STRATTEC SECURITY CORP - 10-Q Quarterly Report

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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 March 30, 2003

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 is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). YES X NO
--- ---

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: 3,759,570 shares outstanding as of
March 30, 2003.

STRATTEC SECURITY CORPORATION

FORM 10-Q

March 30, 2003

INDEX

2

Item 1 Financial Statements

STRATTEC SECURITY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)

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

3

STRATTEC SECURITY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)

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)

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

5

STRATTEC SECURITY CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

BASIS OF FINANCIAL STATEMENTS

STRATTEC SECURITY CORPORATION (the "Company") designs, develops,
manufactures and markets mechanical locks, electro-mechanical locks and related
access-control products for North American and global automotive manufacturers.
The accompanying condensed unaudited financial statements reflect the
consolidated results of the Company, its wholly owned Mexican subsidiaries, and
its foreign sales corporation.

In the opinion of management, the accompanying unaudited financial
statements contain all adjustments, which are of a normal recurring nature,
necessary to present fairly the financial position as of March 30, 2003, and the
results of operations and cash flows for the three and nine month periods then
ended. All significant intercompany transactions have been eliminated. Interim
financial results are not necessarily indicative of operating results for an
entire year.

These financial statements and notes thereto should be read in conjunction
with the financial statements and notes thereto included in the Company's 2002
Annual Report.

EARNINGS PER SHARE (EPS)

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

Options to purchase 74,160 shares of common stock at a price of $58.59 per
share were outstanding as of March 30, 2003, but were not included in the
computation of diluted EPS because the options' exercise prices were greater
than the average market price of the common shares. Options to purchase 226,128
shares of common stock at prices ranging from $43.07 to $45.79 per share were
outstanding as of March 31, 2002, but were not included in the computation of
diluted EPS because the options' exercise prices were greater than the average
market price of the common shares.

COMPREHENSIVE INCOME

The following table presents the Company's comprehensive income (in
thousands):

6

STOCK BASED COMPENSATION

The Company accounts for its stock-based compensation plans in accordance
with APB Opinion No. 25 and related interpretations as permitted by Statement of
Financial Accounting Standard (SFAS) No. 123, "Accounting for Stock-Based
Compensation" and SFAS No. 148, "Accounting for Stock-Based Compensation -
Transition and Disclosure." Accordingly, no compensation cost related to these
plans was charged against earnings during 2003 and 2002. Had compensation cost
for these plans been determined consistent with SFAS No. 123, the pro forma
impact on earnings per share would have been as follows (in thousands):

7

Item 2
STRATTEC SECURITY CORPORATION AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The following Management's Discussion and Analysis should be read in
conjunction with the Company's accompanying Financial Statements and Notes
thereto and the Company's 2002 Annual Report. Unless otherwise indicated, all
references to years refer to fiscal years.

Analysis of Results of Operations

Three months ended March 30, 2003 compared to the three months ended March 31,
2002

Net sales for the three months ended March 30, 2003, were $49.9 million
compared to net sales of $51.7 million for the three months ended March 31,
2002. Overall sales to the Company's largest customers decreased in the current
quarter compared to the prior year quarter levels. Production sales volumes
increased approximately 5 percent over the prior year quarter. However, sales
were impacted by the elimination of certain mechanical and electronic content
within the Company's lockset products to help reduce vehicle cost and by
pre-programmed price reductions. As a result, sales to General Motors
Corporation decreased to $15.0 million from $15.7 million in the prior year
quarter and sales to DaimlerChrysler Corporation decreased to $8.6 million from
$9.6 million. Sales to Ford Motor Company and Mitsubishi Motor Manufacturing of
America, Inc. were flat during the current quarter at $10.6 million and $2.4
million, respectively. Sales to Delphi Corporation increased slightly to $7.6
million compared to $7.4 million in the prior year quarter.

