Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number) | ||||
(Address of principal executive offices) | (Zip code) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
☒ | Accelerated filer | ☐ | Emerging growth company | ||||||||||||||
Non-accelerated filer | ☐ | Smaller Reporting Company |
PAGE | |||||||||||||||||||||||
PART I | |||||||||||||||||||||||
Item 1 | |||||||||||||||||||||||
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Item 2 | |||||||||||||||||||||||
Item 3 | |||||||||||||||||||||||
Item 4 | |||||||||||||||||||||||
PART II | |||||||||||||||||||||||
Item 1 | |||||||||||||||||||||||
Item 1a | |||||||||||||||||||||||
Item 2 | |||||||||||||||||||||||
Item 3 | |||||||||||||||||||||||
Item 4 | |||||||||||||||||||||||
Item 5 | |||||||||||||||||||||||
Item 6 | |||||||||||||||||||||||
September 28, 2019 | December 31, 2018 | ||||||||||
Current Assets: | |||||||||||
Cash and Cash Equivalents | $ | $ | |||||||||
Accounts Receivable, Net of Allowance for Doubtful Accounts | |||||||||||
Inventories | |||||||||||
Prepaid Expenses and Other Current Assets | |||||||||||
Assets Held for Sale | |||||||||||
Total Current Assets | |||||||||||
Property, Plant and Equipment, Net of Accumulated Depreciation | |||||||||||
Other Assets | |||||||||||
Intangible Assets, Net of Accumulated Amortization | |||||||||||
Goodwill | |||||||||||
Total Assets | $ | $ | |||||||||
Current Liabilities: | |||||||||||
Current Maturities of Long-term Debt | $ | $ | |||||||||
Accounts Payable | |||||||||||
Accrued Expenses and Other Current Liabilities | |||||||||||
Customer Advance Payments and Deferred Revenue | |||||||||||
Liabilities Held for Sale | |||||||||||
Total Current Liabilities | |||||||||||
Long-term Debt | |||||||||||
Other Liabilities | |||||||||||
Total Liabilities | |||||||||||
Shareholders’ Equity: | |||||||||||
Common Stock | |||||||||||
Accumulated Other Comprehensive Loss | ( | ( | |||||||||
Other Shareholders’ Equity | |||||||||||
Total Shareholders’ Equity | |||||||||||
Total Liabilities and Shareholders’ Equity | $ | $ |
Nine Months Ended | Three Months Ended | ||||||||||||||||||||||
September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | ||||||||||||||||||||
Sales | $ | $ | $ | $ | |||||||||||||||||||
Cost of Products Sold | |||||||||||||||||||||||
Gross Profit | |||||||||||||||||||||||
Selling, General and Administrative Expenses | |||||||||||||||||||||||
Income from Operations | |||||||||||||||||||||||
Net (Gain) Loss on Sale of Businesses | ( | ||||||||||||||||||||||
Other Expense, Net of Other Income | |||||||||||||||||||||||
Interest Expense, Net of Interest Income | |||||||||||||||||||||||
Income Before Income Taxes | |||||||||||||||||||||||
Provision for (Benefit from) Income Taxes | ( | ||||||||||||||||||||||
Net Income | $ | $ | $ | $ | |||||||||||||||||||
Earnings Per Share: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | |||||||||||||||||||
Diluted | $ | $ | $ | $ |
Nine Months Ended | Three Months Ended | ||||||||||||||||||||||
September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | ||||||||||||||||||||
Net Income | $ | $ | $ | $ | |||||||||||||||||||
Other Comprehensive Income (Loss): | |||||||||||||||||||||||
Foreign Currency Translation Adjustments | ( | ( | ( | ||||||||||||||||||||
Retirement Liability Adjustment – Net of Tax | |||||||||||||||||||||||
Total Other Comprehensive Income (Loss) | ( | ( | ( | ||||||||||||||||||||
Comprehensive Income | $ | $ | $ | $ |
Nine Months Ended | |||||||||||
September 28, 2019 | September 29, 2018 | ||||||||||
Cash Flows From Operating Activities: | |||||||||||
Net Income | $ | $ | |||||||||
Adjustments to Reconcile Net Income to Cash Provided By Operating Activities: | |||||||||||
Depreciation and Amortization | |||||||||||
Provisions for Non-Cash Losses on Inventory and Receivables | |||||||||||
Equity-based Compensation Expense | |||||||||||
Deferred Tax Benefit | ( | ( | |||||||||
Net Gain on Sale of Businesses, Before Taxes | ( | ||||||||||
Other | ( | ( | |||||||||
Cash Flows from Changes in Operating Assets and Liabilities, Excluding the Effects of Acquisitions: | |||||||||||
Accounts Receivable | ( | ||||||||||
Inventories | ( | ( | |||||||||
Accounts Payable | ( | ||||||||||
Accrued Expenses | ( | ||||||||||
Other Current Assets and Liabilities | ( | ( | |||||||||
Customer Advanced Payments and Deferred Revenue | ( | ||||||||||
Income Taxes | ( | ||||||||||
Supplemental Retirement and Other Liabilities | |||||||||||
Cash Provided By Operating Activities | |||||||||||
Cash Flows From Investing Activities: | |||||||||||
Acquisition of Business, Net of Cash Acquired | ( | ||||||||||
Proceeds on Sale of Businesses | |||||||||||
Capital Expenditures | ( | ( | |||||||||
Other Investing Activities | ( | ||||||||||
Cash Provided By (Used For) Investing Activities | ( | ||||||||||
Cash Flows From Financing Activities: | |||||||||||
Proceeds from Long-term Debt | |||||||||||
Payments for Long-term Debt | ( | ( | |||||||||
Purchase of Outstanding Shares for Treasury | ( | ||||||||||
Debt Acquisition Costs | ( | ||||||||||
Proceeds from Exercise of Stock Options | |||||||||||
Other Financing Activities | ( | ||||||||||
Cash Used For Financing Activities | ( | ( | |||||||||
Effect of Exchange Rates on Cash | ( | ( | |||||||||
Increase (Decrease) in Cash and Cash Equivalents | ( | ||||||||||
Cash and Cash Equivalents at Beginning of Period | |||||||||||
Cash and Cash Equivalents at End of Period | $ | $ |
Nine Months Ended | Three Months Ended | ||||||||||||||||||||||
September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | ||||||||||||||||||||
Common Stock | |||||||||||||||||||||||
Beginning of Period | $ | $ | $ | $ | |||||||||||||||||||
Exercise of Stock Options and Equity-based Compensation Expense – Net of Taxes | — | — | — | ||||||||||||||||||||
Class B Stock Converted to Common Stock | |||||||||||||||||||||||
End of Period | $ | $ | $ | $ | |||||||||||||||||||
Convertible Class B Stock | |||||||||||||||||||||||
Beginning of Period | $ | $ | $ | $ | |||||||||||||||||||
Exercise of Stock Options and Equity-based Compensation Expense – Net of Taxes | — | — | — | ||||||||||||||||||||
Class B Stock Converted to Common Stock | ( | ( | ( | ( | |||||||||||||||||||
End of Period | $ | $ | $ | $ | |||||||||||||||||||
Additional Paid in Capital | |||||||||||||||||||||||
Beginning of Period | $ | $ | $ | $ | |||||||||||||||||||
Exercise of Stock Options and Equity-based Compensation Expense - Net of Taxes | |||||||||||||||||||||||
End of Period | $ | $ | $ | $ | |||||||||||||||||||
Accumulated Comprehensive Loss | |||||||||||||||||||||||
Beginning of Period | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Adoption of ASU 2018-02 | — | ( | — | — | |||||||||||||||||||
Foreign Currency Translation Adjustments | ( | ( | ( | ||||||||||||||||||||
Retirement Liability Adjustment – Net of Taxes | |||||||||||||||||||||||
End of Period | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Retained Earnings | |||||||||||||||||||||||
Beginning of Period | $ | $ | $ | $ | |||||||||||||||||||
Adoption of ASU 2018-02 | — | — | — | ||||||||||||||||||||
Adoption of ASU 2014-09 | — | — | — | ||||||||||||||||||||
Net income | |||||||||||||||||||||||
End of Period | $ | $ | $ | $ | |||||||||||||||||||
Treasury Stock | |||||||||||||||||||||||
Beginning of Period | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Purchase of Shares | ( | — | ( | — | |||||||||||||||||||
End of Period | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Total Shareholders’ Equity | $ | $ | $ | $ |
Nine Months Ended | Three Months Ended | ||||||||||||||||||||||
September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | ||||||||||||||||||||
Common Stock | |||||||||||||||||||||||
Beginning of Period | |||||||||||||||||||||||
Exercise of Stock Options and Issuances of Restricted Stock | ( | ||||||||||||||||||||||
Class B Stock Converted to Common Stock | |||||||||||||||||||||||
End of Period | |||||||||||||||||||||||
Convertible Class B Stock | |||||||||||||||||||||||
Beginning of Period | |||||||||||||||||||||||
