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Strattec Issues Warranty Warning, Corrects Two Decade Old Accounting Error
Recently discovered pension liability has remained off-balance sheet since 2001.
February 9, 2023
Strattec Security (STRT), a maker of automotive access control products, says automakers have recently begun demanding higher warranty cost sharing arrangements from suppliers. The alleged demands do not seem coincidental in Strattec’s case. The company— which sells to GM, Ford, and Stellantis— expects future warranty expense to rise as:
“During the quarter ended January 1, 2023, we received notice that a product we shipped failed to perform as the customer expected.”
The warranty liability on the balance sheet actually fell 4.9% YoY. While suggesting the provision may increase, Strattec is not providing investors an estimate of the damage.
Separately, the company also surfaced a pension liability wrongly kept off the books for what appears to be decades. The death benefit— impacting salaried and hourly employees retiring prior to 2001 and 2010, respectively— wasn’t discovered until December 2022.
Revised financial statements show slight reductions in Strattec’s retained earnings, shareholder equity and net income.
The errors, according to Strattec, are not material.
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