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 October 2, 1999
[ ] 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 October 2, 1999, 4,999,249 shares of $.01 par value common
stock and 670,274 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
October 2, 1999
With Comparative Figures for December 31, 1998
(Dollars in Thousands)
October 2, 1999 December 31,
(Unaudited) 1998
_______________ ____________
Current Assets:
Cash $ 554 $ 523
Accounts receivable 6,565 5,435
Inventories 8,741 4,935
Prepaid expenses 350 1,229
________ ________
Total current assets 16,210 12,122
Property, Plant and Equipment 55,656 44,090
Less accumulated depreciation
and amortization 21,531 19,096
________ ________
Net property, plant and equipment 34,125 24,994
Unexpended Industrial Revenue
Bond Proceeds 0 4,657
Other Assets 2,142 1,934
________ ________
$ 52,477 $ 43,707
======== ========
Current Liabilities:
Current maturities of
long-term liabilities $ 450 $ 446
Accounts payable 7,351 2,939
Accrued expenses 1,747 2,085
Income taxes 39 347
________ ________
Total current liabilities 9,587 5,817
Other Liabilities 16,894 15,160
Shareholders' Equity:
Common stock, $.01 par value
Authorized 10,000,000 shares, issued
5,318,654 in 1999, 5,225,001 in 1998 53 52
Class B common stock, $.01 par value
Authorized 5,000,000 shares, issued
670,274 in 1999, 693,660 in 1998 7 7
Additional paid-in capital 2,904 2,681
Retained earnings 23,894 20,932
________ ________
26,858 23,672
Less shares in Treasury, at cost 862 942
________ ________
Total shareholders' equity 25,996 22,730
$ 52,477 $ 43,707
See notes to financial statements. ======== ========
<PAGE>
ASTRONICS CORPORATION
Consolidated Statement of Income and Retained Earnings
Period Ended October 2, 1999
With Comparative Figures for 1998
(Dollars in Thousands)
(Unaudited)
NINE MONTHS THREE MONTHS
______________________ _______________________
1999 1998 1999 1998
____ ____ ____ ____
Net Sales $ 35,475 $ 33,042 $ 12,017 $ 11,689
Costs and Expenses:
Cost of products sold 25,097 22,991 8,537 8,038
Selling, general and
administrative
expenses 5,784 5,715 1,744 1,950
Interest expenses,
net of interest income
of $75 in 1999 and
$0 in 1998 147 301 59 121
_______ _______ _______ _______
Total costs
and expenses 31,028 29,007 10,340 10,109
_______ _______ _______ _______
Income before taxes 4,447 4,035 1,677 1,580
Provision for income taxes 1,485 1,420 544 531
_______ _______ _______ _______
Net Income 2,962 2,615 1,133 1,049
======= =======
Retained Earnings:
January 1 20,932 16,640
_______ _______
October 2 $ 23,894 $ 19,255
======= =======
Earnings per share:
Basic $ .53 $ .47 $ .20 $ .19
======= ======= ======== ======
Diluted $ .50 $ .44 $ .19 $ .18
See notes to financial statements.
<PAGE>
ASTRONICS CORPORATION
Consolidated Statement of Cash Flows
Nine Months Ended October 2, 1999
With Comparative Figures for 1998
(Dollars in Thousands)
(Unaudited)
1999 1998
____ ____
Cash Flows from Operating Activities:
Net income $ 2,962 $ 2,615
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 2,647 2,228
Provision for doubtful accounts (49) 29
Provision for deferred taxes 192 8
Cash flows from changes in operating
assets and liabilities:
Accounts receivable (1,081) (1,175)
Inventories (3,806) (568)
Prepaid expenses 879 151
Accounts payable 4,412 1,014
Accrued expenses (338) (390)
Income taxes (308) (155)
Deferred compensation 97 93
_______ ________
Net Cash provided by
Operating Activities $ 5,607 $ 3,850
_______ ________
Cash Flows from Investing Activities:
Change in other assets (419) (89)
Capital expenditures (11,567) (7,243)
_______ ________
Net Cash used by
Investing Activities $(11,986) $ (7,332)
_______ ________
Cash Flows from Financing Activities:
New long-term debt 1,800 4,368
Principal payments on long-term
debt and capital lease obligations (351) (1,083)
Unexpended industrial revenue
bond proceeds 4,657 0
Proceeds from issuance of stock 304 221
_______ ________
Net Cash provided by
Financing Activities $ 6,410 $ 3,506
_______ ________
Net increase in Cash and
Cash Equivalents 31 24
Cash and Cash Equivalents at
Beginning of Year 523 740
_______ ________
Cash and Cash Equivalents at October 2 $ 554 $ 764
======= ========
Disclosure of cash payments for:
Interest $ 189 $ 320
Income taxes 1,567 1,568
See notes to financial statements.
