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): January 28,
2010
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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):
| 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
January 28, 2010, STRATTEC SECURITY CORPORATION issued a press release (the
"Press Release") announcing results for the fiscal second quarter ended December
27, 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 January 28,
2010.
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: February
1, 2010
BY /s/ Patrick J.
Hansen
Patrick
J. Hansen, Senior Vice President and
Chief
Financial Officer
3
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 SECOND QUARTER RESULTS
Milwaukee,
Wisconsin – January 28, 2010 -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT)
today reported operating results for the fiscal second quarter ended December
27, 2009.
Net sales
for the Company’s second quarter ended December 27, 2009 were $52.5 million,
compared to net sales of $33.8 million for the second quarter ended December 28,
2008. Net income for the period was $844,000, compared to a net loss
of $1.2 million in the prior year quarter. Diluted earnings per share
for the period were $.26 compared to diluted loss per share of $.37 in the prior
year quarter. The higher sales for the quarter can be attributed to increased
customer production volumes and the power access business STRATTEC acquired
November 30, 2008. That business, now called STRATTEC POWER ACCESS,
generated $15.5 million of sales in the current quarter compared to $1.3 million
in the prior year quarter.
For the
six months ended December 27, 2009, net sales were $93.7 million compared to net
sales of $68.5 million in the prior year period. Net income was $1.8
million compared to net a loss of $1.2 million in the prior year period and
diluted earnings per share were $.55 compared to diluted loss per share of
$.36.
Sales to
STRATTEC’s largest customers overall increased in the current quarter compared
to the prior year quarter levels. Sales to Chrysler Group LLC were
$16.5 million in the current quarter compared to $7.7 million in the prior year
quarter. Included in the current quarter were sales generated by
STRATTEC POWER ACCESS, offset by a combination of lower vehicle production
volume and reduced component content in the other security products we
supply. Sales to General Motors Company were $12.3 million compared
to $11.6 million. Sales to Ford Motor Company were $5.2 million
compared to $3.0 million due to higher Ford vehicle production
volumes. In the current quarter, sales to Hyundai/Kia were $4.3
million generated by the STRATTEC POWER ACCESS business.
Gross
profit margins were 14.6 percent in the current quarter compared to 8.6 percent
in the prior year quarter. The higher gross profit margin in
the current year quarter was primarily the result of favorable customer vehicle
production volumes compared to the prior year quarter, offset by premium freight
costs and overtime incurred during the months of October and November to meet
significantly increased production requirements from the Company’s largest
customers as they continued to rebuild retail inventories following the U.S.
Government’s “Cash for Clunkers” program that ended in August
2009. These negative factors reduced the current quarter gross profit
margin by approximately 3.0 percentage points.
2
Operating expenses were $7.5 million in the
current quarter, compared to $6.7 million in the prior year
quarter. The current quarter includes three months of expenses for
STRATTEC POWER ACCESS engineering and administrative personnel compared to one
month in the prior year quarter, due to the timing of the acquisition of this
business.
Included
in the current quarter results are the following non-recurring
items:
| ● | A $505,000 curtailment loss to immediately recognize the prior service cost associated with freezing STRATTEC’s defined benefit retirement plan effective December 31, 2009; |
| ● | A $223,000 impairment charge to write off the goodwill recorded as part of the acquisition of STRATTEC POWER ACCESS in November 2008; |
| ● | A $1,125,000 favorable adjustment to an environmental reserve resulting from a re-evaluation of the potential remaining cost to satisfy an environmental remediation issue at the Milwaukee production facility dating back to 1985; and |
| ● | A $201,000 recovery of the allowance for doubtful accounts recorded in the third quarter of fiscal 2009, relating to the Chrysler LLC bankruptcy filing. During the current quarter, Chrysler paid a significant portion of the outstanding accounts receivable STRATTEC held at the time of Chrysler’s bankruptcy filing. |
On
November 20, 2009, Vehicle Access Systems Technology LLC (VAST LLC) a joint
venture between STRATTEC, WITTE Automotive of Velbert, Germany, and ADAC
Automotive of Grand Rapids, Michigan, completed its acquisition of the remaining
non-controlling interest in VAST LLC’s two Chinese joint ventures, VAST Great
Shanghai CO., LTD. and VAST Fuzhou CO., LTD., collectively known as VAST
China.
3
During the current quarter the Company contributed
$1.0 million to its Defined Benefit Pension Trust.
At the
end of fiscal year 2009, we changed our method of accounting for inventories
from last-in, first-out (LIFO) to first-in, first-out (FIFO). The
prior year reported information has been retrospectively adjusted on a FIFO
basis.
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, door handles 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 over
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.
