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 4, 2009
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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 |
39-1804239 | |
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(Commission File Number) |
(I.R.S. Employer I.D. Number) |
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3333 West Good Hope Road
Milwaukee, WI |
53209 | |
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(Address of Principal Executive Offices) |
(Zip Code) |
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(414) 247-3333 |
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(Registrant's telephone number; including area code) |
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 4, 2009, STRATTEC SECURITY CORPORATION issued a press release (the "Press Release") announcing results for the fiscal fourth quarter and year ended June 28, 2009. 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 4, 2009.
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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, 2009
BY /s/ Patrick J. Hansen
Patrick J. Hansen, Senior Vice President and
Chief Financial Officer
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Exhibit 99.1
FOR RELEASE AT 3:00 PM CDT
Contact: Pat Hansen
Senior Vice President and
Chief Financial Officer
414-247-3435
www.strattec.com
STRATTEC SECURITY CORPORATION
REPORTS FISCAL FOURTH QUARTER RESULTS
Milwaukee, Wisconsin – August 4, 2009 -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal fourth quarter ended June 28, 2009.
Net sales for the Company’s fourth quarter ended June 28, 2009 were $28.2 million, compared to net sales of $38.6 million for the prior year quarter ended June 29, 2008. Net loss for the period was $2.1 million, compared to net loss of $907,000 in the prior year quarter. Diluted loss per share for the period
was $.65 compared to diluted loss per share of $.26 in the prior year quarter. In both the current and prior year quarter, sales were significantly impacted by customer assembly plant shutdowns.
In the current quarter, our two largest customers, Chrysler LLC and General Motors Corporation, filed for Chapter 11 bankruptcy protection for their U.S. legal entities. Chrysler’s filing occurred on April 30th, and General Motors filed on June
1st. Within days of its filing, Chrysler took the unusual step of shutting down all of its North American manufacturing facilities for the months of May and June. This development was on top of previously announced GM plant shutdowns idling a significant amount of its North American plant capacity for the purpose of reducing its retail inventory of new vehicles. May and June were therefore extremely
slow sales months for STRATTEC, each nearly 45% below our April sales levels. This slowness extended into July, the first month of our next fiscal year.
The bankruptcy filings had little affect on our receivables with Chrysler and GM, as both Companies were able to continue making payments to suppliers for parts they had purchased prior to their bankruptcy filings. We increased our reserve for doubtful accounts at the end of our fiscal third quarter by $500,000 in anticipation
of difficulties collecting on our outstanding receivables from Chrysler. While a majority of our receivables from both Chrysler and GM have been paid under normal terms, there remain some pre-bankruptcy receivable balances still outstanding. We expect these to be resolved or adequately accounted for through the reserve taken in the third quarter. Subsequently, both Companies emerged from bankruptcy and started to resume production in July.
During the prior year quarter, a strike by a major supplier to General Motors resulted in temporary closure of several vehicle plants we supplied during the months of April and May 2008. In addition, during the latter half of the prior year quarter, gasoline prices exceeded $4.00/gallon, which significantly changed consumer preferences
away from larger vehicles causing our major customers to re-align their production schedules and mix, depressing our sales and production.
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The sales decreases in the current quarter were experienced across all of our largest customers. Sales to Chrysler LLC were $5.8 million in the current quarter compared to $9.9 million in the prior year quarter. Included in the current quarter were $3.1 million of sales generated by STRATTEC POWER ACCESS, offset
by a combination of lower vehicle production volume and reduced component content in the security products we supply. Sales to General Motors Corporation were $8.4 million compared to $10.4 million. Sales to Ford Motor Company were $3.8 million compared to $4.5 million, and sales to Delphi Corporation were $1.1 million compared to $3.3 million. For each of these three customers our decreased sales were a result of lower production volumes for the vehicles we supply.
Gross profit margins were 10.1 percent in the current quarter compared to 9.6 percent in the prior year quarter. The gross profit margins in both the current year quarter and prior year quarter were significantly impacted by our customers’ reduced vehicle production volumes which lowered the absorption of our fixed
manufacturing costs. The current quarter was favorably impacted by lower purchased material costs for both zinc and brass along with a favorable Mexico Peso to U.S. dollar exchange rate affecting the Company’s operations in Mexico. During the prior year quarter, there were also two unusual items: a lump sum bonus paid to the Company’s Milwaukee represented hourly workers resulting from a 4-year labor contract ratified in June, 2008; and the disposal of a customer-specific
fixed asset that was no longer in service. Together these two unusual items increased the prior years quarter diluted loss per share by $.11.
