SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended September 28, 1996
[ ] 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 0-7087
ASTRONICS CORPORATION
_________________________________________________________________
(Exact Name of Registrant as Specified in Its Charter)
New York 16-0959303
_________________________________________________________________
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1801 Elmwood Avenue, Buffalo, New York 14207
_________________________________________________________________
(Address of Principal Executive Office) (Zip Code)
716-447-9013
_________________________________________________________________
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(g) of the Act:
$.01 par value Common Stock, $.01 par value Class B Stock
_________________________________________________________________
(Title of Class)
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 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 ___
As of September 28, 1996, 4,083,320 shares of $.01 par value
common stock and 743,853 shares of $.01 par value Class B common
stock were outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
____________________
ASTRONICS CORPORATION
Consolidated Balance Sheet
September 28, 1996
With Comparative Figures for December 31, 1995
ASSETS
______
(Dollars in Thousands)
September 28, 1996 December 31,
(Unaudited) 1995
__________________ ____________
Current Assets:
Cash $ 480 $ 772
Accounts receivable 4,546 4,874
Inventories:
Finished goods 2,515 2,454
Work in process 809 1,081
Raw material 2,153 2,765
Prepaid expenses 558 646
_______ _______
Total current assets 11,061 12,592
Property, Plant and Equipment 31,322 31,134
Less accumulated depreciation
and amortization 13,693 14,858
_______ _______
Net property, plant
and equipment 17,629 16,276
Other Assets 1,964 1,947
_______ _______
$30,654 $30,815
======= =======
See notes to financial statements.
<PAGE>
ASTRONICS CORPORATION
Consolidated Balance Sheet
September 28, 1996
With Comparative Figures for December 31, 1995
LIABILITIES AND SHAREHOLDERS' EQUITY
____________________________________
(Dollars in Thousands)
September 28, 1996 December 31,
(Unaudited) 1995
___________________ ____________
Current Liabilities:
Current maturities of
long-term debt $ 2,240 $ 2,266
Accounts payable 2,697 2,524
Accrued expenses 1,681 1,449
Income taxes 236 252
_______ _______
Total current liabilities 6,854 6,491
Long-Term Debt 7,908 9,713
Long-Term Obligations under
Capital Leases 1,709 2,010
Deferred Income Taxes 970 875
Shareholders' Equity:
Common stock, $.01 par value
Authorized 10,000,000 shares,
issued 4,274,241 in 1996,
3,301,751 in 1995 43 33
Class B common stock, $.01 par value
Authorized 5,000,000 shares,
issued 743,853 in 1996,
814,908 in 1995 7 8
Additional paid-in capital 2,114 2,046
Retained earnings 11,857 10,447
_______ _______
14,021 12,534
Less shares in Treasury, at cost 808 808
_______ _______
Total shareholders' equity 13,213 11,726
_______ _______
$30,654 $30,815
======= =======
See notes to financial statements.
<PAGE>
ASTRONICS CORPORATION
Consolidated Statement of Income and Retained Earnings
Period Ended September 28, 1996
With Comparative Figures for 1995
(Dollars in Thousands)
(Unaudited)
___________
NINE MONTHS THREE MONTHS
___________ ____________
1996 1995 1996 1995
____ ____ ____ ____
Net Sales $28,347 $19,716 $9,095 $6,266
Costs and Expenses:
Cost of products sold 20,427 13,791 6,544 4,376
Selling, general and
administrative
expenses 5,131 4,073 1,305 1,045
Interest expenses, net
of interest earned of
$14 in 1996 and $97
in 1995 657 319 203 105
_______ ______ ______ ______
Total costs and
expenses 26,215 18,183 8,052 5,526
_______ ______ ______ ______
Income before provision
for taxes on income 2,132 1,533 1,043 740
Provision for taxes
on income 711 618 365 273
_______ ______ ______ ______
Net Income 1,421 915 678 467
====== ======
Retained Earnings:
January 1 10,447 8,687
Less stock
distribution (11) --
_______ ______
September 28 $11,857 $9,602
======= ======
Income per Common Share $ .27 $ .19 $ .13 $ .10
======= ====== ====== =======
See notes to financial statements.
