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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 1997
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)
Registrant's telephone number
including area code (716) 447-9013
Securities registered pursuant to Section 12(b) of the Act: None
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 twelve
months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days.
Yes _X_ No ___
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10K or any amendment to this
Form 10K. (X)
EXHIBIT INDEX APPEARS ON PAGE 16
Page 1 of 17
As of March 6, 1998, 4,322,874 shares of Common Stock and
711,387 shares of Class B Stock were outstanding, and the
aggregate market value of the shares of Common Stock and Class B
Stock (assuming conversion of all of the outstanding Class B
Stock into Common Stock) of Astronics Corporation held by non-
affiliates was approximately $35,373,000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's 1997 Annual Report to
Shareholders are incorporated into Parts II and III of this
Report. Portions of the Registrant's Proxy Statement for the
1998 Annual Meeting of Shareholders dated March 18, 1998 are
incorporated by reference into Part III of this Report.
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PART I
Item 1. BUSINESS
Profile
Astronics Corporation ("Astronics", "Company", or
"Registrant"), a New York corporation formed in 1968, is a
diversified company engaged principally in the design,
manufacture and marketing of products and processes in two
business segments: "Aerospace and Electronics" and "Specialty
Packaging." Aerospace and Electronics is involved in the design,
manufacture, and marketing of advanced technology products.
Major applications include specialized lighting systems and
ruggedized electro-mechanical assemblies. The Specialty
Packaging segment is predominantly a direct marketing provider of
proprietary designs of paperboard folding boxes and paper
products.
Aerospace and Electronics
The Company's Aerospace and Electronics segment is involved
in the design, manufacture, and sales of technically
sophisticated systems and components for a variety of
applications. Most of these applications are based on specialty
lighting requirements. Approximately 20 percent of the segment's
sales are defense-related and 27 percent of sales are
international. The Company maintains a sales/engineering office
in Belgium to support international relationships.
The Aerospace and Electronics segment operates manufacturing
facilities in East Aurora, NY, and Lebanon, NH.
Electroluminescent Lamps: One of the Company's core
technologies is designing and manufacturing electroluminescent
(EL) lamps. EL is a phenomenon whereby phosphors, when
sandwiched between two electrodes and exposed to alternating
current, emit light. The resultant lamps are efficient, durable,
thin, and flexible compared to other lighting technologies, and
have become a preferred light source for many lighting
applications in products as varied as automobiles, home light
fixtures, and consumer electronics.
The Company also manufactures power conversion devices,
commonly called "inverters," to power EL lamps. EL lamps are
best driven by alternating current, but typically only direct
current is available in the end use application. Our inverters
convert DC power to AC, thereby providing power sufficient to
drive EL lamps.
The Company has been involved in EL lighting for over 25
years, and has established itself as a leader in the industry.
Moreover, its EL lighting expertise has been vital in helping it
to establish certain of its other product lines. Still, the
Company recognizes that no light source is ideal for all
applications, and has therefore developed expertise in a number
of other technologies as dictated by its business requirements,
specifically, incandescent, light-emitting diodes, and cold
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cathode fluorescence. These technologies are used selectively in
the Company's various product lines, depending on what is most
appropriate for each specific application.
Escape Path Lighting: The Company manufactures emergency
escape lighting systems for use in aircraft, buildings, and
trains. These systems are designed to help people find exits in
case of crashes, fire, power outages, earthquakes, and other
disasters. Customers are typically vehicle fleet operators,
manufacturers, or third party contractors. Often, the use of
these systems is dictated by governing laws and regulations.
The systems typically include a series of light elements, a
case or mounting system to hold the light elements, and a network
of logic controlled back-up battery systems to power the light
elements. The systems are typically modular in nature, but
require a significant amount of custom documentation to satisfy
regulatory requirements for each installation.
Aircraft Cockpit Lighting: The Company is a major supplier
and integrator of cockpit lighting systems for aircraft. The
Company designs and manufactures integrally illuminated display
panels and related assemblies, integrally illuminated keyboards,
floodlights, ambient light sensors, and dimmable power supplies.
Customers include aircraft manufacturers and avionics electronics
manufacturers. There is a trend in the industry whereby aircraft
manufacturers are seeking system suppliers rather than component
manufacturers, and the company is uniquely positioned to respond
to this trend.
Military Aircraft Formation Lights: The Company is the
world's dominant supplier of EL formation lights for military
aircraft. These lights are essentially EL lamps encapsulated in
a protective shell material, which are then mounted to the
outside skin of military aircraft. These lights provide visual
cues to pilots who are flying in close formation to one another
during night missions. Customers include military aircraft
manufacturers and the government defense procuring activities who
are responsible for maintaining military aircraft in their
fleets. The Company's formation lights can be found on most
modern western military aircraft.
Ruggedized Keyboards: The Company manufactures a wide range
of input/output keyboards for ruggedized computer systems. These
computer systems are often used in military applications, though
not exclusively. In today's world of shrinking defense budgets,
investments continue in battlefield command, control, and
communication systems.
The Company's keyboards range from relatively simple
mechanical devices to complex systems employing various display
technologies, encoding topologies, and communication protocols.
Customers are typically large, well-known defense electronics
companies.
- 4 -
Specialty Packaging
Astronics' Specialty Packaging group designs, manufactures
and markets standard and custom folding cartons, and presentation
products. By possessing such design, manufacturing and marketing
capabilities in-house, the Company provides optimum efficiency
and quality while retaining a wide range of flexibility. This
group delivers products to over 10,000 customers in more than 10
countries and is established , within its chosen markets, as a
sole or preferred supplier for most of its customer base.
The Company also engages in high quality specialty
imprinting of wedding and party invitations, monogrammed napkins,
and related party accessories. These products are directly
marketed primarily through catalogs which are located at
stationery stores, printers, gift shops and specialty boutiques
throughout the United States.
Competitive Conditions
Astronics experiences considerable competition in its
segments, principally in the areas of product performance and
price, from various competitors, many of which are substantially
larger and have greater resources. Success in the Aerospace and
Electronics segment depends upon product innovation, customer
support, responsiveness, and cost management. Astronics
continues to invest in developing the tools critical to competing
in today's worldwide markets. Success in Specialty Packaging is
dependent upon competitive pricing, innovative and responsive
customer support and short lead time delivery performance.
Astronics has invested and will continue to invest in state-of-
the-art process and systems technology.
Raw Materials
Materials, supplies and components are available and
purchased from a wide variety of sources, the loss of any one of
which would not materially affect the Company's operations.
Patents
The Company has a number of patents and has filed numerous
applications for others. While the aggregate protection of these
patents is of value, Registrant does not consider that the
successful conduct of any material part of its business is
dependent upon the protection afforded by these patents. The
Company's patents and patent applications relate to EL,
instrument panels, keyboard technology and various components
used in their manufacture. The Company regards its expertise and
techniques as proprietary and relies upon trade secret laws and
contractual arrangements to protect its rights.
Research Activities
The Company is engaged in a variety of research and
development activities directed to the improvement and
application of the Company's technologies. The extent of the
Company's engagement in pure research, however, is not material.
- 5 -
Employees
The Registrant employed approximately 443 employees as of
December 31, 1997, including 255 in the Aerospace and Electronics
segment, 181 in the Specialty Packaging segment and 7 at the
Corporate level, compared to 393 as of December 31, 1996,
including 204 in the Aerospace and Electronics segment, 182 in
the Specialty Packaging segment and 7 at the Corporate level as
of that date. The Company considers its relations with its
employees to be good.
Working Capital
Inventories constitute a major component of the Company's
working capital, reflective of the production cycle on most of
the Company's products and anticipated production required for
the seasonal aspects of the Company's packaging products. A
substantial portion of the business of the Specialty Packaging
segment consists of proprietary designs of stock boxes used by
the confectionery industry, which requires the Company to
increase inventory at the beginning of its principal seasons.
Financial Information about Industry Segments
Sales, operating profit and identifiable assets attributable
to each of the Registrant's industry segments for each of the
last three years as of December 31, 1997 appear on page 18 of the
Registrant's Annual Report to Shareholders for the fiscal year
ended December 31, 1997, submitted herewith as an exhibit and
incorporated by reference.
Order Backlog
The backlog of orders as of December 31, 1997 was
approximately $10,807,000 ($9,686,000 related to the Aerospace
and Electronics segment and $1,121,000 related to the Specialty
Packaging segment), substantially all of which is expected to be
filled in the current fiscal year. This compares to $10,106,000
($8,784,000 related to the Aerospace and Electronics segment and
$1,322,000 related to the Specialty Packaging segment) as of
December 31, 1996.
Item 2. PROPERTIES
Corporate Headquarters
The Company's corporate office is located at 1801 Elmwood
Avenue, Buffalo, NY 14207, the sight of the largest portion of
the Specialty Packaging segment.
Aerospace and Electronics
Registrant owns manufacturing and office facilities of
approximately 45,000 square feet in the Buffalo, New York area,
and leases approximately 42,000 square feet in Lebanon, New
Hampshire.
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Specialty Packaging
Registrant owns buildings totaling approximately 437,000
square feet in the Buffalo, New York area for its manufacturing
and office facilities. Currently, about 40 percent of the
building space is under lease to others.
The Company believes that the physical properties of the
Registrant are suitable and adequate for the purpose for which
they are employed. Additions and expansions are made as needed.
