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): January 29,
2009
|
STRATTEC
SECURITY CORPORATION
|
|
(Exact
name of registrant as specified in its
charter)
|
|
Wisconsin
|
|
(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)
|
(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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|
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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):
(17
CFR
230.425)
(17
CFR 240.14a-12)
Exchange Act (17 CFR 240.14d-2(b))
Exchange
Act (17 CFR 240.13e-4(c))
Section
2 – Financial Information
Item
2.02. Results
of
Operations and Financial Condition.
On
January
29, 2009, STRATTEC SECURITY CORPORATION
issued a
press release (the "Press Release") announcing results for the fiscal
second quarter
ended
December 28, 2008. 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 January 29,
2009.
2
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: January
30, 2009
BY
/s/ Patrick J.
Hansen
Patrick
J. Hansen
Senior
Vice President and
Chief
Financial Officer
3
Exhibit
99.1
FOR
RELEASE AT 3:00 PM CST
Contact: Pat
Hansen
Senior
Vice President and
Chief
Financial Officer
414-247-3435
www.strattec.com
STRATTEC
SECURITY CORPORATION
REPORTS
FISCAL SECOND QUARTER RESULTS
Milwaukee,
Wisconsin – January 29, 2009 -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT)
today reported operating results for the fiscal second quarter ended December
28, 2008.
Net
sales
for the Company’s second quarter ended December 28, 2008 were $33.8 million,
compared to net sales of $39.9 million for the second quarter ended December
30,
2007. Net loss for the period was $1.2 million, compared to net
income of $1.3 million in the prior year quarter. Diluted loss per
share for the period was $.38 compared to diluted earnings per share of $.38
in
the prior year quarter. The decline in sales and profitability during the
current quarter reflects the overall weakness in the US economy, and in
particular the sharp decline in vehicle sales and production during the quarter.
STRATTEC’s production volumes were down approximately 22% during the current
quarter, modestly better than the 26% overall decline in North American light
vehicle production volume. The current quarter results
include one month of STRATTEC POWER ACCESS operations. STRATTEC POWER
ACCESS is the new name of the business the Company acquired from Delphi
Corporation in a transaction that closed effective November 30,
2008.
For
the
six months ended December 28, 2008, net sales were $68.5 million compared to
net
sales of $82.6 million in the prior year period. Net loss was $1.2
million compared to net income of $3.7 million in the prior year period and
diluted loss per share was $.36 compared to diluted earnings per share of
$1.06.
Sales
to
STRATTEC’s largest customers overall were significantly lower in the current
quarter compared to the prior year quarter. Sales to General Motors
Corporation in the current quarter were $11.6 million compared to $11.9 million
in the prior year quarter due to the takeover of certain passenger car lockset
production from another supplier, offset by lower vehicle production volumes,
primarily for trucks and SUV’s. Sales to Chrysler LLC were $7.7
million compared to $10.0 million due to a combination of lower vehicle
production volume and reduced component content in the products we supply,
offset somewhat by $1.3 million of sales generated by STRATTEC POWER ACCESS
in
December. Sales to Ford Motor Company were $3.0 million compared to
$4.4 million and sales to Delphi Corporation were $2.0 million compared to
$3.8
million due to lower vehicle production volumes. Sales during the current
quarter were weaker than initially anticipated for the above four customers
due
to their additional production cut backs announced after the Thanksgiving
holiday. Subsequently, these customers extended their Christmas
holiday shutdown downtime and further reduced their production schedules that
will effect both our sales and profitability for the third fiscal quarter ending
March 28, 2009.
2
Gross profit margins were 8.5% in the current quarter compared to 17.3% in
the
prior year quarter. The year-over-year decrease in gross profit
margins was primarily attributed to reduced customer production volumes offset
by lower purchased material costs for zinc and brass along with a favorable
Mexico Peso to U.S. dollar exchange rate affecting the Company’s operations in
Mexico.
Operating
expenses were $6.7 million in the current quarter, compared to $5.8 million
in
the prior year quarter. The increased spending is attributed to
hiring STRATTEC POWER ACCESS engineering personnel, contracting with Delphi
for
temporary transition services related to the acquisition, and outside legal
costs incurred to defend a STRATTEC patent.
During
the current quarter, the Company contributed $3.0 million to its Pension
Fund. In addition, the Company completed construction on its new
manufacturing facility in Juarez, Mexico. Including land, the capital
expenditure for this new facility totaled approximately $7.3 million over the
last three quarters.
Harold
M.
Stratton II, Chairman, President & CEO commented: “We are
reacting to the unprecedented decline in the North American auto industry in
several ways. In our second quarter, we reduced our productive work
force at both our Milwaukee, Wisconsin and Juarez, Mexico facilities through
a
combination of temporary and permanent layoffs. We will continue to
adjust our productive work force in this way until the business improves or
stabilizes at a predictable level.
