<PAGE>   1
 2001 ANNUAL REPORT


                                 [STRATTEC LOGO]

                                    STRATTEC

<PAGE>   2

FORGING AHEAD IN A GLOBAL ENVIRONMENT

         When STRATTEC produced its first ignition lock back in 1915, the idea
of a truly international marketplace for automotive technology would have seemed
far-fetched. But the Company kept pace with the development of the American
automobile industry through decades of growth; as technology advanced, STRATTEC
was in the vanguard. And as markets expanded and diversified, STRATTEC evolved
with the industry. Today, the Company is positioned for global growth with new
technologies, new partnerships, new markets ... these are the elements from
which our success is forged.
<TABLE>
<CAPTION>
CONTENTS

<S>                                                                         <C>
Financial Highlights .......................................................  1

Letter to Shareholders .....................................................  2

Company Description ........................................................  4

STRATTEC Equipped Vehicle List .............................................  9

Management's Discussion and Analysis ....................................... 10

Financial Statements ....................................................... 13

Report of Independent Public Accountants ................................... 22

Report of Management ....................................................... 22

Financial Summary .......................................................... 23

Directors/Officers/Shareholders Information ................................ 24
</TABLE>


STRATTEC SECURITY CORPORATION

STRATTEC SECURITY CORPORATION designs, develops, manufactures and markets
mechanical locks, electro-mechanical locks and related access control products
for global automotive manufacturers. Our products are shipped to customer
locations in the United States, Canada, Mexico, Europe and South America, and we
provide full service and aftermarket support. We also supply products for the
heavy truck, recreational vehicle, marine and industrial markets, as well as
precision die castings for the transportation, security and recreational
products industries.






<PAGE>   3

FINANCIAL HIGHLIGHTS

(In Millions)
<TABLE>
<CAPTION>
                                        2001                    2000                   1999
                                        ----                    ----                   ----
<S>                                 <C>                     <C>                     <C>
Net Sales                           $  203.0                $  224.8                $  202.6
Gross Profit                            40.2                    49.4                    46.8
Income from Operations                  20.6                    29.1                    26.6
Net Income                              13.0                    18.5                    17.0
Total Assets                           101.6                   109.0                   128.2
Total Debt                                 -                       -                       -
Shareholders' Equity                    60.0                    60.4                    82.3
</TABLE>

(In Millions)

        [NET SALES GRAPH] [NET INCOME GRAPH] [ECONOMIC VALUE ADDED EVA(R) GRAPH]

ECONOMIC VALUE ADDED (EVA(R))

        All U.S. associates and many of our Mexico-based salaried associates
participate in incentive plans that are based upon our ability to add economic
value to the enterprise. During 2001, $5.6 million of positive economic value
was generated, a decrease of $5.0 million compared to the economic value the
business generated in 2000. We continue to believe that EVA(R) represents
STRATTEC's ultimate measure of success and shareholder value.

<TABLE>
<S>                                          <C>       <C>
Net Operating Profit After Cash-Based Taxes            $12.9
Average Net Capital Employed                 $61.0
Capital Cost                                    12%
                                             -----
                                                         7.3
Economic Value Added                                   $ 5.6
                                                       =====
</TABLE>

EVA is a registered trademark of Stern, Stewart & Co.






                         2001 STRATTEC Annual Report 1
<PAGE>   4

A LETTER TO THE SHAREHOLDERS


Fellow Shareholders:

         Fiscal 2001 was one of those years a business would rather not
experience, but comes along every once in a while anyway during the existence of
a corporation. After a record production and sales year in fiscal 2000, we
started fiscal 2001 at a fast pace. By late fall, however, the slumping economy
significantly affected new-vehicle sales, and by mid-November, our customers
responded by cutting their production. The reductions in vehicle production in
November, December, January and February had the obvious effect on us, resulting
in reduced production at both our manufacturing locations and temporary layoffs
of our operations associates.

         While the economic slowdown has been an unpleasant experience for us as
well as most businesses in North America, it was not entirely unexpected. Some
forecasts had predicted a slowdown, and the incredible vigor of the auto
industry in the preceding several years made some kind of adjustment likely. We
therefore made it one of our missions for the fiscal year to optimize our
processes and eliminate costs in a more organized and focused manner. The
resulting cost-reduction teams made significant progress during the year,
identifying and implementing cost cutting amounting to an annualized $8 million.
These reductions came from finding and eliminating waste, revising operating
methods, and reducing employment levels. Had we not achieved these cost
reductions, the effects of the economic slowdown on our business would have been
more dramatic.

         In late December, one of our major customers abruptly announced that it
was unilaterally reducing all of its material purchase orders by 5%, effective
January 1st. We viewed this action as an arbitrary and unreasonable attempt to
mitigate that customer's negative financial condition resulting from its own
internal issues. Our position on this action is that we should not and cannot
allow our shareholders to suffer as a result of our customers' self-induced
problems. Nevertheless, that customer's partial success in forcing this action
on its supply base has encouraged other customers suffering under the economic
slowdown to increase pressure for price reductions as well. While we recognize
our customers' rationale for this price reduction pressure, we are looking, and
will continue to look, at solutions that are strategically fair and equitable
for STRATTEC, its shareholders and its customers.

         In March, we began negotiations with PACE Local 7-0232, the union
representing our hourly operations associates. These negotiations were conducted
in anticipation of the expiration of our then existing labor contract on May 31,
2001. On that date, both sides reached a tentative agreement for a new contract
which included an extension of the current contract until June 6, 2001 to allow
the union time to organize and call a ratification meeting of its members.
Despite the endorsement of the tentative agreement by both the union Bargaining
Committee and Executive Committee, the membership rejected the proposed contract
by a narrow margin, and a strike against the company began.

         The strike lasted 16 days, during which time we operated the Milwaukee
facility under a Strike Contingency Plan devised several months earlier. This
plan included the build-up of certain component and finished goods inventories
prior to May 31st, as well as an operating plan that used our salaried work
force to produce parts. Thanks to this plan and the dedication and enthusiasm of
our salaried employees, we were able to support our major customers'
requirements without interrupting their production processes.

         On June 22nd, after mediated negotiations, the union took another
tentative agreement before the membership. This agreement was again endorsed by
both the union Bargaining Committee and Executive Committee, and this time was
ratified by the members. Despite the strike and its effects on our fourth
quarter results, we believe the resulting 4-year contract is fair to both the
Company and its hourly represented associates, and should provide us
opportunities to continue to make changes for more efficient operations in our
Milwaukee facility.

         The pricing pressure we are receiving from our customers is a
continuation of prior years' experience, but is now heightened by the need for
these customers to reduce costs in the face of a very competitive but stagnate
market, and reduced automotive production at some of our their




                          2001 STRATTEC Annual Report 2

<PAGE>   5

A LETTER TO THE SHAREHOLDERS

assembly plants. To this end, we are seeing some attempts to reduce vehicle cost
by de-contenting - a tactic which reduces the overall amount of standard and/or
optional equipment on a vehicle. This is having an effect on our product by
reducing the number of locks per vehicle on certain models. While this does cut
cost for our customers, it reduces volume for us, on top of the already reduced
volumes resulting from the current market conditions.

        De-contenting of our lock set packages is a trend that is likely to
continue, as electronic remote key device usage increases as standard equipment
on new vehicles. We have been anticipating this potential, and the actions we
have taken to broaden our vehicle access product line were put in place
partially as a defense against this slow erosion of our traditional product
line.

        Expansion of our product line with additional access control products is
an important part of our Alliance with WiTTE. The Alliance was formalized with
the signing of legal agreements on November 28, 2000. To date, we have several
Alliance programs under way, including a lockset program with Saab in Sweden and
a hood latch program for Volkswagen in Mexico. Additionally, our WiTTE-STRATTEC
LLC joint venture has signed letters of intent with intended partners in Brazil
and China, and we are proceeding to formalize these relationships. We have one
committed vehicle program for Brazil, and four committed programs for China. In
addition, we are receiving quote requests for "global" vehicle programs. With
these developments, we are encouraged that our globalization strategy is working
for our customers and us.

        It is clear that the strategic challenges we have discussed in previous
annual reports are still before us. But we believe we have put into place the
necessary foundation upon which to build our future. In addition to the Alliance
structure we have created with Witte, we are actively seeking relationships with
other strategic partners that can further our interests and strengthen our
position as a global provider of vehicle access control components and systems.
We continue to develop our own in-house capabilities for designing, testing and
producing these products. And we continue to emphasize cost reduction and
efficiency enhancements in our existing processes to support our traditional
product business.

        As the ultimate measure of our performance, our goal was to deliver a
fifth consecutive year of increased EVA. Although we did not attain that goal,
we still created $5.6 million positive EVA in fiscal 2001, our third best year.
And we were able to deliver our second best year of earnings per share. We are
pleased to be able to continue adding value to your investment in STRATTEC. For
a more detailed discussion of financial operating results, please read the
Management's Discussion and Analysis of operating results on pages 10, 11 and 12
of this report.