<PAGE>
ASTRONICS CORPORATION
Consolidated Statement of Cash Flows
Six Months Ended September 28, 1996
With Comparative Figures for 1995
(Dollars in Thousands)
(Unaudited)
1996 1995
__________ __________
Cash Flows from Operating Activities:
Net income $ 1,421 $ 915
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,901 1,986
Provision for doubtful accounts 65 229
Provision for deferred taxes 95 (278)
Cash flows from changes in operating
assets and liabilities:
Accounts receivable 263 (67)
Inventories 822 (186)
Prepaid expenses 88 (953)
Accounts payable 173 96
Accrued expenses 232 (43)
Income taxes payable (16) (256)
___________ __________
Net Cash provided (used) by
Operating Activities: $ 5,044 $ 1,443
___________ __________
Cash Flows from Investing Activities:
Proceeds from sale of assets 219 10
Change in other assets (201) (19)
Capital expenditures (3,289) (2,705)
___________ __________
Net Cash provided (used) by
Investing Activities $ (3,271) $ (2,714)
Cash Flows from Financing Activities:
Principal payments on long-term
debt and capital lease obligations (2,131) (1,670)
Proceeds from issuance of stock 68 160
Fractional shares on distribution (2) --
Purchase of stock for Treasury -- (444)
___________ _________
Net Cash provided (used) by
Financing Activities $ (2,065) $ (1,954)
___________ _________
Net increase (decrease) in Cash
and Cash Equivalents (292) (3,225)
Cash and Cash Equivalents at
Beginning of Year 772 3,520
<PAGE>
Cash and Cash Equivalents at
September 28 $ 480 $ 295
========== =========
Disclosure of cash payments for:
Interest $ 687 $ 426
Income taxes 897 1,144
See notes to financial statements.
<PAGE>
ASTRONICS CORPORATION
Notes to Financial Statements
September 28, 1996
1) The interim financial statements are unaudited, but, in
the opinion of management, reflect all adjustments
necessary for a fair presentation of results for such
periods. The results of operations for any interim
period are not necessarily indicative of results for
the full year. These financial statements should be
read in conjunction with the financial statements and
notes thereto contained in the Company's annual report
for the year ended December 31, 1995.
2) The financial statements include the results of
operation of the acquisition of Loctite Luminescent
Systems, Inc. from November 29, 1995 forward.
3) On October 31, 1996, the Company signed an agreement
that sold its Rodgard Division's business to Hutchinson
Industries, Inc. for $2,250,000. The effective date
for this transaction was September 29, 1996.
<PAGE>
ASTRONICS CORPORATION
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following table sets forth as a percent of net sales certain
items reflected in the financial data and the percentage increase
(decrease) of such items as compared to the prior period.
Percent of Net Sales Period-to-Period
Nine Months Ended Increase
September 28, (Decrease)
1996 1995 1995-1996
Net Sales:
Electronic Systems 55.5% 41.3% 93.1%
Customized Printing and
Packaging 44.5 58.7 9.1%
______ ______ ______
100.0% 100.0% 43.8%
Cost of products sold 72.1 69.9 48.1%
Selling, general and
administrative expenses 18.1 20.7 26.0%
Interest expenses, net 2.3 1.6 105.9%
______ ______
92.5% 92.2% 44.2%
Income before provision
for income taxes 7.5% 7.8% 39.1%
Provision for taxes 2.5 3.1 15.1%
_______ ______
Net Income 5.0% 4.7% 55.3%
======= ======
SALES In November, 1995, the Company purchased the
electroluminescent business of Loctite
Corporation. The financial information from this
business is included in the 1996 financials. As a
result of the acquisition, the Electronic Systems
segment is now the largest of the two segments.
Another result of the acquisition is the smoothing
of the quarterly sales as the seasonal business of
the Specialty Packaging and Printing segment's
confectionery business is a smaller piece of the
new consolidated sales.
<PAGE>
On October 31, 1996, the Company sold its
elastomeric business, with an effective date of
September 29, 1996. Therefore, there will be no
sales from this former division in the fourth
quarter. The division had shipped $1,500,000
through nine months, and it was budgeted to
continue at that pace in the fourth quarter.
Also, the gain in sales growth will slow in this
quarter as the sales from the acquisition
mentioned above were reflected in the 1995 fourth
quarter, November 29.
New records for sales were established for the
Third Quarter and the first nine months of the
year in 1996: $9,095,000, an increase of 45.1
percent for the quarter and $28,437,000, an
increase of 43.8 percent for the nine months. A
large portion of the 1996 sales increase is in the
Electronic Systems segment reflecting the
acquisition mentioned above.