In general, the productive capacity of the Registrant's physical
properties are in excess of current production requirements and
greater utilization is available.
Item 3. LEGAL PROCEEDINGS
Rodgard Corporation, formerly a wholly-owned subsidiary of
Astronics, and one of its former officers, Mason C. Winfield
("Plaintiffs"), instituted an action against Miner Enterprises,
Inc. and David G. Anderson ("Defendants") on April 10, 1984, in
the United States District Court of the Western District of New
York, seeking damages for breaches of confidentiality agreements
and seeking to be declared a co-inventor of a David G. Anderson
patent. Defendants counterclaimed for unspecified damages
alleging that the Plaintiffs breached a confidentiality provision
pursuant to a consulting agreement between Winfield and Miner.
The judge rendered a decision that neither side has a sufficient
case to enable awards. The case was appealed by Plaintiffs in
the Federal Court of Appeals.
On March 13, 1997 the Court of Appeals remanded the case to
the District Court to permit Plaintiffs to initiate discovery
related to Defendants' foreign patents. The Company is engaging
in discovery to determine the amount of damages and to otherwise
vigorously pursue this claim in District Court. The Company is
not able to estimate damages, if any.
Except for the matter described above, there are no material
pending legal proceedings, other than ordinary routine litigation
incidental to the business, to which the Registrant or any of its
subsidiaries is a party or of which any of their property is the
subject.
Item 4. SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS
Not applicable.
Executive Officers of the Registrant
The following table sets forth the names and ages of all
executive officers of the Company and certain information
- 7 -
relative to their positions with the Company and prior employment
history during at least the past five years:
Position with the Company
Name Age and Prior Employment History
Kevin T. Keane 65 President, Chief Executive
Officer and Director.
John M. Yessa 58 Vice President of Finance,
Treasurer, Chief Financial
Officer and Director.
- 8 -
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
Information with respect to the market price of and
dividends on the Company's Common Stock and related shareholder
matters appears on the inside cover and page 19 of the Company's
Annual Report to Shareholders for the fiscal year ended
December 31, 1997, submitted herewith as an exhibit and
incorporated by reference.
Item 6. SELECTED FINANCIAL DATA
Selected Financial Data appears on page 20 of Registrant's
Annual Report to Shareholders for the fiscal year ended
December 31, 1997, submitted herewith as an exhibit and
incorporated by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
Management's discussion and analysis of financial condition,
changes in financial condition and results of operations appears
on pages 20, 21, 22 and 23 of Registrant's Annual Report to
Shareholders for the fiscal year ended December 31, 1997,
submitted herewith as an exhibit and incorporated by reference.
Item 8. FINANCIAL STATEMENTS
The Financial Statements of Astronics Corporation which are
incorporated by reference in this Annual Report on Form 10-K are
described in the accompanying Index to Financial Statements at
Item 14 of this Report.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
- 9 -
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT
The information regarding directors is contained under the
captions "Election of Directors" and "Record Date and Voting
Securities" in the Company's definitive Proxy Statement dated
March 18, 1998 and is incorporated herein by reference.
Certain information regarding executive officers is
contained under the captions "Executive Compensation" and "Record
Date and Voting Securities" in the Company's definitive Proxy
Statement dated March 18, 1998 and on the back inside cover of
the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1997, submitted herewith as an exhibit, which
are both incorporated herein by reference.
Item 11. EXECUTIVE COMPENSATION
The information contained under the caption "Executive
Compensation" in the Company's definitive Proxy Statement dated
March 18, 1998 is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The information required is contained under the caption
"Record Date and Voting Securities" in the Company's definitive
Proxy Statement dated March 18, 1998, and is hereby incorporated
by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of March 6, 1998, the Company knows of no relationships
required to be disclosed pursuant to Item 404 of Regulation S-K.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K
(a) The documents filed as a part of this report are as
follows:
1. Financial Statements
2. Financial Statement Schedules
See Index to Financial Statements and
Financial Statement Schedules on page 14 of this report.
All other consolidated financial schedules
are omitted because they are inapplicable, not required, or
the information is included elsewhere in the consolidated
financial statements or the notes thereto.
- 10 -
3. Exhibits
Exhibit No. Description
3(a) Restated Certificate of Incorporation, as
amended; incorporated by reference to exhibit
3(a) of the Registrant's December 31, 1988
Annual Report on Form 10-K.
(b) By-Laws, as amended; incorporated by
reference to exhibit 3(b) of the Registrant's
December 31, 1988 Annual Report on Form 10-K.
10.1 Restated Thrift and Profit Sharing Retirement
Plan; incorporated by reference to exhibit
10.1 of the Registrant's December 31, 1994
Annual Report on Form 10-KSB.
10.3 Incentive Stock Option Plan; incorporated by
reference to the Registrant's definitive
proxy statement dated March 26, 1982.
10.4 Director Stock Option Plan; incorporated by
reference to the Registrant's definitive
proxy statement dated March 16, 1984.
10.5 Employment Contract of Kevin T. Keane;
incorporated by reference to Exhibit 10.5 of
the Registrant's registration statement on
Form S-2 (No. 33-8040).
10.7 Employment Contract of John M. Yessa;
incorporated by reference to Exhibit 10.7 of
the Registrant's registration statement on
Form S-2 (No. 33-8040).
10.10 1992 Incentive Stock Option Plan;
incorporated by reference to the Registrant's
definitive proxy statement dated March 30,
1992.
10.11 1993 Director Stock Option Plan; incorporated
by reference to the Registrant's definitive
proxy statement dated March 19, 1993.
10.12 1997 Director Stock Option Plan; incorporated
by reference to the Registrant's definitive
proxy statement dated March 14, 1997.
13 1997 Annual Report to Shareholders filed
herewith. (Except for those portions which
are expressly incorporated by reference to
the Annual Report on Form 10-K, this exhibit
is furnished for the information of the
Securities and Exchange Commission and is not
deemed to be filed as part of this Annual
Report for Form 10K.)
- 11 -
21 Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
27 Financial Data Schedule.
(b) Reports on Form 8-K
None
- 12 -
ASTRONICS CORPORATION
INDEX TO FINANCIAL STATEMENTS
The financial statements, together with the report thereon of
Ernst & Young LLP dated January 22, 1998, appearing on pages 8 to
19 of the accompanying 1997 Annual Report to Shareholders are
incorporated by reference in this Annual Report on Form 10-K.
Financial schedules for the years 1997, 1996 and 1995:
Page
Valuation and Qualifying Accounts F-2
- 13 -
SCHEDULE II
ASTRONICS CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Balance at the Charged to
Beginning of Costs and Write-offs/ Balance at
Year Description Period Expense Recoveries End of Period
1997 Allowance
for Doubtful
Accounts $404 $111 $(288) $227
1996 Allowance
for Doubtful
Accounts $359 $176 $(131) $404
1995 Allowance
for Doubtful
Accounts $367 $125 $(133) $359
- 14 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on March 27, 1998.
Astronics Corporation
By /s/ Kevin T. Keane By /s/ John M. Yessa
Kevin T. Keane, President John M. Yessa, Vice President-
and Chief Executive Officer Finance and Treasurer,
Principal Financial and
Accounting Officer
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Signature Title Date
/s/ Robert T. Brady Director March 27, 1998
Robert T. Brady
/s/ John B. Drenning Director March 27, 1998
John B. Drenning
/s/ Kevin T. Keane Director March 27, 1998
Kevin T. Keane
/s/ Robert J. McKenna Director March 27, 1998
Robert J. McKenna
/s/ John M. Yessa Director March 27, 1998
John M. Yessa
- 15 -
ASTRONICS CORPORATION
INDEX TO EXHIBITS
Sequential
Exhibit No. Description Page Number
3(a) Restated Certificate of Incorporation,
as amended; incorporated by reference
to exhibit 3(a) of the Registrant's
December 31, 1988 Annual Report on
Form 10-K.
(b) By-Laws, as amended; incorporated by
reference to the Registrant's December 31,
1988 Annual Report on Form 10-K.
10.1 Restated Thrift and Profit Sharing
Retirement Plan; incorporated by
reference to the Registrant's
December 31, 1994 Annual Report on
Form 10-KSB.
10.3 Incentive Stock Option Plan; incorporated
by reference to the Registrant's definitive
proxy statement dated March 26, 1982.
10.4 Director Stock Option Plan; incorporated
by reference to the Registrant's definitive
proxy statement dated March 16, 1984.
10.5 Employment Contract of Kevin T. Keane;
incorporated by reference to Exhibit 10.5
of the Registrant's registration statement
on Form S-2 (No. 33-8040).
10.7 Contract of John M. Yessa; incorporated
by reference to Exhibit 10.7 of the
Registrant's registration statement on
Form S-2 (No. 33-8040).
10.10 1992 Incentive Stock Option Plan;
incorporated by reference to the
Registrant's definitive proxy statement
dated March 30, 1992.
10.11 1993 Director Stock Option Plan;
incorporated by reference to the
Registrant's definitive proxy statement
dated March 19, 1993.
10.12 1997 Director Stock Option Plan;
incorporated by reference to the
Registrant's definitive proxy statement
dated March 14, 1997.
- 16 -
13 1997 Annual Report to Shareholders filed
herewith. (Except for those portions which
are expressly incorporated by reference to
the Annual Report on Form 10-K, this exhibit
is furnished for the information of the
Securities and Exchange Commission and is
not deemed to be filed as part of this Annual
Report on Form 10-K.)