        Despite fiscal 2001 being a difficult year for a number of reasons, we
have weathered the storm reasonably well, and look to the future with optimism.
We believe we are doing the right things to position our Company for additional
economic value creation in the immediate and long-term future. Your support
during this past year has been quite heartening, and we appreciate your
confidence in us. We look forward to justifying that confidence.

Sincerely,


/s/ Harold M. Stratton II                  /s/ John G. Cahill
Harold M. Stratton II                      John G. Cahill
Chairman and Chief Executive Officer       President and Chief Operating Officer



August, 2001




                          2001 STRATTEC Annual Report 3


<PAGE>   6

COMPANY DESCRIPTION



BASIC BUSINESS

        STRATTEC SECURITY CORPORATION designs, develops, manufactures and
markets mechanical locks, electro-mechanical locks, latches and related access
control products for major North American and global automotive manufacturers.
We also supply these products for the heavy truck, recreational vehicle, marine
and industrial markets. Through our alliance partner, WiTTE-Velbert Gmbh in
Germany, both companies' access control products are manufactured and marketed
globally. We also provide full service and aftermarket support.

[STRATTEC LOGO]

HISTORY

        STRATTEC formerly was a division of Briggs & Stratton Corporation. On
February 27, 1995, STRATTEC was spun off from Briggs & Stratton through a
tax-free distribution to the then-existing Briggs shareholders. STRATTEC
received substantially all of the assets and liabilities related to the lock and
key business owned by Briggs & Stratton.

        Starting as a division of Briggs & Stratton, and continuing today as a
totally separate and independent company, we have a history in the automotive
lock manufacturing business spanning over 85 years. We also have been in the
zinc die-casting business for more than 75 years. STRATTEC has been the world's
largest producer of automotive locks and keys since the late 1920s, and we
currently maintain a dominant share of the North American markets for these
products.


PRODUCTS

        Our principal products are locks and keys for cars and trucks. A typical
automobile contains a set of five locks: a steering column/ignition lock, a
glove box lock, two front door locks and a deck lid (trunk) lock. Pickup trucks
typically use three to four locks, while sport utility vehicles and vans use
five to seven locks. Some vehicles have additional locks for under-floor
compartments or folding rear seat latches. T-top locks, spare tire locks and
burglar alarm locks also are offered as options. Usually two keys are provided
with each vehicle lockset. Additional products include zinc die cast steering
column lock housings, and an electronic Vehicle Access Control System (VACS).

[PICTURE OF KEY]

         VACS is a passive security system for commercial delivery vehicles.
It's an example of our ability to effectively integrate mechanical and
electronic components such as Radio Frequency Identification (RFID) and Hall
Effect sensors.




                          2001 STRATTEC Annual Report 4
<PAGE>   7

COMPANY DESCRIPTION

         Through our alliance with WiTTE-Velbert in Germany, we are expanding
our automotive access control product offerings to include hood latches, trunk
or liftgate latches, door latches, door handles, and vehicle access modules that
contain some or all of these components.


MARKETS

        We are a direct supplier to OEM auto and light truck manufacturers, to
over-the-road heavy truck manufacturers and recreational vehicle manufacturers,
as well as to other transportation-related manufacturers. For the 2001 model
year, we enjoyed a 62% market share in the North American automotive industry,
supplying locks and keys for approximately 84% of General Motors' production,
63% of Ford's, 97% of DaimlerChrysler's and 100% of Mitsubishi's production. We
also are an OEM components supplier to other "Tier 1" automotive suppliers and a
wide array of smaller industrial manufacturers.

        Direct sales to various OEMs represent approximately 82% of our total
sales. The remainder of the company's revenue is received primarily through
sales to the OEM service channels, and the locksmith aftermarket.

[PICTURE OF WAREHOUSE]

        Sales to our major automotive customers are coordinated through our
direct sales personnel located in our Detroit-area office. Sales also are
partially facilitated through daily interaction between our application
engineers located in Detroit and customer engineering departments. Sales to
other OEM customers are accomplished through a combination of our own sales
personnel and manufacturer representative agencies.

        STRATTEC's products are supported by an extensive staff of experienced
lock and latch engineers. This staff, which includes product design, quality and
manufacturing engineers, is capable of providing complete design, development
and testing services of new products for our customers. This staff also is
available for customer problem solving, warranty analysis and other activities
that arise during a product's life cycle. Our customers receive aftersales
support in the form of special field service kits, service manuals, and specific
in-plant production repair programs.

        The majority of our OEM products are sold in North America. However, our
dominance in the North American market translates into a world market share of
around 20%, making STRATTEC the largest producer of automotive locks and keys in
the world. While a modest amount of exporting is done to automotive assembly
plants in Europe and South America, we are in the process of expanding our
presence in these markets and elsewhere through our alliance with WiTTE-Velbert
Gmbh.



                          2001 STRATTEC Annual Report 5

<PAGE>   8

COMPANY DESCRIPTION

        OEM service and replacement parts are sold to the OEM's own service
operations. In addition, we distribute our components and security products to
the automotive aftermarket through approximately 60 authorized wholesale
distributors, as well as other marketers and users of component parts, including
export customers. These aftermarket activities are serviced through a
warehousing operation integral to our Milwaukee headquarters and manufacturing
facility.


CUSTOMER FOCUS

        Since the majority of the company's sales are to the "Big Three" North
American automotive manufacturers, STRATTEC is organized to assure that our
activities are focused on these major customers and their associated entities.
We have customer-focused teams for General Motors, for Ford, for
DaimlerChrysler/Mitsubishi and for Delphi Automotive Systems. A fifth team deals
with programs and new products associated with our alliance partner,
WiTTE-Velbert, while a sixth team handles our industrial and service customers,
including such heavy truck manufacturers as Peterbilt, Kenworth, Mack,
Freightliner, Navistar and Volvo.

[STRATTEC LOGO]

        Each of the six teams possesses all of the necessary disciplines
required to meet their customers' needs. Leading each team's efforts are Product
Business Managers who handle the overall coordination of various product
programs. The Product Business Managers work closely with their team's quality
engineers, cost engineers, purchasing agents, internal and external customer
service representatives, service manager, and engineering manager. The
engineering manager in turn helps coordinate the efforts of design engineers,
product and process engineers, component engineers, and electrical engineers.

        STRATTEC uses a formalized product development process to identify and
meet customer needs in the shortest possible time. By creating and following
this streamlined development system, we shorten product lead times, tighten our
response to market changes, and provide our customers with the optimum value
solution to their security requirements. STRATTEC also is QS-9000/ISO 9001
certified. This means we embrace the philosophy that quality should exist not
only in the finished product, but in every step of our process as well.


OPERATIONS

        Most of the components that go into our products are manufactured at our
main facility and headquarters in Milwaukee, Wisconsin. This facility

[PICTURE OF MANUFACTURING FACILITY]


                          2001 STRATTEC Annual Report 6
<PAGE>   9
COMPANY DESCRIPTION


also makes zinc die cast components for other manufacturers. Assembly is
performed at the Milwaukee location and at our primary assembly facility,
located in Jurez, Mexico.

[PHOTO OF ASSEMBLY FACILITY IN MEXICO]

ADVANCED DEVELOPMENT

         Research and development activities are centered around a dedicated
research engineering staff we call our Advanced Development Group. This Group
has the responsibility for developing future products and processes that will
keep us in the forefront of the markets we serve. Projects we are pursuing focus
on electronic and mechanical access control products, modularization of related
access control components, and new manufacturing processes to reduce costs for
ourselves and our customers.

ALLIANCE

         Our alliance with WiTTE-Velbert Gmbh consists of two main initiatives.
The first is a set of cross-licensing agreements which allows STRATTEC to
manufacture, market and sell WiTTE products in North America, and allows WiTTE
to manufacture, market and sell STRATTEC products in Europe. In this way, both
STRATTEC and WiTTE have established international reach for their respective
products and services, while sharing the potential profits of those products
sold outside of their respective home markets.

[CAR GRAPHIC]

[WITTE STRATTEC LOGO]


         The second initiative is a 50-50 joint venture company, WiTTE-STRATTEC
LLC, which is the corporate entity through which we and WiTTE are pursuing
emerging markets outside of Europe and North America.

Additionally, through WiTTE-STRATTEC LLC, the two companies will jointly own the
intellectual property rights for any products that result from the coordinated
activities of their respective research and development resources.

                          2001 STRATTEC Annual Report 7

<PAGE>   10

COMPANY DESCRIPTION

CYCLICAL NATURE OF THE BUSINESS

         The manufacturing of components used in automobiles is driven by the
normal peaks and valleys associated with the automotive industry. Typically, the
months of July and August are relatively slow as summer vacation shutdowns and
model year changeover occur at the automotive assembly plants. September volumes
increase rapidly as the new model year begins. This volume strength continues
through October and into early November. As the holiday and winter seasons
approach, the demand for automobiles slows. March usually brings a major sales
and production increase, which then continues through most of June. This results
in our first fiscal quarter (ending in September) sales and operating results
typically being our weakest, with the remaining quarters being more consistent.