Sales within the Electronics Systems segment
increased in the electroluminescent lamp and
related products areas while sales decreased in
keyboard applications as well as in thick walled
elastomeric products. Sales to aircraft
manufacturers increased over the previous year,
while defense electronics sales decreased. The
Specialty Packaging and Printing segment grew 9.1
percent, mainly in the folding carton area.
Pricing adjustments are nominal as competitive
pricing remains a major factor in maintaining
current business and in obtaining new business.
In 1995, Sales increased 12.7 percent for the
first nine months of the year, compared to a
decrease of 1.3 percent in 1994. Sales increased
in the Electronic Systems segment by 23.4 percent
in the 1995 period compared to a decrease of 7.9
percent in 1994. Specialized Packaging and
Printing sales increased 6.1 percent in the 1995
period and 3.1 percent in the 1994 period. In the
Electronics Systems segment, sales increased in
1995 to defense electronics customers and to the
international market for runflats. The Specialty
Packaging and Printing segment's sales increased
about equally between folding carton sales to the
confectionery industry and from specialty
imprinting for the stationery, party and gift
market.
BACKLOG The Company's backlog at September 28, 1996, was
$10,200,000 compared to the 1995 backlog of
$6,400,000, an increase of 54.9 percent. At
December 31, 1995, the backlog was $9,000,000.
The backlog is mainly in the Electronic Systems
segment, $8,500,000, where longer
<PAGE>
lead times apply to the manufacturing process.
The company also works on a number of development
contracts which can run for several months
depending on the complexity of the project. The
backlog for Specialized Packaging and Printing is
$1,700,000. Last year these backlogs were
$4,000,000 and $2,400,000 respectively.
EXPENSES Cost of products sold increased, as a percentage
of sales, 48.1 percent in 1996, compared to a
sales increase of 43.8 percent. In 1995, cost of
goods sold increased 10.0 percent on a sales
increase of 12.7 percent. In 1996, these costs
are being affected by the tooling and start-up
costs necessary to fully implement the upgrading
processes and technology investments in the
Specialized Packaging and Printing segment and the
transition costs related to the November
electroluminescent acquisition and a heavier
commitment to research and development in the
Electronics Systems segment.
Material costs increased slightly in the 1996
period to 25.3 percent compared to 25.0 percent in
1995 and 27.2 percent in 1994. This change in
material usage reflects product mix changes, with
the increased sales in the Electronic Systems
segment. Employee costs increased in 1996 to 26.4
percent from 23.4 percent in 1995, and 23.9
percent in 1994. This increase results from more
development contracts in process and a larger
commitment to research and development. Facility
costs, reflecting the rental of the facility in
New Hampshire, increased 98.5 percent to 6.9
percent of sales in 1996, compared to 5.0 percent
in 1995, and 4.5 percent in 1994. Although the
Company invested heavily in equipment in 1995,
depreciation as a percent of sales decreased to
5.6 percent of sales in 1996, compared to 8.7
percent in 1995, and 7.7 percent in 1994,
reflecting the substantial increase in sales and
the leasing of the facility in New Hampshire.
Other costs increased at a similar rate or a lower
rate than the growth of sales. Product mix always
has an effect on the various components of cost of
goods sold. With the substantial sales increase
in the Electronics Systems Segment, the product
mix has shifted costs in various areas and is
reflecting differing contributions to the gross
profit line. The total costs for the first nine
months of 1996 were $20,427,000, or 72.1 percent
of sales, compared to $13,791,000 in 1995, and
12,539,000 in 1994. Gross profit increased 33.7
percent to $7,920,000 in 1996, compared to
$5,925,000 in 1995, and $4,963,000 in 1994.
<PAGE>
Selling, general and administrative expenses
continued to decrease as a percentage of sales:
18.1 percent in 1996, 20.7 percent in 1995, and
22.5 percent in 1994. The majority of these costs
are for employee services, marketing expenses, and
operating supplies. The Company has a policy that
it reserves all trade receivables over 150 days
(180 days in 1995), or earlier if there are
substantial questions.
