Exhibit 13
 
 The Trusted Leader in Automotive Access Control Products
2010 ANNUAL REPORT




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##### 



The Trusted Leader in Automotive Access Control Products
STRATTEC SECURITY CORPORATION is a direct descendant of a company founded in 1908 to produce
automobiles and automotive components. While the production of automobiles was a very small and
brief part of our heritage, automotive components, particularly security products, became the
foundation for a century of leadership.
We have provided quality locks and keys for cars and light trucks to our three largest customers
and their predecessors for 90 years. That longevity is a good indication of the level of trust
placed in us by our customers.
Over the past 15 years, STRATTEC has been hard at work diversifying our product offerings. In
addition to our
traditional products, we now supply ignition lock housings, latches for the access points around a
vehicle, and power access devices for sliding side doors, liftgates, trunk lids and even mobility
ramps. Through a joint venture with ADAC Automotive, we also supply door handle components and
related vehicle access hardware.
Building on our heritage, we continually strive to develop the products and services that will keep
us the trusted leader in automotive access products for years to come.




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##### 



(GRAPHIC)
 2010 ANNUAL REPORT
 
  CONTENTS
 LETTER TO THE SHAREHOLDERS
    
    
    2FINANCIAL HIGHLIGHTS
    
    
    4COMPANY DESCRIPTION
    
    
    5STRATTEC EQUIPPED VEHICLE LIST
    
    
    12MANAGEMENTS DISCUSSION AND ANALYSIS
    
    
    13FINANCIAL STATEMENTS
    
    
    25REPORT OF MANAGEMENT
    
    
    44REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    45FINANCIAL SUMMARY
    
    
    47PERFORMANCE GRAPH
    
    
    48DIRECTORS / OFFICERS / SHAREHOLDERS INFORMATION
    
    
    49
 PROSPECTIVE INFORMATION




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##### 



LETTER TO THE SHAREHOLDERS
 AUGUST, 2010
   would
    ® ® ®
   2010 STRATTEC Annual Report
    
    2




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##### 



LETTER TO THE SHAREHOLDERS
 ®
   2010 STRATTEC Annual Report
    
    3




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##### 



FINANCIAL HIGHLIGHTS
 (IN MILLIONS)
 2010
    
    2009
    
    2008Net Sales
    
    $
    208.0
    
    
    $
    126.1
    
    
    $
    159.6Gross Profit
    
    
    33.0
    
    
    
    13.2
    
    
    
    24.8Income (Loss) from Operations
    
    
    4.4
    
    
    
    (12.7
    )
    
    
    .8Net Income (Loss)
    
    
    3.4
    
    
    
    (6.1
    )
    
    
    2.8Total Assets
    
    
    145.0
    
    
    
    128.2
    
    
    
    144.2Total Debt
    
    
    
    
    
    
    
    
    
    
    Shareholders Equity
    
    
    74.1
    
    
    
    71.4
    
    
    
    98.0
 ECONOMIC VALUE ADDED (EVA ® )
 ® ® ® ® ®
 Net Operating Profit After Cash-Basis Taxes
    
    
    
    
    
    $
    3.1Average Monthly Net Capital Employed
    
    $
    80.0Cost of Capital
    
    
    10
    %Capital Charge
    
    
    
    
    
    
    8.0Economic Value Added
    
    
    
    
    
    $
    (4.9
    )
 ® ® ® ®
 Net Operating Profit After Cash-Basis Taxes:
 2010 Net Income as Reported
    
    $
    3.4Deferred Tax Provision
    
    
    3.4Other
    
    
    (3.7
    )Net Operating Profit After
Cash-Basis Taxes
    
    $
    3.1
 Average Monthly Net Capital Employed:
 Total Shareholders Equity as Reported at June 27, 2010
    
    $
    74.1Long-Term Liabilities
    
    
    23.0Deferred Tax Asset
    
    
    (11.9
    )Other
    
    
    (2.5
    )Net Capital Employed at June 27, 2010
    
    $
    82.7Impact of 12 Month Average
    
    
    (2.7
    )Average Monthly Net Capital Employed
    
    $
    80.0
 ®
   2010 STRATTEC Annual Report
    
    4




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COMPANY DESCRIPTION
 BASIC BUSINESS
  
 HISTORY
   
 PRODUCTS
   2010 STRATTEC Annual Report
    
    5




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##### 



COMPANY DESCRIPTION
  
  
 
 MARKETS
   2010 STRATTEC Annual Report
    
    6




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##### 



COMPANY DESCRIPTION
   
 
 CUSTOMER FOCUS
    
 The Aston Martin DBS uses an electronic key fob and mating docking station developed by
STRATTEC
exclusively for Aston Martin.
   2010 STRATTEC Annual Report
    
    7




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##### 



COMPANY DESCRIPTION
   
 OPERATIONS
  
 
 ADVANCED DEVELOPMENT
   2010 STRATTEC Annual Report
    
    8




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##### 



COMPANY DESCRIPTION
 VAST ALLIANCE
   2010 STRATTEC Annual Report
    
    9




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##### 



COMPANY DESCRIPTION
 ADAC-STRATTEC de MEXICO
  STRATTEC POWER ACCESS LLC
  
 
 STRATTEC has just introduced BOLT,
the worlds first codeable padlock. In a simple one-step process, users can code the padlock to
their vehicle key. This provides significant convenience by reducing the number of keys users need to secure their lockers,
storage sheds and vehicle accessories such as tool boxes, trailer hitches, etc. You can buy this product direct at
www.boltlock.com
 SEASONAL NATURE OF THE BUSINESS
   2010 STRATTEC Annual Report
    
    10




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##### 



COMPANY DESCRIPTION
  GLOBAL PRESENCE
 
 1. STRATTEC  Milwaukee, Wisconsin 1
2. STRATTEC de Mexico  Juarez, Mexico 1
3. STRATTEC de Mexico  Key Finishing  Juarez, Mexico 1
4. ADAC-STRATTEC de Mexico  Juarez, Mexico
5. STRATTEC Power Access de Mexico  Juarez, Mexico
6. ADAC Automotive  Grand Rapids and Muskegan, Michigan 1
7. ADAC Automotive, STRATTEC and STRATTEC POWER ACCESS  (Sales/Engineering Offices  Detroit, Michigan 1
8. WITTE Automotive  Velbert, Germany 1
9. WITTE Automotive  Nejdek, Czech Republic 1
10. VAST do Brasil  Sao Paulo, Brazil 2
11. VAST Fuzhou  Fuzhou, China 2
12. VAST Great Shanghai Co.  Shanghai, China 2
13. VAST Japan  Tokyo, Japan (Branch Office) 2
14. VAST Korea  Anyang, Korea (Branch Office) 2
 
 1
    
    Members of the VAST Alliance. 2 Units of VAST LLC
joint venture. ECONOMIC VALUE COMMITMENT
 ® ® ®
   2010 STRATTEC Annual Report
    
    11




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##### 



VEHICLE LIST
2011 VEHICLES
We are proud to be associated with many of the quality vehicles produced in North America
and elsewhere. The following model year 2011 cars and light trucks are equipped with STRATTEC
products.
CARS AND CAR BASED UTILITY VEHICLES
Aston Martin DB9 * Chevrolet Impala            Ford Taurus
Aston Martin DBS * Chevrolet Malibu            GMC Acadia
Aston Martin Rapide * Chevrolet Orlando * GMC Terrain
Aston Martin V8 Vantage * Chevrolet Traverse            Holden Commodore *
Aston Martin V12 Vantage * Chevrolet Volt            Honda Civic
Buick Excelle * Chrysler 300 Hyundai Veracruz *
Buick Enclave            Chrysler Sebring (Nassau) Jeep Compass
Buick LaCrosse * Daewoo Gentra * Jeep Patriot
Buick Lucerne            Dodge Avenger            Lincoln MKS
Buick Regal * Dodge Caliber            Lincoln MKT
Cadillac CTS            Dodge Challenger            Lincoln MKX
Cadillac DTS            Dodge Charger            Lincoln MKZ
Cadillac SRX            Dodge Journey            Lincoln Town Car
Cadillac STS * Ford Crown Victoria            Opel Astra *
Chevrolet Aveo * Ford Edge            Opel Astra Van *
Chevrolet Camaro            Ford Fiesta            Opel Insignia *
Chevrolet Cruze * Ford Flex            Opel Zafira *
Chevrolet Equinox            Ford Focus            Saab 9-4X
Chevrolet Corvette            Ford Fusion            Saab 9-5 *
Chevrolet HHR            Ford Mustang
LIGHT TRUCKS, VANS AND SPORT UTILITY VEHICLES
Buick GL8 * Dodge Dakota Pickup            GMC Sierra Pickup
Cadillac Escalade            Dodge Durango            GMC Yukon
Cadillac Escalade ESV            Dodge Nitro            Jeep Grand Cherokee
Cadillac Escalade EXT            Dodge Ram Pickup            Jeep Liberty
Chevrolet Avalanche            Ford Expedition            Jeep Wrangler/Wrangler
Chevrolet Express Van            Ford Explorer          
  Unlimited
Chevrolet Silverado Pickup            Ford Explorer Sport Trac            Kia Sedona
Chevrolet Suburban            Ford F-Series Pickup            Lincoln Mark LT
Chevrolet Tahoe            Ford F-Series Super Duty            Lincoln Navigator
Chrysler Town & Country * Ford Ranger Pickup            Nissan Titan
Dodge Grand Caravan            GMC Savana            Volkswagen Routan
* Vehicles produced outside of North America, or both in and outside North America. 2010 STRATTEC Annual Report
    