ECONOMIC VALUE COMMITMENT

         The underlying philosophy of our business, and the means by which we
measure our performance, is Economic Value Added (EVA(R)). Simply stated,
economic value is created when our business enterprise yields a return greater
than the cost of capital we and our shareholders have invested in STRATTEC. The
amount by which our return exceeds the cost of our capital is EVA(R). In line
with this philosophy, EVA(R) bonus plans are in effect for our associates and
our outside directors as an incentive to help positively drive the business.

         STRATTEC's significant market share is the result of an
eight-decade-long commitment to creating quality products and systems that are
responsive to changing needs. As technologies advance and markets grow, STRATTEC
retains that commitment to meeting and exceeding the expectations of our
customers, and providing economic value to our shareholders.

GLOBAL PARTNERS


[GLOBAL MAP]

1. STRATTEC - Milwaukee, Wisconsin             4. WITTE - Nejdek, Czech Republic
2. STRATTEC de Mexico - Juarez, Mexico         5. IFER - Sao Paulo, Brazil
3. WITTE - Velbert, Germany                    6. ZU YIH - Fuzhou, China

                          2001 STRATTEC Annual Report 8

<PAGE>   11



VEHICLE LIST

2002 VEHICLES

         We're proud of the quality vehicles that use STRATTEC components. They
include over-the-road trucks like Peterbilt, Kenworth, Mack, Freightliner,
Navistar and Volvo. And recreational vehicles such as Winnebago. Also, the
following model year 2002 cars and light trucks:

<TABLE>
<CAPTION>
CARS
<S>                                 <C>                          <C>
Buick Century                       Chrysler Concorde            Jaguar S-Type
Buick La Sabre                      Chrysler 300M                Lincoln Continental
Buick Park Avenue                   Chrysler LHS                 Lincoln LS
Buick Regal                         Chrysler Prowler             Mercury Sable
Cadillac Deville                    Chrysler PT Cruiser          Mitsubishi Eclipse
Cadillac Eldorado                   Chrysler Sebring             Mitsubishi Galant
Chevrolet Camaro                    Dodge Intrepid               Oldsmobile Alero
Chevrolet Cavalier                  Dodge Neon                   Oldsmobile Intrigue
Chevrolet Corvette                  Dodge Stratus                Pontiac Firebird
Chevrolet Impala                    Dodge Viper                  Pontiac Grand Am
Chevrolet Lumina                    Ford Taurus                  Pontiac Grand Prix
Chevrolet Malibu                    Ford Thunderbird             Pontiac Sunfire
Chevrolet Monte Carlo               GM Impact EV1                Saturn L Series
</TABLE>


<TABLE>
<CAPTION>
LIGHT TRUCKS, VANS AND SPORT UTILITY VEHICLES
<S>                                 <C>                          <C>
Cadillac Escalade                   Dodge Ramcharger             GMC Sonoma Pickup
Cadillac EXT                        Dodge Ram Pickup             GMC Yukon
Chevrolet Astro                     Dodge Ram Van/Wagon          GMC Yukon XL
Chevrolet Avalanche                 Ford Excursion               Isuzu Hombre Pickup
Chevrolet Silverado Pickup          Ford Expedition              Jeep Grand Cherokee
Chevrolet Express                   Ford Explorer                Jeep Liberty
Chevrolet S-10 Pickup               Ford Explorer Sport          Jeep Wrangler
Chevrolet Suburban                  Ford Explorer Sport Trac     Lincoln Blackwood
Chevrolet Tahoe                     Ford F-Series Pickup         Lincoln Navigator
Chevrolet Trailblazer               Ford Ranger Pickup           Mazda B-Series Pickup
Chevrolet Venture                   GMC Envoy                    Mercury Mountaineer
Chrysler Town & Country             GMC Denali                   Mercury Villager
Chrysler Voyager                    GMC Jimmy                    Nissan Quest
Dodge Caravan/Grand Caravan         GMC Safari                   Oldsmobile Bravada
Dodge Dakota Pickup                 GMC Savana                   Oldsmobile Silhouette
Dodge Durango                       GMC Sierra Pickup            Pontiac Montana
</TABLE>


                          2001 STRATTEC Annual Report 9

<PAGE>   12

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following Discussion and Analysis should be read in conjunction with the
Company's Financial Statements and Notes thereto. Unless otherwise indicated,
all references to years refer to fiscal years.

RESULTS OF OPERATIONS
2001 COMPARED TO 2000

         Net sales were $203.0 million in 2001 compared to $224.8 million in
2000. The prior year included one additional shipping week, which contributed to
the overall sales reduction. Sales to the Company's largest customers overall
decreased in the current year compared to the record prior year levels, with
General Motors at $60.2 million compared to $69.0 million, Delphi Automotive
Systems Corporation at $26.9 million compared to $31.5 million, DaimlerChrysler
Corporation at $33.9 million compared to $35.1 million, and Ford Motor Company
at $45.3 million compared to $54.5 million. Sales to Mitsubishi Motor
Manufacturing of America actually increased from $9.4 million to $11.8 million.
The overall sales decrease is the result of reduced vehicle production at our
customer's assembly plants.

         Gross profit as a percentage of net sales was 19.8 percent in 2001
compared to 22.0 percent in 2000. The lower gross margin is the result of
several factors, including a 16-day strike in June 2001 at the Company's
Milwaukee facility which resulted in additional costs to support customer
requirements; reduced efficiencies at the Company's Mexican facility; and
reduced sales due to delayed shipments. Also negatively impacting the current
year margin was less favorable absorption of manufacturing costs due to reduced
production volumes resulting from customer plant shutdowns, an overall decline
in automotive production, and a reduction in the Company's inventory levels in
comparison to the prior year. Additional items impacting the gross margin
include an increase in the cost of zinc, and increased U.S. dollar costs at the
Company's Mexico assembly facility. The average cost of zinc per pound, which
the Company uses at a rate of approximately 1 million pounds per month,
increased to approximately $.57 in 2001, from approximately $.55 in 2000. The
increased U.S. dollar costs at the Company's Mexico assembly facility are the
result of the appreciation of the Mexican peso and overall inflation in Mexico
in the current year. The inflation rate in Mexico for the 12 months ended June
2001 was approximately 7 percent while the U.S. dollar/Mexican peso exchange
rate fell to approximately 9.4 in 2001, from approximately 9.5 in 2000.

         Engineering, selling and administrative expenses were $19.7 million, or
9.7 percent of net sales in 2001, compared to $20.3 million, or 9.0 percent of
net sales in 2000. The decreased operating expenses are attributed to one less
week of operating expenses in the current year compared to the prior year and
the impact of cost savings realized as a result of the human resources
realignment, which took place in the third quarter of fiscal 2001.

         Income from operations was $20.6 million in 2001, compared to $29.1
million in 2000, reflecting the decreased sales volume and reduced gross margin
as discussed above.

         The effective income tax rate in 2001 was 37.0 percent compared to 39.0
percent in 2000. The reduction is due to an increase in the foreign sales
benefit. The overall effective rate differs from the federal statutory tax rate
primarily due to the effects of state income taxes.

RESULTS OF OPERATIONS
2000 COMPARED TO 1999

         Net sales were $224.8 million in 2000, an increase of 11 percent
compared to net sales of $202.6 million in 1999. Fiscal 2000 included one
additional shipping week, which contributed to the overall sales growth. Sales
to General Motors Corporation and Delphi Automotive Corporation increased 10
percent to $100.5 million as a result of increased unit production by these
customers. In addition, labor disruptions at General Motors Corporation during
July 1998 reduced sales to this customer by an estimated $3 million during the
fiscal 1999 September quarter. Sales to DaimlerChrysler Corporation increased 14
percent to $35.1 million. The increase was due primarily to increased vehicle
production schedules and higher value mechanical and electrical content in the
locksets the Company supplies. Sales to Mitsubishi Motor Manufacturing of
America increased to $9.4 million in 2000 compared to $2.2 million in 1999. This
is due to an increase in the Company's share of this customer's production
requirements with the launch of the 2000 Eclipse. Sales to the Ford Motor
Company were comparable to 1999.

         Gross profit as a percentage of net sales was 22.0 percent in 2000
compared to 23.1 percent in 1999. The lower gross margin is the result of
several factors including higher production start-up costs relating to the
launch of the new model year 2000 vehicles, investment


                          2001 STRATTEC Annual Report 10

<PAGE>   13

MANAGEMENT'S DISCUSSION AND ANALYSIS 2001

in process changes, facilities rearrangement and training associated with Lean
Manufacturing initiatives, product mix, and increased U.S. dollar costs at the
Company's Mexico assembly facility. The major portion of the facility's
rearrangement was completed during the first three months of fiscal 2001, and
benefits were being realized in the form of cost reduction, inventory reduction
and the enhanced ability to meet continually increasing customer requirements
for productivity and quality. The increased U.S. dollar costs at the Company's
Mexico assembly facility are the result of the appreciation of the Mexican peso
and higher wage inflation in comparison to 1999. The inflation rate in Mexico
for the 12 months ended June 2000 was approximately 10 percent while the U.S.
dollar/Mexican peso exchange rate fell to approximately 9.5 in 2000, from
approximately 9.8 in 1999. In addition, the average cost of zinc per pound,
which the Company uses at a rate of approximately 1 million pounds per month,
increased to approximately $.55 in 2000, from approximately $.52 in 1999.

