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): January 27, 2011
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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 27, 2011, STRATTEC SECURITY CORPORATION issued a press release (the "Press Release") announcing results for the fiscal second quarter ended December 26, 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.
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 27, 2011.
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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: January 28, 2011
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 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 27, 2011 -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal second quarter ended December 26, 2010.
Net sales for the Company’s second quarter ended December 26, 2010 were $61.2 million, compared to net sales of $52.5 million for the second quarter ended December 27, 2009. Net income for the period was $1.2 million, compared to net income of $844,000 in the prior year quarter. Diluted earnings per share for the period were $.37 compared to diluted earnings per share of $.26 during the prior year quarter. The higher sales and profitability for the quarter were primarily the result of increased customer production volumes.
For the six months ended December 26, 2010, net sales were $121.1 million compared to net sales of $93.7 million during the prior year period. Net income during the current year period was $2.7 million compared to net income of $1.8 million during the prior year period and diluted earnings per share were $.80 compared to diluted earnings per share of $.55.
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 $17.6 million in the current quarter compared to $16.5 million in the prior year quarter. Sales to General Motors Company were $16.3 million compared to $12.3 million. Sales to Ford Motor Company were $6.1 million compared to $5.2 million. However sales to Hyundai/Kia decreased to $3.4 million compared to $4.3 million in the prior year quarter.
Gross profit margins were 16.3 percent in the current quarter compared to 14.6 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, offset by an unfavorable Mexico Peso to U.S. dollar exchange rate affecting the Company’s operations in Mexico. The prior year quarter included a significant amount of premium freight costs and overtime incurred during the months of October and November 2009 to meet significantly increased production requirements from the Company’s largest customers as they rebuilt retail inventories following the U.S. Government’s “Cash for Clunkers” program that ended in August 2009.
Operating expenses were $8.3 million in the current quarter, compared to $7.5 million in the prior year quarter. The increase in operating expenses during the current quarter was primarily attributed to higher spending for new product development. Additionally, expenses in the prior year period were lower due to temporary actions implemented with respect to the U.S. salaried work force to help conserve cash during the recession. These actions included reductions in wages and the Company 401(k) match.
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Included in the prior year quarter results were 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 outstanding environmental remediation issues 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 Chrysler LLC’s bankruptcy filing on April 30, 2009. |
STRATTEC designs, develops, manufactures and markets automotive Access Control Products, including mechanical locks and keys, electronically enhanced locks and keys, steering column and instrument panel ignition lock housings, latches, power sliding side door systems, power lift gate systems, power deck lid systems, door handles and related products. These products are provided to customers in North America, and on a global basis through 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 (including fluctuations in the cost of raw materials). Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances occurring after the date of this release. In addition, such uncertainties and other operational matters are discussed further in the Company’s quarterly and annual filings with the Securities and Exchange Commission.
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STRATTEC SECURITY CORPORATION
Results of Operations
(In Thousands except per share amounts)
(Unaudited)
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Second Quarter Ended
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Six Months Ended
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December 26, 2010
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December 27, 2009
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December 26, 2010
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December 27, 2009
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Net Sales
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$ | 61,212 | $ | 52,540 | $ | 121,061 | $ | 93,721 | ||||||||
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Cost of Goods Sold
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51,239 | 44,887 | 100,935 | 79,270 | ||||||||||||
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Gross Profit
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9,973 | 7,653 | 20,126 | 14,451 | ||||||||||||
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Engineering, Selling & Administrative Expenses
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8,318 | 7,455 | 16,483 | 13,654 | ||||||||||||
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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 from Operations
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1,655 | 1,301 | 3,643 | 2,120 | ||||||||||||
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Interest Income
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25 | 19 | 48 | 42 | ||||||||||||
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Interest Expense
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(45 | ) | (59 | ) | (96 | ) | (115 | ) | ||||||||
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Other Income, Net
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438 | 306 | 1,059 | 790 | ||||||||||||
| 2,073 | 1,567 | 4,654 | 2,837 | |||||||||||||
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Provision for Income Taxes
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331 | 721 | 1,132 | 1,062 | ||||||||||||
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Net Income
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1,742 | 846 | 3,522 | 1,775 | ||||||||||||
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Net Income Attributable to Non-Controlling Interest
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(495 | ) | (2 | ) | (857 | ) | 12 | |||||||||
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Net Income Attributable to STRATTEC
SECURITY CORPORATION
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$ | 1,247 | $ | 844 | $ | 2,665 | $ | 1,787 | ||||||||
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Earnings Per Share:
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Basic
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$ | 0.38 | $ | 0.26 | $ | 0.81 | $ | 0.55 | ||||||||
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Diluted
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$ | 0.37 | $ | 0.26 | $ | 0.80 | $ | 0.55 | ||||||||
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Average Basic Shares Outstanding
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3,286 | 3,272 | 3,283 | 3,269 | ||||||||||||
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Average Diluted Shares Outstanding
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3,329 | 3,272 | 3,314 | 3,271 | ||||||||||||
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Other
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Capital Expenditures
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$ | 1,706 | $ | 1,342 | $ | 3,482 | $ | 3,104 | ||||||||
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Depreciation & Amortization
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$ | 1,589 | $ | 1,827 | $ | 3,227 | $ | 3,578 | ||||||||
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STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
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December 26, 2010
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June 27, 2010
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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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$ | 17,811 | $ | 21,867 | ||||
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Restricted Cash (A)
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- | 2,100 | ||||||
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Receivables, Net
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33,397 | 36,084 | ||||||
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Inventories
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22,415 | 17,086 | ||||||