4
STRATTEC SECURITY
CORPORATION
Results
of Operations
(In
Thousands except per share amounts)
(Unaudited)
|
Second
Quarter Ended
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Six
Months Ended
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|||||||||||||||
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December 27, 2009
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December 28, 2008
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December 27, 2009
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December 28, 2008
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|||||||||||||
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(Note
A)
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(Note
A)
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|||||||||||||||
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Net
Sales
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$ | 52,540 | $ | 33,799 | $ | 93,721 | $ | 68,530 | ||||||||
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Cost
of Goods Sold
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44,887 | 30,888 | 79,270 | 60,195 | ||||||||||||
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Gross
Profit
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7,653 | 2,911 | 14,451 | 8,335 | ||||||||||||
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Engineering,
Selling & Administrative Expenses
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7,455 | 6,669 | 13,654 | 12,621 | ||||||||||||
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Impairment
Charge
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223 | - | 223 | - | ||||||||||||
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Environmental
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(1,125 | ) | - | (1,125 | ) | - | ||||||||||
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Recovery
of Bad Debts
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(201 | ) | - | (421 | ) | - | ||||||||||
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Income
(Loss) from Operations
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1,301 | (3,758 | ) | 2,120 | (4,286 | ) | ||||||||||
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Interest
Income
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19 | 284 | 42 | 602 | ||||||||||||
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Interest
Expense
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- | - | - | - | ||||||||||||
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Other
Income, Net
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247 | 557 | 675 | 780 | ||||||||||||
| 1,567 | (2,917 | ) | 2,837 | (2,904 | ) | |||||||||||
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Provision
(Benefit) for Income Taxes
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721 | (1,428 | ) | 1,062 | (1,621 | ) | ||||||||||
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Net
Income (Loss)
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846 | (1,489 | ) | 1,775 | (1,283 | ) | ||||||||||
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Net Income (Loss) Attributable to
Non-Controlling Interest
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(2 | ) | 287 | 12 | 101 | |||||||||||
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Net Income Attributable to STRATTEC
SECURITY CORPORATION
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$ | 844 | $ | (1,202 | ) | $ | 1,787 | $ | (1,182 | ) | ||||||
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||||||||||||||||
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Earnings
(Loss) Per Share:
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||||||||||||||||
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Basic
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$ | 0.26 | $ | (0.37 | ) | $ | 0.55 | $ | (0.36 | ) | ||||||
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Diluted
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$ | 0.26 | $ | (0.37 | ) | $ | 0.55 | $ | (0.36 | ) | ||||||
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Average
Basic
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||||||||||||||||
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Shares Outstanding
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3,272 | 3,264 | 3,269 | 3,298 | ||||||||||||
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Average
Diluted
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||||||||||||||||
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Shares Outstanding
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3,272 | 3,267 | 3,271 | 3,303 | ||||||||||||
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Other
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Capital Expenditures
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$ | 1,342 | $ | 3,195 | $ | 3,104 | $ | 8,511 | ||||||||
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Depreciation & Amortization
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$ | 1,827 | $ | 1,475 | $ | 3,578 | $ | 2,855 | ||||||||
NOTE
A: Prior year balances have been restated to reflect the change from
LIFO to FIFO accounting for inventories.
5
STRATTEC SECURITY
CORPORATION
Condensed
Balance Sheet Data
(In
Thousands)
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December 27, 2009
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June 28, 2009
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|||||||
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(Unaudited)
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||||||||
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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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$ | 22,016 | $ | 22,764 | ||||
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Receivables, net
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26,450 | 17,235 | ||||||
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Restricted Cash (A)
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2,100 | - | ||||||
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Inventories
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16,435 | 16,589 | ||||||
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Other current assets
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15,989 | 15,970 | ||||||
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Total Current Assets
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82,990 | 72,558 | ||||||
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Deferred Income Taxes
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10,121 | 13,143 | ||||||
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Investment in Joint Venture
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4,652 | 4,483 | ||||||
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Other Long Term Assets
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2,290 | 1,069 | ||||||
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Property, Plant and Equipment, Net
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36,672 | 36,936 | ||||||
| $ | 136,725 | $ | 128,189 | |||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
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Current Liabilities:
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Accounts Payable
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$ | 18,727 | $ | 11,369 | ||||
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Other
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19,762 | 19,479 | ||||||
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Total Current Liabilities
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38,489 | 30,848 | ||||||
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Borrowings Under Line of Credit Facility
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- | - | ||||||
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Accrued Pension and Post Retirement Obligations
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23,485 | 24,784 | ||||||
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Shareholders’ Equity
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240,180 | 238,601 | ||||||
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Accumulated Other Comprehensive Loss
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(30,494 | ) | (31,094 | ) | ||||
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Less: Treasury Stock
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(136,064 | ) | (136,089 | ) | ||||
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Total STRATTEC SECURITY CORPORATION Shareholders’ Equity
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73,622 | 71,418 | ||||||
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Non-Controlling Interest
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1,129 | 1,139 | ||||||
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Total Shareholders’ Equity
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74,751 | 72,557 | ||||||
| $ | 136,725 | $ | 128,189 | |||||
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NOTE
A:
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Represents
a commercial guarantee by STRATTEC SECURITY CORPORATION relating to a
promissory note issued by Vehicle Access System Technology, LLC (VAST,
LLC).
