FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
−Removed: REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM S
−Removed: CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (Loss)
+Added: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
+Added: CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
CONSOLIDATED BALANCE SHEETS
2 unchanged sentences
Notes to Financial Statements
−Removed: SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
2 unchanged sentences
Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheet of STRATTEC SECURITY CORPORATION (the "Company") as of June 27, 2021, the related consolidated statements of income (loss) and comprehensive income (loss), shareholders’ equity, and cash flows for the year ended June 27, 2021, and the related notes (collectively referred to as the "financial statements").
−Removed: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 27, 2021, and the results of its operations and its cash flows for the year ended June 27, 2021, in conformity with accounting principles generally accepted in the United States of America.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of June 27, 2021, based on criteria established in Internal Control – Integrated Framework:
+Added: We have audited the accompanying consolidated balance sheets of STRATTEC SECURITY CORPORATION (the "Company") as of July 3, 2022 and June 27, 2021, the related consolidated statements of income and comprehensive income, shareholders’ equity, and cash flows for each of the two years in the period ended July 3, 2022, and the related notes (collectively referred to as the "financial statements").
+Added: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of July 3, 2022 and June 27, 2021, and the results of its operations and its cash flows for each of the two years in the period ended July 3, 2022, in conformity with accounting principles generally accepted in the United States of America.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of July 3, 2022, based on criteria established in Internal Control – Integrated Framework:
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated September 8, 2022 expressed an unqualified opinion.
1 unchanged sentence
These financial statements are the responsibility of the Company's management.
−Removed: Our responsibility is to express an opinion on the Company's financial statements based on our audit.
+Added: Our responsibility is to express an opinion on the Company's financial statements based on our audits.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
+Added: We conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
−Removed: Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
−Removed: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
+Added: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
+Added: We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
4 unchanged sentences
As described in the Notes to Financial Statements, the Company records a liability for known and potential exposure to warranty claims in the event its products fail to perform as expected and in the event that it may be required to participate in the repair costs incurred by its customers for such products.
−Removed: At June 27, 2021, the Company’s warranty reserve was $8.4 million.
−Removed: The warranty reserve is estimated based on management’s analysis of historical data, current trends, known claims, and the terms of specific customer warranty programs and supply agreements.
+Added: At July 3, 2022, the Company’s warranty reserve was $8.1 million.
+Added: The warranty reserve is estimated based on management’s analysis of historical data, current trends, known and projected claims for products sold, and the terms of specific customer warranty programs and supply agreements.
The warranty reserve requires management to apply significant judgment to its estimation of the liability which requires substantial auditor judgment due to the highly subjective nature and materiality of the future estimated claims to be paid.
4 unchanged sentences
Obtaining and reviewing copies of select customer agreements, including provisions related to warranty policies and recall provisions and evaluating the Company’s estimated contractual obligations in comparison to the terms of selected customer agreements.
−Removed: Tested the completeness and accuracy of the claims to date and payments.
−Removed: Evaluate the reasonableness of the estimated repair costs by comparing historical repair costs to estimated future repair cost for known product issues.
−Removed: Evaluate the reasonableness of management’s judgement regarding negotiations with customers.
+Added: Testing the completeness and accuracy of the claims to date and payments.
+Added: Evaluating the reasonableness of the estimated repair costs by comparing historical repair costs to estimated future repair cost for known product issues.
+Added: Evaluating the reasonableness of management’s judgement regarding negotiations with customers.
Independently developing ranges of possible outcomes based on the Company’s historical claim experience and comparing those to the warranty reserve established by the Company.
/s/ Crowe LLP
−Removed: Oak Brook, Illinois
−Removed: September 2, 2021
We have served as the Company's auditor since fiscal year 2021.
−Removed: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
−Removed: To the shareholders and the Board of Directors of STRATTEC SECURITY CORPORATION
−Removed: Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheet of STRATTEC SECURITY CORPORATION and subsidiaries (the "Company") as of June 28, 2020, the related consolidated statements of income (loss) and comprehensive income (loss), shareholders’ equity, and cash flows, for the year ended June 28, 2020, and the related notes (collectively referred to as the "financial statements").
−Removed: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 28, 2020, and the results of its operations and its cash flows for the year ended June 28, 2020, in conformity with accounting principles generally accepted in the United States of America.
−Removed: Basis for Opinion
−Removed: These financial statements are the responsibility of the Company's management.
−Removed: Our responsibility is to express an opinion on the Company's financial statements based on our audit.
−Removed: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
−Removed: federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
−Removed: Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
−Removed: Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
−Removed: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
−Removed: /s/ Deloitte & Touche LLP
−Removed: Milwaukee, Wisconsin
+Added: Oak Brook, Illinois
September 8, 2022
−Removed: We began serving as the Company’s auditor in 2010.
−Removed: In 2020 we became the predecessor auditor.
−Removed: CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
+Added: CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
June 27, 2021
−Removed: June 28, 2020
Cost of goods sold
Engineering, selling, and administrative expenses
−Removed: INCOME (LOSS) FROM OPERATIONS
−Removed: Equity earnings (loss) of joint ventures
+Added: INCOME FROM OPERATIONS
+Added: Equity earnings of joint ventures
Interest expense
−Removed: Other (expense) income, net
−Removed: INCOME (LOSS) BEFORE BENEFIT FOR INCOME TAXES AND NON-
+Added: Other income (expense), net
+Added: INCOME BEFORE BENEFIT FOR INCOME TAXES AND NON-
CONTROLLING INTEREST
−Removed: Provision (benefit) for income taxes
−Removed: NET INCOME (LOSS)
+Added: Provision for income taxes
Net income attributable to non-controlling interest
−Removed: NET INCOME (LOSS) ATTRIBUTABLE TO STRATTEC SECURITY
−Removed: COMPREHENSIVE INCOME (LOSS):
−Removed: NET INCOME (LOSS)
+Added: NET INCOME ATTRIBUTABLE TO STRATTEC SECURITY
+Added: COMPREHENSIVE INCOME:
Currency translation adjustments, net of tax
Pension and postretirement plans, net of tax
−Removed: TOTAL OTHER COMPREHENSIVE INCOME (LOSS)
−Removed: COMPREHENSIVE INCOME (LOSS)
−Removed: Comprehensive income (loss) attributable to non-controlling interest
−Removed: COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO
+Added: TOTAL OTHER COMPREHENSIVE (LOSS) INCOME
+Added: COMPREHENSIVE INCOME
+Added: Comprehensive income attributable to non-controlling interest
+Added: COMPREHENSIVE INCOME ATTRIBUTABLE TO
STRATTEC SECURITY CORPORATION
−Removed: INCOME (LOSS) PER SHARE ATTRIBUTABLE TO STRATTEC
+Added: INCOME PER SHARE ATTRIBUTABLE TO STRATTEC
SECURITY CORPORATION:
AVERAGE SHARES OUTSTANDING:
−Removed: The accompanying Notes to Financial Statements are an integral part of these Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).
+Added: The accompanying Notes to Financial Statements are an integral part of these Consolidated Statements of Income and Comprehensive Income.
CONSOLIDATED BALANCE SHEETS
1 unchanged sentence
June 27, 2021
−Removed: June 28, 2020
CURRENT ASSETS:
Cash and cash equivalents
−Removed: Receivables, less allowance for doubtful accounts of $ 500 at June 27, 2021 and
+Added: Receivables, less allowance for doubtful accounts of $ 500 at July 3, 2022 and
June 27, 2021
21 unchanged sentences
SHAREHOLDERS’ EQUITY:
−Removed: Common stock, authorized 12,000,000 shares, $ .01 par value, issued 7,411,717
−Removed: shares at June 27, 2021 and 7,358,812 shares at June 28, 2020
+Added: Common stock, authorized 18,000,000 shares at July 3, 2022 and 12,000,000 shares
+Added: at June 27, 2021, $ .01 par value, issued 7,481,169 shares at July 3, 2022 and
+Added: 7,411,717 shares at June 27, 2021
Capital in excess of par value
1 unchanged sentence
Accumulated other comprehensive loss
−Removed: Treasury stock at cost ( 3,606,652 shares at June 27, 2021 and 3,609,193 shares
+Added: Treasury stock at cost ( 3,604,466 shares at July 3, 2022 and 3,606,652 shares
at June 27, 2021)
7 unchanged sentences
BALANCE June 28, 2020
−Removed: Net (loss) income
Currency translation adjustments
1 unchanged sentence
adjustment, net of tax of $ 42
−Removed: Cash dividends declared ($ 0.42 per share)
Cash dividends paid to non-controlling interests
4 unchanged sentences
BALANCE June 27, 2021
−Removed: Net income (loss)
Currency translation adjustments
6 unchanged sentences
Employee stock purchases
−Removed: BALANCE June 27, 2021
+Added: BALANCE July 3, 2022
The accompanying Notes to Financial Statements are an integral part of these Consolidated Statements of Shareholders’ Equity.
