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): October 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 October 27, 2011, STRATTEC SECURITY CORPORATION issued a press release (the "Press Release") announcing results for the fiscal first quarter ended October 2, 2011. 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 October 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: October 27, 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 CDT
Contact: Pat Hansen
Senior Vice President and
Chief Financial Officer
414-247-3435
www.strattec.com
STRATTEC SECURITY CORPORATION
REPORTS FISCAL 2012 FIRST QUARTER RESULTS
Milwaukee, Wisconsin – October 27, 2011 -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal first quarter ended October 2, 2011.
Net sales for the Company’s first quarter ended October 2, 2011 were $66.4 million, compared to net sales of $59.8 million for the prior year quarter ended September 26, 2010. Net income for the current year quarter was $1,282,000, compared to net income of $1,418,000 in the prior year quarter. Diluted earnings per share for the current quarter were $.39 compared to diluted earnings per share of $.43 in the prior year quarter.
Overall sales to STRATTEC’s largest customers increased in the current quarter compared to the prior year quarter levels primarily due to higher customer vehicle production volumes. Sales to Chrysler Group LLC were $19.8 million in the current quarter compared to $19.6 million in the prior year quarter. Sales to General Motors Company were $16.1 million in the current quarter compared to $14.8 million in the prior year quarter. Included in the prior year quarter sales to General Motors were $1.7 million of sales to Nexteer Automotive, formerly a unit of General Motors. Sales to Ford Motor Company were $8.3 million in the current quarter compared to $5.5 million in the prior year quarter. Net sales to Hyundai/Kia were $3.8 million in the current quarter compared to $4.3 million in the prior year quarter, a reduction of $0.5 million primarily due to lower vehicle production in the current quarter.
The gross profit margin was 17.3 percent in the current quarter compared to 17.0 percent in the prior year quarter. The higher gross profit margin in the current year quarter was largely the result of higher customer vehicle production volumes which increased overhead absorption of STRATTEC’s manufacturing costs. Items negatively impacting the current quarter gross margin were an unfavorable Mexico peso to U.S. dollar exchange rate affecting the Company’s operations in Mexico for most of the quarter, a less favorable product content sales mix and higher purchased raw material costs for zinc and brass.
Operating expenses were essentially flat at $8.2 million in both the current quarter and prior year quarter.
Included in Other (Expense) Income in the current quarter compared to the prior year quarter were the following items (in thousands of dollars):
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October 2,
2011
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September 26,
2010
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Foreign Currency Transaction Gain (Loss)
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$ | 1,699 | $ | (31 | ) | |||
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Unrealized Loss on Mexican Peso Option Contracts
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(2,305 | ) | - | |||||
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Rabbi Trust (Loss) Gain
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(241 | ) | 124 | |||||
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Equity (Loss) Earnings of VAST LLC Joint Venture
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(120 | ) | 422 | |||||
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Other
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(21 | ) | 106 | |||||
| $ | (988 | ) | $ | 621 | ||||
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Increase (Decrease) Diluted Earnings Per Share
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$ | (.13 | ) | $ | .11 | |||
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During the later part of the current quarter, the Mexican peso devalued significantly to the US dollar creating both transaction gains and unrealized losses on our Mexican peso currency option contracts entered into during the later half of fiscal 2011 and early 2012. Our objective in entering into these currency option contracts is to minimize our earnings volatility resulting from changes in exchange rates affecting the U.S. dollar cost of our Mexican operations. The unrealized loss recognized in the current quarter results from mark-to-market adjustments as of October 2, 2011 and may or may not be realized, depending on actual Mexican peso to US dollar exchange rates experienced during the balance of the fiscal year.
During the current quarter our joint ventures in China and Brazil both incurred relocation costs associated with moves to new facilities and start-up costs associated with a new product line. Both of these items caused STRATTEC to incur an equity loss from joint ventures in the current year quarter compared to the prior year quarter equity earnings from joint ventures. We anticipate these transition costs to continue over most of the remaining fiscal year.
