Business Context and Reporting Period
Company: Astronics Corporation
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Nine months ended September 29, 2001 (Unaudited)
Business Segments: Aerospace-Electronics (specialized lighting and control systems for aircraft) and Printing-Packaging (folding cartons and commercial printing).
Key Financial Metrics
| Metric | Nine Months 2001 | Nine Months 2000 | Three Months 2001 | Three Months 2000 |
|---|---|---|---|---|
| Net Sales | $62,703 | $48,659 | $20,836 | $17,408 |
| Net Income | $4,375 | $3,566 | $1,690 | $1,440 |
| Diluted EPS | $0.52 | $0.43 | $0.20 | $0.18 |
| Operating Cash Flow | $7,227 | $(166) | N/A | N/A |
| Cash Balance (End of Period) | $4,810 | $31 | N/A | N/A |
| Total Debt (Current + Long-term) | $17,495 | $19,022 | N/A | N/A |
| Backlog | $38,400 | N/A | N/A | N/A |
Note: All dollar figures in thousands except per share data.
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 29% year-over-year for the nine-month period ($62.7M vs $48.7M) and 20% for the quarter ($20.8M vs $17.4M).
- Segment Performance:
- Aerospace-Electronics: Nine-month sales rose 35% to $41.1M, driven by the F-16 night vision upgrade program ($17.4M sales) and full-period contribution from the Montreal acquisition.
- Printing-Packaging: Nine-month sales rose 19% to $21.6M, driven by custom folding cartons and short-run commercial printing.
- Profitability: Net income increased 23% for the nine-month period. Earnings before interest and taxes (EBIT) margin remained steady at 11.6% for the nine-month comparison.
- Liquidity: Cash and cash equivalents surged from $45,000 at year-end 2000 to $4.81M at September 29, 2001, supported by strong operating cash flow of $7.2M.
- Debt: Total debt decreased slightly to $17.5M. The company utilized $3.4M of its $12M revolving line of credit (down from $4.1M at year-end 2000).
Outlook, Risks, and Unusual Items
- Stock Distribution: The Board declared a 25% stock distribution to shareholders of record on November 16, 2001. All share and per-share data in the filing have been retroactively adjusted.
- Accounting Changes: New FASB standards (No. 141 and 142) regarding goodwill and intangible assets will be effective in 2002. This is expected to increase net income by approximately $170,000 annually by eliminating amortization, though impairment tests will be required.
- Market Risk: The company has approximately $17.5M in floating-rate debt. An interest rate swap on $6.9M of this debt fixes the rate at 4.09%. A 1% change in interest rates would impact annual net income by less than $100,000.
- Backlog: Total backlog stands at $38.4M ($35.6M Aerospace, $2.8M Printing). Approximately $11.4M of the Aerospace backlog is scheduled to ship in Q4 2001.
- Capital Expenditures: CapEx for the nine months was $1.6M, a decrease of $2M from the prior year due to the timing of facility acquisitions.
Investor Verification Checklist
- Verify the impact of the 25% stock distribution on share count and per-share metrics in future filings.
- Monitor the execution of the $11.4M Aerospace backlog scheduled for Q4 2001 shipment.
- Assess the effect of the new goodwill accounting standards (FAS 142) on 2002 earnings and potential impairment charges.
- Review the sustainability of the 35% sales growth in the Aerospace segment, specifically regarding the F-16 program and Montreal operations.
- Confirm compliance with financial covenants on the $12M revolving line of credit.