         Engineering, selling and administrative expenses were $20.3 million, or
9.0 percent of net sales in 2000, compared to $20.2 million, or 10.0 percent of
net sales in 1999. Fiscal 2000 expense levels reflect the favorable impact of
moving the Company's service aftermarket warehouse and distribution to the
Milwaukee facility in April 1999. Also, included in current year expenses are
development activities associated with new products and the Company's
globalization activities with its alliance partner, WiTTE-Velbert GmbH & Co. KG.

         Income from operations was $29.1 million in 2000, compared to $26.6
million in 1999, reflecting the increased sales volume as previously discussed.

         The effective income tax rate in 2000 was 39.0 percent compared to 38.1
percent in 1999. This is due to an increase in the state effective tax rate. The
overall effective rate differs from the federal statutory tax rate primarily due
to the effects of state income taxes.

LIQUIDITY AND CAPITAL RESOURCES

         The Company generated cash from operating activities of $23.2 million
in 2001 compared to $36.0 million in 2000. The reduction in the generation of
cash is due to several factors including decreased sales levels as previously
discussed and a reduction in accounts payable and accrued liabilities in 2001 as
opposed to an increase in 2000. The changes in accounts payable and accrued
liabilities each year were primarily in response to production levels and
financial results. In addition, accounts receivable decreased by approximately
$1.5 million at July 1, 2001, as compared to July 2, 2000, primarily due to
decreased sales. Inventory balances decreased by approximately $5.7 million
during the same period as a result of decreased customer vehicle production
levels, company focused efforts and the 16-day strike during June 2001 at the
Milwaukee facility.

        Capital expenditures in 2001 were $7.5 million, compared to $9.4 million
in 2000. Expenditures primarily were in support of requirements for new product
programs and the upgrade and replacement of existing equipment. The Company
anticipates that capital expenditures will be approximately $8 million in fiscal
2002, primarily in support of requirements for new product programs and the
upgrade and replacement of existing equipment.

        The Board of Directors of the Company has authorized a stock repurchase
program to buy back up to 2,639,395 outstanding shares. A total of 2,160,026
shares have been repurchased as of July 1, 2001, at a cost of approximately
$69.0 million. Additional repurchases may occur from time to time. Funding for
the repurchases was provided primarily from cash flow from operations and to a
lesser extent from borrowings under existing credit facilities.

         The Company has a $50.0 million unsecured, revolving credit facility
(the "Credit Facility"), of which $30 million expires October 31, 2001, and $20
million expires October 31, 2003. There were no outstanding borrowings under the
Credit Facility at July 1, 2001. Interest on borrowings under the Credit
Facility are at varying rates based, at the Company's option, on the London
Interbank offering rate, the Federal Funds Rate, or the bank's prime rate. The
Credit Facility contains various restrictive covenants including those that
require the Company to maintain minimum levels for certain financial ratios such
as tangible net worth, ratio of indebtedness to tangible net worth and fixed
charge coverage. The Company believes that the Credit Facility will be adequate,
along with cash flow from operations, to meet its anticipated capital
expenditure, working capital and operating expenditure requirements.

         The Company has not been significantly impacted by inflationary
pressures over the last several years, except for zinc and Mexican assembly
operations as noted elsewhere in this Management's Discussion and Analysis.

                          2001 STRATTEC Annual Report 11

<PAGE>   14

MANAGEMENT'S DISCUSSION AND ANALYSIS

MEXICAN OPERATIONS

         The Company has assembly operations in Juarez, Mexico. Since December
28, 1998, the functional currency of the Mexican operation has been the Mexican
peso. The effects of currency fluctuations result in adjustments to the U.S.
dollar value of the Company's net assets and to the equity accounts in
accordance with Statement of Financial Accounting Standard (SFAS) No. 52,
"Foreign Currency Translation."

OTHER

         On November 28, 2000, the Company signed certain alliance agreements
with E. WiTTE Verwaltungsgesellschaft GMBH, and its operating unit,
WiTTE-Velbert GmbH & Co. KG ("WiTTE"). WiTTE, of Velbert, Germany, is a
privately held, QS 9000 and VDA 6.1 certified automotive supplier with sales of
DM313 million in its last fiscal year. WiTTE designs, manufactures and markets
components including locks and keys, hood latches, rear compartment latches,
seat back latches, door handles and specialty fasteners. WiTTE's primary market
for these products has been Europe. The WiTTE-STRATTEC alliance provides a set
of cross-licensing agreements for the manufacture, distribution and sale of
WiTTE products by the Company in North America, and the manufacture,
distribution and sale of the Company's products by WiTTE in Europe.
Additionally, a joint venture company ("WiTTE-STRATTEC LLC") in which each
company holds a 50 percent interest has been established to seek opportunities
to manufacture and sell both companies' products in other areas of the world
outside of North America and Europe. These activities did not have a material
impact on the July 1, 2001, financial statements.

PROSPECTIVE INFORMATION

         A number of the matters and subject areas discussed in this Annual
Report 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 "could." These include expected future financial results, product offerings,
global expansion, liquidity needs, financing ability, planned capital
expenditures, management's or the Company's expectations and beliefs, and
similar matters discussed in the Company's Management's Discussion and Analysis.
The discussions of such matters and subject areas are qualified by the inherent
risk and uncertainties surrounding future expectations generally, and also may
materially differ from the Company's actual future experience.

         The Company's business, operations and financial performance are
subject to certain risks and uncertainties, which could result in material
differences in actual results from the Company's current expectations. These
risks and uncertainties include, but are not limited to, general economic
conditions, in particular those relating to the automotive industry, customer
demand for the Company's and its customers' products, competitive and
technological developments, customer purchasing actions, foreign currency
fluctuations and costs of operations.

         Shareholders, potential investors and other readers are urged to
consider these factors carefully in evaluating the forward-looking statements
and are cautioned not to place undue reliance on such forward-looking
statements. The forward-looking statements made herein are only made as of the
date of this Annual Report 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 Annual Report.


                         2001 STRATTEC Annual Report 12

<PAGE>   15

CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                    Fiscal Years Ended
                                        ---------------------------------------------
                                        July 1, 2001     July 2, 2000   June 27, 1999
                                        ------------     ------------   -------------
<S>                                     <C>              <C>            <C>
NET SALES                                 $ 202,973        $224,817       $ 202,625
Cost of goods sold                          162,735         175,459         155,821
                                          ---------        --------       ---------
   GROSS PROFIT                              40,238          49,358          46,804
Engineering, selling and
   administrative expenses                   19,676          20,254          20,191
                                          ---------        --------       ---------

   INCOME FROM OPERATIONS                    20,562          29,104          26,613
Interest income                                 628           1,056           1,132
Interest expense                                  -               -               -
Other income (expense), net                    (514)            189            (239)
                                          ---------        --------       ---------
   INCOME BEFORE PROVISION FOR
   INCOME TAXES                              20,676          30,349          27,506
Provision for income taxes                    7,650          11,836          10,491
                                          ---------        --------       ---------

NET INCOME                                $  13,026        $ 18,513       $  17,015
                                          =========        ========       =========

EARNINGS PER SHARE:
   BASIC                                  $    3.02        $   3.75       $    3.02
                                          =========        ========       =========
   DILUTED                                $    2.96        $   3.65       $    2.94
                                          =========        ========       =========
</TABLE>

The accompanying notes are an integral part of these consolidated statements.