2 unchanged sentences
June 27, 2021
−Removed: June 28, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
−Removed: Net income (loss)
−Removed: Adjustments to reconcile net income (loss) to net cash provided by operating
−Removed: Equity (earnings) loss of joint ventures
−Removed: Foreign currency transaction loss (gain)
−Removed: Unrealized (gain) loss on peso forward contracts
+Added: Adjustments to reconcile net income to net cash provided by operating
+Added: Equity earnings of joint ventures
+Added: Foreign currency transaction (gain) loss
+Added: Unrealized gain on peso forward contracts
Loss on disposition of property, plant and equipment
−Removed: Non-cash compensation expense
Deferred income taxes
13 unchanged sentences
Dividends paid to non-controlling interests of subsidiaries
−Removed: Dividends paid
Net cash used in financing activities
FOREIGN CURRENCY IMPACT ON CASH
−Removed: NET INCREASE IN CASH AND CASH
+Added: NET (DECREASE) INCREASE IN CASH AND CASH
CASH AND CASH EQUIVALENTS
1 unchanged sentence
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
−Removed: Cash Paid During the Period For:
+Added: Cash (Recovered) Paid During the Period For:
Non-Cash Investing Activities:
7 unchanged sentences
STRATTEC products are shipped to customer locations in the United States, Canada, Mexico, Europe, South America, Korea, China and India, and we, along with our VAST LLC partners, provide full service and aftermarket support for each VAST Automotive Group partner’s products.
−Removed: We also previously maintained a 51 percent interest in a joint venture, STRATTEC Advanced Logic, LLC (“SAL LLC”), which was established to introduce a new generation of commercial and residential biometric security products based on the designs of Actuator Systems, our partner and owner of the remaining ownership interest.
−Removed: SAL LLC was dissolved during our fiscal 2020.
The accompanying consolidated financial statements reflect the consolidated results of STRATTEC SECURITY CORPORATION, its wholly owned Mexican subsidiary, STRATTEC de Mexico, and its majority owned subsidiaries, ADAC-STRATTEC, LLC and STRATTEC POWER ACCESS LLC.
2 unchanged sentences
ADAC-STRATTEC, LLC and STRATTEC POWER ACCESS LLC have operations in El Paso, Texas and in Juarez and Leon, Mexico.
−Removed: Equity investments in Vehicle Access Systems Technology LLC (“VAST LLC”) and SAL LLC for which we exercise significant influence but do not control and are not variable interest entities of STRATTEC, are accounted for using the equity method.
+Added: Equity investments in Vehicle Access Systems Technology LLC (“VAST LLC”) for which we exercise significant influence but do not control and are not variable interest entities of STRATTEC, are accounted for using the equity method.
VAST LLC consists primarily of four wholly owned subsidiaries in China, one wholly owned subsidiary in Brazil and one joint venture entity in India.
The results of the VAST LLC foreign subsidiaries and joint venture are reported on a one-month lag basis.
−Removed: SAL LLC was located in El Paso, Texas.
We have only one reporting segment.
1 unchanged sentence
In December 2019, a novel strain of coronavirus (COVID-19) was reported in Wuhan, China.
−Removed: The coronavirus has since spread, and infections have been found in multiple countries around the world, including the United States.
+Added: The coronavirus subsequently spread, and infections occurred in multiple countries around the world, including the United States.
In March 2020, the World Health Organization recognized the COVID-19 outbreak as a pandemic based on the global spread of the disease, the severity of illnesses it causes and its effects on society.
−Removed: In response to the COVID-19 outbreak, the governments of many countries, states, cities and other geographic regions have taken preventative or protective actions, such as imposing restrictions on travel and business operations and advising or requiring individuals to limit or forego their time outside of their homes.
−Removed: Accordingly, the COVID-19 outbreak has severely restricted the level of economic activity in many countries, and continues to adversely impact global economic activity, including with respect to customer purchasing actions and supply chain continuity and disruption, and in particular the supply of semiconductor chips, transponders and related components to the automotive industry.
−Removed: STRATTEC’s operating performance is subject to global economic conditions and levels of consumer spending specifically within the automotive industry.
+Added: In response to the COVID-19 outbreak, the governments of many countries, states, cities and other geographic regions have taken preventative or protective actions, such as imposing restrictions on travel and business operations, and in certain cases, advising or requiring individuals to limit or forego their time outside of their homes or from participating in large group gatherings.
+Added: Accordingly, the COVID-19 outbreak, as well as the recent conflict in the Ukraine, has severely restricted the level of economic activity in many countries, and continues to adversely impact global economic activity, including with respect to customer purchasing actions and supply chain continuity and disruption, and in particular the supply of semiconductor chips, transponders and related components to the automotive industry.
+Added: STRATTEC’s operating performance is subject to global economic conditions, inflationary pressures and levels of consumer spending specifically within the automotive industry.
During the period from late March 2020 through mid-June 2020, the majority of our OEM customer assembly plant operations were completely closed including most of the supply chain.
Additionally, during most of this same period, STRATTEC’s Mexico facilities were closed as a result of the Mexican government’s shutdown of non-essential businesses.
−Removed: Re-opening of our OEM customer facilities and our Mexico facilities began in June 2020, and the automotive industry continued to ramp-up throughout our fiscal year ended June 27, 2021 resulting in an increase in our net sales for this current fiscal year period compared to our prior year period.
−Removed: The extent of the impact of the COVID-19 outbreak on our future operating results will depend on the duration, intensity and continued spread of the outbreak, regulatory and private sector responses, which may be precautionary and may include potential restrictive operating measures imposed by governmental authorities, and the impact to our customers, workforce and suppliers, in particular related to the sourcing of semiconductor chips, transponders and other critical supply chain components by us and our customers to meet expected production schedules, all of which are uncertain and cannot be predicted.
−Removed: These changing conditions may also affect the estimates and assumptions made by our management.
+Added: Re-opening of our OEM customer facilities and our Mexico facilities began in June 2020, and the automotive industry continued to ramp-up throughout our fiscal year ended June 27, 2021.
+Added: Nonetheless, during the fourth quarter of our fiscal 2021, our net sales were negatively impacted by a global semiconductor chip shortage (especially as it relates to the automotive industry), which shortage continued into our fiscal 2022 resulting in a decrease in our net sales for 2022 as compared to 2021.
+Added: Additionally, inflationary pressures resulted in increased raw material and purchased part costs as well as increased wage rates in Mexico beginning in calendar 2021.
+Added: Such increases negatively impacted our operating results in 2022 as compared to 2021.
+Added: Each of the COVID-19 outbreak, the Ukraine conflict and the resulting inflationary pressures in the U.S.
+Added: and global economy continue to adversely impact our operating results due mostly to the supply chain continuity and disruption issues noted above, and in particular related to the supply of semiconductor chips, transponders and related components to our customers in the automotive industry.
+Added: The extent of such impacts, including related to their duration and intensity, depends upon any continued spread of the COVID-19 outbreak, the length of the Ukraine conflict and related regulatory or operating restraints, which may be precautionary, imposed by local governments and the private sector.