21 Subsidiaries of the Registrant.
23 Consent of Independent Auditors.
27 Financial Data Schedule.
- 17 -
EXHIBIT 13
ASTRONICS CORPORATION 1997 ANNUAL REPORT
Astronics is a niche-oriented company which, by virtue of
its strategic and operational focus, achieves growth and income
objectives that exceed its industry norms.
Composed of two business groups, operating in the segments
of Aerospace and Electronics, and Specialty Packaging, the
businesses are decentralized with the autonomy necessary to
capitalize on rapid changes in today's business environment.
Growth opportunities are targeted that can benefit from our
technical and operational superiority. This enables Astronics to
provide unique product diversity and performance capabilities,
competitive market pricing, and performance with exceptional
response standards.
Astronics enjoys substantial market share dominance within
its business areas. In each of its segments, the company aims to
be the sole source or the preferred provider for the majority of
the business.
Financial Highlights
(in thousands except for per share data)
1997 1996 1995 1994 1993
Net Sales $ 40,972 $ 38,371 $ 28,536 $ 24,944 $ 23,957
Net Income 3,551 2,657 1,760 1,306 1,188*
Diluted Earnings
Per Share .67 .51 .37 .26 .24*
Shareholders' Equity 18,198 14,842 11,726 10,334 9,414
Book Value Per Share 3.63 2.99 2.46 2.13 1.86
Stock Market
Price - High 12.50 6.00 3.10 2.50 2.60
Stock Market
Price - Low 4.88 2.80 1.60 1.50 1.60
Return on Equity 23.9% 22.7% 17.0% 13.9% 14.5%
(on January 1 Equity)
*Includes extraordinary expense item net of income taxes $307
($.06 per share)
Graph inserted depicting Net Sales (in millions) of Astronics:
1993 1994 1995 1996 1997
23.9 24.9 28.5 38.3 40.9
Performance Highlights
New state-of-the-art computerized Bobst die cutting equipment
purchased by Specialty Packaging has reduced make-ready from
hours to minutes and increased production rates substantially.
This allows lower lot sizes, smaller inventories and exceptional
response capability.
The new MaxEL lamp creates a new generation of electroluminescent
technology and is leading Astronics into numerous new consumer
electronics and automotive markets.
Innovative partnerships such as the Hershey products program will
continue to move Specialty Packaging to increased penetration
throughout its market niches where technology, competence and
exceptional responsiveness are critical success factors.
Message to our Shareholders
It is a pleasure to again report record sales, earnings,
return on equity and record highs for our stock prices. The
results for 1997 reflect the continuation of strong operations,
increasing product offerings, expanding market opportunities, and
management believes, the emergence of growing double-digit sales.
The 1997 shipments were $40,972,000, an 11% increase from
ongoing operations. As a result of continued productivity gains,
earnings increased 34% to $3,551,000 or $.67 per share. For each
of the last three years, earnings have grown in excess of 30% per
year. Return on shareholder equity increased to 24% in 1997.
All told, the market has rewarded this performance with a 90%
increase in the price of the stock during 1997.
Our confidence is reflected in the strong investments that
we continue to make to expand our facilities, advance
technological capabilities, improve process efficiencies and
enhance competitive leverage. During the last five years,
capital expenditures for product development, technological
improvements, and facility expansions, with the exclusion of
acquisitions, have exceeded 11% of sales. In 1997 alone, this
figure exceeded $3,000,000 or 7% of sales. For 1998, we expect
these commitments to be approximately 15% of sales.
It is our conviction that we are well positioned for
increasing growth rates. This will be driven by a number of new
product offerings and market strategies in our business segments
and by technological enhancements which are continuing to
decrease costs and therefore increase competitiveness, and
provide aggressive customer response capability.
During 1997, we were ISO 9001 certified in our Specialty
Packaging manufacturing operations. We expect to realize this
certification in our Aerospace and Electronics operations within
the foreseeable future. This quality process is essential to our
business initiatives as we expand in our national and global
marketing perspectives.
Astronics continues to generate high levels of cash flow
that has provided the ability to maintain our strong investments
and enabled the Company, during 1997, to retire $3,146,000 in
debt and long-term lease obligations. At year end, long-term
debt and lease obligations were reduced to 11% of assets and 18%
of equity. While we are expanding our opportunities to grow more
aggressively, we continue to maintain a conservative financial
structure that is important to our strategy of long-term business
acceleration and development.
We view 1998 as another year of potential double-digit
growth. A number of new products are expected to enter the
market and further broaden our marketing opportunities. Our
technical capabilities are strong and continuing to improve as we
commit further investments to state-of-the-art technology. We
are looking forward with confidence and great anticipation to the
future.
Kevin T. Keane
President and Chief Executive Officer
January 22, 1998
Graph inserted depicting Net Income (in millions) of Astronics:
1993 1994 1995 1996 1997
1.1 1.3 1.7 2.6 3.6
Aerospace and Electronics
The Aerospace and Electronics group designs, manufactures
and markets specialized lighting systems and ruggedized keyboard
assemblies. The Company maintains close working relationships
with customers and therefore has an extensive understanding of
modern aerospace requirements. The Company aggressively pursues
new business by providing technologically superior products at
competitive prices. Astronics' customers in this group are
located in 47 countries and include high profile businesses in
the electronics, aerospace, air transport and automotive
industries. The Aerospace and Electronics group generates 27% of
its revenues from international operations and 20% from sales to
the defense industry.
With a resurgence of corporate and commuter aircraft, the
Aerospace and Electronics group experienced strong operating
results for 1997. Operating income was 62% higher than in 1996
while sales increased 2%. Domestic and foreign sales enjoyed
similar rates of growth. There were numerous process
improvements in lighting and panel technology that provided
significant gains in manufacturing efficiency. This group
constantly commits revenues to research and development in order
to ensure a consistent rate of future growth.
Astronics maintains competitive advantage within the
marketplace by marketing its in-depth knowledge and experience.
Tight process management, quality controls, and investment in
state-of-the-art manufacturing technologies nurture and support
our development of innovative products and provide customers with
cost-effective solutions for their technical requirements.
Astronics commits to comprehensive involvement with our
customers. This gives Astronics sharper focus on our chosen
specialized markets. Design reviews, project management and
engineering integration are common forums shared by Astronics
with our clients in maximizing the potential of our product
solutions.
Innovative engineering, cost management, and dedicated
customer support are all fundamental to Astronics' industry
leadership position. By emphasizing these areas and investing in
key technology, the Company drives a sustainable long-term future
while maintaining a competitive position in today's chosen
markets.
Specialty Packaging
Astronics' Specialty Packaging group designs, manufactures
and markets standard and custom folding cartons, and presentation
products. By possessing capabilities in-house, the Company
provides optimum efficiency and quality while retaining a wide
range of flexibility. This group delivers products to over
10,000 customers in more than 10 countries and is established as
a sole or preferred supplier for most of its' customer base.
During 1997, operating income and sales increased 23% and
11% respectively. Foreign sales remained a constant 6% of total
sales. Sales expectations for 1998 are strong and include an
agreement signed with Staples Office Superstores to market
products nationally to its 700-plus locations.
Customers are comprised largely of pharmaceutical,
healthcare, food, confectionery, automotive, and similar
industries that require packaging design and construction for
both aesthetic and protective purposes. The Company has the
ability to provide unique accommodation to these industries by
virtue of its' state-of-the-art capabilities in design and
production. In 1997, the Packaging business was certified to ISO
9001 quality standards. Comprehensive service and partnership
relationships have developed strong customer commitments. This
has created consistent market expansion among existing customers
and the rapid development of new accounts.
The Company is committed to investing in technologically
advanced equipment in support of its niche strategy. The recent
acquisition of Heidelberg printing equipment, and Bobst die
cutters, positions Specialty Packaging with the most efficient
systems on the market. Such reinvestment of earnings advances
the competitive advantage in all areas of the business process.
With a growth rate of more than twice the industry average,
the Astronics Specialty Packaging group has proven itself to be a
premier supplier within the specialty paperboard packaging
industry.
Aerospace and Electronics
Electroluminescent Lamps
Astronics has been a pioneer in the field of
electroluminescent (EL) lighting and continues as a leading
innovator. For more than 25 years, the Company has supplied the
commercial and military sectors with EL systems for use in both
standard and advanced applications.
Our newest product addition, trade-named MaxEL, uses the
latest phosphor microencapsulation technology. This lightweight,
thin profile lamp is designed for high-volume, low cost
manufacturing processes. MaxEL lamps are gaining recognition
around the world and can be seen in watches, clocks, LCD's,
hand-held keypad devices and automotive applications.
Features of EL lamps include customized shaping, uniform
luminosity, minimal heat generation and solid state reliability.
Graph inserted depicting Sales Growth (in millions) for the
Aerospace and Electronics group:
1993 1994 1995 1996 1997
9.1 9.1 11.5 19.7 20.1
Military Aircraft Formation Lights
Military rotary and fixed wing aircraft have been guided by
Astronics light systems while flying in formation and landing in
some of the most precarious places. These EL devices provide
uninterrupted performance in the presence of extreme pressures
and temperatures, shock, vibration, humidity, and environmental
contaminants. Astronics dominates this market segment world-wide
and builds formation lights for most western military aircraft
flying today.
