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): May 5,
2009
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STRATTEC
SECURITY CORPORATION
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(Exact
name of registrant as specified in its
charter)
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Wisconsin
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(State
or other jurisdiction of
incorporation)
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0-25150
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39-1804239
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(Commission
File Number)
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(I.R.S.
Employer I.D. Number)
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3333
West Good Hope Road
Milwaukee,
WI
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53209
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(414)
247-3333
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(Registrant's
telephone number; including area
code)
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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):
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o
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(17
CFR 230.425)
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o
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Soliciting
material
pursuant to Rule 14a-12 under the Exchange Act
(17
CFR 240.14a-12)
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o
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Exchange
Act (17 CFR 240.14d-2(b))
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o
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Exchange
Act (17 CFR
240.13e-4(c))
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Section
2 - Financial
Information
Item
2.02. Results of
Operations and Financial Condition
On May 5, 2009, STRATTEC SECURITY CORPORATION issued a press release (the "Press
Release") announcing results for the fiscal third quarter ended March 29, 2009
and disclosing potential losses on outstanding trade receivables with Chrysler
LLC that may become uncollectible as a result of Chrysler's filing for Chapter
11 bankruptcy protection on April 30, 2009. 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 May 5,
2009.
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: May
5, 2009
BY
/s/
Patrick J.
Hansen
Patrick
J. Hansen, Senior Vice President and
Chief
Financial Officer
3
FOR
RELEASE AT 3:00 PM CDT
Contact: Pat
Hansen
Senior
Vice President and
Chief
Financial Officer
414-247-3435
www.strattec.com
STRATTEC
SECURITY CORPORATION
REPORTS
POTENTIAL LOSS ON TRADE RECEIVABLE WITH CHRYSLER LLC
AND
FISCAL THIRD QUARTER RESULTS
Milwaukee,
Wisconsin – May 5, 2009 -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) announced
today that it has identified the need to increase its reserve for uncollectible
trade accounts receivables by $500,000 for the third quarter of fiscal
2009. STRATTEC has approximately $2.7 million of pre-petition
bankruptcy accounts receivable due from Chrysler LLC, a portion of which the
Company believes could be uncollectible due to Chrysler LLC’s filing for Chapter
11 bankruptcy protection for their U.S. legal entities on April 30,
2009. Prior to this filing, the Company had been accepted into
the United States Department of Treasury “Auto Supplier Support Program” for
Chrysler suppliers and is in the process of determining what trade
receivables are eligible for payment under this Program.
Based
on
information currently available, the Company believes the increase in its
reserve is adequate to cover the potential loss exposure on this account as
of
the fiscal third quarter that ended on March 29, 2009. The reserve
for uncollectible trade accounts receivable reduced the third quarter’s earnings
per share by $.10. As further information becomes available, the
Company may be required to record an additional reserve in the fourth fiscal
quarter of 2009 for the remaining loss exposure.
OPERATING
RESULTS
FOR
THE FISCAL THIRD QUARTER ENDED MARCH 29, 2009
Net
sales
for the Company’s third quarter ended March 29, 2009 were $29.3 million,
compared to net sales of $38.4 million for the third quarter ended March 30,
2008. Net loss for the current period was $2.8 million, compared to
net income of $446,000 for the quarter ended March 30, 2008. Diluted
loss per share for the current quarterly period was $.87 compared to diluted
earnings per share of $.13 in the prior year quarter. The significant
reduction in sales and profitability for the current quarter reflect extensive
customer assembly plant shutdowns in the month of January and into the first
half of February. STRATTEC’s OEM production volumes were down
approximately 52% during the current quarter which is slightly less than the
overall decline in our customers’ North American light vehicle production
volume. The current quarter results include the operations of
STRATTEC POWER ACCESS LLC, the power products business acquired from Delphi
Corporation on November 30, 2008. However, STRATTEC POWER ACCESS
sales were very low the first half of the quarter due to the aforementioned
customer assembly plant shutdowns. For comparison purposes, it should
also be noted that the prior year quarter sales were negatively impacted by
a
prolonged strike against a major supplier to General Motors
Corporation.