Exercise of Stock Options | ( | ||||||||||||||||||||||
Class B Stock Converted to Common Stock | ( | ( | ( | ( | |||||||||||||||||||
End of Period | |||||||||||||||||||||||
Treasury Stock | |||||||||||||||||||||||
Beginning of Period | ( | ( | ( | ( | |||||||||||||||||||
Purchase of Shares | ( | — | ( | — | |||||||||||||||||||
Retirement of Treasury Shares | — | — | — | — | |||||||||||||||||||
End of Period | ( | ( | ( | ( |
(In thousands) | Contract Assets | Contract Liabilities | |||||||||
Beginning Balance, January 1, 2019 | $ | $ | |||||||||
Ending Balance, September 28, 2019 | $ | $ |
Nine Months Ended | Three Months Ended | |||||||||||||||||||||||||
(In thousands) | September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | ||||||||||||||||||||||
Aerospace Segment | ||||||||||||||||||||||||||
Commercial Transport | $ | $ | $ | $ | ||||||||||||||||||||||
Military | ||||||||||||||||||||||||||
Business Jet | ||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||
Aerospace Total | ||||||||||||||||||||||||||
Test Systems Segment | ||||||||||||||||||||||||||
Semiconductor | ||||||||||||||||||||||||||
Aerospace & Defense | ||||||||||||||||||||||||||
Test Systems Total | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
Nine Months Ended | Three Months Ended | |||||||||||||||||||||||||
(In thousands) | September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | ||||||||||||||||||||||
Aerospace Segment | ||||||||||||||||||||||||||
Electrical Power & Motion | $ | $ | $ | $ | ||||||||||||||||||||||
Lighting & Safety | ||||||||||||||||||||||||||
Avionics | ||||||||||||||||||||||||||
Systems Certification | ||||||||||||||||||||||||||
Structures | ||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||
Aerospace Total | ||||||||||||||||||||||||||
Test Systems | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
(In thousands) | September 28, 2019 | December 31, 2018 | |||||||||
Finished Goods | $ | $ | |||||||||
Work in Progress | |||||||||||
Raw Material | |||||||||||
$ | $ |
(In thousands) | September 28, 2019 | December 31, 2018 | |||||||||
Land | $ | $ | |||||||||
Buildings and Improvements | |||||||||||
Machinery and Equipment | |||||||||||
Construction in Progress | |||||||||||
Less Accumulated Depreciation | |||||||||||
$ | $ |
September 28, 2019 | December 31, 2018 | ||||||||||||||||||||||||||||
(In thousands) | Weighted Average Life | Gross Carrying Amount | Accumulated Amortization | Gross Carrying Amount | Accumulated Amortization | ||||||||||||||||||||||||
Patents | $ | $ | $ | $ | |||||||||||||||||||||||||
Non-compete Agreement | |||||||||||||||||||||||||||||
Trade Names | |||||||||||||||||||||||||||||
Completed and Unpatented Technology | |||||||||||||||||||||||||||||
Customer Relationships | |||||||||||||||||||||||||||||
Total Intangible Assets | $ | $ | $ | $ |
Nine Months Ended | Three Months Ended | |||||||||||||||||||||||||
(In thousands) | September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | ||||||||||||||||||||||
Amortization Expense | $ | $ | $ | $ |
(In thousands) | |||||
2019 | $ | ||||
2020 | |||||
2021 | |||||
2022 | |||||
2023 | |||||
2024 |
(In thousands) | December 31, 2018 | Acquisition/Divestiture/Adjustments | Foreign Currency Translation | September 28, 2019 | ||||||||||||||||||||||
Aerospace | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||
Test Systems | ||||||||||||||||||||||||||
$ | $ | $ | ( | $ |
Nine Months Ended | Three Months Ended | |||||||||||||||||||||||||
(In thousands) | September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | ||||||||||||||||||||||
Balance at Beginning of Period | $ | $ | $ | $ | ||||||||||||||||||||||
Warranties Divested or Acquired | ( | |||||||||||||||||||||||||
Warranties Issued | ||||||||||||||||||||||||||
Warranties Settled | ( | ( | ( | ( | ||||||||||||||||||||||
Reassessed Warranty Exposure | ( | ( | ||||||||||||||||||||||||
Balance at End of Period | $ | $ | $ | $ |
Nine months ended | Three months ended | |||||||||||||
(In thousands) | September 28, 2019 | September 28, 2019 | ||||||||||||
Finance Lease Cost: | ||||||||||||||
Amortization of Right-of-use Assets | $ | $ | ||||||||||||
Interest on Lease Liabilities | ||||||||||||||
Total Finance Lease Cost | ||||||||||||||
Operating Lease Cost | ||||||||||||||
Variable Lease Cost | ||||||||||||||
Short-term Lease Cost (excluding month-to-month) | ||||||||||||||
Less Sublease and Rental (Income) Expense | ( | |||||||||||||
Total Operating Lease Cost | $ | $ | ||||||||||||
Total Net Lease Cost | $ | $ |
Nine months ended | |||||
(In thousands) | September 28, 2019 | ||||
Operating Cash Flows Used for Finance Leases | $ | ||||
Operating Cash Flows Used for Operating Leases | $ | ||||
Financing Cash Flows Used for Finance Leases | $ |
(In thousands) | Operating Leases | Financing Leases | ||||||||||||
2019 | $ | $ | ||||||||||||
2020 | ||||||||||||||
2021 | ||||||||||||||
2022 | ||||||||||||||
2023 | ||||||||||||||
Thereafter | ||||||||||||||
Total Lease Payments | $ | $ | ||||||||||||
Less: Interest | ||||||||||||||
Total Lease Liability | $ | $ |
Nine Months Ended | Three Months Ended | |||||||||||||||||||||||||
(In thousands) | September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | ||||||||||||||||||||||
Weighted Average Shares - Basic | ||||||||||||||||||||||||||
Net Effect of Dilutive Stock Options | ||||||||||||||||||||||||||
Weighted Average Shares - Diluted |
(In thousands) | September 28, 2019 | December 31, 2018 | |||||||||
Foreign Currency Translation Adjustments | $ | ( | $ | ( | |||||||
Retirement Liability Adjustment – Before Tax | ( | ( | |||||||||
Tax Benefit of Retirement Liability Adjustment | |||||||||||
Retirement Liability Adjustment – After Tax | ( | ( | |||||||||
Accumulated Other Comprehensive Loss | $ | ( | $ | ( |
Nine Months Ended | Three Months Ended | ||||||||||||||||||||||
(In thousands) | September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | |||||||||||||||||||
Foreign Currency Translation Adjustments | $ | ( | $ | ( | $ | ( | $ | ||||||||||||||||
Retirement Liability Adjustments: | |||||||||||||||||||||||
Reclassifications to General and Administrative Expense: | |||||||||||||||||||||||
Amortization of Prior Service Cost | |||||||||||||||||||||||
Amortization of Net Actuarial Losses | |||||||||||||||||||||||
Tax Benefit | ( | ( | ( | ( | |||||||||||||||||||
Retirement Liability Adjustment | |||||||||||||||||||||||
Other Comprehensive Income (Loss) | $ | ( | $ | ( | $ | ( | $ |
Nine Months Ended | Three Months Ended | ||||||||||||||||||||||
(In thousands) | September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | |||||||||||||||||||
Service Cost | $ | $ | $ | $ | |||||||||||||||||||
Interest Cost | |||||||||||||||||||||||
Amortization of Prior Service Cost | |||||||||||||||||||||||
Amortization of Net Actuarial Losses | |||||||||||||||||||||||
Net Periodic Cost | $ | $ | $ | $ |
Nine Months Ended | Three Months Ended | ||||||||||||||||||||||
(In thousands) | September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | |||||||||||||||||||
Service Cost | $ | $ | $ | $ | |||||||||||||||||||
Interest Cost | |||||||||||||||||||||||
Amortization of Prior Service Cost | |||||||||||||||||||||||
Amortization of Net Actuarial Losses | |||||||||||||||||||||||
Net Periodic Cost | $ | $ | $ | $ |
Nine Months Ended | Three Months Ended | |||||||||||||||||||||||||
(In thousands) | September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | ||||||||||||||||||||||
Sales | ||||||||||||||||||||||||||
Aerospace | $ | $ | $ | $ | ||||||||||||||||||||||
Less Intersegment Sales | ( | ( | ( | |||||||||||||||||||||||
Total Aerospace Sales | ||||||||||||||||||||||||||
Test Systems | ||||||||||||||||||||||||||
Less Intersegment Sales | ( | ( | ||||||||||||||||||||||||
Total Test Systems Sales | ||||||||||||||||||||||||||
Total Consolidated Sales | $ | $ | $ | $ | ||||||||||||||||||||||
Operating Profit and Margins | ||||||||||||||||||||||||||
Aerospace | $ | $ | $ | $ | ||||||||||||||||||||||
% | % | % | % | |||||||||||||||||||||||
Test Systems | ||||||||||||||||||||||||||
% | % | % | % | |||||||||||||||||||||||
