SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended March 29, 1997
[ ] 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
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1801 Elmwood Avenue, Buffalo, New York 14207
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(Address of Principal Executive Office) (Zip Code)
716-447-9013
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(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
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(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 March 29, 1997, 4,304,813 shares of $.01 par value common
stock and 745,837 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
March 29, 1997
With Comparative Figures for December 31, 1996
ASSETS
------
(Dollars in Thousands)
March 29, 1997 December 31,
(Unaudited) 1996
-------------- ------------
Current Assets:
Cash $ 1,249 $ 1,130
Accounts receivable 3,683 3,688
Inventories:
Finished goods 1,891 1,826
Work in process 720 744
Raw material 2,096 2,292
Prepaid expenses 450 578
--------- ---------
Total current assets 10,089 10,258
Property, Plant and Equipment 31,873 31,714
Less accumulated depreciation
and amortization 14,669 14,072
--------- ---------
Net property, plant and
equipment 17,204 17,642
Other Assets 1,933 1,965
--------- ---------
$ 29,226 $ 29,865
========= =========
See notes to financial statements.
<PAGE>
ASTRONICS CORPORATION
Consolidated Balance Sheet
March 29, 1997
With Comparative Figures for December 31, 1996
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
(Dollars in Thousands)
March 29, 1997 December 31,
(Unaudited) 1996
-------------- ------------
Current Liabilities:
Current maturities of long-term debt $ 2,246 $ 2,246
Accounts payable 2,629 2,463
Accrued expenses 1,203 1,757
Income taxes 377 937
--------- ---------
Total current liabilities 6,455 7,403
Long-Term Debt 3,389 3,798
Long-Term Obligations under
Capital Leases 1,499 1,600
Deferred Income Taxes 595 545
Supplemental Retirement Obligations 1,714 1,677
Shareholders' Equity:
Common stock, $.01 par value
Authorized 10,000,000 shares, issued
4,603,120 in 1997, 4,519,219 in 1996 46 45
Class B common stock, $.01 par value
Authorized 5,000,000 shares, issued
745,837 in 1997, 749,161 in 1996 7 7
Additional paid-in capital 2,445 2,297
Retained earnings 13,672 13,089
------- -------
16,170 15,438
Less shares in Treasury, at cost (596) (596)
------- -------
Total shareholders' equity 15,574 14,842
------- -------
$ 29,226 $ 29,865
======== ========
See notes to financial statements.
<PAGE>
ASTRONICS CORPORATION
Consolidated Statement of Income and Retained Earnings
Three Months Ended March 29, 1997
With Comparative Figures for 1996
(Dollars in Thousands)
(Unaudited)
1997 1996
---- ----
Net Sales $ 9,625 $ 9,569
Costs and Expenses:
Cost of products sold 6,643 6,848
Selling, general and administrative
expenses 1,873 1,952
Interest expenses, net of interest
earned of $11 in 1997 and $4 in 1996 109 231
-------- -------
Total costs and expenses 8,625 9,031
-------- -------
Income before provision for
taxes on income 1,000 538
Provision for taxes on income 417 172
------- -------
Net Income 583 366
Retained Earnings:
January 1 13,089 10,447
------- -------
March 29 $13,672 $10,813
======= =======
Income per Common Share $ .11 $ .07
======= =======
See notes to financial statements.
