strattecjuly312007form8-k.htm
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):  July 31, 2007

STRATTEC SECURITY CORPORATION
(Exact name of registrant as specified in its charter)

Wisconsin
(State or other jurisdiction of incorporation)

0-25150
 
39-1804239
(Commission File Number)
 
(I.R.S. Employer I.D. Number)

3333 West Good Hope Road
Milwaukee, WI
 
 
53209
(Address of Principal Executive Offices)
 
(Zip Code)

(414) 247-3333
(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 July 31, 2007, STRATTEC SECURITY CORPORATION issued a press release (the "Press Release") announcing results for the fiscal fourth quarter and fiscal year ended July 1, 2007.  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.

(c)           Exhibits

99.1 -- Press Release of STRATTEC SECURITY CORPORATION, issued July 31, 2007.



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 1, 2007
BY  /s/ Patrick J. Hansen                                                                                                    
Patrick J. Hansen, Senior Vice President
and Chief Financial Officer
 
 
 



ex-99.htm
 
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 – July 31, 2007 -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal fourth quarter ended July 1, 2007.

Net sales for the Company’s three months ended July 1, 2007 were $46.1 million, compared to net sales of $46.6 million for the three months ended July 2, 2006.  Net income for the period was $3.4 million, compared to $4.0 million in the prior year quarter.  Diluted earnings per share for the period were $.97 compared to $1.08 in the prior year quarter.   During the prior year quarter, the Company received a $961,000 ($605,000 after tax) customer reimbursement for costs incurred related to a production capacity constraints that the Company had expensed during previous reporting periods.  This reimbursement increased the prior year quarterly diluted earnings per share by $.17.  In addition, both the current year quarter and the prior year quarter results included favorable income tax adjustments that increased diluted earnings per share by $.31 and $.22, respectively.
 
For the fiscal year ended July 1, 2007, net sales were $167.7 million compared to net sales of $181.2 million in the prior year period.  Net income was $8.2 million compared to $12.5 million and diluted earnings per share were $2.30 compared to $3.35 in the prior year.

Sales to STRATTEC’s largest customers overall decreased in the current quarter compared to the prior year quarter levels.  Sales to DaimlerChrysler Corporation were essentially flat between years at $15.4 million in the current quarter compared to $15.2 million in the prior year quarter.  Sales to General Motors Corporation were $10.9 million compared to $8.3 million due to higher product content on certain GM vehicles and takeover of certain passenger car lockset production from another supplier.  Sales to Delphi Corporation were $4.9 million compared to $6.7 million due primarily to reduced component content and lower production volumes.  Sales to Ford Motor Company were $6.4 million compared to $7.0 million due to lower Ford vehicle production volumes.  Sales to Mitsubishi Motor Manufacturing of America were $89,000 compared to $1.2 million due to the previously announced phase-out of this customer relationship.
 



Gross profit margins were 17.0 percent in the current quarter compared to 20.6 percent in the prior year quarter.   The lower gross profit margins in the current year quarter compared to the prior year quarter were primarily the result of the customer reimbursement previously noted that favorably increased the prior year gross profit margin by 2.1%.  The remaining decrease was attributed to lower overhead absorption of our manufacturing costs due to reduced production related to modest customer demand and a reduction in inventory between the current quarter compared to the prior year quarter.
 
Operating expenses were $5.3 million in the current quarter, compared to $5.8 million in the prior year quarter.

Provision for income taxes in both the current and previous year quarters were not our normal effective income tax rate of 37%.   The current year quarter included a favorable adjustment primarily relating to foreign taxes that positively impacted diluted earnings per share by $.31 and the prior year quarter included a State refund claim recovery and a favorable foreign tax adjustment that increased diluted earnings per share by $.22.

During the fourth quarter, the Company repurchased 24,313 STRATTEC SECURITY CORPORATION shares under the Company’s stock repurchase program at a cost of $1,153,000.  For the year ended July 1, 2007, a total of 126,213 shares were repurchased at a cost of $5,075,000.


STRATTEC designs, develops, manufacturers and markets mechanical locks and keys, electronically enhanced locks and keys, steering column and instrument panel ignition lock housings, latches and related access control products for North American automotive customers, and for global automotive manufacturers through the VAST Alliance in which it participates with WITTE Automotive of Velbert, Germany and ADAC Plastics, Inc. of Grand Rapids, Michigan.  The Company’s history in the automotive business spans nearly 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.  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)

 
   
Fourth Quarter Ended   
 
 
Years Ended   
 
   
July 1, 2007
   
July 2, 2006
   
July 1, 2007
   
July 2, 2006
 
   
 (Unaudited)
   
 (Unaudited)
       
                         
Net Sales
  $
46,097
    $
46,551
    $
167,707
    $
181,197
 
Cost of Goods Sold
   
38,279
     
36,943
     
141,213
     
144,151
 
Gross Profit
   
7,818
     
9,608
     
26,494
     
37,046
 
                                 
Engineering, Selling &
                               
  Administrative Expenses
   
5,307
     
5,821
     
20,189
     
22,067
 
Provision for Doubtful Accounts
   
-
   
-
   
-
     
1,622
 
Income from Operations
   
2,511
     
3,787
     
6,305
     
13,357
 
                                 
Interest Income
   
905
     
830
     
3,611
     
2,563
 
Interest Expense
   
-
     
-
     
-
     
-
 
Other Income (Expense), Net
   
225
     
388
     
715
     
960
 
Minority Interest
 
50
   
-
   
75
   
-
 
     
3,691
     
5,005
     
10,706
     
16,880
 
                                 
Provision for Income Taxes
   
257
     
1,040
     
2,523
     
4,403
 
                                 
Net Income
  $
3,434
    $
3,965
    $
8,183
    $
12,477
 
                                 
Earnings Per Share:
                               