Escape Path Lighting Systems
Astronics is a leading supplier of emergency lighting
systems to over 300 airlines around the world. This product line
combines the durability of EL lighting with the reliability of
solid state electronics. Astronics' emergency lighting products
include floor and seat mounted proximity escape path marking,
exit locator and marking signs, and rotor craft exit locators.
Other applications include ships, oil platforms, and special use
buildings.
Cockpit Lighting Systems
Aircraft cockpit lighting is available by individual
components or as fully integrated, customized assemblies.
Astronics' products have set the standard for long term
reliability in the most demanding aerospace applications. Made
of patented Astron construction, products include integrally lit
panels, avionics keyboards, ambient light sensors, annunciator
panels and a full range of electronic dimmers. Astronics has
developed a reputation as an innovator in this field and
continues to provide the most advanced cockpit lighting systems
to major airframe and avionics manufacturers in North America and
Europe. The increasing use of integrated lighting systems, among
the avionics industry, favors the Astronics components and should
provide substantial future growth opportunities.
Ruggedized Keyboard Systems
Astronics has taken lighting experience, display technology,
electro-mechanical packaging and combined them in a durable line
of ruggedized keyboards and switch panel products. Advanced
production methods allow every possibility from prototyping to
high-volume runs. By incorporating a modular concept and
flexible manufacturing capabilities, these units are able to
satisfy requirements for both the industrial and military
sectors.
This product line includes full travel keyboards for high
speed data entry in the harshest environments, keypads designed
for military and industrial purposes and illuminated switch
panels that adapt keyboard devices to detailed lighting
requirements.
Specialty Packaging
Proprietary Products
Flexibility has contributed to Astronics being a premier
supplier within the Specialty Packaging industry. The Company's
broad line of standard packaging designs are available for same
day shipment from in-stock inventory in quantities as small as 50
units or by the truckload. With hundreds of items to choose
from, this product line fills a wide range of uses and is
personalized with graphic designs and special imprinting.
Astronics is the dominant U.S. provider of stock boxes for small
to mid-size confectionery store operations.
Imprinted Products
Astronics, in addition to providing substantial enhancement
of packaging products through foil and ink imprinting, does
custom offset printing. Specialty Packaging is noted for
exceptional response capabilities and markets on a direct basis
and through store catalogs nationwide, including Hawaii and
Puerto Rico. Most imprinted products are shipped within 24 hours
of order.
Custom Products
The company's custom packaging is a practical solution for
filling unique requirements such as protective functions and
product differentiation. These forms can be economically
manufactured in most configurations and satisfy a wide range of
applications. Throughout all stages of design and production,
every effort is made to minimize manufacturing costs and maintain
a highly creative product.
Within custom products, customers are offered full or
partial packaging programs which utilize advanced computer aided
design and manufacturing systems (CAD-CAM). As of early 1998,
these systems will be fully networked with printing plate
production (CTP), computer driven product production, and quality
management systems. This creates the ability for innovative and
short cycle time packaging solutions that are a key factor for
success in today's market.
Graph inserted depicting Sales Growth (in millions) for the
Specialty Packaging group:
1993 1994 1995 1996 1997
14.7 15.8 17.0 18.6 20.8
Partnership Programs
Special interactive programs and partnerships are utilized
for focused market expansion. As a result, new demands from the
market are quickly recognized and analyzed for execution. Solid
graphic arts coupled with strong structural design are joined
with customer initiatives to provide a product that is optimally
designed for the manufacturing process. Coordinated initiatives
significantly reduce the production cycle times and production
costs which translates to a major competitive advantage.
Astronics Corporation Financial Review
The following financial statements and related information
for Astronics Corporation has been prepared by management and
audited by Ernst and Young LLP, independent auditors.
Consolidated Statements of Income
(in thousands, except per share data)
Year ended December 31,
1997 1996 1995
____ ____ ____
Net Sales $40,972 $38,371 $28,536
Cost and Expenses
Cost of products sold 27,543 27,333 19,970
Selling, general and
administrative expenses 7,463 7,959 5,148
Interest expense, net of
interest income of
$14, $23 and $102 437 813 479
Gain on sale of assets - (1,757) -
_______ _______ _______
35,443 34,348 25,597
Income before taxes 5,529 4,023 2,939
Provision for income taxes 1,978 1,366 1,179
_______ _______ _______
Net Income $ 3,551 $ 2,657 $ 1,760
======= ======= =======
Earnings per Share
Basic $ .71 $ .55 $ .37
======= ======= =======
Diluted $ .67 $ .51 $ .37
======= ======= =======
See notes to financial statements.
Consolidated Balance Sheets
(in thousands, except per share data)
December 31,
1997 1996
____ ____
Current Assets
Cash and cash equivalents $ 740 $ 1,130
Accounts receivable, net of
allowance for doubtful accounts
of $227 in 1997 and $404 in 1996 4,443 3,688
Inventories 4,761 4,862
Prepaid expenses 415 578
_______ _______
Total Current Assets 10,359 10,258
Property, Plant and Equipment, at cost
Land 326 326
Buildings and improvements 9,807 9,178
Machinery and equipment 24,640 22,210
_______ _______
34,773 31,714
Less accumulated depreciation
and amortization 16,613 14,072
_______ _______
Net Property, Plant and Equipment 18,160 17,642
Other Assets 1,722 1,965
_______ _______
$30,241 $29,865
======= =======
Current Liabilities
Current maturities of long-term
liabilities $ 1,194 $ 2,246
Accounts payable 2,564 2,463
Accrued expenses 1,942 1,757
Income taxes 360 937
_______ ______
Total Current Liabilities 6,060 7,403
Long-Term Debt 2,110 3,798
Long-Term Obligations Under
Capital Leases 1,194 1,600
Deferred Income Taxes 822 545
Deferred Compensation 1,857 1,677
Shareholders' Equity
Common Stock, $.01 par value
Authorized 10,000,000 shares, issued
4,642,910 in 1997; 4,519,219 in 1996 46 45
Class B Stock, $.01 par value
Authorized 5,000,000 shares, issued
715,797 in 1997; 749,161 in 1996 7 7
Additional Paid-in capital 2,520 2,297
Retained earnings 16,640 13,089
_______ _______
19,213 15,438
Less Treasury Stock: 341,946 shares
in 1997; 298,307 shares in 1996,
at cost 1,015 596
_______ _______
Total Shareholders' Equity 18,198 14,842
_______ _______
$30,241 $29,865
======= =======
Consolidated Statements of Cash Flows
(in thousands)
Year ended December 31,
1997 1996 1995
---- ---- ----
Cash Flows from Operating Activities
Net income $3,551 $2,657 $1,760
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,831 2,631 2,575
Provision for doubtful accounts (177) 45 (8)
Gain on sale of assets - (1,757) (50)
Provision for deferred taxes 277 (330) (300)
Cash flows from changes in operating
assets and liabilities, Net of the
effect of acquired or sold business:
Accounts receivable (578) 1,141 169
Inventories 101 1,354 565
Prepaid expenses 163 68 51
Accounts payable 101 (61) 615
Accrued expenses 185 308 235
Income taxes (577) 685 10
Deferred compensation 180 1,339 -
------ ----- -----
Net Cash provided by Operating Activities 6,057 8,080 5,622
------ ----- -----
Cash Flows from Investing Activities
Proceeds from sale of assets - 219 60
Change in other assets (46) (281) (429)
Capital expenditures (3,060) (4,025) (6,101)
Net payment for assets of company acquired - - (6,292)
Proceeds from sale of division - 2,250 -
------ ------ ------
Net Cash used by Investing Activities (3,106) (1,837) (12,762)
------ ------ -----
Cash Flows from Financing Activities
New long-term debt - - 6,990
Principal payments on long-term debt and
capital lease obligations (3,146) (6,345) (2,230)
Proceeds from issuance of stock 337 464 193
Fractional shares paid on stock
distribution - (4) -
Purchase of stock for treasury (532) - (561)
------ ------ ------
Net Cash provided (used) by
Financing Activities (3,341) (5,885) 4,392
Net increase (decrease) in cash and ------ ------ ------
cash equivalents (390) 358 (2,748)
Cash and Cash Equivalents at
Beginning of Year 1,130 772 3,520
------ ------ ------
Cash and Cash Equivalents at End of Year $ 740 $1,130 $ 772
====== ====== ======
Disclosure of Cash Payments for:
Interest $ 474 $ 869 $ 551
Income taxes 2,278 1,017 1,468
See notes to financial statements.