                         2001 STRATTEC Annual Report 13

<PAGE>   16


CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                     July 1, 2001     July 2, 2000
                                                                     ------------     ------------
<S>                                                                  <C>              <C>
ASSETS
CURRENT ASSETS
   Cash and cash equivalents                                          $  15,298         $  13,915
   Receivables, less allowance for doubtful
      accounts of $250 at July 1, 2001,
      and July 2, 2000                                                   27,189            28,731
   Inventories                                                            8,605            14,342
   Customer tooling in progress                                           2,588             4,248
   Future income tax benefits                                             1,880             2,092
   Other current assets                                                   4,107             3,273
                                                                      ---------         ---------
         Total current assets                                            59,667            66,601
DEFERRED INCOME TAXES                                                       130                 -
PROPERTY, PLANT, AND EQUIPMENT, NET                                      41,851            42,381
                                                                      ---------         ---------
                                                                      $ 101,648         $ 108,982
                                                                      =========         =========


LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts payable                                                   $  14,178         $  19,694
   Accrued liabilities:
      Payroll and benefits                                                7,501            10,394
      Environmental                                                       2,749             2,770
      Income taxes                                                          354                47
      Other                                                               1,711             1,196
                                                                      ---------         ---------
         Total current liabilities                                       26,493            34,101
DEFERRED INCOME TAXES                                                         -               299
BORROWINGS UNDER REVOLVING CREDIT FACILITY                                    -                 -
ACCRUED PENSION OBLIGATIONS                                              10,617             9,839
ACCRUED POST-RETIREMENT OBLIGATIONS                                       4,528             4,293
SHAREHOLDERS' EQUITY
   Common stock, authorized 12,000,000 shares
      $.01 par value, issued 6,195,889 shares
      at July 1, 2001, and 6,120,788 shares at
      July 2, 2000                                                           62                61
   Capital in excess of par value                                        49,545            47,924
   Retained earnings                                                     80,990            67,964
   Accumulated other comprehensive loss                                  (1,749)           (2,239)
   Less: Treasury stock, at cost (2,149,800 shares at
      July 1, 2001, and 1,668,179 shares at July 2, 2000)               (68,838)          (53,260)
                                                                      ---------         ---------
         Total shareholders' equity                                      60,010            60,450
                                                                      ---------         ---------
                                                                      $ 101,648         $ 108,982
                                                                      =========         =========
</TABLE>

The accompanying notes are an integral part of these consolidated balance sheets


                         2001 STRATTEC Annual Report 14
<PAGE>   17
CONSOLIDATED STATEMENTS OF CHANGE IN EQUITY (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                 Accumulated
                                         Capital in                 Other
                              Common     Excess of  Retained    Comprehensive  Treasury  Comprehensive
                              Stock      Par Value  Earnings        Loss         Stock       Income
                              -----      ---------  --------    -------------  --------  -------------
<S>                           <C>        <C>        <C>         <C>           <C>       <C>


BALANCE,
JUNE 28, 1998                 $59        $42,489    $32,436     $(1,863)      $(2,723)
Net income                      -              -     17,015           -             -       $17,015
Translation adjustments         -              -          -        (218)            -          (218)
                                                                                            -------
Comprehensive income                                                                        $16,797
                                                                                            =======
Purchase of common stock        -              -          -           -        (6,416)
Exercise of stock options,
  including tax benefit
  of $415                       -          1,510          -           -            56
                              ---        -------    -------     -------       -------


BALANCE,
JUNE 27, 1999                  59         43,999     49,451      (2,081)       (9,083)
                              ===        =======    =======     =======       =======
Net income                      -              -     18,513           -             -       $18,513
Translation adjustments         -              -          -        (158)            -          (158)
                                                                                            -------
Comprehensive income                                                                        $18,355
                                                                                            =======
Purchase of common stock        -              -          -           -       (44,230)
Exercise of stock options,
  including tax benefit
  of $1,109                     2          3,925          -           -            53
                              ---        -------    -------     -------      --------

BALANCE,
JULY 2, 2000                   61         47,924     67,964      (2,239)      (53,260)
                              ===        =======    =======     =======      ========

Net income                      -              -     13,026           -             -       $13,026
Translation adjustments         -              -          -         490             -           490
                                                                                            -------
Comprehensive income                                                                        $13,516
                                                                                            =======
Purchase of common stock        -              -          -           -       (15,620)
Exercise of stock options,
  including tax benefit
  of $436                       1          1,621          -           -            42
                              ---        -------    -------     -------      --------

BALANCE,
JULY 1, 2001                  $62        $49,545    $80,990     $(1,749)     $(68,838)
                              ===        =======    =======     =======      ========
</TABLE>



The accompanying notes are an integral part of these consolidated statements.

                         2001 STRATTEC Annual Report 15


<PAGE>   18
CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                        Fiscal Years Ended

                                                         July 1, 2001  July 2, 2000    June 27, 1999
                                                         ------------  ------------    -------------
<S>                                                      <C>           <C>             <C>


CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                              $13,026         $18,513         $17,015
  Adjustments to reconcile net income to
     net cash provided by operating activities:
     Depreciation                                           7,939           7,576           7,107
     Loss on disposition of property,
        plant and equipment                                   201             254             463
     Deferred taxes                                          (312)            392              (7)
     Change in operating assets and liabilities:
        (Increase) decrease in receivables                  1,639           7,294         (10,788)
        (Increase) decrease in inventories                  5,737            (538)          1,158
        (Increase) decrease in other assets                   960          (1,284)          4,510
        Increase (decrease) in accounts payable
            and accrued liabilities                        (6,830)          2,957           8,156
        Tax benefit from options exercised                    436           1,109             415
        Other, net                                            439            (260)            (91)
                                                          -------          ------          ------
        Net cash provided by
            operating activities                           23,235          36,013          27,938
                                                          =======          ======          ======

CASH FLOWS FROM INVESTING ACTIVITIES
  Additions to property, plant and equipment               (7,548)         (9,357)         (8,831)
  Proceeds received on sale of property,
    plant and equipment                                        88               7              15
                                                          -------          ------          ------
        Net cash used in investing activities              (7,460)         (9,350)         (8,816)
                                                          =======          ======          ======

CASH FLOWS FROM FINANCING ACTIVITIES
  Purchase of common stock                                (15,620)        (44,230)         (6,416)
  Exercise of stock options                                 1,228           2,871           1,151
                                                          -------          ------          ------
        Net cash used in financing activities             (14,392)        (41,359)         (5,265)
                                                          =======          ======          ======

NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS                                      1,383         (14,696)         13,857

CASH AND CASH EQUIVALENTS
  Beginning of year                                        13,915          28,611          14,754
                                                          -------          ------          ------
  End of year                                             $15,298         $13,915         $28,611
                                                          =======          ======          ======

SUPPLEMENTAL DISCLOSURE OF
  CASH FLOW INFORMATION
  Income taxes paid                                        $7,101         $10,880         $ 9,882
  Interest paid                                                 -               -               -

</TABLE>

The accompanying notes are an integral part of these consolidated statements.


                         2001 STRATTEC Annual Report 16

<PAGE>   19
NOTES TO FINANCIAL STATEMENTS



ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        STRATTEC SECURITY CORPORATION (the "Company") designs, develops,
manufactures and markets mechanical locks, electro-mechanical locks and related
access-control products for North American and global automotive manufacturers.
        The significant accounting policies followed by the Company in the
preparation of these financial statements, as summarized in the following
paragraphs, are in conformity with accounting principles generally accepted in
the United States.

        PRINCIPLES OF CONSOLIDATION AND PRESENTATION: The accompanying financial
statements reflect the consolidated results of the Company, its wholly owned
Mexican subsidiary, and its foreign sales corporation.

        Certain amounts previously reported have been reclassified to conform to
the July 1, 2001, presentation. These reclassifications have no effect on
previously reported net income or retained earnings.

        FISCAL YEAR: The Company's fiscal year ends on the Sunday nearest June
30. The years ended July 1, 2001, July 2, 2000, and June 27, 1999 are comprised
of 52, 53 and 52 weeks, respectively.

        USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those estimates.

        FAIR VALUE OF FINANCIAL INSTRUMENTS: The fair value of financial
instruments does not materially differ from their carrying values.

        CASH AND CASH EQUIVALENTS: Cash and cash equivalents include all
short-term investments with an original maturity of three months or
less.

        INVENTORIES:  Inventories are stated at cost,  which does not exceed
market.  The last-in,  first-out  (LIFO) method was used for determining the
cost of the inventories at the end of each period.

        Inventories consist of the following (thousands of dollars):

<TABLE>
<CAPTION>
                          July 1,       July 2,
                           2001          2000
                          -------       -------
<S>                      <C>           <C>

Finished products        $ 1,737       $ 3,630
Work in process            8,456        12,374
Raw materials                594         1,054
LIFO adjustment           (2,182)       (2,716)
                         -------       -------
                         $ 8,605       $14,342
                         =======       =======
</Table>

        CUSTOMER TOOLING IN PROGRESS: The Company accumulates its costs for
development of certain tooling used in component production and assembly. The
costs, which are primarily from third-party tool vendors, are accumulated on the
Company's balance sheet. These amounts are then billed to the customer upon
formal acceptance by the customer of products produced with the individual tool.

        PROPERTY, PLANT, AND EQUIPMENT:  Property, plant, and equipment are
stated at cost, and depreciation is computed using the straight-line method over
the following estimated useful lives:

<Table>
<CAPTION>

                                   Expected
Classification                   Useful Lives
--------------                   ------------
<S>                              <C>

Land improvements                20 years
Buildings and improvements       20 to 35 years
Machinery and equipment          3 to 10 years

</Table>

        Property, plant, and equipment consist of the following (thousands of
dollars):

<Table>
<CAPTION>

                              July 1,    July 2,
                               2001       2000
                              -------    -------
<S>                          <C>         <C>

Land                          $ 1,389   $ 1,317
Buildings and improvements     11,780    11,205
Machinery and equipment        82,939    77,390
                              -------   -------
                               96,108    89,912
Less: accumulated
   depreciation               (54,257)  (47,531)
                              -------   -------
                              $41,851   $42,381
                              =======   =======
</TABLE>

        Expenditures for repairs and maintenance are charged to expense as
incurred. Expenditures for major renewals and betterments, which significantly
extend the useful lives of existing plant and equipment, are capitalized and
depreciated. Upon retirement or disposition of plant and equipment, the cost and
related accumulated depreciation are removed from the accounts and any resulting
gain or loss is recognized in income.

