10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 28, 2014

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-25150

STRATTEC SECURITY CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Wisconsin	39-1804239
(State of Incorporation)	(I.R.S. Employer Identification No.)

3333 West Good Hope Road, Milwaukee, WI 53209

(Address of Principal Executive Offices)

(414) 247-3333

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     YES  x    NO  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     YES  x    NO  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨(Do not check if a smaller reporting company)	Smaller Reporting Company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     YES  ¨    NO  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

Common stock, par value $0.01 per share: 3,584,554 shares outstanding as of September 28, 2014 (which number includes all restricted shares previously awarded that have not vested as of such date).

STRATTEC SECURITY CORPORATION

FORM 10-Q

September 28, 2014

INDEX

		Page
Part I - FINANCIAL INFORMATION
Item 1	Financial Statements
	Condensed Consolidated Statements of Income and Comprehensive Income	3
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6-14
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15-20
Item 3	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4	Controls and Procedures	22
Part II - OTHER INFORMATION
Item 1	Legal Proceedings	23
Item 1A	Risk Factors	23
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3	Defaults Upon Senior Securities	23
Item 4	Mine Safety Disclosures	23
Item 5	Other Information	23
Item 6	Exhibits	23

PROSPECTIVE INFORMATION

A number of the matters and subject areas discussed in this Form 10-Q 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,” “would,” “expect,” “intend,” “may,” “planned,” “potential,” “should,” “will,” and “could,” or the negative of these terms or words of similar meaning. These statements 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 this Form 10-Q. The discussions of such matters and subject areas are qualified by the inherent risks 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 relating to the automotive industry, consumer demand for the Company’s and its customers’ products, competitive and technological developments, customer purchasing actions, foreign currency fluctuations, fluctuations in costs of operations (including fluctuations in the cost of raw materials) and other matters described in the section titled “Risk Factors” in the Company’s Form 10-K report filed on September 5, 2014 with the Securities and Exchange Commission for the year ended June 29, 2014.

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 Form 10-Q 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 Form 10-Q.

Item 1 Financial Statements

STRATTEC SECURITY CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Income and Comprehensive Income

(In Thousands, Except Per Share Amounts)

(Unaudited)

	Three Months Ended
	September 28,2014			September 29,2013
Net sales	$	122,242		$	79,595
Cost of goods sold		94,185			65,080
Gross profit		28,057			14,515
Engineering, selling and administrative expenses		13,187			9,470
Income from operations		14,870			5,045
Interest income		22			6
Equity earnings of joint ventures		190			294
Interest expense		(11	)		(14	)
Other income, net		788			279
Income before provision for income taxes and non-controlling interest		15,859			5,610
Provision for income taxes		5,519			1,756
Net income		10,340			3,854
Net income attributable to non-controlling interest		1,040			643
Net income attributable to STRATTEC SECURITY CORPORATION	$	9,300		$	3,211
Comprehensive Income:
Net income	$	10,340		$	3,854
Pension and postretirement plans, net of tax		428			435
Currency translation adjustments		(852	)		(336	)
Other comprehensive (loss) income, net of tax		(424	)		99
Comprehensive income		9,916			3,953
Comprehensive income attributable to non-controlling interest		976			623
Comprehensive income attributable to STRATTEC SECURITY CORPORATION	$	8,940		$	3,330
Earnings per share attributable to STRATTEC SECURITY CORPORATION:
Basic	$	2.63		$	0.93
Diluted	$	2.55		$	0.91
Average shares outstanding:
Basic		3,497			3,382
Diluted		3,593			3,460
Cash dividends declared per share	$	0.12		$	0.11

The accompanying notes are an integral part of these condensed consolidated statements of income and comprehensive income.

3

STRATTEC SECURITY CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In Thousands, Except Share Amounts)

	September 28, 2014			June 29, 2014
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	22,545		$	19,756
Receivables, net		79,321			68,822
Inventories
Finished products		8,610			9,034
Work in process		7,487			7,386
Purchased materials		18,150			16,232
Excess and obsolete reserve		(2,200	)		(2,150	)
Inventories, net		32,047			30,502
Other current assets		17,572			16,559
Total current assets		151,485			135,639
Investment in joint ventures		10,341			9,977
Other long-term assets		12,322			11,639
Property, plant and equipment		178,781			172,717
Less: accumulated depreciation		(118,112	)		(116,936	)
Net property, plant and equipment		60,669			55,781
	$	234,817		$	213,036
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	38,138		$	36,053
Accrued Liabilities:
Payroll and benefits		18,888			18,058
Environmental		1,396			1,397
Warranty		3,340			3,462
Other		14,446			6,293
Total current liabilities		76,208			65,263
Deferred income taxes		5,168			5,127
Borrowings under credit facility		4,000			2,500
Accrued pension obligations		1,652			1,619
Accrued postretirement obligations		2,027			2,223
Other long-term liabilities		1,421			1,401
Shareholders’ Equity:
Common stock, authorized 12,000,000 shares, $.01 par value, issued 7,138,978 shares at September 28, 2014 and 7,110,308 shares at June 29, 2014		71			71
Capital in excess of par value		87,881			87,054
Retained earnings		203,371			194,498
Accumulated other comprehensive loss		(20,558	)		(20,198	)
Less: treasury stock, at cost (3,625,224 shares at September 28, 2014 and 3,625,492 shares at June 29, 2014)		(135,915	)		(135,919	)
Total STRATTEC SECURITY CORPORATION shareholders’ equity		134,850			125,506
Non-controlling interest		9,491			9,397
Total shareholders’ equity		144,341			134,903
	$	234,817		$	213,036

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

4

STRATTEC SECURITY CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)

	Three Months Ended
	September 28, 2014			September 29, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	10,340		$	3,854
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		2,112			2,112
Foreign currency transaction gain		(786	)		(212	)
Stock based compensation expense		389			354
Equity earnings of joint ventures		(190	)		(294	)
Change in operating assets and liabilities:
Receivables		(10,618	)		(4,544	)
Inventories		(1,545	)		(3,032	)
Other assets		(890	)		(3,216	)
Accounts payable and accrued liabilities		10,298			752
Other, net		125			86
Net cash provided by (used in) operating activities		9,235			(4,140	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan to joint ventures		(215	)		-
Purchase of property, plant and equipment		(6,963	)		(2,876	)
Proceeds received on sale of property, plant and equipment		-			8
Net cash used in investing activities		(7,178	)		(2,868	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit facility		1,500			750
Dividends paid to non-controlling interests of subsidiaries		(882	)		(984	)
Dividends paid		(427	)		(380	)
Exercise of stock options and employee stock purchases		440			98
Net cash provided by (used in) financing activities		631			(516	)
Foreign currency impact on cash		101			23
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		2,789			(7,501	)
CASH AND CASH EQUIVALENTS
Beginning of period		19,756			20,307
End of period	$	22,545		$	12,806
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes	$	1,102		$	372
Interest	$	5		$	13
Non-cash investing activities:
Change in capital expenditures in accounts payable	$	516		$	-

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

5

STRATTEC SECURITY CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Basis of Financial Statements

STRATTEC SECURITY CORPORATION designs, develops, manufactures and markets automotive access control products including mechanical locks and keys, electronically enhanced locks and keys, steering column and instrument panel ignition lock housings, latches, power sliding door systems, power lift gate systems, power deck lid systems, door handles and related products for primarily North American automotive customers. We also supply global automotive manufacturers through a unique strategic relationship with WITTE Automotive of Velbert, Germany, and ADAC Automotive of Grand Rapids, Michigan. Under this relationship, STRATTEC, WITTE and ADAC market the products of each company to global customers under the “VAST” brand name. STRATTEC products are shipped to customer locations in the United States, Canada, Mexico, Europe, South America, Korea and China, and we provide full service and aftermarket support for our products.

During 2013, we acquired a 51 percent ownership interest in NextLock LLC, a newly formed joint venture which will introduce a new generation of biometric security products based upon the designs of Actuator Systems LLC, our partner and the owner of the remaining ownership interest. We anticipate shipment of new biometric security products to begin in the second quarter of our 2015 fiscal year through this new NextLock joint venture.

The accompanying condensed consolidated financial statements reflect the consolidated results of STRATTEC SECURITY CORPORATION, its wholly owned Mexican subsidiary, STRATTEC de Mexico, and its majority owned subsidiaries, ADAC-STRATTEC, LLC and STRATTEC POWER ACCESS LLC. STRATTEC SECURITY CORPORATION is located in Milwaukee, Wisconsin. STRATTEC de Mexico is located in Juarez, Mexico. ADAC-STRATTEC, LLC and STRATTEC POWER ACCESS LLC have operations in El Paso, Texas and Juarez, Mexico. Equity investments in Vehicle Access Systems Technology LLC (“VAST LLC”) and NextLock LLC for which we exercise significant influence but do not control and are not the primary beneficiary, are accounted for using the equity method. VAST LLC consists primarily of three wholly owned subsidiaries in China and one in Brazil. NextLock LLC is located in El Paso, Texas. We have only one reporting segment.

In the opinion of management, the accompanying condensed consolidated balance sheet as of June 29, 2014, which has been derived from our audited financial statements, and the related unaudited interim condensed consolidated financial statements included herein contain all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance with Rule 10-01 of Regulation S-X. All significant intercompany transactions have been eliminated.

Interim financial results are not necessarily indicative of operating results for an entire year. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis and the financial statements and notes thereto included in the STRATTEC SECURITY CORPORATION 2014 Annual Report, which was filed with the Securities and Exchange Commission as an exhibit to our Form 10-K on September 5, 2014.

New Accounting Standard

In May 2014, the FASB issued an update to the accounting guidance for the recognition of revenue arising from contracts with customers. The update supersedes most current revenue recognition guidance and outlines a single comprehensive model for revenue recognition based on the principle that an entity should recognize revenue in an amount that reflects the expected consideration to be received in the exchange of goods and services. The guidance update also required additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The guidance update is effective for annual reporting periods beginning after December 15, 2016 and becomes effective for us at the beginning of our 2018 fiscal year. Early adoption is not permitted. We are currently assessing the impact that this guidance will have on our consolidated financial statements.

Fair Value of Financial Instruments

The fair value of our cash and cash equivalents, accounts receivable, accounts payable and borrowings under our credit facility approximated book value as of September 28, 2014 and June 29, 2014. Fair value is defined as the exchange price that would be received for an asset or paid for a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date.

6

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of September 28, 2014 (in thousands of dollars):

	Fair Value Inputs
	Level 1 Assets:Quoted PricesIn Active Markets		Level 2 Assets:Observable  Inputs Other Than Market Prices		Level 3 Assets:UnobservableInputs
Assets:
Rabbi Trust Assets:
Stock Index Funds:
Small Cap	$	332	$	-	$	-
Mid Cap		225		-		-
Large Cap		456		-		-
International		428		-		-
Fixed Income Funds		752		-		-
Cash and Cash Equivalents		-		28		-
Total Assets at Fair Value	$	2,193	$	28	$	-

The Rabbi Trust assets fund our amended and restated supplemental executive retirement plan and are included in Other Long-term Assets in the accompanying Condensed Consolidated Balance Sheets. There were no transfers between Level 1 and Level 2 assets during the three months ended September 28, 2014.

Equity Earnings (Loss) of Joint Ventures

We hold a one-third interest in a joint venture company, Vehicle Access Systems Technology LLC (“VAST LLC”), with WITTE Automotive of Velbert, Germany (“WITTE”), and ADAC Automotive of Grand Rapids, Michigan (“ADAC”). VAST LLC exists to seek opportunities to manufacture and sell all three companies’ products in areas of the world outside of North America and Europe. VAST LLC consists primarily of three wholly owned subsidiaries in China and one in Brazil. Our investment in VAST LLC, for which we exercise significant influence but do not control and are not the primary beneficiary, is accounted for using the equity method.

The following are summarized statements of operations for VAST LLC (thousands of dollars):  

	Three Months Ended
	September 28, 2014			September 29, 2013
Net Sales	$	30,998		$	24,529
Cost of Goods Sold		26,083			20,415
Gross Profit		4,915			4,114
Engineering, Selling and Administrative Expenses		4,198			3,490
Income From Operations		717			624
Other Income (Expense), net		473			(2	)
Income before Provision for Income taxes		1,190			622
Provision for (Benefit from) Income Taxes		59			(454	)
Net Income	$	1,131		$	1,076
STRATTEC’s Share of VAST LLC Net Income	$	377		$	359
Intercompany Profit Elimination		(1	)		(6	)
STRATTEC’s Equity Earnings of VAST LLC	$	376		$	353

During 2013, we acquired a 51% ownership interest in a newly formed joint venture company, NextLock LLC, which will introduce a new generation of biometric security products based upon designs of Actuator Systems LLC, our partner. We anticipate shipment of the biometric security products to begin in the second quarter of our 2015 fiscal year through this new joint venture. Our investment in NextLock, for which we exercise significant influence but do not control, is accounted for using the equity method.

7

The following are summarized statements of operations for NextLock LLC (thousands of dollars):

	Three Months Ended
	September 28, 2014			September 29, 2013
Engineering, Selling and Administrative Expenses	$	364		$	116
Loss From Operations		(364	)		(116	)
Net Loss	$	(364	)	$	(116	)
STRATTEC’s Equity Loss of NextLock LLC	$	(186	)	$	(59	)

We have sales of component parts to VAST LLC and NextLock LLC, purchases of component parts from VAST LLC, expenses charged to VAST LLC for engineering and accounting services and expenses charged to us from VAST LLC for general headquarters expenses.  The following tables summarize the related party transactions with VAST LLC (thousands of dollars):

	Three Months Ended
	September 28, 2014		September 29, 2013
Sales to VAST LLC	$	114	$	40
Sales to NextLock LLC	$	5	$	-
Purchases from VAST LLC	$	39	$	115
Expenses Charged to VAST LLC	$	159	$	240
Expenses Charged from VAST LLC	$	483	$	282

Credit Facilities and Guarantees

STRATTEC has a $25 million secured revolving credit facility (the “STRATTEC Credit Facility”) with BMO Harris Bank N.A. ADAC-STRATTEC LLC has a $5 million secured revolving credit facility (the “ADAC-STRATTEC Credit Facility”) with BMO Harris Bank N.A, which is guaranteed by STRATTEC. The credit facilities both expire August 1, 2016. Borrowings under either credit facility are secured by our U.S. cash balances, accounts receivable, inventory and fixed assets located in the U.S. Interest on borrowings under the ADAC-STRATTEC Credit Facility for periods prior to January 22, 2014 was at varying rates based, at our option, on LIBOR plus 1.75 percent or the bank’s prime rate.  Interest on borrowings under the STRATTEC credit facility and effective on or after January 22, 2014 under the ADAC-STRATTEC Credit Facility is at varying rates based, at our option, on the London Interbank Offering Rate plus 1.0 percent or the bank’s prime rate. Both credit facilities contain a restrictive financial covenant that requires the applicable borrower to maintain a minimum net worth level. The ADAC-STRATTEC Credit Facility includes an additional restrictive financial covenant that requires the maintenance of a minimum fixed charge coverage ratio.

Outstanding borrowings under the credit facilities were as follows (thousands of dollars):

	September 28, 2014		June 29, 2014
STRATTEC Credit Facility	$	-	$	-
ADAC-STRATTEC Credit Facility	$	4,000	$	2,500

Average outstanding borrowings and the weighted average interest rate under each credit facility were as follows for each period presented (thousands of dollars):

	Three Months Ended
	Average Outstanding Borrowings				Weighted Average Interest Rate
	September 28, 2014		September 29, 2013		September 28, 2014			September 29, 2013
STRATTEC Credit Facility	$	-	$	-		-	%		-	%
ADAC-STRATTEC Credit Facility	$	3,481	$	2,769		1.2	%		1.9	%

8

Environmental Reserve

In 1995, we recorded a provision of $3 million for estimated costs to remediate an environmental contamination site at our Milwaukee facility. The site was contaminated by a solvent spill, which occurred in 1985, from a former above ground solvent storage tank located on the east side of the facility. The reserve was originally established based on third party estimates to adequately cover the cost for active remediation of the contamination. Due to changing technology and related costs associated with active remediation of the contamination, an updated analysis and estimate was obtained during fiscal 2010. As a result of this analysis, the reserve was reduced by approximately $1.1 million, to $1.5 million in 2010, to reflect the revised monitoring and remediation cost estimate. From 1995 through September 28, 2014, costs of approximately $479,000 have been incurred related to the installation of monitoring wells on the property and ongoing monitoring costs. We continue to monitor and evaluate the site with the use of these groundwater monitoring wells. An environmental consultant samples these wells one or two times a year to determine the status of the contamination and the potential for remediation of the contamination by natural attenuation, the dissipation of the contamination over time to concentrations below applicable standards. If such sampling evidences a sufficient degree of and trend toward natural attenuation of the contamination at the site, we may be able to obtain a closure letter from the regulatory authorities resolving the issue without the need for active remediation. If a sufficient degree and trend toward natural attenuation is not evidenced by sampling, a more active form of remediation beyond natural attenuation may be required. The sampling has not yet satisfied all of the requirements for closure by natural attenuation. As a result, sampling continues and the reserve remains at an amount to reflect the estimated cost of active remediation. The reserve is not measured on a discounted basis. We believe, based on findings-to-date and known environmental regulations, that the remaining environmental reserve of $1.4 million at September 28, 2014, is adequate.

Shareholders’ Equity

A summary of activity impacting shareholders’ equity for the three month period ended September 28, 2014 was as follows (in thousands):

	TotalShareholders’Equity			EquityAttributable toSTRATTEC			Equity Attributable to  Non-ControllingInterest
Balance, June 29, 2014	$	134,903		$	125,506		$	9,397
Net Income		10,340			9,300			1,040
Dividend Declared		(427	)		(427	)		-
Dividend Declared – Non-controlling Interests of Subsidiaries		(882	)		-			(882	)
Translation adjustments		(852	)		(788	)		(64	)
Stock Based Compensation		389			389			-
Tax Benefit – Dividend Paid on Restricted Shares		2			2			-
Pension and Postretirement Adjustment, Net of tax		428			428			-
Employee Stock Purchases and Stock Option Exercises		440			440			-
Balance, September 28, 2014	$	144,341		$	134,850		$	9,491

Other Income, net

Net other income included in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income primarily included foreign currency transaction gains and losses and Rabbi Trust gains and losses. Foreign currency transaction gains and losses resulted from activity associated with foreign denominated assets held by our Mexican subsidiaries. The Rabbi Trust assets fund our amended and restated supplemental executive retirement plan. The investments held in the Trust are considered trading securities.

