SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal quarter ended April 1, 1995 [ ] 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, Warrants ___________________________________________________________________________ (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 April 1, 1995, 3,032,734 shares of $.01 par value common stock and 842,608 shares of $.01 par value Class B common stock were outstanding. PART I - FINANCIAL INFORMATION Item 1. Financial Statements ASTRONICS CORPORATION Consolidated Balance Sheet April 1, 1995 With Comparative Figures for December 31, 1994 ASSETS (Dollars in Thousands) April 1, 1995 December 31, (Unaudited) 1994 Current Assets: Cash $ 2,402 $ 3,520 Accounts receivable 3,265 2,950 Inventories: Finished goods 1,633 1,556 Work in process 641 815 Raw material 1,703 1,814 Prepaid expenses 193 659 _______ _______ Total current assets 9,837 11,314 Property, Plant and Equipment 25,389 25,228 Less accumulated depreciation and amortization 13,382 14,051 _______ _______ Net property, plant and equipment 12,007 11,177 Other Assets 1,353 1,296 _______ _______ $23,197 $23,787 ======= ======= See notes to financial statements. ASTRONICS CORPORATION Consolidated Balance Sheet April 1, 1995 With Comparative Figures for December 31, 1994 LIABILITIES AND SHAREHOLDERS' EQUITY (Dollars in Thousands) April 1, 1995 December 31, (Unaudited) 1994 Current Liabilities: Current maturities of long-term debt $ 2,235 $ 2,230 Accounts payable 1,706 1,599 Accrued expenses 835 1,208 Income taxes 408 242 _______ _______ Total current liabilities 5,184 5,279 Long-Term Debt 4,312 4,771 Long-Term Obligation under Capital Leases 2,124 2,228 Deferred Income Taxes 1,020 1,175 Shareholders' Equity: Common stock, $.01 par value Authorized 10,000,000 shares, issued 3,245,851 in 1995, 3,232,157 in 1994 33 32 Class B common stock, $.01 par value Authorized 5,000,000 shares, issued 842,608 in 1995, 850,102 in 1994 8 9 Additional paid-in capital 2,077 2,068 Retained earnings 8,963 8,687 Less Treasury stock, at cost (524) (462) _______ _______ Total shareholders' equity 10,557 10,334 _______ _______ $23,197 $23,787 ======= ======= See notes to financial statements. ASTRONICS CORPORATION Consolidated Statement of Income and Retained Earnings Three Months Ended April 1, 1995 With Comparative Figures for 1994 (Dollars in Thousands) (Unaudited) 1995 1994 Net Sales $ 7,226 $ 6,108 Costs and Expenses: Cost of products sold 5,081 4,545 Selling, general and administrative expenses 1,518 1,345 Interest expenses, net of interest earned of $39 in 1995 and $25 in 1994 109 149 _______ _______ Total costs and expenses 6,708 6,039 _______ _______ Income before provision for taxes on income 518 69 Provision for taxes on income 242 33 _______ _______ Net Income 276 36 Retained Earnings: January 1 8,687 7,381 _______ _______ April 1 $ 8,963 $ 7,417 ======= ======= Income per Common Share $ .07 $ .01 ======= ======= See notes to financial statements. ASTRONICS CORPORATION Consolidated Statement of Cash Flows Three Months Ended April 1, 1995 With Comparative Figures for 1994 (Dollars in Thousands) (Unaudited) 1995 1994 Cash Flows from Operating Activities Net income $ 276 $ 36 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 746 553 Provision for doubtful accounts 101 54 Provision for deferred taxes (155) 52 Cash flows from changes in operating assets and liabilities: Accounts receivable (416) 45 Inventories 208 335 Prepaid expenses 465 18 Accounts payable 107 (45) Accrued expenses (373) (196) Income taxes payable 166 (130) _______ _______ Net Cash provided (used) by Operating Activities $ 1,125 $ 722 _______ _______ Cash Flows from Investing Activities Proceeds from sale of assets 10 34 Change in other assets (100) (16) Capital expenditures (1,543) (234) _______ _______ Net Cash provided (used) by Investing Activities $(1,633) $ (216) _______ _______ Cash Flows from Financing Activities Principal payments on long-term debt and capital lease obligations (557) (401) Proceeds from issuance of stock 9 -- Purchase of stock for Treasury (62) -- _______ _______ Net Cash provided (used) by Financing Activities $ (610) $ (401) _______ _______ Net increase (decrease) in cash and cash equivalents (1,118) 105 Cash and Cash Equivalents at Beginning of Year 3,520 3,496 _______ _______ Cash and Cash Equivalents at April 1 $ 2,402 $ 3,601 ======= ======= Disclosure of cash payments for: Interest $ 151 $ 182 Income taxes 231 111 See notes to financial statements. ASTRONICS CORPORATION Notes to Financial Statements April 1, 1995 1) The interim financial statements are unaudited, but, in the opinion of management, reflect all adjustments necessary for a