    12




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
  Purchase of Delphi Power Products Business
     EXECUTIVE OVERVIEW
   2010 STRATTEC Annual Report
    
    13




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
       RESULTS OF OPERATIONS
  2010 Compared to 2009
  ®
   2010 STRATTEC Annual Report
    
    14




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
  ® ®
   2010 STRATTEC Annual Report
    
    15




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
   2009 Compared to 2008
   2010 STRATTEC Annual Report
    
    16




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
      LIQUIDITY AND CAPITAL RESOURCES
  U.S.
    
    
    Canada
    
    
    Mexico
    
    
    TotalGeneral Motors
    
    $
    5,779
    
    
    $
    1,231
    
    
    $
    1,115
    
    
    $
    8,125Ford
    
    $
    2,430
    
    
    $
    165
    
    
    $
    123
    
    
    $
    2,718Chrysler
    
    $
    4,634
    
    
    $
    6,808
    
    
    $
    789
    
    
    $
    12,231
   2010 STRATTEC Annual Report
    
    17




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
       OFF-BALANCE SHEET ARRANGEMENTS
  Payments Due By PeriodLess Than
    
    
    
    
    
    
    
    
    
    
    More ThanContractual Obligation
    
    Total
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsOperating Leases
    
    $
    1,732
    
    
    $
    508
    
    
    $
    771
    
    
    $
    453
    
    
    $
    Other Purchase Obligations
    
    
    24,154
    
    
    
    9,849
    
    
    
    14,305
    
    
    
    
    
    
    
    Pension and Postretirement
Obligations(a)
    
    
    6,293
    
    
    
    6,293
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    32,179
    
    
    $
    16,650
    
    
    $
    15,076
    
    
    $
    453
    
    
    $
    
 
 (a)
    
    As disclosed in our Notes to Financial Statements, estimated cash funding
related to our pension and postretirement benefit plans is expected to total $6.3 million in 2011.
Because the timing of funding related to these plans beyond 2011 is uncertain, and is dependent on
future movements in interest rates and investment returns, changes in laws and regulations, and
other variables, pension and postretirement outflows beyond 2011 have not been included in the
table above.
   2010 STRATTEC Annual Report
    
    18




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
 JOINT VENTURES
       OTHER MATTERS
  RECENTLY ISSUED ACCOUNTING STANDARDS
   CRITICAL ACCOUNTING POLICIES
  Pension and Postretirement Health Benefits 
   2010 STRATTEC Annual Report
    
    19




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
            Other Reserves 
   2010 STRATTEC Annual Report
    
    20




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
       Stock-Based Compensation 
   2010 STRATTEC Annual Report
    
    21




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
  RISK FACTORS
  Loss of Significant Customers, Vehicle Content, Vehicle Models and Market Share 
   Production Slowdowns for Customers 
 Financial Distress of Automotive Supply Base 
   2010 STRATTEC Annual Report
    
    22




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
  Shortage of Raw Materials or Components Supply 
  Cost Reduction 
 Cyclicality and Seasonality in the Automotive Market 
 Foreign Operations 
 Currency Exchange Rate Fluctuations 
 Sources of and Fluctuations in Market Prices of Raw Materials 
  Disruptions Due to Work Stoppages and Other Labor Matters 
   2010 STRATTEC Annual Report
    
    23




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
  Environmental and Safety Regulations 
 Highly Competitive Automotive Supply Industry 
  Program Volume and Pricing Fluctuations 
 Investments in Customer Program Specific Assets 
 Financial Industry / Credit Market Risk 
 Warranty Claims 
   2010 STRATTEC Annual Report
    
    24




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##### 



CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 Years EndedJune 27, 2010
    
    
    June 28, 2009
    
    
    June 29, 2008NET SALES
    
    $
    207,964
    
    
    $
    126,097
    
    
    $
    159,642Cost of goods sold
    
    
    174,922
    
    
    
    112,857
    
    
    
    134,875GROSS PROFIT
    
    
    33,042
    
    
    
    13,240
    
    
    
    24,767Engineering, selling, and administrative expenses
    
    
    29,939
    
    
    
    25,480
    
    
    
    23,962Impairment charge
    
    
    223
    
    
    
    
    
    
    
    Environmental Reserve Adjustment
    
    
    (1,125
    )
    
    
    
    
    
    
    (Recovery of) Provision for doubtful accounts
    
    
    (421
    )
    
    
    500
    
    
    
    INCOME (LOSS) FROM OPERATIONS
    
    
    4,426
    
    
    
    (12,740
    )
    
    
    805Interest income
    
    
    86
    
    
    
    731
    
    
    
    2,749Equity earnings of joint ventures
    
    
    1,008
    
    
    
    245
    
    
    
    561Interest expense-related parties
    
    
    (225
    )
    
    
    (164
    )
    
    
    (31
    )Other income (expense), net
    
    
    312
    
    
    
    804
    
    
    
    (300
    )INCOME (LOSS) BEFORE PROVISION FOR INCOME
TAXES AND NON-CONTROLLING INTEREST
    
    
    5,607
    
    
    
    (11,124
    )
    
    
    3,784Provision (benefit) for income taxes
    
    
    1,666
    
    
    
    (4,222
    )
    
    
    977NET INCOME (LOSS)
    
    
    3,941
    
    
    
    (6,902
    )
    
    
    2,807Net (income) loss attributable to non-controlling
interest
    
    
    (520
    )
    
    
    780
    
    
    
    (26
    )NET INCOME (LOSS) ATTRIBUTABLE TO
STRATTEC SECURITY CORPORATION
    
    $
    3,421
    
    
    $
    (6,122
    )
    
    $
    2,781COMPREHENSIVE INCOME (LOSS):NET INCOME (LOSS)
    
    $
    3,941
    
    
    $
    (6,902
    )
    
    $
    2,807Change in cumulative translation adjustments
    
    
    503
    
    
    
    (2,505
    )
    
    
    717Pension funded status adjustment, net of tax
    
    
    (1,346
    )
    
    
    (11,114
    )
    
    
    (3,868
    )TOTAL OTHER COMPREHENSIVE LOSS
    
    
    (843
    )
    
    
    (13,619
    )
    
    
    (3,151
    )COMPREHENSIVE INCOME (LOSS)
    
    
    3,098
    
    
    
    (20,521
    )
    
    
    (344
    )Comprehensive (income) loss attributed to
non controlling interest
    
    
    (525
    )
    
    
    800
    
    
    
    (29
    )COMPREHENSIVE INCOME (LOSS)
ATTRIBUTABLE TO STRATTEC
SECURITY CORPORATION
    
    $
    2,573
    
    
    $
    (19,721
    )
    
    $
    (373
    )EARNINGS (LOSS) PER SHARE:BASIC
    
    $
    1.05
    
    
    $
    (1.87
    )
    
    $
    0.80DILUTED
    
    $
    1.04
    
    
    $
    (1.86
    )
    
    $
    0.80AVERAGE SHARES OUTSTANDING:BASIC
    
    
    3,271
    
    
    
    3,280
    
    
    
    3,487DILUTED
    
    
    3,280
    
    
    
    3,284
    
    
    
