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, 2014
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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 | 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 5, 2014, STRATTEC SECURITY CORPORATION issued a press release (the "Press Release") announcing results for the fiscal fourth quarter and year ended June 29, 2014. 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 5, 2014.
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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 5, 2014
By: /s/ Patrick J. Hansen
Patrick J. Hansen, Senior Vice President and
Chief Financial Officer
Exhibit 99.1
For the fiscal year ended June 29, 2014, net sales were $348.4 million compared to net sales of $298.2 million during fiscal 2013. Net income for fiscal 2014 was $16.4 million compared to net income of $9.4 million in the prior year period. Diluted earnings per share for the current year were $4.59 compared to diluted earnings per share of $2.72 in the prior year. NOTE: The prior year included a $2.1 million pre-tax pension settlement charge that reduced diluted earnings per share by $.39.
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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 RECORD FISCAL 2014 FOURTH QUARTER
SALES AND OPERATING RESULTS
Milwaukee, Wisconsin – August 5, 2014-- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal fourth quarter and year ended June 29, 2014.
Fourth Quarter
Net sales for the fourth quarter ended June 29, 2014 were $102.1 million, compared to net sales of $80.5 million for the fourth quarter ended June 30, 2013. Net income was $5.7 million in the current year quarter compared to $3.2 million in the prior year quarter. Diluted earnings per share for the 2014 fourth quarter were $1.58 compared to $.92 in the prior year quarter.
Net sales to each of our customers in the current year quarter and prior year quarter were as follows (in thousands):
| Three Months Ended | ||||||||
| June 29, 2014 | June 30, 2013 | |||||||
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Chrysler Group LLC
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$ | 33,036 | $ | 27,219 | ||||
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General Motors Company
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30,308 | 14,320 | ||||||
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Ford Motor Company
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12,198 | 11,999 | ||||||
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Tier 1 Customers
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15,425 | 16,266 | ||||||
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Commercial and Other OEM Customers
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9,016 | 8,273 | ||||||
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Hyundai / Kia
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2,079 | 2,394 | ||||||
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TOTAL
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$ | 102,062 | $ | 80,471 | ||||
Increased sales to Chrysler Group LLC in the current year quarter was primarily due to higher customer vehicle production volumes and increased content on models for which we supply components. The increase in sales to General Motors Company in the current year quarter was primarily attributed to incremental service parts sales of $11 million, higher vehicle production volume, and greater product content on models introduced during the 2014 model year. The incremental service parts sales will continue into the first quarter of fiscal year 2015 after which service parts sales will likely return to more normal levels during the second half of the new fiscal year. Sales to Ford Motor Company in the current year quarter were flat. Sales to Tier 1 Customers during the current year quarter decreased slightly in comparison to the prior year quarter. These customers represent primarily 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 20.0 percent in the current year quarter compared to 18.2 percent in the prior year quarter. The increase in gross profit margin in the current year quarter was attributed to a more favorable product sales mix, higher overhead absorption from increased customer vehicle production volumes and a favorable Mexican Peso to U.S. Dollar exchange rate affecting our operations in Mexico. Items adversely impacting gross margin during the current quarter were higher raw material costs for zinc and higher expense provisions for the company’s incentive bonus plans as compared to the prior year quarter.
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Operating expenses were $10.8 million in the current year quarter and $9.3 million in the prior year quarter. As a percent of net sales in the current quarter operating expenses decreased to 10.6% from 11.6% in comparison to the prior year quarter. The major contributors to the increased spending during the current quarter were higher engineering development costs and higher expense provisions for our incentive bonus program.
Included in Other Income, Net in the current year quarter compared to the prior year quarter were the following items (in thousands of dollars):
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June 29,
2014
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June 30,
2013
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Equity Earnings of VAST LLC Joint Venture
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$ | 99 | $ | 177 | ||||
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Foreign Currency Transaction (Loss) Gain
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(110 | ) | 905 | |||||
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Impact of Mexican Peso Option Contracts, Net Loss
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- | (9 | ) | |||||
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Other
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86 | 23 | ||||||
| $ | 75 | $ | 1,096 | |||||
During the current year quarter STRATTEC contributed $2.5 million to its Defined Benefit Pension Trust to improve the overall funded status of the Plan.
Full Year
STRATTEC’s fiscal 2014 net sales reached a record high, exceeding the prior year record by approximately 17% and diluted earnings per share increased approximately 69% in comparison to the prior year. (See NOTE below regarding prior year pension settlement charge).