<PAGE>
ASTRONICS CORPORATION
Notes to Financial Statements
October 2, 1999
1) The accompanying unaudited statements have been prepared in
accordance with generally accepted accounting principles for
interim financial information. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete
financial statements. In the opinion of management, all
adjustments considered necessary for a fair presentation
have been included. The results of operations for any
interim period are not necessarily indicative of results for
the full year. Operating results for the nine-month period
ended October 2, 1999 are not necessarily indicative of the
results that may be expected for the year ended December 31,
1999.
The balance sheet at December 31, 1998 has been derived from
the audited financial statements at that date, but does not
include all of the information and footnotes required by
generally accepted accounting principles for complete
financial statements.
For further information, refer to the financial statements
and footnotes thereto included in the Company's 1998 annual
report.
2) Inventories are stated at the lower of cost or market, cost
being determined in accordance with the first-in, first-out
method. Inventories are as follows:
(in thousands)
October 2, 1999 December 31,
(Unaudited) 1998
_______________ ____________
Finished goods $1,905 $1,357
Work in progress 1,103 1,064
Raw material 5,733 2,514
______ ______
$8,741 $4,935
====== ======
3) Other liabilities consist of the following:
(in thousands)
October 2, 1999 December 31,
(Unaudited) 1998
_______________ ____________
Long-Term Debt $13,088 $11,319
Long-Term Obligations
under Capital Leases 465 789
Deferred Income Taxes 1,262 1,070
Deferred Compensation 2,079 1,982
______ ______
$16,894 $15,160
====== ======
<PAGE>
ASTRONICS CORPORATION
Notes to Financial Statements (Continued)
October 2, 1999
4) The Company adopted SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information," at
December 31, 1998, which changes the way the Company reports
information about its operating segments.
The Company operates in two areas: Aerospace and
Electronics, and Specialty Packaging. Operations in
Aerospace and Electronics involve the design, manufacturing
and marketing of state-of-the-art and advanced technological
components incorporated into functional systems including
instrument panels, photo reproductions and keyboard
technologies. Customers are typically well-known companies
in the automotive, aerospace, defense, and electronics
industries worldwide. Operations in Specialty Packaging
involve the design, manufacturing and marketing of folding
paperboard packaging for customers' delivery of their
products and high quality custom imprinting of napkins,
invitations and other paper products. The Company is a
dominant provider of custom folding boxes in chosen markets.
(in thousands) Nine Months Nine Months
Ended October 2, 1999 Ended October 3, 1998
_____________________ _____________________
Aerospace Aerospace
and Specialty and Specialty
Electronics Packaging Electronics Packaging
___________ _________ ___________ _________
Sales to external
customers $18,553 $16,922 $17,670 $15,372
Income before taxes 2,295 2,027 2,369 1,226
Segment assets 23,733 27,765 14,140 24,475
The Aerospace and Electronics segment has moved into a new
80,000 square foot facility, which will replace four leased
facilities in its New Hampshire operation. Also, during the
Quarter ended July 3, 1999, they started construction of a
70,000 square foot manufacturing facility in New York.
The segment asset value changed from October 3, 1998 to
October 2, 1999 as follows:
(in thousands) Aerospace Specialty
and Electronics Packaging
_______________ _________
October 3, 1998 $14,140 $24,475
Land acquisitions 350 --
Building construction 7,600 --
Die Cutting equipment -- 2,700
Other, net 1,643 590
______ ______
October 2, 1999 $23,733 $27,765
<PAGE>
ASTRONICS CORPORATION
Notes to Financial Statements (Continued)
October 2, 1999
A reconciliation of combined income before taxes for the
nine-month period is as follows:
(in thousands) Nine Months Ended
October 2, 1999 October 3, 1998
_______________ _______________
Income before taxes
from segments $4,322 $3,595
Corporate income, net 125 440
______ ______
Income before taxes $4,477 $4,035
====== ======
5) On July 1, 1999, the Company renegotiated its financial
arrangements, including changing financial institutions. As
a result of the changes, the Company's Revolver is a five-
year program with a $12,000,000 line, with interest at the
bank's prime rate, or LIBOR plus 60 basis points. At the end
of five years, the Company may convert the outstanding
balance to a four-year term loan. The Company also changed
the letter of credit arrangement and the remarketing
agreement on the Industrial Revenue Tax-Exempt Bonds issued
through the Business Finance Authority of the State of New
Hampshire. The new letter of credit is 50 basis points vs.