<PAGE>
ASTRONICS CORPORATION
Consolidated Statement of Cash Flows
Three Months Ended March 29, 1997
With Comparative Figures for 1996
(Dollars in Thousands)
(Unaudited)
1997 1996
---- ----
Cash Flows from Operating Activities:
Net income $ 583 $ 366
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 665 596
Provision for doubtful accounts (77) 141
Provision for deferred taxes 50 52
Cash flows from changes in
operating assets and liabilities:
Accounts receivable 82 242
Inventories 155 (137)
Prepaid expenses 128 434
Accounts payable 166 184
Accrued expenses (554) (330)
Income taxes payable (560) (22)
------- -------
Net Cash provided (used) by
Operating Activities: $ 638 $ 1,526
------- -------
Cash Flows from Investing Activities:
Change in other assets (36) (57)
Capital expenditures (159) (1,677)
------- -------
Net Cash provided (used) by
Investing Activities $ (195) $(1,734)
------- -------
Cash Flows from Financing Activities:
New long-term debt 281 473
Principal payments on long-term
debt and capital lease obligations (760) (565)
Proceeds from issuance of stock 149 45
------- -------
Net Cash provided (used) by
Financing Activities $ (324) $ (47)
------- -------
Net increase (decrease) in Cash
and Cash Equivalents 119 (255)
Cash and Cash Equivalents at
Beginning of Year 1,130 772
------- -------
Cash and Cash Equivalents at March 29 $ 1,249 $ 517
======= =======
Disclosure of cash payments for:
Interest $ 129 $ 237
Income taxes 926 141
See notes to financial statements.
<PAGE>
ASTRONICS CORPORATION
Notes to Financial Statements
March 29, 1997
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,
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
Three months ended March 29, Increase
(Decrease)
--------------------------- ------------------
- -
1997 1996 1996-1997
---- ---- ---------
Net Sales:
Electronic Systems 47.1% 53.1% (11.3)%
Specialty Packaging 52.9 46.9 14.2 %
------ ------
100.0% 100.0% .6 %
Cost of products sold 69.0 71.6 (3.0)%
Selling, general and
administrative expenses 19.5 20.4 (4.1)%
Interest expenses, net 1.1 2.4 (52.8)%
------ ------
89.6% 94.4% (4.5)%
Income before provision
for income taxes 10.4% 5.6% 85.9%
Provision for taxes 4.3 1.8 142.4%
------ -------
Net Income 6.7% 3.8% 59.3%
====== ======
INTRODUCTION Astronics Corporation operates in two business
segments: Electronic Systems and Specialty
Packaging.
On October 30, 1996, effective September 30, 1996,
Astronics Corporation sold its Rodgard Division, a
manufacturer of thick walled elastomeric products.
Sales for the nine months of 1996 totaled
$1,494,000, and sales for the 1995 year were
$2,568,000.
On November 29, 1995, The Company acquired the
business and assets of Loctite Luminescent
Systems, Inc., in Lebanon, NH. This business
complements the electroluminescent business
already performed by the Company's Electronic
Systems segment. The newly acquired business and
<PAGE>
the existing enterprise were combined in a single
business unit under the name of Luminescent
Systems, Inc. The Company operates plants in New
Hampshire and New York.
During the First Quarter a new accounting
pronouncement was issued for the calculation of
earnings per share. This is FASB Statement No.
128, Earnings per Share. The Company is still
studying the statement and how it applies to its
financial reporting. While the Company has not
finalized its application, it believes this will
have a favorable impact on earnings per share
between five and ten percent.
SALES A new record for sales was set as sales increased
slightly in the First Quarter of 1997 to
$9,625,000 from $9,569,000 for the same period of
1996. In 1996, sales increased 32.4 percent from
1995 sales of $7,226,000. Sales from continuing
operations, eliminating the Rodgard Division sales
for 1996, for the First Quarter of 1997 compared
to 1996 shows growth of 6.7 percent.
Sales within the Electronic Systems segment, based
on continuing operations, were nominally the same.
The Company continues to work on the development
contracts that it received in 1996, with
anticipation that some will be completed in 1997,
resulting in additional billings and the beginning
of follow-on production. In 1996, sales increased
70.7 percent, substantially the result of the
November, 1995 acquisition.
Sales in the Specialty Packaging segment increased
14.2 percent in 1997 compared to 1996. This
compares to an increase of 5.4 percent in 1996.
The Company continues to expand its market share
through focus on customer service with on time
deliveries, high quality and short turnaround
times. Price increases have been nominal, but the
pressure to reduce pricing has moderated.