Gross profit as a percentage of net sales was 23.4 percent in the current
quarter compared to 22.0 percent in the prior year quarter. The improvement is
primarily due to the Company's on-going cost reduction initiatives at its
Milwaukee, Wisconsin and Juarez, Mexico facilities along with a favorable
Mexican peso to U.S. dollar exchange rate.

Engineering, selling and administrative expenses were $5.0 million in the
current quarter, approximately the same level as in the prior year quarter.

Income from operations was $6.6 million in the current quarter compared to
$6.4 million in the prior year quarter. The increase is primarily the result of
the improved gross profit margin as discussed above.

The effective income tax rate for the current quarter was 37.0 percent,
which is consistent with the prior year quarter. The overall effective tax rate
differs from the federal statutory tax rate primarily due to the effects of
state income taxes.

Nine months ended March 30, 2003 compared to the nine months ended March 31,
2002

Net sales for the nine months ended March 30, 2003, were $146.5 million
compared to net sales of $150.3 million for the nine months ended March 31,
2002. Overall sales to the Company's largest customers decreased in the current
year period compared to the prior year period levels. Production sales volumes
increased approximately 6 percent over the prior year period. However, sales
were impacted by the elimination of certain mechanical and electronic content
within the Company's lockset products to help reduce vehicle cost and by
pre-programmed price reductions. In addition, the prior year period sales
included the after-effects of a June 2001 strike at the Company's Milwaukee
facility, which resulted in approximately $1.5 million of past due June orders
being shipped during the first quarter of 2002 in addition to regular quarterly
orders. The change in sales

8

to the Company's largest customers in the current year period compared to the
prior year period include General Motors Corporation at $45.5 million compared
to $46.4 million, Delphi Corporation at $21.8 million compared to $21.3 million,
DaimlerChrysler Corporation at $25.1 million compared to $27.4 million, Ford
Motor Company at $30.0 million compared to $30.2 million and Mitsubishi Motor
Manufacturing of America, Inc. at $7.0 million compared to $7.3 million.

Gross profit as a percentage of net sales was 23.2 percent in the current
year period compared to 21.0 percent in the prior year period. The improvement
is primarily due to the Company's on-going cost reduction initiatives at its
Milwaukee, Wisconsin and Juarez, Mexico facilities along with a favorable
Mexican peso to U.S. dollar exchange rate. In addition, during the early part of
the prior year period, additional costs were incurred to expedite past due
orders and rebuild inventories depleted during the June 2001 strike at the
Milwaukee facility that reduced gross profit margins.

Engineering, selling and administrative expenses were relatively
consistent between periods and totaled $14.2 million in the nine months ended
March 30, 2003, compared to $14.6 million in the prior year period.

Income from operations was $19.7 million in the nine months ended March
30, 2003, compared to $17.0 million in the prior year period. The increase is
primarily the result of the improved gross profit margin discussed above.

The effective income tax rate for the current year period was 37.0
percent, which is consistent with the prior year period. The overall effective
rate differs from the federal statutory tax rate primarily due to the effects of
state income taxes.

Liquidity and Capital Resources

The Company generated cash from operating activities of $12.9 million in
the nine months ended March 30, 2003. In the nine months ended March 31, 2002,
the Company generated $19.2 million in cash from operating activities. The
decreased generation of cash between periods is primarily due to a $5 million
contribution to the Company's pension fund in the current period compared to a
$1.6 million contribution in the prior year period. The change in cash between
periods was also impacted by the timing of the payment of accounts payable,
which is based on normal payment terms as well as financial results, which
impact the bonus amounts paid to eligible associates.

The Company's investment in accounts receivable of $28.2 million at March
30, 2003 is consistent with the June 30, 2002 balance of $27.9 million.
Inventories increased by approximately $2.8 million March 30, 2003, as compared
to June 30, 2002 in support of increased customer production levels.

The Company made an additional investment in joint ventures of $876,000
during the nine months ended March 30, 2003, in order to support an additional
capital contribution due to WITTE-STRATTEC China as well as ongoing operating
expenses of WITTE-STRATTEC LLC.