Total Operating Profit | ||||||||||||||||||||||||||
% | % | % | % | |||||||||||||||||||||||
Additions/Deductions from Operating Profit | ||||||||||||||||||||||||||
Net (Gain) Loss on Sale of Businesses | ( | |||||||||||||||||||||||||
Interest Expense, Net of Interest Income | ||||||||||||||||||||||||||
Corporate Expenses and Other | ||||||||||||||||||||||||||
Income Before Income Taxes | $ | $ | $ | $ |
(In thousands) | September 28, 2019 | December 31, 2018 | ||||||||||||
Aerospace | $ | $ | ||||||||||||
Test Systems | ||||||||||||||
Corporate | ||||||||||||||
Total Assets | $ | $ |
(In thousands) | December 31, 2018 | |||||||
Assets Held for Sale | ||||||||
Inventories | $ | |||||||
Prepaid Expenses and Other Current Assets | ||||||||
Net Property, Plant and Equipment | ||||||||
Other Assets | ||||||||
Intangible Assets, Net of Accumulated Amortization | ||||||||
Total Assets Held for Sale | $ | |||||||
Liabilities Held for Sale | ||||||||
Deferred Income Taxes | $ |
Item 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Nine Months Ended | Three Months Ended | |||||||||||||||||||||||||
(Dollars in thousands) | September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | ||||||||||||||||||||||
Sales | $ | 574,290 | $ | 600,339 | $ | 177,018 | $ | 212,674 | ||||||||||||||||||
Gross Profit (sales less cost of products sold) | $ | 129,234 | $ | 133,024 | $ | 36,794 | $ | 46,320 | ||||||||||||||||||
Gross Margin | 22.5 | % | 22.2 | % | 20.8 | % | 21.8 | % | ||||||||||||||||||
Selling, General and Administrative Expenses | $ | 90,677 | $ | 87,919 | $ | 31,691 | $ | 27,976 | ||||||||||||||||||
SG&A Expenses as a Percentage of Sales | 15.8 | % | 14.6 | % | 17.9 | % | 13.2 | % | ||||||||||||||||||
Net (Gain) Loss on Sale of Businesses | $ | (78,801) | $ | — | $ | 1,332 | $ | — | ||||||||||||||||||
Interest Expense, Net of Interest Income | $ | 4,576 | $ | 7,326 | $ | 1,547 | $ | 2,511 | ||||||||||||||||||
Effective Tax Rate | 22.9 | % | 6.5 | % | 31.3 | % | (9.1) | % | ||||||||||||||||||
Net Income | $ | 86,082 | $ | 34,318 | $ | 1,210 | $ | 16,999 |
Nine Months Ended | Three Months Ended | |||||||||||||||||||||||||
(In thousands) | September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | ||||||||||||||||||||||
Sales | $ | 520,495 | $ | 500,445 | $ | 157,702 | $ | 169,588 | ||||||||||||||||||
Less Intersegment Sales | (5) | (62) | — | (9) | ||||||||||||||||||||||
Total Aerospace Sales | $ | 520,490 | $ | 500,383 | $ | 157,702 | $ | 169,579 | ||||||||||||||||||
Operating Profit | $ | 48,949 | $ | 47,525 | $ | 8,789 | $ | 16,210 | ||||||||||||||||||
Operating Margin | 9.4 | % | 9.5 | % | 5.6 | % | 9.6 | % | ||||||||||||||||||
Aerospace Sales by Market | ||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Commercial Transport | $ | 393,721 | $ | 402,539 | $ | 122,212 | $ | 136,692 | ||||||||||||||||||
Military | 57,753 | 46,410 | 17,255 | 16,125 | ||||||||||||||||||||||
Business Jet | 49,555 | 30,291 | 12,432 | 9,289 | ||||||||||||||||||||||
Other | 19,461 | 21,143 | 5,803 | 7,473 | ||||||||||||||||||||||
$ | 520,490 | $ | 500,383 | $ | 157,702 | $ | 169,579 | |||||||||||||||||||
Aerospace Sales by Product Line | ||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Electrical Power & Motion | $ | 255,007 | $ | 218,931 | $ | 78,428 | $ | 78,610 | ||||||||||||||||||
Lighting & Safety | 139,502 | 129,244 | 44,127 | 43,481 | ||||||||||||||||||||||
Avionics | 79,414 | 100,354 | 19,871 | 31,059 | ||||||||||||||||||||||
Systems Certification | 9,050 | 12,028 | 3,384 | 2,373 | ||||||||||||||||||||||
Structures | 18,056 | 18,683 | 6,089 | 6,583 | ||||||||||||||||||||||
Other | 19,461 | 21,143 | 5,803 | 7,473 | ||||||||||||||||||||||
$ | 520,490 | $ | 500,383 | $ | 157,702 | $ | 169,579 |
(In thousands) | September 28, 2019 | December 31, 2018 | |||||||||
Total Assets | $ | 657,169 | $ | 647,870 | |||||||
Backlog | $ | 308,223 | $ | 326,047 |
Nine Months Ended | Three Months Ended | |||||||||||||||||||||||||
(In thousands) | September 28, 2019 | September 29, 2018 | September 28, 2019 | September 29, 2018 | ||||||||||||||||||||||
Sales | $ | 53,995 | $ | 99,956 | $ | 19,346 | $ | 43,095 | ||||||||||||||||||
Less Intersegment Sales | (195) | — | (30) | — | ||||||||||||||||||||||
Net Sales | $ | 53,800 | $ | 99,956 | $ | 19,316 | $ | 43,095 | ||||||||||||||||||
Operating profit | $ | 4,166 | $ | 10,151 | $ | 2,075 | $ | 5,833 | ||||||||||||||||||
Operating Margin | 7.7 | % | 10.2 | % | 10.7 | % | 13.5 | % | ||||||||||||||||||
Test Systems Sales by Market | ||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Semiconductor | $ | 7,815 | $ | 72,061 | $ | 2,219 | $ | 33,596 | ||||||||||||||||||
Aerospace & Defense | 45,985 | 27,895 | 17,097 | 9,499 | ||||||||||||||||||||||
$ | 53,800 | $ | 99,956 | $ | 19,316 | $ | 43,095 |
(In thousands) | September 28, 2019 | December 31, 2018 | |||||||||
Total Assets | $ | 88,662 | $ | 97,056 | |||||||
Backlog (1) | $ | 71,137 | $ | 89,470 | |||||||
(1) - $89.5 million backlog at December 31, 2018 includes $12.2 million related to the divested semiconductor business |
Payments Due by Period | |||||||||||||||||||||||||||||
(In thousands) | Total | 2019 | 2020-2021 | 2022-2023 | After 2023 | ||||||||||||||||||||||||
Long-term Debt | $ | 180,246 | $ | 27 | $ | 219 | $ | 180,000 | $ | — | |||||||||||||||||||
Interest on Long-term Debt | 19,489 | 1,448 | 11,582 | 6,459 | — | ||||||||||||||||||||||||
Purchase Obligations | 136,051 | 83,995 | 51,700 | 326 | 30 | ||||||||||||||||||||||||
Supplemental Retirement Plan and Post Retirement Obligations | 22,793 | 104 | 827 | 798 | 21,064 | ||||||||||||||||||||||||
Lease Obligations | 36,318 | 1,755 | 12,827 | 8,985 | 12,751 | ||||||||||||||||||||||||
Interest on Finance Lease Obligations | 380 | 67 | 305 | 8 | — | ||||||||||||||||||||||||
Other Long-term Liabilities | 108 | 3 | 25 | 32 | 48 | ||||||||||||||||||||||||
Total Contractual Obligations | $ | 395,385 | $ | 87,399 | $ | 77,485 | $ | 196,608 | $ | 33,893 |
Period | (a) Total Number of Shares Purchased | (b) Average Price Paid Per Share | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Dollar Value of Shares that may yet be Purchased Under the Program (1) | ||||||||||
June 30, 2019 - July 27, 2019 | — | — | — | $50,000,000 | ||||||||||
July 28, 2019 - August 24, 2019 (2) | 985,564 | $27.19 | 983,994 | $23,243,987 | ||||||||||
August 25, 2019 - September 28, 2019 | 839,300 | $27.69 | 839,300 | $50,000,000 |
Section 302 Certification - Chief Executive Officer | ||||||||
Section 302 Certification - Chief Financial Officer | ||||||||
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||||||||
Exhibit 101.1* | Instance Document | |||||||
Exhibit 101.2* | Schema Document | |||||||
Exhibit 101.3* | Calculation Linkbase Document | |||||||
Exhibit 101.4* | Labels Linkbase Document | |||||||
Exhibit 101.5* | Presentation Linkbase Document | |||||||
Exhibit 101.6* | Definition Linkbase Document |
* | Submitted electronically herewith. |
ASTRONICS CORPORATION | ||||||||||||||
(Registrant) | ||||||||||||||
Date: | November 7, 2019 | By: | /s/ David C. Burney | |||||||||||
David C. Burney Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
/s/ Peter J. Gundermann | |||||
Peter J. Gundermann | |||||
President and Chief Executive Officer |
/s/ David C. Burney | |||||
David C. Burney | |||||
Chief Financial Officer |
November 7, 2019 | /s/ Peter J. Gundermann | |||||||
Peter J. Gundermann | ||||||||
Title: | Chief Executive Officer | |||||||
November 7, 2019 | /s/ David C. Burney | |||||||
David C. Burney | ||||||||
Title: | Chief Financial Officer |
Segment Information |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information Below are the sales and operating profit by segment for the three and nine months ended September 28, 2019 and September 29, 2018 and a reconciliation of segment operating profit to income before income taxes. Operating profit is net sales less cost of products sold and other operating expenses excluding interest and corporate expenses. Cost of products sold and other operating expenses are directly identifiable to the respective segment.