    3,494
   2010 STRATTEC Annual Report
    
    25




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##### 



CONSOLIDATED BALANCE SHEETS
 (IN THOUSANDS, EXCEPT SHARE AMOUNTS AND PER SHARE AMOUNTS)
 June 27, 2010
    
    
    June 28, 2009ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    21,867
    
    
    $
    22,764Receivables, less allowance for doubtful accounts
of $400 at June 27, 2010 and $750 at June 28, 2009
    
    
    36,084
    
    
    
    17,235Restricted cash
    
    
    2,100
    
    
    
    Inventories
    
    
    17,086
    
    
    
    16,589Customer tooling in progress
    
    
    3,439
    
    
    
    1,714Deferred income taxes
    
    
    2,133
    
    
    
    2,124Income taxes recoverable
    
    
    
    
    
    
    1,181Other current assets
    
    
    7,299
    
    
    
    10,951Total current assets
    
    
    90,008
    
    
    
    72,558DEFERRED INCOME TAXES
    
    
    10,534
    
    
    
    13,143INVESTMENT IN JOINT VENTURES
    
    
    5,176
    
    
    
    4,483LOAN TO JOINT VENTURE
    
    
    1,500
    
    
    
    OTHER LONG-TERM ASSETS
    
    
    733
    
    
    
    1,069PROPERTY, PLANT AND EQUIPMENT, NET
    
    
    37,051
    
    
    
    36,936$
    145,002
    
    
    $
    128,189LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    21,192
    
    
    $
    11,369Loans from related parties
    
    
    3,000
    
    
    
    3,225Accrued liabilities:Payroll and benefits
    
    
    15,496
    
    
    
    8,232Environmental
    
    
    1,497
    
    
    
    2,636Income taxes
    
    
    63
    
    
    
    Other
    
    
    4,983
    
    
    
    5,386Total current liabilities
    
    
    46,231
    
    
    
    30,848COMMITMENTS AND CONTINGENCIES see note on page 37BORROWINGS UNDER LINE OF CREDIT
    
    
    
    
    
    
    ACCRUED PENSION OBLIGATIONS
    
    
    18,492
    
    
    
    15,183ACCRUED POSTRETIREMENT OBLIGATIONS
    
    
    4,490
    
    
    
    9,601SHAREHOLDERS EQUITY:Common stock, authorized 12,000,000 shares, $.01 par value,
issued 6,909,357 shares at June 27, 2010 and
6,897,957 shares at June 28, 2009
    
    
    69
    
    
    
    69Capital in excess of par value
    
    
    79,339
    
    
    
    79,247Retained earnings
    
    
    162,706
    
    
    
    159,285Accumulated other comprehensive loss
    
    
    (31,941
    )
    
    
    (31,094
    )Less: Treasury stock at cost (3,633,402 shares at
June 27, 2010 and 3,635,989 shares at June 28, 2009)
    
    
    (136,047
    )
    
    
    (136,089
    )Total STRATTEC SECURITY CORPORATION shareholders equity
    
    
    74,126
    
    
    
    71,418Non-controlling interest
    
    
    1,663
    
    
    
    1,139Total shareholders equity
    
    
    75,789
    
    
    
    72,557$
    145,002
    
    
    $
    128,189
   2010 STRATTEC Annual Report
    
    26




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##### 



CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 AccumulatedCapital in
    
    
    
    
    
    
    OtherCommon
    
    
    Excess of
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    Non-controllingTotal
    
    
    Stock
    
    
    Par Value
    
    
    Earnings
    
    
    Loss
    
    
    Stock
    
    
    InterestBALANCE JULY 1, 2007
    
    $
    106,529
    
    
    $
    69
    
    
    $
    78,122
    
    
    $
    168,922
    
    
    $
    (14,341
    )
    
    $
    (126,818
    )
    
    $
    575Net Income
    
    
    2,807
    
    
    
    
    
    
    
    
    
    
    
    2,781
    
    
    
    
    
    
    
    
    
    
    
    26Translation adjustments
    
    
    717
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    714
    
    
    
    
    
    
    
    3Contribution from
non-controlling interest
    
    
    349
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    349Pension and postretirement
funded status adjustment,
net of tax of $2,371
    
    
    (3,868
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,868
    )
    
    
    
    
    
    
    Purchase of common stock
    
    
    (3,109
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,109
    )
    
    
    Cash dividends declared
($1.60 per share)
    
    
    (5,652
    )
    
    
    
    
    
    
    
    
    
    
    (5,652
    )
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation,
including tax benefit on
restricted stock dividends
of $13
    
    
    745
    
    
    
    
    
    
    
    745
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Adoption of accounting for
uncertain tax positions
    
    
    346
    
    
    
    
    
    
    
    
    
    
    
    346
    
    
    
    
    
    
    
    
    
    
    
    Employee stock purchases
    
    
    29
    
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    BALANCE JUNE 29, 2008
    
    $
    98,893
    
    
    $
    69
    
    
    $
    78,885
    
    
    $
    166,397
    
    
    $
    (17,495
    )
    
    $
    (129,916
    )
    
    $
    953Net loss
    
    
    (6,902
    )
    
    
    
    
    
    
    
    
    
    
    (6,122
    )
    
    
    
    
    
    
    
    
    
    
    (780
    )Translation adjustments
    
    
    (2,505
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,485
    )
    
    
    
    
    
    
    (20
    )Contribution from
non-controlling interest
    
    
    986
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    986Pension and postretirement
funded status adjustment,
net of tax of $6,812
    
    
    (11,114
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,114
    )
    
    
    
    
    
    
    Purchase of common stock
    
    
    (6,214
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,214
    )
    
    
    Cash dividends declared
($0.30 per share)
    
    
    (990
    )
    
    
    
    
    
    
    
    
    
    
    (990
    )
    
    
    
    
    
    
    
    
    
    
    Stock-Based Compensation,
including tax benefit on
restricted stock dividends
of $5
    
    
    363
    
    
    
    
    
    
    
    363
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Employee stock purchases
    
    
    40
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    41
    
    
    
    BALANCE June 28, 2009
    
    $
    72,557
    
    
    $
    69
    
    
    $
    79,247
    
    
    $
    159,285
    
    
    $
    (31,094
    )
    
    $
    (136,089
    )
    
    $
    1,139Net income
    
    
    3,941
    
    
    
    
    
    
    
    
    
    
    
    3,421
    
    
    
    
    
    
    
    
    
    
    
    520Translation adjustments
    
    
    503
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    499
    
    
    
    
    
    
    
    4Pension and postretirement
funded status adjustment,
net of tax of $825
    
    
    (1,346
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,346
    )
    
    
    
    
    
    
    Share of premium on
equity method ownership
    
    
    (409
    )
    
    
    
    
    
    
    (409
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    464
    
    
    
    
    
    
    
    464
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock Option Exercises
    
    
    35
    
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Employee stock purchases
    
    
    44
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    42
    
    
    
    BALANCE June 27, 2010
    
    $
    75,789
    
    
    $
    69
    
    
    $
    79,339
    
    
    $
    162,706
    
    
    $
    (31,941
    )
    
    $
    (136,047
    )
    
    $
    1,663
   2010 STRATTEC Annual Report
    
    27




---



##### 



CONSOLIDATED STATEMENTS OF CASH FLOWS
 (IN THOUSANDS)
 Years EndedJune 27, 2010
    
    
    June 28, 2009
    
    
    June 29, 2008CASH FLOWS FROM OPERATING ACTIVITIESNet Income (Loss)
    
    $
    3,421
    
    
    $
    (6,122
    )
    
    $
    2,781Adjustments to reconcile net income (loss) to
net cash provided by operating activities:Non-controlling interest
    
    
    520
    
    
    
    (780
    )
    
    
    26Equity earnings in joint ventures
    
    
    (1,008
    )
    
    
    (245
    )
    
    
    (561
    )Depreciation and amortization
    
    
    7,143
    
    
    
    6,264
    
    
    
    6,830Foreign currency transaction loss (gain)
    
    
    283
    
    
    
    (918
    )
    
    
    320Loss on disposition of property, plant and
equipment
    
    
    50
    
    
    
    39
    
    
    
    434Deferred income taxes
    
    
    3,428
    
    
    
    (2,986
    )
    
    
    622Stock-based compensation expense
    
    
    468
    
    
    
    419
    
    
    
    741(Recovery) provision for doubtful accounts
    
    
    (421
    )
    
    
    500
    
    
    
