Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 28, 2019 | Nov. 01, 2019 | |
Document Information | ||
Entity Registrant Name | ASTRONICS CORPORATION | |
Trading Symbol | ATRO | |
Entity Central Index Key | 0000008063 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 28, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Title of 12(b) Security | Common Stock, $.01 par value per share | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Document Transition Report | false | |
Entity Address, Postal Zip Code | 14052 | |
Entity Address, State or Province | NY | |
Entity Address, City or Town | East Aurora | |
Entity Address, Address Line One | 130 Commerce Way | |
Entity Tax Identification Number | 16-0959303 | |
Entity Incorporation, State or Country Code | NY | |
Document Quarterly Report | true | |
Entity File Number | 0-7087 | |
Local Phone Number | 805-1599 | |
City Area Code | 716 | |
Security Exchange Name | NASDAQ | |
Entity Shell Company | false | |
Common Class Undefined | ||
Document Information | ||
Entity Common Stock, Shares Outstanding (in shares) | 23,107,564 | |
Title of 12(g) Security | $.01 par value Common Stock | |
Convertible Class B Stock | ||
Document Information | ||
Entity Common Stock, Shares Outstanding (in shares) | 7,765,526 | |
Title of 12(g) Security | $.01 par value Class B Stock |
Consolidated Condensed Balance
Consolidated Condensed Balance Sheets - USD ($) $ in Thousands | Sep. 28, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash and Cash Equivalents | $ 22,795 | $ 16,622 |
Accounts Receivable, Net of Allowance for Doubtful Accounts | 159,715 | 182,308 |
Inventories | 149,621 | 138,685 |
Prepaid Expenses and Other Current Assets | 17,576 | 17,198 |
Disposal Group, Including Discontinued Operation, Assets | 3,186 | 19,358 |
Total Current Assets | 352,893 | 374,171 |
Property, Plant and Equipment, Net of Accumulated Depreciation | 113,137 | 120,862 |
Other Assets | 45,911 | 21,272 |
Intangible Assets, Net of Accumulated Amortization | 132,433 | 133,383 |
Goodwill | 133,594 | 124,952 |
Total Assets | 777,968 | 774,640 |
Current Liabilities: | ||
Current Maturities of Long-term Debt | 191 | 1,870 |
Accounts Payable | 46,046 | 50,664 |
Accrued Expenses and Other Current Liabilities | 49,321 | 47,772 |
Customer Advance Payments and Deferred Revenue | 23,525 | 26,880 |
Liabilities Held for Sale | 0 | 906 |
Total Current Liabilities | 119,083 | 128,092 |
Long-term Debt | 180,055 | 232,112 |
Other Liabilities | 53,038 | 27,811 |
Total Liabilities | 352,176 | 388,015 |
Shareholders’ Equity: | ||
Common Stock | 344 | 343 |
Accumulated Other Comprehensive Loss | (13,610) | (13,329) |
Other Shareholders’ Equity | 439,058 | 399,611 |
Total Shareholders’ Equity | 425,792 | 386,625 |
Total Liabilities and Shareholders’ Equity | $ 777,968 | $ 774,640 |
Consolidated Condensed Statemen
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 |
Consolidated Condensed Statem_2
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 |
Consolidated Condensed Statem_3
Consolidated Condensed Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Cash Flows From Operating Activities: | ||
Net Income | $ 86,082 | $ 34,318 |
Adjustments to Reconcile Net Income to Cash Provided By Operating Activities: | ||
Depreciation and Amortization | 24,183 | 26,756 |
Provisions for Non-Cash Losses on Inventory and Receivables | 4,613 | 2,432 |
Equity-based Compensation Expense | 2,943 | 2,349 |
Deferred Tax Benefit | (3,820) | (1,536) |
Net Gain on Sale of Businesses, Before Taxes | (78,801) | 0 |
Other | (792) | (507) |
Cash Flows from Changes in Operating Assets and Liabilities, Excluding the Effects of Acquisitions: | ||
Accounts Receivable | 23,423 | (52,890) |
Inventories | (18,963) | (15,768) |
Accounts Payable | (5,494) | 571 |
Accrued Expenses | (5,867) | 4,977 |
