form8k.htm
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):  April 24, 2014

STRATTEC SECURITY CORPORATION
(Exact name of registrant as specified in 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 April 24, 2014, STRATTEC SECURITY CORPORATION issued a press release (the "Press Release") announcing results for the fiscal third quarter ended March 30, 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 April 24, 2014.

 

 

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:  April 24, 2014
By: /s/ Patrick J. Hansen                                                             
       Patrick J. Hansen, Senior Vice President and
       Chief Financial Officer


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ex991.htm
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 2014 THIRD QUARTER RESULTS

Milwaukee, Wisconsin – April 24, 2014 -- STRATTEC SECURITY CORPORATION (NASDAQ:STRT) today reported operating results for the fiscal third quarter ended March 30, 2014.

Net sales for the Company’s third quarter ended March 30, 2014 were $85.3 million, compared to net sales of $74.7 million for the third quarter ended March 31, 2013.  The net sales improvement during the current quarter over the prior year quarter was attributed to increased customer production volumes and higher product content on certain vehicles for which we supply components.

Net income for the current quarterly period was $3.6 million, compared to net income of $1.1 million in the prior year quarter.  Diluted earnings per share for the current quarterly period were $1.00 compared to diluted earnings per share of $.32 in the prior year quarter. The lower net income for the prior year quarter was significantly affected by a pre-tax pension settlement charge relating to our Supplemental Executive Retirement Plan of $2.1 million or $.42 per diluted earnings per share.  This settlement charge recognized the prior unrealized actuarial losses which were cash settled during the prior year quarter.
 
 
 
1

 

For the nine months ended March 30, 2014, the Company’s net sales were $246.4 million compared to net sales of $217.7 million in the prior year nine month period.  Net income during the current year nine month period was $10.7 million compared to net income of $6.2 million in the prior year nine month period.  Diluted earnings per share were $3.00 for the nine month period ended March 30, 2014 compared to diluted earnings per share of $1.80 during the nine month period ended March 31, 2013.

Net sales to each of our customers or customer groups in the current year quarter and prior year quarter were as follows (in thousands):

   
Three Months Ended
 
   
March 30, 2014
   
March 31, 2013
 
Chrysler Group LLC
  $ 29,180     $ 22,854  
General Motors Company
    18,221       14,063  
Ford Motor Company
    11,707       12,325  
Tier 1 Customers
    14,968       13,930  
Commercial and Other OEM Customers
    9,947       8,897  
Hyundai / Kia
    1,255       2,589  
    TOTAL
  $ 85,278     $ 74,658  

Increased sales to Chrysler Group LLC and General Motors Company in the current year quarter was in each case primarily due to higher customer vehicle production volumes and content on models for which we supply components.  The reduction in sales to Ford Motor Company in the current year quarter was attributed to lower vehicle production volumes on models we supply.  Increased sales to Tier 1, Commercial and Other OEM Customers during the current year quarter related primarily to market growth and the increasing impact of sales of other vehicle access control products, such as latches, fobs, and driver controls, that have been 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 on models for which we supply components.
 
 
 
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Gross profit margins were 17.5 percent in the current year quarter compared to 17.7 percent in the prior year quarter.  The reduction in gross profit margin percentage in the current year quarter was impacted by higher manufacturing startup costs associated with new product program launches.  These startup costs were partially offset by the benefits of higher customer vehicle production volumes.

Normal operating expenses (excluding the prior year quarter $2.1 million pension settlement charge) as a percent of net sales in the current year quarter increased to 11.4% from 10.7% in comparison to the prior year quarter.  The major contributors to the current quarter increase were higher engineering costs associated with new product programs under development and outside consulting and temporary help costs associated with an upgrade to our existing enterprise resource planning (ERP) system.  The prior year quarter also included customer cost recoveries of engineering design and development costs previously incurred for a program that was canceled early.
 

