended
|
|
||||||
|
|
|
October
1, 2006
|
|
October
2, 2005
|
|
||
|
|
|
(Unaudited)
|
|||||
|
Cash
Flows from Operating Activities:
|
|||||||
|
Net
Income
|
$
|
741
|
$
|
1,740
|
|||
|
Adjustments
to Reconcile Net Income to
|
|||||||
|
Cash
Used in Operating Activities:
|
|||||||
|
Depreciation
|
1,749
|
1,824
|
|||||
|
Stock
Based Compensation Expense
|
193
|
209
|
|||||
|
Tax
Benefit from Options Exercised
|
-
|
61
|
|||||
|
Provision
for Doubtful Accounts
|
-
|
3,200
|
|||||
|
Change
in Operating Assets/Liabilities
|
134
|
(14,413
|
)
|
||||
|
Other,
Net
|
99
|
(84
|
)
|
||||
|
Net
Cash Provided (Used) in Operating Activities
|
2,916
|
(7,463
|
)
|
||||
|
Cash
Flows from Investing Activities:
|
|||||||
|
Additions
to Property, Plant and Equipment
|
(915
|
)
|
(1,580
|
)
|
|||
|
Proceeds
Received from Sale of Property,
Plant
and
Equipment
|
21
|
-
|
|||||
|
Net
Cash Used in Investing Activities
|
(894
|
)
|
(1,580
|
)
|
|||
|
Cash
Flow from Financing Activities:
|
|||||||
|
Purchase
of Common Stock
|
(3,326
|
)
|
(1,196
|
)
|
|||
|
Reissue/Exercise
of Stock Option
|
9
|
1,060
|
|||||
|
Net
Cash Used in Financing Activities
|
(3,317
|
)
|
(136
|
)
|
|||
|
Net
Decrease in Cash and Cash Equivalents
|
(1,295
|
)
|
(9,179
|
)
|
|||
|
Cash
and Cash Equivalents:
|
|||||||
|
Beginning
of Period
|
65,712
|
56,950
|
|||||
|
End
of Period
|
$
|
64,417
|
$ |
47,771
|
|||
6