Capital expenditures during the nine months ended March 30, 2003, were
$2.7 million compared to $3.8 million during the nine months ended March 31,
2002. The Company anticipates that capital expenditures will be approximately $4
million to $5 million in 2003, primarily in support of requirements for new
product programs and the upgrade and replacement of existing equipment.

The Board of Directors of the Company has authorized a stock repurchase
program to buy back up to 3,039,395 outstanding shares. A total of 2,785,192
shares have been repurchased as of March 30, 2003, at a cost of approximately
$96.9 million. During the quarter ended March 30, 2003, 33,000 shares were
repurchased at a cost of approximately $1.6 million. Additional repurchases may
occur from time to time. Funding for the repurchases was provided by cash flow
from operations.

9

The Company has a $20.0 million unsecured, revolving credit facility (the
"Credit Facility"), which expires October 31, 2003. The Company previously had
an additional $30 million under this Credit Facility, which expired October 31,
2002. The Company is currently in the process of negotiating a new credit
facility. There were no outstanding borrowings under the Credit Facility at
March 30, 2003. Interest on borrowings under the Credit Facility are at varying
rates based, at the Company's option, on the London Interbank offering rate, the
Federal Funds Rate, or the bank's prime rate. The Credit Facility contains
various restrictive covenants including covenants that require the Company to
maintain minimum levels for certain financial ratios such as tangible net worth,
ratio of indebtedness to tangible net worth and fixed charge coverage. The
Company believes that the Credit Facility is adequate, along with cash flow from
operations, to meet its anticipated capital expenditure, working capital and
operating expenditure requirements.

The Company has not been significantly impacted by inflationary pressures
over the last several years, except for fluctuations in the market price of
zinc, which the Company uses at a rate of approximately 1 million pounds per
month, and inflation in Mexico, which impacts the U.S. dollar costs of the
Mexican assembly operations.

Mexican Operations

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

Joint Ventures

On November 28, 2000, the Company signed certain alliance agreements with
E. WITTE Verwaltungsgesellschaft GMBH, and its operating unit, WITTE-Velbert
GmbH & Co. KG ("WITTE"). WITTE, of Velbert, Germany, is a privately held, QS
9000 and VDA 6.1 certified automotive supplier with sales of 200 million EUROs
in their last fiscal year. WITTE designs, manufactures and markets components
including locks and keys, hood latches, rear compartment latches, seat back
latches, door handles and specialty fasteners. WITTE's primary market for these
products has been Europe. The WITTE-STRATTEC alliance provides a set of
cross-licensing agreements for the manufacture, distribution and sale of WITTE
products by the Company in North America, and the manufacture, distribution and
sale of the Company's products by WITTE in Europe. Additionally, a joint venture
company ("WITTE-STRATTEC LLC") in which each company holds a 50 percent interest
has been established to seek opportunities to manufacture and sell both
companies' products in other areas of the world outside of North America and
Europe.

In November 2001, WITTE-STRATTEC do Brasil, a joint venture formed between
WITTE-STRATTEC LLC and Ifer Estamparia e Ferramentaria Ltda. was formed to
service customers in South America. On March 1, 2002, WITTE-STRATTEC LLC
completed the formation of WITTE-STRATTEC China, a joint venture between
WITTE-STRATTEC LLC and a unit of Elitech Technology Co. Ltd. of Taiwan.
WITTE-STRATTEC China, located in Fuzhou, People's Republic of China, will be the
base of operations to service the Company's automotive customers in the Asian
market.

The joint ventures are accounted for on the equity basis of accounting.
The activities related to the joint ventures did not have a material impact on
the March 30, 2003 or March 31, 2002 financial statements.