75 basis points under the previous agreement. The Company
also arranged the financing for the Industrial Revenue Tax-
Exempt Bonds to be issued through the County of Erie, State
of New York, in connection with the construction of the
Aerospace and Electronics segment's construction project in
New York. It is anticipated that this will close early in
the Fourth Quarter. The financial terms are similar to the
New Hampshire transaction.
<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
Nine Months Period-to-Period
ended October 2, Increase (Decrease)
____________________ ___________________
1999 1998 1998-1999
____ ____ _________
Net Sales:
Aerospace and
Electronics 52.3% 53.5% 5.0 %
Specialty Packaging 47.7 46.5 10.1 %
_____ _____
100.0% 100.0% 7.4 %
Cost of products sold 70.8 69.6 9.2 %
Selling, general and
administrative
expenses 16.3 17.3 1.2 %
Interest expenses, net .4 .9 (51.2)%
_____ _____
87.5% 87.8% 7.0 %
Income before provision
for income taxes 12.5% 12.2% 10.2 %
Provision for taxes 4.2 4.3 4.6 %
_____ _____
Net Income 8.3% 7.9% 13.3 %
===== =====
INTRODUCTION Astronics Corporation operates in two business
segments: Aerospace and Electronics; and Specialty
Packaging. The Company changed the name of its
Electronics Systems segment in 1997 to Aerospace
and Electronics to better reflect its products and
market focus. This business segment designs,
manufactures and markets electroluminescent lamps
and incorporates them into escape path lighting
systems, aircraft cockpit lighting systems,
military aircraft formation lighting, and
ruggedized and avionics keyboards.
On October 27, 1999, the Company closed an
Industrial Revenue Tax-Exempt Bond with the Erie
County Industrial Development Agency of Erie
County, State of New York for $7,000,000. The
<PAGE>
interest rate floats with tax exempt funds and is
reset every seven days. These funds are being used
to finance the new East Aurora, New York
manufacturing facility and production equipment
for expanded customer needs.
Late in the Third Quarter of 1999, the Company
started shipments on the NVIS F-16 (night vision
lighting modification kits) program. The Company
expects these shipments to increase, and, by the
end of 1999, to be at the scheduled annualized
rate. The Company has $29,000,000 in backlog and
it expects the United States Air Force to exercise
additional production options in the future.
On July 1, 1999, the Company established a
$12,000,000 five-year revolving line of credit at
the bank's prime rate or LIBOR plus 60 basis
points. The revolver can be converted to a four-
year term loan at the end of five years.
The Aerospace and Electronics segment completed
their move into the new manufacturing facility in
Lebanon, New Hampshire during October 1999. Basic
construction on the new 80,000 square foot
building was completed late in the Second Quarter,
with the installation of equipment and systems
completed in the Third Quarter. This allows the
Company to consolidate its New Hampshire
operations, previously in four leased locations,
into a single facility.
On May 12, 1999, the Company's Aerospace and
Electronics segment acquired 14.9 acres of land in
East Aurora, New York, and has started
construction of a 70,000 square foot manufacturing
facility on this new property. The Company plans
to close a tax-exempt bond transaction early in
the Fourth Quarter to finance this project. The
Company anticipates completion of the construction
and installation of equipment and systems during
the First Quarter of 2000, and the acquisition of
equipment over the next 24 months.
On March 17, 1999, The Erie County Industrial
Development Agency, Buffalo, NY authorized the
issuance and sale of tax-exempt Industrial Revenue
Bonds up to $7,500,000 for Luminescent Systems,
Inc. to acquire land and construct a new
manufacturing facility in East Aurora, NY.
On April 24, 1998, the Company announced that the
United States Air Force (USAF) had selected its
Luminescent Systems Inc. subsidiary to design,
develop and manufacture night vision lighting
modification kits for the NVIS F-16 program. The
<PAGE>
contract with the Air Force is potentially valued
in excess of $50,000,000. The initial award is for
377 F-16 aircraft to be completed in year 2000 for
a revenue value in excess of $16,000,000. The USAF
exercised its second option on February 10, 1999
for an additional 305 units for approximately
$13,500,000. An additional 474 units, upon
exercise of the government's option, would be
manufactured in the following years.
