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): August 5, 2010
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STRATTEC SECURITY CORPORATION
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(Exact name of registrant as specified in 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 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 August 5, 2010, STRATTEC SECURITY CORPORATION (the "Company") issued a press release (the "Press Release") announcing results for the fiscal fourth quarter and year ended June 27, 2010. 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.
Section 7 – Regulation FD
Item 7.01. Regulation FD Disclosure.
On August 5, 2010, the Company also announced in the Press Release the declaration of a special dividend. 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 7.01 of Form 8-K.
The information in this Form 8-K, including Items 2.02 and 7.01, 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 August 5, 2010.
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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: August 9, 2010
BY /s/ Patrick J. Hansen
Patrick J. Hansen, Senior Vice President and
Chief Financial Officer
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Exhibit 99.1
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 FISCAL FOURTH QUARTER RESULTS
Milwaukee, Wisconsin – August 5, 2010 -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal fourth quarter and year ended June 27, 2010.
Fiscal 2010 fourth quarter and full year net sales and income significantly improved over fiscal 2009. The year-over-year comparisons are dramatic, as the prior year fourth quarter and full year results were the Company’s worst, reflecting widespread customer assembly plant shutdowns and bankruptcy filings by the Company’s two largest customers, Chrysler and General Motors. Following the end of STRATTEC’s fiscal 2009, the auto industry began making encouraging progress toward meaningful recovery. The positive trend continued throughout the Company’s fiscal 2010, which subsequently fueled the Company’s return to profitability.
Net sales for the Company’s fourth quarter ended June 27, 2010 were $61.4 million, compared to net sales of $28.2 million for the prior year quarter ended June 28, 2009. Net income for the period was $853,000, compared to a net loss of $2.1 million in the prior year quarter. Diluted earnings per share for the period were $.26 compared to diluted loss per share of $.65 in the prior year quarter.
Sales to STRATTEC’s largest customers overall increased in the current quarter compared to the prior year quarter levels primarily due to higher vehicle production volumes. Sales to Chrysler Group LLC were $21.9 million in the current quarter compared to $5.8 million in the prior year quarter. Sales to General Motors Company were $16.0 million compared to $8.4 million. Included in the current quarter sales to General Motors were $1.9 million of sales to Nexteer Automotive, formerly a unit of Delphi Corporation, which is now owned by General Motors. Sales to Ford Motor Company were $5.1 million compared to $3.8 million. In the current quarter, sales of $3.1 million to Hyundai/Kia were generated by the STRATTEC POWER ACCESS business.
Gross profit margins were 15.9 percent in the current quarter compared to 10.1 percent in the prior year quarter. The higher gross profit margin in the current year quarter was primarily the result of higher customer vehicle production volumes which increased overhead absorption of STRATTEC’s manufacturing costs, offset by expense provisions for the Company’s Economic Value Added (EVA®) incentive bonus plan. During the current quarter and fiscal year, the Company significantly exceeded its planned financial targets on which payouts under the incentive bonus plan are based. The Company’s operating results, therefore, reflect incentive bonus expense provisions of $2.8 million in the current qu
arter and $5.2 million for the fiscal year ended June 27, 2010. These expenses affect both cost of goods sold and operating expenses. In the prior fiscal year, no bonuses were provided for or paid based upon fiscal 2009 financial performance. Also impacting the current quarter results were lower purchased raw material costs for zinc.
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Operating expenses were $8.7 million in the current quarter, compared to $5.7 million in the prior year quarter. As referenced above, this increase was primarily the result of the incentive bonus expense incurred during fiscal 2010. Other factors offsetting the increase in operating expenses during the current year period included a $340,000 recovery of patent defense costs during the prior year quarter from a third party relating to outside legal costs expensed in previous reported periods and changes implemented in the prior year quarter with respect to the Company’s U.S. salaried work force which included temporary reductions in wages and the Company 401(k) match, as well as several unpaid work furlough days.
For the fiscal year ended June 27, 2010, net sales were $208.0 million compared to net sales of $126.1 million in the prior year period. Net income was $3.4 million compared to a net loss of $6.1 million in the prior year period and diluted earnings per share were $1.04 compared to diluted loss per share of $1.86.
On August 4, 2010, STRATTEC SECURITY CORPORATION’s Board of Directors declared a special dividend of $1.20 per share. The special dividend will be paid on October 29, 2010 to shareholders of record at the close of business on October 8, 2010. The Company believes that, with its return to profitability in fiscal 2010, the special dividend is a meaningful, appropriate, timely and tax efficient method of transferring economic value directly to its shareholders.