Critical Accounting Policies and Estimates

The Company believes the following represents its critical accounting policies:

10

Pension and Post-Retirement Health Benefits - The determination of the
obligation and expense for pension and post-retirement health benefits is
dependent on the selection of certain assumptions used by actuaries in
calculating such amounts. Those assumptions include, among others, the discount
rate, expected long term rate of return on plan assets and rates of increase in
compensation and health care costs. In accordance with accounting principles
generally accepted in the United States of America, actual results that differ
from these assumptions are accumulated and amortized over future periods. While
the Company believes that the assumptions used are appropriate, significant
differences in the actual experience or significant changes in the assumptions
may materially affect the pension and post-retirement health obligations and
future expense.

Other Reserves - The Company has reserves such as an environmental
reserve, returns reserve, incurred but not reported claim reserves for
self-insured health plans, and a repair and maintenance supply parts reserve.
These reserves require the use of estimates and judgement with regard to risk
exposure, ultimate liability, and net realizable value. The Company believes
such reserves are estimated using consistent and appropriate methods. However,
changes to the assumptions could materially affect the recorded reserves.

Recently Issued Accounting Pronouncements

In December 2002, the Financial Accounting Standards Board authorized the
issuance of SFAS No. 148, "Accounting for Stock-Based Compensation." This
statement amends SFAS No. 123, to provide alternative methods of transition for
a voluntary change to the fair value based method of accounting for stock-based
employee compensation. In addition, SFAS No. 148 amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures in both annual and
interim financial statements about the method of accounting for stock-based
employee compensation and the effect of the method used on reported results. The
Company does not intend to adopt the recognition provisions of SFAS No. 123, as
amended by SFAS No. 148.

In November 2002, the Financial Accounting Standards Board authorized the
issuance of Interpretation No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, including Indirect Guarantees of Indebtedness of
Others." Interpretation No. 45, the accounting under which is effective for
guarantees issued or modified after December 31, 2002, also requires additional
disclosure. The Company has not yet completed the evaluation of the application
of the accounting provisions of these new rules.

Risk Factors

The Company understands it is subject to the following risk factors based on its
operations and the nature of the automotive industry in which it operates:

Loss of Significant Customers or Vehicle Content - Sales to General Motors
Corporation, Ford Motor Company, DaimlerChrysler Corporation and Delphi
Corporation represent approximately 85 percent of the Company's annual sales.
The contracts with these customers provide for supplying the customer's
requirements for a particular model. The contracts do not specify a specific
quantity of parts. The contracts typically cover the life of a model, which
averages approximately 4 to 5 years. Certain customer models may also be market
tested annually. Therefore, the loss of any one of these customers, the loss of
a contract for a specific vehicle model, reduction in vehicle content,
technological changes or a significant reduction in demand for certain key
models could have a material adverse effect on the Company's existing and future
revenues and net income.

Cost Reduction - There is continuing pressure from the Company's major
customers to reduce costs, including the cost of components purchased from
outside suppliers. If the Company is unable to generate sufficient production
cost savings in the future to offset programmed price reductions, the Company's
gross margin and profitability would be adversely affected.

Cyclicality and Seasonality in the Automotive Market - The automotive
market is highly cyclical and is dependent on consumer spending and to a certain
extent on customer sales incentives. Economic factors adversely affecting
consumer demand for automobiles and automotive production could adversely impact
the

11

Company's revenues and net income. The Company typically experiences decreased
revenue and operating income during the first fiscal quarter of each year due to
the impact of scheduled customer plant shut-downs in July and new model
changeovers.

Foreign Operations - As discussed under Joint Ventures, the Company has
joint venture investments in both Brazil and China. These operations are
currently not material. However, as these operations expand, their success will
depend, in part, on the ability to anticipate and effectively manage certain
risks inherent in international operations including: enforcing agreements and
collecting receivables through certain foreign legal systems, payment cycles of
foreign customers, compliance with foreign tax laws, general economic and
political conditions in these countries, and compliance with foreign laws and
regulations.

