STRATTEC SECURITY CORP Leases Disclosure
NOTE 5. LEASES
As of June 29, 2025, the Company has one operating lease for its El Paso, Texas finished goods and service parts distribution warehouse. Operating lease expense totaled $951,000 for the year ended June 29, 2025 and $989,000 for the year ended June 30, 2024. The operating lease asset and obligation related to our operating lease included in the accompanying consolidated balance sheets are presented below (in thousands):
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June 29, 2025 |
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June 30, 2024 |
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Right-of-use asset: |
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$ |
2,942 |
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$ |
3,801 |
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Lease liability: |
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$ |
808 |
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$ |
744 |
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|
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2,478 |
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|
3,390 |
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|
|
|
$ |
3,286 |
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|
$ |
4,134 |
|
Cash flow information related to the operating lease is shown below (in thousands):
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Years Ended |
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June 29, 2025 |
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June 30, 2024 |
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Operating Cash Flows: |
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Cash paid related to operating lease obligation |
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$ |
941 |
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$ |
769 |
|
The weighted average remaining lease term and discount rate for our operating lease are shown below:
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June 29, 2025 |
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June 30, 2024 |
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Weighted average remaining lease term, (in years) |
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3.5 |
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|
4.5 |
|
Weighted average discount rate |
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|
6.2 |
% |
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|
6.2 |
% |
Future minimum lease payments, by fiscal year, including options to extend that are reasonably certain to be exercised, under our non-cancelable lease are as follows as of June 29, 2025 (in thousands):
2026 |
|
$ |
988 |
|
2027 |
|
|
1,037 |
|
2028 |
|
|
1,089 |
|
2029 |
|
|
558 |
|
Thereafter |
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|
— |
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Total future minimum lease payments |
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|
3,672 |
|
Less: imputed interest |
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|
(386 |
) |
Total lease obligations |
|
$ |
3,286 |
|
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.