+Added: All of these events may continue to impact the supply chain and our operations, including impacting our customers, workforce and suppliers, any of which may continue to disrupt and limit sourcing of semiconductor chips, transponders and other critical supply chain components needed by us and our customers to meet expected production schedules.
+Added: Moreover, these events may continue to create added inflationary pressures on our operations, including related to wages and the prices of raw materials and purchased parts.
+Added: All of these foregoing matters, including their scope and duration are uncertain and cannot be predicted as to timing and cost impacts.
+Added: These changing conditions may also affect the estimates and assumptions made by our management in our financial statements.
Such estimates and assumptions affect, among other things, our long-lived asset valuations, equity investment valuation, assessment of our annual effective tax rate, valuation of deferred income taxes, assessment of excess and obsolete inventory reserves, and assessment of collectability of trade receivables.
12 unchanged sentences
We are planning to adopt this standard in the first quarter of our fiscal 2024.
−Removed: We are currently evaluating the potential effects of adopting the new guidance on our consolidated financial statements.
+Added: We do not expect that the adoption of this pronouncement will have a material impact on our consolidated financial statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes , which enhances and simplifies various aspects of income tax accounting including hybrid tax regimes, tax basis step-up in goodwill obtained in a transaction that is not a business combination, separate financial statements of entities not subject to tax, the intraperiod tax allocation exception to the incremental approach, investment ownership changes from a subsidiary to an equity method investment and vice versa, interim-period accounting for enacted changes in tax law, and the year-to-date loss limitation in interim-period tax accounting.
This accounting update is effective for annual and interim periods beginning after December 15, 2020, with early adoption permitted.
−Removed: We do not expect that the adoption of this pronouncement will have a material impact on our consolidated financial statements.
+Added: The adoption of this pronouncement did not have a material impact on our consolidated financial statements.
Our fiscal year ends on the Sunday nearest June 30.
−Removed: The years ended June 27, 2021 and June 28, 2020 are each comprised of 52 weeks .
+Added: The year ended July 3, 2022 is comprised of 53 weeks .
+Added: The year ended June 27, 2021 is comprised of 52 weeks .
Use of Estimates:
14 unchanged sentences
The Mexican peso forward contracts are not used for speculative purposes and are not designated as hedges.
−Removed: As a result, all currency forward contracts are recognized in our accompanying consolidated financial statements at fair value and changes in the fair value are reported in current earnings as part of Other (Expense) Income, net.
−Removed: The following table quantifies the outstanding Mexican peso forward contracts as of June 27, 2021 (thousands of dollars, except with respect to the average forward contractual exchange rate):
+Added: As a result, all currency forward contracts are recognized in our accompanying consolidated financial statements at fair value and changes in the fair value are reported in current earnings as part of Other Income (Expense), net.
+Added: The following table quantifies the outstanding Mexican peso forward contracts as of July 3, 2022 (thousands of dollars, except with respect to the average forward contractual exchange rate):
Effective Dates
5 unchanged sentences
June 27, 2021
−Removed: June 28, 2020
Not designated as hedging instruments:
1 unchanged sentence
Mexican peso forward contracts
−Removed: Other current liabilities:
−Removed: Mexican peso forward contracts
−Removed: The pre-tax effects of the Mexican peso forward contracts on the accompanying Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) Income consisted of the following (thousands of dollars):
−Removed: Other (Expense) Income, net
−Removed: June 27, 2021
+Added: The pre-tax effects of the Mexican peso forward contracts on the accompanying Consolidated Statements of Income and Comprehensive Income consisted of the following (thousands of dollars):
+Added: Other Income (Expense), net
June 27, 2021
Not Designated as Hedging Instruments:
−Removed: Realized gain (loss)
−Removed: Unrealized gain (loss)
+Added: Realized gain
+Added: Realized (loss)
+Added: Unrealized gain
Fair Value of Financial Instruments:
−Removed: The fair value of our cash and cash equivalents, accounts receivable, accounts payable and borrowings under our credit facilities approximated their book value as of June 27, 2021 and June 28, 2020.
+Added: The fair value of our cash and cash equivalents, accounts receivable, accounts payable and borrowings under our credit facilities approximated their book value as of July 3, 2022 and June 27, 2021.
Fair value is defined as the exchange price that would be received for an asset or paid for a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
7 unchanged sentences
These inputs reflect the reporting entity’s own assumptions of the data that market participants would use in pricing the asset or liability, based on the best information available in the circumstances.
−Removed: The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of June 27, 2021 and June 28, 2020 (thousands of dollars) :
−Removed: June 27, 2021
+Added: The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of July 3, 2022 and June 27, 2021 (thousands of dollars) :
June 27, 2021
6 unchanged sentences
Total assets at fair value
−Removed: Mexican peso forward contracts
−Removed: The Rabbi Trust assets fund our supplemental executive retirement plan and are primarily included in Other Long-Term Assets in the accompanying Consolidated Balance Sheets.
+Added: The Rabbi Trust assets fund our supplemental executive retirement plan.
+Added: Of the July 3, 2022 $ 3.3 million Rabbi Trust asset balance, $ 863,000 was included in Other Current Assets and $ 2.4 million was included in Other Long-Term Assets in the accompanying Consolidated Balance Sheets.
+Added: The June 27, 2021 $ 3.6 million Rabbi Trust asset balance was included in Other Long-Term Assets in the accompanying Balance Sheets.
Refer to discussion of Mexican peso forward contracts under Derivative Instruments above.
2 unchanged sentences
We evaluate the collectability of receivables based on a number of factors.
−Removed: An allowance for doubtful accounts is recorded for significant past due receivable balances based on a review of the past due items, general economic conditions (including with respect to the impact of COVID-19 on our customers) and the industry as a whole.
−Removed: The allowance for doubtful accounts totaled $ 500,000 at June 27, 2021 and June 28, 2020.
+Added: An allowance for doubtful accounts is recorded for significant past due receivable balances based on a review of the past due items, general economic conditions (including with respect to the impact of COVID-19, the Ukraine conflict and the supply chain disruptions on our customers) and the industry as a whole.
+Added: The allowance for doubtful accounts totaled $ 500,000 at July 3, 2022 and June 27, 2021.
Inventories are comprised of material, direct labor and manufacturing overhead, and are stated at net realizable value using the first-in, first-out (“FIFO”) cost method of accounting.
1 unchanged sentence
June 27, 2021
−Removed: June 28, 2020
Finished products
7 unchanged sentences
The activity related to the excess and obsolete inventory reserve was as follows (thousands of dollars):
−Removed: Year ended June 27, 2021
+Added: Year ended July 3, 2022
Year ended June 27, 2021
17 unchanged sentences
June 27, 2021
−Removed: June 28, 2020
Land and improvements
5 unchanged sentences
June 27, 2021
−Removed: June 28, 2020
Gross book value
4 unchanged sentences
Assets to be disposed of are reported at the lower of the carrying amount or fair value, less estimated costs to sell.
−Removed: There were no impairments recorded in the years ended June 27, 2021 or June 28, 2020.
+Added: There were no impairments recorded in the years ended July 3, 2022 or June 27, 2021.
Expenditures for repairs and maintenance are charged to expense as incurred.
11 unchanged sentences
June 27, 2021
−Removed: June 28, 2020
Right-of-Use Asset Under Operating Lease:
4 unchanged sentences
Other Long-Term Liabilities
−Removed: Future minimum lease payments, by our fiscal year, including options to extend that are reasonably certain to be exercised, under the non-cancelable lease are as follows as of June 27, 2021 (thousands of dollars):
+Added: Future minimum lease payments, by our fiscal year, including options to extend that are reasonably certain to be exercised, under the non-cancelable lease are as follows as of July 3, 2022 (thousands of dollars):
Total Future Minimum Lease Payments
3 unchanged sentences
June 27, 2021
−Removed: June 28, 2020
Operating Cash Flows:
Cash Paid Related to Operating Lease Obligation
−Removed: The weighted average lease term and discount rate for the El Paso, Texas operating lease are shown below:
−Removed: June 27, 2021
+Added: The weighted average remaining lease term and discount rate for the El Paso, Texas operating lease are shown below:
June 27, 2021
1 unchanged sentence
Weighted Average Discount Rate
−Removed: Operating lease expense for the year ended June 27, 2021 and June 28, 2020 totaled $ 473,000 and $ 461,000 , respectively.