Other Current Assets and Liabilities | (697) | (1,620) |
Customer Advanced Payments and Deferred Revenue | (3,266) | 19,241 |
Income Taxes | 5,581 | (4,315) |
Supplemental Retirement and Other Liabilities | 1,116 | 1,351 |
Cash Provided By Operating Activities | 30,241 | 15,359 |
Cash Flows From Investing Activities: | ||
Acquisition of Business, Net of Cash Acquired | (21,785) | 0 |
Proceeds on Sale of Businesses | 104,792 | 0 |
Capital Expenditures | (8,850) | (12,416) |
Other Investing Activities | 0 | (3,376) |
Cash Provided By (Used For) Investing Activities | 74,157 | (15,792) |
Cash Flows From Financing Activities: | ||
Proceeds from Long-term Debt | 99,000 | 35,015 |
Payments for Long-term Debt | (146,080) | (47,116) |
Purchase of Outstanding Shares for Treasury | (50,000) | 0 |
Debt Acquisition Costs | 0 | (516) |
Proceeds from Exercise of Stock Options | 423 | 283 |
Other Financing Activities | (1,284) | 0 |
Cash Used For Financing Activities | (97,941) | (12,334) |
Effect of Exchange Rates on Cash | (284) | (254) |
Increase (Decrease) in Cash and Cash Equivalents | 6,173 | (13,021) |
Cash and Cash Equivalents at Beginning of Period | 16,622 | 17,914 |
Cash and Cash Equivalents at End of Period | $ 22,795 | $ 4,893 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common StockCommon Class Undefined | Common StockConvertible Class B Stock | Additional Paid in Capital | Accumulated Comprehensive Loss | Retained Earnings | Treasury Stock |
Beginning of Period at Dec. 31, 2017 | $ 229 | $ 111 | $ 67,748 | $ (13,352) | $ 325,191 | $ (50,000) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of Stock Options and Equity-based Compensation Expense – Net of Taxes | 1 | 2,631 | |||||
Conversion of Class B Shares to Common Shares | 4 | (4) | |||||
Adoption of ASU 2018-02 | (1,373) | 1,373 | |||||
Foreign Currency Translation Adjustments | (1,346) | ||||||
Retirement Liability Adjustment – Net of Tax | $ 646 | 646 | |||||
Net Income | 34,318 | 34,318 | |||||
End of Period at Sep. 29, 2018 | 369,445 | $ 233 | $ 108 | 70,379 | (15,425) | 364,150 | $ (50,000) |
Beginning of Period (in shares) at Dec. 31, 2017 | 22,861 | 11,083 | 1,675 | ||||
Increase (Decrease) in Stockholders' Equity (in shares) | |||||||
Exercise of Stock Options and Issuances of Restricted Stock (in shares) | 25 | ||||||
Exercise of Stock Options (in shares) | 21 | ||||||
Conversion of Class B Shares to Common Shares (in shares) | 443 | (443) | |||||
End of Period (in shares) at Sep. 29, 2018 | 23,329 | 10,661 | 1,675 | ||||
Beginning of Period at Jun. 30, 2018 | $ 232 | $ 109 | 69,665 | (15,867) | 347,151 | $ (50,000) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of Stock Options and Equity-based Compensation Expense – Net of Taxes | 714 | ||||||
Conversion of Class B Shares to Common Shares | 1 | (1) | |||||
Foreign Currency Translation Adjustments | 226 | ||||||
Retirement Liability Adjustment – Net of Tax | 216 | 216 | |||||
Net Income | 16,999 | 16,999 | |||||
End of Period at Sep. 29, 2018 | 369,445 | $ 233 | $ 108 | 70,379 | (15,425) | 364,150 | $ (50,000) |
Beginning of Period (in shares) at Jun. 30, 2018 | 23,219 | 10,789 | 1,675 | ||||
Increase (Decrease) in Stockholders' Equity (in shares) | |||||||
Exercise of Stock Options and Issuances of Restricted Stock (in shares) | (1) | ||||||
Exercise of Stock Options (in shares) | (17) | ||||||
Conversion of Class B Shares to Common Shares (in shares) | 111 | (111) | |||||
End of Period (in shares) at Sep. 29, 2018 | 23,329 | 10,661 | 1,675 | ||||
Beginning of Period at Dec. 31, 2018 | 386,625 | $ 260 | $ 83 | 73,044 | (13,329) | 376,567 | $ (50,000) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of Stock Options and Equity-based Compensation Expense – Net of Taxes | 1 | 3,365 | |||||
Conversion of Class B Shares to Common Shares | 4 | (4) | |||||
