Equity Earnings (Loss) of Joint Ventures

9 Months Ended

Mar. 27, 2022

Equity Method Investments And Joint Ventures [Abstract]

Equity Earnings (Loss) of Joint Ventures

As discussed above under Investment in Joint Ventures and Majority Owned Subsidiaries, we hold a one-third interest in a joint venture company, VAST LLC. Our investment in VAST LLC, for which we exercise significant influence but do not control and is not a variable interest entity of STRATTEC, is accounted for using the equity method. The results of the VAST LLC foreign subsidiaries and joint venture are reported on a one-month lag basis. We assess the impairment of equity investments whenever events or changes in circumstances indicate that a decrease in value of the investment has occurred that is other than temporary.

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

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

	Three Months Ended						Nine Months Ended
	March 27, 2022			March 28, 2021			March 27, 2022			March 28, 2021
Net Sales	$	55,281		$	51,748		$	153,454		$	160,511
Cost of Goods Sold		46,418			44,155			127,022			131,345
Gross Profit		8,863			7,593			26,432			29,166
Engineering, Selling and Administrative Expenses		7,575			7,684			24,075			22,936
Income (Loss) From Operations		1,288			(91	)		2,357			6,230
Other Income, net		692			327			1,085			1,363
Income before Provision for Income Taxes		1,980			236			3,442			7,593
Provision for Income Taxes		239			348			614			2,011
Net Income (Loss)	$	1,741		$	(112	)	$	2,828		$	5,582
STRATTEC's Share of VAST LLC Net Income (Loss)		581			(37	)		943			1,861
Intercompany Profit Elimination		(4	)		(19	)		(2	)		(17	)
STRATTEC’s Equity Earnings (Loss) of VAST LLC	$	577		$	(56	)	$	941		$	1,844

We have 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 to us from VAST LLC for general headquarters expenses. The following table summarizes these related party transactions with VAST LLC for the periods indicated below (in thousands):

	Three Months Ended				Nine Months Ended
	March 27, 2022		March 28, 2021		March 27, 2022		March 28, 2021
Sales to VAST LLC	$	316	$	1,059	$	1,533	$	3,273
Purchases from VAST LLC	$	6	$	139	$	157	$	340
Expenses Charged to VAST LLC	$	134	$	265	$	512	$	1,361
Expenses Charged from VAST LLC	$	151	$	302	$	593	$	953