+Added: Operating lease expense for the year ended July 3, 2022 and June 27, 2021 totaled $ 484,000 and $ 473,000 , respectively.
Supplier Concentrations:
3 unchanged sentences
Labor Concentrations:
−Removed: We had approximately 3,752 full-time associates of which approximately 204 or 5.4 percent were represented by a labor union at June 27, 2021.
−Removed: The associates represented by a labor union account for all production associates at our Milwaukee facility.
−Removed: The current contract with the unionized associates is effective through September 17, 2021.
+Added: We had approximately 3,373 full-time associates.
+Added: Approximately 180 or 5.3 percent of our full time associates were represented by a labor union at July 3, 2022 at our Milwaukee facility, which associates account for all production associates at our Milwaukee, WI facility.
+Added: The current contract with our Milwaukee unionized associates is effective through November 1, 2025.
+Added: Additionally, approximately 104 or 3.1 percent of our full time associates were represented by a labor union at our Leon, Mexico facility.
+Added: The current contract with our Leon unionized associates is effective through April 12, 2023.
Revenue Recognition:
16 unchanged sentences
Therefore, we recognize revenue at the point in time we satisfy a performance obligation by transferring control of a part to a customer.
−Removed: Amounts billed to customers related to shipping and handling costs are included in Net Sales in the accompanying Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).
−Removed: Shipping and handling costs are accounted for as fulfillment costs and are included in Cost of Goods Sold in the accompanying Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).
+Added: Amounts billed to customers related to shipping and handling costs are included in Net Sales in the accompanying Consolidated Statements of Income and Comprehensive Income.
+Added: Shipping and handling costs are accounted for as fulfillment costs and are included in Cost of Goods Sold in the accompanying Consolidated Statements of Income and Comprehensive Income.
Tooling and Pre-Production Engineering Costs Related to Long-Term Supply Arrangements:
1 unchanged sentence
Customer reimbursements for tooling and pre-production engineering activities that are part of a long-term supply arrangement are accounted for as a reduction of cost in accordance with ASC 340, Other Assets and Deferred Costs.
−Removed: Pre-production costs related to long-term supply agreements with a contractual guarantee for reimbursement are included in Other Current Assets in the accompanying Consolidated Balance Sheets.
+Added: Pre-production costs related to long-term supply agreements with a contractual guarantee for reimbursement are included in Other Current Assets in
+Added: the accompanying Consolidated Balance Sheets.
We expense all pre-production engineering costs for which reimbursement is not contractually guaranteed by the customer.
5 unchanged sentences
Contract Balances:
−Removed: We had no material contract assets or contract liabilities as of June 27, 2021 or June 28, 2020.
+Added: We had no material contract assets or contract liabilities as of July 3, 2022 or June 27, 2021.
Product Sales and Sales and Receivable Concentration:
3 unchanged sentences
Research and development expenditures were approximately $ 12.2 million in 2022 and $ 10.8 million in 2021.
−Removed: Other (Expense) Income, Net:
−Removed: Net other (expense) income included in the accompanying Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) primarily included foreign currency transaction gains and losses, realized and unrealized gains and losses on our Mexican peso currency forward contracts, the components of net periodic benefit cost other than the service cost component related to our pension and postretirement plans and Rabbi Trust gains and losses.
+Added: Other Income (Expense), Net:
+Added: Net other income (expense) included in the accompanying Consolidated Statements of Income and Comprehensive Income primarily included foreign currency transaction gains and losses, realized and unrealized gains and losses on our Mexican peso currency forward contracts, the components of net periodic benefit cost other than the service cost component related to our pension and postretirement plans and Rabbi Trust gains and losses.
Foreign currency transaction gains and losses resulted from activity associated with foreign denominated assets held by our Mexican subsidiaries.
3 unchanged sentences
dollar cost of our Mexican operations.
−Removed: Unrealized gains and losses on the peso forward contracts recognized as a result of mark-to-market adjustments as of June 27, 2021 may or may not be realized in future periods, depending on actual Mexican peso to U.S.
+Added: Unrealized gains and losses on the peso forward contracts recognized as a result of mark-to-market adjustments as of July 3, 2022 may or may not be realized in future periods, depending on actual Mexican peso to U.S.
dollar exchange rates experienced during the balance of the contract period.
Pension and postretirement plan costs include the components of net periodic benefit cost other than the service cost component.
−Removed: Additionally, during fiscal 2020, other miscellaneous income, net includes $ 450,000 of favorable valued-added tax adjustments realized by our Mexican entities and $ 434,000 of experience gains from asset returns related to the termination of our Qualified Pension Plan as discussed below under Retirement Plans and Postretirement Costs.
The impact of these items for the periods presented was as follows (thousands of dollars):
June 27, 2021
−Removed: June 28, 2020
−Removed: Foreign currency transaction (loss) gain
−Removed: Rabbi Trust gain (loss)
−Removed: Unrealized gain (loss) on Mexican peso forward contracts
−Removed: Realized gain (loss) on Mexican peso forward contracts
+Added: Foreign currency transaction gain (loss)
+Added: Rabbi Trust Assets (loss) gain
+Added: Unrealized gain on Mexican peso forward contracts
+Added: Realized gain on Mexican peso forward contracts, net
Pension and postretirement plans cost
−Removed: Other miscellaneous income, net
Warranty Reserve:
5 unchanged sentences
Changes in the warranty reserve were as follows (thousands of dollars):
−Removed: Year ended June 27, 2021
+Added: Year ended July 3, 2022
Year ended June 27, 2021
3 unchanged sentences
Foreign currency translation adjustments are included as a component of accumulated other comprehensive loss.
−Removed: Foreign currency transaction gains and losses are included in other (expense) income, net in the accompanying Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).
+Added: Foreign currency transaction gains and losses are included in other income (expense), net in the accompanying Consolidated Statements of Income and Comprehensive Income.
Accumulated Other Comprehensive Loss (“AOCL”):
−Removed: The following tables summarize the changes in AOCL for the years ended June 27, 2021 and June 28, 2020 (thousands of dollars):
−Removed: Year Ended June 27, 2021
+Added: The following tables summarize the changes in AOCL for the years ended July 3, 2022 and June 27, 2021 (thousands of dollars):
+Added: Year Ended July 3, 2022
Postretirement
4 unchanged sentences
Reclassifications:
−Removed: Prior service credits (A)
Actuarial losses (A)
4 unchanged sentences
to non-controlling interest
−Removed: Balance June 27, 2021
+Added: Balance July 3, 2022
Year Ended June 27, 2021
9 unchanged sentences
Net reclassifications
−Removed: Other comprehensive loss
−Removed: Other comprehensive loss attributable
+Added: Other comprehensive income
+Added: Other comprehensive income attributable
to non-controlling interest
Balance June 27, 2021
−Removed: Amounts reclassified are included in the computation of net periodic benefit cost, which is included in Other (Expense) Income, net in the accompanying Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).
+Added: Amounts reclassified are included in the computation of net periodic benefit cost, which is included in Other Income (Expense), net in the accompanying Consolidated Statements of Income and Comprehensive Income.
See Retirement Plans and Postretirement Costs note to these Notes to Financial Statements below.
3 unchanged sentences
The Board of Directors has designated 2 million shares of common stock available for the grant of awards under the plan.
−Removed: Remaining shares available to be granted under the plan as of June 27, 2021 were 219,084 .
+Added: Remaining shares available to be granted under the plan as of July 3, 2022 were 177,959 .
Awards that expire or are cancelled without delivery of shares become available for re-issuance under the plan.
18 unchanged sentences
We record stock based compensation only for those awards that are expected to vest.
−Removed: All compensation cost related to stock options granted under the plan h as been recognized as of June 27 , 202 1 .