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Other Current Assets
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14,798 | 12,871 | ||||||
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Total Current Assets
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88,421 | 90,008 | ||||||
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Deferred Income Taxes
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10,534 | 10,534 | ||||||
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Loan to Joint Venture
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1,500 | 1,500 | ||||||
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Investment in Joint Venture
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6,302 | 5,176 | ||||||
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Other Long Term Assets
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684 | 733 | ||||||
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Property, Plant and Equipment, Net
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37,539 | 37,051 | ||||||
| $ | 144,980 | $ | 145,002 | |||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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Current Liabilities:
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Accounts Payable
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$ | 23,082 | $ | 21,192 | ||||
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Other
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22,858 | 25,038 | ||||||
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Total Current Liabilities
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45,940 | 46,230 | ||||||
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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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22,868 | 22,982 | ||||||
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Shareholders’ Equity
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241,115 | 242,115 | ||||||
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Accumulated Other Comprehensive Loss
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(31,421 | ) | (31,941 | ) | ||||
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Less: Treasury Stock
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(136,029 | ) | (136,047 | ) | ||||
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Total STRATTEC SECURITY CORPORATION Shareholders’ Equity
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73,665 | 74,127 | ||||||
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Non-Controlling Interest
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2,507 | 1,663 | ||||||
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Total Shareholders’ Equity
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76,172 | 75,790 | ||||||
| $ | 144,980 | $ | 145,002 | |||||
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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). This guarantee was canceled in October 2010.
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STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
(Unaudited)
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Second Quarter Ended
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Six Months Ended
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December 26, 2010
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December 27, 2009
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December 26, 2010
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December 27, 2009
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Cash Flows from Operating Activities:
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Net Income
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$ | 1,742 | $ | 846 | $ | 3,522 | $ | 1,775 | ||||||||
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Adjustment to Reconcile Net Income to
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Cash Provided by Operating Activities:
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Equity Earnings in VAST LLC Joint Venture
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(381 | ) | (383 | ) | (803 | ) | (479 | ) | ||||||||
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Depreciation and Amortization
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1,589 | 1,827 | 3,227 | 3,578 | ||||||||||||
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Foreign Currency Transaction Loss
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160 | 222 | 190 | 157 | ||||||||||||
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Stock Based Compensation Expense
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156 | 98 | 298 | 204 | ||||||||||||
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Recovery of Doubtful Accounts
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- | (201 | ) | - | (421 | ) | ||||||||||
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Deferred Tax Provision
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- | 3,258 | - | 3,258 | ||||||||||||
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Curtailment Loss
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- | 505 | - | 505 | ||||||||||||
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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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Change in Operating Assets/Liabilities
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1,256 | (289 | ) | (4,197 | ) | (1,540 | ) | |||||||||
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Other, net
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11 | (10 | ) | 17 | 22 | |||||||||||
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Net Cash Provided by Operating Activities
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4,533 | 4,971 | 2,254 | 6,157 | ||||||||||||
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Cash Flows from Investing Activities:
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Investment in Joint Ventures
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(150 | ) | (100 | ) | (150 | ) | (100 | ) | ||||||||
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Loan to Joint Venture
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- | (1,500 | ) | - | (1,500 | ) | ||||||||||
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Restricted Cash
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2,100 | (2,100 | ) | 2,100 | (2,100 | ) | ||||||||||
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Purchase of Additional Interest in
ADAC-STRATTEC LLC
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- | - | (22 | ) | - | |||||||||||
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Additions to Property, Plant and Equipment
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(1,706 | ) | (1,342 | ) | (3,482 | ) | (3,104 | ) | ||||||||
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Proceeds from Sale of Property, Plant and Equipment
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- | 10 | - | 10 | ||||||||||||
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Net Cash Provided by (Used in) Investing Activities
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244 | (5,032 | ) | (1,554 | ) | (6,794 | ) | |||||||||
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Cash Flow from Financing Activities:
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Dividends Paid
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(3,989 | ) | - | (3,989 | ) | - | ||||||||||
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Repayment of Loan to Related Parties
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(250 | ) | - | (750 | ) | - | ||||||||||
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Exercise of Stock Options and
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Employee Stock Purchases
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15 | 12 | 28 | 23 | ||||||||||||
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Net Cash Provided by (Used in) Financing Activities
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(4,224 | ) | 12 | (4,711 | ) | 23 | ||||||||||
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Effect of Foreign Currency Fluctuations on Cash
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(64 | ) | (165 | ) | (45 | ) | (134 | ) | ||||||||
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Net Increase (Decrease) in Cash & Cash Equivalents
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489 | (214 | ) | (4,056 | ) | (748 | ) | |||||||||
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Cash and Cash Equivalents:
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Beginning of Period
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17,322 | 22,230 | 21,867 | 22,764 | ||||||||||||
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End of Period
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$ | 17,811 | $ | 22,016 | $ | 17,811 | $ | 22,016 | ||||||||
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