Consolidated Statements of Shareholders' Equity
(dollars and shares in thousands)
Treasury
Common Stock Class B Stock Stock
------------ ------------- -------------
Shares Par Shares Par Paid-In Retained
Issued Value Issued Value Shares Cost Capital Earnings
------ ----- ------ ----- ------ ---- ------- --------
Balance at December 31, 1994 3,232 $32 850 $ 9 187 $ 462 $2,068 $8,687
Net Income for 1995 1,760
Treasury Stock Sold (82) (215) (76)
Treasury Stock Purchased 197 561
Exercise of Stock Options 35 - 54
Class B Stock converted
to Common Stock 35 1 (35) (1)
_____ ____ ____ ____ _____ ______ ______ _______
Balance at December 31, 1995 3,302 33 815 8 302 808 2,046 10,447
Net Income for 1996 2,657
Stock Distribution 1,040 10 75 (15)
Treasury Stock Sold (79) (212) (41)
Exercise of Stock Options 98 1 13 - 292
Class B Stock converted to
Common Stock 79 1 (79) (1)
_____ ____ ____ ____ _____ ______ ______ _______
Balance at December 31, 1996 4,519 45 749 $ 7 298 $ 596 $2,297 $13,089
Net Income for 1997 3,551
Treasury Stock Sold (38) (113) 53
Treasury Stock Purchased 82 532
Exercise of Stock Options 91 1 170
Class B Stock converted to
Common Stock 33 - (33) -
_____ ____ ____ ____ _____ ______ ______ _______
Balance at December 31, 1997 4,643 $46 716 $ 7 342 $1,015 $2,520 $16,640
===== ==== ==== ==== ===== ====== ====== =======
See notes to financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1
Summary of Significant Accounting Principles and Practices
Principles of Consolidation
The consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiaries. All
intercompany transactions and balances have been eliminated.
Revenue Recognition
Revenue is recognized on the accrual basis, i.e., at the
time of shipment of goods. There are no significant contracts
allowing for right of return. The Company performs periodic
credit evaluations of its customers financial condition and
generally does not require collateral.
Inventories
Inventories are stated at the lower of cost or market, cost
being determined in accordance with the first-in, first-out
method. Inventories at December 31 are as follows:
(in thousands)
1997 1996
________________
Finished Goods $1,740 $1,826
Work in Progress 879 744
Raw Material 2,142 2,292
________________
$4,761 $4,862
================
Property, Plant and Equipment
Depreciation of property, plant and equipment is computed on
the straight-line method for financial reporting purposes and on
accelerated methods for income tax purposes. Estimated useful
lives of the assets are as follows: buildings, 13-40 years; and
machinery and equipment, 3-13 years. Leasehold improvements are
amortized over the terms of the lease or the lives of the assets,
whichever is shorter.
The cost of properties sold or otherwise disposed of and the
accumulated depreciation thereon are eliminated from the
accounts, and the resulting gain or loss, as well as maintenance
and repair expenses, are reflected in income. Renewals and
betterments are capitalized.
Goodwill
Included in other assets, the excess of purchase price over
the fair value of net tangible assets acquired, net of
accumulated amortization, amounted to $1,099,000 and $1,149,000
at December 31, 1997 and 1996, respectively. Accumulated
amortization amounted to $332,000 and $282,000 at December 31,
1997 and 1996, respectively. These assets are amortized over
15-40 years on a straight-line basis, starting in the year of
acquisition.
Income Taxes
The Company files a consolidated federal income tax return.
Deferred taxes are computed under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes."
Earnings Per Share
Earnings per share computations are based upon the following
table:
1997 1996 1995
__________________________
Net Income $3,551 $2,657 $1,760
Basic earnings per share
weighted average shares 4,996 4,835 4,789
Net effect of dilutive stock options 336 367 -
__________________________
Diluted earnings per share
weighted average shares 5,332 5,202 4,789
======= ====== ======
Basic earnings per share $ 0.71 $ 0.55 $ 0.37
======= ====== ======
Diluted earnings per share $ 0.67 $ 0.51 $ 0.37
======= ====== ======
Cash Equivalents
The Company considers all highly-liquid investments in debt
securities with original maturities of three months or less as
cash equivalents.
Class B Stock
Class B Stock is identical to Common Stock, except Class B
Stock has ten votes per share, is automatically converted to
Common Stock when sold or traded, and cannot receive dividends
unless an equal or greater amount is declared on Common Stock.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported
in the financial statements and accompanying notes. Actual
results could differ from those estimates.
Note 2
Acquisition
On November 29, 1995, Astronics Corporation acquired for
$6,292,000 the assets and business devoted to electroluminescent
lighting business of Loctite Luminescent Systems, Inc. of
Lebanon, New Hampshire.
The acquisition has been accounted for as a purchase, and
the purchase price has been allocated to the tangible assets
acquired in proportion to their estimated fair value at the
acquisition date. The excess of the purchase price over the fair
market value of net assets has been recorded as goodwill. The
results of operation have been included in the consolidated
statement of operations and retained earnings from the date of
acquisition.
Note 3
Notes Payable
The Company has an unsecured line of credit of $11,000,000,
which provides for interest at bank prime or LIBOR plus 100 basis
points. The line is available for three years and automatically
converts into a four year term loan at not more than $9,000,000.
At December 31, 1997 and 1996, $1,800,000 and $2,700,000,
respectively, was outstanding.
Note 4
Long-Term Debt
Long-term debt consists of the following:
(in thousands)
1997 1996
-----------------------------
Mortgage payable in installments
through 2003 with interest
at 11.00% $ 39 $ 43
Term loan payable in installments
through 1998 with interest
at 6.96% 750 2,550
Revolver loan with interest
at LIBOR plus 100 basis points 1,800 2,700
Urban Development Action Grant
financing payable in monthly
installments through 2006, with
interest at 3% 310 342
------------------------------
2,899 5,635
Less current maturities 789 1,837
------------------------------
$ 2,110 $ 3,798
==============================
The mortgage payable and grant are secured by certain
property, plant and equipment. The unsecured term loan, among
other requirements, imposes certain covenants with which the
Company maintains compliance.
Estimated principal maturities of long-term debt over the
next five years are as follows: $789,000; $490,000; $492,000;
$494,000, and $496,000.
Note 5
Long-Term Obligations Under Capital Leases
The County of Erie, State of New York, has issued industrial
Revenue Development Bonds in connection with the acquisition of
certain land, production facilities and equipment. These bear
interest at seven to ten percent, or 70 percent of the bank's
prime rate. The Company also leases certain other equipment
under capital leases from six to ten percent interest. The
following is a schedule by years of future minimum lease payments
under the capital leases, together with the present value of the
net minimum lease payments as of December 31, 1997:
(in thousands)
Capital
Period Lease
-----------------------------------
1998 $ 520
1999 492
2000 429
2001 177
2002 143
2003-2004 176
---------
Net minimum lease payments 1,937
Amounts representing interest 338
---------
Present value of net
minimum lease payments $ 1,599
=========
Amounts related to the capital leases included in the
Balance Sheet are summarized as follows:
(in thousands)
1997 1996
------------------------------
Property, Plant and Equipment:
Land $ 125 $ 125
Buildings and improvements 2,592 2,592
Machinery and equipment 2,578 2,578
------------------------------
5,295 5,295
Less accumulated
depreciation 4,025 3,863
------------------------------
$ 1,270 $ 1,432
======== =======
Debt:
Current 405 409
Long-term 1,194 1,600
-----------------------------
$ 1,599 $ 2,009
======== =======
The Company subleases a portion of these facilities from
which they anticipate future total minimum rentals of $1,043,000.
Note 6
Stock Option and Purchase Plans
A summary of the Company's stock option activity, and
related information for the years ended December 31 follows:
1997 1996 1995
--------------------------------------------------------
Weighted Weighted Weighted
Average Average Average
Exercised Exercised Exercised
Options Price Options Price Options Price*
---------------------------------------------------------
Outstanding at
the beginning of
the year 577,233 $2.07 540,849 $ 2.33 612,719 $2.05
Options granted 47,714 $7.69 95,714 $ 4.71 133,500 $2.93
Stock distribution - - 129,247 $ (.47) - -
Options exercised (128,563) $2.63 (175,582) $ 1.55 (131,045) $1.58
Options expired (15,358) $3.38 (12,995) $ 2.61 (74,325) $2.41
--------- ------- -------
Outstanding at
the end of the
year 481,026 $2.60 577,233 $ 2.07 540,849 $2.33
-------- ------- -------
Exercisable at
December 31 403,156 $2.02 413,487 $ 1.66 374,849 $2.20
======== ======= =======
Exercise prices for options outstanding as of December 31,
1997 range from $1.05 to $8.29. The weighted average remaining
contractual life of these options is 4.8 years.
*1995 does not reflect restatement for the September 30,
1996 stock distribution.
In October 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards (SFAS) No. 123
"Accounting for Stock-Based Compensation." The Company uses the
measurement prescribed by APB Opinion No. 25 which does not
recognize compensation expense if the exercise price of the stock
option equals the market price of the underlying stock on the
date of grant. SFAS 123 requires companies that choose to
continue using APB Opinion No. 25, and thus not adopting the new
fair value accounting rules, to disclose pro forma net income and
earnings per share under the new method.
The fair value for these options was estimated at the date
of grant using a Black-Scholes option pricing model with the
following weighted-average assumptions for 1997: risk-free
interest rate of 6.0%; dividend yield of 0%; volatility factor of
the expected market price of the Company's common stock of .38;
and a weighted-average expected life of the option of 4.8 years.
The Black-Scholes option valuation model was developed for
use in estimating the fair value of traded options which have no
vesting restrictions and are fully transferable. In addition,
option valuation models require the input of highly subjective
assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because
changes in the subjective input assumptions can materially affect
the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of
the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair
value of the options is amortized to expense over the options'
vesting period. The Company's pro forma information for the year
ended December 31, 1997 is as follows: net income $3,431,000;
basic earnings per share $ .69; and diluted earnings per share
$ .65. The pro forma effect on earnings for the years ended
December 31, 1996 and 1995 was immaterial.