Since
the
beginning of our current fiscal year, we have not been replacing salaried
associates who retired or left the company through normal attrition, saving
nearly $1 million on an annualized basis. However, in November it
became clear that a larger adjustment needed to be made. On
January15, 2009, we reduced the U.S. salaried work force by
approximately 10%. Effective January 1, 2009, we also froze executive
officer salaries at their 2008 levels, and reduced the Company’s 401k match for
salaried associates. These changes will save approximately $2 million
more on an annualized basis, but will be offset during our third quarter with
a
charge to earnings of $350,000 for severance and outplacement
costs. Other cost reduction activities aimed at reducing general
overhead costs are in place.
3
With
the
November completion of our new manufacturing facility in Juarez, Mexico we
are
vacating two leased facilities in Juarez and Matamoros,
Mexico. During the current quarter, we incurred approximately
$132,000 of relocation costs to vacate a majority of the leased facility in
Juarez. We expect additional relocation costs to be incurred in the third
quarter to complete the moves out of both facilities. After the consolidation
of
the two facilities is completed we anticipate annual savings of approximately
$500,000.
While
there has not been much positive news lately coming out of the auto industry,
I
am pleased to report that a large volume ignition lock housing program
originally planned for our VAST Fuzhou joint venture plant in China will soon
be
sourced from our North American operations, providing additional sales and
increased production of this product line at both our Milwaukee and Juarez
facilities. Production for this program should begin late in the
current fiscal year, and if current forecasts are correct, it should enhance
sales by more than $12 million over the next two years.”
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 systems,
power lift gate systems, power deck lid systems 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.
4
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.
5
STRATTEC
SECURITY
CORPORATION
Results
of Operations
(In
Thousands except per share amounts)
(Unaudited)
|
Second
Quarter Ended
|
Six
Months Ended
|
|||||||||||||||
|
December
28, 2008
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December
30, 2007
|
December
28. 2008
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December
30. 2007
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|||||||||||||
|
Net
Sales
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$ | 33,799 | $ | 39,908 | $ | 68,530 | $ | 82,647 | ||||||||
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Cost
of Goods Sold
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30,919 | 33,002 | 60,208 | 67,347 | ||||||||||||
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Gross
Profit
|
2,880 | 6,906 | 8,322 | 15,300 | ||||||||||||
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Engineering,
Selling &
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||||||||||||||||
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Administrative
Expenses
|
6,669 | 5,838 | 12,621 | 11,631 | ||||||||||||
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(Loss)
Income from Operations
|
(3,789 | ) | 1,068 | (4,299 | ) | 3,669 | ||||||||||
|
Interest
Income
|
284 | 814 | 602 | 1,727 | ||||||||||||
|
Interest
Expense
|
- | - | - | - | ||||||||||||
|
Other
Income, Net
|
557 | 158 | 780 | 466 | ||||||||||||
|
Minority
Interest
|
293 | 69 | 111 | 118 | ||||||||||||
| (2,655 | ) | 2,109 | (2,806 | ) | 5,980 | |||||||||||
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Provision
(Benefit) for Income Taxes
|
(1,422 | ) | 786 | (1,611 | ) | 2,238 | ||||||||||
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Net
(Loss) Income
|
$ | (1,233 | ) | $ | 1,323 | $ | (1,195 | ) | $ | 3,742 | ||||||
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Earnings
(Loss) Per Share:
|
||||||||||||||||
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Basic
|
$ | (0.38 | ) | $ | 0.38 | $ | (0.36 | ) | $ | 1.07 | ||||||
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Diluted
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$ | (0.38 | ) | $ | 0.38 | $ | (0.36 | ) | $ | 1.06 | ||||||
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Average
Basic
|
||||||||||||||||
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Shares
Outstanding
|
3,264 | 3,506 | 3,298 | 3,513 | ||||||||||||
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Average
Diluted
|
||||||||||||||||