On December 30, 1998, the Company closed an
Industrial Revenue Tax-Exempt Bond with the
Business Finance Authority of the State of New
Hampshire for $7,250,000. The interest rate floats
with tax-exempt funds and is reset every seven
days. These funds are being used to finance the
new Lebanon, New Hampshire facility and
manufacturing equipment for expanded production
needs.
During the Third Quarter of 1998, the New
Hampshire operations of the Aerospace and
Electronics segment received their ISO 9001
certification. In the Third Quarter of 1997, the
Specialty Packaging segment received its ISO 9001
certification.
SALES The Company reported record sales for the Third
Quarter, for the first nine months of the year,
and for the trailing twelve months. Sales
increased 2.8 percent for the quarter to
$12,017,000, compared to a 14.5 percent gain for
the same quarter in 1998 (sales were $11,689,000),
which was up from 1997 Third Quarter sales of
$10,214,000. The sales were lower than anticipated
as the Company was delayed in starting shipments
on the NVIS F-16 contract. The year-to-date sales
are $35,475,000, a 7.4 percent increase in 1999,
compared to $33,042,000, which were 11.9 percent
ahead of 1997 sales of $29,527,000. Sales for the
first nine months of 1999 were 52.3 percent in the
Aerospace and Electronics segment, compared to
53.5 percent in 1998 and 50.2 percent in 1997.
Specialty Packaging accounted for 47.7 percent of
1999 sales compared to 46.5 percent in 1998, which
compared to 49.8 percent in 1997.
The Aerospace and Electronics segment's sales have
increased 5.0 percent for the first nine months of
1999, compared to 19.2 percent for the first nine
months of 1998, which compared to an increase of
4.3 percent in 1997. The segment's sales were
negatively affected by the delay in shipments of
the NVIS F-16 program. The total contract remains
in place, and the Company expects it to be
fulfilled over the next three years. Shipments in
1999 were strongest in escape path lighting
<PAGE>
systems product line, compared to 1998 when sales
were especially strong in three product lines:
1) military aircraft formation lights, 2) escape
path lighting systems, and 3) cockpit lighting
systems. The Company's order activity remains
solid. Pricing for comparable products is
nominally the same this year as last year.
The Specialty Packaging segment sales increased
10.1 percent for the first nine months of 1999,
compared to 4.6 percent in 1998, which compared to
a 16.4 percent increase in 1997. In 1998,
customers' management of their inventories
affected the timing of sales. This reflected the
just-in-time philosophy that is prevalent in
today's business world. During 1999, the Company's
sales have been strong in the custom packaging
market resulting from expansion of product
capabilities. The Company continues to expand its
overall market share in its chosen market niche
through focus on customer service with on-time
deliveries, high quality products and short
turnaround times. Pricing remains nominally the
same for similar products.
BACKLOG The Company's backlog increased 93.4 percent in
1999 to $42,852,000, compared to 99.6 percent in
1998, which was the previous Third Quarter all
time record, of $22,153,000. This compares to
$10,800,000 at December 31, 1997. The backlog is
composed of $40,977,000 in the Aerospace and
Electronics segment and $1,875,000 in the
Specialty Packaging segment.
EXPENSES The cost of products sold increased 9.2 percent in
1999 compared to a sales gain of 7.4 percent. In
1998, cost of products sold increased 14.0
percent. As a percentage of sales, cost of goods
sold was 70.8 percent in 1999, 69.6 percent in
1998 and 68.3 percent in 1997. The increase in
1999 reflects increased costs for employees,
manufacturing supplies and depreciation. The
increase in 1998 reflected higher material and
employee costs. Material costs were 19.8 percent
of sales in 1999, 20.6 percent of sales in 1998,
and 20.0 percent of sales in 1997. The material
cost changes over these three years relates to
product mix changes. The increase in employee
costs reflect additional personnel supporting the
technical aspects of the businesses. These costs
were 29.8 percent of sales in 1999, 29.1 percent
of sales in 1998, compared to 28.5 percent of
sales in 1997. The decrease in overall product
costs in 1997 resulted from improved productivity
and the reduction of tooling and supply costs in
technology transitions. As a percent of sales, the
Company experienced higher rental and repair costs
<PAGE>
in 1998, as another facility was leased in the
Aerospace and Electronics segment to meet
production needs. The remaining expense categories
increased at a lower rate than the sales growth.