    Impairment charge
    
    
    223
    
    
    
    
    
    
    
    Environmental reserve adjustment
    
    
    (1,125
    )
    
    
    
    
    
    
    Loss on curtailment of employee benefits
    
    
    505
    
    
    
    
    
    
    
    Change in operating assets and liabilities:Receivables
    
    
    (18,301
    )
    
    
    5,235
    
    
    
    3,465Inventories
    
    
    (497
    )
    
    
    1,033
    
    
    
    (2,319
    )Other assets
    
    
    3,181
    
    
    
    (1,966
    )
    
    
    (8,413
    )Accounts payable and accrued liabilities
    
    
    12,192
    
    
    
    (7,326
    )
    
    
    163Other, net
    
    
    3
    
    
    
    17
    
    
    
    (271
    )Net cash provided (used) by operating activities
    
    
    10,065
    
    
    
    (6,836
    )
    
    
    3,818CASH FLOWS FROM INVESTING ACTIVITIESInvestment in joint ventures
    
    
    (100
    )
    
    
    (551
    )
    
    
    Restricted cash
    
    
    (2,100
    )
    
    
    
    
    
    
    Loan to joint venture
    
    
    (2,500
    )
    
    
    
    
    
    
    Proceeds from repayment of loan to joint venture
    
    
    1,000
    
    
    
    
    
    
    
    Additions to property, plant and equipment
    
    
    (6,903
    )
    
    
    (12,492
    )
    
    
    (10,930
    )Purchase of Delphi Power Products
    
    
    
    
    
    
    (4,931
    )
    
    
    Proceeds received on sale of property, plant and equipment
    
    
    21
    
    
    
    8
    
    
    
    Net cash used in investing activities
    
    
    (10,582
    )
    
    
    (17,966
    )
    
    
    (10,930
    )CASH FLOWS FROM FINANCING ACTIVITIESPurchase of common stock
    
    
    
    
    
    
    (6,214
    )
    
    
    (3,109
    )Exercise of stock options and employee stock
purchases
    
    
    72
    
    
    
    40
    
    
    
    29Excess tax benefits from stock-based compensation
    
    
    9
    
    
    
    
    
    
    
    Dividends paid
    
    
    
    
    
    
    (1,511
    )
    
    
    (5,133
    )Loan from related parties
    
    
    
    
    
    
    2,175
    
    
    
    1,050Repayment of loan from related parties
    
    
    (225
    )
    
    
    
    
    
    
    Contribution from minority interest
    
    
    
    
    
    
    986
    
    
    
    349Net cash used in financing activities
    
    
    (144
    )
    
    
    (4,524
    )
    
    
    (6,814
    )FOREIGN CURRENCY IMPACT ON CASH
    
    
    (236
    )
    
    
    589
    
    
    
    (64
    )NET DECREASE IN CASH
AND CASH EQUIVALENTS
    
    
    (897
    )
    
    
    (28,737
    )
    
    
    (13,990
    )CASH AND CASH EQUIVALENTSBeginning of year
    
    
    22,764
    
    
    
    51,501
    
    
    
    65,491End of year
    
    $
    21,867
    
    
    $
    22,764
    
    
    $
    51,501SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATIONIncome taxes (recovered) paid
    
    $
    (2,963
    )
    
    $
    (1,869
    )
    
    $
    3,238Interest paid  related parties
    
    
    250
    
    
    
    107
    
    
    
    13
   2010 STRATTEC Annual Report
    
    28




---



##### 



NOTES TO FINANCIAL STATEMENTS
 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
    Purchase of Delphi Power Products Business:
    Principles of Consolidation and Presentation:
 Reclassifications:
 Fiscal Year:
   2010 STRATTEC Annual Report
    
    29




---



##### 



NOTES TO FINANCIAL STATEMENTS
 Use of Estimates:
 Cash and Cash Equivalents:
 Restricted Cash:
 Fair Value of Financial Instruments:
 Level 1
    
    Level 2
    
    Level 3
    
    TotalRabbi Trust assets
    
    $
    3,965
    
    
    $
    
    
    
    $
    
    
    
    $
    3,965
  Receivables:
 Balance,
    
    (Recovery) Provision
    
    
    
    
    
    Balance,Beginning
    
    for Doubtful
    
    Net
    
    End ofof Year
    
    Accounts
    
    Recoveries
    
    YearYear ended June 27, 2010
    
    $
    750
    
    
    $
    (421
    )
    
    $
    71
    
    
    $
    400Year ended June 28, 2009
    
    $
    250
    
    
    $
    500
    
    
    $
    
    
    
    $
    750Year ended June 29, 2008
    
    $
    250
    
    
    $
    
    
    
    $
    
    
    
    $
    250
 Inventories:
 June 27, 2010
    
    
    June 28, 2009Finished products
    
    $
    3,653
    
    
    $
    3,812Work in process
    
    
    4,260
    
    
    
    3,432Purchased materials
    
    
    9,173
    
    
    
    9,345$
    17,086
    
    
    $
    16,589
   2010 STRATTEC Annual Report
    
    30




---



##### 



NOTES TO FINANCIAL STATEMENTS
  2008Originally
    
    As ComputedReported
    
    Under FIFOConsolidated Statement of Operations:Cost of goods sold
    
    $
    134,091
    
    
    $
    134,875Provision for income taxes
    
    
    1,225
    
    
    
    927Net income attributable to STRATTECSECURITY CORPORATION
    
    
    3,267
    
    
    
    2,781Basic earnings per share
    
    
    0.94
    
    
    
    0.80Diluted earnings per share
    
    
    0.94
    
    
    
    0.80Consolidated Balance Sheet:Inventories
    
    
    10,269
    
    
    
    14,314Deferred income taxes  current
    
    
    3,252
    
    
    
    1,715Retained earnings
    
    
    163,889
    
    
    
    166,397Consolidated Statement of Cash Flows:Deferred income taxes
    
    
    920
    
    
    
    622Change in inventories
    
    
    (3,103
    )
    
    
    (2,319
    )
 Customer Tooling in Progress:
 Repair and Maintenance Supply Parts:
 Balance,
    
    Provision
    
    
    
    
    
    Balance,Beginning
    
    Charged to
    
    Amounts
    
    End ofof Year
    
    Expense
    
    Written Off
    
    YearYear ended June 27, 2010
    
    $
    630
    
    
    $
    78
    
    
    $
    28
    
    
    $
    680Year ended June 28, 2009
    
    $
    650
    
    
    $
    80
    
    
    $
    100
    
    
    $
    630Year ended June 29, 2008
    
    $
    640
    
    
    $
    145
    
    
    $
    135
    
    
    $
    650
 Goodwill and Other Intangibles:
  June 27, 2010
    
    
    June 28, 2009Patents, engineering drawings
and software
    
    $
    890
    
    
    $
    890Less: accumulated amortization
    
    
    (157
    )
    
    
    (58
    )$
    733
    
    
    $
    832
   2010 STRATTEC Annual Report
    
    31




---



##### 



NOTES TO FINANCIAL STATEMENTS
  Property, Plant and Equipment:
 Classification
    
    Expected Useful LivesLand improvements
    
    20 yearsBuildings and improvements
    
    20 to 35 yearsMachinery and equipment
    
    3 to 10 years
  June 27, 2010
    
    
    June 28, 2009Land and improvements
    
    $
    2,919
    
    
    $
    2,841Buildings and improvements
    
    
    18,337
    
    
    
    17,862Machinery and equipment
    
    
    115,472
    
    
    
    110,799136,728
    
    
    
    131,502Less: accumulated
depreciation
    
    
    (99,677
    )
    
    
    (94,566
    )$
    37,051
    
    
    $
    36,936
    Supplier Concentrations:
 Percentage of
    
    Number ofFiscal Year
    
    Inventory Purchases
    
    Suppliers2010
    
    
    34
    %
    
    
    82009
    
    
    24
    %
    
    
    42008
    
    
    25
    %
    
    
    3
  Labor Concentrations:
 Revenue Recognition:
 Research and Development Costs:
 Other Income, Net:
   2010 STRATTEC Annual Report
    
    32




---



##### 



NOTES TO FINANCIAL STATEMENTS
  Years EndedJune 27, 2010
    
    
    June 28, 2009
    
    
    June 29, 2008Foreign currency
transaction (loss)
gain
    
    $
    (283
    )
    
    $
    918
    
    
    $
    (320
    )Rabbi Trust gain (loss)
    