Total Assets:
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Basis of Presentation (Policies) |
9 Months Ended |
---|---|
Sep. 28, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of PresentationThe accompanying unaudited statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. |
Operating Results | Operating Results The results of operations for any interim period are not necessarily indicative of results for the full year. Operating results for the nine months ended September 28, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. The balance sheet at December 31, 2018 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements.
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Cost of Products Sold, Engineering and Development, Interest, and Selling, General and Administrative Expenses | Cost of Products Sold, Engineering and Development, Interest, and Selling, General and Administrative ExpensesCost of products sold includes the costs to manufacture products such as direct materials and labor and manufacturing overhead as well as all engineering and development costs. The Company is engaged in a variety of engineering and design activities as well as basic research and development activities directed to the substantial improvement or new application of the Company’s existing technologies. These costs are expensed when incurred and included in cost of products sold. |
Selling, General and Administrative Expenses | Selling, general and administrative expenses include costs primarily related to our sales and marketing departments and administrative departments. |
Newly Adopted and Recent Accounting Pronouncements | Newly Adopted and Recent Accounting Pronouncements During the first quarter of 2018, the Company early-adopted ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows for a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The Company applied the guidance as of the beginning of the period of adoption and reclassified approximately $1.4 million from accumulated other comprehensive loss to retained earnings due to the change in federal corporate tax rate. In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 required entities to adopt the new standard using a modified retrospective method and initially apply the related guidance at the beginning of the earliest period presented in the financial statements. During July 2018, the FASB issued ASU 2018-11, which allows for an additional and optional transition method under which an entity would record a cumulative-effect adjustment at the beginning of the period of adoption (“cumulative-effect method”). We have adopted this guidance as of January 1, 2019 using the cumulative-effect method. The standard requires lessees to recognize a lease liability and a right-of-use (“ROU”) asset on the balance sheet for operating leases. Accounting for finance leases is substantially unchanged. Prior year financial statements were not recast under the new method. We elected the package of transition provisions available for expired or existing contracts, which allowed us to carryforward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. The implementation of this standard did not have a material effect on our consolidated financial statements. As of January 1, 2019, ROU assets of approximately $18.4 million and lease liabilities of approximately $18.5 million were recognized on our balance sheet for our leased office and manufacturing facilities and equipment leases. There was a reclassification to ROU assets of approximately $3.5 million from net property plant and equipment for assets under existing finance leases at the transition date. The standards did not materially impact the Company's consolidated statements of operations or retained earnings. Refer to Note 9 for additional information. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This standard requires that an entity measure impairment of certain financial instruments, including trade receivables, based on expected losses rather than incurred losses. In November 2018, the FASB issued ASU 2018-19 which clarifies the guidance in ASU 2016-13. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the impact of this ASU. We do not expect this ASU to have a significant impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement. The new standard removes the disclosure requirements for the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. We do not expect this ASU to have a significant impact on our consolidated financial statements, as it only includes changes to disclosure requirements. In August 2018, the FASB issued ASU 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans. The new standard includes updates to the disclosure requirements for defined benefit plans including several additions, deletions and modifications to the disclosure requirements. The provisions of this ASU are effective for years beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this ASU.
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Fair Value | Fair Value A fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. Fair value is based upon an exit price model. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and involves consideration of factors specific to the asset or liability. The Company follows a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value.
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Acquisition and Divestiture Activities - Summary of Assets and Liabilities Held for Sale (Details) - USD ($) $ in Thousands |
Sep. 28, 2019 |
Dec. 31, 2018 |
---|---|---|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Total Assets Held for Sale | $ 3,186 | $ 19,358 |
Held for Sale | Test Systems Segment | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Inventories | 14,385 | |
Prepaid Expenses and Other Current Assets | 87 | |
Net Property, Plant and Equipment | 3,521 | |
Other Assets | 714 | |
Intangible Assets, Net of Accumulated Amortization | 651 | |
Total Assets Held for Sale | 19,358 | |
Deferred Income Taxes | $ 906 |
Shareholders' Equity - Components of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands |
Sep. 28, 2019 |
Jun. 29, 2019 |
Dec. 31, 2018 |
Sep. 29, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|---|---|
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Total Shareholders’ Equity | $ 425,792 | $ 386,625 | $ 369,445 | |||
Foreign Currency Translation Adjustments | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Total Shareholders’ Equity | (7,878) | (7,156) | ||||
Retirement Liability Adjustment | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Retirement Liability Adjustment – Before Tax | (7,256) | (7,814) | ||||
Tax Benefit of Retirement Liability Adjustment | 1,524 | 1,641 | ||||
Total Shareholders’ Equity | (5,732) | (6,173) | ||||
Accumulated Comprehensive Loss | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Total Shareholders’ Equity | $ (13,610) | $ (12,421) | $ (13,329) | $ (15,425) | $ (15,867) | $ (13,352) |
Legal Proceedings (Details) - Germany - Lufthansa Technik AG - Patent Infringement - AES $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 28, 2019
USD ($)
|
Sep. 28, 2019
USD ($)
|
|
Loss Contingencies [Line Items] | ||
Damages sought | $ 6.2 | |
Incremental reserve | $ 1.7 | 1.7 |
Recorded reserve | 2.7 | 2.7 |
Minimum | ||
Loss Contingencies [Line Items] | ||
Estimate of the value of the dispute | 2.7 | 2.7 |
Maximum | ||
Loss Contingencies [Line Items] | ||
Estimate of the value of the dispute | $ 6.3 | $ 6.3 |
Property, Plant and Equipment - Summary of Property, Plant and Equipment (Details) - USD ($) $ in Thousands |
Sep. 28, 2019 |
Dec. 31, 2018 |
---|---|---|
Property, Plant and Equipment | ||
Property, plant and equipment, gross | $ 203,632 | $ 207,734 |
Less Accumulated Depreciation | 90,495 | 86,872 |
Property, plant and equipment, net | 113,137 | 120,862 |
Land | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 9,778 | 11,191 |
Buildings and Improvements | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 73,988 | 83,812 |
Machinery and Equipment | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | 114,190 | 106,327 |
Construction in Progress | ||
Property, Plant and Equipment | ||
Property, plant and equipment, gross | $ 5,676 | $ 6,404 |
Revenue - Revenue Disaggregated by Market (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2019 |
Sep. 29, 2018 |
Sep. 28, 2019 |
Sep. 29, 2018 |
|
Disaggregation of Revenue [Line Items] | ||||
Sales | $ 177,018 | $ 212,674 | $ 574,290 | $ 600,339 |
Commercial Transport | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 122,212 | 136,692 | 393,721 | 402,539 |
Military | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 17,255 | 16,125 | 57,753 | 46,410 |
Business Jet | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 12,432 | 9,289 | 49,555 | 30,291 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 5,803 | 7,473 | 19,461 | 21,143 |
Aerospace Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 157,702 | 169,579 | 520,490 | 500,383 |
Semiconductor | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 2,219 | 33,596 | 7,815 | 72,061 |
Aerospace & Defense | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 17,097 | 9,499 | 45,985 | 27,895 |
Test Systems Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | $ 19,316 | $ 43,095 | $ 53,800 | $ 99,956 |
Consolidated Condensed Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2019 |
Sep. 29, 2018 |
Sep. 28, 2019 |
Sep. 29, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net Income | $ 1,210 | $ 16,999 | $ 86,082 | $ 34,318 |
Other Comprehensive Income (Loss): | ||||
Foreign Currency Translation Adjustments | (1,336) | 226 | (722) | (1,346) |
Retirement Liability Adjustment – Net of Tax | 147 | 216 | 441 | 646 |
Total Other Comprehensive Income (Loss) | (1,189) | 442 | (281) | (700) |
Comprehensive Income | $ 21 | $ 17,441 | $ 85,801 | $ 33,618 |
