Equity Earnings of Joint Ventures

12 Months Ended

Jul. 02, 2023

Equity Method Investments and Joint Ventures [Abstract]

EQUITY EARNINGS OF JOINT VENTURES

As discussed above within Investment in Joint Ventures and Majority Owned Subsidiaries, effective June 30, 2023, we sold our one-third ownership interest in VAST LLC, for which we exercised significant influence but did not control. VAST LLC was not a variable interest entity of STRATTEC. Until the effective date of the sale, our investment in VAST LLC was accounted for using the equity method. The results of the VAST LLC foreign subsidiaries and joint venture were reported on a one-month lag basis.

During the quarter ended March 27, 2022, VAST China experienced a fire at their Taicang facility. As a result, certain door handle and painting operations were subsequently transferred to their new Jingzhou facility and to another supplier. The transfer of production negatively impacted VAST China’s fiscal 2022 profitability.

As a result of the Restructuring Agreement, STRATTEC no longer holds an ownership interest in VAST LLC as of July 2, 2023. The following are summarized statements of operations and summarized balance sheet data for VAST LLC (thousands of dollars):


	Years Ended
	July 2, 2023			July 3, 2022
Net sales	$	207,362		$	191,642
Cost of goods sold		171,851			160,886
Gross profit		35,511			30,756
Engineering, selling and administrative expense		31,302			31,887
Income (Loss) from operations		4,209			(1,131	)
Other income, net		2,304			902
Loss on disposal of investment in Brazil		(1,592	)		—
Income (Loss) before provision for income taxes		4,921			(229	)
Provision (benefit) for income taxes		672			(754	)
Net income	$	4,249		$	525
STRATTEC’s share of VAST LLC net
income	$	1,416		$	175
Intercompany profit eliminations		33			2
STRATTEC’s equity earnings of VAST LLC prior to loss on sale		1,449			177
Gain on sale of VAST LLC		110			—
STRATTEC's equity earnings of VAST LLC	$	1,559		$	177


	July 2, 2023		July 3, 2022
Cash and cash equivalents	$	—	$	21,694
Receivables, net		—		39,467
Inventories, net		—		26,881
Other current assets		—		14,574
Total current assets		—		102,616
Property, plant and equipment, net		—		70,096
Other long-term assets		—		16,686
Total assets	$	—	$	189,398
Current debt	$	—	$	388
Other current liabilities		—		86,364
Long-term debt		—		20,079
Other long-term liabilities		—		2,258
Total liabilities	$	—	$	109,089
Net assets	$	—	$	80,309
STRATTEC’s share of VAST LLC net assets	$	—	$	26,770

We had sales of component parts to VAST LLC, purchases of component parts from VAST LLC, expenses charged to VAST LLC for engineering and accounting services and expenses charged from VAST LLC to STRATTEC for general headquarter expenses. As a result of the Restructuring Agreement, STRATTEC no longer holds an ownership interest in VAST LLC as of July, 2, 2023. The following tables summarize the related party transactions with VAST LLC for the periods indicated (thousands of dollars):


	Years Ended
	July 2, 2023		July 3, 2022
Sales to VAST LLC	$	64	$	1,805
Purchases from VAST LLC	$	49	$	169
Expenses charged to VAST LLC	$	382	$	593
Expenses charged from VAST LLC	$	761	$	784


	July 2, 2023		July 3, 2022
Accounts receivable from VAST LLC	$	—	$	63
Accounts payable to VAST LLC	$	—	$	23