−Removed: Unrecognized compensatio n cost as of June 27 , 202 1 related to restricted stock granted under the plan was as follows (thousands of dollars):
+Added: All compensation cost related to stock options granted under the plan has been recognized as of July 3, 2022.
+Added: Unrecognized compensation cost as of July 3, 2022 related to restricted stock granted under the plan was as follows (thousands of dollars):
Weighted Average
6 unchanged sentences
June 27, 2021
−Removed: June 28, 2020
Intrinsic value of options exercised
Fair value of stock options vested
−Removed: No options were granted during the fiscal years ended June 27, 2021 or June 28, 2020.
−Removed: The range of options outstanding as of June 27, 2021 was as follows :
−Removed: and Exercisable
+Added: No options were granted during the fiscal years ended July 3, 2022 or June 27, 2021.
+Added: The range of o ptions outstanding as of Ju ly 3, 2022 was as follows :
+Added: Outstanding and
Exercise Price
−Removed: and Exercisable
+Added: Outstanding and
Life Outstanding
−Removed: $26.53-$25.64
Income Taxes:
8 unchanged sentences
Additionally, we accrue interest and related penalties, if applicable, on all tax exposures for which reserves have been established consistent with jurisdictional tax laws.
−Removed: Interest and penalties on uncertain tax positions are classified in the (Benefit) Provision for Income Taxes in the accompanying Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).
+Added: Interest and penalties on uncertain tax positions are classified in the (Benefit) Provision for Income Taxes in the accompanying Consolidated Statements of Income and Comprehensive Income.
INVESTMENT IN JOINT VENTURES AND MAJORITY OWNED SUBSIDIARIES
8 unchanged sentences
STRATTEC currently purchases such component parts from WITTE.
−Removed: These purchases totaled $ 874,000 in 2021 and $ 1.0 million in 2020.
+Added: These purchases totaled $ 918,000 in 2022 and $ 874,000 in 2021.
STRATTEC also pays WITTE a royalty related to certain latch product sales.
−Removed: Such royalties incurred totaled $ 1.1 million in 2021.
−Removed: The outstanding payable balance to WITTE was $ 427,000 and $ 21,000 as of June 27, 2021 and June 28, 2020, respectively.
+Added: Such royalties incurred totaled $ 889,000 in 2022 and $ 1.1 million in 2021.
+Added: The outstanding payable balance to WITTE was $ 459,000 and $ 427,000 as of July 3, 2022 and June 27, 2021, respectively.
VAST LLC has investments in Sistema de Acesso Veicular Ltda, VAST China (Taicang), VAST Jingzhou Co.
12 unchanged sentences
Results of the VAST LLC foreign subsidiaries and joint venture are reported on a one-month lag basis.
−Removed: The activities of the VAST LLC foreign subsidiaries and joint ventures resulted in equity earnings of joint ventures to STRATTEC of approximately $ 2.6 million during 2021 and equity loss of joint ventures of $ 565,000 during 2020.
−Removed: This 2020 equity loss of joint ventures included a $ 2 million impairment charge related to its Minda-VAST Access Systems joint venture in India.
−Removed: STRATTEC’s portion of this impairment charge totaled $ 667,000 .
+Added: The activities of the VAST LLC foreign subsidiaries and joint ventures resulted in equity earnings of joint ventures to STRATTEC of approximately $ 181,000 during 2022 and $ 2.6 million during 2021.
During 2022, capital contributions totaling $ 450,000 were made to VAST LLC for purposes of funding operations in Brazil.
+Added: STRATTEC’s portion of the capital contribution totaled $ 150,000 .
+Added: During 2021, capital contributions totaling $ 300,000 were made to VAST LLC for purposes of funding operations in Brazil.
STRATTEC’s portion of the capital contributions totaled $ 100,000 .
−Removed: During 2020, no capital contributions were made to VAST LLC.
ADAC-STRATTEC LLC, a Delaware limited liability company, was formed in fiscal year 2007 to support injection molding and door handle assembly operations in Mexico.
1 unchanged sentence
An additional Mexican entity, ADAC-STRATTEC de Mexico, is wholly owned by ADAC-STRATTEC LLC.
−Removed: ADAC-STRATTEC LLC’s financial results are consolidated with the financial results of STRATTEC and resulted in increased net income to STRATTEC of approximately $ 4.1 million in 2021 and $ 1.5 million in 2020.
+Added: ADAC-STRATTEC LLC’s financial results are consolidated with the financial results of STRATTEC and resulted in increased net sales and decreased net income to STRATTEC of approximately $ 111.8 million and $ 100,000 , respectively, in 2022 and increased net sales and increased net income to STRATTEC of approximately $ 126.2 million and $ 4.1 million, respectively, in 2021.
ADAC Charges ADAC-STRATTEC LLC an engineering, research and design fee as well as a sales fee.
Such fees are calculated as a percentage of ADAC-STRATTEC LLC net sales, are included in the consolidated results of STRATTEC, and totaled $ 7.8 million in 2022 and $ 8.8 million in 2021.
−Removed: The related outstanding payable balance to ADAC was $ 1.9 million and $ 658,000 as of June 27, 2021 and June 28, 2020, respectively.
+Added: The related outstanding payable balance to ADAC was $ 1.9 million as of each of July 3, 2022 and June 27, 2021.
Additionally, ADAC-STRATTEC LLC sells production parts to ADAC.
Sales to ADAC are included in the consolidated results of STRATTEC and totaled $ 9.1 million in 2022 and $ 11.6 million in 2021.
−Removed: The related outstanding receivable balance from ADAC was $ 1.5 million and $ 1.0 million as of June 27, 2021 and June 28, 2020, respectively.
−Removed: STRATTEC POWER ACCESS LLC (“SPA”) was formed in fiscal year 2009 to supply the North American portion of the power sliding door, lift gate and deck lid system access control products which were acquired from Delphi Corporation.
+Added: The related outstanding receivable balance from ADAC was $ 1.6 million and $ 1.5 million as of July 3, 2022 and June 27, 2021, respectively.
+Added: STRATTEC POWER ACCESS LLC (“SPA”) was formed in fiscal year 2009 to supply the North American portion of the power sliding door, lift gate, tail gate and deck lid system access control products which were acquired from Delphi Corporation.
SPA was 80 percent owned by STRATTEC and 20 percent owned by WITTE for all periods presented in this report.
An additional Mexican entity, STRATTEC POWER ACCESS de Mexico, is wholly owned by SPA.
−Removed: The financial results of SPA are consolidated with the financial results of STRATTEC and resulted in increased net income to STRATTEC of approximately $ 6.4 million in 2021 and reduced net income to STRATTEC of approximately $ 1.3 million in 2020.
−Removed: See further discussion under Equity Earnings (Loss) of Joint Ventures included in Notes to Financial Statements herein.
−Removed: EQUITY EARNINGS (LOSS) OF JOINT VENTURES
+Added: The financial results of SPA are consolidated with the financial results of STRATTEC and resulted in increased net sales and increased net income to STRATTEC of approximately $ 95.7 million and $ 5.3 million, respectively, in 2022 and $ 95.2 million and $ 6.4 million, respectively, in 2021.
+Added: See further discussion under Equity Earnings of Joint Ventures included in Notes to Financial Statements herein.
+Added: EQUITY EARNINGS OF JOINT VENTURES
As discussed above under the note Investment in Joint Ventures and Majority Owned Subsidiaries, we hold a one-third ownership interest in VAST LLC, for which we exercise significant influence but do not control and VAST LLC is not a variable interest entity of STRATTEC.
1 unchanged sentence
The results of the VAST LLC foreign subsidiaries and joint venture are reported on a one-month lag basis.
+Added: During the quarter ended March 27, 2022, VAST China experienced a fire at their Taicang facility.
+Added: As a result, certain door handle and painting operations were subsequently transferred to their new Jingzhou facility and to another supplier.
+Added: The transfer of production negatively impacted VAST China’s profitability for the six month period ended July 3, 2022.