BACKLOG The backlog for the Company at the end of the
First Quarter of 1997 was $10,511,000, an increase
of $405,000 since December 31, 1996. This
compares to $11,061,000 at end of the First
Quarter of 1996. The backlog is composed of
$8,990,000 in the Electronic Systems segment and
$1,521,000 in the Specialty Packaging segment.
EXPENSES Cost of products sold decreased as a percentage of
sales to 69.0 percent in 1997, compared to 71.6
percent of sales in 1996, and compared to 70.3
percent in 1995. The decrease results from
improved productivity, reduced tooling and
transition costs. Material costs decreased to
20.2 percent in 1997, compared to 23.6 percent in
<PAGE>
1996, and 26.7 percent in 1995. Employee costs
were nominally the same in 1997 as in 1996 at 28.0
percent of sales. This compared to 23.1 percent
in 1995. The increase over the 1995 level is in
the additional personnel costs supporting the
technical aspects of the business, mainly in the
Electronic Systems Segment. The Company has
completed a significant portion of its retooling
for new equipment in the Specialty Packaging area.
It has also made the majority of the transition
changes with the facility and operations of the
business acquired in 1995. The remaining general
categories increased less than .5 percentage
points of sales. This resulted in an increase in
gross profit of 9.6 percent to $2,982,000. In
1996, gross profit increased 26.9 percent to
$2,721,000
Selling, general and administrative expenses
continued to decrease as a percentage of sales:
19.5 percent in 1997, 20.4 percent in 1996, and
21.0 percent in 1995. The majority of these costs
are for employee services (57.4 percent),
marketing expenses (14.6 percent), and operating
supplies (11.9 percent). The Company has a policy
that it reserves all trade receivables over 120
days (150 days in 1996), or earlier if there are
substantial questions. During this quarter, the
company reduced reserves by $77,000, compared to
an increase of $141,000 in 1996. Operating income
increased to $1,109,000 in 1997, or 11.5 percent
of sales, compared to $769,000, or 8.0 percent in
1996, and compared to $627,000, or 8.7 percent in
1995.
INTEREST Interest costs, net, decreased in 1997 by the same
amount as it increased in 1996, $122,000. The
1997 decrease reflects the strong cash flow
experienced in 1996 which allowed for the
accelerated reduction of the revolving line of
credit. The 1996 increase reflected the financing
of the November 1995 acquisition. As a percent of
sales, net interest costs were 1.1 percent of
sales in 1997, 2.4 percent in 1996, and 1.5
percent in 1995. While the Company increased its
borrowing for the acquisition in 1995, and for
working capital in late 1995 and early 1996 and
1997, it has steadily reduced prior debt as
scheduled. The revolving line of credit is priced
at LIBOR plus 125 basis points. Gross interest
expense was $120,000 in 1997, $235,000 in 1996,
and $148,000 in 1995.
SUMMARY When the above is combined, the Company earned,
before provision for taxes, $1,000,000, or 10.4
percent in 1997, $538,000, or 5.6 percent in 1996,
and $518,000, or 7.2 percent in 1995 on sales.
<PAGE>
TAXES The Company's tax provision takes into account the
federal and state taxes for which it is liable.
Normally, the First Quarter's tax provision is
higher as all minimum taxes are accrued during
this period. The 1997 tax provision is $417,000,
compared to $172,000 in 1996, and 242,000 in 1995.
The 1996 provision reflected favorable changes in
the New York State tax law for the First Quarter
of 1996 and for the 1995 year. The tax provision,
as a percentage of sales, is 4.3 percent in 1997,
1.8 percent in 1996, and 3.4 in 1995. The Company
records its tax expense under the FASB 109
guidelines.
NET INCOME Net income for the First Quarter of 1996 set a new
record for the quarter: $583,000, or $.11 per
share, which compared to $366,000, or $.07 per
share in 1996, and $276,000, or $.06 per share in
1995.
