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 7, 2013
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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 August 7, 2013, STRATTEC SECURITY CORPORATION issued a press release (the "Press Release") announcing results for the fiscal fourth quarter and year ended June 30, 2013. 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 August 7, 2013.
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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 7, 2013
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 2013 FOURTH QUARTER AND FULL YEAR RESULTS
Milwaukee, Wisconsin – August 7, 2013-- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal fourth quarter and year ended June 30, 2013.
Fourth Quarter
Net sales for the fourth quarter ended June 30, 2013 were $80.5 million, compared to net sales of $76.4 million for the fourth quarter ended July 1, 2012. Net income was $3.2 million both in the current and prior year quarters. Diluted earnings per share for the fourth quarter were $.92 compared to $.97 in the prior year quarter.
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Net sales to each of our customers in the current year quarter and prior year quarter were as follows (in thousands):
| Three Months Ended | ||||||||
| June 30, 2013 | July 1, 2012 | |||||||
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Chrysler Group LLC
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$ | 27,219 | $ | 24,996 | ||||
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General Motors Company
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14,320 | 17,378 | ||||||
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Ford Motor Company
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11,999 | 9,192 | ||||||
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Tier 1 Customers
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16,266 | 13,239 | ||||||
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Commercial and Other OEM Customers
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8,273 | 8,301 | ||||||
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Hyundai / Kia
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2,394 | 3,257 | ||||||
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TOTAL
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$ | 80,471 | $ | 76,363 | ||||
Increased sales to Chrysler Group LLC in the current quarter was primarily due to higher customer vehicle production volumes and increased content on models for which we supply components. The reduction in sales to General Motors Company in the current quarter was primarily attributed to business we lost to other suppliers during the latter half of the 2012 model year. Increased sales to Ford Motor Company in the current quarter was largely attributed to a combination of business won with new products and higher vehicle production volumes. Increased sales to Tier 1 customers during the current year quarter related primarily to market growth and the increasing impact of other vehicle access control products, such as latches, fobs, and driver controls, that we have developed in recent years to complement our historic core business of locks and keys. The reduction in sales to Hyundai / Kia in the current year quarter was principally due to lower customer vehicle production volume and the discontinuation of a vehicle model for which we had been supplying components.
Gross profit margins were 18.2 percent in the current year quarter compared to 18.9 percent in the prior year quarter. The reduction in gross profit margin in the current year quarter was impacted by a less favorable product sales mix, an unfavorable Mexico Peso to U.S. Dollar exchange rate affecting our operations in Mexico, and a higher expense provision for our frozen defined benefit pension plan. These negative items were partially offset by the benefits of higher overhead absorption from increased production volumes.
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Operating expenses were $9.3 million in the current year quarter and $9.0 million in the prior year quarter. The major contributor to the increase was a higher expense provision for our frozen defined benefit pension plan.
Included in Other Income (Expense) in the current year quarter compared to the prior year quarter were the following items (in thousands of dollars):
| June 30, 2013 | July 1, 2012 | |||||||
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Equity Earnings (Loss) of VAST LLC Joint Venture
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$ | 255 | $ | (619 | ) | |||
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Foreign Currency Transaction Gain
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905 | 462 | ||||||
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Impact of Mexican Peso Option Contracts, Net Loss
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(9 | ) | (238 | ) | ||||
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Other
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(55 | ) | 61 | |||||
| $ | 1,096 | $ | (334 | ) |
STRATTEC is a partner in VAST LLC, a global alliance of companies involved in the design and manufacture of automotive access products. VAST provides global growth opportunities while complementing our North American business. During the current quarter, the VAST LLC operations both in China and Brazil reported positive operating results for the first time in two years. In the prior year quarter operating results, the VAST LLC operations primarily in China incurred relocation costs associated with moves to a new facility and start-up costs associated with a new product line. In addition, the prior year quarter equity loss also included STRATTEC’s portion of a goodwill impairment charge of $284,000 relating to VAST China.
During the current year quarter STRATTEC contributed $625,000 to its Defined Benefit Pension Trust to improve the overall funded status of the Plan.
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Frank Krejci, President and CEO commented:
“My thanks go to both the STRATTEC team and our VAST partners for making significant progress this year. With a solid automotive market, STRATTEC achieved record sales of nearly $300 million along with growth in economic value added. Along with our VAST partners and joint ventures, the VAST Group supplies over $1.1 billion globally in automotive products.
Highlights in growth, performance and financial strength deserve special attention. After challenging years of new product introduction, our joint venture in China is once again profitable and growing. STRATTEC was honored as a Supplier of the Year by Chrysler for Electrical Products, one of their few product categories which accounts for most of our Chrysler business. Lastly, our frozen defined benefit pension plan funded status improved by over $18 million during the fiscal year as a result of contributions and investment earnings, and keeping our assumptions regarding the funded status of the plan consistent between fiscal years.
Looking to next year, we are optimistic about the projected continued growth of the automotive industry, with the average age of vehicles on the road at an all-time high.”