The following are summarized statements of operations and summarized balance sheet data for VAST LLC (thousands of dollars) :
June 27, 2021
−Removed: June 28, 2020
Cost of goods sold
Engineering, selling and administrative expense
−Removed: Impairment charge
−Removed: Income (loss) from operations
+Added: (Loss) income from operations
Other income, net
−Removed: Income (loss) before provision for income taxes
−Removed: Provision for income taxes
−Removed: Net income (loss)
+Added: (Loss) income before (benefit) provision for
+Added: (Benefit) provision for income taxes
STRATTEC’s share of VAST LLC net
−Removed: income (loss)
Intercompany profit eliminations
−Removed: STRATTEC’s equity earnings (loss) of VAST LLC
−Removed: June 27, 2021
+Added: STRATTEC’s equity earnings of VAST LLC
June 27, 2021
11 unchanged sentences
STRATTEC’s share of VAST LLC net assets
−Removed: SAL LLC was dissolved during 2020.
−Removed: STRATTEC’s equity earnings of SAL LLC totaled $ 356,000 in 2020.
We have sales of component parts to VAST LLC, purchases of component parts from VAST LLC, expenses charged to VAST LLC for engineering and accounting services and expenses charged from VAST LLC to STRATTEC for general headquarter expenses.
1 unchanged sentence
June 27, 2021
−Removed: June 28, 2020
Sales to VAST LLC
3 unchanged sentences
June 27, 2021
−Removed: June 28, 2020
Accounts receivable from VAST LLC
3 unchanged sentences
ADAC-STRATTEC LLC has a $ 25 million secured revolving credit facility (the “ADAC-STRATTEC Credit Facility”) with BMO Harris Bank N.A., which is guaranteed by STRATTEC.
−Removed: The credit facilities were extended during June 2021 and both expire on August 1, 2024 .
+Added: The credit facilities expire on August 1, 2024 .
Borrowings under either credit facility are secured by our U.S.
5 unchanged sentences
The ADAC-STRATTEC Credit Facility includes an additional restrictive financial covenant that requires the maintenance of a minimum fixed charge coverage ratio.
−Removed: As of June 27, 2021, we were in compliance with all financial covenants required by these credit facilities.
+Added: As of July 3, 2022, we were in compliance with all financial covenants required by these credit facilities.
Outstanding borrowings under the credit facilities referenced in the above paragraph as of the end of 2022 and 2021 were as follows (thousands of dollars):
June 27, 2021
−Removed: June 28, 2020
STRATTEC Credit Facility
6 unchanged sentences
June 27, 2021
−Removed: June 27, 2021
−Removed: June 28, 2020
STRATTEC Credit Facility
16 unchanged sentences
The reserve is not measured on a discounted basis.
−Removed: We believe, based on findings-to-date and known environmental regulations, that the environmental reserve of $ 1.4 million at June 27, 2021 is adequate.
−Removed: At June 27, 2021 , we had purch ase commitments related to zinc and other purchased parts .
+Added: We believe, based on findings-to-date and known environmental regulations, that the environmental reserve of $ 1.4 million at July 3, 2022 is adequate.
+Added: At July 3, 2022, we had purchase commitments related to zinc and aluminum.
We also had minimum rental commitments under non-cancelable operating leases with a term in excess of one year.
3 unchanged sentences
June 27, 2021
−Removed: June 28, 2020
Currently (recoverable) payable:
2 unchanged sentences
June 27, 2021
−Removed: June 28, 2020
statutory rate
1 unchanged sentence
Foreign subsidiaries
−Removed: Federal net operating loss carry-back statutory rate
+Added: Return to provision adjustment
Global intangible low-taxed income
Research and development tax credit
+Added: Solar investment tax credit
Non-controlling interest
−Removed: Uncertain tax positions
Stock based compensation
−Removed: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("the CARES Act") was enacted.
−Removed: The CARES Act contains several income tax provisions, as well as other measures, that are intended to assist businesses impacted by the economic effects of the COVID-19 pandemic.
−Removed: The CARES Act includes a five-year carryback allowance for taxable net operating losses generated in tax years 2018 through 2020, our fiscal years 2019 through 2021.
−Removed: We recorded an expected benefit for the carryback of our fiscal year 2020 federal net operating loss.
−Removed: As we carried the losses back to years beginning before January 1, 2018, the tax benefit was a result of the rate differential between the previous 35 % federal tax rate and current statutory rate of 21 %.
+Added: The return to provision adjustment related to adjustments we made to our fiscal 2021 estimated foreign tax credits and estimated tax impacts associated with our investment in VAST LLC.
+Added: These true-up adjustments resulted from the filing of our US income tax returns during fiscal 2022 and were attributable to actual results included in the non-US income tax returns, which are filed on a calendar year basis, and which differ from estimates included in our fiscal 2021 tax provision.
+Added: This adjustment was not material to our previously issued financial statements.
The components of deferred tax (liabilities) assets were as follows (thousands of dollars):
June 27, 2021
−Removed: June 28, 2020
Unrecognized pension and postretirement benefit
15 unchanged sentences
Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax basis and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered.
−Removed: Federal credit carry-forwards at June 27, 2021 resulted in future benefits of approximately $ 1.4 million and expire between 2030 and 2031 .
+Added: Federal credit carry-forwards at July 3, 2022 resulted in future benefits of approximately $ 2.8 million and expire between 2031 and 2040 .
We currently anticipate having sufficient Federal taxable income to offset these credit carry-forwards.
−Removed: State credit carry-forwards at June 27, 2021 resulted in future benefits of approximately $ 194,000 and expire at varying times between 2025 and 2035 .
−Removed: A valuation allowance of $ 153,000 has been recorded as of June 27, 2021, due to our assessment of the future realization of certain credit carry-forward benefits.
+Added: State credit carry-forwards at July 3, 2022 resulted in future benefits of approximately $ 192,000 and expire at varying times between 2025 and 2031 .
+Added: A valuation allowance of $ 158,000 has been recorded as of July 3, 2022, due to our assessment of the future realization of certain state credit carry-forward benefits.
We do not currently anticipate having sufficient state taxable income to offset these credit carry-forwards.
Foreign income before the provision for income taxes was $ 8.6 million in 2022 and $ 5.1 million in 2021.
−Removed: The total liability for unrecognized tax benefits was $ 1.6 million as of each of June 27, 2021 and June 28, 2020 and was included in Other Long-term Liabilities in the accompanying Consolidated Balance Sheets.
−Removed: This liability includes approximately $ 1.5 million of unrecognized tax benefits at each of June 27, 2021 and June 28, 2020 and approximately $ 146,000 of accrued interest at June 27, 2021 and $ 147,000 at June 28, 2020.
+Added: The total liability for unrecognized tax benefits was $ 1.5 million as of July 3, 2022 and $ 1.6 million as of June 27, 2021 and was included in Other Long-term Liabilities in the accompanying Consolidated Balance Sheets.
+Added: This liability includes approximately $ 1.3 million and $ 1.5 million of unrecognized tax benefits at July 3, 2022 and June 27, 2021, respectively, and approximately $ 137,000 of accrued interest at July 3, 2022 and $ 146,000 at June 27, 2021.
This liability does not include an amount for accrued penalties.
−Removed: The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was approximately $ 1.1 million at June 27, 2021 and at June 28, 2020.
+Added: The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was approximately $ 1.0 million at July 3, 2022 and $ 1.1 million at June 27, 2021.
We recognize interest and penalties related to unrecognized tax benefits in the provision for income taxes.
−Removed: A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows for the years ended June 27, 2021 and June 28, 2020 (thousands of dollars):
−Removed: June 27, 2021
+Added: A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows for the years ended July 3, 2022 and June 27, 2021 (thousands of dollars):
June 27, 2021
1 unchanged sentence
Gross increases – tax positions in prior years
+Added: Gross decreases – tax positions in prior years
Gross increases – current period tax positions
4 unchanged sentences
RETIREMENT PLANS AND POSTRETIREMENT COSTS
−Removed: We had a qualified, noncontributory defined benefit pension plan (“Qualified Pension Plan”) covering substantially all U.S.