fair presentation of results for such periods. The results of operations for any interim period are not necessarily indicative of results for the full year. These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company's annual report for the year ended December 31, 1994. ASTRONICS CORPORATION Item 2. Management's Discussion and Analysis of the Financial Condition and Results of Operations The following table sets forth as a percent of net sales certain items reflected in the financial data and the percentage increase (decrease) of such items as compared to the prior period. Percent of Net Sales Period-to-Period Three months ended Increase April 1 (Decrease) 1995 1994 1994-1995 Net Sales: Electronic Systems 41.4% 35.9% 36.4% Customized Printing and Packaging 58.6 64.1 8.1% _____ _____ 100.0% 100.0% 18.3% Cost of products sold 70.3 74.4 11.8% Selling, general and administrative expenses 21.0 22.1 12.9% Interest expenses, net 1.5 2.4 (26.8%) _____ _____ 92.8% 98.9% 11.1% Income before provision for income taxes 7.2% 1.1% 650.8% Provision for taxes 3.4 .5 633.4% _____ _____ Net Income 3.8% .6% 666.7% ====== ===== SALES Sales increased in the First Quarter of 1995 by 18.3 percent to $7,226,000, compared to the First Quarter of 1994. In the 1994 First Quarter, sales decreased by 7.5 percent to $6,108,000 compared to $6,604,000. The 1995 sales increase achieved in the First Quarter consisted of 36.4 percent in the Electronic Systems segment and 8.1 percent in the Customized Packaging and Printing segment. In the Electronics segment, sales increases, in dollar value, came about equally from the electroluminescent and keyboard manufacturing side and the thick walled elastomeric products. The first is related to increased activity in the aerospace and defense electronics products. The latter, to the increased business activity in the global marketplace. The Customized Printing and Packaging sales increased about equally between folding carton sales to the confectionery industry and from specialty imprinting for the stationery, party and gift market. In 1994, the sales decrease came in the Electronics Systems segment and was related to the defense electronics and aerospace industry. Price increases have been nominal, but the pressure to reduce pricing has moderated. BACKLOG The backlog for the Company decreased to $6,000,000 compared to $6,700,000 at December 31, 1994, and $7,500,000 as of April 2, 1994. The April 1, 1995, backlog is composed of $4,700,000 in the Electronic Systems segment and $1,300,000 in the Customized Printing and Packaging segment. Part of the decrease in the backlog relates to the timing/release of orders and part is a reflection of the reduced cycle time from the receipt of an order to the completion and delivery of the order to the customer. EXPENSES Cost of products sold decreased, as a percent of sales, from 74.4 percent in 1994 to 70.3 percent in 1995. This decrease reflects the 1994 one-time charges related to the transition and relocation of the Gloucester, MA, operation into the East Aurora, NY, manufacturing facility. The hard costs of the move were approximately $400,000, or 6.5 percent of sales. These costs consisted of the following: Buyout of a 5.75 year facility lease $150,000 Employee severance payments $150,000 Moving and travel costs $100,000 Overall, therefore, operating expenses increased in the quarter. The three areas of increase were manufacturing supplies, repairs and depreciation. The Company is continuing to invest in technology and processes which require initial investments in support items, which are generally being treated as supplies. During the quarter, the Company elected to do additional preventive maintenance on several machines and facilities. This had a temporary effect of increasing repair costs. Depreciation expense increased in the quarter to 9.3 percent of sales compared to 7.2 percent in 1994, and 5.8 percent in 1993. This reflects the investment in technology and processes and the retirement of an obsolete price of machinery. Material usage costs, despite some increases in raw material costs, continued to decrease. In 1995, they were 26.7 percent, in 1994, they were 27.0 percent. In 1993, product mix differences reduced material usage to 25.0 percent. Employee costs also continue to decrease. In 1995, these costs are 23.1 percent of sales, compared to 24.2 percent in 1994, and 25.4 percent in 1993. The remaining areas of costs were similar in 1995, 1994, and 1993. Total costs in this areas were $5,801,000, or 70.3 percent of sales in 1995, compared to $4,545,000, or 74.4 percent of sales in 1994, compared to $4,376,000, or 66.3 percent in 1993. Selling, general