2
For
the
nine months ended March 29, 2009, net sales were $97.9 million compared to
net
sales of $121.1 million in the prior year period. Net loss for the
current nine month period was $4.0 million compared to net income of $4.2
million in the prior year period and diluted loss per share was $1.22 compared
to diluted earnings per share of $1.19.
Sales
to
STRATTEC’s largest customers overall were significantly lower in the current
quarter compared to the prior year quarter. Sales to General Motors
Corporation in the current quarter were $6.6 million compared to $10.1 million
in the prior year quarter due to lower vehicle production volumes, offset by
the
takeover of certain passenger car lockset production from another
supplier. Sales to Chrysler LLC were $11.1 million compared to
$9.7 million. The increased Chrysler sales were due to $5.2 million
of sales generated by STRATTEC POWER ACCESS relating primarily to the products
supplied on Dodge, Chrysler and Volkswagen minivans, offset by a combination
of
lower vehicle production volume and reduced component content in the lock
products we supply. Sales to Ford Motor Company were $3.6 million
compared to $5.0 million and sales to Delphi Corporation were $1.2 million
compared to $3.8 million due to lower vehicle production volumes. Sales during
the current quarter were weaker than initially anticipated for the above four
customers due to their additional production schedule cut backs following the
Christmas holiday shutdown.
Gross
profit margins were 7.0% in the current quarter compared to 16.3% in the prior
year quarter. The year-over-year decrease in gross profit margins was
primarily attributed to reduced customer production volumes offset by lower
purchased material costs for zinc and brass along with a favorable Mexico Peso
to U.S. dollar exchange rate affecting the Company’s operations in
Mexico.
3
Operating
expenses were $7.2 million in the current quarter, compared to $6.1 million
in
the prior year quarter. The increased spending is primarily
attributed to including in the current quarter STRATTEC POWER ACCESS engineering
personnel costs and contracting with Delphi for temporary transition services
related to the acquisition of Delphi’s power products business. The
temporary transition services and related expenses totaled $309,000 during
the
quarter ended March 29, 2009. Also included in the current quarter is
a one-time charge of $350,000 for severance and outplacement costs relating
to a U.S. salaried work force reduction on January 15, 2009. We
expect that the salaried workforce reduction, along with reductions in our
401k
match, will save approximately $2.0 million annually.
RECENT
DEVELOPMENTS
On
April
23, 2009, General Motors announced assembly plant downtime for the months of
May
through July in order to reduce excess inventories at their dealer
locations. Most of the approximately 190,000 vehicles removed from
GM’s production schedules are those that we supply. On April 27,
2009, General Motors announced certain aspects of its Revised Viability Plan
including reduced production volumes for calendar year 2009 and the subsequent
five years. We will be evaluating the impact this Plan will have on
our business as more details become available. On April 30, 2009, Chrysler
LLC
announced assembly plant downtime for the months of May and June as part of
their reorganization under Chapter 11 bankruptcy.
As
a
result of these announced reductions in production by General Motors and
Chrysler LLC, we are also reducing our production schedules. These reductions
will affect both our sales and profitability for the fourth fiscal quarter
ending June 28, 2009.
STRATTEC
designs, develops, manufactures and markets automotive Security Products
including mechanical locks and keys, electronically enhanced locks and keys,
steering column and instrument panel ignition lock housings; and Access Control
Products including latches, power sliding side door systems, power lift gate
systems, power deck lid systems and related products. These products are
provided to customers in North America, and on a global basis through the VAST
Alliance in which STRATTEC participates with WITTE Automotive of Velbert,
Germany and ADAC Automotive of Grand Rapids, Michigan. STRATTEC’s
history in the automotive business spans 100 years.
4
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.