Revenue |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue ASU 2014-09 was adopted on January 1, 2018 using the modified retrospective method, which required the recognition of the cumulative effect of the transition as an adjustment to retained earnings. We recognized a transition adjustment of $3.3 million, net of tax effects, which increased our January 1, 2018 retained earnings. Revenue is recognized when, or as, the Company transfers control of promised products or services to a customer in an amount that reflects the consideration the Company expects to be entitled in exchange for transferring those products or services. Sales shown on the Company's Consolidated Condensed Statements of Operations are from contracts with customers. Payment terms and conditions vary by contract, although terms generally include a requirement of payment within a range from 30 to 60 days after the performance obligation has been satisfied; or in certain cases, up-front deposits. In circumstances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that the Company's contracts generally do not include a significant financing component. Taxes collected from customers, which are subsequently remitted to governmental authorities, are excluded from sales. The Company recognizes an asset for the incremental, material costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year and the costs are expected to be recovered. These incremental costs include, but are not limited to, sales commissions incurred to obtain a contract with a customer. As of September 28, 2019, the Company does not have material incremental costs on any open contracts with an original expected duration of greater than one year. The Company recognizes an asset for certain, material costs to fulfill a contract if it is determined that the costs relate directly to a contract or anticipated contracts that can be specifically identified, generate or enhance resources that will be used in satisfying performance obligations in the future, and are expected to be recovered. Such costs are amortized on a systematic basis that is consistent with the transfer to the customer of the goods to which the asset relates. Start-up costs are expensed as incurred. Capitalized fulfillment costs are included in Inventories in the accompanying Consolidated Condensed Balance Sheets. Should future orders not materialize or it is determined the costs are no longer probable of recovery, the capitalized costs are written off. As of September 28, 2019, the Company does not have material capitalized fulfillment costs. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts which are, therefore, not distinct. Promised goods or services that are immaterial in the context of the contract are not separately assessed as performance obligations. Some of our contracts have multiple performance obligations, most commonly due to the contract covering multiple phases of the product lifecycle (development, production, maintenance and support). For contracts with multiple performance obligations, the contract’s transaction price is allocated to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. The primary method used to estimate standalone selling price is the expected cost plus margin approach, under which expected costs are forecast to satisfy a performance obligation and then an appropriate margin is added for that distinct good or service. Shipping and handling activities that occur after the customer has obtained control of the good are considered fulfillment activities, not performance obligations. Some of our contracts offer price discounts or free units after a specified volume has been purchased. The Company evaluates these options to determine whether they provide a material right to the customer, representing a separate performance obligation. If the option provides a material right to the customer, revenue is allocated to these rights and recognized when those future goods or services are transferred, or when the option expires. Contract modifications are routine in the performance of our contracts. Contracts are often modified to account for changes in contract specifications or requirements. In most instances, contract modifications are for goods or services that are distinct, and, therefore, are accounted for as new contracts. The effect of modifications has been reflected when identifying the satisfied and unsatisfied performance obligations, determining the transaction price and allocating the transaction price. The majority of the Company’s revenue from contracts with customers is recognized at a point in time, when the customer obtains control of the promised product, which is generally upon delivery and acceptance by the customer. These contracts may provide credits or incentives, which may be accounted for as variable consideration. Variable consideration is estimated at the most likely amount to predict the consideration to which the Company will be entitled, and only to the extent it is probable that a subsequent change in estimate will not result in a significant revenue reversal when estimating the amount of revenue to recognize. Variable consideration is treated as a change to the sales transaction price and based on an assessment of all information (i.e., historical, current and forecasted) that is reasonably available to the Company, and estimated at contract inception and updated at the end of each reporting period as additional information becomes available. Most of our contracts do not contain rights to return product; where this right does exist, it is evaluated as possible variable consideration. For contracts that are subject to the requirement to accrue anticipated losses, the company recognizes the entire anticipated loss in the period that the loss becomes probable. For contracts with customers in which the Company promises to provide a product to the customer that has no alternative use to the Company and the Company has enforceable rights to payment for progress completed to date inclusive of profit, the Company satisfies the performance obligation and recognizes revenue over time, using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, material and overhead. The Company also recognizes revenue from service contracts (including service-type warranties) over time. The Company recognizes revenue over time during the term of the agreement as the customer is simultaneously receiving and consuming the benefits provided throughout the Company’s performance. The Company typically recognizes revenue on a straight-line basis throughout the contract period. On September 28, 2019, we had $379.4 million of remaining performance obligations, which we refer to as total backlog. We expect to recognize approximately $175.0 million of our remaining performance obligations as revenue in 2019. The Company has not recognized any material amount of revenue from performance obligations that were satisfied or partially satisfied in previous periods. Costs in excess of billings includes unbilled amounts resulting from revenues under contracts with customers that are satisfied over time and when the cost-to-cost measurement method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer, and right to payment is not just subject to the passage of time. Amounts may not exceed their net realizable value. Costs in excess of billings are classified as current assets, within Accounts Receivable, Net of Allowance for Doubtful Accounts on our Consolidated Condensed Balance Sheet. Billings in excess of cost includes billings in excess of revenue recognized as well as deferred revenue, which includes advanced payments, up-front payments, and progress billing payments. Billings in excess of cost are classified as current liabilities, reported in our Consolidated Condensed Balance Sheet within Customer Advance Payments and Deferred Revenue. To determine the revenue recognized in the period from the beginning balance of billings in excess of cost, the contract liability as of the beginning of the period is recognized as revenue on a contract-by-contract basis when the Company satisfies the performance obligation related to the individual contract. Once the beginning contract liability balance for an individual contract has been fully recognized as revenue, any additional payments received in the period are recognized as revenue once the related costs have been incurred. We recognized $5.1 million and $6.3 million during the three months ended September 28, 2019 and September 29, 2018, respectively, and $15.7 million and $6.3 million for the nine months ended September 28, 2019 and September 29, 2018, respectively, in revenues that were included in the contract liability balance at the beginning of the period. The Company's contract assets and contract liabilities consist primarily of costs in excess of billings and billings in excess of cost, respectively. The following table presents the beginning and ending balances of contract assets and contract liabilities during the nine months ended September 28, 2019:
The following table presents our revenue disaggregated by Market Segments as follows:
The following table presents our revenue disaggregated by Product Lines as follows:
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Leases - Summary of Maturity of Lease Liabilities (Details) $ in Thousands |
Sep. 28, 2019
USD ($)
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Operating Leases | |
2019 | $ 1,192 |
2020 | 4,142 |
2021 | 4,121 |
2022 | 3,904 |
2023 | 3,677 |
Thereafter | 11,981 |
Total Lease Payments | 29,017 |
Less: Interest | 3,624 |
Lease liability | 25,393 |
Financing Leases | |
2019 | 522 |
2020 | 2,128 |
2021 | 2,181 |
2022 | 743 |
2023 | 0 |
Thereafter | 0 |
Total Lease Payments | 5,574 |
Less: Interest | 380 |
Financing lease, liability | $ 5,194 |
Segment Information (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Segment Reporting Information | Below are the sales and operating profit by segment for the three and nine months ended September 28, 2019 and September 29, 2018 and a reconciliation of segment operating profit to income before income taxes. Operating profit is net sales less cost of products sold and other operating expenses excluding interest and corporate expenses. Cost of products sold and other operating expenses are directly identifiable to the respective segment.
