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 June 29, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE
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 June 29, 1996, 3,111,707 shares of $.01 par value common
stock and 750,031 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
June 29, 1996
With Comparative Figures for December 31, 1995
ASSETS
(Dollars in Thousands)
June 29, 1996 December 31,
(Unaudited) 1995
Current Assets:
Cash $ 613 $ 772
Accounts receivable 4,515 4,874
Inventories:
Finished goods 2,855 2,454
Work in process 927 1,081
Raw material 2,195 2,765
Prepaid expenses (79) 646
_______ _______
Total current assets 11,026 12,592
Property, Plant and Equipment 30,450 31,134
Less accumulated depreciation
and amortization 13,115 14,858
_______ _______
Net property, plant and equipment 17,335 16,276
Other Assets 1,896 1,947
_______ _______
$30,257 $30,815
======= =======
See notes to financial statements.
<PAGE>
ASTRONICS CORPORATION
Consolidated Balance Sheet
June 29, 1996
With Comparative Figures for December 31, 1995
LIABILITIES AND SHAREHOLDERS' EQUITY
(Dollars in Thousands)
June 29, 1996 December 31,
(Unaudited) 1995
Current Liabilities:
Current maturities of long-term debt $ 2,241 $ 2,266
Accounts payable 2,761 2,524
Accrued expenses 1,338 1,449
Income taxes 129 252
_______ _______
Total current liabilities 6,469 6,491
Long-Term Debt 8,517 9,713
Long-Term Obligations under
Capital Leases 1,812 2,010
Deferred Income Taxes 922 875
Shareholders' Equity:
Common stock, $.01 par value
Authorized 10,000,000 shares, issued
3,413,728 in 1996, 3,254,454 in 1995 34 33
Class B common stock, $.01 par value
Authorized 5,000,000 shares, issued
750,031 in 1996, 834,005 in 1995 7 8
Additional paid-in capital 2,114 2,046
Retained earnings 11,190 10,447
_______ _______
13,345 12,534
Less shares in Treasury, at cost 808 808
_______ _______
Total shareholders' equity 12,537 11,726
_______ _______
$30,257 $30,815
======= =======
See notes to financial statements.
<PAGE>
ASTRONICS CORPORATION
Consolidated Statement of Income and Retained Earnings
Period Ended June 29, 1996
With Comparative Figures for 1995
(Dollars in Thousands)
(Unaudited)
SIX MONTHS THREE MONTHS
1996 1995 1996 1995
Net Sales $19,252 $13,450 $ 9,683 $ 6,224
Costs and Expenses:
Cost of products sold 13,883 9,415 7,035 4,334
Selling, general and
administrative expenses 3,826 3,028 1,874 1,510
Interest expenses, net of
interest earned of $8 in
1996 and $73 in 1995 454 214 223 105
Total costs and expenses 18,163 12,657 9,132 5,949
_______ _______ _______ _______
Income before provision for
taxes on income 1,089 793 551 275
Provision for taxes on income 346 345 174 103
_______ _______ _______ _______
Net Income 743 448 377 172
Retained Earnings:
January 1 10,447 8,687
_______ _______ _______ _______
June 29 $11,190 $ 9,135
======= =======
Income per Common Share $ .18 $ .12 $ .09 $ .05
======= ======= ======= =======
See notes to financial statements.
<PAGE>
ASTRONICS CORPORATION
Consolidated Statement of Cash Flows
Six Months Ended June 29, 1996
With Comparative Figures for 1995
(Dollars in Thousands)
(Unaudited)
1996 1995
Cash Flows from Operating Activities:
Net income $ 743 $ 448
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,247 1,444
Provision for doubtful accounts 153 291
Provision for deferred taxes 47 (310)
Cash flows from changes in
operating assets and liabilities:
Accounts receivable 206 129
Inventories 323 260
Prepaid expenses 725 459
Accounts payable 237 163
Accrued expenses (112) (254)
Income taxes payable (123) (278)
_______ _______
Net Cash provided (used) by Operating
Activities: $ 3,446 $ 2,352
Cash Flows from Investing Activities:
Proceeds from sale of assets 219 10
Change in other assets (57) --
Capital expenditures (2,417) (2,003)
_______ _______
Net Cash provided (used) by Investing
Activities $(2,255) $(1,993)
_______ _______
Cash Flows from Financing Activities:
Principal payments on long-term debt
and capital lease obligations (1,418) (1,112)
Proceeds from issuance of stock 68 9
Purchase of stock for Treasury -- (303)
_______ _______
Net Cash provided (used) by Financing
Activities $(1,350) $(1,406)
_______ _______
Net increase (decrease) in Cash and
Cash Equivalents (159) (1,047)
<PAGE>
Cash and Cash Equivalents at Beginning
of Year 772 3,520
_______ _______
Cash and Cash Equivalents at June 29 $ 613 $ 2,473
======= =======
Disclosure of cash payments for:
Interest $ 473 $ 294
Income taxes 416 933
See notes to financial statements.