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For the fiscal year ended June 29, 2014, net sales were $348.4 million compared to net sales of $298.2 million during fiscal 2013. Net income for fiscal 2014 was $16.4 million compared to net income of $9.4 million in the prior year period. Diluted earnings per share for the current year were $4.59 compared to diluted earnings per share of $2.72 in the prior year. NOTE: The prior year included a $2.1 million pre-tax pension settlement charge that reduced diluted earnings per share by $.39.
Frank Krejci, President and CEO commented: “In 2000, we began to transform the Company through the creation of our global alliance, VAST. Since that time, we have also worked to broaden our product portfolio. I am honored to report that as a result of these and other strategic initiatives, STRATTEC set a sales record both this quarter and for this fiscal year, set a quarterly earnings record and set a record for profit sharing among its associates. In addition to these record results, we continue to make significant progress in global coordination and new strategic initiatives. Another recent milestone of note is that STRATTEC’s stock was added to the Russell 2000.”
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 each company's 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 29, 2014 | June 30, 2013 | June 29, 2014 | June 30, 2013 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
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Net Sales
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$ | 102,062 | $ | 80,471 | $ | 348,419 | $ | 298,179 | ||||||||
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Cost of Goods Sold
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81,614 | 65,846 | 282,621 | 244,313 | ||||||||||||
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Gross Profit
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20,448 | 14,625 | 65,798 | 53,866 | ||||||||||||
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Engineering, Selling &
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Administrative Expenses
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10,797 | 9,308 | 39,274 | 34,934 | ||||||||||||
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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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9,651 | 5,317 | 26,524 | 16,788 | ||||||||||||
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Interest Income
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42 | 5 | 106 | 21 | ||||||||||||
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Interest Expense
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(8 | ) | (9 | ) | (45 | ) | (34 | ) | ||||||||
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Other Income, Net
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75 | 1,096 | 1,229 | 104 | ||||||||||||
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Income before Provision for
Income Taxes and
Non-Controlling Interest |
9,760 | 6,409 | 27,814 | 16,879 | ||||||||||||
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Provision for Income Taxes
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3,372 | 2,489 | 8,674 | 5,366 | ||||||||||||
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Net Income
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$ | 6,388 | $ | 3,920 | $ | 19,140 | $ | 11,513 | ||||||||
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Net Income Attributable
to Non-Controlling Interest |
649 | 703 | 2,716 | 2,138 | ||||||||||||
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Net Income Attributable
to STRATTEC SECURITY CORPORATION
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$ | 5,739 | $ | 3,217 | $ | 16,424 | $ | 9,375 | ||||||||
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Earnings Per Share:
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Basic
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$ | 1.62 | $ | 0.94 | $ | 4.70 | $ | 2.77 | ||||||||
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Diluted
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$ | 1.58 | $ | 0.92 | $ | 4.59 | $ | 2.72 | ||||||||
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Average Basic
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Shares Outstanding
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3,476 | 3,356 | 3,428 | 3,327 | ||||||||||||
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Average Diluted
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Shares Outstanding
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3,571 | 3,433 | 3,513 | 3,379 | ||||||||||||
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Other
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Capital Expenditures
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$ | 3,431 | $ | 4,710 | $ | 12,812 | $ | 12,515 | ||||||||
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Depreciation & Amortization
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$ | 2,054 | $ | 2,116 | $ | 8,267 | $ | 7,490 | ||||||||
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STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
| June 29, 2014 | June 30, 2013 | |||||||
| (Unaudited) | ||||||||
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ASSETS
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Current Assets:
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Cash and cash equivalents
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$ | 19,756 | $ | 20,307 | ||||
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Receivables, net
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68,822 | 47,514 | ||||||
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Inventories, net
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30,502 | 24,312 | ||||||
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Other current assets
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16,559 | 14,366 | ||||||
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Total Current Assets
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135,639 | 106,499 | ||||||
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Investment in Joint Ventures
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9,977 | 9,166 | ||||||
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Other Long Term Assets
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11,639 | 2,420 | ||||||
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Property, Plant and Equipment, Net
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55,781 | 51,415 | ||||||
| $ | 213,036 | $ | 169,500 | |||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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Current Liabilities:
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Accounts Payable
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$ | 36,053 | $ | 25,543 | ||||
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Borrowings Under Credit Facility
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- | 2,250 | ||||||
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Other
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29,210 | 22,932 | ||||||
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Total Current Liabilities
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65,263 | 50,725 | ||||||