The impact of these items for each of the periods presented was as follows (in thousands):

	Three Months Ended
	September 28,2014			September 29,2013
Foreign Currency Transaction Gain	$	786		$	212
Rabbi Trust (Loss) Gain		(27	)		48
Other		29			19
	$	788		$	279

9

Income Taxes

The income tax provisions for the three month periods ended September 28, 2014 and September 29, 2013 were affected by the non-controlling interest portion of our pre-tax income.  The income tax provision for the three month period ended September 29, 2013 was also affected by a lower statutory tax rate for income subject to tax in Mexico as compared to the statutory tax rate for income subject to tax in the U.S.

Earnings Per Share (EPS)

Basic earnings per share is computed on the basis of the weighted average number of shares of common stock outstanding during the applicable period. Diluted earnings per share is computed on the basis of the weighted average number of shares of common stock plus the potential dilutive common shares outstanding during the applicable period using the treasury stock method. Potential dilutive common shares include outstanding stock options and unvested restricted stock awards.

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

	Three Months Ended
	September 28,2014		September 29,2013
Net Income Attributable to STRATTEC SECURITY CORPORATION	$	9,300	$	3,211
Less: Income Attributable to Participating Securities		120		60
Net Income Attributable to Common Shareholders	$	9,180	$	3,151
Basic Weighted Average Shares of Common Stock Outstanding		3,497		3,382
Incremental Shares – Stock based Compensation		96		78
Diluted Weighted Average Shares of Common Stock Outstanding		3,593		3,460
Basic Earnings Per Share	$	2.63	$	0.93
Diluted Earnings Per Share	$	2.55	$	0.91

We consider unvested restricted stock that provides the holder with a non-forfeitable right to receive dividends to be a participating security.

As of September 28, 2014, options to purchase 10,000 shares of common stock were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.  As of September 29, 2013, options to purchase 82,000 shares of common stock were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

Stock-based Compensation

We maintain an omnibus stock incentive plan. This plan provides for the granting of stock options, shares of restricted stock and stock appreciation rights. As of September 28, 2014, the Board of Directors had designated 1,700,000 shares of common stock available for the grant of awards under the plan. Remaining shares available to be granted under the plan as of September 28, 2014 were 91,250. Upon approval of an amendment to the plan by our shareholders at our 2014 annual meeting, effective October 7, 2014, an additional 150,000 shares of common stock were designated as available for the grant of awards under the plan. Awards that expire or are canceled without delivery of shares become available for re-issuance under the plan. We issue new shares of common stock to satisfy stock option exercises.

Nonqualified and incentive stock options and shares of restricted stock have been granted to our officers, outside directors and specified employees under our stock incentive plan. Stock options granted under the plan may not be issued with an exercise price less than the fair market value of the common stock on the date the option is granted. Stock options become exercisable as determined at the date of grant by the Compensation Committee of the Board of Directors. The options expire 5 to 10 years after the grant date unless an earlier expiration date is set at the time of grant. The options vest 1 to 4 years after the date of grant. Shares of restricted stock granted under the plan are subject to vesting criteria determined by the Compensation Committee of the Board of Directors at the time the shares are granted and have a minimum vesting period of three years from the date of grant. Restricted shares granted have voting rights, regardless if the shares are vested or unvested. Restricted shares granted prior to August 2014 have dividend rights, regardless if the shares are vested or unvested. Commencing in August 2014 and thereafter, shares of restricted stock are not entitled to receive any cash dividends if they are unvested as of the record date. The restricted stock grants issued to date vest 3 years after the date of grant.

10

The fair value of each stock option grant was estimated as of the date of grant using the Black-Scholes pricing model. The resulting compensation cost for fixed awards with graded vesting schedules is amortized on a straight line basis over the vesting period for the entire award. The fair value of each restricted stock grant was based on the market price of the underlying common stock as of the date of grant. The resulting compensation cost is amortized on a straight line basis over the vesting period.

A summary of stock option activity under our stock incentive plan for the three months ended September 28, 2014 was as follows:

	Shares			WeightedAverageExercise Price		WeightedAverageRemainingContractualTerm (years)		AggregateIntrinsicValue(in thousands)
Outstanding, June 29, 2014		185,242		$	24.73
Granted		10,000		$	79.73
Exercised		(10,870	)	$	25.30
Outstanding, September 28, 2014		184,372		$	27.68		6.5	$	10,105
Exercisable, September 28, 2014		102,979		$	19.50		4.8	$	6,487

The intrinsic value of stock options exercised and the fair value of stock options vesting during the three month periods presented below was as follows (in thousands):

	Three Months Ended
	September 28,2014		September 29,2013
Intrinsic Value of Options Exercised	$	500	$	55
Fair Value of Stock Options Vesting	$	382	$	273

The grant date fair value and assumptions used to determine compensation expense for the options granted during each period presented below were as follows:

	Three Months Ended
	September 28, 2014			September 29, 2013
Weighted Average Grant Date Fair Value:
Options Issued at Grant Date Market Value		n/a			n/a
Options Issued Above Grant Date Market Value	$	34.93		$	17.58
Assumptions:
Risk Free Interest Rate		1.90	%		2.06	%
Expected Volatility		57.83	%		58.75	%
Expected Dividend Yield		0.62	%		1.11	%
Expected Term (in years)		6.0			6.0

A summary of restricted stock activity under our omnibus stock incentive plan for the three months ended September 28, 2014 was as follows:

	Shares			Weighted AverageGrant DateFair Value
Nonvested Balance, June 29, 2014		63,600		$	28.64
Granted		25,000		$	70.90
Vested		(17,800	)	$	23.01
Nonvested Balance, September 28, 2014		70,800		$	44.98

As of September 28, 2014, there was $759,000 of total unrecognized compensation cost related to outstanding stock options granted under our omnibus stock incentive plan. This cost is expected to be recognized over a weighted average period of 1.1 years. As of September 28, 2014, there was approximately $2.0 million of total unrecognized compensation cost related to unvested restricted stock grants outstanding under the plan. This cost is expected to be recognized over a weighted average period of 1.3 years. Total unrecognized compensation cost will be adjusted for any future changes in estimated and actual forfeitures of awards granted under our omnibus stock incentive plan.

11

Pension and Postretirement Benefits

We have a qualified, noncontributory defined benefit pension plan (“Qualified Pension Plan”) covering substantially all U.S. associates. Benefits are based on years of service and final average compensation. Our 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. Effective December 31, 2009, an amendment to the Qualified Pension Plan discontinued the benefit accruals for salary increases and credited service rendered after that date.  On April 2, 2014, our Board of Directors approved a resolution to terminate the Qualified Pension Plan.  The termination of the Qualified Pension Plan is subject to the Internal Revenue Service’s (“IRS”) determination that the Qualified Pension Plan is qualified on termination.  We believe it will take 18 to 24 months to finalize the complete termination of the Qualified Pension Plan after obtaining IRS approval.  Additionally, we have amended the Qualified Pension Plan to provide that participants are 100 percent vested in their accrued benefits as of the effective date of the plan termination, to adopt a new standard for disability benefits that will apply when the plan’s assets are distributed due to the termination, to add a lump sum distribution for employees and terminated vested participants who are not in payment status when Qualified Pension Plan assets are distributed due to the termination and to make certain other conforming amendments to the Qualified Pension Plan to comply with applicable laws that may be required by the IRS or may be deemed necessary or advisable to improve the administration of the Qualified Pension Plan or facilitate its termination and liquidation.  The foregoing Qualified Pension Plan amendments are also subject to our requirement to bargain with the union.  We also intend to make contributions to the Trust Fund for the Qualified Pension Plan to ensure that there are sufficient assets to provide all Qualified Pension Plan benefits as of the anticipated distribution date.  The financial impact of the plan termination will be recognized as a settlement of the Qualified Pension Plan liabilities.  The settlement date and related financial impact have not yet been determined.

We have historically had in place a noncontributory supplemental executive retirement plan (“SERP”), which was a nonqualified defined benefit plan that essentially mirrored the Qualified Pension Plan, but provided benefits in excess of certain limits placed on our Qualified Pension Plan by the Internal Revenue Code.  We froze our Qualified Pension Plan effective as of December 31, 2009 and the SERP provided benefits to participants as if the Qualified Pension Plan had not been frozen.  Because the Qualified Pension Plan was frozen and because new employees were not eligible to participate in the Qualified Pension Plan, our Board of Directors adopted amendments to the SERP on October 8, 2013 that were effective as of December 31, 2013 to simplify the SERP calculation.  The SERP is funded through a Rabbi Trust with BMO Harris Bank N.A.  Under the amended SERP, participants received an accrued lump-sum benefit as of December 31, 2013 which was credited to each participant’s account.  Going forward, each eligible participant will receive a supplemental retirement benefit equal to the foregoing lump-sum benefit, plus an annual benefit accrual equal to 8 percent of the participant’s base salary and cash bonus, plus annual credited interest on the participant’s account balance.  All current participants are fully vested in their account balances with any new individuals participating in the SERP effective on or after January 1, 2014 being subject to a five year vesting schedule.  The SERP, which is considered a defined benefit plan under applicable rules and regulations, will continue to be funded through the use of a Rabbi Trust to hold investment assets to be used in part to fund any future required lump sum benefit payments to participants.  The foregoing amendments to the SERP did not have a material effect on our financial statements.  The Rabbi Trust assets had a value of $2.2 million at both September 28, 2014 and June 29, 2014, respectively, and are included in Other Long-Term Assets in the accompanying Condensed Consolidated Balance Sheets.

We also sponsor a postretirement health care plan for all of our U.S. associates hired prior to June 2, 2001. The expected cost of retiree health care benefits is recognized during the years that the associates who are covered under the plan render service. Effective January 1, 2010, an amendment to the postretirement health care plan limited the benefit for future eligible retirees to $4,000 per plan year and is subject to a maximum five year coverage period based on the associate’s retirement date and age. The postretirement health care plan is unfunded.

Net periodic benefit costs are allocated between Cost of Goods Sold and Engineering, Selling and Administrative Expenses in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income.

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The following tables summarize the net periodic benefit cost recognized for each of the periods indicated under these plans (in thousands):

	Pension Benefits						Postretirement Benefits
	Three Months Ended						Three Months Ended
	September 28,2014			September 29,2013			September 28,2014			September 29,2013
Service cost	$	16		$	54		$	4		$	4
Interest cost		1,043			1,102			28			39
Expected return on plan assets		(1,543	)		(1,610	)		-			-
Amortization of prior service cost (credit)		3			3			(191	)		(191	)
Amortization of unrecognized net loss		693			666			173			212
Net periodic benefit cost	$	212		$	215		$	14		$	64

No contributions were made to the Qualified Pension Plan during the three month period ended September 28, 2014. Contributions of $750,000 were made to the Qualified Pension Plan during the three month period ended September 29, 2013. Voluntary contributions of $3.0 million are anticipated to be made during the remainder of fiscal 2015.

Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated other comprehensive loss (“AOCL”) for each period presented (in thousands):

		Three Months Ended September 28, 2014
	Foreign  Currency Translation Adjustments		Retirement  and Postretirement Benefit Plans			Total
Balance, June 29, 2014	$	3,411	$	16,787		$	20,198
Other comprehensive loss before reclassifications		852		-			852
Income tax		-		-			-
Net other comprehensive loss before reclassifications		852		-			852
Reclassifications:
Prior service credits (A)		-		188			188
Actuarial gains (A)		-		(867	)		(867	)
Total reclassifications before tax		-		(679	)		(679	)
Income tax		-		251			251
Net reclassifications		-		(428	)		(428	)
Other comprehensive loss (income)		852		(428	)		424
Other comprehensive loss attributable to non-controlling interest		64		-			64
Balance, September 28, 2014	$	4,199	$	16,359		$	20,558

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		Three Months Ended September 29, 2013
	Foreign  Currency Translation Adjustments		Retirement  and Postretirement Benefit Plans			Total
Balance, June 30, 2013	$	3,268	$	18,944		$	22,212
Other comprehensive loss before reclassifications		336		-			336
Income tax		-		-			-
Net other comprehensive loss before reclassifications		336		-			336
Reclassifications:
Prior service credits (A)		-		188			188
Unrecognized net loss (A)		-		(878	)		(878	)
Total reclassifications before tax		-		(690	)		(690	)
Income tax		-		255			255
Net reclassifications		-		(435	)		(435	)
Other comprehensive loss (income)		336		(435	)		(99	)
Other comprehensive loss attributable to non-controlling interest		20		-			20
Balance, September 29, 2013	$	3,584	$	18,509		$	22,093

(A) Amounts reclassified are included in the computation of net periodic benefit cost, which is included in Cost of Goods Sold and Engineering, Selling and Administrative expenses in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income. See Pension and Postretirement Benefits note to these condensed consolidated financial statements above.

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Item 2

STRATTEC SECURITY CORPORATION AND SUBSIDIARIES

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis should be read in conjunction with STRATTEC SECURITY CORPORATION’s accompanying Condensed Consolidated Financial Statements and Notes thereto and its 2014 Annual Report which was filed with the Securities and Exchange Commission as an exhibit to its Form 10-K on September 5, 2014. Unless otherwise indicated, all references to years refer to fiscal years.

Analysis of Results of Operations

Three months ended September 28, 2014 compared to the three months ended September 29, 2013

	Three Months Ended
	September 28, 2014		September 29, 2013
Net Sales (in millions)	$	122.2	$	79.6

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

	Three Months Ended
	September 28, 2014		September 29, 2013
Chrysler Group LLC	$	32.0	$	26.6
General Motors Company		44.9		15.0
Ford Motor Company		11.8		11.4
Tier 1 Customers		17.0		15.8
Commercial and Other OEM Customers		9.1		8.7
Hyundai / Kia		7.4		2.1
	$	122.2	$	79.6

The increase in sales to General Motors Company in the current year quarter was primarily attributed to incremental service parts sales of $28.0 million related to a recall campaign. The incremental sales are expected to adjust to lower levels during the second quarter of the fiscal 2015, after which the service parts sales may return to more normal levels. Higher vehicle production volumes and greater product content on vehicle models for which we supply components introduced for the 2015 model year also attributed to the sales increase. Increased sales to Chrysler Group LLC in the current year quarter were the result of higher customer vehicle production volumes and increased content on models for which we supply components.  Sales to Ford Motor Company in the current year quarter were flat.  Sales to Tier 1 Customers during the current year quarter increased slightly in comparison to the prior year quarter. These customers primarily represent purchasers of vehicle access control products, such as latches, fobs, and driver controls, that we have developed in recent years to complement our historic core business of locks and keys.  The increase in sales to Hyundai / Kia in the current year quarter was due to the ramp-up of a new model introduction for which we supply components.

	Three Months Ended
	September 28, 2014		September 29, 2013
Cost of Goods Sold (in millions)	$	94.2	$	65.1

Direct material costs are the most significant component of our cost of goods sold and comprised $60.1 million or 63.8 percent of cost of goods sold in the current year quarter compared to $42.5 million or 65.4 percent of cost of goods sold in the prior year quarter. The increase in material costs of $17.6 million or 41.4 percent was due to increased sales volumes in the current year quarter over the prior year quarter as discussed above. The reduction in material costs as a percent of cost of goods sold is the result of increased sales of service parts as discussed above, which typically have lower material cost percentages as compared to parts sold for new vehicle production.  

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The remaining components of cost of goods sold consist of labor and overhead costs which increased $22.6 million or 50.9 percent in the current year quarter over the prior year quarter as the variable portion of these costs increased due to the increase in sales volumes during the current year quarter. In addition, the current year quarter includes benefits of favorable absorption of the fixed portion of our labor and overhead costs resulting from increased sales volumes between periods, partially offset by higher costs associated with new product launches, an increase of $3.1 million in expense provisions for the accrual of bonuses under our incentive bonus plans as a result of improved financial results and a lump sum bonus totaling $311,000 paid to the Company’s Milwaukee represented hourly workers resulting from a new 4-year labor contract ratified on September 18, 2014.

	Three Months Ended
	September 28, 2014			September 29, 2013
Gross Profit (in millions)	$	28.1		$	14.5
Gross Profit as a percentage of net sales		23.0	%		18.2	%

The improvement in gross profit in the current year quarter over the prior year quarter was the result of the increase in sales, partially offset by the increase in cost of goods sold as discussed above. The improvement in gross profit as a percentage of net sales in the current year quarter as compared to the prior year quarter was the result of increased sales of service parts related to a customer recall campaign, which typically have higher gross profit margins as compared to gross profit margins on parts sold for new vehicle production, and increased customer production volumes resulting in more favorable absorption of our fixed manufacturing costs. These favorable impacts to the gross profit margin as a percentage of net sales were partially offset by higher costs associated with new product launches, an increase in expense provisions for the accrual of bonuses under our incentive bonus plans and a lump sum bonus paid to the Company’s Milwaukee represented hourly workers resulting from the ratification of a new 4-year labor contract, all as discussed above.

Engineering, selling and administrative expenses in the current year quarter and prior year quarter were as follows (in millions):

	Three Months Ended
	September 28, 2014			September 29, 2013
Expenses (in millions)	$	13.2		$	9.5
Expenses as a percentage of net sales		10.8	%		11.9	%

Engineering, selling and administrative increased approximately $3.7 million between periods while decreasing as a percentage of net sales. The increase in these costs in the current year quarter over the prior year quarter was due to higher expense provisions for the accrual of bonuses under our incentive bonus plans as a result of improved financial results.

Income from operations in the current year quarter was $14.9 million compared to $5.1 million in the prior year quarter. This increase was the result of increased sales and improved gross profit margins in the current year quarter over the prior year quarter, partially offset by an increase in engineering, selling and administrative expenses, all as discussed above.  

Equity earnings of joint ventures was $190,000 during the current year quarter compared $294,000 in the prior year quarter. Included in equity earnings of joint ventures were start-up costs associated with our new joint venture, NextLock LLC.  These start-up costs totaled $186,000 in the current quarter and $59,000 in the prior year quarter.

Included in other income, net in the current year quarter and prior year quarter were the following items (in thousands):

	Three Months Ended
	September 28, 2014			September 29, 2013
Foreign Currency Transaction Gain	$	786		$	212
Rabbi Trust (Loss) Gain		(27	)		48
Other		29			19
	$	788		$	279

Foreign currency transaction gains resulted from activity associated with foreign denominated assets held by our Mexican subsidiaries. Our Rabbi Trust assets fund our amended and restated supplemental executive retirement plan. The investments held in the Trust are considered trading securities.  