    
    431
    
    
    
    (393
    )
    
    
    (174
    )Other
    
    
    164
    
    
    
    279
    
    
    
    194$
    312
    
    
    $
    804
    
    
    $
    (300
    )
 Self Insurance and Loss Sensitive Plans:
    Balance,
    
    Provision
    
    
    
    
    
    Balance,Beginning
    
    Charged to
    
    
    
    
    
    End ofof Year
    
    Expense
    
    Payments
    
    YearYear ended June 27, 2010Incurred but not reported claims
reserve for self insured plans
    
    $
    300
    
    
    $
    3,041
    
    
    $
    3,021
    
    
    $
    320Workers Compensation
    
    
    (78
    )
    
    
    259
    
    
    
    366
    
    
    
    (185
    )Year ended June 28, 2009Incurred but not reported claims
reserve for self insured plans
    
    $
    300
    
    
    $
    2,468
    
    
    $
    2,468
    
    
    $
    300Workers Compensation
    
    
    (140
    )
    
    
    208
    
    
    
    146
    
    
    
    (78
    )Year ended June 29, 2008Incurred but not reported claims
reserve for self insured plans
    
    $
    300
    
    
    $
    2,408
    
    
    $
    2,408
    
    
    $
    300Workers Compensation
    
    
    (251
    )
    
    
    254
    
    
    
    143
    
    
    
    (140
    )
   2010 STRATTEC Annual Report
    
    33




---



##### 



NOTES TO FINANCIAL STATEMENTS
 Warranty:
  Balance,
    
    Provision
    
    
    
    
    
    Balance,Beginning
    
    Charged to
    
    
    
    
    
    End ofof Year
    
    Expense
    
    Payments
    
    YearYear ended June 27, 2010
    
    $
    221
    
    
    $
    2,560
    
    
    $
    1,063
    
    
    $
    1,718Year ended June 28, 2009
    
    $
    390
    
    
    $
    362
    
    
    $
    531
    
    
    $
    221Year ended June 29, 2008
    
    $
    390
    
    
    $
    267
    
    
    $
    267
    
    
    $
    390
 Foreign Currency Translation:
 Accumulated Other Comprehensive Loss:
 June 27, 2010
    
    
    June 28, 2009
    
    
    June 29, 2008Unrecognized pension and
postretirement
benefit liabilities, net of tax
    
    $
    28,222
    
    
    $
    26,876
    
    
    $
    15,762Foreign currency translation
    
    
    3,719
    
    
    
    4,218
    
    
    
    1,733$
    31,941
    
    
    $
    31,094
    
    
    $
    17,495
 Deferred taxes have not been provided for the foreign currency translation adjustments.
 Accounting For Stock-Based Compensation:
   2010 STRATTEC Annual Report
    
    34




---



##### 



NOTES TO FINANCIAL STATEMENTS
    Years EndedJune 27, 2010
    
    June 28, 2009
    
    June 29, 2008Intrinsic value of options exercised
    
    $
    35
    
    
    $
    
    
    
    $
    Fair value of stock options vesting
    
    $
    114
    
    
    $
    469
    
    
    $
    273
  Options Granted During
    
    2010
    
    
    2009Weighted average grant date fair value:Options issued at grant date market value
    
    $
    8.95
    
    
    $
    3.80Options issued above grant date market value
    
    
    n/a
    
    
    
    n/aAssumptions:Risk free interest rates
    
    
    3.14
    %
    
    
    2.22
    %Expected volatility
    
    
    49.73
    %
    
    
    32.96
    %Expected dividend yield
    
    
    
    
    
    
    1.67
    %Expected term (in years)
    
    
    6.0
    
    
    
    5.5
  The range of options outstanding as of June 27, 2010 is as follows:
 Weighted Average RemainingNumber of Options
    

    Weighted Average Exercise
    
    Contractual Life OutstandingOutstanding/Exercisable
    

    Price Outstanding/Exercisable

    
    (In Years)$10.92-$18.49
    
    170,000/21,700
    
    
    $14.62/$12.23
    
    
    9.0$31.95-$44.93
    
    5,100/5,100
    
    
    $39.25/$39.25
    
    
    1.7$53.07-$63.25
    
    122,550/122,550
    
    
    $58.25/$58.25
    
    
    2.6$33.01/$50.92
 Recent Accounting Pronouncements:
  SUBSEQUENT EVENTS
   2010 STRATTEC Annual Report
    
    35




---



##### 



NOTES TO FINANCIAL STATEMENTS
 INVESTMENT IN JOINT VENTURES
       LOANS FROM RELATED PARTIES
  LINE OF CREDIT
   2010 STRATTEC Annual Report
    
    36




---



##### 



NOTES TO FINANCIAL STATEMENTS
 COMMITMENTS AND CONTINGENCIES
   INCOME TAXES
   2010
    
    
    2009
    
    
    2008Currently (refundable) payable:Federal
    
    $
    (2,745
    )
    
    $
    (1,747
    )
    
    $
    62State
    
    
    230
    
    
    
    150
    
    
    
    226Foreign
    
    
    753
    
    
    
    361
    
    
    
    67(1,762
    )
    
    
    (1,236
    )
    
    
    355Deferred tax (benefit) provision
    
    
    3,428
    
    
    
    (2,986
    )
    
    
    622$
    1,666
    
    
    $
    (4,222
    )
    
    $
    977
  2010
    
    2009
    
    2008U.S. statutory rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %State taxes, net of Federal tax benefit
    
    
    4.1
    
    
    
    1.2
    
    
    
    4.6Foreign subsidiaries
    
    
    (4.1
    )
    
    
    4.3
    
    
    
    (9.6
    )Non-controlling interest
    
    
    (3.5
    )
    
    
    (2.3
    )
    
    
    .7Valuation allowance
    
    
    2.8
    
    
    
    
    
    
    
    Other
    
    
    (3.6
    )
    
    
    .8
    
    
    
    (3.9
    )29.7
    %
    
    
    38.0
    %
    
    
    25.8
    %
   2010 STRATTEC Annual Report
    
    37




---



##### 



NOTES TO FINANCIAL STATEMENTS
   June 27, 2010
    
    
    June 28, 2009Deferred income taxescurrent:Repair and maintenance supply parts reserve
    
    $
    258
    
    
    $
    239Payroll-related accruals
    
    
    1,028
    
    
    
    814Environmental reserve
    
    
    569
    
    
    
    1,002Inventory reserve
    
    
    475
    
    
    
    371Allowance for Doubtful Accounts
    
    
    152
    
    
    
    285Accrued customer pricing
    
    
    
    
    
    
    934Accrued Warranty
    
    
    436
    
    
    
    54Method change for inventory valuation
    
    
    (919
    )
    
    
    (1,317
    )Other
    
    
    288
    
    
    
    (258
    )2,287
    
    
    
    2,124Valuation allowance
    
    
    (154
    )
    
    
    $
    2,133
    
    
    $
    2,124Deferred income taxesnoncurrent:Accrued pension obligations
    
    $
    (8,634
    )
    
    $
    (7,384
    )Unrecognized pension and postretirement
benefit plan liabilities
    
    
    17,297
    
    
    
    16,472Accumulated depreciation
    
    
    (2,001
    )
    
    
    (1,807
    )Stock-based compensation
    
    
    740
    
    
    
    707Postretirement obligations
    
    
    1,651
    
    
    
    1,625NOL/credit carry-forwards
    
    
    273
    
    
    
    3,259Other
    
    
    1,208
    
    
    
    271$
    10,534
    
    
    $
    13,143
      Unrecognized tax benefits June 28, 2009
    
    $
    1,103Gross increases  tax positions in prior years
    
    
    Gross decreases  tax positions in prior years
    
    
    (29
    )Gross increases  current period tax positions
    
    
    115Tax Years Closed
    
    
    (64
    )Unrecognized tax benefits June 27, 2010
    
    $
    1,125
   2010 STRATTEC Annual Report
    
    38




---



##### 



NOTES TO FINANCIAL STATEMENTS
  RETIREMENT PLANS AND POSTRETIREMENT COSTS
     Pension and SERP Benefits
    
    
    Postretirement BenefitsPrior service cost (credit)
    
    $
    59
    
    
    $
    (4,083
    )Net actuarial loss
    
    
    27,359
    
    
    