 
 
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Included in Other Income (Expense) in the current year quarter compared to the prior year quarter were the following items (in thousands of dollars):
 
   
March 30,
   
March 31,
 
   
2014
   
2013
 
Foreign Currency Transaction Gain (Loss)
  $ 36     $ (987 )
Net Realized and Unrealized Gain on Mexican Peso
               
    Option Contracts
    -       77  
Rabbi Trust Gain
    27       103  
Other
    8       48  
    $ 71     $ (759 )

Frank Krejci, President & CEO commented: “Over the last quarter, our associates have continued to effectively support growth of the automotive industry, while dealing with the challenges and costs associated with new product launches.  These launches include the introduction of new biometric security products for our NextLock joint venture (www.getnextlock.com), which will go on sale at the beginning of our next fiscal year in July.  The coordination with our VAST partners to effectively and efficiently supply global customer needs continues to make noticeable progress.  In addition, our VAST China joint venture after experiencing startup costs and losses a year ago, now continues to report positive operating results.  We are proud of the tactical accomplishments we are making and excited about the continued evolution of our strategic growth plans”.

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 fluctuations in our costs of operation (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)

   
Third Quarter Ended
   
Nine Months Ended
 
   
March 30, 2014
   
March 31, 2013
   
March 30, 2014
   
March 31, 2013
 
Net Sales
  $ 85,278     $ 74,658     $ 246,357     $ 217,708  
                                 
Cost of Goods Sold
    70,386       61,437       201,007       178,467  
                                 
Gross Profit
    14,892       13,221       45,350       39,241  
                                 
Engineering, Selling &
   Administrative Expenses
    9,757       8,025       28,477       25,626  
                                 
Loss on Settlement of
   Pension Obligation
    -       2,144       -       2,144  
                                 
Income from Operations
    5,135       3,052       16,873       11, 471  
                                 
Interest Income
    37       3       64       16  
                                 
Equity Earnings (Loss) in
    Joint Ventures
    267       (291 )     858       (402 )
                                 
Interest Expense
    (8 )     (10 )     (37 )     (25 )
                                 
Other Income (Expense), Net
    71       (759 )     296       (590 )
                                 
Income before Provision for Income
   Taxes and Non-Controlling Interest
    5,502       1,995       18,054       10,470  
                                 
Provision for Income Taxes
    1,285       557       5,302       2,877  
                                 
Net Income
    4,217       1,438       12,752       7,593  
                                 
Net Income Attributable
    to Non-Controlling Interest
    (616 )     (344 )     (2,067 )     (1,435 )
                                 
Net Income Attributable to
   STRATTEC SECURITY CORPORATION
  $ 3,601     $ 1,094     $ 10,685     $ 6,158  
 
                               
Earnings Per Share:
                               
Basic
  $ 1.03     $ 0.32     $ 3.07     $ 1.82  
Diluted
  $ 1.00     $ 0.32     $ 3.00     $ 1.80  
Average Basic
                               
   Shares Outstanding
    3,443       3,327       3,413       3,318  
                                 
Average Diluted
                               
   Shares Outstanding
    3,534       3,389       3,494       3,361  
                                 
Other
                               
   Capital Expenditures
  $ 2,931     $ 2,617     $ 9,381     $ 7,805  
   Depreciation & Amortization
  $ 2,046     $ 1,843     $ 6,213     $ 5,374  

 
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STRATTEC SECURITY CORPORATION

Condensed Balance Sheet Data
(In Thousands)
 
 
   
March 30, 2014
   
June 30, 2013
 
   
(Unaudited)
       
ASSETS
           
   Current Assets:
           
   Cash and cash equivalents
  $ 20,494     $ 20,307  
   Receivables, net
    54,448       47,514  
   Inventories, net
    28,646       24,312  
   Other current assets
    16,069       14,366  
    Total Current Assets
    119,657       106,499  
   Investment in Joint Ventures
    9,981       9,166  
   Other Long-term Assets
    7,682       2,420  
   Property, Plant and Equipment, Net
    54,393       51,415  
    $ 191,713     $ 169,500  
                 