5
STRATTEC
SECURITY
CORPORATION
Results
of Operations
(In
Thousands except per share amounts)
| Third Quarter Ended | Nine Months Ended | |||||||||||||||
| March 29, 2009 | March 30, 2008 | March 29, 2009 | March 30, 2008 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
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Net
Sales
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$ | 29,348 | $ | 38,428 | $ | 97,878 | $ | 121,075 | ||||||||
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Cost
of Goods Sold
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27,295 | 32,161 | 87,503 | 99,508 | ||||||||||||
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Gross
Profit
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2,053 | 6,267 | 10,375 | 21,567 | ||||||||||||
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Engineering,
Selling &
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||||||||||||||||
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Administrative Expenses
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7,175 | 6,109 | 19,796 | 17,740 | ||||||||||||
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Provision for Doubtful Accounts
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500 | - | 500 | - | ||||||||||||
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(Loss)
Income from Operations
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(5,622 | ) | 158 | (9,921 | ) | 3,827 | ||||||||||
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Interest
Income
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91 | 617 | 693 | 2,344 | ||||||||||||
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Other
Income (Expense), Net
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104 | (58 | ) | 884 | 408 | |||||||||||
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Minority
Interest
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503 | (48 | ) | 614 | 70 | |||||||||||
| (4,924 | ) | 669 | (7,730 | ) | 6,649 | |||||||||||
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Provision
(Benefit) for Income Taxes
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(2,092 | ) | 223 | (3,703 | ) | 2,461 | ||||||||||
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Net
(Loss) Income
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$ | (2,832 | ) | $ | 446 | $ | (4,027 | ) | $ | 4,188 | ||||||
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Earnings
(Loss) Per Share:
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Basic
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$ | (0.87 | ) | $ | 0. 13 | $ | (1.22 | ) | $ | 1. 20 | ||||||
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Diluted
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$ | (0.87 | ) | $ | 0. 13 | $ | (1.22 | ) | $ | 1. 19 | ||||||
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Average
Basic
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Shares Outstanding
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3,261 | 3,476 | 3,285 | 3,500 | ||||||||||||
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Average
Diluted
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||||||||||||||||
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Shares Outstanding
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3,262 | 3,482 | 3,290 | 3,506 | ||||||||||||
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Other
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Capital Expenditures
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$ | 2,418 | $ | 4,013 | $ | 10,929 | $ | 8,487 | ||||||||
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Depreciation & Amortization
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$ | 1,649 | $ | 1,665 | $ | 4,495 | $ | 5,161 | ||||||||
6
STRATTEC
SECURITY
CORPORATION
Condensed
Balance Sheet Data
(In
Thousands)
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March
29, 2009
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June
29, 2008
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|||||||
| (Unaudited) | ||||||||
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ASSETS
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||||||||
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Current Assets:
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||||||||
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Cash and cash equivalents
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$ | 22,598 | $ | 51,501 | ||||
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Receivables, net
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21,174 | 23,518 | ||||||
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Inventories
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11,513 | 10,269 | ||||||
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Other current assets
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18,870 | 17,978 | ||||||
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Total Current Assets
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74,155 | 103,266 | ||||||
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Deferred Income Taxes
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4,044 | 3,684 | ||||||
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Investment in Joint Ventures
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4,264 | 3,642 | ||||||
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Prepaid Pension Cost
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3,407 | 758 | ||||||
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Other Long Term Assets
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889 | 27 | ||||||
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Property, Plant and Equipment, Net
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36,535 | 30,336 | ||||||
| $ | 123,294 | $ | 141,713 | |||||
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LIABILITIES
AND SHAREHOLDERS’ EQUITY
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||||||||
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Current Liabilities:
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Accounts Payable
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$ | 10,694 | $ | 15,974 | ||||
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Other
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17,717 | 16,965 | ||||||
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Total Current Liabilities
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28,411 | 32,939 | ||||||