Total Assets:
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Leases (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Lease Costs and Cash Paid | The following is a summary of the Company's total lease costs:
The following is a summary of cash paid for amounts included in the measurement of lease liabilities:
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Summary of Maturity of Lease Liabilities, Operating Leases | The following is a summary of the Company's maturity of lease liabilities:
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Summary of Maturity of Lease Liabilities, Financing Leases | The following is a summary of the Company's maturity of lease liabilities:
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Shareholders' Equity |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders' Equity Share Buyback Program On February 24, 2016, the Company’s Board of Directors authorized the repurchase of up to $50 million of common stock (the “Buyback Program”). The Buyback Program allowed the Company to purchase shares of its common stock in accordance with applicable securities laws on the open market or through privately negotiated transactions. The Company has repurchased approximately 1,675,000 shares and has completed that program. On December 12, 2017, the Company’s Board of Directors authorized an additional repurchase of up to $50 million. The Company has repurchased approximately 1,823,000 shares and has completed that program in the third quarter of 2019. On September 17, 2019, the Company’s Board of Directors authorized an additional repurchase of up to $50 million. No amounts have been repurchased under the new program as of September 28, 2019. Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss are as follows:
The components of other comprehensive income (loss) are as follows:
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Property, Plant and Equipment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property, Plant and Equipment Property, Plant and Equipment are as follows:
Additionally, net Property, Plant and Equipment of $3,186 and $3,521 are classified in Assets Held for Sale at September 28, 2019 and December 31, 2018, respectively. Refer to Note 18.
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Product Warranties |
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Product Warranties Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranties | Product Warranties In the ordinary course of business, the Company warrants its products against defects in design, materials and workmanship typically over periods ranging from 12 to 60 months. The Company determines warranty reserves needed by product line based on experience and current facts and circumstances. Activity in the warranty accrual is summarized as follows:
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Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories are as follows:
Additionally, net Inventories of $14,385 are classified in Assets Held for Sale at December 31, 2018. Refer to Note 18.
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Product Warranties - Summary of Activity in Warranty Accrual (Details) - USD ($) $ in Thousands |
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Sep. 28, 2019 |
Sep. 29, 2018 |
Sep. 28, 2019 |
Sep. 29, 2018 |
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Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Balance at Beginning of Period | $ 4,806 | $ 5,180 | $ 5,027 | $ 5,136 |
Warranties Divested or Acquired | 20 | 0 | (103) | 0 |
Warranties Issued | 769 | 801 | 2,014 | 2,102 |
Warranties Settled | (670) | (934) | (1,850) | (2,219) |
Reassessed Warranty Exposure | 301 | (105) | 138 | (77) |
Balance at End of Period | $ 5,226 | $ 4,942 | $ 5,226 | $ 4,942 |
Minimum | ||||
Product Liability Contingency [Line Items] | ||||
Product warranty period | 12 months | |||
Maximum | ||||
Product Liability Contingency [Line Items] | ||||
Product warranty period | 60 months |
Income Taxes (Details) |
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Sep. 28, 2019 |
Sep. 29, 2018 |
Sep. 28, 2019 |
Sep. 29, 2018 |
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Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 31.30% | (9.10%) | 22.90% | 6.50% |
Supplemental Retirement Plan and Related Post Retirement Benefits (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Components of Net Periodic Cost | The following table sets forth information regarding the net periodic pension cost for the plans.
Participants in the SERP are entitled to paid medical, dental and long-term care insurance benefits upon retirement under the plan. The following table sets forth information regarding the net periodic cost recognized for those benefits:
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Product Warranties (Tables) |
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Product Warranties Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Activity in Warranty Accrual | The Company determines warranty reserves needed by product line based on experience and current facts and circumstances. Activity in the warranty accrual is summarized as follows:
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Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Intangible Assets The following table summarizes acquired intangible assets as follows:
Additionally, net Intangible Assets of $651 are classified in Assets Held for Sale at December 31, 2018. Refer to Note 18. All acquired intangible assets other than goodwill and one trade name are being amortized. Amortization expense for acquired intangibles is summarized as follows:
Amortization expense for acquired intangible assets expected for 2019 and for each of the next five years is summarized as follows:
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The Company has operating and finance leases for leased office and manufacturing facilities and equipment leases. At inception of arrangements with vendors, the Company determines whether the contract is or contains a lease based on each party’s rights and obligations under the arrangement. At inception, any new additional operating lease liabilities and corresponding ROU assets are based on the present value of the remaining minimum rental payments. If the lease arrangement also contains non-lease components, the Company elected the practical expedient not to separate any combined lease and non-lease components for all lease contracts. For our real estate leases, the remaining fixed minimum rental payments used in the calculation of the new lease liability, include fixed payments and variable payments (if the variable payments are based on an index), over the remaining lease term. While we do have real estate leases with options to purchase the facility at a market value at the date of exercise, these are not included in the calculation of the lease liability, as these options are not expected to be exercised as of the January 1, 2019 transition date. The present value of the Company’s lease liability at transition was calculated using a weighted-average incremental borrowing rate of 3.7%. In determining the incremental borrowing rate, we have considered borrowing data for secured debt obtained from our lending institution as of the transition date. As of September 28, 2019, the Company recognized an operating right-of-use asset and lease liability of approximately $25.1 million and $25.4 million, respectively. The Company's operating lease liability increased approximately $4.1 million and $9.7 million as a result of acquiring right-of-use-assets from new leases entered into during the three and nine months ended September 28, 2019. As of September 28, 2019, the Company recognized a financing right-of-use asset and lease liability of approximately $2.7 million and $5.2 million, respectively. No new financing lease liabilities were entered into during the three and nine months ended September 28, 2019. The right-of-use asset is included within Other assets in the Consolidated Condensed Balance Sheets, while the lease liability is included within Other current liabilities and Other liabilities, as appropriate. As permitted by ASC 842, leases with expected durations of less than 12 months from inception (i.e. short-term leases) were excluded from the Company’s calculation of its lease liability and right-of-use asset. Furthermore, as permitted by ASC 842, the Company elected to apply the package of practical expedients, which allows companies not to reassess: (a) whether its expired or existing contracts are or contain leases, (b) the lease classification for any expired or existing leases, and (c) initial direct costs for any existing leases. The following is a summary of the Company's total lease costs:
The following is a summary of cash paid for amounts included in the measurement of lease liabilities:
The weighted-average remaining term for the Company's operating and financing leases are approximately 8 years and 3 years, respectively. The following is a summary of the Company's maturity of lease liabilities:
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Leases | Leases The Company has operating and finance leases for leased office and manufacturing facilities and equipment leases. At inception of arrangements with vendors, the Company determines whether the contract is or contains a lease based on each party’s rights and obligations under the arrangement. At inception, any new additional operating lease liabilities and corresponding ROU assets are based on the present value of the remaining minimum rental payments. If the lease arrangement also contains non-lease components, the Company elected the practical expedient not to separate any combined lease and non-lease components for all lease contracts. For our real estate leases, the remaining fixed minimum rental payments used in the calculation of the new lease liability, include fixed payments and variable payments (if the variable payments are based on an index), over the remaining lease term. While we do have real estate leases with options to purchase the facility at a market value at the date of exercise, these are not included in the calculation of the lease liability, as these options are not expected to be exercised as of the January 1, 2019 transition date. The present value of the Company’s lease liability at transition was calculated using a weighted-average incremental borrowing rate of 3.7%. In determining the incremental borrowing rate, we have considered borrowing data for secured debt obtained from our lending institution as of the transition date. As of September 28, 2019, the Company recognized an operating right-of-use asset and lease liability of approximately $25.1 million and $25.4 million, respectively. The Company's operating lease liability increased approximately $4.1 million and $9.7 million as a result of acquiring right-of-use-assets from new leases entered into during the three and nine months ended September 28, 2019. As of September 28, 2019, the Company recognized a financing right-of-use asset and lease liability of approximately $2.7 million and $5.2 million, respectively. No new financing lease liabilities were entered into during the three and nine months ended September 28, 2019. The right-of-use asset is included within Other assets in the Consolidated Condensed Balance Sheets, while the lease liability is included within Other current liabilities and Other liabilities, as appropriate. As permitted by ASC 842, leases with expected durations of less than 12 months from inception (i.e. short-term leases) were excluded from the Company’s calculation of its lease liability and right-of-use asset. Furthermore, as permitted by ASC 842, the Company elected to apply the package of practical expedients, which allows companies not to reassess: (a) whether its expired or existing contracts are or contain leases, (b) the lease classification for any expired or existing leases, and (c) initial direct costs for any existing leases. The following is a summary of the Company's total lease costs:
The following is a summary of cash paid for amounts included in the measurement of lease liabilities:
The weighted-average remaining term for the Company's operating and financing leases are approximately 8 years and 3 years, respectively. The following is a summary of the Company's maturity of lease liabilities:
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Supplemental Retirement Plan and Related Post Retirement Benefits |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Retirement Plan and Related Post Retirement Benefits | Supplemental Retirement Plan and Related Post Retirement Benefits The Company has two non-qualified supplemental retirement defined benefit plans (“SERP” and “SERP II”) for certain executive officers. The following table sets forth information regarding the net periodic pension cost for the plans.
