Strattec Security Corp. (STRT, Financial) filed Quarterly Report for the period ended 2009-12-27.
Strattec Security Corp. has a market cap of $63.1 million; its shares were traded at around $19.3 with and P/S ratio of 0.5. STRT is in the portfolios of PRIMECAP Management, Chuck Royce of ROYCE & ASSOCIATES.
Net other income was $247,000 in the current quarter compared to $557,000 in the prior year quarter. The change between periods was primarily due to gains and losses on the Rabbi Trust, transaction gains and losses resulting from foreign currency transactions entered into by our Mexican subsidiaries and equity earnings of joint ventures. The Rabbi Trust funds our supplemental executive retirement plan. Gains related to the Rabbi Trust totaled $93,000 in the current quarter compared to losses of $470,000 in the prior year quarter. The investments held in the Trust are considered trading securities. Foreign currency transaction losses totaled $222,000 in the current quarter compared to gains of $909,000 in the prior year quarter. Equity earnings of joint ventures totaled $383,000 in the current quarter compared to $85,000 in the prior year quarter. The improvement in equity earnings of joint ventures is primarily due to the favorable economic conditions in China.
Net sales for the six months ended December 27, 2009 were $93.7 million compared to net sales of $68.5 million for the six months ended December 28, 2008. Sales to our largest customers overall increased in the current period compared to the prior year period levels. Sales to Chrysler Group LLC were $29.3 million in the current period compared to $14.8 million in the prior year period. Included in the current quarter were sales to Chrysler Group LLC generated by SPA, offset by a combination of lower vehicle production volumes and reduced component content in the other security products we supply. Sales to General Motors Company were $22.2 million in the current period compared to $23.9 million in the prior year quarter. The reduction was primarily due to lower vehicle production volumes. Sales to Ford Motor Company increased to $8.8 million in the current period compared to $5.3 million in the prior year period largely due to higher Ford vehicle production volumes. Also, in the current period, sales generated by SPA to Hyundai Kia were $7.3 million.
Net other income was $675,000 in the current period compared to $780,000 in the prior year period. The change between periods was primarily due to gains and losses on the Rabbi Trust, transaction gains and losses resulting from foreign currency transactions entered into by our Mexican subsidiaries and equity earnings of joint ventures. The Rabbi Trust funds our supplemental executive retirement plan. Gains related to the Rabbi Trust totaled $376,000 in the current period compared to losses of $530,000 in the prior year period. The investments held in the Trust are considered trading securities. Foreign currency transaction losses totaled $157,000 in the current period compared to gains of approximately $1.1 million in the prior year period. Equity earnings of joint ventures totaled $479,000 in the current quarter compared to $126,000 in the prior year quarter. The improvement in equity earnings of joint ventures is primarily due to the favorable economic conditions in China.
Accounts receivable balances at December 27, 2009 increased $9.2 million from the June 28, 2009 balances. This increase was primarily the result of increased sales during the current quarter as compared to the quarter ended June 28, 2009. The restricted cash balance of $2.1 million and loan to joint ventures balance of $1.5 million at December 27, 2009 relate to the purchase by VAST LLC effective November 20, 2009 of the non-controlling interest of its two Chinese joint ventures, VAST Fuzhou and VAST Great Shanghai for $9.6 million. A loan of $2.5 million was made from STRATTEC to VAST LLC to cover STRATTEC s share of a November 2009 $7.5 million payment made in connection with the purchase. The outstanding loan balance at December 27, 2009 is $1.5 million. The remaining purchase price of $2.1 million will be paid by VAST LLC in three installments over the next 18 months. A $2.1 million stand-by letter of credit was issued by VAST LLC, and is guaranteed by STRATTEC, related to the future installment payments. Cash of $2.1 million has been transferred to a separate account in support of the stand-by letter of credit guarantee. The long-term deferred tax asset balance at December 27, 2009 decreased approximately $3.0 million from the balance at June 28, 2009. The decrease is primarily due to a change in the available Federal operating loss carry-back period from 2 years to 5 years. As a result of this change, approximately $2.8 million of long-term deferred tax assets related to Federal operating loss carry-forwards were reclassified as current tax recoverable, which is reflected in Other Current Assets in the Condensed Consolidated Balance Sheets. The other current asset balance at December 27, 2009 is consistent with the balance at June 28, 2009. The increase in the balance due to the Federal operating loss carry-back period changing from 2 years to 5 years was offset by a reduction in prepaid zinc and brass balances. Accounts payable balances at December 27, 2009 increased $7.4 million from the June 28, 2009 balances as a result of increased production activity during the current period.
The VAST LLC investments are accounted for using the equity method of accounting. The activities related to the VAST LLC joint ventures resulted in equity earnings of joint ventures of approximately $479,000 during the six months ended December 27, 2009 and $126,000 during the six months ended December 28, 2008. During the six months ended December 27, 2009, capital contributions totaling $300,000 were made to VAST LLC in support of general operating expenses. STRATTEC s portion of the capital contributions totaled $100,000. During the six months ended December 28, 2008, capital contributions totaling approximately $1.2 million were made to VAST LLC in support of general operating expenses. STRATTEC s portion of the capital contributions totaled $388,000.
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Strattec Security Corp. has a market cap of $63.1 million; its shares were traded at around $19.3 with and P/S ratio of 0.5. STRT is in the portfolios of PRIMECAP Management, Chuck Royce of ROYCE & ASSOCIATES.