(EVA® is a registered trademark of Stern, Stewart & Co.)
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.
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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 Compa
ny’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.
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STRATTEC SECURITY CORPORATION
Results of Operations
(In Thousands except per share amounts)
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Fourth Quarter Ended
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Years Ended
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June 27, 2010
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June 28, 2009
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June 27, 2010
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June 28, 2009
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(Unaudited)
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(Unaudited)
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Net Sales
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$ | 61,360 | $ | 28,219 | $ | 207,964 | $ | 126,097 | ||||||||
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Cost of Goods Sold
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51,630 | 25,377 | 174,922 | 112,857 | ||||||||||||
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Gross Profit
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9,730 | 2,842 | 33,042 | 13,240 | ||||||||||||
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Engineering, Selling &
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Administrative Expenses
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8,665 | 5,684 | 29,939 | 25,480 | ||||||||||||
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Impairment Charge
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- | - | 223 | - | ||||||||||||
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Environmental
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- | - | (1,125 | ) | - | |||||||||||
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(Recovery) Provision for Doubtful Accounts
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- | - | (421 | ) | 500 | |||||||||||
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Income (Loss) from Operations
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1,065 | (2,842 | ) | 4,426 | (12,740 | ) | ||||||||||
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Interest Income
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28 | 38 | 86 | 731 | ||||||||||||
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Other Income (Expense), Net
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300 | 1 | 1,095 | 885 | ||||||||||||
| 1,393 | (2,803 | ) | 5,607 | (11,124 | ) | |||||||||||
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Provision (Benefit) for Income Taxes
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276 | (506 | ) | 1,666 | (4,222 | ) | ||||||||||
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Net (Loss) Income
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$ | 1,117 | $ | (2,297 | ) | $ | 3,941 | $ | (6,902 | ) | ||||||
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Net Income (Loss) Attributed to Non-Controlling Interest
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264 | (179 | ) | 520 | (780 | ) | ||||||||||
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Net Income (Loss) Attributed to STRATTEC SECURITY CORPORATION
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$ | 853 | $ | (2,118 | ) | $ | 3,421 | $ | (6,122 | ) | ||||||
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Earnings (Loss) Per Share:
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Basic
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$ | 0.26 | $ | (0.65 | ) | $ | 1.05 | $ | (1.87 | ) | ||||||
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Diluted
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$ | 0.26 | $ | (0.65 | ) | $ | 1.04 | $ | (1.86 | ) | ||||||
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Average Basic
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Shares Outstanding
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3,275 | 3,262 | 3,271 | 3,280 | ||||||||||||
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Average Diluted
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Shares Outstanding
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3,296 | 3,266 | 3,280 | 3,284 | ||||||||||||
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Other
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Capital Expenditures
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$ | 1,958 | $ | 1,563 | $ | 6,903 | $ | 12,492 | ||||||||
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Depreciation & Amortization
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$ | 1,808 | $ | 1,736 | $ | 7,143 | $ | 6,264 | ||||||||
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STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
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June 27, 2010
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June 28, 2009
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(Unaudited)
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ASSETS
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Current Assets:
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Cash and cash equivalents
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$ | 21,867 | $ | 22,764 | ||||
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Restricted Cash (A)
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2,100 | - | ||||||
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Receivables, net
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36,084 | 17,235 | ||||||
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Inventories
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17,086 | 16,589 | ||||||
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Other current assets
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12,871 | 15,970 | ||||||
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Total Current Assets
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90,008 | 72,558 | ||||||
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Deferred Income Taxes
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10,534 | 13,143 | ||||||
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Loan to Joint Venture
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1,500 | - | ||||||
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Investment in Joint Venture
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5,176 | 4,483 | ||||||
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Other Long Term Assets
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733 | 1,069 | ||||||
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Property, Plant and Equipment, Net
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37,051 | 36,936 | ||||||
| $ | 145,002 | $ | 128,189 | |||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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Current Liabilities:
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Accounts Payable
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$ | 21,192 | $ | 11,369 | ||||
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Other
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25,038 | 19,479 | ||||||
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Total Current Liabilities
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46,230 | 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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22,982 | 24,784 | ||||||
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Shareholders’ Equity
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242,115 | 238,601 | ||||||
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Accumulated Other Comprehensive Loss
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(31,941 | ) | (31,094 | ) | ||||
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Less: Treasury Stock
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(136,047 | ) | (136,089 | ) | ||||
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Total STRATTEC SECURITY CORPORATION Shareholders’ Equity
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74,127 | 71,418 | ||||||
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Non-Controlling Interest
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1,663 | 1,139 | ||||||
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Total Shareholders’ Equity
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75,790 | 72,557 | ||||||
| $ | 145,002 | $ | 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 Systems Technology, LLC (VAST, LLC).