16

Our income tax provision for each of the three month periods ended September 28, 2014 and September 29, 2013 was affected by the non-controlling interest portion of our pre-tax income.  Our effective tax rate was 34.8 percent for the current year quarter as compared to 31.3 percent for the prior year quarter.  The major contributors to the change in the effective tax rate between periods was an increase in income subject to tax in the U.S. and a higher statutory tax rate for income subject to tax in Mexico in the current year quarter as compared to the prior year quarter.

Liquidity and Capital Resources

Outstanding Receivable Balances from Major Customers

Our primary source of cash flow is from our major customers, which include Chrysler Group LLC, General Motors Company and Ford Motor Company. As of the date of filing this Form 10-Q with the Securities and Exchange Commission, all of our major customers are making payments on their outstanding accounts receivable in accordance with the payment terms included on their purchase orders. A summary of our outstanding receivable balances from our major customers as of September 28, 2014 was as follows (in millions of dollars):

Chrysler Group LLC	$	22.2
General Motors Company	$	25.3
Ford Motor Company	$	5.7

Cash Balances in Mexico

We earn a portion of our operating income in Mexico, which is deemed to be permanently reinvested. As of September 28, 2014, $12.5 million of our $22.5 million cash and cash equivalents balance was held by our foreign subsidiaries in Mexico. Cash balances in Mexico will be used for future capital expenditures and future plant expansion in Mexico. We currently do not intend nor foresee a need to repatriate these funds. We expect existing domestic cash and cash equivalents and cash flows from operations to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities, such as regular quarterly dividends and capital expenditures, for at least the next 12 months and thereafter for the foreseeable future. Should we require more capital in the U.S. than is generated by our operations domestically, for example to fund significant discretionary activities, such as acquisitions of businesses and share repurchases, we could elect to repatriate future earnings from foreign jurisdictions or raise capital in the U.S. through borrowings under our revolving credit facility. These alternatives could result in higher effective tax rates, increased interest expense, or other dilution of our earnings.

Cash Flow Analysis

	Three Months Ended
	September 28, 2014			September 29, 2013
Cash Flows from (in millions):
Operating Activities	$	9.2		$	(4.1	)
Investing Activities	$	(7.2	)	$	(2.9	)
Financing Activities	$	0.6		$	(0.5	)

17

Net cash provided by operating activities was $9.2 million during the current year quarter compared to net cash used in operating activities of $4.1 million during the prior year quarter. The change in operating cash flow between periods was due to improvement in our operating results in the current year quarter as compared to the prior year quarter as discussed above under analysis of results of operations as well as a net decrease in working capital requirements between periods of $7.3 million, with the major contributors to the decrease being as follows (in millions of dollars):

	Increase (Decrease) in Working Capital Requirements
	Three Months Ended
		September 28, 2014			September 29, 2013			Change
Accounts Receivable	$	10.6		$	4.5		$	6.1
Inventory		1.5			3.0			(1.5	)
Other Assets		0.9			3.2			(2.3	)
Accounts Payable and Accrued Liabilities		(10.3	)		(0.8	)		(9.5	)

The change in working capital requirements between periods related to changes in the accounts receivable balances reflected a significant increase in sales during the current year quarter as compared to the prior year quarter, which occurred as a result of $28.0 million of additional service parts sales in conjunction with a customer’s recall campaign and an overall increase in customer vehicle production volumes on models for which we supply components. The change in working capital requirements between periods related to changes in the inventory balances reflected a larger build of inventories during the prior year quarter as compared to the current year quarter in support of production shipment requirements for new model year launches. The change in working capital requirements between periods related to changes in the other assets balances reflected a larger investment in customer tooling asset balances, which consist of costs incurred for the development of tooling that will be directly reimbursed by the customer whose parts are produced from the tools, resulting from the timing of tooling development spending required to meet customer production requirements and related customer reimbursements. The change in working capital requirements between periods related to changes in the accounts payable and accrued liabilities balances occurred because of larger increases in our income tax liability balances and larger accruals of bonuses under our incentive bonus plans in the current year quarter as compared to the prior year quarter. Both of these conditions occurred because of the improvement in our financial results in the current year quarter as compared to the prior year quarter.

Other significant cash payments impacting net cash provided by operating activities during both the current year quarter and prior year quarter included cash payments made under our incentive bonus plans and cash payments for Federal, state and foreign income taxes.  Cash payments under our incentive bonus plans totaled $7.3 million in the current year quarter compared to $4.0 million during the prior year quarter. Cash payments made for Federal, state and foreign income taxes totaled $1.1 million during the current quarter compared to $372,000 during the prior year quarter.

Net cash used by investing activities of $7.2 million during the current year quarter and $2.9 million during the prior year quarter included capital expenditures of $7.0 million and $2.9 million, respectively. Capital expenditures during each period were made in support of requirements for new product programs and the upgrade and replacement of existing equipment. Current year quarter capital expenditures of $2.1 million were also made for the purchase of an additional facility in Juarez, Mexico. Net cash used by investing activities during the current year quarter also included a loan to our joint venture, VAST LLC.  A loan of $215,000 was made by each partner, STRATTEC, WITTE and ADAC, in support of VAST LLC’s purchase of the non-controlling interest in VAST do Brasil and in support of funding operating costs of the Brazil entity.

Net cash provided by financing activities of $631,000 during the current year quarter included $1.5 million of additional borrowings under credit facilities and $440,000 of proceeds received from stock option exercises and related excess tax benefits, partially offset by $427,000 for regular quarterly dividend payments to shareholders and $882,000 for dividend payments to non-controlling interests in our subsidiaries. Net cash used in financing activities during the prior year quarter of $516,000 included $380,000 for regular quarterly dividend payments to shareholders and $984,000 for dividend payments to non-controlling interests in our subsidiaries, partially offset by $750,000 of additional borrowings under credit facilities and $98,000 of proceeds received from stock option exercises and related excess tax benefits.

VAST LLC Cash Requirements

During the current year quarter and prior year quarter, no cash capital contributions were made to VAST LLC. VAST China operational costs have been financed internally by VAST LLC along with external financing secured from three local Chinese banks. We currently anticipate VAST China has adequate debt facilities in place over the next nine to twelve month period to cover future operating and capital requirements.

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Future Capital Expenditures

Capital expenditures during the current quarter totaled $7.0 million compared to $2.9 million in the prior year quarter. We anticipate that capital expenditures will be approximately $21 million during all of fiscal 2015 in support of requirements for new product programs, the upgrade and replacement of existing equipment and the purchase of two buildings, one of which is located in Michigan and the other is located in Juarez, Mexico.  The Michigan building is expected to be used as a sales and engineering office and will replace two current leased facilities in Michigan.  The Juarez, Mexico building is expected to be used as an additional facility to support current operations and new business awards in Mexico.

Stock Repurchase Program

Our Board of Directors has authorized a stock repurchase program to buy back outstanding shares of our common stock. Shares authorized for buy back under the program totaled 3,839,395 at September 28, 2014. A total of 3,655,322 shares have been repurchased over the life of the program through September 28, 2014, at a cost of approximately $136.4 million. No shares were repurchased during the three month periods ended September 28, 2014 or September 29, 2013. Additional repurchases may occur from time to time and are expected to continue to be funded by cash flow from operations and current cash balances. Based on the current economic environment and our preference to conserve cash for other uses, we anticipate modest or no stock repurchase activity for the remainder of fiscal year 2015.

Credit Facilities

STRATTEC has a $25 million secured revolving credit facility (the “STRATTEC Credit Facility”) with BMO Harris Bank N.A. ADAC-STRATTEC LLC has a $5 million secured revolving credit facility (the “ADAC-STRATTEC Credit Facility”) with BMO Harris Bank N.A, which is guaranteed by STRATTEC. The credit facilities both expire August 1, 2016. Borrowings under either credit facility are secured by our U.S. cash balances, accounts receivable, inventory and fixed assets located in the U.S. Interest on borrowings under the ADAC-STRATTEC Credit Facility for periods prior to January 22, 2014 was at varying rates based, at our option, on LIBOR plus 1.75 percent or the bank’s prime rate. Interest on borrowings under the STRATTEC credit facility and effective on or after January 22, 2014 under the ADAC-STRATTEC Credit Facility is at varying rates based, at our option, on the London Interbank Offering Rate plus 1.0 percent or the bank’s prime rate. Both credit facilities contain a restrictive financial covenant that requires the applicable borrower to maintain a minimum net worth level. The ADAC-STRATTEC Credit Facility includes an additional restrictive financial covenant that requires the maintenance of a minimum fixed charge coverage ratio. There were no borrowings under the STRATTEC Credit Facility during fiscal 2015 to date or during fiscal 2014. Borrowings under the ADAC-STRATTEC Credit Facility totaled $4.0 million at September 28, 2014 and $2.5 million at June 29, 2014. The average outstanding borrowings and weighted average interest rate on the ADAC-STRATTEC Credit Facility loans were approximately $3.5 million and 1.2 percent, respectively, during the three months ended September 28, 2014. The average outstanding borrowings and weighted average interest rate on the ADAC-STRATTEC Credit Facility loans were approximately $2.8 million and 1.9 percent, respectively, during the three months ended September 29, 2013.

Inflation and Other Changes in Prices

Inflation Related Items:  Over the past several years, we have been impacted by rising health care costs, which have increased our cost of associate medical coverage. A portion of these increases have been offset by plan design changes and associate wellness initiatives. We have also been impacted by increases in the market price of zinc and brass and inflation in Mexico, which impacts the U. S. dollar costs of our Mexican operations. We have negotiated raw material price adjustment clauses with certain, but not all, of our customers to offset some of the market price fluctuations in the cost of zinc.

Joint Ventures and Majority Owned Subsidiaries

We participate in certain Alliance Agreements with WITTE Automotive (“WITTE”) and ADAC Automotive (“ADAC”). WITTE, of Velbert, Germany, is a privately held automotive supplier. WITTE designs, manufactures and markets automotive 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. ADAC, of Grand Rapids, Michigan, is a privately held automotive supplier and manufactures engineered products, including door handles and other automotive trim parts, utilizing plastic injection molding, automated painting and various assembly processes.  

The Alliance Agreements include a set of cross-licensing agreements for the manufacture, distribution and sale of WITTE products by STRATTEC and ADAC in North America, and the manufacture, distribution and sale of STRATTEC and ADAC products by WITTE in Europe. Additionally, a joint venture company, Vehicle Access Systems Technology LLC (“VAST LLC”), in which WITTE, STRATTEC and ADAC each hold a one-third interest, exists to seek opportunities to manufacture and sell the companies’ products in areas of the world outside of North America and Europe.  

19

VAST do Brasil services customers in South America. Effective March 21, 2014, VAST LLC purchased the remaining non-controlling interest in VAST do Brasil. VAST Fuzhou, VAST Great Shanghai and VAST Shanghai Co. (collectively known as VAST China), provides a base of operations to service our automotive customers in the Asian market. VAST LLC also maintains branch offices in South Korea and Japan in support of customer sales and engineering requirements.

The VAST LLC investments are accounted for using the equity method of accounting. The activities related to the VAST LLC joint ventures resulted in equity earnings of joint ventures to STRATTEC of approximately $376,000 during the three months ended September 28, 2014 and approximately $353,000 during the three months ended September 29, 2013. During the three month periods ended September 28, 2014 and September 29, 2013, no cash capital contributions were made to VAST LLC. During the quarter ended September 28, 2014, STRATTEC made a loan of $215,000 to VAST LLC, to support VAST LLC’s purchase of the non-controlling interest in VAST do Brasil and to fund the operating costs of the Brazilian entity.

In fiscal year 2007, we established a new entity with ADAC forming ADAC-STRATTEC LLC, a Delaware limited liability company. The new entity was created to establish injection molding and door handle assembly operations in Mexico. STRATTEC holds a 51 percent interest in ADAC-STRATTEC LLC. A Mexican entity, ADAC-STRATTEC de Mexico, exists and is wholly owned by ADAC-STRATTEC LLC. ADAC-STRATTEC LLC’s financial results are consolidated with the financial results of STRATTEC and resulted in increased net income to STRATTEC of approximately $662,000 during the three months ended September 28, 2014 and approximately $287,000 during the three months ended September 29, 2013.

Effective November 30, 2008, STRATTEC established a new entity, STRATTEC POWER ACCESS LLC (“SPA”), which is 80 percent owned by STRATTEC and 20 percent owned by WITTE. SPA supplies the North American portion of the power sliding door, lift gate and deck lid system access control products which were acquired from Delphi Corporation. The financial results of SPA are consolidated with the financial results of STRATTEC and resulted in increased net income to STRATTEC of approximately $76,000 during the three months ended September 28, 2014 and approximately $419,000 during the three months ended September 29, 2013.  

On April 5, 2013, we acquired a 51 percent ownership interest in NextLock LLC, a newly formed joint venture which was formed to introduce a new generation of biometric security products based upon the designs of Actuator Systems LLC, our partner and the owner of the remaining ownership interest. The initial capitalization of the NextLock joint venture totaled $1.5 million. STRATTEC’s portion of the initial capitalization totaled $765,000. We anticipate shipments of the new biometric security products to begin during the second quarter of fiscal 2015. Our investment in NextLock, for which we exercise significant influence but do not control and are not the primary beneficiary, is accounted for using the equity method. The activities related to the NextLock joint venture resulted in equity loss of joint ventures to STRATTEC of approximately $186,000 during the three months ended September 28, 2014 and approximately $59,000 during the three months ended September 29, 2013.

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Item 3 Quantitative and Qualitative Disclosures About Market Risk

Our exposure to market risk is limited to fluctuations in raw material commodity prices, interest rate fluctuations on borrowings under our secured revolving credit facilities and foreign currency exchange rate risk associated with STRATTEC’s foreign operations. We do not utilize financial instruments for trading purposes.

Interest Rates: We are subject to interest rate fluctuations on borrowings under our revolving credit facilities. At September 28, 2014, we had $4 million of outstanding borrowings under our credit facilities. The interest expense related to borrowings under the credit facilities during the three months ended September 28, 2014 was $11,000. A 10% increase or decrease in the interest rate on our borrowings would not have a material effect on our financial position, results of operations or cash flows.

Foreign Currency: We are subject to foreign currency exchange rate exposure related to the U.S. dollar costs of our manufacturing operations in Mexico. A portion of our manufacturing costs are incurred in Mexican pesos. Our earnings and cash flows are subject to fluctuations as a result of changes in the U.S. dollar / Mexican peso exchange rate.

Raw Materials Commodity Prices: Our primary raw materials are high-grade zinc, brass, nickel silver, aluminum, steel and plastic resins. These materials are generally available from a number of suppliers, but we have chosen to concentrate our sourcing with one primary vendor for each commodity or purchased component. We believe our sources of raw materials are reliable and adequate for our needs. However, the development of future sourcing issues related to using existing or alternative raw materials and the global availability of these materials as well as significant fluctuations in the market prices of these materials may have an adverse effect on our financial results if the increased raw material costs cannot be recovered from our customers. Given the significant financial impact on us relating to changes in the cost of our primary raw materials, we now attempt to quote quarterly material price adjustments for changes in our zinc costs in our negotiations with our customers. Our success in obtaining these quarterly price adjustments in our customer contracts is dependent on separate negotiations with each customer. It is not a standard practice for our customers to include such price adjustments in their contracts. We have been successful in obtaining quarterly price adjustments in some of our customer contracts. However, we have not been successful in obtaining the adjustments with all of our customers.

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Item 4 Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act, are recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act are accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of such period, our disclosure controls and procedures were effective at reaching a level of reasonable assurance. It should be noted that in designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost benefit relationship of possible controls and procedures. We have designed our disclosure controls and procedures to reach a level of reasonable assurance of achieving the desired control objectives.

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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Part II

Other Information

Item 1 Legal Proceedings

In the normal course of business, we may be involved in various legal proceedings from time to time.  We do not believe we are currently involved in any claim or action the ultimate disposition of which would have a material adverse effect on our financial statements.

Item 1A—Risk Factors

There have been no material changes to the risk factors disclosed in our Form 10-K as filed with the Securities and Exchange Commission on September 5, 2014.

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds—

Our Board of Directors authorized a stock repurchase program on October 16, 1996, and the program was publicly announced on October 17, 1996. The Board of Directors has periodically increased the number of shares authorized for repurchase under the program, most recently in August 2008. The program currently authorizes the repurchase of up to 3,839,395 shares of our common stock from time to time, directly or through brokers or agents, and has no expiration date. Over the life of the repurchase program through September 28, 2014, a total of 3,655,322 shares have been repurchased at a cost of approximately $136.4 million. No shares were repurchased during the three month period ended September 28, 2014.

Item 3 Defaults Upon Senior Securities—None

Item 4 Mine Safety Disclosures—None

Item 5 Other Information—None

Item 6 Exhibits

(a)  Exhibits

10.1	Amended and Restated STRATTEC SECURITY CORPORATION Stock Incentive Plan
31.1	Rule 13a-14(a) Certification for Frank J. Krejci, President and Chief Executive Officer
31.2	Rule 13a-14(a) Certification for Patrick J. Hansen, Chief Financial Officer
32 (1)	18 U.S.C. Section 1350 Certifications
101	The following materials from STRATTEC SECURITY CORPORATION's Quarterly Report on Form 10-Q for the fiscal quarter ended September 28, 2014 formatted in XBRL (eXtensible Business Reporting Language) and furnished electronically herewith: (i) Condensed Consolidated Statements of Income and Comprehensive Income; (ii) Condensed Consolidated Balance Sheets; (iii) Condensed Consolidated Statements of Cash Flows; and (iv) Notes to Condensed Consolidated Financial Statements

⁽¹⁾ This certification is not "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	STRATTEC SECURITY CORPORATION (Registrant)
Date: November 6, 2014	By:	/s/ Patrick J. Hansen
		Patrick J. Hansen
		Senior Vice President,
		Chief Financial Officer,
		Treasurer and Secretary
		(Principal Accounting and Financial Officer)

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EX-10.1

Exhibit 10.1

AMENDED AND RESTATED

STRATTEC SECURITY CORPORATION

STOCK INCENTIVE PLAN

(As amended and restated effective September 30, 2014)

1. Purpose; Definitions. The purpose of the Plan is to advance the interests of the Company's shareholders by enhancing the Company's ability to attract, retain and motivate persons who make (or are expected to make) important contributions to the Company by providing such persons with equity ownership opportunities and performance-based incentives and thereby better aligning the interests of such persons with those of the Company's shareholders.

For purposes of the Plan, the following terms are defined as set forth below:

(a) “Board” means the Board of Directors of the Company.

(b) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.

(c) “Commission” means the Securities and Exchange Commission or any successor agency.

(d) “Committee” means the Committee referred to in Section 2.

(e) “Company” means STRATTEC SECURITY CORPORATION, a corporation organized under the laws of the State of Wisconsin, or any successor corporation.