During the first nine months of 1996, $105,000 was
expensed compared to $253,000 in 1995, and
$182,000 in 1994. While the Company makes every
effort to collect all receivables, it believes it
is prudent to adequately reserve accounts that are
not collected in a reasonable timeframe. Employee
costs, while the major expense in this area, have
decreased as a percent of sales: 10.6 percent in
1996, 11.3 percent in 1995, and 11.3 percent in
1994. Other cost areas are minor or had nominal
changes as a percent of sales. The total dollars
spent in this area was $5,131,000 in 1996,
$4,073,000 in 1995, and $3,929,000 in 1994. The
operating income was $2,789,000, or 9.8 percent in
1996, compared to $1,852,000, or 9.4 percent in
1995, compared to $1,034000, or 5.9 percent in
1994.
INTEREST Interest costs, net, increased 106.0 percent in
1996 to $657,000, compared to $319,000 in 1995, a
decrease of 22.4 percent from 1994's costs of
$411,000. The 1996 increase reflects the
financing of the November 1995 acquisition. As a
percent of sales, net interest costs were 2.3
percent of sales in 1996, 1.6 percent in 1995, and
2.4 percent in 1994. While the Company increased
its borrowing for the acquisition and for working
capital in late 1995, and early 1996, it has
steadily reduced prior debt as scheduled. The
Company has reduced long-term indebtedness by
$2,131,000 in 1996, compared to $1,670,000 in
1995. The new loans are at LIBOR plus 125 basis
points.
SUMMARY When the all of the above is combined, the Company
earned, before provision for taxes, $2,132,000, or
7.5 percent of sales in 1996, $1,533,000, or 7.8
percent of sales in 1995, and $946,000, or 5.4
percent of sales in 1994.
TAXES The Company's tax provision for 1996 takes into
consideration both the 1995 and 1996 favorable tax
adjustments made by New York State. In 1995, the
Company did not reflect the tax changes until
later quarters. Also, the Company reduced its
reserve for potential tax adjustments based on the
latest information. The Company is undergoing a
<PAGE>
New York State tax audit, but it does not
anticipate a material change in the tax liability.
The tax provision, as a percentage of sales, is
2.5 percent in 1996, 3.1 percent in 1995, and 2.1
in 1994. The Company records its tax expense
under the FASB 109 guidelines.
NET INCOME Net income for the first nine months of 1996 was
$1,421,000, or $.27 per share, compared to
$915,000, or $.19 per share in 1995, and $578,000,
or $.12 per share in 1994. Earnings per share
have been restated to reflect the Company's 25
percent share distribution to shareholders of
record on August 30, 1996.
LIQUIDITY The Company's cash decreased in the first nine
months of 1996 by $292,000, compared to a decrease
of $3,225,000 in the same time period in 1995.
The Company's ongoing operations generated cash of
$5,044,000 in the first nine months of 1996,
compared to $1,443,000 in 1995, and $2,415,000 in
1994. The Company's investment in new equipment
was $3,289,000 in 1996, compared to $2,705,000 in
1995, and $1,176,000 in 1994. The Company
anticipates that it will spend approximately of
$4,000,000 during the 1996 fiscal year. The
Company reduced its scheduled indebtedness and its
revolving line of credit borrowing in the first
nine months of 1996 by $2,131,000, compared to
$1,670,000 in 1995, and $1,430,000 in 1994. The
Company has an $11,000,000 revolving line of
credit available for additional working capital
needs, of which it had utilized $6,350,000 as of
September 28, 1996. The Company feels that its
cash balance, the cash flow from internal
operations and the available amount on the
revolving line of credit are adequate to meet the
Company's operational and investment plans for
1996.
COMMITMENTS The Company has commitments for items that it
purchases in the normal ongoing affairs of the
business. As of September 28, 1996, it has a
commitment for $750,000 for a building addition in
the Specialty Packaging and Printing Segment,
which is anticipated to be completed in the Fourth
Quarter of this year. Also outstanding were
commitments for equipment of $2,000,000, including
$1,500,000 for delivery of equipment in the First
Quarter of 1997. The Company is not aware of any
obligations in excess of normal market conditions,
nor of any long-term commitments that would affect
its financial condition.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
_________________
None.
Item 2. Changes in Securities.
_____________________
None.
Item 3. Defaults Upon Senior Securities.
_______________________________
None.
Item 4. Submission of Matters to a Vote of Securities Holders.
_____________________________________________________
None.
Item 5. Other Information.
_________________
None.
Item 6. Exhibits and Reports on Form 8-K.
________________________________
None.
<PAGE>
SIGNATURES
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.
DATED: November 13, 1996
ASTRONICS CORPORATION
___________________________________
___________________________________
(Signature)
John M. Yessa
Vice President-Finance and Treasurer
<PAGE>
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