    4,887$
    27,418
    
    
    $
    804
   2010 STRATTEC Annual Report
    
    39




---



##### 



NOTES TO FINANCIAL STATEMENTS
 Pension and SERP Benefits
    
    
    Postretirement Benefits2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008COMPONENTS OF NET PERIODIC
BENEFIT COST:Service cost
    
    $
    1,006
    
    
    $
    1,935
    
    
    $
    2,018
    
    
    $
    124
    
    
    $
    191
    
    
    $
    221Interest cost
    
    
    5,047
    
    
    
    5,083
    
    
    
    4,680
    
    
    
    701
    
    
    
    737
    
    
    
    718Expected return on plan assets
    
    
    (6,351
    )
    
    
    (6,562
    )
    
    
    (6,210
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    45
    
    
    
    79
    
    
    
    64
    
    
    
    (388
    )
    
    
    (388
    )
    
    
    (378
    )Amortization of unrecognized net loss
    
    
    727
    
    
    
    255
    
    
    
    643
    
    
    
    685
    
    
    
    695
    
    
    
    702Net periodic benefit cost
    
    
    474
    
    
    
    790
    
    
    
    1,195
    
    
    
    1,122
    
    
    
    1,235
    
    
    
    1,263Curtailment loss
    
    
    505
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net benefit cost
    
    $
    979
    
    
    $
    790
    
    
    $
    1,195
    
    
    $
    1,122
    
    
    $
    1,235
    
    
    $
    1,263
 Pension and SERP Benefits
    
    
    Postretirement BenefitsJune 27,
    
    
    June 28,
    
    
    June 27,
    
    
    June 28,2010
    
    
    2009
    
    
    2010
    
    
    2009WEIGHTED-AVERAGE ASSUMPTIONSBenefit Obligations:Discount rate
    
    
    5.41
    %
    
    
    6.86
    %
    
    
    5.41
    %
    
    
    6.86
    %Expected return on plan assets
    
    
    8.0
    %
    
    
    8.0
    %
    
    
    n/a
    
    
    
    n/aRate of compensation increases
    
    
    3.0
    %
    
    
    3.0
    %
    
    
    n/a
    
    
    
    n/aNet Periodic Benefit Cost:Discount rate
    
    
    6.86
    %
    
    
    7.13
    %
    
    
    6.86
    %
    
    
    7.13
    %Expected return on plan assets
    
    
    8.0
    %
    
    
    8.25
    %
    
    
    n/a
    
    
    
    n/aRate of compensation increases
    
    
    3.0
    %
    
    
    3.5
    %
    
    
    n/a
    
    
    
    n/a
 2010
    
    
    2009
    
    
    2010
    
    
    2009CHANGE IN PROJECTED
BENEFIT OBLIGATION:Benefit obligation at beginning of year
    
    $
    78,058
    
    
    $
    72,939
    
    
    $
    10,812
    
    
    $
    10,871Service cost
    
    
    1,006
    
    
    
    1,935
    
    
    
    124
    
    
    
    191Interest cost
    
    
    5,047
    
    
    
    5,083
    
    
    
    701
    
    
    
    737Plan amendments
    
    
    (3,982
    )
    
    
    
    
    
    
    (3,399
    )
    
    
    Actuarial loss (gain)
    
    
    14,101
    
    
    
    1,567
    
    
    
    (1,543
    )
    
    
    502Benefits paid
    
    
    (3,828
    )
    
    
    (3,466
    )
    
    
    (1,053
    )
    
    
    (1,489
    )Benefit obligation at end of year
    
    $
    90,402
    
    
    $
    78,058
    
    
    $
    5,642
    
    
    $
    10,812CHANGE IN PLAN ASSETS:Fair value of plan assets at beginning
of year
    
    $
    60,594
    
    
    $
    70,996
    
    
    $
    
    
    
    $
    Actual return on plan assets
    
    
    7,783
    
    
    
    (9,936
    )
    
    
    
    
    
    
    Employer contribution
    
    
    4,219
    
    
    
    3,000
    
    
    
    1,053
    
    
    
    1,489Benefits paid
    
    
    (3,828
    )
    
    
    (3,466
    )
    
    
    (1,053
    )
    
    
    (1,489
    )Fair value of plan assets at end of
year
    
    
    68,768
    
    
    
    60,594
    
    
    
    
    
    
    
    Funded statusaccrued benefit
obligations
    
    $
    (21,634
    )
    
    $
    (17,464
    )
    
    $
    (5,642
    )
    
    $
    (10,812
    )AMOUNTS RECOGNIZED IN
CONSOLIDATED BALANCE SHEETS:Accrued payroll and benefits
(current liabilities)
    
    $
    (3,142
    )
    
    $
    (2,281
    )
    
    $
    (1,152
    )
    
    $
    (1,211
    )Accrued benefit obligations
(long-term liabilities)
    
    
    (18,492
    )
    
    
    (15,183
    )
    
    
    (4,490
    )
    
    
    (9,601
    )Net amount recognized
    
    $
    (21,634
    )
    
    $
    (17,464
    )
    
    $
    (5,642
    )
    
    $
    (10,812
    )CHANGES IN PLAN ASSETS AND
BENEFIT OBLIGATIONS RECOGNIZED
IN OTHER COMPREHENSIVE INCOME:Net periodic benefit cost
    
    $
    979
    
    
    $
    790
    
    
    $
    1,122
    
    
    $
    1,235Net actuarial loss (gain)
    
    
    8,686
    
    
    
    18,065
    
    
    
    (1,543
    )
    
    
    502Prior service cost
    
    
    
    
    
    
    
    
    
    
    (3,399
    )
    
    
    Amortization of prior service (cost)
credits
    
    
    (550
    )
    
    
    (79
    )
    
    
    388
    
    
    
    388Amortization of unrecognized net loss
    
    
    (727
    )
    
    
    (255
    )
    
    
    (685
    )
    
    
    (695
    )Total recognized in other comprehensive
income, before tax
    
    
    7,409
    
    
    
    17,731
    
    
    
    (5,239
    )
    
    
    (195
    )Total recognized in net periodic
benefit
cost and other comprehensive income
    
    $
    8,388
    
    
    $
    18,521
    
    
    $
    (4,117
    )
    
    $
    1,430
   2010 STRATTEC Annual Report
    
    40




---



##### 



NOTES TO FINANCIAL STATEMENTS
  Pension
    
    SERPJune 27, 2010
    

June 28, 2009
    

June 27, 2010
    
    June 28, 2009Accumulated benefit
obligation
    
    $
    86,658
    
    
    $
    71,167
    
    
    $
    3,682
    
    
    $
    2,826Projected benefit obligation
    
    $
    86,658
    
    
    $
    75,079
    
    
    $
    3,744
    
    
    $
    2,979
   1% Increase
    
    1% DecreaseEffect on total of service and interest
cost components in fiscal 2010
    
    $
    7
    
    
    $
    (7
    )Effect on postretirement benefit
obligation as of June 27, 2010
    
    $
    129
    
    
    $
    (124
    )
  Target Allocation
    
    June 27, 2010
    
    June 28, 2009Equity investments
    
    
    65
    %
    
    
    56
    %
    
    
    61
    %Fixed-income investments
    
    
    35
    %
    
    
    44
    %
    
    
    39
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
  Asset Category
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalCash and cash equivalents
    
    $
    1,508
    
    
    $
    
    
    
    $
    
    
    
    $
    1,508Equity Securities:Domestic
    
    
    4,067
    
    
    
    
    
    
    
    
    
    
    
    4,067Foreign
    
    
    158
    
    
    
    
    
    
    
    
    
    
    
    158Equity Funds:Small Cap
    
    
    6,392
    
    
    
    
    
    
    
    
    
    
    
    6,392Mid Cap
    
    
    4,727
    
    
    
    
    
    
    
    
    
    
    
    4,727Large Cap
    
    
    17,060
    
    
    
    
    
    
    
    
    
    
    
    17,060International
    
    
    5,970
    
    
    
    
    
    
    
    
    
    
    
    5,970Marketable Limited
Partnership
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    21Taxable Bond Funds
    
    
    28,865
    
    
    
    
    
    
    
    
    
    
    
    28,865Total
    
    $
    68,768
    
    
    $
    
    
    
    $
    
    
    
    $
    68,768
   Pension and SERP Benefits
    
    Postretirement Benefits2011
    
    $
    7,425
    
    
    $
    1,1512012
    
    
    4,669
    
    
    
    1,0912013
    
    
    4,884
    
    
    