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Accrued Pension and Post Retirement Obligations
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3,842 | 4,181 | ||||||
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Borrowings Under Credit Facility
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2,500 | - | ||||||
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Deferred Income Taxes
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5,127 | 1,009 | ||||||
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Other Long-term Liabilities
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1,401 | 1,705 | ||||||
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Shareholders’ Equity
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281,623 | 262,368 | ||||||
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Accumulated Other Comprehensive Loss
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(20,198 | ) | (22,212 | ) | ||||
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Less: Treasury Stock
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(135,919 | ) | (135,938 | ) | ||||
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Total STRATTEC SECURITY
CORPORATION Shareholders’ Equity
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125,506 | 104,218 | ||||||
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Non-Controlling Interest
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9,397 | 7,662 | ||||||
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Total Shareholders’ Equity
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134,903 | 111,880 | ||||||
| $ | 213,036 | $ | 169,500 | |||||
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STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
| Fourth Quarter Ended | Years Ended | |||||||||||||||
| June 29, 2014 | June 30, 2013 | June 29, 2014 | June 30, 2013 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
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Cash Flows from Operating Activities:
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Net Income
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$ | 6,388 | $ | 3,920 | $ | 19,140 | $ | 11,513 | ||||||||
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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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(99 | ) | (177 | ) | (957 | ) | 225 | |||||||||
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Depreciation and Amortization
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2,054 | 2,116 | 8,267 | 7,490 | ||||||||||||
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Foreign Currency Transaction Loss (Gain)
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110 | (905 | ) | 36 | 395 | |||||||||||
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Unrealized Loss (Gain) on Foreign Currency
Option Contracts
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- | 29 | - | (395 | ) | |||||||||||
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Deferred Income Taxes
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1,447 | 3,847 | 1,447 | 3,847 | ||||||||||||
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Stock Based Compensation Expense
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248 | 306 | 1,128 | 1,062 | ||||||||||||
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Loss on Settlement of Pension Obligation
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- | - | - | 2,144 | ||||||||||||
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Change in Operating Assets/Liabilities
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(8,113 | ) | (1,455 | ) | (17,828 | ) | (10,743 | ) | ||||||||
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Other, net
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172 | 55 | 286 | 127 | ||||||||||||
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Net Cash Provided by Operating Activities
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2,207 | 7,736 | 11,519 | 15,665 | ||||||||||||
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Cash Flows from Investing Activities:
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Investment in Joint Ventures
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- | (765 | ) | - | (965 | ) | ||||||||||
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Additions to Property, Plant and Equipment
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(3,431 | ) | (4,710 | ) | (12,812 | ) | (12,515 | ) | ||||||||
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Proceeds from Sale of Property, Plant and Equipment
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25 | 5 | 71 | 91 | ||||||||||||
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Other
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- | - | (285 | ) | - | |||||||||||
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Net Cash Used in Investing Activities
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(3,406 | ) | (5,470 | ) | (13,026 | ) | (13,389 | ) | ||||||||
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Cash Flows from Financing Activities:
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Borrowings Under Credit Facility
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- | 750 | 1,250 | 3,250 | ||||||||||||
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Repayments Under Credit Facility
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- | - | (1,000 | ) | (1,000 | ) | ||||||||||
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Dividends Paid
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(390 | ) | - | (1,542 | ) | (1,352 | ) | |||||||||
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Dividends Paid to Non-Controlling Interest Of Subsidiaries
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- | - | (984 | ) | (1,331 | ) | ||||||||||
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Excess Tax Benefits from Stock Based Compensation
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40 | 206 | 495 | 270 | ||||||||||||
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Exercise of Stock Options and Employee Stock Purchases
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769 | 557 | 2,742 | 823 | ||||||||||||
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Net Cash Provided by Financing Activities
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419 | 1,513 | 961 | 660 | ||||||||||||
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Foreign Currency Impact on Cash
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42 | 273 | (5 | ) | (116 | ) | ||||||||||
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Net (Decrease) Increase in Cash & Cash Equivalents
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(738 | ) | 4,052 | (551 | ) | 2,820 | ||||||||||
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Cash and Cash Equivalents:
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Beginning of Period
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20,494 | 16,255 | 20,307 | 17,487 | ||||||||||||
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End of Period
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$ | 19,756 | $ | 20,307 | $ | 19,756 | $ | 20,307 | ||||||||
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