Equity Earnings of Joint Ventures

6 Months Ended

Dec. 28, 2014

Equity Method Investments And Joint Ventures [Abstract]

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					Six Months Ended
	December 28, 2014		December 29, 2013				December 28, 2014		December 29, 2013
Net Sales	$	35,663	$	27,135			$	66,661	$	51,664
Cost of Goods Sold		30,469		22,943				56,552		43,358
Gross Profit		5,194		4,192				10,109		8,306
Engineering, Selling and Administrative Expenses		4,590		2,791				8,788		6,281
Income From Operations		604		1,401				1,321		2,025
Other Income (Expense), net		183		(19	)			656		(21	)
Income before Provision for Income taxes		787		1,382				1,977		2,004
Provision for (Benefit from) Income Taxes		376		219				435		(235	)
Net Income	$	411	$	1,163			$	1,542	$	2,239
STRATTEC’s Share of VAST LLC Net Income	$	137	$	387				514	$	746
Intercompany Profit Elimination		5		2				4		(4	)
STRATTEC’s Equity Earnings of VAST LLC	$	142	$	389			$	518	$	742

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 during the second half of our 2015 fiscal year through this new joint venture. Our investment in NextLock LLC, 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						Six Months Ended
	December 28, 2014			December 29, 2013			December 28, 2014			December 29, 2013
Engineering, Selling and Administrative Expenses	$	516		$	181		$	880		$	297
Loss From Operations		(516	)		(181	)		(880	)		(297	)
Net Loss	$	(516	)	$	(181	)	$	(880	)	$	(297	)
STRATTEC’s Equity Loss of NextLock LLC	$	(263	)	$	(92	)	$	(449	)	$	(151	)

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 these related party transactions with VAST LLC and NextLock LLC for the periods indicated below (thousands of dollars):

	Three Months Ended				Six Months Ended
	December 28, 2014		December 29, 2013		December 28, 2014		December 29, 2013
Sales to VAST LLC	$	657	$	55	$	771	$	95
Sales to NextLock LLC	$	27	$	-	$	32	$	-
Purchases from VAST LLC	$	41	$	43	$	80	$	158
Expenses Charged to VAST LLC	$	245	$	159	$	404	$	399
Expenses Charged from VAST LLC	$	457	$	303	$	940	$	585

- Definition

The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.

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