Foreign Currency Translation Adjustments | (722) | ||||||
Retirement Liability Adjustment – Net of Tax | 441 | 441 | |||||
Net Income | 86,082 | 86,082 | |||||
Purchase of Shares | (50,000) | ||||||
End of Period at Sep. 28, 2019 | 425,792 | $ 265 | $ 79 | 76,409 | (13,610) | 462,649 | $ (100,000) |
Beginning of Period (in shares) at Dec. 31, 2018 | 25,978 | 8,290 | 1,675 | ||||
Increase (Decrease) in Stockholders' Equity (in shares) | |||||||
Exercise of Stock Options and Issuances of Restricted Stock (in shares) | 53 | ||||||
Exercise of Stock Options (in shares) | 50 | ||||||
Conversion of Class B Shares to Common Shares (in shares) | 444 | (444) | |||||
Purchase of shares (in shares) | (1,823) | ||||||
End of Period (in shares) at Sep. 28, 2019 | 26,475 | 7,896 | 3,498 | ||||
Beginning of Period at Jun. 29, 2019 | $ 264 | $ 80 | 75,604 | (12,421) | 461,439 | $ (50,000) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of Stock Options and Equity-based Compensation Expense – Net of Taxes | 805 | ||||||
Conversion of Class B Shares to Common Shares | 1 | (1) | |||||
Foreign Currency Translation Adjustments | (1,336) | ||||||
Retirement Liability Adjustment – Net of Tax | 147 | 147 | |||||
Net Income | 1,210 | 1,210 | |||||
Purchase of Shares | (50,000) | ||||||
End of Period at Sep. 28, 2019 | $ 425,792 | $ 265 | $ 79 | $ 76,409 | $ (13,610) | $ 462,649 | $ (100,000) |
Beginning of Period (in shares) at Jun. 29, 2019 | 26,343 | 8,007 | 1,675 | ||||
Increase (Decrease) in Stockholders' Equity (in shares) | |||||||
Exercise of Stock Options and Issuances of Restricted Stock (in shares) | 19 | ||||||
Exercise of Stock Options (in shares) | 2 | ||||||
Conversion of Class B Shares to Common Shares (in shares) | 113 | (113) | |||||
Purchase of shares (in shares) | (1,823) | ||||||
End of Period (in shares) at Sep. 28, 2019 | 26,475 | 7,896 | 3,498 |
Basis of Presentation
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. |
Revenue
Revenue | 9 Months Ended |
Sep. 28, 2019 | |
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: (In thousands) Contract Assets Contract Liabilities Beginning Balance, January 1, 2019 $ 33,030 $ 27,347 Ending Balance, September 28, 2019 $ 25,952 $ 23,959 The following table presents our revenue disaggregated by Market Segments as follows: Nine Months Ended Three Months Ended (In thousands) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Aerospace Segment 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 Aerospace Total 520,490 500,383 157,702 169,579 Test Systems Segment Semiconductor 7,815 72,061 2,219 33,596 Aerospace & Defense 45,985 27,895 17,097 9,499 Test Systems Total 53,800 99,956 19,316 43,095 Total $ 574,290 $ 600,339 $ 177,018 $ 212,674 The following table presents our revenue disaggregated by Product Lines as follows: 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 $ 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 Aerospace Total 520,490 500,383 157,702 169,579 Test Systems 53,800 99,956 19,316 43,095 Total $ 574,290 $ 600,339 $ 177,018 $ 212,674 |
Inventories
Inventories | 9 Months Ended |
Sep. 28, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories are as follows: ( In thousands ) September 28, 2019 December 31, 2018 Finished Goods $ 33,275 $ 33,100 Work in Progress 26,611 27,409 Raw Material 89,735 78,176 $ 149,621 $ 138,685 Additionally, net Inventories of $14,385 are classified in Assets Held for Sale at December 31, 2018. Refer to Note 18. |
Property, Plant and Equipment
Property, Plant and Equipment | 9 Months Ended |