LIQUIDITY The Company's working capital increased in the
First Quarter of 1997 by $779,000 compared to a
decrease in 1996 of $756,000 and of $1,382,000 in
the First Quarter of 1995. The Company's
investment in new equipment was $159,000 in the
First Quarter of 1997, compared to $1,677,000 in
1996, and to $1,543,000 in 1995. The Company
reduced its indebtedness by $760,000 in the First
Quarter of 1997, compared to $565,000 in 1996, and
to $557,000 in 1995. Also, the Company borrowed
an additional $250,000 in the First Quarter of
1997, and $473,000 in 1996 towards working
capital needs. The Company has an $11,000,000
revolving line of credit available for additional
working capital needs, of which it had utilized
$2,750,000 at the end of the First Quarter of
1997, compared to $7,250,000 at the same time in
1996. The Company feels that its beginning cash
balance, the cash flow from internal operations
and the available balance of the revolving line of
credit are adequate to meet the Company's
operational and investment plans for 1997.
COMMITMENTS The Company has outstanding commitments for
capital investments of approximately $2,000,000 at
the end of the First Quarter of 1997. An
investment of approximately $1,600,000, initially
scheduled for installation in the First Quarter of
1997, was delayed until the Second Quarter.
During the Second Quarter, the Company will
repurchase its shares owned by ATRO Companies
Profit Sharing/401(k) Plan for approximately
$500,000. The Company has commitments for items
that it purchases in the normal on-going affairs
of the business. 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.
-----------------------------------------------------
At the annual meeting of shareholders held on April 18,
1997, the nominees to the Board of Directors were re-
elected based on the following results:
Votes Withholding
Nominees Votes For Authority
-------- --------- -----------------
Robert T. Brady 8,194,633 171,061
John B. Drenning 8,193,633 172,061
Kevin T. Keane 8,193,767 171,927
Robert J. McKenna 8,193,893 171,801
John M. Yessa 8,194,633 171,061
The 1997 Director Stock Option Plan was approved by
7,857,669 in favor and 459,766 votes against, with
48,259 abstentions.
The selection of Ernst & Young LLP as the Registrant's
auditors was approved by the following vote:
8,339,509 in favor; 8,431 against; and 17,754
abstentions.
Under applicable New York law and the Company's charter
documents, abstentions and non-votes have no effect.
Item 5. Other Information.
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
Exhibit 11. Computation of Per Share Earnings.
<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: May 13, 1997
ASTRONICS CORPORATION
---------------------------------
/S/ John M. Yessa
John M. Yessa
Vice President-Finance and
Treasurer
<PAGE>
EXHIBIT 11
----------
COMPUTATION OF PER SHARE EARNINGS
(in thousands, except for per share data)
Quarter Ended March 29
1997 1996 1995
---- ---- ----
Primary
Average shares outstanding 5,022 4,786 4,852
Net effect of dilutive stock
options based on the treasury
stock method using average
market price 340 333 --
----- ----- -----
Total 5,362 5,119 4,852
===== ===== =====
Net income $ 583 $ 366 $ 276
===== ===== =====
Per share amount $ .11 $ .07 $ .06
===== ===== =====
Fully Diluted
Average shares outstanding 5,022 4,786 4,852
Net effect of dilutive stock
options based on the
treasury stock method using
quarter-end market price 345 354 --
----- ----- -----
Total 5,368 5,140 4,852
===== ===== =====
Net income $ 583 $ 366 $ 276
===== ===== =====
Per share amount $ .11 $0.07 $0.06
<PAGE>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-29-1997
<CASH> 1,249
<SECURITIES> 0
<RECEIVABLES> 3,683
<ALLOWANCES> 220
<INVENTORY> 4,707
<CURRENT-ASSETS> 10,089
<PP&E> 31,873
<DEPRECIATION> 14,669
<TOTAL-ASSETS> 29,226
<CURRENT-LIABILITIES> 6,455
<BONDS> 0
0
0
<COMMON> 53
<OTHER-SE> 15,521
<TOTAL-LIABILITY-AND-EQUITY> 29,226
<SALES> 9,625
<TOTAL-REVENUES> 9,625
<CGS> 6,643
<TOTAL-COSTS> 8,516
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 109
<INCOME-PRETAX> 1,000
<INCOME-TAX> 417
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 583
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
