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 June 28, 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
___________________________________________________________________________
(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 28, 1997, 4,229,938 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
June 28, 1997
With Comparative Figures for December 31, 1996
ASSETS
------
(Dollars in Thousands)
June 28, 1997 December 31,
(Unaudited) 1996
-------------- ------------
Current Assets:
Cash $ 199 $ 1,130
Accounts receivable 4,111 3,688
Inventories:
Finished goods 2,073 1,826
Work in process 735 744
Raw material 2,126 2,292
Prepaid expenses 127 578
--------- ---------
Total current assets 9,371 10,258
Property, Plant and Equipment 33,597 31,714
Less accumulated depreciation
and amortization 15,283 14,072
--------- ---------
Net property, plant and
equipment 18,314 17,642
Other Assets 1,874 1,965
--------- ---------
$ 29,559 $ 29,865
========= =========
See notes to financial statements.
<PAGE>
ASTRONICS CORPORATION
Consolidated Balance Sheet
June 28, 1997
With Comparative Figures for December 31, 1996
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
(Dollars in Thousands)
June 28, 1997 December 31,
(Unaudited) 1996
-------------- ------------
Current Liabilities:
Current maturities of long-term debt $ 2,095 $ 2,246
Accounts payable 2,720 2,463
Accrued expenses 1,411 1,757
Income taxes (14) 937
--------- ---------
Total current liabilities 6,212 7,403
Long-Term Debt 3,779 3,798
Long-Term Obligations under
Capital Leases 1,397 1,600
Deferred Income Taxes 732 545
Supplemental Retirement Obligations 1,751 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 14,318 13,089
------- -------
16,816 15,438
Less shares in Treasury, at cost (1,128) (596)
------- -------
Total shareholders' equity 15,688 14,842
------- -------
$ 29,559 $ 29,865
======== ========
See notes to financial statements.
<PAGE>
ASTRONICS CORPORATION
Consolidated Statement of Income and Retained Earnings
Period Ended June 28, 1997
With Comparative Figures for 1996
(Dollars in Thousands)
(Unaudited)
-----------
SIX MONTHS THREE MONTHS
----------- ------------
1997 1996 1997 1996
---- ---- ---- ----
Net Sales $19,313 $19,252 $9,688 $9,683
Costs and Expenses:
Cost of products sold 13,240 13,883 6,597 7,035
Selling, general and
administrative
expenses 3,825 3,826 1,952 1,874
Interest expenses, net
of interest earned of
$13 in 1997 and $8
in 1996 235 454 126 223
------- ------ ------ ------
Total costs and
expenses 17,300 18,163 8,675 9,132
------- ------ ------ ------
Income before provision
for taxes on income 2,013 1,089 1,013 551
Provision for taxes
on income 784 346 367 174
------- ------ ------ ------
Net Income 1,229 743 646 377
Retained Earnings:
January 1 13,089 10,447
------- -------
June 28 $14,318 $11,190
======= =======
Income per Common Share $ .23 $ .14 $ .12 $ .07
======= ====== ====== =======
See notes to financial statements.
<PAGE>
ASTRONICS CORPORATION
Consolidated Statement of Cash Flows
Three Months Ended June 28, 1997
With Comparative Figures for 1996
(Dollars in Thousands)
(Unaudited)
1997 1996
---- ----
Cash Flows from Operating Activities:
Net income $ 1,229 $ 743
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 1,342 1,247
Provision for doubtful accounts (43) 153
Provision for deferred taxes 187 47
Cash flows from changes in
operating assets and liabilities:
Accounts receivable (380) 206
Inventories (72) 323
Prepaid expenses 451 725
Accounts payable 257 237
Accrued expenses (346) (112)
Income taxes payable (951) (123)
Supplemental retirement obligations 74 0
------- -------
Net Cash provided (used) by
Operating Activities: $ 1,748 $ 3,446
------- -------
Cash Flows from Investing Activities:
Proceeds from sale of assets 0 219
Change in other assets (41) (57)
Capital expenditures (1,882) (2,417)
------- -------
Net Cash provided (used) by
Investing Activities $(1,923) $(2,255)
------- -------
Cash Flows from Financing Activities:
New long-term debt 950 0
Principal payments on long-term
debt and capital lease obligations (1,323) (1,418)
Proceeds from issuance of stock 149 68
Purchase of Treasury Stock (532) 0
------- -------
Net Cash provided (used) by
Financing Activities $ (756) $(1,350)
------- -------
<PAGE>
Net increase (decrease) in Cash
and Cash Equivalents (931) (159)
Cash and Cash Equivalents at
Beginning of Year 1,130 772
------- -------
Cash and Cash Equivalents at June 28 $ 199 $ 613
======= =======
Disclosure of cash payments for:
Interest $ 254 $ 473
Income taxes 1,548 416
See notes to financial statements.