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6
STRATTEC SECURITY
CORPORATION
Condensed
Cash Flow Statement Data
(In
Thousands)
(Unaudited)
|
Second
Quarter Ended
|
Six
Months Ended
|
|||||||||||||||
|
December 27, 2009
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December 28, 2008
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December 27, 2009
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December 28, 2008
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|||||||||||||
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(Note
A)
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(Note
A)
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|||||||||||||||
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Cash
Flows from Operating Activities:
|
||||||||||||||||
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Net
(Loss) Income
|
$ | 844 | $ | (1,202 | ) | $ | 1,787 | $ | (1,182 | ) | ||||||
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Adjustment
to Reconcile Net Income (Loss) to
|
||||||||||||||||
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Cash Provided by Operating Activities:
|
||||||||||||||||
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Non-Controlling Interest
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2 | (287 | ) | (12 | ) | (101 | ) | |||||||||
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Depreciation and Amortization
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1,827 | 1,475 | 3,578 | 2,855 | ||||||||||||
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Stock Based Compensation Expense
|
98 | 89 | 204 | 217 | ||||||||||||
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Recovery of Doubtful Accounts
|
(201 | ) | - | (421 | ) | - | ||||||||||
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Deferred Tax Provision
|
3,258 | - | 3,258 | - | ||||||||||||
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Curtailment Loss
|
505 | - | 505 | - | ||||||||||||
|
Impairment Charge
|
223 | - | 223 | - | ||||||||||||
|
Environmental
|
(1,125 | ) | - | (1,125 | ) | - | ||||||||||
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Change in Operating Assets/Liabilities
|
(289 | ) | (2,198 | ) | (1,540 | ) | (2,951 | ) | ||||||||
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Other, net
|
(171 | ) | (992 | ) | (300 | ) | (1,270 | ) | ||||||||
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Net
Cash Provided by (Used in) Operating Activities
|
4,971 | (3,115 | ) | 6,157 | (2,432 | ) | ||||||||||
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Cash
Flows from Investing Activities:
|
||||||||||||||||
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Investment in Joint Ventures
|
(100 | ) | (263 | ) | (100 | ) | (388 | ) | ||||||||
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Loan to Joint Venture
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(1,500 | ) | - | (1,500 | ) | - | ||||||||||
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Restricted Cash
|
(2,100 | ) | - | (2,100 | ) | - | ||||||||||
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Purchase of Delphi Power Products
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- | (3,813 | ) | - | (3,813 | ) | ||||||||||
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Additions to Property, Plant and Equipment
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(1,342 | ) | (3,195 | ) | (3,104 | ) | (8,511 | ) | ||||||||
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Proceeds from Sale of Property, Plant
and
Equipment
|
10 | - | 10 | - | ||||||||||||
|
Net
Cash Used in Investing Activities
|
(5,032 | ) | (7,271 | ) | (6,794 | ) | (12,712 | ) | ||||||||
|
Cash
Flow from Financing Activities:
|
||||||||||||||||
|
Purchase of Common Stock
|
- | (500 | ) | - | (6,214 | ) | ||||||||||
|
Dividends Paid
|
- | (502 | ) | - | (1,023 | ) | ||||||||||
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Contribution from Non-Controlling Interest
|
- | 762 | - | 762 | ||||||||||||
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Loan from Non-Controlling Interest
|
- | 800 | - | 1,175 | ||||||||||||
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Exercise of Stock Options and Employee Stock
Purchases
|
12 | 10 | 23 | 20 | ||||||||||||
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Net
Cash Provided by (Used in) Financing Activities
|
12 | 570 | 23 | (5,280 | ) | |||||||||||
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Effect
of Foreign Currency Fluctuations on Cash
|
(165 | ) | 636 | (134 | ) | 801 | ||||||||||
|
Net
Decrease in Cash & Cash Equivalents
|
(214 | ) | (9,180 | ) | (748 | ) | (19,623 | ) | ||||||||
|
Cash
and Cash Equivalents:
|
||||||||||||||||
|
Beginning of Period
|
22,230 | 41,058 | 22,764 | 51,501 | ||||||||||||
|
End of Period
|
$ | 22,016 | $ | 31,878 | $ | 22,016 | $ | 31,878 | ||||||||
NOTE
A: Prior year balances have been restated to reflect the change from
LIFO to FIFO accounting for inventories.
7