Participants in the SERP are entitled to paid medical, dental and long-term care insurance benefits upon retirement under the plan. The following table sets forth information regarding the net periodic cost recognized for those benefits:
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Fair Value |
9 Months Ended |
---|---|
Sep. 28, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value A fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. Fair value is based upon an exit price model. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and involves consideration of factors specific to the asset or liability. The Company follows a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. On a Recurring Basis: A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. There were no financial assets or liabilities carried at fair value measured on a recurring basis at December 31, 2018 or September 28, 2019. On a Non-recurring Basis: The Company estimates the fair value of reporting units, utilizing unobservable Level 3 inputs. Level 3 inputs require significant management judgment due to the absence of quoted market prices or observable inputs for assets of a similar nature. The Company utilizes a discounted cash flow analysis to estimate the fair value of reporting units utilizing unobservable inputs. The fair value measurement of the reporting unit under the step-one analysis of the quantitative goodwill impairment test are classified as Level 3 inputs. Intangible assets that are amortized are evaluated for recoverability whenever adverse effects or changes in circumstances indicate that the carrying value may not be recoverable. The recoverability test consists of comparing the undiscounted projected cash flows with the carrying amount. Should the carrying amount exceed undiscounted projected cash flows, an impairment loss would be recognized to the extent the carrying amount exceeds fair value. For the Company’s indefinite-lived intangible asset, the impairment test consists of comparing the fair value, determined using the relief from royalty method, with its carrying amount. An impairment loss would be recognized for the carrying amount in excess of its fair value. Due to their short-term nature, the carrying value of cash and equivalents, accounts receivable, accounts payable, and notes payable approximate fair value. The carrying value of the Company’s variable rate long-term debt instruments also approximates fair value due to the variable rate feature of these instruments. As of September 28, 2019, the Company concluded that no indicators of impairment relating to intangible assets or goodwill existed and an interim test was not performed.
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Revenue (Tables) |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Contract Assets and Liabilities | The following table presents the beginning and ending balances of contract assets and contract liabilities during the nine months ended September 28, 2019:
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Disaggregation of Revenue | The following table presents our revenue disaggregated by Market Segments as follows:
The following table presents our revenue disaggregated by Product Lines as follows:
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Subsequent Events (Details) - USD ($) |
Oct. 04, 2019 |
Sep. 28, 2019 |
Dec. 31, 2018 |
Oct. 01, 2018 |
---|---|---|---|---|
Subsequent Event [Line Items] | ||||
Goodwill | $ 133,594,000 | $ 124,952,000 | ||
AeroSat | ||||
Subsequent Event [Line Items] | ||||
Goodwill | 1,600,000 | |||
Intangible and long-lived assets | 8,900,000 | |||
Percentage of fair value exceeding carrying value (as a percentage) | 35.00% | |||
CCC | ||||
Subsequent Event [Line Items] | ||||
Goodwill | 2,300,000 | |||
Intangible and long-lived assets | $ 4,900,000 | |||
Percentage of fair value exceeding carrying value (as a percentage) | 43.00% | |||
Subsequent Event | Diagnosys | ||||
Subsequent Event [Line Items] | ||||
Cash paid to acquire stock | $ 7,000,000.0 | |||
Potential additional earn-out | $ 13,000,000.0 | |||
Achievement period | 3 years | |||
Earn-out achievement benchmark | $ 72,000,000.0 |
Inventories - Narrative (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Held for Sale | Test Systems Segment | |
Inventory [Line Items] | |
Inventories | $ 14,385 |
Revenue - Summary of Contract Assets and Liabilities (Details) - USD ($) $ in Thousands |
Sep. 28, 2019 |
Jan. 01, 2019 |
---|---|---|
Revenue from Contract with Customer [Abstract] | ||
Contract Assets | $ 25,952 | $ 33,030 |
Contract Liabilities | $ 23,959 | $ 27,347 |
Shareholders' Equity - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 28, 2019 |
Dec. 12, 2017 |
Feb. 24, 2016 |
Sep. 28, 2019 |
Sep. 28, 2019 |
Sep. 17, 2019 |
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Stockholders Equity | ||||||
Authorized repurchase of common stock, amount | $ 50,000,000 | $ 50,000,000 | $ 50,000,000 | |||
Treasury Stock | ||||||
Stockholders Equity | ||||||
Purchase (in shares) | 0 | 1,823,000 | 1,675,000 | 1,823,000 | 1,823,000 |
Goodwill - Summary of Changes in Carrying Amount of Goodwill (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 28, 2019
USD ($)
| |
Goodwill [Roll Forward] | |
Balance at beginning of period | $ 124,952 |
Acquisition/Divestiture/Adjustments | 8,867 |
ForeignCurrencyTranslation | (225) |
Balance at end of period | 133,594 |
Operating Segments | Aerospace Segment | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 124,952 |
Acquisition/Divestiture/Adjustments | (262) |
ForeignCurrencyTranslation | (225) |
Balance at end of period | 124,465 |
Operating Segments | Test Systems Segment | |
Goodwill [Roll Forward] | |
Balance at beginning of period | 0 |
Acquisition/Divestiture/Adjustments | 9,129 |
ForeignCurrencyTranslation | 0 |
Balance at end of period | $ 9,129 |
Leases - Summary of Lease Cost and Cash Paid (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 28, 2019 |
Sep. 28, 2019 |
|
Leases [Abstract] | ||
Amortization of Right-of-use Assets | $ 255 | $ 765 |
Interest on Lease Liabilities | 76 | 243 |
Total Finance Lease Cost | 331 | 1,008 |
Operating Lease Cost | 1,216 | 3,622 |
Variable Lease Cost | 279 | 958 |
Short-term Lease Cost (excluding month-to-month) | 33 | 118 |
Less Sublease and Rental (Income) Expense | 216 | (301) |
Total Operating Lease Cost | 1,744 | 4,397 |
Total Net Lease Cost | $ 2,075 | 5,405 |
Operating Cash Flows Used for Finance Leases | 1,008 | |
Operating Cash Flows Used for Operating Leases | 2,767 | |
Financing Cash Flows Used for Finance Leases | $ 1,284 |
Basis of Presentation |
9 Months Ended |
---|---|
Sep. 28, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Operating Results The results of operations for any interim period are not necessarily indicative of results for the full year. Operating results for the nine months ended September 28, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. The balance sheet at December 31, 2018 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. For further information, refer to the financial statements and footnotes thereto included in Astronics Corporation’s 2018 annual report on Form 10-K. Description of the Business Astronics Corporation (“Astronics” or the “Company”) is a leading supplier of advanced technologies and products to the global aerospace and defense industries. Our products and services include advanced, high-performance electrical power generation and distribution systems, seat motion solutions, lighting and safety systems, avionics products, aircraft structures, systems certification and automated test systems. We have operations in the United States (“U.S.”), Canada and France. We design and build our products through our wholly owned subsidiaries Astronics Advanced Electronic Systems Corp. (“AES”); Astronics AeroSat Corporation (“AeroSat”); Armstrong Aerospace, Inc. (“Armstrong”); Astronics Test Systems, Inc. (“ATS”); Ballard Technology, Inc. (“Ballard”); Astronics Connectivity Systems and Certification Corp. (“CSC”); Astronics Custom Control Concepts Inc. (“CCC”); Astronics DME LLC (“DME”); Freedom Communication Technologies, Inc. (“FCT”); Luminescent Systems, Inc. (“LSI”); Luminescent Systems Canada, Inc. (“LSI Canada”); Max-Viz, Inc. (“Max-Viz”); Peco, Inc. (“Peco”); and PGA Electronic s.a. (“PGA”). On October 4, 2019, the Company acquired the primary operating subsidiaries of Diagnosys Test Systems Limited (“Diagnosys”). On February 13, 2019, the Company completed a divestiture of its semiconductor test business within the Test Systems segment. The total proceeds of the divestiture amounted to $103.8 million. The Company recorded a pre-tax gain on the sale of $80.1 million in the first quarter of 2019. The income tax expense relating to the gain is expected to be $21.3 million. On July 1, 2019, the Company acquired all of the issued and outstanding capital stock of FCT. FCT, located in Kilgore, Texas, is a leader in wireless communication testing, primarily for the civil land mobile radio market. FCT is included in our Test Systems segment. The total consideration for the transaction was $21.8 million, net of $0.6 million in cash acquired. On July 12, 2019, the Company sold intellectual property and certain assets associated with its Airfield Lighting product line for $1.0 million in cash. The Airfield Lighting product line, part of the Aerospace segment, represented less than 1% of 2018 revenue. The Company recorded a pre-tax loss on the sale of approximately $1.3 million. For additional information regarding these acquisitions and divestitures see Note 18. On October 4, 2019, the Company acquired the stock of the primary operating subsidiaries as well as certain other assets from mass transit and defense market test solution provider, Diagnosys, for $7.0 million in cash. Diagnosys is a developer and manufacturer of comprehensive automated test equipment providing test, support, and repair of high value electronics, electro-mechanical, pneumatic and printed circuit boards focused on the global mass transit and defense markets. The terms of the acquisition allow for a potential earn-out of up to an additional $13.0 million over the next three years based on achievement of new order levels of over $72.0 million during that period. The acquired business has operations in Westford, Massachusetts as well as Ferndown, England, and an engineering center of excellence in Bangalore, India. Refer to Note 19 for additional information. Cost of Products Sold, Engineering and Development, Interest, and Selling, General