Full Year
STRATTEC’s fiscal 2013 net sales reached a record high, exceeding the prior year record by approximately 7% and adjusted diluted earnings per share increased approximately 18% in comparison to the prior year. (See Non-GAAP Financial Measure below).
For the fiscal year ended June 30, 2013, net sales were $298.2 million compared to net sales of $279.2 million in the prior year period. Net income was $9.4 million compared to net income of $8.8 million in the prior year period. Diluted earnings per share for the current year were $2.72 (or $3.11 without the third quarter $2.1 million pension settlement charge as shown in the table below) compared to diluted earnings per share of $2.64 in the prior year.
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Reconciliation of Non-GAAP Financial Measure:
| Year Ended | ||||||||
| June 30, | July 1, | |||||||
| 2013 | 2012 | |||||||
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Diluted earnings per share, as reported
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$ | 2.72 | $ | 2.64 | ||||
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Effect of pension settlement charge
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0.39 | - | ||||||
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Diluted earnings per share, as adjusted
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$ | 3.11 | $ | 2.64 | ||||
In addition to the results reported in accordance with U.S. generally accepted accounting principles ("GAAP") included in this release, the table above (as well as the information provided in this release) provides certain non-GAAP financial information, related to diluted earnings per share excluding the impact of a pension settlement charge (as described above). Management believes that the presentation of this non-GAAP financial measure provides useful information to investors because this information may allow investors to better evaluate ongoing business performance and certain components of STRATTEC’s results. In addition, we believe the presentation of diluted earnings per share excluding the impact of the pension settlement charge enhances an investor’s ability to make period-to-period comparisons of our operating results. This information should be considered in addition to the results presented in accordance with GAAP, and should not be considered a substitute for the GAAP results. We have reconciled the non-GAAP financial information included in this release to the nearest GAAP measure.
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 a unique strategic relationship with WITTE Automotive of Velbert, Germany and ADAC Automotive of Grand Rapids, Michigan. Under this relationship, STRATTEC, WITTE and ADAC market our products to global customers under the “VAST” brand name. 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 Company’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
Condensed Results of Operations
(In Thousands, except per share amounts)
| Fourth Quarter Ended | Years Ended | |||||||||||||||
| June 30, 2013 | July 1, 2012 | June 30, 2013 | July 1, 2012 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
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Net Sales
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$ | 80,471 | $ | 76,363 | $ | 298,179 | $ | 279,234 | ||||||||
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Cost of Goods Sold
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65,846 | 61,896 | 244,313 | 228,971 | ||||||||||||
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Gross Profit
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14,625 | 14,467 | 53,866 | 50,263 | ||||||||||||
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Engineering, Selling & Administrative
Expenses
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9,308 | 9,013 | 34,934 | 33,920 | ||||||||||||
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Loss on Settlement of Pension Obligations
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- | - | 2,144 | - | ||||||||||||
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Income from Operations
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5,317 | 5,454 | 16,788 | 16,343 | ||||||||||||
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Interest Income
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5 | 22 | 21 | 69 | ||||||||||||
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Interest Expense
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(9 | ) | (8 | ) | (34 | ) | (81 | ) | ||||||||
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Other Income (Expense), Net
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1,096 | (334 | ) | 104 | (489 | ) | ||||||||||
| 6,409 | 5,134 | 16,879 | 15,842 | |||||||||||||
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Provision for Income
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Taxes
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2,489 | 872 | 5,366 | 3,589 | ||||||||||||
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Net Income
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$ | 3,920 | $ | 4,262 | $ | 11,513 | $ | 12,253 | ||||||||
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Net Income Attributable to
Non-Controlling Interest
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703 | 1,027 | 2,138 | 3,460 | ||||||||||||
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Net Income Attributable to STRATTEC SECURITY
CORPORATION
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$ | 3,217 | $ | 3,235 | $ | 9,375 | $ | 8,793 | ||||||||
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Earnings Per Share:
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Basic
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$ | 0.94 | $ | 0.98 | $ | 2.77 | $ | 2.66 | ||||||||
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Diluted
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$ | 0.92 | $ | 0.97 | $ | 2.72 | $ | 2.64 | ||||||||
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Average Basic
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Shares Outstanding
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3,356 | 3,303 | 3,327 | 3,300 | ||||||||||||
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Average Diluted
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Shares Outstanding
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3,433 | 3,333 | 3,379 | 3,330 | ||||||||||||
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Other
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Capital Expenditures
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$ | 4,710 | $ | 3,973 | $ | 12,515 | $ | 13,558 | ||||||||
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Depreciation & Amortization
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$ | 2,116 | $ | 1,726 | $ | 7,490 | $ | 6,809 | ||||||||
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STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
| June 30, 2013 | July 1, 2012 | |||||||
| (Unaudited) | ||||||||
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ASSETS
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Current Assets:
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Cash and cash equivalents
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$ | 20,307 | $ | 17,487 | ||||
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Receivables, net
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47,514 | 44,496 | ||||||
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Inventories, net
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24,312 | 21,236 | ||||||
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Other current assets
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14,366 | 18,072 | ||||||
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Total Current Assets
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106,499 | 101,291 | ||||||
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Deferred Income Taxes
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- | 9,742 | ||||||
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Investment in Joint Ventures
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9,166 | 8,139 | ||||||
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Other Long Term Assets