        REVENUE RECOGNITION: Revenue is recognized upon the shipment of
products, net of estimated costs of returns and allowances.

        RESEARCH AND DEVELOPMENT COSTS:  Expenditures relating to the
development of new products and processes, including significant improvements
and refinements to existing products, are expensed as incurred.

        FOREIGN CURRENCY TRANSLATION: Since December 28, 1998, the
functional currency of the Mexican operation has been the Mexican peso.
The effects of currency fluctuations result in adjustments to the U.S.
dollar value of the Company's net assets and to the equity accounts in
accordance with Statement of Financial Accounting Standard (SFAS) No. 52,
"Foreign Currency Translation."

                         2001 STRATTEC Annual Report 17

<PAGE>   20
NOTES TO FINANCIAL STATEMENTS

        ACCUMULATED OTHER COMPREHENSIVE LOSS: The only component
of accumulated other comprehensive loss is cumulative translation
adjustments. Deferred taxes have not been provided for the
translation adjustments in accordance with SFAS No. 109,
"Accounting for Income Taxes."

        DERIVATIVE INSTRUMENTS: SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," establishes accounting and reporting
standards requiring that certain derivative instruments be recorded in the
balance sheet as either an asset or liability measured at its fair value. The
Company currently does not hold any such derivative instruments.

REVOLVING CREDIT FACILITY

        The Company has a $50 million unsecured, revolving credit facility (the
"Credit Facility"), of which $30 million expires October 31, 2001, and $20
million expires October 31, 2003. Interest on borrowings under the Credit
Facility are at varying rates based, at the Company's option, on the London
Interbank Offering Rate, the Federal Funds Rate, or the bank's prime rate. There
were no outstanding borrowings at July 1, 2001, or July 2, 2000. There were no
borrowings under the credit facility during the years ended July 1, 2001, and
July 2, 2000.

        The Credit Facility contains various restrictive covenants that require
the Company to maintain minimum levels for certain financial ratios, including
tangible net worth, ratio of indebtedness to tangible net worth and fixed charge
coverage.

COMMITMENTS AND CONTINGENCIES

        In 1995, the Company recorded a provision of $3.0 million for estimated
costs to remediate a site at the Company's Milwaukee facility that was
contaminated by a solvent spill, which occurred in 1985. The Company continues
to monitor and evaluate the site and minimal activity has taken place since the
provision was recorded in 1995. The ultimate resolution of this matter is still
unknown. However, management believes, based upon findings-to-date and known
environmental regulations, that the environmental reserve at July 1, 2001, is
adequate to cover any future developments.

INCOME TAXES

The provision for income taxes consists of the following (thousands of dollars):

<TABLE>
<CAPTION>

                           2001     2000     1999
                           ----     ----     ----
<S>                     <C>      <C>       <C>

Currently payable:
  Federal                $5,817   $ 8,809   $ 8,106
  State                   1,535     2,044     1,976
  Foreign                   610       591       416
                         ------   -------   -------
                          7,962    11,444    10,498
Deferred tax
(benefit) provision        (312)      392        (7)
                         ------   -------   -------
                         $7,650   $11,836   $10,491
                         ======   =======   =======
</Table>

      A reconciliation of the U.S. statutory tax rates to the
effective tax rates follows:

<Table>
<CAPTION>

                        2001     2000    1999
                        ----     ----    ----
<S>                     <C>      <C>    <C>

U.S. statutory rate     35.0%    35.0%   35.0%
State taxes, net of
  federal tax benefit    4.6      4.5     4.7
Foreign sales benefit    (.9)     (.6)    (.5)
Other                   (1.7)      .1    (1.1)
                        ----     ----    ----
                        37.0%    39.0%   38.1%
                        =====    =====   =====
</Table>


        The components of deferred tax assets and (liabilities) are as follows
(thousands of dollars):

<Table>
<CAPTION>

                               July 1, July 2,
                                2001    2000
                                ----    ----
<S>                            <C>     <C>

Future income tax benefits:
Customer tooling              $    95  $   156
Payroll-related accruals          523      507
Environmental reserve           1,045    1,080
Other                             217      349
                              -------  -------
                              $ 1,880  $ 2,092
                              =======  =======

Deferred income taxes:
Accrued pension obligations   $ 4,034  $ 3,837
Accumulated depreciation       (5,625)  (5,810)
Postretirement obligations      1,721    1,674
                              -------  -------
                                 $130    ($299)
                              =======  =======
</TABLE>

        Foreign income before the provision for income taxes was not significant
for each of the years indicated.

RETIREMENT PLANS AND POSTRETIREMENT COSTS

        The Company has a noncontributory defined benefit pension plan covering
substantially all U.S. associates. Benefits are based on years of service and
final average compensation. The Company's policy is to fund at least the minimum
actuarially computed annual contribution required under the Employee Retirement
Income Security Act of 1974 (ERISA). Plan assets consist primarily of listed
equity and fixed income securities. The Company recognizes the expected cost of
retiree health care benefits for substantially all U.S. associates during the
years that the associates render service. Effective June 1, 2001, any new U.S.
associates hired after the above date are no longer eligible for postretirement
plan benefits. The postretirement health care plan is unfunded.


                         2001 STRATTEC Annual Report 18

<PAGE>   21
NOTES TO FINANCIAL STATEMENTS

        The following tables summarize the pension and postretirement plans'
income and expense, funded status, and actuarial assumptions for the years
indicated (thousands of dollars):

<TABLE>
<CAPTION>

                             Pension           Postretirement
                             Benefits            Benefits
                        ----------------      ----------------
                        2001        2000      2001        2000
                        ----        ----      ----        ----
<S>                    <C>          <C>       <C>         <C>

CHANGE IN BENEFIT
OBLIGATION:
Benefit obligation
  at beginning
  of year             $ 31,320     $29,187  $ 3,729     $ 4,500
Service cost             1,614       1,535      184         220
Interest cost            2,403       2,097      286         293
Settlement of
  postretirement
  Life benefit               -           -        -        (419)
Plan amendments            389           -      (78)          -
Actuarial (gain) loss    3,233        (830)     508        (711)
Benefits paid             (862)       (669)    (242)       (154)
                      --------     -------  -------     -------
Benefit obligation
  at end of year      $ 38,097     $31,320  $ 4,387     $ 3,729
                      ========     =======  =======     =======

CHANGE IN
PLAN ASSETS:
Fair value of plan
   assets at
   beginning of year  $ 34,612     $29,177        -           -
Actual return on
   plan assets          (2,753)      6,104        -           -
Employer contributions     306           -      242         154

Benefits paid             (862)       (669)    (242)       (154)
                      --------     -------  -------     -------
Fair value of plan
   assets at end of
   year                 31,303      34,612        -           -
                      --------     -------  -------     -------
Funded status           (6,794)      3,292   (4,387)     (3,729)
Unrecognized net gain   (3,696)    (12,478)    (280)       (813)

Unrecognized prior
  service cost             372          (5)     139         249
Unrecognized net
  transition asset        (499)       (648)       -           -
                      --------     -------  -------     -------
Accrued benefit cost  $(10,617)    $(9,839) $(4,528)    $(4,293)
                      ========     =======  =======     =======
<CAPTION>

                        July 1,     July 2,   July 1,     July 2,
                         2001        2000      2001        2000
                        -------     -------  -------     -------
<S>                     <C>         <C>      <C>         <C>

WEIGHTED-AVERAGE
ASSUMPTIONS
Discount rate              7.5%       7.75%     7.5%       7.75%
Expected return on
  plan assets              8.5%        8.5%      n/a        n/a
Rate of compensation
  increases                4.0%        4.0%      n/a        n/a
</Table>

        For measurement purposes, a 7 percent annual rate of increase in the per
capita cost of covered health care benefits was assumed for 2001; the rate was
assumed to remain at that level thereafter.

<Table>
<CAPTION>

                             Pension            Postretirement
                             Benefits              Benefits
                        --------------       ------------------
                        2001      2000       2001          2000
                        ----      ----       ----          ----
<S>                    <C>       <C>        <C>            <C>

COMPONENTS OF
NET PERIODIC
BENEFIT COST:
Service cost           $1,614    $1,535     $184           $220
Interest cost           2,403     2,097      286            293
Expected return
  on plan assets       (2,491)   (2,193)       -              -
Amortization of
  prior service cost       12        12       16             16
Amortization of
  unrecognized
  net gain               (304)     (132)     (25)             -
Amortization of
  net transition asset   (150)     (150)       -              -
                       ------    ------     ----           ----
Net periodic
  benefit cost         $1,084    $1,169     $461           $529
                       ======    ======     ====           ====
</Table>

        The health care cost trend assumption has a significant effect on the
postretirement benefit amounts reported. A 1% change in the health care cost
trend rates would have the following effects (thousands of dollars):

<Table>
<CAPTION>

                         1% Increase  1% Decrease
                         -----------  -----------
<S>                      <C>          <C>

Effect on total of
  service and interest
  cost components          $ 94          ($78)
Effect on postretirement
  benefit obligation       $665         ($564)

</TABLE>

        All U.S. associates of the Company may participate in a 401(k) Plan. The
Company contributes a fixed percentage of up to the first 6 percent of eligible
compensation that a participant contributes to the plan. The Company's
contributions totaled approximately $679,000 in 2001, $679,000 in 2000, and
$635,000 in 1999.