The Company established the 1982 and 1992 Inventive Stock
Option Plans for the purpose of attracting and retaining
executive officers and key employees, and to align management's
interest with those of the shareholders. Generally, the options
must be exercised within ten years from the grant date and, under
the 1992 Plan, the options vest ratably over a five year period.
The exercise price for the options is equal to the fair market
value at the date of grant. The Company had options outstanding
for 152,500 shares and 173,750 shares under the 1982 and 1992
Plans, respectively. At December 31, 1997 options available for
future issuance under the 1992 Plan are 109,250 shares.
The Company established the 1984, 1993 and the 1997
Directors Stock Option Plan for the purpose of attracting and
retaining the services of experienced and knowledgeable outside
directors, and to align their interest with those of the
shareholders. The options must be exercised within ten years
from the grant date. The exercise price for the option is equal
to the fair market value at the date of grant. The Company had
options outstanding for 78,906 shares and 44,000 shares under the
1984 and 1993 Plans, respectively. At December 31, 1997 options
available for future issuance under the 1997 Plan are 100,000
shares.
The Company established the Employee Stock Purchase Plan to
encourage employees to invest in the Company. Each option is for
one year, but may be canceled by the employee at any time during
that year. The purchase price of the option is 85 percent of the
market price on the date of grant. The employee pays for the
option through a weekly payroll deduction. At December 31, 1997
employees had outstanding options to purchase 31,870 shares at
$8.29 per share on September 30, 1998.
Note 7
Income Taxes
The provision for income taxes consists of the following:
(in thousands)
1997 1996 1995
--------------------------------
Currently payable
Federal $1,635 $1,614 $1,412
State 146 82 67
Deferred (from prior)
to future years 197 (330) (300)
--------------------------------
$1,978 $1,366 $1,179
====== ====== ======
The effective tax rates of 35.8% in 1997, 34.0% in 1996, and
40.1% in 1995, which differ from the statutory federal income
tax, are a result of the following:
1997 1996 1995
----------------------------------
Statutory federal income
tax rate 34.0% 34.0% 34.0%
Tax exempt items, net .4% .6% .6%
State income tax, net of
federal income tax
benefit 1.8% 1.8% 1.5%
Other (.4%) (2.4%) 4.0%
----------------------------------
35.8% 34.0% 40.1%
===== ===== =====
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for income tax purposes. Significant components of the Company's
deferred tax liabilities and assets as of December 31, 1997 and
1996 are as follows:
(in thousands)
1997 1996
---------------------------------
Long-term deferred tax liabilities:
Tax depreciation over book
depreciation $ 1,999 $ 1,730
Net long-term deferred tax
liability 1,999 1,730
---------------------------------
Long-term deferred assets:
State net operating loss
carryforwards $ 57 $ 118
State investment tax credit
carryforwards 972 800
Deferred compensation 814 749
Other-net 234 318
---------------------------------
Total long-term deferred
tax assets 2,077 1,985
Valuation allowance for
deferred tax assets related
to state net operating
losses and investment tax
credit carryforward (900) (800)
---------------------------------
Net long-term deferred tax
asset 1,177 1,185
---------------------------------
Net long-term deferred
tax liability $ 822 $ 545
======= =======
At December 31, 1997, the Company had state net operating
loss carryforwards of $1,055,000 for income tax purposes expiring
through 2010 and state investment tax credit carryforwards of
$972,000 expiring through 2007. The state carryforwards are
subject to separate tax return limitations.
Note 8
Deferred Profit Sharing/401(k) Plan and Deferred Compensation
The Company has a trustees Deferred Profit Sharing/401(k)
Plan for the benefit of its eligible full-time employees. The
Profit Sharing/401(k) Plan provides for annual contributions
based on percentages of pre-tax income. In addition, employees
may contribute up to ten percent of their salary to the 401(k)
features. The plan may be amended or terminated at any time.
Total charges to income for the plan were $745,000, $548,000, and
$438,000, in 1997, 1996, and 1995, respectively. In 1996, the
Company formalized a deferred compensation arrangement for senior
officers, payable over a ten-year period after retirement.
Note 9
Accrued Expenses
Accrued expenses consist of the following:
(in thousands)
1997 1996
-------------------------
Accrued payroll and employee benefits $ 842 $ 590
Accrued profit sharing 745 616
Other accrued liabilities 355 551
-------------------------
$ 1,942 $ 1,757
======= ========
Note 10
Selected Quarterly Financial Information
(unaudited) (in thousands, except for per share data)
Quarter ended
Dec. 31, Sept. 27, June 28, Mar. 29 Dec. 31, Sept. 28, June 29, Mar. 30,
1997 1997 1997 1997 1996 1996 1996 1996
Net Sales $11,445 $10,214 $ 9,688 $ 9,625 $10,024 $ 9,095 $ 9,683 $ 9,569
- ----------------------------------------------------------------------------------------------------
Gross Profit $ 4,067 $ 3,289 $ 3,091 $ 2,982 $ 3,118 $ 2,551 $ 2,648 $ 2,721
- ----------------------------------------------------------------------------------------------------
Income before tax $ 2,059 $ 1,457 $ 1,013 $ 1,000 $ 1,891 $ 1,043 $ 551 $ 538
- ----------------------------------------------------------------------------------------------------
Net income $ 1,385 $ 937 $ 646 $ 583 $ 1,236 $ 678 $ 377 $ 366
- ----------------------------------------------------------------------------------------------------
Basic earnings
per share $ .28 $ .18 $ .13 $ .12 $ .25 $ .14 $ .08 $ .08
- ----------------------------------------------------------------------------------------------------
Diluted earnings
per share $ .26 $ .18 $ .12 $ .11 $ .24 $ .13 $ .07 $ .07
- ----------------------------------------------------------------------------------------------------
Note 11
Supplemental Cash Flow Information
During the year ended December 31, 1996, the Company sold
substantially all the assets of the Rodgard Division. During the
year ended December 31, 1995, the Company purchased substantially
all the assets of Loctite Luminescent Systems, Inc. These
transactions resulted in non-cash increases in the following
accounts.
1996 1995
------------------------------
Accounts receivable $ - $ 2,093
Inventories (84) 2,680
Prepaid expenses - 38
Other assets - 498
Property, plant and equipment - 1,299
Accounts payable - (310)
Accrued expenses - (6)
Deferred compensation (338) -
Note 12
Operations in Different Industries
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-know 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,
invitation and other paper products. The Company is a dominant
provider of custom folding boxes in chosen markets.
Corporate assets consist mainly of cash, cash equivalents and
furniture and equipment.
(in thousands)
Income Depreciation
Operating Before Capital and
Sales Profit Taxes Assets ExpendituresAmortization
----------------------------------------------------------
1997 Aerospace
and Electronics $20,167 $3,529 - $ 9,110 $ 412 $ 767
Specialty
Packaging 20,805 3,996 20,011 2,644 2,029
Operating
profit 7,525
Interest
expense (437)
Corporate (1,559) 1,120 4 35
----------------------------------------------------------
$40,972 $7,525 $5,529 $30,241 $3,060 $2,831
======= ====== ====== ======= ====== ======
1996 Aerospace
and Electronics $19,718 $2,173 - $ 8,077 $ 254 $ 799
Specialty
Packaging 18,653 3,258 20,295 3,761 1,753
Operating
profit 5,431
Interest
expense (813)
Gain on sale
of assets 1,757
Corporate (2,352) 1,493 10 79
----------------------------------------------------------
$38,371 $5,431 $4,023 $29,865 $4,025 $2,631
======= ====== ====== ======= ====== ======
1995 Aerospace
and Electronics $11,530 $1,557 - $12,082 $ 234 $1,219
Specialty
Packaging 17,006 2,955 17,603 5,817 1,306
Operating
profit 4,512
Interest
expense (479)
Corporate (1,094) 1,130 50 50
---------------------------------------------------------
$28,536 $4,512 $2,939 $30,815 $6,101 $2,575
======= ====== ====== ======= ====== ======
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of Astronics Corporation
We have audited the accompanying consolidated balance sheets of
Astronics Corporation as of December 31, 1997 and 1996, and the related
consolidated statements of income, shareholders' equity, and cash flows for
each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Astronics Corporation at December 31, 1997 and 1996, and the consolidated
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1997, in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
Buffalo, New York
January 22, 1998
MANAGEMENT'S STATEMENT OF RESPONSIBILITY
The financial statements and accompanying information were prepared by
and are the responsibility of Astronics' management. The statements were
prepared in conformity with generally accepted accounting principles and,
as such, include amounts that are based on management's best estimates and
judgments.
The Company's internal control systems are designed to provide
reliable financial information for the preparation of financial statements,
to safeguard assets against loss or unauthorized use and to ensure that
transactions are executed consistent with Company policies and procedures.
Management believes that existing internal accounting control systems are
achieving their objectives and that they provide reasonable assurance
concerning the accuracy of the financial statements.
Oversight of management's financial reporting and internal accounting
control responsibilities is exercised by the Board of Directors, through an
Audit Committee which consists solely of outside directors. The Committee
meets periodically with management and the independent accountants to
ensure that each is meeting its responsibilities and to discuss matters
concerning auditing, internal accounting control and financial reporting.