Highlight of Business Operations:
Net sales for the three months ended December 27, 2009 were $52.5 million compared to net sales of $33.8 million for the three months ended December 28, 2008. Sales to our largest customers overall increased in the current quarter compared to the prior year quarter levels. Sales to Chrysler Group LLC were $16.5 million in the current quarter compared to $7.7 million in the prior year quarter. Included in the current quarter were sales to Chrysler Group LLC generated by STRATTEC POWER ACCESS, offset by a combination of lower vehicle production volume and reduced component content in the other security products we supply. Sales to General Motors Company were $12.3 million in the current quarter compared to $11.6 million in the prior year quarter. Sales to Ford Motor Company were $5.2 million in the current quarter compared to $3.0 million in the prior year quarter due to higher Ford vehicle production volumes. Also, in the current quarter, sales generated by SPA to Hyundai/Kia were $4.3 million.Net other income was $247,000 in the current quarter compared to $557,000 in the prior year quarter. The change between periods was primarily due to gains and losses on the Rabbi Trust, transaction gains and losses resulting from foreign currency transactions entered into by our Mexican subsidiaries and equity earnings of joint ventures. The Rabbi Trust funds our supplemental executive retirement plan. Gains related to the Rabbi Trust totaled $93,000 in the current quarter compared to losses of $470,000 in the prior year quarter. The investments held in the Trust are considered trading securities. Foreign currency transaction losses totaled $222,000 in the current quarter compared to gains of $909,000 in the prior year quarter. Equity earnings of joint ventures totaled $383,000 in the current quarter compared to $85,000 in the prior year quarter. The improvement in equity earnings of joint ventures is primarily due to the favorable economic conditions in China.
Net sales for the six months ended December 27, 2009 were $93.7 million compared to net sales of $68.5 million for the six months ended December 28, 2008. Sales to our largest customers overall increased in the current period compared to the prior year period levels. Sales to Chrysler Group LLC were $29.3 million in the current period compared to $14.8 million in the prior year period. Included in the current quarter were sales to Chrysler Group LLC generated by SPA, offset by a combination of lower vehicle production volumes and reduced component content in the other security products we supply. Sales to General Motors Company were $22.2 million in the current period compared to $23.9 million in the prior year quarter. The reduction was primarily due to lower vehicle production volumes. Sales to Ford Motor Company increased to $8.8 million in the current period compared to $5.3 million in the prior year period largely due to higher Ford vehicle production volumes. Also, in the current period, sales generated by SPA to Hyundai Kia were $7.3 million.
Net other income was $675,000 in the current period compared to $780,000 in the prior year period. The change between periods was primarily due to gains and losses on the Rabbi Trust, transaction gains and losses resulting from foreign currency transactions entered into by our Mexican subsidiaries and equity earnings of joint ventures. The Rabbi Trust funds our supplemental executive retirement plan. Gains related to the Rabbi Trust totaled $376,000 in the current period compared to losses of $530,000 in the prior year period. The investments held in the Trust are considered trading securities. Foreign currency transaction losses totaled $157,000 in the current period compared to gains of approximately $1.1 million in the prior year period. Equity earnings of joint ventures totaled $479,000 in the current quarter compared to $126,000 in the prior year quarter. The improvement in equity earnings of joint ventures is primarily due to the favorable economic conditions in China.
Accounts receivable balances at December 27, 2009 increased $9.2 million from the June 28, 2009 balances. This increase was primarily the result of increased sales during the current quarter as compared to the quarter ended June 28, 2009. The restricted cash balance of $2.1 million and loan to joint ventures balance of $1.5 million at December 27, 2009 relate to the purchase by VAST LLC effective November 20, 2009 of the non-controlling interest of its two Chinese joint ventures, VAST Fuzhou and VAST Great Shanghai for $9.6 million. A loan of $2.5 million was made from STRATTEC to VAST LLC to cover STRATTEC s share of a November 2009 $7.5 million payment made in connection with the purchase. The outstanding loan balance at December 27, 2009 is $1.5 million. The remaining purchase price of $2.1 million will be paid by VAST LLC in three installments over the next 18 months. A $2.1 million stand-by letter of credit was issued by VAST LLC, and is guaranteed by STRATTEC, related to the future installment payments. Cash of $2.1 million has been transferred to a separate account in support of the stand-by letter of credit guarantee. The long-term deferred tax asset balance at December 27, 2009 decreased approximately $3.0 million from the balance at June 28, 2009. The decrease is primarily due to a change in the available Federal operating loss carry-back period from 2 years to 5 years. As a result of this change, approximately $2.8 million of long-term deferred tax assets related to Federal operating loss carry-forwards were reclassified as current tax recoverable, which is reflected in Other Current Assets in the Condensed Consolidated Balance Sheets. The other current asset balance at December 27, 2009 is consistent with the balance at June 28, 2009. The increase in the balance due to the Federal operating loss carry-back period changing from 2 years to 5 years was offset by a reduction in prepaid zinc and brass balances. Accounts payable balances at December 27, 2009 increased $7.4 million from the June 28, 2009 balances as a result of increased production activity during the current period.
The VAST LLC investments are accounted for using the equity method of accounting. The activities related to the VAST LLC joint ventures resulted in equity earnings of joint ventures of approximately $479,000 during the six months ended December 27, 2009 and $126,000 during the six months ended December 28, 2008. During the six months ended December 27, 2009, capital contributions totaling $300,000 were made to VAST LLC in support of general operating expenses. STRATTEC s portion of the capital contributions totaled $100,000. During the six months ended December 28, 2008, capital contributions totaling approximately $1.2 million were made to VAST LLC in support of general operating expenses. STRATTEC s portion of the capital contributions totaled $388,000.
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