(f) “Director” means a member of the Board.

(g) “Disability” means permanent and total disability as determined under procedures established by the Committee for purposes of the Plan.

(h) “Early Retirement” means, with respect to Employees, retirement, with the consent of and for purposes of the Company, from active employment with the Company, a subsidiary or affiliate pursuant to the early retirement provisions of the applicable pension plan of such employer.

(i) “Employee” means any person, including Officers, employed by the Company or any affiliate or subsidiary of the Company.  A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its subsidiaries, or any successor.  Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to constitute “employment” by the Company.

(j) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto.

(k) “Fair Market Value” means, the mean, as of any given date, between the highest and lowest reported sales prices of the Stock on the applicable NASDAQ Stock Market or any other exchange on which the Stock is then trading or, if no such sale of Stock occurs on the applicable market on such date, the fair market value of the Stock as determined by the Committee in good faith and, where applicable, in compliance with Treasury Regulation section 1.409A-1(b)(5)(iv).

(l) “Incentive Stock Option” means any Stock Option intended to be and designated as an “incentive stock option” within the meaning of Section 422 of the Code.

(m) “Non-Employee Director” shall have the meaning set forth in Rule 16b-3(b)(3)(i), as promulgated by the Commission under the Exchange Act, or any successor definition adopted by the Commission.

(n) “Non‑Qualified Stock Option” means any Stock Option that is not an Incentive Stock Option.

(o) “Normal Retirement” means, with respect to Employees, retirement from active employment with the Company, a subsidiary or affiliate at or after age 65.

(p) “Officer” means a person who is an officer of the Company within the meaning of section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(q) “Plan” means the Amended and Restated STRATTEC SECURITY CORPORATION Stock Incentive Plan, as set forth herein and as hereinafter amended from time to time.

(r) “Restricted Stock” means an award under Section 7.

(s) “Retirement” means Normal Retirement or Early Retirement.

(t) “Rule 16b‑3” means Rule 16b‑3, as promulgated by the Commission under Section 16(b) of the Exchange Act, as amended from time to time.

(u) “Service Provider” means an Employee, Officer or Director.

(v) “Stock” means the Common Stock, $.01 par value per share, of the Company.

(w) “Stock Appreciation Right” means a right granted under Section 6.

(x) “Stock Option” or “Option” means an Option or Leveraged Stock Option granted under Section 5.

In addition, the terms “Change in Control” and “Change in Control Price” have the meanings set forth in Sections 8(b) and (c), respectively, and other capitalized terms used herein shall have the meanings ascribed to such terms in the relevant section of this Plan.

2. Administration.  The Plan shall be administered by the Compensation Committee of the Board or such other committee of the Board, composed solely of two or more Non-Employee Directors, who shall be appointed by the Board and who shall serve at the pleasure of the Board. If at any time no Committee shall be in office, the functions of the Committee specified in the Plan shall be exercised by the Board.  Any member of the Compensation Committee who is not an “outside” director under Treasury Regulation section 1.162-27(e)(3) shall be recused from all matters involving grants to Covered Employees (within the meaning of Code section 162(m)) of Stock Options and Stock Appreciation Rights under the Plan.

The Committee shall have plenary authority to grant to eligible Service Providers, pursuant to the terms of the Plan, Stock Options, Stock Appreciation Rights and Restricted Stock.

In particular, the Committee shall have the authority, subject to the terms of the Plan:

(a) to select the Service Providers to whom Stock Options, Stock Appreciation Rights and Restricted Stock may from time to time be granted;

(b) to determine whether and to what extent Incentive Stock Options, Non‑Qualified Stock Options, Stock Appreciation Rights and Restricted Stock or any combination thereof are to be granted hereunder; provided, however, Incentive Stock Options may not be granted to Non-Employee Directors,

(c) to determine the number of shares to be covered by each award granted hereunder,

(d) to determine the terms and conditions of any award granted hereunder (including, but not limited to, the share price, any restriction or limitation and any vesting acceleration or forfeiture waiver regarding any Stock Option or other award and the shares of Stock relating thereto, based on such factors as the Committee shall determine);

(e) to adjust the performance goals and measurements applicable to performance‑based awards pursuant to the terms of the Plan;

(f) to determine under what circumstances a Stock Option may be settled in cash or Restricted Stock under Section 5(k); and

(g) to determine to what extent and under what circumstances Stock and other amounts payable with respect to an award shall be deferred.

The Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable, to interpret the terms and provisions of the Plan and any award issued under the Plan (and any agreement relating thereto) and to otherwise supervise the administration of the Plan.

The Committee may act only by a majority of its members then in office, except that the members thereof may authorize any one or more of their number or any Officer to execute and deliver documents on behalf of the Committee.

Any determination made by the Committee pursuant to the provisions of the Plan with respect to any award shall be made in its sole discretion at the time of the grant of the award or, unless in contravention of any express term of the Plan, at any time thereafter.  All decisions made by the Committee pursuant to the provisions of the Plan shall be final and binding on all persons, including the Company and Plan participants.

3. Stock Subject to Plan.  The total number of shares of Stock reserved and available for distribution under the Plan shall be 1,850,000 shares.  Such shares may consist, in whole or in part, of authorized and unissued shares or treasury shares.

Subject to Section 6(b)(iv), if any shares of Stock that have been optioned cease to be subject to a Stock Option, if any shares of Stock that are subject to a Restricted Stock award are forfeited or if any Stock Option or other award otherwise terminates without a payment being made to the participant in the form of Stock, such shares shall again be available for distribution in connection with awards under the Plan.

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In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split or other change in corporate structure affecting the Stock, such substitution or adjustments shall be made in the aggregate number of shares reserved for issuance under the Plan, in the number and option price of shares subject to outstanding Stock Options and in the number of shares subject to other outstanding awards granted under the Plan as may be determined to be appropriate by the Board, in its sole discretion and in compliance with Code section 409A; provided, however, that the number of shares subject to any award shall always be a whole number.  Such adjusted option price shall also be used to determine the amount payable by the Company upon the exercise of any Stock Appreciation Right associated with any Stock Option.

4. Eligibility.  Service Providers of the Company, its subsidiaries and affiliates who are responsible for or contribute to the management, growth and profitability of the business of the Company, its subsidiaries or affiliates are eligible to be granted awards under the Plan; provided, however, Non-Employee Directors are not eligible to receive awards of Incentive Stock Options under the Plan.

5. Stock Options.  Stock Options may be granted alone or in addition to other awards granted under the Plan and may be of two types:  Incentive Stock Options and Non‑Qualified Stock Options.  Any Stock Option granted under the Plan shall be in such form as the Committee may from time to time approve.

Subject to the limitations contained herein, the Committee shall have the authority to grant to any optionee Incentive Stock Options, Non‑Qualified Stock Options or both types of Stock Options (in each case with or without Stock Appreciation Rights); provided, however, Non-Employee Directors are not eligible to receive awards of Incentive Stock Options under the Plan.

Incentive Stock Options may be granted only to Employees of the Company and its subsidiaries (within the meaning of Section 424(f) of the Code) and shall not be granted ten years after the earlier of (i) the date the Board of Directors adopts the Plan (as amended and restated) or (ii) the date the shareholders of the Company approve the Plan (as amended and restated).  To the extent that any Stock Option does not qualify as an Incentive Stock Option, it shall constitute a separate Non‑Qualified Stock Option.

Stock Options shall be evidenced by option agreements, the terms and provisions of which may differ.  An option agreement shall indicate on its face whether it is an agreement for Incentive Stock Options or Non-Qualified Stock Options.  The grant of a Stock Option shall occur on the date the Committee by resolution selects a Service Provider as a participant in any grant of Stock Options, determines the number of Stock Options to be granted to such Service Provider and specifies the terms and provisions of the option agreement.  The Company shall notify a participant of any grant of Stock Options, and a written option agreement or agreements shall be duly executed and delivered by the Company.

Anything in the Plan to the contrary notwithstanding, no term of the Plan relating to Incentive Stock Options shall be interpreted, amended or altered nor shall any discretion or authority granted under the Plan be exercised so as to disqualify the Plan under Section 422 of the Code or, without the consent of the optionee affected, to disqualify any Incentive Stock Option under such Section 422.

Options granted under the Plan shall be subject to the following terms and conditions and shall contain such additional terms and conditions as the Committee shall deem desirable:

(a) Option Price.  The option price per share of Stock purchasable under a Stock Option shall be equal to the Fair Market Value of the Stock at time of grant or such higher price as shall be determined by the Committee at grant.

(b) Option Term.  The term of each Stock Option shall be fixed by the Committee, but no Incentive Stock Option shall be exercisable more than 10 years after the date the Option is granted, and no Non‑Qualified Stock Option shall be exercisable more than 10 years and one day after the date the Option is granted.

(c) Exercisability.  Stock Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee.  If the Committee provides that any Stock Option is exercisable only in installments, the Committee may at any time waive such installment exercise provisions, in whole or in part, based on such factors as the Committee may determine.

(d) Method of Exercise.  Subject to the provisions of this Section 5, Stock Options may be exercised, in whole or in part, at any time during the option period by giving written notice of exercise to the Company specifying the number of shares to be purchased.

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Such notice shall be accompanied by the payment in full of the purchase price for such shares or, to the extent authorized by the Committee, by irrevocable instructions to a broker to promptly pay to the Company in full the purchase price for such shares.  Such payment shall be made in cash, outstanding shares of Stock, in combinations thereof, or any other method of payment approved by the Committee; provided, however, that the deposit of any withholding tax shall be made in accordance with applicable law.  If shares of Stock are being used in part or full payment for the shares to be acquired upon exercise of the Stock Option, such shares shall be valued for the purpose of such exchange as of the date of exercise of the Stock Option at the Fair Market Value of the shares.  Any certificates evidencing shares of Stock used to pay the purchase price shall be accompanied by stock powers duly endorsed in blank by the registered holder of the certificate (with signatures thereon guaranteed).  In the event the certificates tendered by the holder in such payment cover more shares than are required for such payment, the certificate shall also be accompanied by instructions from the holder to the Company's transfer agent with regard to the disposition of the balance of the shares covered thereby.

If payment of the option exercise price of a Non‑Qualified Stock Option is made in whole or in part in the form of Restricted Stock, such Restricted Stock (and any replacement shares relating thereto) shall remain (or be) restricted in accordance with the original terms of the Restricted Stock award in question, and any additional Stock received upon the exercise shall be subject to the same forfeiture restrictions, unless otherwise determined by the Committee.

No shares of Stock shall be issued until full payment therefor has been made.  Subject to any forfeiture restrictions that may apply if a Stock Option is exercised using Restricted Stock, an optionee shall have all of the rights of a shareholder of the Company, including the right to vote the shares and the right to receive dividends, with respect to shares subject to the Stock Option when the optionee has given written notice of exercise, has paid in full for such shares and, if requested, has given the representation described in Section 12(a).

(e) Non‑transferability of Options.  No Stock Option shall be transferable by the optionee other than by will or by laws of descent and distribution, and all Stock Options shall be exercisable, during the optionee's lifetime, only by the optionee or by the guardian or legal representative of the optionee, it being understood that the terms “holder” and “optionee” include the guardian and legal representative of the optionee named in the option agreement and any person to whom an option is transferred by will or the laws of descent and distribution.

(f) Termination by Death.  Subject to Section 5(j), if an optionee's status as a Service Provider terminates by reason of death, any Stock Option held by such optionee may thereafter be exercised, to the extent then exercisable or on such accelerated basis as the Committee may determine, for a period of one year (or such other period as the Committee may specify) from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is shorter.

(g) Termination by Reason of Disability.  Subject to Section 5(j), if an optionee's status as a Service Provider terminates by reason of Disability, any Stock Option held by such optionee may thereafter be exercised by the optionee, to the extent it was exercisable at the time of termination or on such accelerated basis as the Committee may determine, for a period of three years (or such shorter period as the Committee may specify at grant) from the date of such termination as a Service Provider or until the expiration of the stated term of such Stock Option, whichever period is shorter; provided, however, that, if the optionee dies within such three‑year period (or such shorter period), any unexercised Stock Option held by such optionee shall, notwithstanding the expiration of such three‑year (or such shorter) period, continue to be exercisable to the extent to which it was exercisable at the time of death for a period of 12 months from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is shorter. With respect to an Employee, in the event of termination of employment by reason of Disability, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Stock Option will thereafter be treated as a Non‑Qualified Stock Option.

(h) Termination by Reason of Retirement.  Subject to Section 5(j), if an Employee optionee's employment terminates by reason of Retirement, any Stock Option held by such optionee may thereafter be exercised by the optionee, to the extent it was exercisable at the time of such Retirement or on such accelerated basis as the Committee may determine, for a period of three years (or such shorter period as the Committee may specify at grant) from the date of such termination of employment or until the expiration of the stated term of such Stock Option, whichever period is shorter, provided, however, that, if the optionee dies within such three‑year (or such shorter) period any unexercised Stock option held by such optionee shall, notwithstanding the expiration of such three‑year (or such shorter) period, continue to be exercisable to the extent to which it was exercisable at the time of death for a period of 12 months from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is shorter.  In the event of termination of employment by reason of Retirement, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Stock Option will thereafter be treated as a Non‑Qualified Stock Option.

(i) Other Termination.  Unless otherwise determined by the Committee, if an optionee's status as a Service provider terminates for any reason other than death, Disability or Retirement, the Stock Option shall thereupon terminate, except that such Stock Option, to the extent then exercisable, may be exercised for the lesser of three months following such termination or the balance of such Stock Option's term in the event the Service Provider is not an Employee and may be exercised for the lesser of three months

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or the balance of such Stock Option's term if the optionee is an Employee and is involuntarily terminated by the Company, a subsidiary or affiliate without cause. Notwithstanding the foregoing, if an optionee's status as a Service Provider terminates at or after a Change in Control (as defined in Section 8(b)), other than by reason of death, Disability or Retirement, any Stock Option held by such optionee shall be exercisable for the lesser of (x) six months and one day, and (y) the balance of such Stock Option's term pursuant to Section 5(b).  In the event of termination of employment at or after a Change in Control, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Stock Option will thereafter be treated as a Non‑Qualified Stock Option.

(j) Incentive Stock Option Limitations.  To the extent required for “incentive stock option” status under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the Stock with respect to which Incentive Stock Options are exercisable for the first time by the optionee during any calendar year under the Plan and any other stock option plan of any subsidiary or parent corporation (within the meaning of Section 424 of the Code) shall not exceed $100,000.

The Committee is authorized to provide at grant that, to the extent permitted under Section 422 of the Code, if a participant's employment with the Company and its subsidiaries is terminated by reason of death, Disability or Retirement and the portion of any Incentive Stock Option that is otherwise exercisable during the post‑termination period specified under Sections 5(f), (g), or (h), applied without regard to this Section 5(j), is greater than the portion of such option that is exercisable as an “incentive stock option” during such post‑termination period under Section 422, such post‑termination period shall automatically be extended (but not beyond the original option term) to the extent necessary to permit the optionee to exercise such Incentive Stock Option (either as an Incentive Stock Option or, if exercised after the expiration periods that apply for the purposes of Section 422, as a Non‑Qualified Stock Option).

(k) Cashing Out of Option; Settlement of Spread Value in Restricted Stock.  On receipt of written notice of exercise, the Committee may elect to cash out all or part of the portion of any Stock Option to be exercised by paying the optionee an amount, in cash or Stock, equal to the excess of the Fair Market Value of the Stock over the option price (the “Spread Value”) on the effective date of such cash out.

Cash outs relating to options held by optionees who are actually or potentially subject to Section 16(b) of the Exchange Act shall comply with the provisions of Rule 16b‑3, to the extent applicable.

In addition, if the option agreement so provides at grant or is amended after grant and prior to exercise to so provide (with the optionee's consent), the Committee may require that all or part of the shares to be issued with respect to the Spread Value payable in the event of a cash out of an unexercised Stock Option or the Spread Value portion of an exercised Stock Option take the form of Restricted Stock, which shall be valued on the date of exercise on the basis of the Fair Market Value of such Restricted Stock, determined without regard to the forfeiture restrictions involved.  Notwithstanding any other provision of this Plan, upon a Change in Control (as defined in Section 8(b)) other than a Change in Control specified in clause (i) of Section 8(b) arising as a result of beneficial ownership (as defined therein) by the Plan participant of Outstanding Company Common Stock or Outstanding Company Voting Securities (as such terms are defined below), in the case of Stock Options other than Stock Options held by an Officer or Director of the Company (within the meaning of Section 16 of the Exchange Act) which were granted less than six months prior to the Change in Control, during the 60‑day period from and after a Change in Control (the “Exercise Period”), unless the Committee shall determine otherwise at the time of grant, an optionee shall have the right, in lieu of the payment of the exercise price of the shares of Stock being purchased under the Stock Option and by giving notice to the Company, to elect (within the Exercise Period) to surrender all or part of the Stock Option to the Company and to receive cash, within 30 days of such notice, in an amount equal to the amount by which the “Change in Control Price” (as defined in Section 8(c)) per share of Stock on the date of such election shall exceed the exercise price per share of Stock under the Stock Option multiplied by the number of shares of Stock granted under the Stock Option as to which the right granted under this Section 5(k) shall have been exercised.

(l) Leveraged Stock Options.  Any of the shares of Stock reserved and available for distribution under the Plan may be used for grants of “Leveraged Stock Options” pursuant to the Company's Leveraged Stock Option Program described below (the “LSO Program”).

(i) Objectives.  The LSO Program is designed to build upon the Company's Economic Value Added Bonus Plan (“EVA Plan”) by tying the interests of certain senior executives (“Senior Executives”) to the long term consolidated results of the Company.  In this way, the objectives of Senior Executives will be more closely aligned with the Company's shareholders.  Whereas the EVA Plan provides for near and intermediate term rewards, the LSO Program provides a longer term focus by allowing Senior Executives to participate in the long‑term appreciation in the equity value of the Company.  In general, the LSO Program is structured such that each year an amount equivalent to the Total Bonus Payout under the EVA Plan is invested on behalf of Senior Executives in options on the Company's Stock (“LSOs”).  These LSOs become exercisable after they have been held for three years, and they expire at the end of ten years.  The LSO Program is also structured so that a fair return must be provided to the Company's shareholders before the options become valuable.

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(ii) Leveraged Stock Option Grant.  For fiscal 1995 and subsequent years, the dollar amount to be invested in LSOs for each Senior Executive shall be equal to the amount of each Senior Executive's Total Bonus Payout determined under the EVA Plan effective for the applicable fiscal year. The number of LSOs awarded shall be determined by dividing (a) the dollar amount of such LSO award by (b) 10% of the Fair Market Value of Company Stock on the date of the grant, as determined by the Committee, rounded (up or down) to the nearest 10 shares.