−Removed: associates employed by us prior to January 1, 2010.
−Removed: Effective December 31, 2009 , the Board of Directors amended the Qualified Pension Plan to freeze benefit accruals and future eligibility.
−Removed: The Board of Directors subsequently approved the termination of the Qualified Pension Plan.
−Removed: During the quarter ended December 30, 2018, we completed a substantial portion of terminating the Qualified Pension Plan.
−Removed: In connection with the termination of the Qualified Pension Plan, distributions from the Qualified Pension Plan trust were made during the three month period ended December 30, 2018 to participants who elected lump-sum distributions.
−Removed: Additionally, during the three months ended December 30, 2018, we entered into an agreement with an insurance company to purchase from us, through a series of annuity contracts, our remaining obligations under the Qualified Pension Plan and, as a result, we settled the remaining obligations under the plan for the remaining participants utilizing funds available in the Qualified Pension Plan trust.
−Removed: No additional cash contributions to the trust were required to settle the pension obligations.
−Removed: As a result of these actions, a non-cash pre-tax settlement charge of $ 31.9 million was recorded during fiscal 2019.
−Removed: A non-cash compensation expense charge of $ 4.2 million was also recorded during fiscal 2019 related to the future transfer of the excess assets in the Qualified Pension Plan to a STRATTEC defined contribution plan for subsequent pay-out to eligible STRATTEC employees based on a plan approved by the Board of Directors in June 2019.
−Removed: An additional $ 4.8 million non-cash compensation expense charge related to the final transfer and pay-out of the excess Qualified Pension Plan assets was recorded during our fiscal 2020.
−Removed: During fiscal 2020, the excess Qualified Pension Plan assets were transferred to our defined contribution plan and distributed to eligible STRATTEC employees, which completed the full termination of the Qualified Pension Plan.
We have a noncontributory Supplemental Executive Retirement Plan (“SERP”), which is a nonqualified defined benefit plan.
4 unchanged sentences
The SERP, which is considered a nonqualified defined benefit plan under applicable rules and regulations of the Internal Revenue Code, will continue to be funded through use of a Rabbi Trust to hold investment assets to be used in part to fund any future required lump sum benefit payments to participants.
−Removed: The Rabbi Trust assets had a value of $ 3.6 million at June 27, 2021 and $ 2.9 million at June 28, 2020, respectively.
−Removed: At June 27, 2021, the Rabbi Trust asset balance was included in Other Long-Term Assets in the accompanying Consolidated Balance Sheets.
−Removed: At June 28, 2020, $ 217,000 of the Rabbi Trust asset balance was included in Other Current Assets and $ 2.7 million of the Rabbi Trust asset balance was included in Other Long-Term Assets in the accompanying Consolidated Balance Sheets.
−Removed: The Rabbi Trust assets are excluded from the pension and SERP tables below as they do not qualify as plan assets.
−Removed: The projected benefit obligation under the SERP, which is included in the pension and SERP tables below, was $ 2.8 million at June 27, 2021 and $ 2.3 million at June 28, 2020.
+Added: The Rabbi Trust assets had a value of $ 3.3 million at July 3, 2022 and $ 3.6 million at June 27, 2021, respectively.
+Added: Refer to Fair Value of Financial Instruments discussion included in Notes to Financial Statements herein for further discussion of Rabbi Trust assets.
+Added: The Rabbi Trust assets are excluded from the SERP tables below as they do not qualify as plan assets.
+Added: The projected benefit obligation under the SERP, which is included in the SERP tables below, was $ 3.2 million at July 3, 2022 and $ 2.8 million at June 27, 2021.
The SERP has a separately determined accumulated benefit obligation, which is the actuarial present value of benefits based on service rendered and current and past compensation levels.
This differs from the projected benefit obligation in that it includes no assumptions about future compensation levels.
−Removed: The accumulated benefit obligation under the SERP was $ 2.6 million at June 27, 2021 and $ 2.2 million at June 28, 2020.
+Added: The accumulated benefit obligation under the SERP was $ 2.8 million at July 3, 2022 and $ 2.6 million at June 27, 2021.
We also sponsor a postretirement health care plan for all U.S.
3 unchanged sentences
The postretirement health care plan is unfunded.
−Removed: Amounts included in accumulated other comprehensive loss, net of tax, at June 27, 2021, which have not yet been recognized in net periodic benefit cost were as follows (thousands of dollars):
+Added: Amounts included in accumulated other comprehensive loss, net of tax, at July 3, 2022, which have not yet been recognized in net periodic benefit cost were as follows (thousands of dollars):
Postretirement
Net actuarial loss
−Removed: Unrecognized net actuarial losses included in accumulated other comprehensive loss at June 27, 2021 which are expected to be recognized in net periodic benefit cost (credit) in fiscal 2022, net of tax, for the pension, SERP and postretirement plans are as follows (thousands of dollars):
+Added: Unrecognized net actuarial losses included in accumulated other comprehensive loss at July 3, 2022 which are expected to be recognized in net periodic benefit cost (credit) in fiscal 2023, net of tax, for the SERP and postretirement plans are as follows (thousands of dollars):
Postretirement
Net actuarial loss
−Removed: The following tables summarize the pension, SERP and postretirement plans’ income and expense, funded status and actuarial assumptions for the years indicated (thousands of dollars).
−Removed: We use a June 30 measurement date for our pension and postretirement plans.
−Removed: Pension and SERP Benefits
+Added: The following tables summarize the SERP and postretirement plans’ income and expense, funded status and actuarial assumptions for the years indicated (thousands of dollars).
+Added: We use a June 30 measurement date for our SERP and postretirement plans.
+Added: SERP Benefits
Postretirement Benefits
1 unchanged sentence
June 27, 2021
−Removed: June 27, 2021
−Removed: June 28, 2020
COMPONENTS OF NET PERIODIC BENEFIT
8 unchanged sentences
Discount rate
−Removed: Rate of compensation increases - SERP
+Added: Rate of compensation increases
Net Periodic Benefit Cost:
Discount rate
−Removed: Rate of compensation increases – SERP
+Added: Rate of compensation increases
CHANGE IN PROJECTED BENEFIT
6 unchanged sentences
Fair value of plan assets at beginning of year
−Removed: Actual return on plan assets
Employer contribution
−Removed: Excess Asset Transfer
−Removed: Plan settlements
Benefits paid
21 unchanged sentences
The health care cost trend assumption has a minimal effect on our postretirement benefit amounts reported.
−Removed: We expect to contribute $ 463,000 to our SERP and $ 110,000 to our postretirement health care plan in fiscal 2022.
+Added: We expect to contribute $ 1.9 million to our SERP and $ 96,000 to our postretirement health care plan in fiscal 2023.
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid during the fiscal years noted below (thousands of dollars):
4 unchanged sentences
June 27, 2021
−Removed: June 28, 2020
Company contributions
SHAREHOLDERS’ EQUITY
−Removed: We have 12,000,000 shares of authorized common stock, par value $ .01 per share, with 3,805,065 and 3,749,619 shares outstanding at June 27, 2021 and June 28, 2020, respectively.
+Added: We have 18,000,000 and 12,000,000 shares of authorized common stock, par value $ .01 per share, with 3,876,703 and 3,805,065 shares outstanding at July 3, 2022 and June 27, 2021, respectively.
Holders of our common stock are entitled to one vote for each share on all matters voted on by shareholders.
−Removed: Our Board of Directors previously authorized a stock repurchase program to buy back up to 3,839,395 outstanding shares of our common stock as of June 27, 2021.
−Removed: As of June 27, 2021, 3,655,322 shares have been repurchased under this program at a cost of approximately $ 136.4 million.
+Added: Our Board of Directors previously authorized a stock repurchase program to buy back up to 3,839,395 outstanding shares of our common stock as of July 3, 2022.
+Added: As of July 3, 2022, 3,655,322 shares have been repurchased under this program at a cost of approximately $ 136.4 million.
No shares were repurchased under this program during 2022 or 2021.