Currency Exchange Rate Fluctuations - The Company incurs a portion of its
expenses in Mexican pesos. Exchange rate fluctuations between the U.S. dollar
and the Mexican peso could have an adverse effect on financial results.

Sources of and Fluctuations in Market Prices of Raw Materials - The
primary raw materials used by the Company are high-grade zinc, brass, steel and
plastic resins. These materials are generally available from a number of
suppliers, but the Company has chosen to concentrate its sourcing with one
primary vendor for each commodity. The Company believes its sources of raw
materials are reliable and adequate for its needs. However, the development of
future sourcing issues related to the availability of these materials as well as
significant fluctuations in the market prices of these materials may have an
adverse affect on the Company's financial results.

Disruptions Due to Work Stoppages and Other Labor Matters - The Company's
major customers and many of their suppliers have unionized work forces. Work
stoppages or slow-downs experienced by the Company's customers or their
suppliers could result in slow-downs or closures of assembly plants where the
Company's products are included in assembled vehicles. For example, strikes by
the United Auto Workers led to a shut-down of most of General Motors
Corporation's North American assembly plants in June and July of 1998. A
material work stoppage experienced by one or more of the Company's customers
could have an adverse effect on the Company's business and its financial
results. In addition, all production associates at the Company's Milwaukee
facility are unionized. A 16-day strike by these associates in June 2001
resulted in increased costs by the Company as all salaried associates worked
with additional outside resources to produce the components necessary to meet
customer requirements. The current contract with the unionized associates is
effective through June 26, 2005. The Company may encounter further labor
disruption after the effective date of this contract and may also encounter
unionization efforts in its other plants or other types of labor conflicts, any
of which could have an adverse effect on the Company's business and its
financial results.

Environmental and Safety Regulations - The Company is subject to federal,
state, local and foreign laws and other legal requirements related to the
generation, storage, transport, treatment and disposal of materials as a result
of its manufacturing and assembly operations. These laws include the Resource
Conservation and Recovery Act (as amended), the Clean Air Act (as amended), and
the Comprehensive Environmental Response, Compensation and Liability Act (as
amended). The Company has an environmental management system that is ISO-14001
certified. The Company believes that its existing environmental management
system is adequate and it has no current plans for substantial capital
expenditures in the environmental area. An environmental reserve was established
in 1995 for estimated costs to remediate a site at the Company's Milwaukee
facility that was contaminated by a former above-ground solvent storage tank,
located on the east side of the facility. The contamination occurred in 1985.
This is being monitored in accordance with federal, state and local
requirements. The Company does not currently anticipate any materially adverse
impact on its results of operations, financial condition or competitive position
as a result of compliance with federal, state, local and foreign environmental
laws or other legal requirements. However, risk of environmental liability and
charges associated with maintaining compliance with environmental laws is
inherent in the nature of the Company's business and there is no assurance that
material liabilities or charges could not arise.

12

Highly Competitive Automotive Supply Industry - The automotive component
supply industry is highly competitive. Some of the Company's competitors are
companies, or divisions or subsidiaries of companies, that are larger than the
Company and have greater financial and other resources. The Company's products
may not be able to compete successfully with the products of these other
companies, which could result in loss of customers and, as a result, decreased
revenues and profitability. In addition, the Company's competitive position in
the North American automotive component supply industry could be adversely
affected in the event that it is unsuccessful in making strategic acquisitions,
alliances or establishing joint ventures that would enable it to expand
globally. The Company principally competes for new business at the beginning of
the development of new models and upon the redesign of existing models by its
major customers. New model development generally begins two to five years prior
to the marketing of such new models to the public. The failure to obtain new
business on new models or to retain or increase business on redesigned existing
models could adversely affect the Company's business and financial results. In
addition, as a result of relatively long lead times for many of its components,
it may be difficult in the short-term for the Company to obtain new sales to
replace any unexpected decline in the sale of existing products. The Company may
incur significant product development expense in preparing to meet anticipated
customer requirements which may not be recovered.