(iii) Term.  All LSOs shall be exercisable beginning on the third anniversary of the date of grant, and shall terminate on the tenth anniversary of the date of grant unless sooner exercised, unless the Committee determines other dates.

(iv) Exercise Price.  The exercise price for LSOs shall be the product of 90% of the Fair Market Value per share as determined above, times the sum taken to the fifth (5th) power of (a) 1, plus (b) the Estimated Annual Growth Rate, but in no event may the exercise price be less than Fair Market Value on the date of grant.  The Estimated Annual Growth Rate is the average daily closing 10‑year U.S. Treasury note yield rate for the month of April immediately preceding the relevant Plan year, plus 2%. So,

Exercise Price = (.9 X FMV) X (1 + Estimated Annual Growth Rate)5

Example: $15 share price; 9.75% Estimated Annual Growth Rate (7.75% 10‑year     U.S. Treasury note rate, plus 2%): $13.50 (90% FMV) X (1.0975)5 =     $21.50

(v) Limitations on LSO Grants and Carryover.Notwithstanding subsection (l)(ii) above, the maximum number of LSOs that may be granted to all Senior Executives for any Plan year, shall be 40,000.  In the event that the 40,000 limitation shall be in effect for any Plan year, the dollar amount to be invested for each Senior Executive shall be reduced by proration based on the aggregate Total Bonus Payouts of all Senior Executives so that the limitation is not exceeded.  The amount of any such reduction shall be carried forward to subsequent years and invested in LSOs to the extent the annual limitation is not exceeded in such years.  LSOs may not be awarded to Non-Employee Directors under the Plan.

(vi) The Plan.  Except as modified herein, LSOs are Incentive Stock Options to the extent they are eligible for treatment as such under Section 422 of the Internal Revenue Code.  If not eligible for Incentive Stock Option treatment, the LSOs shall constitute Non‑Qualified Stock Options.  Except as specifically modified herein, LSOs shall be governed by the terms of the Plan.

(m) Stock Option Limit.  The following limitations will apply to grants of Stock Options under Section 5 this Plan and Stock Appreciation Rights under Section 6 of this Plan to Covered Employees:

(i) No Covered Employee will be granted Stock Options or Stock Appreciation Rights under the Plan to receive more than 50,000 shares of Common Stock in any Company fiscal year, provided that the Company may make an additional one‑time grant of up to 10,000 shares to newly hired Covered Employees.

The foregoing limitations are intended to satisfy the requirements applicable to Stock Options and Stock Appreciation Rights so as to qualify such awards as “performance‑based compensation” within the meaning of Code section 162(m).  In the event that the Committee determines that such limitations are not required to qualify Stock Options and Stock Appreciation Rights as performance‑based compensation, the Committee may modify or eliminate such limitations in its discretion.

6. Stock Appreciation Rights.

(a) Grant and Exercise.  Stock Appreciation Rights may be granted in conjunction with all or part of any Stock Option granted under the Plan, and such rights may be granted only at the time of grant of such Stock Option.  No Stock Appreciation Rights may be granted to a Non-Employee Director if granted in conjunction with an Incentive Stock Option.

A Stock Appreciation Right or applicable portion thereof granted with respect to a given Stock Option shall terminate and no longer be exercisable upon the termination or exercise of the related Stock Option, except that, unless otherwise determined by the Committee at the time of grant, a Stock Appreciation Right granted with respect to less than the full number of shares covered by a related Stock Option shall not be reduced until the number of shares covered by an exercise or termination of the related Stock Option exceeds the number of shares not covered by the Stock Appreciation Right.

A Stock Appreciation Right may be exercised by an optionee in accordance with Section 6(b) by surrendering the applicable portion of the related Stock Option in accordance with procedures established by the Committee.  Upon such exercise and surrender, the optionee shall be entitled to receive an amount determined in the manner prescribed in Section 6(b).  Stock Options which have been so surrendered shall no longer be exercisable to the extent the related Stock Appreciation Rights have been exercised.

6

(b) Terms and Conditions.  Stock Appreciation Rights shall be subject to such terms and conditions as shall be determined by the Committee, including the following:

(i) Stock Appreciation Rights shall be exercisable only at such time or times and to the extent that the Stock Options to which they relate are exercisable in accordance with the provisions of Section 5 and this Section 6.

(ii) Upon the exercise of a Stock Appreciation Right, an optionee shall be entitled to receive an amount in cash, shares of Stock or both equal in value to the excess of the Fair Market Value of one share of Stock over the option price per share specified in the related Stock Option multiplied by the number of shares in respect of which the Stock Appreciation Right shall have been exercised, with the Committee having the right to determine the form of payment.

In the case of Stock Appreciation Rights relating to Stock Options held by optionees who are actually or potentially subject to Section 16(b) of the Exchange Act, the Committee may require that such Stock Appreciation Rights be exercised only in accordance with the applicable provisions of Rule 16b‑3.

(iii) Stock Appreciation Rights shall be transferable only when and to the extent that the underlying Stock Option would be transferable under Section 5(e).

(iv) Upon the exercise of a Stock Appreciation Right, the Stock Option or part thereof to which such Stock Appreciation Right is related shall be deemed to have been exercised for the purpose of the limitation set forth in Section 3 on the number of shares of Stock to be issued under the Plan, but only to the extent of the number of shares issued under the Stock Appreciation Right at the time of exercise based on the value of the Stock Appreciation Right at such time.

7. Restricted Stock.

(a) Administration.  Shares of Restricted Stock may be issued either alone or in addition to other awards granted under the Plan.  The Committee shall determine the Service Providers to whom and the time or times at which grants of Restricted Stock will be made, the number of shares to be awarded, the time or times within which such awards may be subject to forfeiture and any other terms and conditions of the awards, in addition to those contained in Section 7(c).

The Committee may condition the grant of Restricted Stock upon the attainment of specified performance goals or such other factors or criteria as the Committee shall determine.  The provisions of Restricted Stock awards need not be the same with respect to each recipient.

(b) Awards and Certificates.  Each participant receiving a Restricted Stock award shall be issued a certificate in respect of such shares of Restricted Stock.  Such certificate shall be registered in the name of such participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such award, substantially in the following form:

“The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the STRATTEC SECURITY CORPORATION Stock Incentive Plan. Copies of such Plan and Agreement are on file at the offices of STRATTEC SECURITY CORPORATION, 3333 West Good Hope Road, Milwaukee, Wisconsin 53209‑2043.”

The Committee may require that the certificates evidencing such shares be held in custody by the Company until the restrictions thereon shall have lapsed and that, as a condition of any Restricted Stock award, the participant shall have delivered a stock power, endorsed in blank, relating to the Stock covered by such award.

(c) Terms and Conditions.  Shares of Restricted Stock shall be subject to the following terms and, conditions:

(i) Subject to the provisions of the Plan and the Restricted Stock Agreement referred to in Section 7(c)(vii), during a period set by the Committee, commencing with the date of such award (the “Restriction Period”), the participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber shares of Restricted Stock.  Within these limits and subject to Section 7(c)(iv), the Committee may provide for the lapse of such restrictions in installments and may accelerate or waive such restrictions, in whole or in part, based on service, performance and such other factors or criteria as the Committee may determine.

(ii) Except as provided in this paragraph (ii), and Section 7(c)(i), the participant shall have, with respect to the shares of Restricted Stock, all of the rights of a shareholder of the Company, including the right to vote the shares, other than, except as determined by the Committee, the right to receive any cash dividends.  The Committee, at the time of the award, shall determine whether any unvested shares of Restricted Stock shall be entitled to cash dividends or whether such cash dividends shall be automatically deferred and reinvested in additional Restricted Stock.  Any dividends payable on the Restricted Stock in the form of Stock shall be paid in the form of Restricted Stock and shall be immediately subject to the same forfeiture and other provisions of this Plan in the same manner and to the same extent as the shares of Restricted Stock.

7

(iii) Except to the extent otherwise provided in the applicable Restricted Stock Agreement and Sections 7(c)(i) and (iv), upon termination of a participant's status as a Service Provider for any reason during the Restriction Period, all shares still subject to restriction shall be forfeited by the participant.

(iv) Except to the extent that an award of Restricted Stock is issued in lieu of cash compensation or in settlement of the spread value of Stock Options pursuant to Section 5(k), the Restriction Period for any grant of shares of Restricted Stock under this Plan shall comply with the following:  (A) with respect to shares of Restricted Stock that vest or otherwise become unrestricted based upon the participant's continued status as a Service Provider with the Company, the minimum Restriction Period shall be three years from the date of grant and after the end of such three year period the restrictions may lapse as to shares of Restricted Stock either immediately or in installments as determined by the Committee; and (B) at the discretion of the Committee, the remaining restrictions may be waived or lapse prior to the end of the Restriction Period in the event of the participant's death, Disability or Retirement or in connection with certain transactions that may involve a Change in Control as provided in Section 8 of this Plan.  Shares of Restricted Stock that are awarded in lieu of cash compensation or pursuant to Section 5(k) may have any Restriction Period as may be determined by the Committee.  For purposes of this Section 7(c)(iv), shares of Restricted Stock shall be deemed to have been awarded in lieu of cash compensation to the extent that the aggregate Fair Market Value of the shares of Restricted Stock on the date of grant is not greater than the amount of any cash compensation that the participant agrees to forego as a condition to the grant.

(v) In the event of hardship or other special circumstances of a participant whose status as a Service Provider is involuntarily terminated (other than for cause), the Committee may waive in whole or in part any or all remaining restrictions with respect to such participant's shares of Restricted Stock.

(vi) If and when the Restriction Period expires without a prior forfeiture of the Restricted Stock subject to such Restriction Period, unlegended certificates for such shares shall be delivered to the participant.

(vii) Each award shall be confirmed by, and be subject to the terms of, a Restricted Stock Agreement.

(viii) Notwithstanding the terms of Section 7(a), the maximum number of shares of Restricted Stock that may be granted to all participants for any Plan year, shall be 40,000.  Moreover, the maximum number of shares of Restricted Stock that may be granted to any one individual for any Plan year is 20% of the total number of shares of Restricted Stock awarded in that Plan year.

8. Change In Control Provisions.

(a) Impact of Event.  Notwithstanding any other provision of the Plan to the contrary, in the event of a Change in Control (as defined in Section 8(b)):

(i) Any Stock Appreciation Rights and Stock Options outstanding as of the date such Change in Control is determined to have occurred and not then exercisable and vested shall become fully exercisable and vested to the full extent of the original grant.

(ii) The restrictions applicable to any Restricted Stock shall lapse and such Restricted Stock shall become free of all restrictions and fully vested to the full extent of the original grant.

(b) Definition of Change in Control.  For purposes of the Plan, a “Change in Control” shall mean the happening of any of the following events:

(i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d‑3 promulgated under the Exchange Act) of 20% or more of either [a] the then outstanding shares of Stock of the Company (the “Outstanding Company Common Stock”) or [b] the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change in Control:  (w) any acquisition directly from the Company, (x) any acquisition by the Company, (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (z) any acquisition by any corporation pursuant to a transaction described in clauses [a], [b] and [c] of paragraph (iii) of this subsection (b) of this Section 8; or

(ii) Individuals who, as of February 27, 1995, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to February 27, 1995 whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

8

(iii) The consummation by the Company of a reorganization, merger or consolidation (a “Business Combination”), in each case, unless, following such Business Combination, [a] all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, [b] no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and [c] at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

(iv) The consummation of [a] a complete liquidation or dissolution of the Company or [b] the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 60% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) less than 20% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by any Person (excluding any employee benefit plan (or related trust) of the Company or such corporation), except to the extent that such Person owned 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities prior to the sale or disposition and (C) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such sale or other disposition of assets of the Company or were elected, appointed or nominated by the Board.

(c) Change in Control Price.  For purposes of the Plan, “Change in Control Price” means the highest price per share paid in any transaction reported on the applicable NASDAQ Stock Market or paid or offered in any bona fide transaction related to a potential or actual change in control of the Company at any time during the preceding 60 day period as determined by the Committee, except that, in the case of Incentive Stock Options and Stock Appreciation Rights relating to Incentive Stock Options, such price shall be based only on transactions reported for the date on which the Committee decides to cash out such options.

9. Amendments and Termination.  The Board may amend, alter or discontinue the Plan but no amendment, alteration or discontinuation shall be made (i) which would impair the rights of an optionee under a Stock Option or a recipient of a Stock Appreciation Right or Restricted Stock award theretofore granted without the optionee's or recipient's consent or (ii) which, without the approval of the Company's shareholders, would:

(a) except as expressly provided in the Plan, increase the total number of shares reserved for the purpose of the Plan;

(b) except as expressly provided in the Plan, decrease the option price of any Stock Option to less than the Fair Market Value on the date of grant;

(c) change or expand the class of Service Providers eligible to participate in the Plan;

(d) extend the maximum option period under Section 5(b);

(e) otherwise materially increase the benefits to participants in the Plan; or

(f) amend Section 10 or this Section 9.

The Committee may amend the terms of any Stock Option or other award theretofore granted, prospectively or retroactively, but no such amendment shall impair the rights of any holder without the holder's consent.

Subject to the above provisions, the Board shall have authority to amend the Plan to take into account changes in law and tax and accounting rules, as well as other developments.

9

10. Repricing.  Except for adjustments pursuant to Section 3, neither the per share option price for any Stock Option granted pursuant to Section 5 or the per share grant price for any Stock Appreciation Right granted pursuant to Section 6 may be decreased after the date of grant nor may an outstanding Stock Option or an outstanding Stock Appreciation Right be surrendered to the Company as consideration for the grant of a new Stock Option or new Stock Appreciation Right with a lower exercise or grant price without the approval of the Company's shareholders.

11. Unfunded Status of Plan.  It is presently intended that the Plan constitute an “unfunded” plan for incentive and deferred compensation.  The Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver Stock or make payments; provided, however, that, unless the Committee otherwise determines, the existence of such trusts or other arrangements is consistent with the “unfunded” status of the Plan.

12. General Provisions.

(a) The Committee may require each person purchasing shares pursuant to a Stock Option to represent to and agree with the Company in writing that the optionee or participant is acquiring the shares without a view to the distribution thereof.  The certificates for such shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer.

All certificates for shares of Stock or other securities delivered under the Plan shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Commission, any stock exchange upon which the Stock is then listed and any applicable federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

(b) Nothing contained in this Plan shall prevent the Company, a subsidiary or affiliate from adopting other or additional compensation arrangements for its Service Providers.

(c) The adoption of the Plan shall not confer upon any Service Provider any right to a continued relationship as a Service Provider nor shall it interfere in any way with the right of the Company, a subsidiary or affiliate to terminate such relationship at any time.

(d) No later than the dates as of which an amount first becomes includable in the gross income of the participant for federal income tax purposes with respect to any award under the Plan, the participant shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount.  Unless otherwise determined by the Company, withholding obligations may be settled with Stock, including Stock that is part of the award that gives rise to the withholding requirement.  The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company, its subsidiaries and affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the participant.

(e) At the time of grant, the Committee may provide in connection with any grant made under this Plan that the shares of Stock received as a result of such grant shall be subject to a right of first refusal pursuant to which the participant shall be required to offer to the Company any shares that the participant wishes to sell at the then Fair Market Value of the Stock, subject to such other terms and conditions as the Committee may specify at the time of grant.

(f) The Committee shall establish such procedures as it deems appropriate for a participant to designate a beneficiary to whom any amounts payable in the event of the participant's death are to be paid.

(g) The Plan and all awards made and actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Wisconsin.

(h) The reinvestment of dividends in additional Restricted Stock at the time of any dividend payment shall only be permissible if sufficient shares of Stock are available under Section 3 for such reinvestment (taking into account then outstanding Stock Options and other Plan awards).

10

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Frank J. Krejci, certify that:

1.I have reviewed this quarterly report on Form 10-Q of STRATTEC SECURITY CORPORATION;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 6, 2014

/s/ Frank J. Krejci

Frank J. Krejci,

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Patrick J. Hansen, certify that:

1.I have reviewed this quarterly report on Form 10-Q of STRATTEC SECURITY CORPORATION;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  November 6, 2014

/s/ Patrick J. Hansen

Patrick J. Hansen,

Chief Financial Officer

EX-32

Exhibit 32

Certification of Periodic Financial Report

Pursuant to 18 U.S.C. Section 1350

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of STRATTEC SECURITY CORPORATION (the "Company") certifies that the Quarterly Report on Form 10-Q of the Company for the quarter ended September 28, 2014 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and information contained in that Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  November 6, 2014	/s/ Frank J. JKrejci
	Frank J. Krejci,
	Chief Executive Officer

Dated:  November 6, 2014	/s/ Patrick J. Hansen
	Patrick J. Hansen,
	Chief Financial Officer

This certification is made solely for purpose of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose.