Actual Gross Profit dollars increased to
$10,378,000 in 1999, compared to $10,051,000 in
1998, and $9,362,000 in 1997.
Selling, general and administrative expenses are
more permanent in nature, and less related to
sales volume. These expenses continued to decrease
as a percentage of sales: 16.3 percent in 1999,
17.3 percent in 1998, and 18.8 percent in 1997.
The majority of these costs are for employee
services. Net Operating Profit has increased in
total dollars: $4,594,000, or 12.9 percent of
sales in 1999, $4,336,000, or 13.1 percent of
sales in 1998, compared to $3,819,000, or 12.9
percent of sales in 1997.
INTEREST Interest costs, net, decreased in 1999 to $147,000
compared to $301,000 in 1998, and $349,000, in
1997. The continual decrease in total indebtedness
reflects the strong positive cash flow that has
allowed steady reduction of indebtedness. As a
percent of sales, net interest costs were .4
percent in 1999, .9 percent in 1998, and 1.2
percent of sales in 1997. Under accounting rules,
the interest on the 1998 Industrial Revenue Bond
has been capitalized during the construction
period. As this project becomes complete (October
30, 1999), the Company will experience higher
interest costs, as these costs will be reflected
in the income statement.
The Company is currently investing daily excess
cash in overnight commercial paper. As working
capital notes become due, the excess cash is being
used to reduce outstanding loans on the revolving
line of credit. In 1998, the Company did not
invest available overnight funds, but elected to
use them to offset bank fees; therefore, no
interest was earned in 1998. The revolving line of
credit is priced at LIBOR plus 60 basis points, as
of July 1, 1999. Previously, the pricing was LIBOR
plus 100 basis points. Gross interest expense was
$222,000 in 1999, $301,000 in 1998, and $363,000
in 1997.
INCOME BEFORE
TAXES As a result of the continuing increases in sales
at a greater rate than total expenses, income
before taxes increased to 12.5 percent of sales in
1999, compared to 12.2 percent of sales in 1998,
and compared to 11.8 percent of sales in 1997. The
Company reported income before taxes of $4,447,000
for the first nine months of 1999, compared to
$4,035,000 in 1998, which compared to $3,470,000
in 1997.
<PAGE>
TAXES The Company's tax provision takes into account the
federal and state taxes for which it is liable.
The Company records its tax expense under the FASB
109 guidelines. The 1999 tax provision is 4.2
percent of sales, which is at a lower effective
tax rate than experienced in previous years. This
reflects the Company's establishment of a foreign
sales corporation to reflect its growing
international business. The 1998 provision for
taxes was 4.3 percent of sales, compared to 4.4
percent of sales in 1997. The tax expense also
reflects the adjustment in 1998 and in 1997 for
the previous year's tax accrual to actual tax
expenses on the returns as filed with government
agencies. The company experienced more favorable
deductions and state allocation ratios than
initially anticipated, which resulted in lower
actual taxes.
NET INCOME Net income for the first nine months of 1999
established a new record: $2,962,000, or $.50 per
diluted share, compared to $2,615,000, or $.44 per
diluted share in 1998, and compared to $2,166,000,
or $.37 per diluted share in 1997. The 1998 and
1997 per share earnings have been restated to
reflect the 10 percent share distribution made in
the fall of 1998.
LIQUIDITY Cash flow from operating activities was $5,607,000
in 1999, compared to $3,850,000 in 1998, and
compared to $3,436,000 in 1997. The Company
experienced a $1,081,000 increase in receivables
since January 1, 1999 and an increase in inventory
of $3,806,000. Much of the increase in inventories
reflects the higher level of F-16 inventory that
has been accumulated in anticipation of shipments,
which started late in the Third Quarter. The
receivable increase appears to be a timing issue,
as the Company's provision for doubtful accounts
is favorable for the first nine months of 1999.