Sep. 28, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, Plant and Equipment Property, Plant and Equipment are as follows: (In thousands) September 28, 2019 December 31, 2018 Land $ 9,778 $ 11,191 Buildings and Improvements 73,988 83,812 Machinery and Equipment 114,190 106,327 Construction in Progress 5,676 6,404 203,632 207,734 Less Accumulated Depreciation 90,495 86,872 $ 113,137 $ 120,862 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. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 28, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets The following table summarizes acquired intangible assets as follows: September 28, 2019 December 31, 2018 (In thousands) Weighted Average Life Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Patents 11 years $ 2,146 $ 1,782 $ 2,146 $ 1,716 Non-compete Agreement 4 years 10,900 6,925 10,900 4,680 Trade Names 10 years 11,419 5,983 11,454 5,182 Completed and Unpatented Technology 10 years 42,904 17,782 36,406 14,964 Customer Relationships 15 years 142,113 44,577 136,894 37,875 Total Intangible Assets 13 years $ 209,482 $ 77,049 $ 197,800 $ 64,417 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: Nine Months Ended Three Months Ended (In thousands) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Amortization Expense $ 12,746 $ 15,144 $ 4,394 $ 4,276 Amortization expense for acquired intangible assets expected for 2019 and for each of the next five years is summarized as follows: (In thousands) 2019 $ 17,131 2020 16,888 2021 14,978 2022 14,554 2023 13,386 2024 11,920 |
Goodwill
Goodwill | 9 Months Ended |
Sep. 28, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The following table summarizes the changes in the carrying amount of goodwill for the nine months ended September 28, 2019: (In thousands) December 31, 2018 Acquisition/Divestiture/Adjustments Foreign Currency Translation September 28, 2019 Aerospace $ 124,952 $ (262) $ (225) $ 124,465 Test Systems — 9,129 — 9,129 $ 124,952 $ 8,867 $ (225) $ 133,594 |
Long-Term Debt and Notes Payabl
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. |
Product Warranties
Product Warranties | 9 Months Ended |
Sep. 28, 2019 | |
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: 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 $ 5,027 $ 5,136 $ 4,806 $ 5,180 Warranties Divested or Acquired (103) — 20 — Warranties Issued 2,014 2,102 769 801 Warranties Settled (1,850) (2,219) (670) (934) Reassessed Warranty Exposure 138 (77) 301 (105) Balance at End of Period $ 5,226 $ 4,942 $ 5,226 $ 4,942 |
Leases
Leases | 9 Months Ended |
Sep. 28, 2019 | |
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: Nine months ended Three months ended (In thousands) September 28, 2019 September 28, 2019 Finance Lease Cost: Amortization of Right-of-use Assets $ 765 $ 255 Interest on Lease Liabilities 243 76 Total Finance Lease Cost 1,008 331 Operating Lease Cost 3,622 1,216 Variable Lease Cost 958 279 Short-term Lease Cost (excluding month-to-month) 118 33 Less Sublease and Rental (Income) Expense (301) 216 Total Operating Lease Cost $ 4,397 $ 1,744 Total Net Lease Cost $ 5,405 $ 2,075 The following is a summary of cash paid for amounts included in the measurement of lease liabilities: Nine months ended (In thousands) September 28, 2019 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 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: (In thousands) Operating Leases Financing Leases 2019 $ 1,192 $ 522 2020 4,142 2,128 2021 4,121 2,181 2022 3,904 743 2023 3,677 — Thereafter 11,981 — Total Lease Payments $ 29,017 $ 5,574 Less: Interest 3,624 380 Total Lease Liability $ 25,393 $ 5,194 |