XML

Other Income, Net (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 28, 2014	Sep. 29, 2013
Other Income And Expenses [Abstract]
Foreign Currency Transaction Gain	$ 786	$ 212
Rabbi Trust (Loss) Gain	(27)	48
Other	29	19
Total	$ 788	$ 279

XML

Pension and Postretirement Benefits (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 28, 2014	Sep. 29, 2013
Pension Benefits
COMPONENTS OF NET PERIODIC BENEFIT COST:
Service cost	$ 16	$ 54
Interest cost	1,043	1,102
Expected return on plan assets	(1,543)	(1,610)
Amortization of prior service cost (credit)	3	3
Amortization of unrecognized net loss	693	666
Net periodic benefit cost	212	215
Postretirement Benefits
COMPONENTS OF NET PERIODIC BENEFIT COST:
Service cost	4	4
Interest cost	28	39
Amortization of prior service cost (credit)	(191)	(191)
Amortization of unrecognized net loss	173	212
Net periodic benefit cost	$ 14	$ 64

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Stock-Based Compensation (Details 3) (Restricted Stock, USD $)	3 Months Ended
	Sep. 28, 2014
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Nonvested, Shares Beginning Balance	63,600
Granted, Shares	25,000
Vested, Shares	(17,800)
Nonvested, Shares Ending Balance	70,800
Nonvested, Weighted Average Grant Date Fair Value Beginning Balance	$ 28.64
Granted, Weighted Average Grant Date Fair Value	$ 70.90
Vested, Weighted Average Grant Date Fair Value	$ 23.01
Nonvested, Weighted Average Grant Date Fair Value Ending Balance	$ 44.98

XML

Equity Earnings (Loss) of Joint Ventures (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 28, 2014	Sep. 29, 2013
VAST LLC
Schedule of Equity Method Investments [Line Items]
Sales	$ 114	$ 40
Purchases from VAST LLC	39	115
Expenses Charged to VAST LLC	159	240
Expenses Charged from VAST LLC	483	282
NextLock LLC
Schedule of Equity Method Investments [Line Items]
Sales	$ 5

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Stock-Based Compensation (Tables)

3 Months Ended

Sep. 28, 2014

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Stock Option Activity Under Our Stock Incentive Plan

A summary of stock option activity under our stock incentive plan for the three months ended September 28, 2014 was as follows:

	Shares			WeightedAverageExercise Price		WeightedAverageRemainingContractualTerm (years)		AggregateIntrinsicValue(in thousands)
Outstanding, June 29, 2014		185,242		$	24.73
Granted		10,000		$	79.73
Exercised		(10,870	)	$	25.30
Outstanding, September 28, 2014		184,372		$	27.68		6.5	$	10,105
Exercisable, September 28, 2014		102,979		$	19.50		4.8	$	6,487

Intrinsic Value of Stock Options Exercised and the Fair Value of Stock Options Vested

The intrinsic value of stock options exercised and the fair value of stock options vesting during the three month periods presented below was as follows (in thousands):

	Three Months Ended
	September 28,2014		September 29,2013
Intrinsic Value of Options Exercised	$	500	$	55
Fair Value of Stock Options Vesting	$	382	$	273

Grant Date Fair Value and Assumptions Used to Determine Compensation Expense

The grant date fair value and assumptions used to determine compensation expense for the options granted during each period presented below were as follows:

	Three Months Ended
	September 28, 2014			September 29, 2013
Weighted Average Grant Date Fair Value:
Options Issued at Grant Date Market Value		n/a			n/a
Options Issued Above Grant Date Market Value	$	34.93		$	17.58
Assumptions:
Risk Free Interest Rate		1.90	%		2.06	%
Expected Volatility		57.83	%		58.75	%
Expected Dividend Yield		0.62	%		1.11	%
Expected Term (in years)		6.0			6.0

Summary of Restricted Stock Activity Under Our Stock Incentive Plan

A summary of restricted stock activity under our omnibus stock incentive plan for the three months ended September 28, 2014 was as follows:

	Shares			Weighted AverageGrant DateFair Value
Nonvested Balance, June 29, 2014		63,600		$	28.64
Granted		25,000		$	70.90
Vested		(17,800	)	$	23.01
Nonvested Balance, September 28, 2014		70,800		$	44.98

XML

Stock-Based Compensation (Details Textual) (USD $)	3 Months Ended
	Sep. 28, 2014 Stock Options	Sep. 28, 2014 Stock Options Minimum	Sep. 28, 2014 Stock Options Maximum	Sep. 28, 2014 Restricted Stock	Sep. 28, 2014 Omnibus Stock Incentive Plan	Oct. 07, 2014 Omnibus Stock Incentive Plan Subsequent Event
Stock Based Compensation Additional Textual [Abstract]
Designated shares of common stock available for the grant of awards					1,700,000	150,000
Shares of common stock available for grant					91,250
Stock Based Compensations Textual [Abstract]
Options expires after date of grant		5 years	10 years
Vesting period after the date of grant		1 year	4 years	3 years
Unrecognized compensation cost related to stock options	$ 759,000
Weighted average period over which unrecognized compensation is expected to be recognized	1 year 1 month 6 days			1 year 3 months 18 days
Unrecognized compensation cost related to unvested restricted stock grants				$ 2,000,000

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Environmental Reserve (Details Textual) (USD $)	3 Months Ended	12 Months Ended
	Sep. 28, 2014	Jun. 27, 2010	Jun. 29, 2014
Environmental Remediation Obligations [Abstract]
Environmental reserve originally established in 1995	$ 3,000,000
Reserve reduced		(1,100,000)
Environmental reserve	1,396,000	1,500,000	1,397,000
Costs incurred to date to install and monitor wells	$ 479,000

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Pension and Postretirement Benefits (Details Textual) (USD $)	3 Months Ended
	Sep. 28, 2014	Sep. 29, 2013	Jun. 29, 2014
Disclosure Pension And Other Postretirement Benefits Details Textual [Line Items]
Date the Board of Directors approved a resolution to terminate the qualified retirement plan	Apr. 02, 2014
Qualified Retirement Plan participants' vesting percentage as of the final termination date of the plan	100.00%
Termination of Qualified Pension Plan, description	On April 2, 2014, our Board of Directors approved a resolution to terminate the Qualified Pension Plan. The termination of the Qualified Pension Plan is subject to the Internal Revenue Service’s (“IRS”) determination that the Qualified Pension Plan is qualified on termination. We believe it will take 18 to 24 months to finalize the complete termination of the Qualified Pension Plan after obtaining IRS approval. Additionally, we have amended the Qualified Pension Plan to provide that participants are 100 percent vested in their accrued benefits as of the effective date of the plan termination, to adopt a new standard for disability benefits that will apply when the plan’s assets are distributed due to the termination, to add a lump sum distribution for employees and terminated vested participants who are not in payment status when Qualified Pension Plan assets are distributed due to the termination and to make certain other conforming amendments to the Qualified Pension Plan to comply with applicable laws that may be required by the IRS or may be deemed necessary or advisable to improve the administration of the Qualified Pension Plan or facilitate its termination and liquidation.
Rabbi Trust Assets - SERP	$ 2,200,000		$ 2,200,000
Postretirement plan annual benefit limit for future eligible retires	4,000
Other postretirement benefits maximum benefit period	5 years
Contributions to the qualified pension plan	0	750,000
Expected additional employer contributions during remainder of fiscal 2015	$ 3,000,000
Supplemental Employee Retirement Plan, Defined Benefit
Disclosure Pension And Other Postretirement Benefits Details Textual [Line Items]
Percentage of participant's base salary received as Supplemental Retirement Benefits	8.00%

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Equity Earnings (Loss) of Joint Ventures

3 Months Ended

Sep. 28, 2014

Equity Method Investments And Joint Ventures [Abstract]

Equity Earnings (Loss) of Joint Ventures

Equity Earnings (Loss) of Joint Ventures

We hold a one-third interest in a joint venture company, Vehicle Access Systems Technology LLC (“VAST LLC”), with WITTE Automotive of Velbert, Germany (“WITTE”), and ADAC Automotive of Grand Rapids, Michigan (“ADAC”). VAST LLC exists to seek opportunities to manufacture and sell all three companies’ products in areas of the world outside of North America and Europe. VAST LLC consists primarily of three wholly owned subsidiaries in China and one in Brazil. Our investment in VAST LLC, for which we exercise significant influence but do not control and are not the primary beneficiary, is accounted for using the equity method.

The following are summarized statements of operations for VAST LLC (thousands of dollars):  

	Three Months Ended
	September 28, 2014			September 29, 2013
Net Sales	$	30,998		$	24,529
Cost of Goods Sold		26,083			20,415
Gross Profit		4,915			4,114
Engineering, Selling and Administrative Expenses		4,198			3,490
Income From Operations		717			624
Other Income (Expense), net		473			(2	)
Income before Provision for Income taxes		1,190			622
Provision for (Benefit from) Income Taxes		59			(454	)
Net Income	$	1,131		$	1,076
STRATTEC’s Share of VAST LLC Net Income	$	377		$	359
Intercompany Profit Elimination		(1	)		(6	)
STRATTEC’s Equity Earnings of VAST LLC	$	376		$	353

During 2013, we acquired a 51% ownership interest in a newly formed joint venture company, NextLock LLC, which will introduce a new generation of biometric security products based upon designs of Actuator Systems LLC, our partner. We anticipate shipment of the biometric security products to begin in the second quarter of our 2015 fiscal year through this new joint venture. Our investment in NextLock, for which we exercise significant influence but do not control, is accounted for using the equity method.

The following are summarized statements of operations for NextLock LLC (thousands of dollars):

	Three Months Ended
	September 28, 2014			September 29, 2013
Engineering, Selling and Administrative Expenses	$	364		$	116
Loss From Operations		(364	)		(116	)
Net Loss	$	(364	)	$	(116	)
STRATTEC’s Equity Loss of NextLock LLC	$	(186	)	$	(59	)

We have sales of component parts to VAST LLC and NextLock LLC, purchases of component parts from VAST LLC, expenses charged to VAST LLC for engineering and accounting services and expenses charged to us from VAST LLC for general headquarters expenses.  The following tables summarize the related party transactions with VAST LLC (thousands of dollars):

	Three Months Ended
	September 28, 2014		September 29, 2013
Sales to VAST LLC	$	114	$	40
Sales to NextLock LLC	$	5	$	-
Purchases from VAST LLC	$	39	$	115
Expenses Charged to VAST LLC	$	159	$	240
Expenses Charged from VAST LLC	$	483	$	282

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Stock-Based Compensation (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Sep. 28, 2014
Summary of stock option activity under our stock incentive plan
Shares, Beginning Balance	185,242
Shares, Granted	10,000
Shares, Exercised	(10,870)
Shares, Ending Balance	184,372
Shares, Exercisable	102,979
Weighted Average Exercise Price, Beginning Balance	$ 24.73
Weighted Average Exercise Price, Granted	$ 79.73
Weighted Average Exercise Price, Exercised	$ 25.30
Weighted Average Exercise Price, Ending Balance	$ 27.68
Weighted Average Exercise Price, Exercisable	$ 19.50
Weighted Average Remaining Contractual Term, Outstanding, September 28, 2014	6 years 6 months
Weighted Average Remaining Contractual Term, Exercisable, September 28, 2014	4 years 9 months 18 days
Aggregate Intrinsic Value, Outstanding, September 28, 2014	$ 10,105
Aggregate Intrinsic Value, Exercisable	$ 6,487

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Fair Value of Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	Sep. 28, 2014
Level 1
Assets:
Total Assets at Fair Value	$ 2,193
Level 1 | Fixed Income Funds
Assets:
Total Assets at Fair Value	752
Level 1 | Stock Index Fund | Small Cap
Assets:
Total Assets at Fair Value	332
Level 1 | Stock Index Fund | Mid Cap
Assets:
Total Assets at Fair Value	225
Level 1 | Stock Index Fund | Large Cap
Assets:
Total Assets at Fair Value	456
Level 1 | Stock Index Fund | International
Assets:
Total Assets at Fair Value	428
Level 2
Assets:
Total Assets at Fair Value	28
Level 2 | Cash and Cash Equivalents
Assets:
Total Assets at Fair Value	$ 28

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Basis of Financial Statements (Details Textual)	3 Months Ended
	Sep. 28, 2014 Segment
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Number of reporting segments related to STRATTEC Security Corporation	1
NextLock LLC
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Percentage ownership interest in joint venture	51.00%
VAST LLC
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Number of wholly owned and majority owned consolidated subsidiaries	3
Number of equity method joint ventures	1

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Stock-Based Compensation (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 28, 2014	Sep. 29, 2013
Intrinsic value of stock options exercised and the fair value of stock options vested
Intrinsic Value of Options Exercised	$ 500	$ 55
Fair Value of Stock Options Vesting	$ 382	$ 273

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Fair Value of Financial Instruments (Details Textual) (USD $)	Sep. 28, 2014
Fair Value of Financial Instruments (Textual) [Abstract]
Fair value, assets, level 1 to level 2 transfers, amount	$ 0

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Equity Earnings (Loss) of Joint Ventures (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 28, 2014	Sep. 29, 2013
Summarized statements of operations
Equity earnings (loss) of joint ventures	$ 190	$ 294
VAST LLC
Summarized statements of operations
Net Sales	30,998	24,529
Cost of Goods Sold	26,083	20,415
Gross Profit	4,915	4,114
Engineering, Selling and Administrative Expenses	4,198	3,490
Income (Loss) From Operations	717	624
Other Income (Expense), net	473	(2)
Income before Provision for Income taxes	1,190	622
Provision for (Benefit from) Income Taxes	59	(454)
Net Income (Loss)	1,131	1,076
STRATTEC’s Share of VAST LLC Net Income	377	359
Intercompany Profit Elimination	(1)	(6)
Equity earnings (loss) of joint ventures	376	353
NextLock LLC
Summarized statements of operations
Engineering, Selling and Administrative Expenses	364	116
Income (Loss) From Operations	(364)	(116)
Net Income (Loss)	(364)	(116)
Equity earnings (loss) of joint ventures	$ (186)	$ (59)

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Fair Value of Financial Instruments

3 Months Ended

Sep. 28, 2014

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The fair value of our cash and cash equivalents, accounts receivable, accounts payable and borrowings under our credit facility approximated book value as of September 28, 2014 and June 29, 2014. Fair value is defined as the exchange price that would be received for an asset or paid for a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date.

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of September 28, 2014 (in thousands of dollars):

	Fair Value Inputs
	Level 1 Assets:Quoted PricesIn Active Markets		Level 2 Assets:Observable  Inputs Other Than Market Prices		Level 3 Assets:UnobservableInputs
Assets:
Rabbi Trust Assets:
Stock Index Funds:
Small Cap	$	332	$	-	$	-
Mid Cap		225		-		-
Large Cap		456		-		-
International		428		-		-
Fixed Income Funds		752		-		-
Cash and Cash Equivalents		-		28		-
Total Assets at Fair Value	$	2,193	$	28	$	-

The Rabbi Trust assets fund our amended and restated supplemental executive retirement plan and are included in Other Long-term Assets in the accompanying Condensed Consolidated Balance Sheets. There were no transfers between Level 1 and Level 2 assets during the three months ended September 28, 2014.

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Equity Earnings (Loss) of Joint Ventures (Details Textual) (NextLock LLC)	Apr. 30, 2013
NextLock LLC
Schedule of Equity Method Investments [Line Items]
STRATTEC's percentage ownership joint venture	51.00%

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Earnings Per Share (''EPS'') (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Sep. 28, 2014	Sep. 29, 2013
Reconciliation of the components of the basic and diluted per share
Net Income Attributable to STRATTEC SECURITY CORPORATION	$ 9,300	$ 3,211
Less: Income Attributable to Participating Securities	120	60
Net Income Attributable to Common Shareholders	$ 9,180	$ 3,151
Basic Weighted Average Shares of Common Stock Outstanding	3,497	3,382
Incremental Shares – Stock based Compensation	96	78
Diluted Weighted Average Shares of Common Stock Outstanding	3,593	3,460
Basic Earnings Per Share	$ 2.63	$ 0.93
Diluted Earnings Per Share	$ 2.55	$ 0.91

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Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Sep. 28, 2014	Sep. 29, 2013
Income Statement [Abstract]
Net sales	$ 122,242	$ 79,595
Cost of goods sold	94,185	65,080
Gross profit	28,057	14,515
Engineering, selling and administrative expenses	13,187	9,470
Income from operations	14,870	5,045
Interest income	22	6
Equity earnings of joint ventures	190	294
Interest expense	(11)	(14)
Other income, net	788	279
Income before provision for income taxes and non-controlling interest	15,859	5,610
Provision for income taxes	5,519	1,756
Net income	10,340	3,854
Net income attributable to non-controlling interest	1,040	643
Net income attributable to STRATTEC SECURITY CORPORATION	9,300	3,211
Comprehensive Income:
Net income	10,340	3,854
Pension and postretirement plans, net of tax	428	435
Currency translation adjustments	(852)	(336)
Other comprehensive (loss) income, net of tax	(424)	99
Comprehensive income	9,916	3,953
Comprehensive income attributable to non-controlling interest	976	623
Comprehensive income attributable to STRATTEC SECURITY CORPORATION	$ 8,940	$ 3,330
Earnings per share attributable to STRATTEC SECURITY CORPORATION:
Basic	$ 2.63	$ 0.93
Diluted	$ 2.55	$ 0.91
Average shares outstanding:
Basic	3,497	3,382
Diluted	3,593	3,460
Cash dividends declared per share	$ 0.12	$ 0.11

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Stock-Based Compensation (Details 2) (USD $)	3 Months Ended
	Sep. 28, 2014	Sep. 29, 2013
Assumptions:
Risk Free Interest Rate	1.90%	2.06%
Expected Volatility	57.83%	58.75%
Expected Dividend Yield	0.62%	1.11%
Expected Term (in years)	6 years	6 years
Options Issued At Grant Date Market Value
Weighted Average Grant Date Fair Value:
Weighted average grant date fair value
Options Issued Above Grant Date Market Value
Weighted Average Grant Date Fair Value:
Weighted average grant date fair value	$ 34.93	$ 17.58

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Basis of Financial Statements

3 Months Ended

Sep. 28, 2014

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Financial Statements

Basis of Financial Statements

STRATTEC SECURITY CORPORATION designs, develops, manufactures and markets automotive access control products including mechanical locks and keys, electronically enhanced locks and keys, steering column and instrument panel ignition lock housings, latches, power sliding door systems, power lift gate systems, power deck lid systems, door handles and related products for primarily North American automotive customers. We also supply global automotive manufacturers through a unique strategic relationship with WITTE Automotive of Velbert, Germany, and ADAC Automotive of Grand Rapids, Michigan. Under this relationship, STRATTEC, WITTE and ADAC market the products of each company to global customers under the “VAST” brand name. STRATTEC products are shipped to customer locations in the United States, Canada, Mexico, Europe, South America, Korea and China, and we provide full service and aftermarket support for our products.

During 2013, we acquired a 51 percent ownership interest in NextLock LLC, a newly formed joint venture which will introduce a new generation of biometric security products based upon the designs of Actuator Systems LLC, our partner and the owner of the remaining ownership interest. We anticipate shipment of new biometric security products to begin in the second quarter of our 2015 fiscal year through this new NextLock joint venture.

The accompanying condensed consolidated financial statements reflect the consolidated results of STRATTEC SECURITY CORPORATION, its wholly owned Mexican subsidiary, STRATTEC de Mexico, and its majority owned subsidiaries, ADAC-STRATTEC, LLC and STRATTEC POWER ACCESS LLC. STRATTEC SECURITY CORPORATION is located in Milwaukee, Wisconsin. STRATTEC de Mexico is located in Juarez, Mexico. ADAC-STRATTEC, LLC and STRATTEC POWER ACCESS LLC have operations in El Paso, Texas and Juarez, Mexico. Equity investments in Vehicle Access Systems Technology LLC (“VAST LLC”) and NextLock LLC for which we exercise significant influence but do not control and are not the primary beneficiary, are accounted for using the equity method. VAST LLC consists primarily of three wholly owned subsidiaries in China and one in Brazil. NextLock LLC is located in El Paso, Texas. We have only one reporting segment.