and administrative expenses increased 12.9 percent in 1995, compared to an increase of 8.5 percent in 1994. The 1995 increase compares to an increase in sales of 18.3 percent. The Company has a policy that it reserves all trade receivables over 180 days, or earlier if their are substantial questions. During this quarter, an increase in reserves of $102,000 was recorded. While the Company makes every effort to collect all receivables, it believes it is prudent to adequately reserve accounts that are not collected in a reasonable timeframe. Because of timing, some normal advertising expenses experienced in the 1994 First Quarter will be incurred in the Second Quarter of 1995. Total selling, general and administrative expenses were $1,518,000, or 21 percent of sales in 1995, compared to $1,345,000, or 22.0 percent in 1994, and $1,240.000, or 18.8 percent of sales in 1993. INTEREST Interest costs, net, continues to decrease. This is the result of the refinancing of the subordinated debentures in 1993 and the steady reduction of indebtedness. During the last twelve months, the company has reduced indebtedness by over $2,000,000. The earnings on temporary available cash was $39,000 in 1995, $25,000 in 1994, and $26,000 in 1993. As a percent of sales, interest costs, net, were 1.5 percent in 1995, 2.4 percent in 1994 and 3.8 percent in 1993. Combining all the costs areas, the Company experienced a 11.1 percent increase in costs, while sales were increasing 18.3 percent. This compares to an increase in costs in 1994 of 3.0 percent on a decline of sales of 7.5 percent. Income before taxes increased to $518,000, or 7,2 percent compared to $69,000, or 1.1 percent of sales in 1994, and $739,000, or 11.2 percent of sales in 1993. TAXES The effective tax rate for the First Quarter of 1995 was 46.7 percent, compared to 47.8 percent in 1994, and 40.2 percent in 1993. The tax provision reflects the Federal income tax rate of 34.0 percent and various state income/franchise tax rates. Where there are minimum taxes required by law in various taxing jurisdictions, these are accrued in the First Quarter. NET INCOME Net income was for the First Quarter was $276,000, or $.07 per share. In 1994, the Company earned $36,000, or $.01 per share compared to the First Quarter of 1993 record earnings of $442,000, or $.11 per share. LIQUIDITY The Company's working capital decreased in the First Quarter of 1995 by $1,382,000. This reflects the following items for which working capital was used: Investment in technology and processes $1,543,000 Reduction of indebtedness 557,000 Acquisition of Treasury Stock 62,000 __________ $2,162,000 This compares to a increase of $135,000 in 1994 and an increase of $414,000 in 1993. The Company has a $5,000,000 line of credit available for additional working capital needs, which the Company has not utilized in recent years. The Company feels that its beginning cash balance, the cash flow from internal operations and the line of credit are adequate to meet the Company's operational and investment plans for 1995. COMMITMENTS The Company is continuing its commitment to technology and processes. As such, it has outstanding commitments at the end of the First Quarter of 1995 of approximately $3,500,000. All of these commitments should be completed and operational by the end of the Fourth Quarter. The Company also has commitments for items that it purchases in the normal on-going affairs of the business. The Company is not aware of any obligations in excess of normal market conditions, nor of any long-term commitments that would affect its financial condition. PART II - OTHER INFORMATION Item 1. Legal Proceedings. None. Item 2. Changes in Securities. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Securities Holders. At the annual meeting of shareholders held on April 28, 1995, the nominees to the Board of Directors were re- elected based on the following results: Votes Withholding Nominees Votes For Authority Guy P. Berner 7,341,461 1,028,749 Robert T. Brady 7,383,498 986,712 John B. Drenning 7,341,461 1,028,749 Kevin T. Keane 7,385,701 984,509 John M. Yessa 7,385,851 984,359 The selection of Ernst & Young as the Registrant's auditors was approved by the following vote: 7,899,622 in favor; 156,839 against; and 313,749 abstentions. Under applicable New York law and the Company's charter documents, abstentions and non-votes have no effect. Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K. None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DATED: May 16, 1995 ASTRONICS CORPORATION _________________________________ _________________________________ (Signature) John M. Yessa Vice President-Finance and Treasurer