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
   Current Liabilities:
               
       Accounts Payable
  $ 29,916     $ 25,543  
       Borrowings Under Credit Facility
    2,500       2,250  
       Other
    25,738       22,932  
    Total Current Liabilities
    58,154       50,725  
   Accrued Pension and Post Retirement Obligations
    4,018       4,181  
   Deferred Income Taxes
    1,355       1,009  
   Other Long-term Liabilities
    1,333       1,705  
   Shareholders’ Equity
    275,203       262,368  
   Accumulated Other Comprehensive Loss
    (21,159 )     (22,212 )
   Less:  Treasury Stock
    (135,924 )     (135,938 )
    Total STRATTEC SECURITY
         CORPORATION Shareholders’ Equity
    118,120       104,218  
    Non-Controlling Interest
    8,733       7,662  
Total Shareholders’ Equity
    126,853       111,880  
    $ 191,713     $ 169,500  


 
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STRATTEC SECURITY CORPORATION
Condensed Cash Flow Statement Data
(In Thousands)
 (Unaudited)

   
Third Quarter Ended
   
Nine Months Ended
 
   
March 30, 2014
   
March 31, 2013
   
March 30, 2014
   
March 31, 2013
 
Cash Flows from Operating Activities:
                       
Net Income
  $ 4,217     $ 1,438     $ 12,752     $ 7,593  
Adjustment to Reconcile Net Income to
                               
        Cash Provided by Operating Activities:
                               
       Equity (Earnings) Loss in Joint Ventures
    (267 )     291       (858 )     402  
       Depreciation and Amortization
    2,046       1,843       6,213       5,374  
       Foreign Currency Transaction (Gain) Loss
    (36 )     987       (74 )     1,300  
       Unrealized (Gain) Loss Foreign Currency Option
            Contracts
    -       (75 )     -       (424 )
       Stock Based Compensation Expense
    250       286       880       756  
       Loss on Settlement of Pension Obligation
    -       2,144       -       2,144  
       Change in Operating Assets/Liabilities
    (3,705 )     (5,094 )     (9,715 )     (9,288 )
       Other, net
    40       133       114       72  
                                 
Net Cash Provided by Operating Activities
    2,545       1,953       9,312       7,929  
                                 
Cash Flows from Investing Activities:
                               
    Investment in Joint Ventures
    -       -       -       (200 )
    Additions to Property, Plant and Equipment
    (2,931 )     (2,617 )     (9,381 )     (7,805 )
    Proceeds from Sale of Property, Plant and
       Equipment
    25       25       46       86  
    Other     (285 )     -       (285 )     -  
Net Cash Used in Investing Activities
    (3,191 )     (2,592 )     (9,620 )     (7,919 )
                                 
Cash Flows from Financing Activities:
                               
    Borrowings Under Credit Facility
    500       250       1,250       2,500  
    Repayment of Borrowings Under Credit Facility
    (1,000 )     (1,000 )     (1,000 )     (1,000 )
    Dividends Paid to Non-Controlling
       Interests of Subsidiaries
    -       (200 )     (984 )     (1,331 )
    Dividends Paid
    (388 )     (664 )     (1,152 )     (1,352 )
    Exercise of Stock Options and Employee Stock
       Purchases
    1,639       259       2,428       330  
Net Cash Provided by (Used in) Financing Activities
    751       (1,355 )     542       (853 )
                                 
Effect of Foreign Currency Fluctuations on Cash
    1       (320 )     (47 )     (389 )
                                 
Net Increase (Decrease) in Cash & Cash Equivalents
    106       (2,314 )     187       (1,232 )
                                 
Cash and Cash Equivalents:
                               
    Beginning of Period
    20,388       18,569       20,307       17,487  
    End of Period
  $ 20,494     $ 16,255     $ 20,494     $ 16,255  

 
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