    9752014
    
    
    5,193
    
    
    
    8412015
    
    
    5,279
    
    
    
    5972016-2020
    
    
    29,089
    
    
    
    1,185
   2010 STRATTEC Annual Report
    
    41




---



##### 



NOTES TO FINANCIAL STATEMENTS
  SHAREHOLDERS EQUITY
   EARNINGS (LOSS) PER SHARE (EPS) (LPS)
  2010
    
    
    2009
    
    
    2008Net
    
    
    
    
    
    
    Per Share
    
    
    Net
    
    
    
    
    
    
    Per Share
    
    
    Net
    
    
    
    
    
    
    Per ShareIncome
    
    
    Shares
    
    
    Amount
    
    
    Loss
    
    
    Shares
    
    
    Amount
    
    
    Income
    
    
    Shares
    
    
    AmountBasic EPS (LPS)
    
    $
    3,421
    
    
    
    3,271
    
    
    $
    1.05
    
    
    $
    (6,122
    )
    
    
    3,280
    
    
    $
    (1.87
    )
    
    $
    2,781
    
    
    
    3,487
    
    
    $
    0.80Stock-based
compensation
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    7Diluted EPS
(LPS)
    
    $
    3,421
    
    
    
    3,280
    
    
    $
    1.04
    
    
    $
    (6,122
    )
    
    
    3,284
    
    
    $
    (1.86
    )
    
    $
    2,781
    
    
    
    3,494
    
    
    $
    0.80
   STOCK OPTION AND PURCHASE PLANS
  Weighted
    
    Weighted Average
    
    AggregateAverage
    
    Remaining
    
    Intrinsic ValueShares
    
    Exercise Price
    
    Contractual Term (in years)
    
    (in thousands)Balance at July 1, 2007
    
    
    235,420
    
    
    $
    58.71Granted
    
    
    
    
    
    $
    Exercised
    
    
    
    
    
    $
    Expired
    
    
    (47,640
    )
    
    $
    58.59Terminated
    
    
    
    
    
    $
    Balance at June 29, 2008
    
    
    187,780
    
    
    $
    58.74Granted
    
    
    96,800
    
    
    $
    11.80Exercised
    
    
    
    
    
    $
    Expired
    
    
    (52,340
    )
    
    $
    61.68Terminated
    
    
    (5,000
    )
    
    $
    58.55Balance at June 28, 2009
    
    
    227,240
    
    
    $
    38.07Granted
    
    
    80,000
    
    
    $
    17.73Exercised
    
    
    (2,400
    )
    
    $
    10.92Expired
    
    
    (2,790
    )
    
    $
    61.22Terminated
    
    
    (4,400
    )
    
    $
    10.92Balance at June 27, 2010
    
    
    297,650
    
    
    $
    33.01
    
    
    
    6.2
    
    
    $
    1,214Exercisable as of:June 27, 2010
    
    
    149,350
    
    
    $
    50.92
    
    
    
    3.4
    
    
    $
    212June 28, 2009
    
    
    130,440
    
    
    $
    57.57
    
    
    
    3.5
    
    
    $
    June 29, 2008
    
    
    148,440
    
    
    $
    58.09
    
    
    
    3.6
    
    
    $
    3Available for grant as of
June 27, 2010
    
    
    250,893
   2010 STRATTEC Annual Report
    
    42




---



##### 



NOTES TO FINANCIAL STATEMENTS
  Weighted AverageGrant DateShares
    
    Fair ValueNonvested Balance at July 1, 2007
    
    
    19,400
    
    
    $
    45.56Granted
    
    
    10,000
    
    
    $
    47.78Vested
    
    
    
    
    
    $
    Forfeited
    
    
    
    
    
    $
    Nonvested Balance at June 29, 2008
    
    
    29,400
    
    
    $
    46.32Granted
    
    
    10,000
    
    
    $
    29.00Vested
    
    
    (10,200
    )
    
    $
    50.58Forfeited
    
    
    (1,000
    )
    
    $
    46.22Nonvested Balance at June 28, 2009
    
    
    28,200
    
    
    $
    38.64Granted
    
    
    10,000
    
    
    $
    14.75Vested
    
    
    (9,000
    )
    
    $
    40.00Forfeited
    
    
    (1,700
    )
    
    $
    32.28Nonvested Balance at June 27, 2010
    
    
    27,500
    
    
    $
    29.90
  EXPORT SALES
 Export sales are summarized below (thousands of dollars):
 2010
    
    2009
    
    2008Export Sales
    
    $
    29,170
    
    
    $
    28,050
    
    
    $
    25,714Percent of Net Sales
    
    
    14
    %
    
    
    22
    %
    
    
    16
    %
  SALES AND RECEIVABLE CONCENTRATION
  2010
    
    
    2009
    
    
    2008Sales
    
    
    %
    
    
    Sales
    
    
    %
    
    
    Sales
    
    
    %General Motors
Company
    
    $
    51,673
    
    
    
    25
    %
    
    $
    39,156
    
    
    
    31
    %
    
    $
    45,039
    
    
    
    28
    %Ford Motor Company
    
    
    18,435
    
    
    
    9
    %
    
    
    12,575
    
    
    
    10
    %
    
    
    19,419
    
    
    
    12
    %Chrysler Group LLC
    
    
    68,216
    
    
    
    33
    %
    
    
    31,864
    
    
    
    25
    %
    
    
    40,209
    
    
    
    25
    %$
    138,324
    
    
    
    67
    %
    
    $
    83,595
    
    
    
    66
    %
    
    $
    104,667
    
    
    
    66
    %
  June 27, 2010
    
    

June 28, 2009Receivables
    
    
    %
    
    
    Receivables
    
    
    %General Motors
Company
    
    $
    8,125
    
    
    
    22
    %
    
    $
    7,029
    
    
    
    39
    %Ford Motor Company
    
    
    2,718
    
    
    
    7
    %
    
    
    2,376
    
    
    
    13
    %Chrysler Group LLC
    
    
    12,231
    
    
    
    34
    %
    
    
    2,627
    
    
    
    15
    %$
    23,074
    
    
    
    63
    %
    
    $
    12,032
    
    
    
    67
    %
   2010 STRATTEC Annual Report
    
    43




---



##### 



REPORTS
 REPORT ON MANAGEMENTS ASSESSMENT OF INTERNAL CONTROL OVER FINANCIAL REPORTING
     -s- Harold M. Stratton II
    
    -s- Patrick J. HansenHarold M. Stratton II
    
    Patrick J. HansenChairman and
    
    Senior Vice President andChief Executive Officer
    
    Chief Financial Officer
   2010 STRATTEC Annual Report
    
    44




---



##### 



REPORTS
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Internal Control  Integrated Framework
    Internal Control  Integrated Framework
   2010 STRATTEC Annual Report
    
    45




---



##### 



REPORTS
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   2010 STRATTEC Annual Report
    
    46




---



##### 



FINANCIAL SUMMARY
 FIVE-YEAR FINANCIAL SUMMARY
  Fiscal Years2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006INCOME STATEMENT DATANet sales
    
    $
    207,964
    
    
    $
    126,097
    
    
    $
    159,642
    
    
    $
    167,707
    
    
    $
    181,197Gross profit
    
    
    33,042
    
    
    
    13,240
    
    
    
    24,767
    
    
    
    26,520
    
    
    
    38,354Engineering, selling, and
administrative expenses
    
    
    29,939
    
    
    
    25,480
    
    
    
    23,962
    
    
    
    20,189
    
    
    
    22,067Impairment charge
    
    
    223
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Environmental reserve
adjustment
    
    
    (1,125
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Recovery of) provision for
doubtful accounts
    
    
    (421
    )
    
    
    500
    
    
    
    
    
    
    
    
    
    
    
    1,622Income (loss) from operations
    
    
    4,426
    
    
    
    (12,740
    )
    
    
    805
    
    
    
    6,331
    
    
    
    14,665Interest income
    
    
    86
    
    
    
    731
    
    
    
    2,749
    
    
    
    3,611
    
    
    
    2,563Equity earnings of joint
ventures
    
    
    1,008
    
    
    
    245
    
    
    
    561
    
    
    
    394
    
    
    
    188Interest expense -
related parties
    
    
    (225
    )
    
    
    (164
    )
    
    
    (31
    )
    
    
    
    
    
    
    Other income, net
    
    
    312
    
    
    
    804
    
    
    
    (300
    )
    