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Shares
Outstanding
|
3,267 | 3,512 | 3,303 | 3,518 | ||||||||||||
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Other
|
||||||||||||||||
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Capital
Expenditures
|
$ | 3,195 | $ | 2,728 | $ | 8,511 | $ | 4,474 | ||||||||
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Depreciation
& Amortization
|
$ | 1,466 | $ | 1,758 | $ | 2,846 | $ | 3,496 | ||||||||
6
STRATTEC
SECURITY
CORPORATION
Condensed
Balance Sheet Data
(In
Thousands)
|
December
28, 2008
(Unaudited)
|
June
29, 2008
|
|||||||
|
ASSETS
|
||||||||
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Current Assets:
|
||||||||
|
Cash and cash equivalents
|
$ | 31,878 | $ | 51,501 | ||||
|
Receivables, net
|
17,784 | 23,518 | ||||||
|
Inventories
|
14,793 | 10,269 | ||||||
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Other current assets
|
19,313 | 17,978 | ||||||
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Total Current Assets
|
83,768 | 103,266 | ||||||
|
Deferred
Income Taxes
|
3,684 | 3,684 | ||||||
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Investment
in Joint Venture
|
4,194 | 3,642 | ||||||
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Prepaid
Pension Cost
|
3,543 | 758 | ||||||
|
Other
Long Term Assets
|
932 | 27 | ||||||
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Goodwill
|
87 | - | ||||||
|
Property,
Plant and Equipment, Net
|
36,202 | 30,336 | ||||||
| 132,410 | $ | 141,713 | ||||||
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
||||||||
|
Current Liabilities:
|
||||||||
|
Accounts Payable
|
$ | 14,638 | $ | 15,974 | ||||
|
Other
|
19,253 | 16,965 | ||||||
|
Total Current Liabilities
|
33,891 | 32,939 | ||||||
|
Borrowings
Under Line of Credit Facility
|
- | - | ||||||
|
Accrued
Pension and Post Retirement Obligations
|
12,193 | 12,389 | ||||||
|
Minority
Interest
|
1,729 | 953 | ||||||
|
Shareholders’
Equity
|
240,887 | 242,843 | ||||||
|
Accumulated
Other Comprehensive Loss
|
(20,173 | ) | (17,495 | ) | ||||
|
Less: Treasury
Stock
|
(136,117 | ) | (129,916 | ) | ||||
|
Total Shareholders’ Equity
|
84,597 | 95,432 | ||||||
| $ | 132,410 | $ | 141,713 | |||||
7
STRATTEC
SECURITY
CORPORATION
Condensed
Cash Flow Statement Data
(In
Thousands)
(Unaudited)
|
Second
Quarter Ended
|
Six
Months Ended
|
|||||||||||||||
|
December
28, 2008
|
December
30, 2007
|
December
28, 2008
|
December
30, 2007
|
|||||||||||||
|
Cash
Flows from Operating Activities:
|
||||||||||||||||
|
Net
(Loss) Income
|
$ | (1,233 | ) | $ | 1,323 | $ | (1,195 | ) | $ | 3,742 | ||||||
|
Adjustment
to Reconcile Net Income to
|
||||||||||||||||
|
Cash Provided by Operating Activities:
|
||||||||||||||||
|
Minority
Interest
|
(287 | ) | (87 | ) | (101 | ) | (148 | ) | ||||||||
|
Depreciation
and Amortization
|
1,475 | 1,758 | 2,855 | 3,496 | ||||||||||||
|
Stock Based Compensation Expense
|
89 | 179 | 217 | 492 | ||||||||||||
|
Change in Operating Assets/Liabilities
|
(2,167 | ) | 19 | (2,938 | ) | (3,400 | ) | |||||||||
|
Other, net
|
(992 | ) | (138 | ) | (1,270 | ) | (323 | ) | ||||||||
|
Net
Cash (Used in) Provided by Operating Activities
|
(3,115 | ) | 3,054 | (2,432 | ) | 3,859 | ||||||||||
|
Cash
Flows from Investing Activities:
|
||||||||||||||||
|
Investment
in Joint Ventures
|
(263 | ) | - | (388 | ) | - | ||||||||||
|
Purchase of Delphi Power Products
|
(3,813 | ) | - | (3,813 | ) | - | ||||||||||
|
Additions to Property, Plant and Equipment
|
(3,195 | ) | (2,728 | ) | (8,511 | ) | (4,474 | ) | ||||||||
|
Net
Cash Used in Investing Activities
|
(7,271 | ) | (2,728 | ) | (12,712 | ) | (4,474 | ) | ||||||||
|
Cash
Flow from Financing Activities:
|
||||||||||||||||
|
Purchase of Common Stock
|
(500 | ) | (1,146 | ) | (6,214 | ) | (1,146 | ) | ||||||||
|
Dividends
Paid
|
(502 | ) | (31 | ) | (1,023 | ) | (4,081 | ) | ||||||||
|
Contribution from Minority Interest
|
762 | - | 762 | 349 | ||||||||||||
|
Loan from Minority Interest
|
800 | 250 | 1,175 | 250 | ||||||||||||
|
Exercise of Stock Options and Employee Stock Purchases
|
10 | 6 | 20 | 13 | ||||||||||||
|
Net
Cash Provided by (Used in) Financing Activities
|
570 | (921 | ) | (5,280 | ) | (4,615 | ) | |||||||||
|
Effect
of Foreign Currency Fluctuations on Cash
|
636 | 14 | 801 | (19 | ) | |||||||||||
|
Net
Decrease in Cash & Cash Equivalents
|
(9,180 | ) | (581 | ) | (19,623 | ) | (5,249 | ) | ||||||||
|
Cash
and Cash Equivalents:
|
||||||||||||||||
|
Beginning of Period
|
41,058 | 60,823 | 51,501 | 65,491 | ||||||||||||
|
End of Period
|
$ | 31,878 | $ | 60,242 | $ | 31,878 | $ | 60,242 | ||||||||
8