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Borrowings
Under Line of Credit Facility
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- | - | ||||||
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Accrued Pension and Postretirement Obligations
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12,317 | 12,389 | ||||||
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Minority Interest
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1,316 | 953 | ||||||
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Shareholders’ Equity
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238,143 | 242,843 | ||||||
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Accumulated Other Comprehensive Loss
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(20,790 | ) | (17,495 | ) | ||||
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Less: Treasury Stock
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(136,103 | ) | (129,916 | ) | ||||
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Total Shareholders’ Equity
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81,250 | 95,432 | ||||||
| $ | 123,294 | $ | 141,713 | |||||
7
STRATTEC
SECURITY
CORPORATION
Condensed
Cash Flow Statement Data
(In
Thousands)
| Third Quarter Ended | Nine Months Ended | |||||||||||||||
| March 29, 2009 | March 30, 2008 | March 29, 2009 | March 30, 2008 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
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Cash
Flows from Operating Activities:
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||||||||||||||||
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Net
Income (Loss)
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$ | (2,832 | ) | $ | 446 | $ | (4,027 | ) | $ | 4,188 | ||||||
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Adjustment
to Reconcile Net Income to
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||||||||||||||||
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Cash Used in Operating Activities:
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||||||||||||||||
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Minority Interest
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(499 | ) | 37 | (600 | ) | (111 | ) | |||||||||
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Depreciation and Amortization
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1,649 | 1,665 | 4,495 | 5,161 | ||||||||||||
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Intangible Amortization
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24 | - | 33 | - | ||||||||||||
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Stock Based Compensation Expense
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92 | 124 | 309 | 616 | ||||||||||||
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Provision for Doubtful Accounts
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500 | - | 500 | - | ||||||||||||
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Change in Operating Assets/Liabilities
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(5,258 | ) | 1,802 | (8,196 | ) | (1,598 | ) | |||||||||
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Other, net
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(160 | ) | (19 | ) | (1,430 | ) | (341 | ) | ||||||||
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Net
Cash Provided (Used) by Operating Activities
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(6,484 | ) | 4,055 | (8,916 | ) | 7,915 | ||||||||||
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Cash
Flows from Investing Activities:
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||||||||||||||||
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Investment in Joint Ventures
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- | - | (388 | ) | - | |||||||||||
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Purchase of Delphi Power Products
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(1,118 | ) | - | (4,931 | ) | - | ||||||||||
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Additions to Property, Plant and Equipment
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(2,418 | ) | (4,013 | ) | (10,929 | ) | (8,487 | ) | ||||||||
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Net
Cash Used in Investing Activities
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(3,536 | ) | (4,013 | ) | (16,248 | ) | (8,487 | ) | ||||||||
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Cash
Flow from Financing Activities:
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||||||||||||||||
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Purchase of Common Stock
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- | (1,188 | ) | (6,214 | ) | (2,334 | ) | |||||||||
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Dividends Paid
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(488 | ) | (528 | ) | (1,511 | ) | (4,609 | ) | ||||||||
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Contribution
from Minority Interest
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224 | - | 986 | 349 | ||||||||||||
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Loan from Minority Interest
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1,000 | 550 | 2,175 | 800 | ||||||||||||
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Exercise of Stock Options and
|
||||||||||||||||
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Employee Stock Purchases
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10 | 8 | 30 | 21 | ||||||||||||
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Net
Cash Provided (Used) by Financing Activities
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746 | (1,158 | ) | (4,534 | ) | (5,773 | ) | |||||||||
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Effect
of Foreign Currency Fluctuations on Cash
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(6 | ) | 4 | 795 | (16 | ) | ||||||||||
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Net
Decrease in Cash & Cash Equivalents
|
(9,280 | ) | (1,112 | ) | (28,903 | ) | (6,361 | ) | ||||||||
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Cash
and Cash Equivalents:
|
||||||||||||||||
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Beginning of Period
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31,878 | 60,242 | 51,501 | 65,491 | ||||||||||||
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End of Period
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$ | 22,598 | $ | 59,130 | $ | 22,598 | $ | 59,130 | ||||||||
8