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Operating expenses were $5.7 million in the current quarter, compared to $6.2 million in the prior year quarter. The decreased spending is attributed to a $340,000 recovery of patent defense costs from a third party relating to outside legal costs expensed in previous reported periods. The current quarter also
included the expense of STRATTEC POWER ACCESS engineering personnel that were hired at the end of our second fiscal quarter. These added costs were offset primarily by a 10% reduction in our U.S. salaried work force and reduced 401k match for salaried associates implemented in January 2009. During the latter half of the current quarter, we also implemented a salary reduction for our U.S. salaried associates and temporary work furloughs that had a modest positive effect on the quarter results. We
anticipate these actions will have more of an effect on the upcoming quarter results.
Reflecting the deepest recession to impact the U.S. and global economies since the Great Depression, and the well-publicized difficulties in the U.S. auto industry of which STRATTEC is a part, net sales for the fiscal year ended June 28, 2009 were $126.1 million compared to net sales of $159.6 million in the prior fiscal year. Net
loss was $6.1 million or diluted loss per share of $1.86 compared to net income of $2.8 million or diluted earnings per share of $.80 in the prior year.
During the current quarter, we changed our method for accounting for inventories from last-in, first out (LIFO) to first-in, first out (FIFO). Both the current and prior year reported information was retrospectively adjusted on a FIFO basis in accordance with Statement of Financial Accounting Standards No. 154.
STRATTEC designs, develops, manufactures and markets automotive Security Products, including mechanical locks and keys, electronically enhanced locks and keys, steering column and instrument panel ignition lock housings; and Access Control Products including latches, power sliding side door
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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 100 years.
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. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and the Company undertakes
no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances occurring after the date of this release. In addition, such uncertainties and other operational matters are discussed further in the Company’s quarterly and annual filings with the Securities and Exchange Commission.
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STRATTEC SECURITY CORPORATION
Results of Operations
(In Thousands except per share amounts)
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Fourth Quarter Ended |
Years Ended |
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June 28, 2009 |
June 29, 2008 |
June 28, 2009 |
June 29, 2008 |
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(Unaudited) |
(Note A) |
(Unaudited) | (Note A) | |||||||||||||
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Net Sales |
$ | 28,219 | $ | 38,567 | $ | 126,097 | $ | 159,642 | ||||||||
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Cost of Goods Sold |
25,377 | 34,867 | 112,857 | 134,875 | ||||||||||||
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Gross Profit |
2,842 | 3,700 | 13,240 | 24,767 | ||||||||||||
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Engineering, Selling & |
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Administrative Expenses |
5,684 | 6,222 | 25,480 | 23,962 | ||||||||||||
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Provision for Doubtful Accounts |
- | - | 500 | - | ||||||||||||
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(Loss) Income from Operations |
(2,842 | ) | (2,522 | ) | (12,740 | ) | 805 | |||||||||
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Interest Income |
38 | 405 | 731 | 2,749 | ||||||||||||
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Other Income (Expense), Net |
1 | (178 | ) | 885 | 230 | |||||||||||
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Minority Interest |
187 | (146 | ) | 801 | (76 | ) | ||||||||||
| (2,616 | ) | (2,441 | ) | (10,323 | ) | 3,708 | ||||||||||
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(Benefit) Provision for Income |
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Taxes |
(498 | ) | (1,534 | ) | (4,201 | ) | 927 | |||||||||
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Net (Loss) Income |
$ | (2,118 | ) | $ | (907 | ) | $ | (6,122 | ) | $ | 2,781 | |||||
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(Loss) Earnings Per Share: |
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Basic |
$ | (0.65 | ) | $ | (0.26 | ) | $ | (1.87 | ) | $ | 0.80 | |||||
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Diluted |
$ | (0.65 | ) | $ | (0.26 | ) | $ | (1.86 | ) | $ | 0.80 | |||||
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Average Basic |
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Shares Outstanding |
3,262 | 3,449 | 3,280 | 3,487 | ||||||||||||
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Average Diluted |
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Shares Outstanding |
3,266 | 3,457 | 3,284 | 3,494 | ||||||||||||
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Other |
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Capital Expenditures |
$ | 1,563 | $ | 2,443 | $ | 12,492 | $ | 10,930 | ||||||||
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Depreciation & Amortization |
$ | 1,736 | $ | 1,669 | $ | 6,264 | $ | 6,830 | ||||||||
NOTE A: Prior year balances have been restated to reflect the change from LIFO to FIFO accounting for inventories.