<PAGE>
ASTRONICS CORPORATION
Notes to Financial Statements
June 29, 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.
<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
Six Months Ended June 29 Increase (Decrease)
1996 1995 1995-1996
Net Sales:
Electronic Systems 57.6% 44.0% 87.3%
Customized Printing
and Packaging 42.4 56.0 8.4
______ ______
100.0% 100.0% 43.1%
Cost of products sold 72.1 70.0 47.5%
Selling, general and
administrative
expenses 19.9 22.5 26.4%
Interest expenses,
net 2.3 1.6 112.1%
______ ______
94.3% 94.1% 43.5%
Income before
provision for
income taxes 5.7% 5.9% 37.3%
Provisions for taxes 1.8 2.6 0.3%
______ ______
Net income 3.9% 3.3% 65.9%
====== ======
SALES In November, 1995, the Company purchased the
electroluminescent business of Loctite Corporation.
Results from this business are included in the 1996
financials. As a result of the acquisition, the
Electronic Systems segment is the largest of the
two segments. Therefore, the seasonal business of
the Specialty Packaging and Printing segment's
confectionery business will be less pronounced in
quarterly sales results.
A new record for sales was set for the Second
Quarter and the first six months of a year. The
1996 sales increase was mainly in the Electronic
segment, 87.3 percent. This reflects the November,
1995 acquisition. Sales within the Electronics
<PAGE>
segment increased in the electroluminescent area
but decreased in the keyboard and thick walled
elastomeric areas. Sales to the private aircraft
manufacturers increased over previous years. The
Specialty Packaging and Printing segment grew 8.4
percent, mainly in the folding carton area.
Competition remains strong, allowing little room
for upward price adjustments. Sales for the Second
Quarter increased 55.6 percent to $9,683,000
compared to $6,224,000 in 1995. Sales for the
First Half of 1996 increased 43.1 percent to
$19,252,000 compared to $13,450,000 in 1995. Sales
for the trailing twelve months increased 27.0
percent to $34,338,000, compared to $27,029,000 for
the twelve months ending July 1, 1995.
In 1995, Sales increased 18.4 percent for the First
Half of the year. These increased sales were
achieved with a 35.0 percent gain in the Electronic
Systems segment and 7.9 percent in the Specialty
Packaging and Printing segment. In the Electronics
segment, sales increased in the electroluminescent
and electronic keyboard area for the aerospace and
defense electronics products. Sales also increased
in elastomeric products mainly do to the increased
business activity in the global marketplace. 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. In 1994, the sales decrease came in
the Electronics Systems segment and was related to
the defense electronics and aerospace industry.
BACKLOG The backlog for the Company increased during the
First Half of 1996 to $10,820,000. This compares
to $8,953,000 at December 31, 1995, and $5,500,000
at July 1, 1995. The 1996 increase is in the
Electronic segment and reflects mainly contracts
that were being negotiated and bid prior to the
November 1995 acquisition. The June 29, 1996,
backlog is composed of $9,276,000 in the Electronic
Systems segment and $1,544,000 in the Specialty
Packaging and Printing segment.
EXPENSES Cost of products sold increased, as a percentage of
sales, 47.5 percent in 1996, compared to a sales
increase of 43.1 percent. This higher increase in
costs reflects the continuing investments made in
upgrading processes and technology, transition
costs related to the November acquisition and a
heavier commitment to research and development. As
a percent of sales, costs of goods sold increased
to 72.1 percent compared to 70.0 percent in 1995
and 74.0 in 1994. The decrease in 1995, when
compared to 1994, reflects the 1994 one-time charge
related to the transition and relocation of the
<PAGE>
Gloucester, MA, operation into the East Aurora, NY,
manufacturing facility. The hard costs of the move
were approximately $400,000, or 3.5 percent of
sales. These costs consisted of the following:
Buyout of a 5.75 year facility lease $150,000
Employee severance payments $150,000
Moving and travel costs $100,000
Material costs continue to decrease as a percent of
sales: 24.9 percent in 1996, 25.7 percent in 1995,
and 27.4 percent in 1994. Conversely, employee
costs increased in 1996 to 27.1 percent from 23.3
percent in 1995, and 24.6 percent in 1994. A
portion of this increase is the investment in
Research and Development. Manufacturing,
engineering and Research and Development costs,
including the continuing investment in processes
and technology improvements in the Specialty
Packaging and Printing Segment, increased 70.2
percent to 8.1 percent of sales compared to 6.8
percent in 1995, and 5.8 percent in 1994. Facility
costs, reflecting the rental of the facility in New
Hampshire, increased 84.9 percent to 6.5 percent of
sales in 1996, compared to 5.0 percent in 1995, and
4.5 percent in 1994. Other costs increased at a
lower rate than the growth of sales. Although the
Company invested heavily in equipment in 1995,
depreciation as a percent of sales decreased to 5.4
percent of sales in 1996, compared to 9.1 percent
in 1995, and 7.8 percent in 1994, reflecting the
substantial increase in sales and the leasing of
the facility in New Hampshire. Product mix always
has an effect on the various components of cost of
goods sold. With the substantial sales increase in
the Electronics 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 Half of 1996 were
$13,883,000, or 72.1 percent of sales, compared to
$9,415,000 in 1995, and $8,410,000 in 1994. Gross
profit increased 33.1 percent to $5,369,000 in
1996, compared to $4,035,00 in 1995, and $2,955,000
in 1994.