and Administrative Expenses Cost of products sold includes the costs to manufacture products such as direct materials and labor and manufacturing overhead as well as all engineering and development costs. The Company is engaged in a variety of engineering and design activities as well as basic research and development activities directed to the substantial improvement or new application of the Company’s existing technologies. These costs are expensed when incurred and included in cost of products sold. Research and development, design and related engineering amounted to $25.6 million and $31.2 million for the three months ended and $80.0 million and $89.0 million for the nine months ended September 28, 2019 and September 29, 2018, respectively. Selling, general and administrative expenses include costs primarily related to our sales and marketing departments and administrative departments. Interest expense is shown net of interest income. Interest income was insignificant for the three and nine months ended September 28, 2019 and September 29, 2018. Foreign Currency Translation The aggregate transaction gain or loss included in operations was insignificant for the three and nine months ended September 28, 2019 and September 29, 2018. Newly Adopted and Recent Accounting Pronouncements During the first quarter of 2018, the Company early-adopted ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which allows for a reclassification from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The Company applied the guidance as of the beginning of the period of adoption and reclassified approximately $1.4 million from accumulated other comprehensive loss to retained earnings due to the change in federal corporate tax rate. In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 required entities to adopt the new standard using a modified retrospective method and initially apply the related guidance at the beginning of the earliest period presented in the financial statements. During July 2018, the FASB issued ASU 2018-11, which allows for an additional and optional transition method under which an entity would record a cumulative-effect adjustment at the beginning of the period of adoption (“cumulative-effect method”). We have adopted this guidance as of January 1, 2019 using the cumulative-effect method. The standard requires lessees to recognize a lease liability and a right-of-use (“ROU”) asset on the balance sheet for operating leases. Accounting for finance leases is substantially unchanged. Prior year financial statements were not recast under the new method. We elected the package of transition provisions available for expired or existing contracts, which allowed us to carryforward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. The implementation of this standard did not have a material effect on our consolidated financial statements. As of January 1, 2019, ROU assets of approximately $18.4 million and lease liabilities of approximately $18.5 million were recognized on our balance sheet for our leased office and manufacturing facilities and equipment leases. There was a reclassification to ROU assets of approximately $3.5 million from net property plant and equipment for assets under existing finance leases at the transition date. The standards did not materially impact the Company's consolidated statements of operations or retained earnings. Refer to Note 9 for additional information. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. This standard requires that an entity measure impairment of certain financial instruments, including trade receivables, based on expected losses rather than incurred losses. In November 2018, the FASB issued ASU 2018-19 which clarifies the guidance in ASU 2016-13. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the impact of this ASU. We do not expect this ASU to have a significant impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement. The new standard removes the disclosure requirements for the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. The provisions of this ASU are effective for years beginning after December 15, 2019, with early adoption permitted. We do not expect this ASU to have a significant impact on our consolidated financial statements, as it only includes changes to disclosure requirements. In August 2018, the FASB issued ASU 2018-14, Changes to the Disclosure Requirements for Defined Benefit Plans. The new standard includes updates to the disclosure requirements for defined benefit plans including several additions, deletions and modifications to the disclosure requirements. The provisions of this ASU are effective for years beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this ASU.
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Consolidated Condensed Statements of Operations - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 28, 2019 |
Sep. 29, 2018 |
Sep. 28, 2019 |
Sep. 29, 2018 |
|
Sales | $ 177,018 | $ 212,674 | $ 574,290 | $ 600,339 |
Gross Profit | 36,794 | 46,320 | 129,234 | 133,024 |
Selling, General and Administrative Expenses | 31,691 | 27,976 | 90,677 | 87,919 |
Income from Operations | 5,103 | 18,344 | 38,557 | 45,105 |
Net (Gain) Loss on Sale of Businesses | 1,332 | 0 | (78,801) | 0 |
Other Expense, Net of Other Income | 464 | 253 | 1,197 | 1,091 |
Interest Expense, Net of Interest Income | 1,547 | 2,511 | 4,576 | 7,326 |
Income Before Income Taxes | 1,760 | 15,580 | 111,585 | 36,688 |
Provision for (Benefit from) Income Taxes | 550 | (1,419) | 25,503 | 2,370 |
Net Income | $ 1,210 | $ 16,999 | $ 86,082 | $ 34,318 |
Earnings Per Share: | ||||
Basic (in usd per share) | $ 0.04 | $ 0.53 | $ 2.65 | $ 1.06 |
Diluted (in usd per share) | $ 0.04 | $ 0.52 | $ 2.61 | $ 1.04 |
Product | ||||
Cost of Products Sold | $ 140,224 | $ 166,354 | $ 445,056 | $ 467,315 |
Long-Term Debt and Notes Payable |
9 Months Ended |
---|---|
Sep. 28, 2019 | |
Debt Disclosure [Abstract] | |
Long-term Debt and Notes Payable | Long-term Debt and Notes Payable The Company's Fourth Amended and Restated Credit Agreement (the “Original Facility”) provided for a $350 million revolving credit line with the option to increase the line by up to $150 million. The maturity date of the Original Facility was January 13, 2021. On February 16, 2018, the Company modified and extended the Original Facility by entering into the Fifth Amended and Restated Credit Agreement (the “Agreement”), which provides for a $500 million revolving credit line with the option to increase the line by up to $150 million. A new lender was added to the facility as well. The outstanding balance of the Original Facility was rolled into the Agreement on the date of closing. The maturity date of the loans under the Agreement is February 16, 2023. At September 28, 2019, there was $180.0 million outstanding on the revolving credit facility and there remains $318.9 million available, net of outstanding letters of credit. The credit facility allocates up to $20 million of the $500 million revolving credit line for the issuance of letters of credit, including certain existing letters of credit. At September 28, 2019, outstanding letters of credit totaled $1.1 million. The maximum permitted leverage ratio of funded debt to Adjusted EBITDA (as defined in the Agreement) is 3.75 to 1, increasing to 4.50 to 1 for up to four fiscal quarters following the closing of an acquisition permitted under the Agreement, subject to limitations. The Company is in compliance with its financial covenant at September 28, 2019. The Company will pay interest on the unpaid principal amount of the facility at a rate equal to one-, three- or six-month LIBOR plus between 1.00% and 1.50% based upon the Company’s leverage ratio. The Company will also pay a commitment fee to the Lenders in an amount equal to between 0.10% and 0.20% on the undrawn portion of the credit facility, based upon the Company’s leverage ratio. The Company’s obligations under the Credit Agreement as amended are jointly and severally guaranteed by each domestic subsidiary of the Company other than a non-material subsidiary. The obligations are secured by a first priority lien on substantially all of the Company’s and the guarantors’ assets. In the event of voluntary or involuntary bankruptcy of the Company or any subsidiary, all unpaid principal and other amounts owing under the Credit Agreement automatically become due and payable. Other events of default, such as failure to make payments as they become due and breach of financial and other covenants, change of control, judgments over a certain amount, and cross default under other agreements give the Agent the option to declare all such amounts immediately due and payable.
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Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share Basic and diluted weighted-average shares outstanding are as follows:
Stock options with exercise prices greater than the average market price of the underlying common shares are excluded from the computation of diluted earnings per share because they are out-of-the-money and the effect of their inclusion would be anti-dilutive. The number of common shares covered by out-of-the-money stock options was approximately 279,000 shares as of September 28, 2019 and 19,000 shares as of September 29, 2018.
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Basic and Diluted Weighted-Average Shares Outstanding | Basic and diluted weighted-average shares outstanding are as follows:
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Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Acquired Intangible Assets | The following table summarizes acquired intangible assets as follows:
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Summary of Amortization Expense for Acquired Intangibles | All acquired intangible assets other than goodwill and one trade name are being amortized. Amortization expense for acquired intangibles is summarized as follows:
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Summary of Amortization Expense for Intangible Assets for Each of Next Five Years | Amortization expense for acquired intangible assets expected for 2019 and for each of the next five years is summarized as follows:
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Acquisition and Divestiture Activities (Tables) |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of assets and liabilities held for sale | The following is a summary of the assets and liabilities held for sale as of December 31, 2018:
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