<PAGE>
ASTRONICS CORPORATION
Notes to Financial Statements
June 28, 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
Six months ended June 28, Increase (Decrease)
--------------------------- -------------------
1997 1996 1996-1997
---- ---- ---------
Net Sales:
Electronic Systems 50.6% 57.6% (11.8)%
Specialty Packaging 49.4 42.4 16.7 %
------ ------
100.0% 100.0% .3 %
Cost of products sold 68.6 72.1 (4.6)%
Selling, general and
administrative expenses 19.8 19.9 --
Interest expenses, net 1.2 2.3 (48.2)%
------ ------
89.6% 94.3% (4.8)%
Income before provision
for income taxes 10.4% 5.7% 84.8%
Provision for taxes 4.0 1.8 126.6%
------ ------
Net Income 6.4% 3.9% 65.4%
====== ======
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 affect of this
statement will be shown in the year end
financials. While the Company has not finalized
its application, it believes this will have a
favorable impact on basic earnings per share
between five and ten percent.
On July 1, 1997, the Company renegotiated the
interest rate terms of its Revolving Line of
Credit. Under the new terms, interest is LIBOR
plus 100 basis points or the bank's prime rate.
SALES A new record for sales was set as sales increased
slightly in the First Half of 1997 to $19,313,000
from $19,252,000 for the same period of 1996. In
1996, sales increased 43.1 percent from 1995 sales
of $13,450,000. Sales from continuing operations
[eliminating the Rodgard Division sales for 1996]
for the First Half of 1997 compared to 1996 shows
growth of 5.9 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
87.3 percent, substantially the result of the
November, 1995 acquisition.
Sales in the Specialty Packaging segment increased
16.7 percent in 1997 compared to 1996. This
compares to an increase of 8.4 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 Half of 1997 was $11,048,000, an increase of
$942,000 since December 31, 1996. This compares
to $10,817,000 at the end of the First Half of
1996. The backlog is composed of $9,027,000 in
the Electronic Systems segment and $2,021,000 in
the Specialty Packaging segment.
<PAGE>
EXPENSES Cost of products sold decreased as a percentage of
sales to 68.6 percent in 1997, compared to 72.1
percent of sales in 1996, and compared to 70.0
percent in 1995. The decreased costs came from
improved productivity which has resulted in
reduced material usage costs and from the
substantial completion of process change costs
relating to tooling and supply costs. Material
costs decreased to 19.7 percent in 1997, compared
to 24.9 percent in 1996, and 25.7 percent in 1995.
Employee costs increased in 1997 to 28.8 percent
compared to 27.1 percent in 1996 as a percent of
sales. This compared to 23.3 percent in 1995.
The increase over the 1995 expense level is in
additional personnel 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 finished the majority of the transition
changes with the facility and operations of the
business acquired in 1995. The remaining general
categories increased less than one percentage
point of sales. This resulted in an increase in
gross profit of 13.1 percent to $6,073,000. In
1996, gross profit increased 33.1 percent to
$5,369,000.
Selling, general and administrative expenses
continued to decrease as a percentage of sales:
19.8 percent in 1997, 19.9 percent in 1996, and
22.5 percent in 1995. The majority of these costs
are for employee services (54.4 percent),
marketing expenses (14.0 percent), and operating
supplies (12.8 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 the First Half of
1997, the company expensed $66,000, compared to an
expense of $184,000 in 1996, and $305,000 in 1995.
Operating income increased to $2,248,000 in 1997,
or 11.6 percent of sales, compared to $1,543,000,
or 8.0 percent in 1996, and compared to
$1,007,000, or 7.5 percent in 1995.
INTEREST Interest costs, net, decreased in the First Half
of 1997 to $235,000, or 1.2 percent of sales,
compared to $454,000, or 2.3 percent of sales in
1996, and compared to $214,000 in 1995, or 1.6
percent of sales. The 1997 decrease reflects the
strong cash flow experienced in 1996 which enabled
the accelerated reduction of the revolving line of
credit. The 1996 increase reflected the financing
of the November 1995 acquisition. While the
Company increased its borrowing for the
acquisition in 1995, and for working capital in
late 1995 and early 1996 and in 1997, it has
<PAGE>
steadily reduced prior debt as scheduled. The
revolving line of credit is priced at LIBOR plus
125 basis points through June 30, 1996. Gross
interest expense was $248,000 in 1997, $462,000 in
1996, and $287,000 in 1995.
SUMMARY When the above is combined, the Company earned,
before provision for taxes, $2,013,000, or 10.4
percent in 1997, $1,089,000, or 5.7 percent in
1996, and $793,000, or 5.9 percent in 1995 on
sales.