    
    321
    
    
    
    772Income (loss) before taxes
and
non-controlling interest
    
    
    5,607
    
    
    
    (11,124
    )
    
    
    3,784
    
    
    
    10,657
    
    
    
    18,188Provision (benefit) for
income taxes
    
    
    1,666
    
    
    
    (4,222
    )
    
    
    977
    
    
    
    2,533
    
    
    
    4,900Net income (loss)
    
    
    3,941
    
    
    
    (6,902
    )
    
    
    2,807
    
    
    
    8,124
    
    
    
    13,288Net (income) loss
attributable to
non-controlling interest
    
    
    (520
    )
    
    
    780
    
    
    
    (26
    )
    
    
    75
    
    
    
    Net income (loss)
attributable to
STRATTEC SECURITY
CORPORATION
    
    $
    3,421
    
    
    $
    (6,122
    )
    
    $
    2,781
    
    
    $
    8,199
    
    
    $
    13,288Earnings (Loss) per share:Basic
    
    $
    1.05
    
    
    $
    (1.87
    )
    
    $
    0.80
    
    
    $
    2.31
    
    
    $
    3.58Diluted
    
    
    1.04
    
    
    
    (1.86
    )
    
    
    0.80
    
    
    
    2.31
    
    
    
    3.57Cash dividends declared per share:
    
    $
    
    
    
    $
    0.30
    
    
    $
    1.60
    
    
    $
    
    
    
    $
    BALANCE SHEET DATANet working capital
    
    $
    43,777
    
    
    $
    41,710
    
    
    $
    72,835
    
    
    $
    84,077
    
    
    $
    83,242Total assets
    
    
    145,002
    
    
    
    128,189
    
    
    
    144,221
    
    
    
    151,440
    
    
    
    157,270Long-term liabilities
    
    
    22,982
    
    
    
    24,784
    
    
    
    12,389
    
    
    
    13,431
    
    
    
    10,510Total STRATTEC SECURITY
CORPORATION
Shareholders equity
    
    
    74,126
    
    
    
    71,418
    
    
    
    97,940
    
    
    
    105,954
    
    
    
    113,253
   2010 STRATTEC Annual Report
    
    47




---



##### 



FINANCIAL SUMMARY/PERFORMANCE GRAPH
 QUARTERLY FINANCIAL DATA (UNAUDITED)
  CashNet Income (Loss)
    
    
    Earnings
    
    
    DividendsAttributable to
    
    
    (Loss) Per Share
    
    
    Declared
    
    
    Market Price Per ShareQuarter
    
    Net Sales
    
    
    Gross Profit
    
    
    STRATTEC
    
    
    Basic
    
    
    Diluted
    
    
    Per Share
    
    
    High
    
    
    Low2010
    
    First
    
    $
    41,181
    
    
    $
    6,798
    
    
    $
    943
    
    
    $
    0.29
    
    
    $
    0.29
    
    
    $
    
    
    
    $
    15.40
    
    
    $
    13.03Second
    
    
    52,540
    
    
    
    7,653
    
    
    
    844
    
    
    
    0.26
    
    
    
    0.26
    
    
    
    
    
    
    
    18.50
    
    
    
    13.29Third
    
    
    52,883
    
    
    
    8,861
    
    
    
    781
    
    
    
    0.24
    
    
    
    0.24
    
    
    
    
    
    
    
    22.15
    
    
    
    16.75Fourth
    
    
    61,360
    
    
    
    9,730
    
    
    
    853
    
    
    
    0.26
    
    
    
    0.26
    
    
    
    
    
    
    
    27.80
    
    
    
    19.52TOTAL
    
    $
    207,964
    
    
    $
    33,042
    
    
    $
    3,421
    
    
    $
    1.05
    
    
    $
    1.04
    
    
    $
    2009
    
    First
    
    $
    34,731
    
    
    $
    5,424
    
    
    $
    20
    
    
    $
    0.01
    
    
    $
    0.01
    
    
    $
    0.15
    
    
    $
    38.45
    
    
    $
    25.63Second
    
    
    33,799
    
    
    
    2,911
    
    
    
    (1,202
    )
    
    
    (0.37
    )
    
    
    (0.37
    )
    
    
    0.15
    
    
    
    28.90
    
    
    
    12.06Third
    
    
    29,348
    
    
    
    2,063
    
    
    
    (2,822
    )
    
    
    (0.87
    )
    
    
    (0.87
    )
    
    
    
    
    
    
    18.89
    
    
    
    6.26Fourth
    
    
    28,219
    
    
    
    2,842
    
    
    
    (2,118
    )
    
    
    (0.65
    )
    
    
    (0.65
    )
    
    
    
    
    
    
    16.03
    
    
    
    7.40TOTAL
    
    $
    126,097
    
    
    $
    13,240
    
    
    $
    (6,122
    )
    
    $
    (1.87
    )
    
    $
    (1.86
    )
    
    $
    0.30
   COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN*
 
 7/1/05
    
    
    6/30/06
    
    
    7/1/07
    
    
    6/29/08
    
    
    6/28/09
    
    
    6/27/10STRATTEC**
    
    
    
    100
    
    
    
    
    93
    
    
    
    
    87
    
    
    
    
    67
    
    
    
    
    27
    
    
    
    
    43NASDAQ Composite Index
    
    
    
    100
    
    
    
    
    107
    
    
    
    
    131
    
    
    
    
    114
    
    
    
    
    90
    
    
    
    
    106Dow Jones U.S. Auto Parts Index
    
    
    
    100
    
    
    
    
    100
    
    
    
    
    136
    
    
    
    
    101
    
    
    
    
    74
    
    
    
    
    95
 *
    
    $100 invested on July 1, 2005 in stock or index-including reinvestment of dividends. Indexes
calculated on a month-end basis.**
    
    The fiscal year end closing price of STRATTEC Common Stock on July 1, 2005 was $53.82, the
closing price on June 30, 2006, was $49.81, the closing price on June 29, 2007 was $46.97, the
closing price on June 27, 2008 was $34.99, the closing price on June 26, 2009 was $13.90 and the
closing price on June 25, 2010 was $22.01.
   2010 STRATTEC Annual Report
    
    48




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##### 



DIRECTORS/OFFICERS/SHAREHOLDERS INFORMATION
STRATTEC Board of Directors:
(Left to Right) Frank J. Krejci, Michael J. Koss, Robert Feitler, Harold M. Stratton
II, David R. Zimmer
BOARD OF DIRECTORS
Harold M. Stratton II, 62
Chairman and Chief Executive Officer
Frank J. Krejci, 60
President and Chief Operating Officer
Robert Feitler, 79
Former President and Chief Operating Officer
of Weyco Group, Inc.
Chairman of the Executive Committee and
Director of Weyco Group, Inc.
Michael J. Koss, 56
President and Chief Executive Officer of
Koss Corporation
Director of Koss Corporation
David R. Zimmer, 64
Managing Partner of
Stonebridge Business Partners
CORPORATE OFFICERS
Harold M. Stratton II, 62
Frank J. Krejci, 60
Patrick J. Hansen, 51
Senior Vice President-Chief Financial
Officer, Treasurer and Secretary
Dennis A. Kazmierski, 58
Vice President-Marketing and Sales
Kathryn E. Scherbarth, 54
Vice President-Milwaukee Operations
Rolando J. Guillot, 42
Vice President-Mexican Operations
Brian J. Reetz, 52
Vice President-Security Products
Richard P. Messina, 44
Vice President-Access Products
SHAREHOLDERS
INFORMATION
Annual Meeting
The Annual Meeting of Shareholders will convene at 8:00 a.m. (CDT)
on October 5, 2010, at the Radisson Hotel,
7065 North Port Washington Road, Milwaukee, WI 53217
Common Stock
STRATTEC SECURITY CORPORATION common stock is traded on the NASDAQ Global 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 W. Good
Hope Road, Milwaukee, WI 53209.
Corporate Governance
To review the Companys corporate governance, board committee charters and code of business
ethics, please visit the Corporate Governance section of our Web site at www.strattec.com.
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, N.A.
Shareholder Services P.O. Box 64854
St. Paul, MN 55164-0854 1.800.468.9716 49




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##### 



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STRATTEC SECURITY CORPORATION
3333 WEST GOOD HOPE ROAD
MILWAUKEE, WI 53209
PHONE 414.247.3333 FAX 414.247.3329
www.strattec.com