Receivables increased $1,175,000 during the same
period last year, while inventories increased
$568,000. Accounts payable increased $4,412,000
reflecting special terms on payment for Die
Cutting equipment that are delayed until January
2000, for $2,400,000, and for delayed payment
terms on F-16 inventory component purchases of
approximately $1,000,000. The Company has invested
$11,567,000 in land, construction in progress on
new buildings, and new equipment in 1999. This
compares to $7,243,000 in 1998. The Company
reduced its indebtedness in 1999 by $351,000,
compared to $1,083,000 in 1998. The Company
borrowed an additional $1,800,000 in 1999 to
temporarily finance the new East Aurora, New York,
manufacturing facility while the long-term
financing was being finalized. This financing was
<PAGE>
completed on October 27, 1999. In 1998 the Company
borrowed $4,368,000 for similar needs as in 1999,
with the New Hampshire financing being completed
on December 30, 1998. In May 1998, the Company
made the final installment on a five-year term
loan.
The Company has a $12,000,000 revolving line of
credit available for additional working capital
needs, of which it had utilized $5,600,000 at
October 2, 1999, compared to $4,969,000 at the end
of the Third Quarter of 1998, and compared to
$2,500,000 at the end of the Third Quarter of
1997. 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 1999 and
2000, after the financing of the land and building
project in New York is completed.
COMMITMENTS The Company has outstanding commitments for
capital investments of approximately $340,000 at
October 2, 1999 [this excludes the project in the
next paragraph], compared to $1,200,000 at the end
of the Third Quarter of 1998, and $4,000,000 at
September 28, 1997. During the Second Quarter of
1997, the Company repurchased its shares of common
stock owned by ATRO Companies Profit
Sharing/401(k) Plan for $532,000. The Company has
commitments for items that it purchases in the
normal ongoing 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.
The Company is currently constructing a 70,000
square foot manufacturing facility in East Aurora,
New York. They have purchased approximately 15
acres of land and have committed to the
construction of a new facility for the Aerospace
and Electronics business unit. The estimated
costs, excluding land that has been purchased, are
$6,000,000 for the manufacturing facility and
$2,500,000 for manufacturing equipment. The
building construction should be completed in early
2000, with the equipment being purchased over the
next 24 months. The Company acquired the land in
May and started actual construction of the
facility in June. The Company owns its current
facility in East Aurora, New York.
YEAR 2000 The Company employs several different computer
systems for financial, engineering, manufacturing
and administrative purposes. The Company purchases
these systems, both hardware and software.
<PAGE>
Therefore, it does not have programmers writing
code internally. In the last year, the Company has
been able to install Year 2000 compliant upgrades
to its systems. At the end of the Third Quarter,
the Company believes it is ready for the Year
2000. The Company will continue to verify and test
systems.
The Company has addressed the Year 2000 issue by
identifying software usage by equipment, or
application. Then the Company classified each
usage on a critical, non-critical basis to
determine priority. Once this was accomplished, an
individual was assigned responsibility to resolve
each issue. A testing procedure was developed to
allow the Company to verify that the solutions met
the Year 2000 issues. The Company also obtained
letters or reports from major and critical
suppliers as to their ability to meet the Year
2000 issues. At this time, the Company is not
aware of any vendors reporting Year 2000 issues
that would affect the continuous operations of the
business. However, we can offer no assurances that
our vendors will in fact be Year 2000 compliant.
The total invested for software upgrades was
approximately $200,000. The Company continues to
monitor this area.
<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: November 10, 1999
ASTRONICS CORPORATION
_________________________________
/s/ John M. Yessa
_________________________________
(Signature)
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 October 2
1999 1998
____ ____
Net income $ 2,962 $ 2,615
======== ========
Basic earnings per share
weighted average shares 5,584 5,534
Net effect of dilutive
stock options 388 395
________ ________
Diluted earnings per share
weighted average shares 5,972 5,929
======== ========
Basic earnings per share $ .53 $ .47
======== ========
Diluted earnings per share $ .50 $ .44
======== ========
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> OCT-02-1999
<CASH> 554
<SECURITIES> 0
<RECEIVABLES> 6,565
<ALLOWANCES> 189
<INVENTORY> 8,741
<CURRENT-ASSETS> 16,210
<PP&E> 55,656
<DEPRECIATION> 21,531
<TOTAL-ASSETS> 52,447
<CURRENT-LIABILITIES> 9,587
<BONDS> 0
0
0
<COMMON> 60
<OTHER-SE> 25,996
<TOTAL-LIABILITY-AND-EQUITY> 52,447
<SALES> 35,475
<TOTAL-REVENUES> 35,475
<CGS> 25,097
<TOTAL-COSTS> 31,028
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 147
<INCOME-PRETAX> 4,447
<INCOME-TAX> 1,485
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,962
<EPS-BASIC> .53
<EPS-DILUTED> .50
</TABLE>