In the opinion of management, the accompanying condensed consolidated balance sheet as of June 29, 2014, which has been derived from our audited financial statements, and the related unaudited interim condensed consolidated financial statements included herein contain all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance with Rule 10-01 of Regulation S-X. All significant intercompany transactions have been eliminated.

Interim financial results are not necessarily indicative of operating results for an entire year. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis and the financial statements and notes thereto included in the STRATTEC SECURITY CORPORATION 2014 Annual Report, which was filed with the Securities and Exchange Commission as an exhibit to our Form 10-K on September 5, 2014.

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Credit Facilities and Guarantees (Details) (USD $) In Thousands, unless otherwise specified	Sep. 28, 2014	Jun. 29, 2014
STRATTEC Credit Facility
Line Of Credit Facility [Line Items]
Outstanding borrowing	$ 0	$ 0
ADAC-STRATTEC Credit Facility
Line Of Credit Facility [Line Items]
Outstanding borrowing	$ 4,000	$ 2,500

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Shareholders' Equity (Tables)

3 Months Ended

Sep. 28, 2014

Equity [Abstract]

Summary of Activity Impacting Shareholders' Equity

A summary of activity impacting shareholders’ equity for the three month period ended September 28, 2014 was as follows (in thousands):

	TotalShareholders’Equity			EquityAttributable toSTRATTEC			Equity Attributable to  Non-ControllingInterest
Balance, June 29, 2014	$	134,903		$	125,506		$	9,397
Net Income		10,340			9,300			1,040
Dividend Declared		(427	)		(427	)		-
Dividend Declared – Non-controlling Interests of Subsidiaries		(882	)		-			(882	)
Translation adjustments		(852	)		(788	)		(64	)
Stock Based Compensation		389			389			-
Tax Benefit – Dividend Paid on Restricted Shares		2			2			-
Pension and Postretirement Adjustment, Net of tax		428			428			-
Employee Stock Purchases and Stock Option Exercises		440			440			-
Balance, September 28, 2014	$	144,341		$	134,850		$	9,491

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Credit Facilities and Guarantees (Details 1) (ADAC-STRATTEC Credit Facility, USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 28, 2014	Sep. 29, 2013
ADAC-STRATTEC Credit Facility
Line Of Credit Facility [Line Items]
Average borrowings under the credit facility during the period	$ 3,481	$ 2,769
Weighted average interest rate	1.20%	1.90%

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Earnings Per Share (''EPS'') (Tables)

3 Months Ended

Sep. 28, 2014

Earnings Per Share [Abstract]

Reconciliation of the Components of the Basic and Diluted Per Share

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

	Three Months Ended
	September 28,2014		September 29,2013
Net Income Attributable to STRATTEC SECURITY CORPORATION	$	9,300	$	3,211
Less: Income Attributable to Participating Securities		120		60
Net Income Attributable to Common Shareholders	$	9,180	$	3,151
Basic Weighted Average Shares of Common Stock Outstanding		3,497		3,382
Incremental Shares – Stock based Compensation		96		78
Diluted Weighted Average Shares of Common Stock Outstanding		3,593		3,460
Basic Earnings Per Share	$	2.63	$	0.93
Diluted Earnings Per Share	$	2.55	$	0.91

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New Accounting Standard

3 Months Ended

Sep. 28, 2014

Accounting Changes And Error Corrections [Abstract]

New Accounting Standard

New Accounting Standard

In May 2014, the FASB issued an update to the accounting guidance for the recognition of revenue arising from contracts with customers. The update supersedes most current revenue recognition guidance and outlines a single comprehensive model for revenue recognition based on the principle that an entity should recognize revenue in an amount that reflects the expected consideration to be received in the exchange of goods and services. The guidance update also required additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The guidance update is effective for annual reporting periods beginning after December 15, 2016 and becomes effective for us at the beginning of our 2018 fiscal year. Early adoption is not permitted. We are currently assessing the impact that this guidance will have on our consolidated financial statements.

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 28, 2014	Jun. 29, 2014
Current Assets:
Cash and cash equivalents	$ 22,545	$ 19,756
Receivables, net	79,321	68,822
Inventories
Finished products	8,610	9,034
Work in process	7,487	7,386
Purchased materials	18,150	16,232
Excess and obsolete reserve	(2,200)	(2,150)
Inventories, net	32,047	30,502
Other current assets	17,572	16,559
Total current assets	151,485	135,639
Investment in joint ventures	10,341	9,977
Other long-term assets	12,322	11,639
Property, plant and equipment	178,781	172,717
Less: accumulated depreciation	(118,112)	(116,936)
Net property, plant and equipment	60,669	55,781
Total assets	234,817	213,036
Current Liabilities:
Accounts payable	38,138	36,053
Accrued Liabilities:
Payroll and benefits	18,888	18,058
Environmental	1,396	1,397
Warranty	3,340	3,462
Other	14,446	6,293
Total current liabilities	76,208	65,263
Deferred income taxes	5,168	5,127
Borrowings under credit facility	4,000	2,500
Accrued pension obligations	1,652	1,619
Accrued postretirement obligations	2,027	2,223
Other long-term liabilities	1,421	1,401
Shareholders’ Equity:
Common stock, authorized 12,000,000 shares, $.01 par value, issued 7,138,978 shares at September 28, 2014 and 7,110,308 shares at June 29, 2014	71	71
Capital in excess of par value	87,881	87,054
Retained earnings	203,371	194,498
Accumulated other comprehensive loss	(20,558)	(20,198)
Less: treasury stock, at cost (3,625,224 shares at September 28, 2014 and 3,625,492 shares at June 29, 2014)	(135,915)	(135,919)
Total STRATTEC SECURITY CORPORATION shareholders’ equity	134,850	125,506
Non-controlling interest	9,491	9,397
Total shareholders’ equity	144,341	134,903
Total liabilities and shareholders' equity	$ 234,817	$ 213,036

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Pension and Postretirement Benefits

3 Months Ended

Sep. 28, 2014

Compensation And Retirement Disclosure [Abstract]

Pension and Postretirement Benefits

Pension and Postretirement Benefits

We have a qualified, noncontributory defined benefit pension plan (“Qualified Pension Plan”) covering substantially all U.S. associates. Benefits are based on years of service and final average compensation. Our 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. Effective December 31, 2009, an amendment to the Qualified Pension Plan discontinued the benefit accruals for salary increases and credited service rendered after that date.  On April 2, 2014, our Board of Directors approved a resolution to terminate the Qualified Pension Plan.  The termination of the Qualified Pension Plan is subject to the Internal Revenue Service’s (“IRS”) determination that the Qualified Pension Plan is qualified on termination.  We believe it will take 18 to 24 months to finalize the complete termination of the Qualified Pension Plan after obtaining IRS approval.  Additionally, we have amended the Qualified Pension Plan to provide that participants are 100 percent vested in their accrued benefits as of the effective date of the plan termination, to adopt a new standard for disability benefits that will apply when the plan’s assets are distributed due to the termination, to add a lump sum distribution for employees and terminated vested participants who are not in payment status when Qualified Pension Plan assets are distributed due to the termination and to make certain other conforming amendments to the Qualified Pension Plan to comply with applicable laws that may be required by the IRS or may be deemed necessary or advisable to improve the administration of the Qualified Pension Plan or facilitate its termination and liquidation.  The foregoing Qualified Pension Plan amendments are also subject to our requirement to bargain with the union.  We also intend to make contributions to the Trust Fund for the Qualified Pension Plan to ensure that there are sufficient assets to provide all Qualified Pension Plan benefits as of the anticipated distribution date.  The financial impact of the plan termination will be recognized as a settlement of the Qualified Pension Plan liabilities.  The settlement date and related financial impact have not yet been determined.

We have historically had in place a noncontributory supplemental executive retirement plan (“SERP”), which was a nonqualified defined benefit plan that essentially mirrored the Qualified Pension Plan, but provided benefits in excess of certain limits placed on our Qualified Pension Plan by the Internal Revenue Code.  We froze our Qualified Pension Plan effective as of December 31, 2009 and the SERP provided benefits to participants as if the Qualified Pension Plan had not been frozen.  Because the Qualified Pension Plan was frozen and because new employees were not eligible to participate in the Qualified Pension Plan, our Board of Directors adopted amendments to the SERP on October 8, 2013 that were effective as of December 31, 2013 to simplify the SERP calculation.  The SERP is funded through a Rabbi Trust with BMO Harris Bank N.A.  Under the amended SERP, participants received an accrued lump-sum benefit as of December 31, 2013 which was credited to each participant’s account.  Going forward, each eligible participant will receive a supplemental retirement benefit equal to the foregoing lump-sum benefit, plus an annual benefit accrual equal to 8 percent of the participant’s base salary and cash bonus, plus annual credited interest on the participant’s account balance.  All current participants are fully vested in their account balances with any new individuals participating in the SERP effective on or after January 1, 2014 being subject to a five year vesting schedule.  The SERP, which is considered a defined benefit plan under applicable rules and regulations, will continue to be funded through the use of a Rabbi Trust to hold investment assets to be used in part to fund any future required lump sum benefit payments to participants.  The foregoing amendments to the SERP did not have a material effect on our financial statements.  The Rabbi Trust assets had a value of $2.2 million at both September 28, 2014 and June 29, 2014, respectively, and are included in Other Long-Term Assets in the accompanying Condensed Consolidated Balance Sheets.

We also sponsor a postretirement health care plan for all of our U.S. associates hired prior to June 2, 2001. The expected cost of retiree health care benefits is recognized during the years that the associates who are covered under the plan render service. Effective January 1, 2010, an amendment to the postretirement health care plan limited the benefit for future eligible retirees to $4,000 per plan year and is subject to a maximum five year coverage period based on the associate’s retirement date and age. The postretirement health care plan is unfunded.

Net periodic benefit costs are allocated between Cost of Goods Sold and Engineering, Selling and Administrative Expenses in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income.

The following tables summarize the net periodic benefit cost recognized for each of the periods indicated under these plans (in thousands):

	Pension Benefits						Postretirement Benefits
	Three Months Ended						Three Months Ended
	September 28,2014			September 29,2013			September 28,2014			September 29,2013
Service cost	$	16		$	54		$	4		$	4
Interest cost		1,043			1,102			28			39
Expected return on plan assets		(1,543	)		(1,610	)		-			-
Amortization of prior service cost (credit)		3			3			(191	)		(191	)
Amortization of unrecognized net loss		693			666			173			212
Net periodic benefit cost	$	212		$	215		$	14		$	64

No contributions were made to the Qualified Pension Plan during the three month period ended September 28, 2014. Contributions of $750,000 were made to the Qualified Pension Plan during the three month period ended September 29, 2013. Voluntary contributions of $3.0 million are anticipated to be made during the remainder of fiscal 2015.

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Document and Entity Information	3 Months Ended
	Sep. 28, 2014
Document And Entity Information [Abstract]
Entity Registrant Name	STRATTEC SECURITY CORP
Entity Central Index Key	0000933034
Document Type	10-Q
Document Period End Date	Sep. 28, 2014
Amendment Flag	false
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--06-28
Entity Filer Category	Accelerated Filer
Entity Common Stock Shares Outstanding	3,584,554

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Accumulated Other Comprehensive Loss

3 Months Ended

Sep. 28, 2014

Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated other comprehensive loss (“AOCL”) for each period presented (in thousands):

		Three Months Ended September 28, 2014
	Foreign  Currency Translation Adjustments		Retirement  and Postretirement Benefit Plans			Total
Balance, June 29, 2014	$	3,411	$	16,787		$	20,198
Other comprehensive loss before reclassifications		852		-			852
Income tax		-		-			-
Net other comprehensive loss before reclassifications		852		-			852
Reclassifications:
Prior service credits (A)		-		188			188
Actuarial gains (A)		-		(867	)		(867	)
Total reclassifications before tax		-		(679	)		(679	)
Income tax		-		251			251
Net reclassifications		-		(428	)		(428	)
Other comprehensive loss (income)		852		(428	)		424
Other comprehensive loss attributable to non-controlling interest		64		-			64
Balance, September 28, 2014	$	4,199	$	16,359		$	20,558

		Three Months Ended September 29, 2013
	Foreign  Currency Translation Adjustments		Retirement  and Postretirement Benefit Plans			Total
Balance, June 30, 2013	$	3,268	$	18,944		$	22,212
Other comprehensive loss before reclassifications		336		-			336
Income tax		-		-			-
Net other comprehensive loss before reclassifications		336		-			336
Reclassifications:
Prior service credits (A)		-		188			188
Unrecognized net loss (A)		-		(878	)		(878	)
Total reclassifications before tax		-		(690	)		(690	)
Income tax		-		255			255
Net reclassifications		-		(435	)		(435	)
Other comprehensive loss (income)		336		(435	)		(99	)
Other comprehensive loss attributable to non-controlling interest		20		-			20
Balance, September 29, 2013	$	3,584	$	18,509		$	22,093

(A) Amounts reclassified are included in the computation of net periodic benefit cost, which is included in Cost of Goods Sold and Engineering, Selling and Administrative expenses in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income. See Pension and Postretirement Benefits note to these condensed consolidated financial statements above.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 28, 2014	Jun. 29, 2014
Statement Of Financial Position [Abstract]
Common stock, shares authorized	12,000,000	12,000,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares issued	7,138,978	7,110,308
Treasury stock, shares	3,625,224	3,625,492

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Shareholders' Equity

3 Months Ended

Sep. 28, 2014

Equity [Abstract]

Shareholders' Equity

Shareholders’ Equity

A summary of activity impacting shareholders’ equity for the three month period ended September 28, 2014 was as follows (in thousands):

	TotalShareholders’Equity			EquityAttributable toSTRATTEC			Equity Attributable to  Non-ControllingInterest
Balance, June 29, 2014	$	134,903		$	125,506		$	9,397
Net Income		10,340			9,300			1,040
Dividend Declared		(427	)		(427	)		-
Dividend Declared – Non-controlling Interests of Subsidiaries		(882	)		-			(882	)
Translation adjustments		(852	)		(788	)		(64	)
Stock Based Compensation		389			389			-
Tax Benefit – Dividend Paid on Restricted Shares		2			2			-
Pension and Postretirement Adjustment, Net of tax		428			428			-
Employee Stock Purchases and Stock Option Exercises		440			440			-
Balance, September 28, 2014	$	144,341		$	134,850		$	9,491

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Environmental Reserve

3 Months Ended

Sep. 28, 2014

Environmental Remediation Obligations [Abstract]

Environmental Reserve

Environmental Reserve

In 1995, we recorded a provision of $3 million for estimated costs to remediate an environmental contamination site at our Milwaukee facility. The site was contaminated by a solvent spill, which occurred in 1985, from a former above ground solvent storage tank located on the east side of the facility. The reserve was originally established based on third party estimates to adequately cover the cost for active remediation of the contamination. Due to changing technology and related costs associated with active remediation of the contamination, an updated analysis and estimate was obtained during fiscal 2010. As a result of this analysis, the reserve was reduced by approximately $1.1 million, to $1.5 million in 2010, to reflect the revised monitoring and remediation cost estimate. From 1995 through September 28, 2014, costs of approximately $479,000 have been incurred related to the installation of monitoring wells on the property and ongoing monitoring costs. We continue to monitor and evaluate the site with the use of these groundwater monitoring wells. An environmental consultant samples these wells one or two times a year to determine the status of the contamination and the potential for remediation of the contamination by natural attenuation, the dissipation of the contamination over time to concentrations below applicable standards. If such sampling evidences a sufficient degree of and trend toward natural attenuation of the contamination at the site, we may be able to obtain a closure letter from the regulatory authorities resolving the issue without the need for active remediation. If a sufficient degree and trend toward natural attenuation is not evidenced by sampling, a more active form of remediation beyond natural attenuation may be required. The sampling has not yet satisfied all of the requirements for closure by natural attenuation. As a result, sampling continues and the reserve remains at an amount to reflect the estimated cost of active remediation. The reserve is not measured on a discounted basis. We believe, based on findings-to-date and known environmental regulations, that the remaining environmental reserve of $1.4 million at September 28, 2014, is adequate.

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Other Income, Net (Tables)

3 Months Ended

Sep. 28, 2014

Other Income And Expenses [Abstract]

Summary of Other Income, Net

The impact of these items for each of the periods presented was as follows (in thousands):

	Three Months Ended
	September 28,2014			September 29,2013
Foreign Currency Transaction Gain	$	786		$	212
Rabbi Trust (Loss) Gain		(27	)		48
Other		29			19
	$	788		$	279

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Fair Value of Financial Instruments (Tables)

3 Months Ended

Sep. 28, 2014

Fair Value Disclosures [Abstract]

Summary of Financial Assets and Liabilities at Fair Value on Recurring Basis

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of September 28, 2014 (in thousands of dollars):

	Fair Value Inputs
	Level 1 Assets:Quoted PricesIn Active Markets		Level 2 Assets:Observable  Inputs Other Than Market Prices		Level 3 Assets:UnobservableInputs
Assets:
Rabbi Trust Assets:
Stock Index Funds:
Small Cap	$	332	$	-	$	-
Mid Cap		225		-		-
Large Cap		456		-		-
International		428		-		-
Fixed Income Funds		752		-		-
Cash and Cash Equivalents		-		28		-
Total Assets at Fair Value	$	2,193	$	28	$	-

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Earnings Per Share (''EPS'')

3 Months Ended

Sep. 28, 2014

Earnings Per Share [Abstract]

Earnings Per Share (''EPS'')

Earnings Per Share (EPS)

Basic earnings per share is computed on the basis of the weighted average number of shares of common stock outstanding during the applicable period. Diluted earnings per share is computed on the basis of the weighted average number of shares of common stock plus the potential dilutive common shares outstanding during the applicable period using the treasury stock method. Potential dilutive common shares include outstanding stock options and unvested restricted stock awards.

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

	Three Months Ended
	September 28,2014		September 29,2013
Net Income Attributable to STRATTEC SECURITY CORPORATION	$	9,300	$	3,211
Less: Income Attributable to Participating Securities		120		60
Net Income Attributable to Common Shareholders	$	9,180	$	3,151
Basic Weighted Average Shares of Common Stock Outstanding		3,497		3,382
Incremental Shares – Stock based Compensation		96		78
Diluted Weighted Average Shares of Common Stock Outstanding		3,593		3,460
Basic Earnings Per Share	$	2.63	$	0.93
Diluted Earnings Per Share	$	2.55	$	0.91

We consider unvested restricted stock that provides the holder with a non-forfeitable right to receive dividends to be a participating security.