Program Volume and Pricing Fluctuations - The Company incurs costs and
makes capital expenditures for new program awards based upon certain estimates
of production volumes over the anticipated program life for certain vehicles.
While the Company attempts to establish the price of its products for variances
in production volumes, if the actual production of certain vehicle models is
significantly less than planned, the Company's revenues and net income may be
adversely affected. The Company cannot predict its customers' demands for the
products it supplies either in the aggregate or for particular reporting
periods.

Investments in Customer Program Specific Assets - The Company makes
investments in machinery and equipment used exclusively to manufacture products
for specific customer programs. This machinery and equipment is capitalized and
depreciated over the expected useful life of each respective asset. Therefore,
the loss of any one of the Company's major customers or specific vehicle models
could result in impairment in the value of these assets and have a material
adverse effect on the Company's financial results.

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

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

13

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 3 Quantitative and Qualitative Disclosures About Market Risk

The Company does not utilize financial instruments for trading purposes
and holds no derivative financial instruments which would expose the Company to
significant market risk. The Company has not had outstanding borrowings since
December 1997. The Company has been in an investment position since this time
and expects to remain in an investment position for the foreseeable future.
There is therefore no significant exposure to market risk for changes in
interest rates. The Company is subject to foreign currency exchange rate
exposure related to the Mexican assembly operations.

Item 4 Controls and Procedures

Within the 90 days prior to the date of this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Company's management, including the Company's chief executive officer and chief
financial officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures (as defined in Rules 13a-14 and
15d-14 of the Securities Exchange Act of 1934, as amended). Based upon that
evaluation, the chief executive officer and chief financial officer concluded
that the Company's disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company required to be
included in the Company's periodic SEC filings.

There have been no significant changes in the Company's internal controls
or in other factors that could significantly affect internal controls subsequent
to the date the Company carried out its evaluation.

14

Part II

Other Information

Item 1 Legal Proceedings - None

Item 2 Changes in Securities and Use of Proceeds - None

Item 3 Defaults Upon Senior Securities - None

Item 4 Submission of Matters to a Vote of Security Holders - None

Item 5 Other Information - None

Item 6 Exhibits and Reports on Form 8-K

(a) Exhibits

3.1* Amended and Restated Articles of Incorporation of the Company

3.2* By-Laws of the Company

4.1* Rights Agreement dated as of February 6, 1995 between the
Company and Firstar Trust Company, as Rights Agent

99.1 Certification Pursuant to 18 U.S.C. Section 1350

(b) Reports on Form 8-K - None

- ----------
* Incorporated by reference to Amendment No. 2 to the Company's Form 10 filed on
February 6, 1995.

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: May 6, 2003 By /s/ Patrick J. Hansen
--------------------------------

Patrick J. Hansen
Vice President,
Chief Financial Officer,
Treasurer and Secretary
(Principal Accounting and Financial Officer)

15

CERTIFICATION

I, Harold M. Stratton II, certify that:

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

2. Based on my knowledge, this quarterly 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 quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly 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-14 and 15d-14) for the registrant and
we have:

(a) designed such disclosure controls and procedures 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
quarterly report is being prepared;

(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and

(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

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

(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and

6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.

Date: May 6, 2003

/s/ Harold M. Stratton II
-------------------------------------------
Harold M. Stratton II,
Chairman and Chief Executive Officer

16

CERTIFICATION

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 quarterly 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 quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly 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-14 and 15d-14) for the registrant and
we have:

(a) designed such disclosure controls and procedures 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
quarterly report is being prepared;

(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and

(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

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

(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and

6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.

Date: May 6, 2003

/s/ Patrick J. Hansen
-----------------------------------
Patrick J. Hansen,
Chief Financial Officer

17

INDEX TO EXHIBITS

- ----------
* Incorporated by reference to Amendment No. 2 to the Company's Form 10 filed on
February 6, 1995.