SHAREHOLDERS' EQUITY

        The Company has 12,000,000 shares of authorized common stock, par value
$.01 per share, with 4,046,089 and 4,452,609 shares issued and outstanding at
July 1, 2001, and July 2, 2000, respectively. Holders of Company common stock
are entitled to one vote for each share on all matters voted on by shareholders.

        On February 27, 1995, one common stock purchase right (a "right") was
distributed for each share of the Company's common stock outstanding. The rights
are not currently exercisable, but would entitle shareholders to buy one-half of
one share of the Company's common stock at an exercise price of $30 per share if
certain events occurred relating to the acquisition or attempted acquisition of
20 percent or more of the outstanding shares. The rights expire in the year
2005, unless redeemed or exchanged by the Company earlier.

                         2001 STRATTEC Annual Report 19
<PAGE>   22
NOTES TO FINANCIAL STATEMENTS

         The Board of Directors of the Company authorized a stock repurchase
program to buy back up to 2,639,395 outstanding shares. As of July 1, 2001,
2,160,026 shares have been repurchased at a cost of approximately $69.0 million.

EARNINGS PER SHARE (EPS)

         A reconciliation of the components of the basic and diluted per share
computations follows (thousands of dollars, except per share amounts):

<TABLE>
<CAPTION>
                               2001
                  ------------------------------
                    Net                Per-Share
                  Income     Shares     Amount
                  -------    ------   ----------
<S>               <C>        <C>      <C>
Basic EPS         $13,026    4,310       $3.02
Stock Options                   91       =====
                             -----
Diluted EPS       $13,026    4,401       $2.96
                             =====       =====
</TABLE>

<TABLE>
<CAPTION>
                               2000
                  ------------------------------
                    Net                Per-Share
                  Income     Shares     Amount
                  -------    ------   ----------
<S>               <C>        <C>      <C>
Basic EPS         $18,513     4,936      $3.75
Stock Options                   143      =====
                              -----
Diluted EPS       $18,513     5,079      $3.65
                              =====      =====
</TABLE>

<TABLE>
<CAPTION>
                               1999
                  ------------------------------
                    Net                Per-Share
                  Income     Shares     Amount
                  -------    ------   ----------
<S>               <C>        <C>      <C>
Basic EPS         $17,015     5,639     $3.02
Stock Options                   152     =====
                              -----
Diluted EPS       $17,015     5,791     $2.94
                              =====     =====
</TABLE>

         Options to purchase the following shares of common stock were
outstanding as of each date indicated but were not included in the computation
of diluted EPS because the options' exercise prices were greater than the
average market price of the common shares:

<TABLE>
<CAPTION>
                     Shares       Exercise Price
                     ------       --------------
<S>                  <C>              <C>
July 1, 2001         80,000           $45.79
                     80,000           $43.07
                     78,623           $37.88
                      5,000           $35.97
                     20,000           $33.63

July 2, 2000         80,000           $45.79
                     78,623           $37.88
                      5,000           $35.97

June 27, 1999        80,000           $37.88
                      5,000           $32.13
                     80,000           $31.98
                      5,000           $30.81
</TABLE>

STOCK OPTION AND PURCHASE PLANS

         The Company maintains an omnibus stock incentive plan, which provides
for the granting of stock options. The Board of Directors has designated
1,200,000 shares of the Company's common stock available for grant under the
plan at a price not less than the fair market value on the date the option is
granted. Options become exercisable as determined at the date of grant by a
committee of the Board of Directors and expire 5 to 10 years after the date of
grant unless an earlier expiration date is set at the time of grant.

<TABLE>
<CAPTION>
                                             Weighted
                                              Average
                                             Exercise
                            Shares             Price
                            ------           ---------
<S>                         <C>              <C>
Balance at
  June 28, 1998             615,889           $17.23
Granted                     110,000           $35.44
Exercised                    68,148           $15.40
Terminated                   20,303           $25.76
                            -------
Balance at
  June 27, 1999             637,438           $20.30
                            -------
Granted                     105,000           $43.01
Exercised                   175,490           $15.72
Terminated                    1,377           $37.88
                            -------
Balance at
  July 2, 2000              565,571           $25.89
                            -------
Granted                     136,000           $38.49
Exercised                    75,101           $15.18
Terminated                    2,500           $30.81
                            -------
Balance at
  July 1, 2001              623,970           $29.91
                            =======
Exercisable as of
  July 1, 2001              316,847           $20.07
Available for grant as
  of July 1, 2001           165,541
</TABLE>

                         2001 STRATTEC Annual Report 20

<PAGE>   23


NOTES TO FINANCIAL STATEMENTS

         The Company accounts for its stock-based compensation plans in
accordance with APB Opinion No. 25 and related Interpretations as permitted by
SFAS No. 123, "Accounting for Stock-Based Compensation. Accordingly, no
compensation cost related to these plans was charged against earnings in 2001,
2000 and 1999. Had compensation cost for these plans been determined consistent
with SFAS No. 123, the pro forma impact on earnings per share would have been as
follows (thousands of dollars):

<TABLE>
<CAPTION>
                       July 1,   July 2,   June 27,
                        2001      2000      1999
                       -------   -------   --------
<S>                    <C>       <C>       <C>
Net income
  As reported          $13,026   $18,513   $17,015
  Pro forma            $12,447   $17,961   $16,464
Basic earnings
  per share
  As reported            $3.02     $3.75     $3.02
  Pro forma              $2.89     $3.64     $2.92
Diluted earnings
  per share
  As reported            $2.96     $3.65     $2.94
  Pro forma              $2.84     $3.54     $2.85
</TABLE>

         The fair value of each option grant was estimated as of the date of
grant using the Black-Scholes pricing model. The resulting pro-forma
compensation cost is amortized over the vesting period.

         The grant date fair values and assumptions used to determine such
impact are as follows:

<TABLE>
<CAPTION>
Options Granted During             2001          2000          1999
                                   ----          ----          ----
<S>                               <C>           <C>           <C>
Weighted average grant
   date fair value                $42.54        $43.01        $35.44
Assumptions:
Risk free interest rates            5.38%         6.18%         5.33%
Expected volatility                24.97%        25.39%        29.09%
Expected term (in years)            5.50          5.67          5.75
</TABLE>

         The range of options outstanding as of July 1, 2001, is as follows:

<TABLE>
<CAPTION>
                                                         Weighted
                                        Weighted          Average
                      Number of          Average         Remaining
                       Options        Exercise Price    Contractual
 Price Range         Outstanding/      Outstanding/        Life
  per Share          Exercisable       Exercisable      (in years)
-------------      ---------------    --------------    -----------
<S>                <C>                <C>               <C>
$11.75-$17.05      167,300/167,300     $12.36/$12.36       3.9
$19.68-$31.98      188,047/132,047     $29.22/$28.06       4.5
Over $31.98         268,623/17,500     $41.32/$33.54       3.7
                   ---------------     -------------    ----------
                   623,970/316,847     $29.91/$20.07       4.0
                   ===============     =============    ==========
</TABLE>

         The Company has an Employee Stock Purchase plan to provide
substantially all U.S. full-time associates an opportunity to purchase shares of
its common stock through payroll deductions. A participant may contribute a
maximum of $5,200 per calendar year to the plan. On the last day of each month,
participant account balances are used to purchase shares of stock at the average
of the highest and lowest reported sales prices of a share of the Company's
common stock on the NASDAQ National Market. A total of 100,000 shares may be
issued under the plan. Shares issued from treasury stock under the plan totaled
2,695 at an average price of $33.05 during fiscal 2001, 3,317 at an average
price of $34.07 during fiscal 2000, and 3,521 at an average price of $28.79
during fiscal 1999. A total of 89,774 shares are available for purchase under
the plan as of July 1, 2001.

EXPORT SALES

         Export sales are summarized below (thousands of dollars):

<TABLE>
<CAPTION>
              Export Sales    Percent of Net Sales
              ------------    --------------------
<S>           <C>             <C>
2001            $29,013                14%
2000            $31,745                14%
1999            $27,233                13%
</TABLE>

         These sales were primarily to automotive manufacturing assembly plants
in Canada and Mexico.