As of September 28, 2014, options to purchase 10,000 shares of common stock were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.  As of September 29, 2013, options to purchase 82,000 shares of common stock were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

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Other Income, Net

3 Months Ended

Sep. 28, 2014

Other Income And Expenses [Abstract]

Other Income, Net

Other Income, net

Net other income included in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income primarily included foreign currency transaction gains and losses and Rabbi Trust gains and losses. Foreign currency transaction gains and losses resulted from activity associated with foreign denominated assets held by our Mexican subsidiaries. The Rabbi Trust assets fund our amended and restated supplemental executive retirement plan. The investments held in the Trust are considered trading securities.

The impact of these items for each of the periods presented was as follows (in thousands):

	Three Months Ended
	September 28,2014			September 29,2013
Foreign Currency Transaction Gain	$	786		$	212
Rabbi Trust (Loss) Gain		(27	)		48
Other		29			19
	$	788		$	279

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Income Taxes

3 Months Ended

Sep. 28, 2014

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The income tax provisions for the three month periods ended September 28, 2014 and September 29, 2013 were affected by the non-controlling interest portion of our pre-tax income.  The income tax provision for the three month period ended September 29,2013 was also affected by a lower statutory tax rate for income subject to tax in Mexico as compared to the statutory tax rate for income subject to tax in the U.S.

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Stock-Based Compensation

3 Months Ended

Sep. 28, 2014

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-based Compensation

Stock-based Compensation

We maintain an omnibus stock incentive plan. This plan provides for the granting of stock options, shares of restricted stock and stock appreciation rights. As of September 28, 2014, the Board of Directors had designated 1,700,000 shares of common stock available for the grant of awards under the plan. Remaining shares available to be granted under the plan as of September 28, 2014 were 91,250. Upon approval of an amendment to the plan by our shareholders at our 2014 annual meeting, effective October 7, 2014, an additional 150,000 shares of common stock were designated as available for the grant of awards under the plan. Awards that expire or are canceled without delivery of shares become available for re-issuance under the plan. We issue new shares of common stock to satisfy stock option exercises.

Nonqualified and incentive stock options and shares of restricted stock have been granted to our officers, outside directors and specified employees under our stock incentive plan. Stock options granted under the plan may not be issued with an exercise price less than the fair market value of the common stock on the date the option is granted. Stock options become exercisable as determined at the date of grant by the Compensation Committee of the Board of Directors. The options expire 5 to 10 years after the grant date unless an earlier expiration date is set at the time of grant. The options vest 1 to 4 years after the date of grant. Shares of restricted stock granted under the plan are subject to vesting criteria determined by the Compensation Committee of the Board of Directors at the time the shares are granted and have a minimum vesting period of three years from the date of grant. Restricted shares granted have voting rights, regardless if the shares are vested or unvested. Restricted shares granted prior to August 2014 have dividend rights, regardless if the shares are vested or unvested. Commencing in August 2014 and thereafter, shares of restricted stock are not entitled to receive any cash dividends if they are unvested as of the record date. The restricted stock grants issued to date vest 3 years after the date of grant.

The fair value of each stock option grant was estimated as of the date of grant using the Black-Scholes pricing model. The resulting compensation cost for fixed awards with graded vesting schedules is amortized on a straight line basis over the vesting period for the entire award. The fair value of each restricted stock grant was based on the market price of the underlying common stock as of the date of grant. The resulting compensation cost is amortized on a straight line basis over the vesting period.

A summary of stock option activity under our stock incentive plan for the three months ended September 28, 2014 was as follows:

	Shares			WeightedAverageExercise Price		WeightedAverageRemainingContractualTerm (years)		AggregateIntrinsicValue(in thousands)
Outstanding, June 29, 2014		185,242		$	24.73
Granted		10,000		$	79.73
Exercised		(10,870	)	$	25.30
Outstanding, September 28, 2014		184,372		$	27.68		6.5	$	10,105
Exercisable, September 28, 2014		102,979		$	19.50		4.8	$	6,487

The intrinsic value of stock options exercised and the fair value of stock options vesting during the three month periods presented below was as follows (in thousands):

	Three Months Ended
	September 28,2014		September 29,2013
Intrinsic Value of Options Exercised	$	500	$	55
Fair Value of Stock Options Vesting	$	382	$	273

The grant date fair value and assumptions used to determine compensation expense for the options granted during each period presented below were as follows:

	Three Months Ended
	September 28, 2014			September 29, 2013
Weighted Average Grant Date Fair Value:
Options Issued at Grant Date Market Value		n/a			n/a
Options Issued Above Grant Date Market Value	$	34.93		$	17.58
Assumptions:
Risk Free Interest Rate		1.90	%		2.06	%
Expected Volatility		57.83	%		58.75	%
Expected Dividend Yield		0.62	%		1.11	%
Expected Term (in years)		6.0			6.0

A summary of restricted stock activity under our omnibus stock incentive plan for the three months ended September 28, 2014 was as follows:

	Shares			Weighted AverageGrant DateFair Value
Nonvested Balance, June 29, 2014		63,600		$	28.64
Granted		25,000		$	70.90
Vested		(17,800	)	$	23.01
Nonvested Balance, September 28, 2014		70,800		$	44.98

As of September 28, 2014, there was $759,000 of total unrecognized compensation cost related to outstanding stock options granted under our omnibus stock incentive plan. This cost is expected to be recognized over a weighted average period of 1.1 years. As of September 28, 2014, there was approximately $2.0 million of total unrecognized compensation cost related to unvested restricted stock grants outstanding under the plan. This cost is expected to be recognized over a weighted average period of 1.3 years. Total unrecognized compensation cost will be adjusted for any future changes in estimated and actual forfeitures of awards granted under our omnibus stock incentive plan.

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Credit Facilities and Guarantees (Details Textual) (USD $) In Millions, unless otherwise specified	0 Months Ended	3 Months Ended
	Jan. 22, 2014	Sep. 28, 2014
STRATTEC Credit Facility
Line Of Credit Facility [Line Items]
Secured revolving credit facility		$ 25
Expiry date of credit facility		Aug. 01, 2016
Interest rate on borrowings under the credit facility		London Interbank Offering Rate plus 1.0 percent or the bank’s prime rate
Interest rate – percentage points added to LIBOR – on borrowings under credit facility		1.00%
ADAC-STRATTEC Credit Facility
Line Of Credit Facility [Line Items]
Secured revolving credit facility		$ 5
Expiry date of credit facility		Aug. 01, 2016
Interest rate on borrowings under the credit facility	LIBOR plus 1.75 percent or the bank’s prime rate.	London Interbank Offering Rate plus 1.0 percent or the bank’s prime rate
Interest rate – percentage points added to LIBOR – on borrowings under credit facility	1.75%	1.00%

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Credit Facilities and Guarantees (Tables)

3 Months Ended

Sep. 28, 2014

Debt Disclosure [Abstract]

Schedule of Outstanding Borrowings Under the Credit Facilities

Outstanding borrowings under the credit facilities were as follows (thousands of dollars):

	September 28, 2014		June 29, 2014
STRATTEC Credit Facility	$	-	$	-
ADAC-STRATTEC Credit Facility	$	4,000	$	2,500

Schedule of Average Outstanding Borrowings and the Weighted Average Interest Rate

Average outstanding borrowings and the weighted average interest rate under each credit facility were as follows for each period presented (thousands of dollars):

	Three Months Ended
	Average Outstanding Borrowings				Weighted Average Interest Rate
	September 28, 2014		September 29, 2013		September 28, 2014			September 29, 2013
STRATTEC Credit Facility	$	-	$	-		-	%		-	%
ADAC-STRATTEC Credit Facility	$	3,481	$	2,769		1.2	%		1.9	%

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Pension and Postretirement Benefits (Tables)

3 Months Ended

Sep. 28, 2014

Compensation And Retirement Disclosure [Abstract]

Summarize the Net Periodic Benefit Cost

The following tables summarize the net periodic benefit cost recognized for each of the periods indicated under these plans (in thousands):

	Pension Benefits						Postretirement Benefits
	Three Months Ended						Three Months Ended
	September 28,2014			September 29,2013			September 28,2014			September 29,2013
Service cost	$	16		$	54		$	4		$	4
Interest cost		1,043			1,102			28			39
Expected return on plan assets		(1,543	)		(1,610	)		-			-
Amortization of prior service cost (credit)		3			3			(191	)		(191	)
Amortization of unrecognized net loss		693			666			173			212
Net periodic benefit cost	$	212		$	215		$	14		$	64

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Accumulated Other Comprehensive Loss (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 28, 2014	Sep. 29, 2013
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning balance	$ 20,198	$ 22,212
Other comprehensive loss before reclassifications	852	336
Retirement and Postretirement Plan Reclassification Adjustment, Income Tax Amount	0	0
Net other comprehensive loss before reclassifications	852	336
Reclassifications:
Prior service credits	188	188
Actuarial gains/Unrecognized net loss	(867)	(878)
Total reclassifications before tax	(679)	(690)
Retirement and Postretirement Plans Reclassifications, Income Tax	251	255
Net reclassifications	(428)	(435)
Other comprehensive loss (income)	424	(99)
Other comprehensive loss attributable to non-controlling interest	64	20
Ending balance	20,558	22,093
Foreign Currency Translation Adjustments
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning balance	3,411	3,268
Other comprehensive loss before reclassifications	852	336
Retirement and Postretirement Plan Reclassification Adjustment, Income Tax Amount	0	0
Net other comprehensive loss before reclassifications	852	336
Reclassifications:
Other comprehensive loss (income)	852	336
Other comprehensive loss attributable to non-controlling interest	64	20
Ending balance	4,199	3,584
Retirement and Postretirement Benefit Plans
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning balance	16,787	18,944
Retirement and Postretirement Plan Reclassification Adjustment, Income Tax Amount	0	0
Reclassifications:
Prior service credits	188	188
Actuarial gains/Unrecognized net loss	(867)	(878)
Total reclassifications before tax	(679)	(690)
Retirement and Postretirement Plans Reclassifications, Income Tax	251	255
Net reclassifications	(428)	(435)
Other comprehensive loss (income)	(428)	(435)
Ending balance	$ 16,359	$ 18,509

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Earnings Per Share (''EPS'') (Details 1) (Stock Options)	3 Months Ended
	Sep. 28, 2014	Sep. 29, 2013
Stock Options
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive options excluded from earnings per share computation	10,000	82,000

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 28, 2014	Sep. 29, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 10,340	$ 3,854
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	2,112	2,112
Foreign currency transaction gain	(786)	(212)
Stock based compensation expense	389	354
Equity earnings of joint ventures	(190)	(294)
Change in operating assets and liabilities:
Receivables	(10,618)	(4,544)
Inventories	(1,545)	(3,032)
Other assets	(890)	(3,216)
Accounts payable and accrued liabilities	10,298	752
Other, net	125	86
Net cash provided by (used in) operating activities	9,235	(4,140)
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan to joint ventures	(215)
Purchase of property, plant and equipment	(6,963)	(2,876)
Proceeds received on sale of property, plant and equipment		8
Net cash used in investing activities	(7,178)	(2,868)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit facility	1,500	750
Dividends paid to non-controlling interests of subsidiaries	(882)	(984)
Dividends paid	(427)	(380)
Exercise of stock options and employee stock purchases	440	98
Net cash provided by (used in) financing activities	631	(516)
Foreign currency impact on cash	101	23
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	2,789	(7,501)
CASH AND CASH EQUIVALENTS
Beginning of period	19,756	20,307
End of period	22,545	12,806
Cash paid during the period for:
Income taxes	1,102	372
Interest	5	13
Non-cash investing activities:
Change in capital expenditures in accounts payable	$ 516

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Credit Facilities and Guarantees

3 Months Ended

Sep. 28, 2014

Debt Disclosure [Abstract]

Credit Facilities and Guarantees

Credit Facilities and Guarantees

STRATTEC has a $25 million secured revolving credit facility (the “STRATTEC Credit Facility”) with BMO Harris Bank N.A. ADAC-STRATTEC LLC has a $5 million secured revolving credit facility (the “ADAC-STRATTEC Credit Facility”) with BMO Harris Bank N.A, which is guaranteed by STRATTEC. The credit facilities both expire August 1, 2016. Borrowings under either credit facility are secured by our U.S. cash balances, accounts receivable, inventory and fixed assets located in the U.S. Interest on borrowings under the ADAC-STRATTEC Credit Facility for periods prior to January 22, 2014 was at varying rates based, at our option, on LIBOR plus 1.75 percent or the bank’s prime rate.  Interest on borrowings under the STRATTEC credit facility and effective on or after January 22, 2014 under the ADAC-STRATTEC Credit Facility is at varying rates based, at our option, on the London Interbank Offering Rate plus 1.0 percent or the bank’s prime rate. Both credit facilities contain a restrictive financial covenant that requires the applicable borrower to maintain a minimum net worth level. The ADAC-STRATTEC Credit Facility includes an additional restrictive financial covenant that requires the maintenance of a minimum fixed charge coverage ratio.

Outstanding borrowings under the credit facilities were as follows (thousands of dollars):

	September 28, 2014		June 29, 2014
STRATTEC Credit Facility	$	-	$	-
ADAC-STRATTEC Credit Facility	$	4,000	$	2,500

Average outstanding borrowings and the weighted average interest rate under each credit facility were as follows for each period presented (thousands of dollars):

	Three Months Ended
	Average Outstanding Borrowings				Weighted Average Interest Rate
	September 28, 2014		September 29, 2013		September 28, 2014			September 29, 2013
STRATTEC Credit Facility	$	-	$	-		-	%		-	%
ADAC-STRATTEC Credit Facility	$	3,481	$	2,769		1.2	%		1.9	%

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Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Sep. 28, 2014

Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]

Summary of Changes in Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated other comprehensive loss (“AOCL”) for each period presented (in thousands):

		Three Months Ended September 28, 2014
	Foreign  Currency Translation Adjustments		Retirement  and Postretirement Benefit Plans			Total
Balance, June 29, 2014	$	3,411	$	16,787		$	20,198
Other comprehensive loss before reclassifications		852		-			852
Income tax		-		-			-
Net other comprehensive loss before reclassifications		852		-			852
Reclassifications:
Prior service credits (A)		-		188			188
Actuarial gains (A)		-		(867	)		(867	)
Total reclassifications before tax		-		(679	)		(679	)
Income tax		-		251			251
Net reclassifications		-		(428	)		(428	)
Other comprehensive loss (income)		852		(428	)		424
Other comprehensive loss attributable to non-controlling interest		64		-			64
Balance, September 28, 2014	$	4,199	$	16,359		$	20,558

		Three Months Ended September 29, 2013
	Foreign  Currency Translation Adjustments		Retirement  and Postretirement Benefit Plans			Total
Balance, June 30, 2013	$	3,268	$	18,944		$	22,212
Other comprehensive loss before reclassifications		336		-			336
Income tax		-		-			-
Net other comprehensive loss before reclassifications		336		-			336
Reclassifications:
Prior service credits (A)		-		188			188
Unrecognized net loss (A)		-		(878	)		(878	)
Total reclassifications before tax		-		(690	)		(690	)
Income tax		-		255			255
Net reclassifications		-		(435	)		(435	)
Other comprehensive loss (income)		336		(435	)		(99	)
Other comprehensive loss attributable to non-controlling interest		20		-			20
Balance, September 29, 2013	$	3,584	$	18,509		$	22,093

(A) Amounts reclassified are included in the computation of net periodic benefit cost, which is included in Cost of Goods Sold and Engineering, Selling and Administrative expenses in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income. See Pension and Postretirement Benefits note to these condensed consolidated financial statements above.

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Shareholders' Equity (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 28, 2014	Sep. 29, 2013
Summary of activity impacting shareholders' equity
Beginning Balance	$ 134,903
Net income	10,340	3,854
Dividend Declared	(427)
Dividend Declared – Non-controlling Interests of Subsidiaries	(882)
Translation adjustments	(852)	(336)
Stock Based Compensation	389	354
Tax Benefit – Dividend Paid on Restricted Shares	2
Pension and postretirement plans, net of tax	428	435
Employee Stock Purchases and Stock Option Exercises	440
Ending Balance	144,341
Equity Attributable to STRATTEC
Summary of activity impacting shareholders' equity
Beginning Balance	125,506
Net income	9,300
Dividend Declared	(427)
Translation adjustments	(788)
Stock Based Compensation	389
Tax Benefit – Dividend Paid on Restricted Shares	2
Pension and postretirement plans, net of tax	428
Employee Stock Purchases and Stock Option Exercises	440
Ending Balance	134,850
Equity Attributable to Non-Controlling Interest
Summary of activity impacting shareholders' equity
Beginning Balance	9,397
Net income	1,040
Dividend Declared – Non-controlling Interests of Subsidiaries	(882)
Translation adjustments	(64)
Ending Balance	$ 9,491

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Equity Earnings (Loss) of Joint Ventures (Tables)

3 Months Ended

Sep. 28, 2014

VAST LLC

Summarized Statements of Operations

The following are summarized statements of operations for VAST LLC (thousands of dollars):  

	Three Months Ended
	September 28, 2014			September 29, 2013
Net Sales	$	30,998		$	24,529
Cost of Goods Sold		26,083			20,415
Gross Profit		4,915			4,114
Engineering, Selling and Administrative Expenses		4,198			3,490
Income From Operations		717			624
Other Income (Expense), net		473			(2	)
Income before Provision for Income taxes		1,190			622
Provision for (Benefit from) Income Taxes		59			(454	)
Net Income	$	1,131		$	1,076
STRATTEC’s Share of VAST LLC Net Income	$	377		$	359
Intercompany Profit Elimination		(1	)		(6	)
STRATTEC’s Equity Earnings of VAST LLC	$	376		$	353

Summarize of Related Party Transaction

We have sales of component parts to VAST LLC and NextLock LLC, purchases of component parts from VAST LLC, expenses charged to VAST LLC for engineering and accounting services and expenses charged to us from VAST LLC for general headquarters expenses.  The following tables summarize the related party transactions with VAST LLC (thousands of dollars):

	Three Months Ended
	September 28, 2014		September 29, 2013
Sales to VAST LLC	$	114	$	40
Sales to NextLock LLC	$	5	$	-
Purchases from VAST LLC	$	39	$	115
Expenses Charged to VAST LLC	$	159	$	240
Expenses Charged from VAST LLC	$	483	$	282

NextLock LLC

Summarized Statements of Operations

The following are summarized statements of operations for NextLock LLC (thousands of dollars):

	Three Months Ended
	September 28, 2014			September 29, 2013
Engineering, Selling and Administrative Expenses	$	364		$	116
Loss From Operations		(364	)		(116	)
Net Loss	$	(364	)	$	(116	)
STRATTEC’s Equity Loss of NextLock LLC	$	(186	)	$	(59	)