/s/ Kevin T. Keane /s/ John M. Yessa
Kevin T. Keane John M. Yessa
President and Vice President-Finance, Treasurer
Chief Executive Officer and Chief Financial Officer
STOCK PRICES
The adjacent table sets forth the range of prices for the Company's Common
Stock, traded on the Nasdaq National Market System, for each quarterly
period during the last two years. The approximate number of shareholders
of record as of February 23, 1998 was 980.
1997 1996
First $4.88 - $7.25 $2.80 - $4.60
Second 6.13 - 6.75 3.70 - 5.60
Third 6.38 - 10.00 4.20 - 5.70
Fourth 8.00 - 12.50 4.50 - 6.00
FIVE-YEAR COMPARISON OF SELECTED FINANCIAL DATA
(in thousands, except per share data)
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
For the year:
Sales $40,972 $38,371 $28,536 $24,944 $23,957
Income before extraordinary
item 3,551 2,657 1,760 1,306 1,495
Net income 3,551 2,657 1,760 1,306 1,188
Per share:
Income before extraordinary
item .71 .55 .37 .26 .30
Basic earnings per share .71 .55 .37 .26 .24
Diluted earnings per share .67 .51 .37 .26 .24
Dividends -- -- -- -- .01
Shares used in computation
of basic earnings per share 4,996 4,835 4,789 4,966 5,002
Shares used in computation
of diluted earnings per
share 5,332 5,202 4,789 4,966 5,002
At end of year:
Total assets $30,241 $29,865 $30,815 $23,787 $24,786
Net investment in property,
plant and equipment 18,160 17,642 16,276 11,177 11,744
Working capital 4,299 2,855 6,101 6,035 6,377
Long-term debt 2,110 3,798 9,713 4,771 6,627
Long-term obligations under
capital leases 1,194 1,600 2,010 2,228 2,624
Shareholders' equity 18,198 14,842 11,726 10,334 9,414
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following table sets forth an income statement with percentage of net sales
and the percentage increase (decrease) of such items as compared to the prior
period.
1997 1996 1995 Period to Period
--------------------------------------------- 1996-97 1995-96
(in thousands) $ % $ % $ % ------- -------
Net sales
Aerospace and Electronics $20,167 49.2 $19,178 51.4 $11,530 40.4 2.3% 71.0%
Specialty Packaging 20,805 50.8 18,653 48.6 17,006 59.6 11.5% 9.7%
------- ---- ------- ---- ------- ---- ---- ----
40,972 100.0 38,371 100.0 28,536 100.0 6.8% 34.5%
Cost of goods sold 27,543 67.2 27,333 71.2 19,970 70.0 .8% 36.9%
Selling, general and
administrative expenses 7,463 18.2 7,959 20.8 5,148 18.0 (6.2)% 54.6%
Gain on sale of assets - - (1,757) (4.6) - - - -
------- ----- ------ ---- ----- ---- ---- ----
5,966 14.6 4,836 12.6 3,418 12.0 23.4% 41.5%
Other deductions:
Interest expense, net 437 1.1 813 2.1 479 1.7 (46.2)% 69.7%
------ ----- ----- ----- ------ ---- ---- ----
Income before taxes 5,529 13.5 4,023 10.5 2,939 10.3 37.4% 36.9%
Provision for taxes 1,978 4.8 1,366 3.6 1,179 4.1 44.8% 15.9%
------ ----- ----- ----- ------ ---- ---- ----
Net income $3,551 8.7 $2,657 6.9 $1,760 6.2 33.6% 51.0%
====== ==== ====== ==== ====== ==== ==== ====
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. The Company 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.
During the Third Quarter of 1997, the Specialty Packaging
segment received its ISO 9001 certification. The Aerospace and
Electronics segment anticipates its ISO 9001 certification in the
near future.
On July 1, 1997, the Company renegotiated the interest rate
terms on its Revolving Line of Credit. Under the new terms, the
company's interest rate is LIBOR plus 100 basis points or the
bank's prime rate. No other terms or conditions were changed in
the agreement.
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 year ended December 31,
1995, were $2,568,000.
On November 29, 1995, the Company acquired the business and
assets of Loctite Luminescent Systems, Inc., Lebanon, NH. This
business complements the electroluminescent business already
performed by the Company's Aerospace and Electronics segment. The
acquired business and 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, as
well as a sales office in Belgium.
The Financial Accounting Standards Board (FASB) issued
Statement No. 128 "Earnings per Share" for Companies reporting
after December 15, 1997. The Company shows the information for
both basic and diluted earnings per share in its financial
statements and footnotes. For Management's Discussion and
Analysis of Financial Condition and Results of Operations, the
Company uses diluted earnings per share only. The new FASB
pronouncement 130 "Reporting Comprehensive Income" is not
applicable to the Company.
Sales
Astronics Corporation established a new sales record for the
year as well as for the last 14 quarters based on the trailing
twelve months results. Sales increased 6.8 percent in 1997 over
1996 compared to an increase of 34.5 percent over 1995. Sales in
1997, based on ongoing operations, increased 11.1 percent. Sales
for the year were evenly divided between Aerospace and
Electronics (49.2 percent) and Specialty Packaging (50.8
percent). The gain in Aerospace and Electronics sales in 1996 is
the result of the late 1995 acquisition of Loctite Luminescent
Systems.
Sales in the Aerospace and Electronics segment increased 2.3
percent in 1997 to $20,167,000 compared to the growth in 1996 of
71.0 percent over 1995. When sales growth is calculated on an
ongoing business basis, sales increased 10.7 percent in 1997 and
103.3 percent in 1996. The major product areas of growth have
been realized in the emergency egress lighting and cockpit
lighting systems areas. The Company has been awarded key
development contracts for lighting systems in planes being
developed for the commercial, private and military aircraft
markets.
Sales in the Specialty Packaging segment increased 11.5
percent in 1997 to $20,805,000. This followed an increase of 9.7
percent in 1996 in which sales increased from $17,006,000 in 1995
to $18,653,000 in 1996. This growth has been experienced mainly
in the custom box business. This product line utilizes the
Company's engineering, design and manufacturing capabilities for
specific product solutions enabling customers to enhance their
distribution to the marketplace. The Company is continuing to
develop opportunities to partner with customers to jointly meet
the customer's needs.
The Company is increasing its international business, which
amounted to approximately 15 percent of 1997 sales. Sales to
foreign customers are made in U.S. dollars. Less than one percent
of total sales were made to Asian countries. Sales in the
Aerospace and Electronics segment are mainly by competitive bid
based on customer specifications. None of the government
contracts are subject to renegotiation of profits clauses. Sales
in the Specialty Packaging segment are approximately 50 percent
from standard catalog pricing and 50 percent from competitive bid
based on customer specifications.
Expenses
The gross profit margin increased in 1997 to 32.8 percent,
compared to 28.8 percent in 1996 and 30.0 percent in 1995. The
product mix change since 1995, which has resulted from the 1995
acquisition, has had an effect on the ratios. The total cost of
goods sold increased less than one percent in 1997 on a sales
increase of 6.8 percent. This compares to an increase of 36.9
percent in 1996 on sales growth of 34.5 percent. Within this
broad group, there have been various shifts of costs. For
example, material usage was 19.7 percent in 1997, 25.2 percent in
1996 and 25.6 percent in 1995. Employee costs (wages and
benefits) was 28.0 percent in 1997, 26.4 percent in 1996 and 23.4
percent in 1995. Part of this increase reflects the technical
nature of the increasing sales in Aerospace and Electronics,
which require more support. Depreciation, as a percent of sales,
decreased from 7.7 percent in 1995 to 5.6 percent in 1997.
Facility costs have increased from 5.1 percent of sales in 1995
to 6.1 percent in 1997. This reflects the rental payments made on
the facilities in New Hampshire. All other categories of expenses
were approximately the same percentage of the sales dollar in
each of the three years.
The company's operating profit increased by 93.8 percent in
1997, after decreasing by 10.0 percent in 1996. This wide
variance is the result of the finalization in 1996 of a deferred
compensation arrangement for senior management. When this
one-time expense is removed for comparison purposes, operating
income increased in both years: 1997 by 39.4 percent and in 1996
by 25.2 percent. The expenses in this area tend to be more fixed
than variable. Employee costs were 10.2 percent of sales in 1997,
10.3 percent in 1996 (restated), and 10.7 percent in 1995. All
other cost areas are within a percentage point of the prior
year.
In October 1996, the Company sold its Rodgard Division for
cash of $2,250,000. The Company retained the facility used by
this Division, and is leasing it to the new owners of the
business. The net gain on this transaction was $1,757,000. The
Company also recorded, as expense in the same period, an
additional contribution to the employees' Profit Sharing Plan,
the write-down of potentially obsolete inventory in the Aerospace
and Electronics segment, an additional reserve for accounts
receivables over 120 days, and the formalization of the deferred
compensation arrangement. The net effect of the gain and the
recording of additional expenses is approximately $100,000 of
income after taxes, or $.02 per share.
Interest
Interest costs, net of interest income, was $437,000 (1.1
percent of sales) in 1997, $813,000 (2.1 percent of sales) in
1996, and $479,000 (1.7 percent of sales) in 1995. The Company
reduced its total long-term indebtedness by $3,146,000 in 1997,
$6,345,000 in 1996, and $2,230,000 in 1995. Also in 1995, the
Company borrowed $6,990,000 to facilitate the acquisition of
Loctite Luminescent Systems, Inc. In July 1997, the Company
reduced its interest rate on outstanding debt from its Revolving
Line of Credit by 25 basis points to LIBOR plus one hundred basis
points. The Company does not have any compensating balance
arrangements in its financing.