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2,420 | 536 | ||||||
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Property, Plant and Equipment, Net
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51,415 | 46,330 | ||||||
| $ | 169,500 | $ | 166,038 | |||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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| Current Liabilities: | ||||||||
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Accounts Payable
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$ | 25,543 | $ | 24,149 | ||||
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Borrowings Under Credit Facility
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2,250 | - | ||||||
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Other
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22,932 | 32,824 | ||||||
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Total Current Liabilities
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50,725 | 56,973 | ||||||
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Accrued Pension and Post Retirement Obligations
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4,181 | 21,667 | ||||||
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Deferred Income Taxes
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1,009 | - | ||||||
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Other Long-term Liabilities
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1,705 | - | ||||||
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Shareholders’ Equity
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262,368 | 252,280 | ||||||
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Accumulated Other Comprehensive Loss
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(22,212 | ) | (35,757 | ) | ||||
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Less: Treasury Stock
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(135,938 | ) | (135,971 | ) | ||||
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Total STRATTEC SECURITY CORPORATION Shareholders’ Equity
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104,218 | 80,552 | ||||||
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Non-Controlling Interest
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7,662 | 6,846 | ||||||
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Total Shareholders’ Equity
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111,880 | 87,398 | ||||||
| $ | 169,500 | $ | 166,038 | |||||
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STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
| Fourth Quarter Ended | Years Ended | |||||||||||||||
| June 30, 2013 | July 1, 2012 | June 30, 2013 | July 1, 2012 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
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Cash Flows from Operating Activities:
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Net Income
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$ | 3,920 | $ | 4,262 | $ | 11,513 | $ | 12,253 | ||||||||
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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) Loss in Joint Ventures
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(177 | ) | 619 | 225 | 1,071 | |||||||||||
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Depreciation and Amortization
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2,116 | 1,726 | 7,490 | 6,809 | ||||||||||||
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Foreign Currency Transaction (Gain) Loss
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(905 | ) | (462 | ) | 395 | (1,369 | ) | |||||||||
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Unrealized Loss (Gain) on Foreign Currency
Option Contracts
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29 | 98 | (395 | ) | 640 | |||||||||||
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Deferred Income Taxes
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3,847 | 54 | 3,847 | 54 | ||||||||||||
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Stock Based Compensation Expense
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306 | 203 | 1,062 | 825 | ||||||||||||
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Loss on Settlement of Pension Obligation
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- | - | 2,144 | - | ||||||||||||
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Provision for Doubtful Accounts
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- | 100 | - | 116 | ||||||||||||
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Change in Operating Assets/Liabilities
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(1,455 | ) | 748 | (10,743 | ) | (3,188 | ) | |||||||||
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Other, net
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55 | 40 | 127 | 30 | ||||||||||||
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Net Cash Provided by Operating Activities
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7,736 | 7,388 | 15,665 | 17,241 | ||||||||||||
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Cash Flows from Investing Activities:
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Investment in Joint Ventures
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(765 | ) | - | (965 | ) | (200 | ) | |||||||||
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Additions to Property, Plant and Equipment
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(4,710 | ) | (3,973 | ) | (12,515 | ) | (13,558 | ) | ||||||||
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Proceeds from Sale of Property, Plant and Equipment
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5 | 10 | 91 | 19 | ||||||||||||
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Net Cash Used in Investing Activities
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(5,470 | ) | (3,963 | ) | (13,389 | ) | (13,739 | ) | ||||||||
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Cash Flows from Financing Activities:
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Borrowings Under Credit Facility
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750 | - | 3,250 | - | ||||||||||||
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Repayments Under Credit Facility
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- | - | (1,000 | ) | - | |||||||||||
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Dividends Paid
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- | (335 | ) | (1,352 | ) | (1,341 | ) | |||||||||
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Dividends Paid to Non-Controlling Interest
Of Subsidiaries |
- | (400 | ) | (1,331 | ) | (400 | ) | |||||||||
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Repayment of Loan to Related Parties
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- | (1,000 | ) | - | (1,850 | ) | ||||||||||
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Excess Tax Benefits from Stock Based Compensation
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206 | - | 270 | 4 | ||||||||||||
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Exercise of Stock Options and Employee Stock Purchases
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557 | 12 | 823 | 82 | ||||||||||||
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Net Cash Provided by (Used in) Financing Activities
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1,513 | (1,723 | ) | 660 | (3,505 | ) | ||||||||||
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Foreign Currency Impact on Cash
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273 | 121 | (116 | ) | 240 | |||||||||||
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Net Increase in Cash & Cash Equivalents
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4,052 | 1,823 | 2,820 | 237 | ||||||||||||
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Cash and Cash Equivalents:
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Beginning of Period
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16,255 | 15,664 | 17,487 | 17,250 | ||||||||||||
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End of Period
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$ | 20,307 | $ | 17,487 | $ | 20,307 | $ | 17,487 | ||||||||
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