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STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
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Fourth Quarter Ended
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Years Ended
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June 27, 2010
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June 28, 2009
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June 27, 2010
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June 28, 2009
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(Unaudited)
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(Unaudited)
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Cash Flows from Operating Activities:
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Net Income (Loss)
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$ | 853 | $ | (2,118 | ) | $ | 3,421 | $ | (6,122 | ) | ||||||
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Adjustment to Reconcile Net Income (Loss) to
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Cash Provided (Used) in Operating Activities:
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Non-Controlling Interest
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264 | (179 | ) | 520 | (780 | ) | ||||||||||
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Equity Earnings in Joint Venture
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(369 | ) | (41 | ) | (1,008 | ) | (245 | ) | ||||||||
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Depreciation and Amortization
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1,808 | 1,736 | 7,143 | 6,264 | ||||||||||||
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Foreign Currency Transaction Loss (Gain)
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(42 | ) | 315 | 283 | (918 | ) | ||||||||||
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Deferred Income Taxes
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170 | (2,986 | ) | 3,428 | (2,986 | ) | ||||||||||
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Stock Based Compensation Expense
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128 | 110 | 468 | 419 | ||||||||||||
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Provision (Recovery) for Doubtful Accounts
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- | - | (421 | ) | 500 | |||||||||||
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Curtailment Loss
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- | - | 505 | - | ||||||||||||
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Impairment Charge
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- | - | 223 | - | ||||||||||||
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Environmental
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- | - | (1,125 | ) | - | |||||||||||
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Change in Operating Assets/Liabilities
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5,737 | 5,195 | (3,425 | ) | (3,024 | ) | ||||||||||
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Other, net
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18 | 48 | 53 | 56 | ||||||||||||
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Net Cash Provided (Used) in Operating Activities
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8,567 | 2,080 | 10,065 | (6,836 | ) | |||||||||||
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Cash Flows from Investing Activities:
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Investment in Joint Ventures
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- | (163 | ) | (100 | ) | (551 | ) | |||||||||
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Restricted Cash
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- | - | (2,100 | ) | - | |||||||||||
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Loan to Joint Venture
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- | - | (2,500 | ) | - | |||||||||||
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Proceeds from Repayment of Loan to Joint Venture
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- | - | 1,000 | - | ||||||||||||
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Purchase of Delphi Power Products
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- | - | - | (4,931 | ) | |||||||||||
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Additions to Property, Plant and Equipment
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(1,958 | ) | (1,563 | ) | (6,903 | ) | (12,492 | ) | ||||||||
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Proceeds from Sale of Property, Plant and Equipment
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11 | 8 | 21 | 8 | ||||||||||||
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Net Cash Used in Investing Activities
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(1,947 | ) | (1,718 | ) | (10,582 | ) | (17,966 | ) | ||||||||
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Cash Flow from Financing Activities:
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Purchase of Common Stock
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- | - | - | (6,214 | ) | |||||||||||
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Dividends Paid
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- | - | - | (1,511 | ) | |||||||||||
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Loan from Related Parties
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- | - | - | 2,175 | ||||||||||||
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Repayment of Loan to Related Parties
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- | - | (225 | ) | - | |||||||||||
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Contribution from Non-Controlling Interest
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- | - | - | 986 | ||||||||||||
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Excess Tax Benefits from Stock Based Compensation
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9 | - | 9 | - | ||||||||||||
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Exercise of Stock Options and Employee Stock Purchases
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39 | 10 | 72 | 40 | ||||||||||||
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Net Cash Provided (Used) in Financing Activities
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48 | 10 | (144 | ) | (4,524 | ) | ||||||||||
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Foreign Currency Impact on Cash
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1 | (206 | ) | (236 | ) | 589 | ||||||||||
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Net Increase (Decrease) in Cash & Cash Equivalents
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6,669 | 166 | (897 | ) | (28,737 | ) | ||||||||||
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Cash and Cash Equivalents:
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Beginning of Period
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15,198 | 22,598 | 22,764 | 51,501 | ||||||||||||
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End of Period
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$ | 21,867 | $ | 22,764 | $ | 21,867 | $ | 22,764 | ||||||||
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