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: Nine months ended Three months ended (In thousands) September 28, 2019 September 28, 2019 Finance Lease Cost: Amortization of Right-of-use Assets $ 765 $ 255 Interest on Lease Liabilities 243 76 Total Finance Lease Cost 1,008 331 Operating Lease Cost 3,622 1,216 Variable Lease Cost 958 279 Short-term Lease Cost (excluding month-to-month) 118 33 Less Sublease and Rental (Income) Expense (301) 216 Total Operating Lease Cost $ 4,397 $ 1,744 Total Net Lease Cost $ 5,405 $ 2,075 The following is a summary of cash paid for amounts included in the measurement of lease liabilities: Nine months ended (In thousands) September 28, 2019 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 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: (In thousands) Operating Leases Financing Leases 2019 $ 1,192 $ 522 2020 4,142 2,128 2021 4,121 2,181 2022 3,904 743 2023 3,677 — Thereafter 11,981 — Total Lease Payments $ 29,017 $ 5,574 Less: Interest 3,624 380 Total Lease Liability $ 25,393 $ 5,194 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 28, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesThe effective tax rates were approximately 22.9% and 6.5% for the nine months ended and 31.3% and (9.1)% for the three months ended September 28, 2019 and September 29, 2018, respectively. The 2019 tax rate was unfavorably impacted by state income taxes, which was partially offset by the federal research and development tax credit. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 28, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic and diluted weighted-average shares outstanding are as follows: Nine Months Ended Three Months Ended (In thousands) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Weighted Average Shares - Basic 32,427 32,304 31,964 32,317 Net Effect of Dilutive Stock Options 575 731 619 652 Weighted Average Shares - Diluted 33,002 33,035 32,583 32,969 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. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Sep. 28, 2019 | |
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: (In thousands) September 28, 2019 December 31, 2018 Foreign Currency Translation Adjustments $ (7,878) $ (7,156) Retirement Liability Adjustment – Before Tax (7,256) (7,814) Tax Benefit of Retirement Liability Adjustment 1,524 1,641 Retirement Liability Adjustment – After Tax (5,732) (6,173) Accumulated Other Comprehensive Loss $ (13,610) $ (13,329) The components of other comprehensive income (loss) are as follows: Nine Months Ended Three Months Ended (In thousands) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Foreign Currency Translation Adjustments $ (722) $ (1,346) $ (1,336) $ 226 Retirement Liability Adjustments: Reclassifications to General and Administrative Expense: Amortization of Prior Service Cost 302 303 101 101 Amortization of Net Actuarial Losses 256 515 85 172 Tax Benefit (117) (172) (39) (57) Retirement Liability Adjustment 441 646 147 216 Other Comprehensive Income (Loss) $ (281) $ (700) $ (1,189) $ 442 |
Supplemental Retirement Plan an
Supplemental Retirement Plan and Related Post Retirement Benefits | 9 Months Ended |
Sep. 28, 2019 | |
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. Nine Months Ended Three Months Ended (In thousands) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Service Cost $ 136 $ 150 $ 45 $ 50 Interest Cost 687 675 229 225 Amortization of Prior Service Cost 290 291 97 97 Amortization of Net Actuarial Losses 224 471 74 157 Net Periodic Cost $ 1,337 $ 1,587 $ 445 $ 529 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: Nine Months Ended Three Months Ended (In thousands) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Service Cost $ 10 $ 12 $ 3 $ 4 Interest Cost 35 34 12 11 Amortization of Prior Service Cost 12 12 4 4 Amortization of Net Actuarial Losses 32 44 11 15 Net Periodic Cost $ 89 $ 102 $ 30 $ 34 |
Sales to Major Customers
Sales to Major Customers | 9 Months Ended |
Sep. 28, 2019 | |
Risks and Uncertainties [Abstract] | |