Basic
  $
.97
    $
1.08
    $
2.30
    $
3.36
 
Diluted
  $
.97
    $
1.08
    $
2.30
    $
3.35
 
Average Basic
                               
  Shares Outstanding
   
3,536
     
3,650
     
3,552
     
3,716
 
                                 
Average Diluted
                               
  Shares Outstanding
   
3,539
     
3,653
     
3,555
     
3,720
 
                                 
Other
                               
  Capital Expenditures
  $
2,103
    $
1,043
    $
5,748
    $
5,766
 
  Depreciation & Amortization
  $
1,772
    $
1,766
    $
6,988
    $
7,155
 

 
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STRATTEC SECURITY CORPORATION

Condensed Balance Sheet Data
(In Thousands)
 

   
July 1, 2007
   
July 2, 2006
 
   
(Unaudited)
       
ASSETS
           
  Current Assets:
           
    Cash and cash equivalents
  $
65,491
    $
65,712
 
    Receivables, net
   
26,890
     
28,254
 
    Inventories
   
7,166
     
9,337
 
    Other current assets
   
13,017
     
10,468
 
         Total Current Assets
   
112,564
     
113,771
 
  Deferred Income Taxes
   
2,117
     
-
 
  Investment in Joint Venture
   
2,813
     
2,202
 
  Prepaid Pension Cost (A)
   
4,385
     
10,358
 
  Other Long Term Assets
   
41
     
197
 
  Property, Plant and Equipment, Net
   
26,526
     
27,764
 
    $
148,446
    $
154,292
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
           
  Current Liabilities:
           
    Accounts Payable
  $
16,575
    $
17,701
 
    Other
   
14,906
     
15,806
 
      Total Current Liabilities
   
31,481
     
33,507
 
  Borrowings Under Line of Credit Facility
   
-
     
-
 
  Deferred Income Taxes
   
-
     
4,266
 
  Accrued Pension and Post Retirement Obligations (A)
   
13,431
     
6,244
 
  Minority Interest
   
574
     
-
 
  Shareholders’ Equity
   
244,119
     
234,989
 
  Accumulated Other Comprehensive Loss
    (14,341 )     (2,958 )
  Less:  Treasury Stock
    (126,818 )     (121,756 )
         Total Shareholders’ Equity
   
102,960
     
110,275
 
    $
148,446
    $
154,292
 

 
(A)Includes $19.2 million of unrecognized pension and postretirement liabilities recorded at year end 2007 in accordance with SFAS No. 158 and $242,000 of additional minimum pension liability recorded during the fourth quarter of 2006.
 
 
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STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)


   
Fourth Quarter Ended  
   
  Years Ended   
 
   
July 1, 2007
   
July 2, 2006
   
July 1, 2007
   
July 2, 2006
 
   
(Unaudited)  
   
 (Unaudited)
       
                         
Cash Flows from Operating Activities:
                       
Net Income
  $
3,434
    $
3,965
    $
8,183
    $
12,477
 
Adjustment to Reconcile Net Income to
                               
Cash Used in Operating Activities:
                               
    Minority Interest
    (50 )    
-
      (75 )    
-
 
    Depreciation and Amortization
   
1,772
     
1,766
     
6,988
     
7,155
 
    Deferred Income Taxes
    (359 )    
350
      (359 )    
350
 
    Stock Based Compensation Expense
   
172
     
257
     
738
     
1,118
 
    Tax Benefit from Options Exercised
   
10
     
-
     
23
     
61
 
    Provision for Doubtful Accounts
   
-
     
-
     
-
     
1,622
 
    Change in Operating Assets/Liabilities
   
685
     
1,148
      (5,609 )     (3,322 )
    Other, net
    (50 )     (172 )     (95 )     (166 )
                                 
Net Cash Provided by Operating Activities
   
5,614
     
7,314
     
9,794
     
19,295
 
                                 
Cash Flows from Investing Activities:
                               
Investment in Joint Ventures
   
-
      (519 )     (100 )     (569 )
Additions to Property, Plant and Equipment
    (2,103 )     (1,043 )     (5,748 )     (5,766 )
Proceeds from Sale of Property, Plant
                               
    and Equipment
   
-
     
-
     
21
     
22
 
Net Cash Used in Investing Activities
    (2,103 )     (1,562 )     (5,827 )     (6,313 )
                                 
Cash Flow from Financing Activities:
                               
Purchase of Common Stock
    (1,153 )     (2,313 )     (5,075 )     (5,306 )
Contribution from Minority Interest
   
375
     
-
     
649
     
-
 
Reissue/Exercise of Stock Options
   
139
     
9
     
238
     
1,086
 
                                 
Net Cash Used in Financing Activities
    (639 )     (2,304 )     (4,188 )     (4,220 )
                                 
Net Increase (Decrease) in Cash & Cash Equivalents
   
2,872
     
3,448
      (221 )    
8,762
 
                                 
Cash and Cash Equivalents:
                               
Beginning of Period
   
62,619
     
62,264
     
65,712
     
56,950
 
End of Period
  $
65,491
    $
65,712
    $
65,491
    $
65,712
 

 
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