−Removed: EARNINGS ( LOSS) PER SHARE
−Removed: Basic earnings (loss) per share is computed on the basis of the weighted average number of shares of common stock outstanding during the applicable period.
−Removed: Diluted earnings (loss) per share is computed on the basis of the weighted average number of shares of common stock plus the potential dilutive common shares outstanding during the applicable period using the treasury stock method.
+Added: EARNINGS PER SHARE
+Added: Basic earnings per share is computed on the basis of the weighted average number of shares of common stock outstanding during the applicable period.
+Added: Diluted earnings per share is computed on the basis of the weighted average number of shares of common stock plus the potential dilutive common shares outstanding during the applicable period using the treasury stock method.
Potential dilutive common shares include outstanding stock options and unvested restricted stock awards.
1 unchanged sentence
June 27, 2021
−Removed: June 28, 2020
−Removed: Net income (loss) attributable to STRATTEC
+Added: Net income attributable to STRATTEC
Weighted average shares of common stock outstanding
1 unchanged sentence
Diluted weighted average shares of common stock
−Removed: Basic earnings (loss) per share
−Removed: Diluted earnings (loss) per share
−Removed: Potentially dilutive common shares that were excluded from the calculation of diluted earnings (loss) per share because their inclusion would have been antidilutive were as follows:
+Added: Basic earnings per share
+Added: Diluted earnings per share
+Added: Potentially dilutive common shares that were excluded from the calculation of diluted earnings per share because their inclusion would have been antidilutive were as follows:
Number of Options
June 27, 2021
−Removed: June 28, 2020
STOCK OPTION AND PURCHASE PLANS
7 unchanged sentences
Balance at June 27, 2021
−Removed: Balance at June 27, 2021
+Added: Balance at July 3, 2022
Exercisable as of:
June 27, 2021
−Removed: June 28, 2020
No options were granted during fiscal 2022 or 2021.
3 unchanged sentences
Nonvested Balance at June 27, 2021
−Removed: Nonvested Balance at June 27, 2021
+Added: Nonvested Balance at July 3, 2022
We have an Employee Stock Purchase Plan to provide substantially all U.S.
4 unchanged sentences
Shares issued from treasury stock under the plan totaled 2,186 at an average price of $ 37.32 during 2022 and 2,541 at an average price of $ 31.03 during 2021.
−Removed: A total of 51,330 shares remain available for purchase under the plan as of June 27, 2021.
+Added: A total of 46,484 shares remain available for purchase under the plan as of July 3, 2022.
Total export sales, sales from the United States to locations outside of the United States, are summarized as follows (thousands of dollars and percent of total net sales):
June 27, 2021
−Removed: June 28, 2020
−Removed: Countries for which customer sales account for ten percent or more of total net sales are summarized as follows (thousands of dollars and percent of total net sales):
−Removed: June 27, 2021
−Removed: June 28, 2020
−Removed: Export sales into Canada
+Added: During the years ended July 3, 2022 and June 27, 2021, no countries accounted for sales of ten percent or more of total net sales.
PRODUCT SALES
1 unchanged sentence
June 27, 2021
−Removed: June 28, 2020
Door handles & exterior trim
5 unchanged sentences
June 27, 2021
−Removed: June 28, 2020
General Motors Company
−Removed: Fiat Chrysler Automobiles
+Added: Stellantis (Formerly Fiat Chrysler Automobiles)
Ford Motor Company
1 unchanged sentence
June 27, 2021
−Removed: June 28, 2020
General Motors Company
−Removed: Fiat Chrysler Automobiles
+Added: Stellantis (Formerly Fiat Chrysler Automobiles)
Ford Motor Company
−Removed: Selected Quarterly Financial Data (unaudited)
−Removed: The following data are in thousands of dollars except per share amounts.
−Removed: Net Income (Loss)
−Removed: Attributable to
−Removed: Earnings (Loss)
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
7 unchanged sentences
We have designed our disclosure controls and procedures to reach a level of reasonable assurance of achieving the desired control objectives.
−Removed: There was no change in our internal control over financial reporting (as defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act) that occurred during the quarter ended June 27, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
+Added: There was no change in our internal control over financial reporting (as defined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act) that occurred during the quarter ended July 3, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management’s Annual Report on Internal Controls over Financial Reporting
9 unchanged sentences
Crowe LLP, independent registered public accounting firm, has direct and confidential access to the Audit Committee at all times to discuss the results of their audits.
−Removed: Management assessed the Corporation’s system of internal control over financial reporting as of June 27, 2021, in relation to criteria for effective internal control over financial reporting as described in Internal Control – Integrated Framework (2013) , issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
−Removed: Based on the assessment, management concluded that, as of June 27, 2021, its system of internal control over financial reporting was effective and met the criteria of the Internal Control – Integrated Framework .
+Added: Management assessed the Corporation’s system of internal control over financial reporting as of July 3, 2022, in relation to criteria for effective internal control over financial reporting as described in Internal Control – Integrated Framework (2013) , issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
+Added: Based on the assessment, management concluded that, as of July 3, 2022, its system of internal control over financial reporting was effective and met the criteria of the Internal Control – Integrated Framework .
Crowe LLP, independent registered public accounting firm, has issued an attestation report on the Corporation’s internal control over financial reporting, which is included herein.
6 unchanged sentences
Opinion on Internal Control over Financial Reporting
−Removed: We have audited STRATTEC SECURITY CORPORATION’s (the “Company”) internal control over financial reporting as of June 27, 2021, based on criteria established in Internal Control – Integrated Framework:
+Added: We have audited STRATTEC SECURITY CORPORATION‘s (the “Company”) internal control over financial reporting as of July 3, 2022, based on criteria established in Internal Control – Integrated Framework:
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
−Removed: In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 27, 2021, based on criteria established in Internal Control – Integrated Framework:
+Added: In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 3, 2022, based on criteria established in Internal Control – Integrated Framework:
(2013) issued by COSO.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet of the Company as of June 27, 2021, the related consolidated statements of income (loss) and comprehensive income (loss), shareholders’ equity, and cash flows for the year ended June 27, 2021, and the related notes (collectively referred to as the "financial statements") and our report dated September 2, 2021 expressed an unqualified opinion.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of July 3, 2022 and June 27, 2021, the related consolidated statements of income and comprehensive income, shareholders’ equity, and cash flows for each of the years in the two-year period ended July 3, 2022, and the related notes (collectively referred to as the "financial statements") and our report dated September 8, 2022 expressed an unqualified opinion.
Basis for Opinion
20 unchanged sentences
Not applicable.
+Added: DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
+Added: Not applicable.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
10 unchanged sentences
Equity Compensation Plan Information
−Removed: The following table summarizes share information, as of June 27, 2021, for our Amended and Restated Stock Incentive Plan.
+Added: The following table summarizes share information, as of July 3, 2022, for our Amended and Restated Stock Incentive Plan.
Plan Category
24 unchanged sentences
Amendment to Amended and Restated Articles of Incorporation of the Company
+Added: Amendment to Amended and Restated Articles of Incorporation of the Company
Amended By-laws of the Company
83 unchanged sentences
Consent of Independent Registered Public Accounting Firm dated September 8, 2022
−Removed: Consent of Independent Registered Public Accounting Firm dated September 2, 2021
Rule 13a-14(a) Certification for Frank J.
5 unchanged sentences
XBRL Instance Document – the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
−Removed: The cover page from the Company’s Annual Report on Form 10-K for the year ended June 27, 2021 has been formatted in Inline XBRL.
+Added: The cover page from the Company’s Annual Report on Form 10-K for the year ended July 3, 2022 has been formatted in Inline XBRL.
Previously filed
26 unchanged sentences
Incorporated by reference from the exhibit to the Form 8-K filed on October 9, 2020.
+Added: Incorporated by reference from the exhibit to the Form 8-K filed on October 21, 2021.
This certification is not "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
18 unchanged sentences
August 23, 2022
+Added: /s/ Tina Chang
+Added: August 23, 2022
/s/ Patrick J.
6 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.