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
Results of Operations
(In Thousands except per share amounts)
(Unaudited)
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First Quarter Ended
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October 2, 2011
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September 26, 2010
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Net Sales
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$ | 66,377 | $ | 59,849 | ||||
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Cost of Goods Sold
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54,873 | 49,696 | ||||||
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Gross Profit
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11,504 | 10,153 | ||||||
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Engineering, Selling & Administrative Expenses
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8,208 | 8,165 | ||||||
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Income from Operations
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3,296 | 1,988 | ||||||
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Interest Income
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17 | 23 | ||||||
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Interest Expense-Related Parties
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(31 | ) | (51 | ) | ||||
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Other (Expense) Income, Net
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(988 | ) | 621 | |||||
| 2,294 | 2,581 | |||||||
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Provision for Income
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Taxes
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321 | 801 | ||||||
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Net Income
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1,973 | 1,780 | ||||||
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Net Income Attributable to Non-Controlling Interest
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(691 | ) | (362 | ) | ||||
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Net Income Attributable to STRATTEC SECURITY CORPORATION
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$ | 1,282 | $ | 1,418 | ||||
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Earnings Per Share:
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Basic
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$ | 0.39 | $ | 0.43 | ||||
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Diluted
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$ | 0.39 | $ | 0.43 | ||||
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Average Basic Shares Outstanding
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3,294 | 3,280 | ||||||
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Average Diluted Shares Outstanding
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3,326 | 3,299 | ||||||
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Other
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Capital Expenditures
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$ | 3,492 | $ | 1,776 | ||||
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Depreciation & Amortization
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$ | 1,652 | $ | 1,638 | ||||
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STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
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October 2, 2011
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July 3, 2011
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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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$ | 13,188 | $ | 17,250 | ||||
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Receivables, net
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41,232 | 39,649 | ||||||
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Inventories
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24,312 | 22,135 | ||||||
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Other current assets
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15,120 | 15,368 | ||||||
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Total Current Assets
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93,852 | 94,402 | ||||||
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Deferred Income Taxes
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3,945 | 3,639 | ||||||
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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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7,293 | 7,276 | ||||||
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Other Long Term Assets
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610 | 635 | ||||||
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Property, Plant and Equipment, Net
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40,781 | 40,636 | ||||||
| $ | 147,981 | $ | 148,088 | |||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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Current Liabilities:
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Accounts Payable
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$ | 24,906 | $ | 22,851 | ||||
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Other
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26,333 | 28,137 | ||||||
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Total Current Liabilities
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51,239 | 50,988 | ||||||
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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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6,995 | 7,036 | ||||||
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Other Long Term Liabilities
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804 | - | ||||||
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Shareholders’ Equity
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245,102 | 243,974 | ||||||
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Accumulated Other Comprehensive Loss
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(24,619 | ) | (21,750 | ) | ||||
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Less: Treasury Stock
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(136,000 | ) | (136,009 | ) | ||||
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Total STRATTEC SECURITY CORPORATION Shareholders’ Equity
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84,483 | 86,215 | ||||||
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Non-Controlling Interest
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4,460 | 3,849 | ||||||
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Total Shareholders’ Equity
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88,943 | 90,064 | ||||||
| $ | 147,981 | $ | 148,088 | |||||
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STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
(Unaudited)
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First Quarter Ended
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October 2, 2011
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September 26, 2010
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Cash Flows from Operating Activities:
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Net Income
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$ | 1,973 | $ | 1,780 | ||||
| Adjustment to Reconcile Net Income to Net Cash Used in Operating Activities: | ||||||||
| Equity Loss (Earnings) in Joint Venture | 120 | (422 | ) | |||||
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Depreciation and Amortization
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1,652 | 1,638 | ||||||
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Foreign Currency Transaction Loss (Gain)
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(1,699 | ) | 31 | |||||
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Unrealized Loss on Foreign Currency Option Contracts
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2,305 | - | ||||||
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Stock Based Compensation Expense
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174 | 143 | ||||||
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Change in Operating Assets/Liabilities
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(4,749 | ) | (5,453 | ) | ||||
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Other, net
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16 | 4 | ||||||
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Net Cash Used In Operating Activities
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(208 | ) | (2,279 | ) | ||||
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Cash Flows from Investing Activities:
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Purchase of Additional Interest in Minority Owned Subsidiaries
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- | (22 | ) | |||||
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Additions to Property, Plant and Equipment
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(3,492 | ) | (1,776 | ) | ||||
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Net Cash Used in Investing Activities
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(3,492 | ) | (1,798 | ) | ||||
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Cash Flow from Financing Activities:
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Dividends Paid
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(335 | ) | - | |||||
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Repayment of Loan to Related Parties
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(400 | ) | (500 | ) | ||||
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Exercise of Stock Options and Employee Stock Purchases
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16 | 13 | ||||||
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Net Cash Used In Financing Activities
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(719 | ) | (487 | ) | ||||
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Foreign Currency Impact on Cash
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357 | 19 | ||||||
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Net Decrease in Cash & Cash Equivalents
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(4,062 | ) | (4,545 | ) | ||||
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Cash and Cash Equivalents:
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Beginning of Period
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17,250 | 21,867 | ||||||
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End of Period
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$ | 13,188 | $ | 17,322 | ||||
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