TAXES The Company's tax provision takes into account the
federal and state taxes for which it is liable.
The Company has nearly depleted its tax credits
available for the Electronic Systems business in
New York State. This will result in higher taxes
in future quarters. The 1997 tax provision is
$784,000, compared to $346,000 in 1996, and
$345,000 in 1995. The 1996 provision reflected
favorable changes in the New York State tax law
for the First Half of 1996 and for the 1995 year.
The tax provision, as a percentage of sales, is
4.0 percent in 1997, 1.8 percent in 1996, and 2.6
in 1995. The Company records its tax expense
under the FASB 109 guidelines.
NET INCOME Net income for the First Half of 1997 was a new
record for that period: $1,229,000, or $.23 per
share in 1997, which compared to $743,000, or $.14
per share in 1996, and $448,000, or $.09 per share
in 1995.
LIQUIDITY The Company's working capital increased in the
First Half of 1997 by $304,000 compared to a
decrease in 1996 of $1,544,000 and a decrease of
$1,832,000 in the First Half of 1995. The
Company's investment in new equipment, processes
and facilities was $1,882,000 in the First Half of
1997, compared to $2,417,000 in 1996, and to
$2,003,000 in 1995. The Company reduced its
indebtedness by $1,323,000 in the First Half of
1997, compared to $1,418,000 in 1996, and to
$1,112,000 in 1995. During the Second Quarter, the
Company repurchased its shares owned by ATRO
Companies Profit Sharing/401(k) Plan for $532,000.
Also, the Company borrowed an additional $950,000
in the First Half of 1997 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 $3,450,000
at the end of the First Half of 1997, compared to
$6,500,000 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.
<PAGE>
COMMITMENTS The Company has outstanding commitments for
capital investments of approximately $4,000,000 at
the end of the First Half of 1997. This includes
an investment in packaging equipment of
approximately $3,400,000, which is scheduled for
installation in the First Quarter of 1998. 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.
-----------------------------------------------------
None.
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: August 12, 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 June 28
1997 1996 1995
---- ---- ----
Primary
Average shares outstanding 5,002 4,796 4,826
Net effect of dilutive stock
options based on the treasury
stock method using average
market price 343 370 --
----- ----- -----
Total 5,345 5,166 4,826
===== ===== =====
Net income $1,229 $ 743 $ 448
===== ===== =====
Per share amount $ .23 $ .14 $ .09
===== ===== =====
Fully Diluted
Average shares outstanding 5,002 4,796 4,826
Net effect of dilutive stock
options based on the
treasury stock method using
quarter-end market price 347 406 --
----- ----- -----
Total 5,349 5,202 4,826
===== ===== =====
Net income $1,229 $ 743 $ 448
===== ===== =====
Per share amount $ .23 $ .14 $ .09
===== ===== =====
<PAGE>
FINANCIAL DATA SCHEDULE
[ARTICLE] 5
[MULTIPLIER] 1,000
[FISCAL-YEAR-END] DEC - 31 - 1997
[PERIOD-END] June 28, 1997
[PERIOD-TYPE] 6 - MOS
[CASH] 199
[SECURITIES] 0
[RECEIVABLES] 4,370
[ALLOWANCES] 259
[INVENTORY] 4,934
[CURRENT-ASSETS] 9,371
[PP&E] 33,597
[DEPRECIATION] 15,283
[TOTAL-ASSETS] 29,559
[CURRENT-LIABILITIES] 6,212
[BONDS] 0
[COMMON] 53
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 15,635
[TOTAL-LIABILITY-AND-EQUITY] 29,559
[SALES] 19,313
[TOTAL-REVENUES] 19,313
[CGS] 13,240
[TOTAL-COSTS] 17,300
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 248
[INCOME-PRETAX] 2,013
[INCOME-TAX] 784
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 1,229
<EPS-PRIMARY .23
[EPS-DILUTED] .23
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-28-1997
<CASH> 199
<SECURITIES> 0
<RECEIVABLES> 4,370
<ALLOWANCES> 259
<INVENTORY> 4,934
<CURRENT-ASSETS> 9,371
<PP&E> 33,597
<DEPRECIATION> 15,283
<TOTAL-ASSETS> 29,559
<CURRENT-LIABILITIES> 6,212
<BONDS> 0
0
0
<COMMON> 53
<OTHER-SE> 15,635
<TOTAL-LIABILITY-AND-EQUITY> 29,559
<SALES> 19,313
<TOTAL-REVENUES> 19,313
<CGS> 13,240
<TOTAL-COSTS> 17,300
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 248
<INCOME-PRETAX> 2,013
<INCOME-TAX> 784
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,229
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
</TABLE>