Cost of products sold increased 12.0 percent in
1995 and 3.4 percent in 1994. In 1995, sales
increased by a larger percent than costs, while in
1994 costs increased while sales decreased. Costs
increased in several areas; for example, purchases
of board, corrugated and plastics. The Company was
unable to pass on these increases as pricing
adjustment in most cases. The offset to these
increased costs was the Company's investment in
technology, processes, and equipment, which have
reduced costs. In 1994, the Company relocated the
Massachusetts portion of the Electronic Systems
segment and combined it with the East Aurora, NY,
operations.
<PAGE>
Raw material costs, as a percent of sales were 25.7
percent and 27.4 percent in 1995 and 1994,
respectively. These costs are affected by product
mix changes, changes in inventory levels, and
manufacturing efficiency. Overall, the increased
benefits from investments in technology, processes
and equipment have reduced material usage through
lower scrap rates. Employee costs, as a percent of
sales, were 23.3 percent and 24.6 percent 1995 and
1994, respectively. This area is also affected by
product mix. The benefits of the investments
referred to above also have reduced employee costs.
The cost side of these investments is reflected in
increasing depreciation costs which, as a percent
of sales, were 9.1 percent and 7.8 percent in 1995
and 1994, respectively. Other costs areas have not
experienced dramatic changes.
Selling, general and administrative expenses
continued to decrease as a percentage of sales:
19.9 percent in 1996, 22.5 percent in 1995, and
23.1 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 Half of
1996, $184,000 was expensed compared to $305,000 in
1995, and $49,000 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, has decreased each year as a percent
of sales: 10.9 percent in 1996, 11.4 percent in
1995, and 11.5 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
$3,826,000 in 1996, $3,028,000 in 1995, and
$2,626,000 in 1994. The operating income was
$1,543,000, or 8.1 percent in 1996, compared to
$1,007,000, or 7.5 percent in 1995, compared to
$329,000, or 2.9 percent in 1994.
INTEREST Interest costs, net, increased 112.1 percent in
1996 to $454,000, compared to $214,000 in 1995, a
decrease of 24.7 percent from 1994's costs of
$284,000. The 1996 increase reflects the financing
of the November 1995 acquisition. As a percent of
sales, net interest costs were 2.4 percent of
sales in 1996, 1.6 percent in 1995, and 2.5 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 new loans are at LIBOR plus
125 basis points.
<PAGE>
SUMMARY When all of the above is combined, the Company
earned, before provision for taxes, $1,089,000, or
5.6 percent of sales in 1996, $793,000, or 5.9
percent of sales in 1995, and $346,000, or 3.0
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 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 1.8 percent
in 1996, 2.6 percent in 1995, and 1.6 in 1994. The
Company records its tax expense under the FASB 109
guidelines.
NET INCOME Net income for the First Half of 1996 was $743,000,
or $.18 per share, compared to $448,000, or $.12
per share in 1995, and $165,000, or $.04 per share
in 1994.
LIQUIDITY The Company's cash decreased in the First Half of
1996 by $159,000, compared to a decrease of
$1,047,000 in the same time period in 1995. The
Company's ongoing operations generated cash of
$3,446,000 in the First Half of 1996, compared to
$2,352,000 in 1995, and $2,209,000 in 1994. The
Company's investment in new equipment was
$2,417,000 in 1996, compared to $2,003,000 in 1995,
and $541,000 in 1994. The Company anticipates that
it will spend in excess 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 Half of 1996 by
$1,418,000, compared to $1,112,000 in 1995, and
$877,000 in 1994. The Company has an $11,000,000
revolving line of credit available for additional
working capital needs, of which it had utilized
$6,500,000 as of June 29, 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 on-going affairs of the
business. As of June 29, 1996, it has a commitment
for $750,000 for a building addition in the
Specialty Packaging and Printing Segment. 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: August 13, 1996
ASTRONICS CORPORATION
__________________________________________
John M. Yessa
__________________________________________
(Signature)
John M. Yessa
Vice President-Finance and Treasurer
<PAGE>
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<PERIOD-END> JUN-29-1996
<CASH> 613,000
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<RECEIVABLES> 4,909,000
<ALLOWANCES> (394,000)
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<CURRENT-ASSETS> 11,026,000
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<COMMON> 34,000
<OTHER-SE> 12,503,000
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<SALES> 19,252,000
<TOTAL-REVENUES> 19,252,000
<CGS> 13,883,000
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