Income Before Taxes
Income before taxes increased 37.4 percent in 1997 to
$5,529,000 compared to the 1996 increase of 36.9 percent to
$4,023,000. In 1995, the Company earned $2,939,000 before
provision for taxes.
Taxes
The provision for taxes for 1997 is $1,978,000, or 4.8
percent of net sales, compared to $1,366,000, or 3.6 percent of
sales in 1996, and $1,179,000, or 4.1 percent of sales in 1995.
The effective tax rate for 1997 was 35.8 percent, compared to
34.0 percent in 1996 and compared to 40.1 percent in 1995. The
Company utilized state tax credits in 1997 and 1996. The
Company's Federal Income Tax returns have been audited through
1995.
Net Income
The Company earned 8.7 percent on the sales dollar in 1997,
compared to 6.9 percent in 1996 and 6.2 percent in 1995. The net
income was $3,551,000 in 1997, $2,657,000 in 1996, and $1,760,000
in 1995. On a trailing twelve-month basis, the Company has
increased earnings in each of the last 15 quarters. On a diluted
earnings per share basis, the Company earned $.67 in 1997, $.51
in 1996, and $.37 in 1995.
Liquidity
Working Capital increased in 1997 to $4,299,000 from
$2,855,000 in 1996. The Company's cash decreased during the 1997
year by $390,000 after increasing by $358,000 in 1996. The
Company remains current on all loan commitments and covenants.
Credit Line
The Company maintains an unsecured revolving line of credit
for $11,000,000 with interest at either the bank's prime rate or
LIBOR plus 100 basis points. At the end of three years (November
27, 1998) the Company can convert up to $9,000,000 of the
outstanding balance to a four-year term loan. At December 31,
1997, the outstanding loan balance was $1,800,000, compared to
$2,700,000 at December 31, 1996.
The Company believes that the cash generated from operations
combined with the Revolving Line of Credit are adequate to fund
the needs for working capital and capital expenditures for the
1998 Corporate Plan.
Dividend
The Company believes that its current investment programs
(investments in technologies, processes and equipment, the
reduction of debt, and the possible purchase of Treasury Stock)
are important uses of cash, and are in the best long-term
interest of its shareholders. Therefore, there are no plans to
institute a cash dividend program.
Backlog
At December 31, 1997, the Company's backlog was $10,807,000,
compared to $10,106,000 at December 31, 1996 and $8,953,000 at
the end of 1995. The backlog for the Aerospace and Electronics
segment was $9,686,000, $8,784,000, and $7,328,000 at December
31, 1997, 1996 and 1995, respectively. The Specialty Packaging
segment had backlogs of $1,121,000, $1,322,000, and $1,625,000 at
December 31, 1997, 1996 and 1995, respectively. The Company's
commitment to on-time delivery of products and short cycle times
have enabled the Company to reduce its inventories and improve
the delivery of products to its customers.
Commitments
At December 31, 1997, the Company had outstanding capital
expenditure commitments of approximately $4,100,000 compared to
$2,000,000 at the end of 1996 and 1995. The major outstanding
commitment is for a new printing press that will be installed in
the Second Quarter of 1998. The Company also has normal
outstanding purchase orders for raw materials and supplies
necessary to carry on the business. The Company is not aware of
any commitments in excess of today's market values nor in excess
of quantities that will be used in normal operations. The Company
is not aware of any contingent liabilities not provided for in
its financial statements.
Year 2000
The Company employs several different computer systems for
financial, engineering and manufacturing purposes. The Company
purchases these systems, both hardware and software. Therefore,
it does not have programmers writing code internally. In the last
year, the Company was able to install upgrades to some of its
systems that are Year 2000 compliant. Other systems will be
upgraded in 1998 or in 1999, which the vendors have promised to
be Year 2000 compliant. In the case of some software, the Company
is installing a totally new software package that meets the Year
2000 issue as well as other desired improvements. At this time,
the Company is not aware of any vendor's schedule that would
affect the continuous operations of the business. The total
invested for software upgrades to date is less than $50,000, and
the Company's budget for additional upgrades and new software in
1998 is approximately the same. The Company continues to monitor
this area, as well as key suppliers' compliance.
DIRECTORS AND OFFICERS OF ASTRONICS CORPORATION
Charles H. Biddlecom
Vice President-Marketing, MOD-PAC CORP.
Robert T. Brady
Director, Astronics Corporation
Chairman of the Board, President and Chief Executive Officer,
Moog Inc.
Donald E. Derrick
Vice President, Luminescent Systems, Inc.
John B. Drenning
Secretary, Director, Astronics Corporation, Partner in the law
firm Phillips, Lytle, Hitchcock, Blaine & Huber
Donna L. Eckman
Vice President, Krepe-Kraft, Inc.
Leo T. Eckman
President, Krepe-Kraft, Inc.
Peter J. Gundermann
President, Luminescent Systems, Inc.
Daniel G. Keane
President, MOD-PAC CORP.
Kevin T. Keane
President and Chief Executive Officer, Director, Astronics
Corporation
James S. Kramer
Vice-President, Luminescent Systems, Inc.
Robert J. McKenna
Director, Astronics Corporation
Chairman of the Board, President and Chief Executive Officer,
Acme Electric Corporation
John M. Yessa
Vice-President-Finance and Treasurer, Chief Financial Officer,
Director, Astronics Corporation
THE COMPANIES OF ASTRONICS
Krepe-Kraft Inc.
Blasdell, New York
Luminescent Systems Inc.
East Aurora, New York and Lebanon, New Hampshire
MOD-PAC CORP.
Buffalo, New York
STOCK EXCHANGE LISTING
The Company's stock trades on the Nasdaq National Market tier of
The Nasdaq Stock Market under the symbol ATRO.
TRANSFER AGENT AND REGISTRAR
American Stock Transfer and Trust Company
New York, New York
ATTORNEYS
Phillips, Lytle, Hitchcock, Blaine & Huber
Buffalo, New York
INDEPENDENT ACCOUNTANTS
Ernst & Young LLP
Buffalo, New York
ANNUAL MEETING
April 23, 1998 - 10:00 A.M.
Orchard Park Country Club
S-4777 South Buffalo Street
Orchard Park, New York
FORM 10-K ANNUAL REPORT
The Company's Form 10-K Annual Report to the Securities and
Exchange Commission provides certain additional information. A
copy of this report may be obtained upon request to Shareholder
Relations, Astronics Corporation, 1801 Elmwood Avenue, Buffalo,
NY 14207.
SHAREHOLDER ADMINISTRATION
Please direct inquiries relating to shareholder accounting
records and stock transfers to:
American Stock Transfer & Trust Company
40 Wall Street
New York, NY 10005
Please report change of address promptly to ensure timely receipt
of Company communications. Please mail a signed and dated letter
or postcard stating the name in which the stock is registered,
and the previous and current addresses, to the above address.
PRESS RELEASES
In an effort to provide efficient and cost-effective
communications to our shareholders, we are mailing copies of all
Press Releases directly to our shareholders of record on the day
of the release. These Press Releases will carry appropriate
financial data, when applicable. The Press Release dates for the
1998 quarterly results are:
First Quarter - April 21, 1998
Second Quarter - July 21, 1998
Third Quarter - October 20, 1998
Fourth Quarter - January 26, 1999
Astronics Corporation
1801 Elmwood Avenue
Buffalo, New York 14207
EXHIBIT 21
ASTRONICS CORPORATION
SUBSIDIARIES OF THE REGISTRANT
Ownership State of
Subsidiary Percentage Incorporation
Krepe-Kraft, Inc. 100% New York
Luminescent Systems, Inc. 100% New York
MOD-PAC CORP 100% New York
EXHIBIT 23
Consent and Report of Independent Auditors
Board of Directors
Astronics Corporation
We consent to the incorporation by reference in this Annual
Report (Form 10-K) of Astronics Corporation of our report dated
January 22, 1998, included in the 1997 Annual Report to
Shareholders of Astronics Corporation.
Our audits also included the financial statement schedule of
Astronics Corporation listed in Item 14(a). This schedule is the
responsibility of the Company's management. Our responsibility
is to express an opinion based on our audits. In our opinion,
the financial statement schedule referred to above, when
considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material
respects the information set forth therein.
We also consent to the incorporation by reference in Registration
Statement (Form S-8 No. 2-93090) pertaining to the Employee Stock
Purchase Plan of Astronics Corporation of our reports dated
January 22, 1998, with respect to the consolidated financial
statements incorporated herein by reference, and our report
included in the preceding paragraph with respect to the financial
statement schedule included in this Annual Report (Form 10-K) of
Astronics Corporation.
We also consent to the incorporation by reference in Registration
Statement (Form S-8 No. 33-65141) filed with the Securities and
Exchange Commission for the registration of 732,132 shares of
Astronics Corporation common stock of our reports dated January
22, 1998, with respect to the consolidated financial statements
incorporated herein by reference, and our report included in the
preceding paragraph with respect to the financial statement
schedule included in this Annual Report (Form 10-K) of Astronics
Corporation.
ERNST & YOUNG LLP
Buffalo, New York
March 25, 1998