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STRATTEC SECURITY CORPORATION
Condensed Balance Sheet Data
(In Thousands)
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June 28, 2009 |
June 29, 2008 |
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(Unaudited) |
(Note A) |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
$ | 22,764 | $ | 51,501 | ||||
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Receivables, net |
17,235 | 23,518 | ||||||
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Inventories |
16,589 | 14,314 | ||||||
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Other current assets |
15,970 | 16,441 | ||||||
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Total Current Assets |
72,558 | 105,774 | ||||||
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Deferred Income Taxes |
13,143 | 3,684 | ||||||
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Investment in Joint Venture |
4,483 | 3,642 | ||||||
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Prepaid Pension Cost |
- | 758 | ||||||
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Other Long Term Assets |
1,069 | 27 | ||||||
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Property, Plant and Equipment, Net |
36,936 | 30,336 | ||||||
| $ | 128,189 | $ | 144,221 | |||||
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current Liabilities: |
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Accounts Payable |
$ | 11,369 | 15,974 | |||||
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Other |
$ | 19,479 | 16,965 | |||||
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Total Current Liabilities |
30,848 | 32,939 | ||||||
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Borrowings Under Line of Credit Facility |
- | - | ||||||
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Accrued Pension and Post Retirement Obligations |
24,784 | 12,389 | ||||||
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Minority Interest |
1,139 | 953 | ||||||
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Shareholders’ Equity |
238,601 | 245,351 | ||||||
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Accumulated Other Comprehensive Loss |
(31,094 | ) | (17,495 | ) | ||||
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Less: Treasury Stock |
(136,089 | ) | (129,916 | ) | ||||
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Total Shareholders’ Equity |
71,418 | 97,940 | ||||||
| $ | 128,189 | $ | 144,221 | |||||
NOTE A: Prior year balances have been restated to reflect the change from LIFO to FIFO accounting for inventories.
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STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
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Fourth Quarter Ended |
Years Ended |
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June 28, 2009 |
June 29, 2008 |
June 28, 2009 |
June 29, 2008 |
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(Unaudited) |
Note A |
(Unaudited) |
Note A |
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Cash Flows from Operating Activities: |
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Net (Loss) Income |
$ | (2,118 | ) | $ | (907 | ) | $ | (6,122 | ) | $ | 2,781 | |||||
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Adjustment to Reconcile Net (Loss) Income to |
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Cash Provided (Used) in Operating Activities: |
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Minority Interest |
(180 | ) | 136 | (780 | ) | 25 | ||||||||||
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Depreciation and Amortization |
1,736 | 1,669 | 6,264 | 6,830 | ||||||||||||
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Foreign Currency Transaction Loss (Gain) |
315 | 243 | (918 | ) | 320 | |||||||||||
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Deferred Income Taxes |
(2,986 | ) | 622 | (2,986 | ) | 622 | ||||||||||
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Stock Based Compensation Expense |
110 | 125 | 419 | 741 | ||||||||||||
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Provision for Doubtful Accounts |
- | - | 500 | - | ||||||||||||
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Change in Operating Assets/Liabilities |
5,195 | (6,006 | ) | (3,024 | ) | (7,104 | ) | |||||||||
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Other, net |
8 | 20 | (189 | ) | (398 | ) | ||||||||||
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Net Cash Provided (Used) in Operating Activities |
2,080 | (4,098 | ) | (6,836 | ) | 3,817 | ||||||||||
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Cash Flows from Investing Activities: |
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Investment in Joint Ventures |
(163 | ) | - | (551 | ) | - | ||||||||||
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Purchase of Delphi Power Products |
- | - | (4,931 | ) | - | |||||||||||
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Additions to Property, Plant and Equipment |
(1,563 | ) | (2,443 | ) | (12,492 | ) | (10,930 | ) | ||||||||
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Proceeds from Sale of Property, Plant and Equipment |
8 | - | 8 | - | ||||||||||||
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Net Cash Used in Investing Activities |
(1,718 | ) | (2,443 | ) | (17,966 | ) | (10,930 | ) | ||||||||
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Cash Flow from Financing Activities: |
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Purchase of Common Stock |
- | (775 | ) | (6,214 | ) | (3,109 | ) | |||||||||
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Dividends Paid |
- | (524 | ) | (1,511 | ) | (5,133 | ) | |||||||||
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Loan from Minority Interest |
- | 250 | 2,175 | 1,050 | ||||||||||||
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Contribution from Minority Interest |
- | - | 986 | 349 | ||||||||||||
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Exercise of Stock Options and Employee |
||||||||||||||||
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Stock Purchases |
10 | 9 | 40 | 30 | ||||||||||||
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Net Cash Provided (Used) in Financing Activities |
10 | (1,040 | ) | (4,524 | ) | (6,813 | ) | |||||||||
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Foreign Currency Impact on Cash |
(206 | ) | (48 | ) | 589 | (64 | ) | |||||||||
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Net Increase (Decrease) in Cash & Cash Equivalents |
166 | (7,629 | ) | (28,737 | ) | (13,990 | ) | |||||||||
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Cash and Cash Equivalents: |
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Beginning of Period |
22,598 | 59,130 | 51,501 | 65,491 | ||||||||||||
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End of Period |
$ | 22,764 | $ | 51,501 | $ | 22,764 | $ | 51,501 | ||||||||
NOTE A: Prior year balances have been restated to reflect the change from LIFO to FIFO accounting for inventories.
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