SALES TO LARGEST CUSTOMERS

         Sales to the Company's largest customers were as follows (thousands of
dollars and percent of total net sales):

<TABLE>
<CAPTION>
                           2001              2000              1999
                       Sales     %       Sales     %       Sales     %
                     --------------    --------------    --------------
<S>                  <C>        <C>    <C>        <C>    <C>        <C>
General Motors
     Corporation     $ 60,216   30%    $ 68,985   31%    $ 88,938   44%
Ford Motor
     Company           45,341   22%      54,498   24%      52,241   26%
DaimlerChrysler
     Corporation       33,939   17%      35,055   16%      30,757   15%
Delphi Automotive
     Systems           26,913   13%      31,487   14%       2,788    1%
                     --------------    --------------    --------------
                     $166,409   82%    $190,025   85%    $174,724   86%
                     ==============    ==============    ==============
</TABLE>



                         2001 STRATTEC Annual Report 21

<PAGE>   24


REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF STRATTEC SECURITY CORPORATION:

         We have audited the accompanying consolidated balance sheets of
STRATTEC SECURITY CORPORATION and subsidiaries, as of July 1, 2001, and July 2,
2000, and the related consolidated statements of income, changes in equity and
cash flows for each of the three years in the period ended July 1, 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of STRATTEC SECURITY
CORPORATION and subsidiaries, as of July 1, 2001, and July 2, 2000, and the
results of their operations and their cash flows for each of the three years in
the period ended July 1, 2001, in conformity with accounting principles
generally accepted in the United States.


/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
July 30, 2001


REPORT OF MANAGEMENT

         The management of STRATTEC SECURITY CORPORATION is responsible for the
fair presentation and integrity of the financial statements and other
information contained in this Annual Report. We rely on a system of internal
financial controls to meet the responsibility of providing financial statements.
The system provides reasonable assurances that assets are safeguarded, that
transactions are executed in accordance with management's authorization, and
that the financial statements are prepared in accordance with generally accepted
accounting principles, including amounts based upon management's best estimates
and judgments.

         The financial statements for each of the years covered in this Annual
Report have been audited by independent auditors, who have provided an
independent assessment as to the fairness of the financial statements.

         The Audit Committee of the Board of Directors meets with management and
the independent auditors to review the results of their work and to satisfy
itself that their responsibilities are being properly discharged. The
independent auditors have full and free access to the Audit Committee and have
discussions with the committee regarding appropriate matters, with and without
management present.


/s/ Harold M. Stratton II    /s/ John G. Cahill          /s/ Patrick J. Hansen
Harold M. Stratton II        John G. Cahill              Patrick J. Hansen
Chairman and                 President and               Vice President and
Chief Executive Officer      Chief Operating Officer     Chief Financial Officer


                         2001 STRATTEC Annual Report 22


<PAGE>   25


FINANCIAL SUMMARY

FIVE-YEAR FINANCIAL SUMMARY

         The financial data for each period presented below reflects the
consolidated results of the Company and its wholly owned subsidiaries. The
information below should be read in conjunction with "Management's Discussion
and Analysis," and the Financial Statements and Notes thereto included elsewhere
herein. The following data are in thousands of dollars except per share amounts.

<TABLE>
<CAPTION>
                                                                                    Fiscal Years
                                                    --------------------------------------------------------------------------------
                                                       2001             2000             1999              1998              1997
                                                    ---------         --------        ---------         ---------         ---------
<S>                                                 <C>               <C>             <C>               <C>               <C>
INCOME STATEMENT DATA
Net sales                                           $ 202,973         $224,817        $ 202,625         $ 186,805         $ 159,054
Gross profit                                           40,238           49,358           46,804            39,940            33,319
Engineering, selling, and
   administrative expenses                             19,676           20,254           20,191            18,925            17,684
                                                    ---------         --------        ---------         ---------         ---------

Income from operations                                 20,562           29,104           26,613            21,015            15,635
Interest income                                           628            1,056            1,132               351                 4
Interest expense                                            -                -                -               (19)             (214)
Other income (expense), net                              (514)             189             (239)               73               125
                                                    ---------         --------        ---------         ---------         ---------

Income before taxes                                    20,676           30,349           27,506            21,420            15,550
Provision for income taxes                              7,650           11,836           10,491             7,931             5,730
                                                    ---------         --------        ---------         ---------         ---------
Net income                                          $  13,026         $ 18,513        $  17,015         $  13,489         $   9,820
                                                    =========         ========        =========         =========         =========

Earnings per share:
   Basic                                            $    3.02         $   3.75        $    3.02         $    2.36         $    1.72
   Diluted                                          $    2.96         $   3.65        $    2.94         $    2.30         $    1.70
BALANCE SHEET DATA
Net working capital                                 $  33,174         $ 32,500        $  54,861         $  42,953         $  32,399
Total assets                                          101,648          108,982          128,194           107,998            95,669
Long-term liabilities                                  15,145           14,132           12,915            12,138            16,000
Shareholders' Equity                                   60,010           60,450           82,345            70,398            56,093
</TABLE>


QUARTERLY FINANCIAL DATA (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                       Earnings               Market Price
                                                                                       Per Share                Per Share
                                                                                    ---------------         ------------------
            Quarter           Net Sales       Gross Profit       Net Income         Basic   Diluted         High         Low
            -------           ---------       ------------       ----------         -----   -------         ----         ---
<S>         <C>               <C>             <C>                <C>                <C>     <C>            <C>         <C>
2001         First             $52,421          $11,303            $ 3,881          $ .87    $ .85         $39.500     $32.250
            Second              49,988            9,922              3,429            .77      .76          35.250      30.500
             Third              48,179            9,337              2,611            .61      .60          33.500      29.000
            Fourth              52,385            9,676              3,105            .77      .75          35.745      31.200
                              --------          -------            -------          -----    -----
             TOTAL            $202,973          $40,238            $13,026          $3.02    $2.96
                              ========          =======            =======          =====    =====

2000         First             $49,667          $10,674            $ 3,708          $ .67    $ .65         $36.750     $31.500
            Second              56,726           12,699              4,944            .98      .95          36.875      32.625
             Third              54,539           11,992              4,390            .94      .91          35.750      31.000
            Fourth              63,885           13,993              5,471           1.20     1.17          35.875      32.500
                              --------          -------            -------          -----    -----
             TOTAL            $224,817          $49,358            $18,513          $3.75    $3.65
                              ========          =======            =======          =====    =====
</TABLE>

Registered shareholders of record at July 1, 2001, were 3,322.

                         2001 STRATTEC Annual Report 23
<PAGE>   26

DIRECTORS/OFFICERS/SHAREHOLDERS INFORMATION

BOARD OF DIRECTORS                                [PHOTO OF BOARD OF DIRECTORS]

HAROLD M. STRATTON II, 53
Chairman and Chief
Executive Officer.

JOHN G. CAHILL, 44
President and Chief
Operating Officer

ROBERT FEITLER, 70
Former President and
Chief Operating Officer
of Weyco Group, Inc.
Chairman of the Executive
Committee and Director
of Weyco Group, Inc.
Trustee of ABN.AMRO Funds

MICHAEL J. KOSS, 47
President and Chief
Executive Officer of
Koss Corporation.
Director of Koss Corporation.

FRANK J. KREJCI, 51
President and Chief
Executive Officer of
Wisconsin Furniture, LLC.

EXECUTIVE OFFICERS

HAROLD M. STRATTON II, 53

JOHN G. CAHILL, 44

PATRICK J. HANSEN, 42
Vice President-
Chief Financial Officer,
Treasurer and Secretary.

MICHAEL R. ELLIOTT, 45
Vice President-
Global Market Development.

GERALD L. PEEBLES, 58
Vice President-
General Manager
STRATTEC de Mexico.

DONALD J. HARROD, 57
Vice President-
Engineering

DONALD P. KLICK, 49
Vice President-
Business Operations

SHAREHOLDERS INFORMATION

ANNUAL MEETING

The Annual Meeting of Shareholders will convene at 2 p.m. (CST) on October 23,
2001, at the Manchester East Hotel, 7065 North Port Washington Road, Milwaukee.

COMMON STOCK

STRATTEC SECURITY CORPORATION common stock is traded on the NASDAQ National
Market under the symbol: STRT.

FORM 10-K

You may receive a copy of the STRATTEC SECURITY CORPORATION Form 10-K, filed
with the Securities and Exchange Commission, by writing to the Secretary at
STRATTEC SECURITY CORPORATION, 3333 West Good Hope Road, Milwaukee, WI 53209.

SHAREHOLDER INQUIRIES

Communications concerning the transfer of shares, lost certificates or changes
of address should be directed to the Transfer Agent.

TRANSFER AGENT AND REGISTRAR

Wells Fargo Bank Minnesota, N.A.
Shareholder Services
P.O. Box 64854
St. Paul, MN 55164-0854
1-800-468-9716


                         2001 STRATTEC Annual Report 24

<PAGE>   27


                                   [GRAPHIC]

                         STRATTEC SECURITY CORPORATION

                            3333 West Good Hope Road
                              Milwaukee, WI 53209
                     Phone: 414.247.3333 Fax: 414.247.3329
                                www.strattec.com