Sales to Major Customers | Sales to Major Customers The Company has a significant concentration of business with two major customers, each in excess of 10% of consolidated sales. The loss of either of these customers would significantly, negatively impact our sales and earnings. Sales to these two customers represented 14% and 13% of consolidated sales for the nine months ended and 14% and 12% for the three months ended September 28, 2019. Sales to these customers were primarily in the Aerospace segment. Accounts receivable from these customers at September 28, 2019 was approximately $39.7 million. Sales to these two customers represented 15% and 15% of consolidated sales for the nine months ended and 14% and 13% for the three months ended September 29, 2018. |
Legal Proceedings
Legal Proceedings | 9 Months Ended |
Sep. 28, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings | Legal Proceedings The Company is subject to various legal proceedings, claims, and litigation arising in the ordinary course of business. While the outcome of these matters is currently not determinable, we do not expect these matters will have a material adverse effect on our business, financial position, results of operations, or cash flows. However, the results of these matters cannot be predicted with certainty. Should the Company fail to prevail in any legal matter or should several legal matters be resolved against the Company in the same reporting period, then the financial results of that particular reporting period could be materially adversely affected. On December 29, 2010, Lufthansa Technik AG (“Lufthansa”) filed a Statement of Claim in the Regional State Court of Mannheim, Germany. Lufthansa’s claim asserts that our subsidiary, AES, sold, marketed, and brought into use in Germany a power supply system that infringes upon a German patent held by Lufthansa. Lufthansa sought an order requiring AES to stop selling and marketing the allegedly infringing power supply system, a recall of allegedly infringing products sold to commercial customers in Germany since November 26, 2003, and compensation for damages related to direct sales of the allegedly infringing power supply system in Germany (referred to as “direct sales”). The claim does not specify an estimate of damages and a related damages claim is being pursued by Lufthansa in separate court proceedings in an action filed in July 2017, as further discussed below. In February 2015, the Regional State Court of Mannheim, Germany rendered its decision that the patent was infringed. The judgment does not require AES to recall products that are already installed in aircraft or have been sold to other end users. On July 15, 2015, Lufthansa advised AES of their intention to enforce the accounting provisions of the decision, which required AES to provide certain financial information regarding direct sales of the infringing product in Germany to enable Lufthansa to make an estimate of requested damages. The Company appealed to the Higher Regional Court of Karlsruhe. On November 15, 2016, the Court issued its ruling and upheld the lower court’s decision. The Company submitted a petition to grant AES leave for appeal to the German Federal Supreme Court. On April 18, 2018, the German Federal Supreme Court granted Astronics’ petition in part, namely with respect to the part concerning the amount of damages. On January 8, 2019 Federal Supreme Court held the hearing on the appeal. By judgment of March 26, 2019 the Federal Supreme Court dismissed AES's appeal. With this decision, the above-mentioned proceedings are complete. In July 2017, Lufthansa filed an action in the Regional State Court of Mannheim for payment of damages caused by the alleged patent infringement of AES, related to direct sales of the allegedly infringing product in Germany (associated with the original December 2010 action discussed above). In this action, which was served on AES on April 11, 2018, Lufthansa claims payment of approximately $6.2 million plus interest. According to AES's assessment, this claim is significantly higher than justified. However, based on the results of the oral hearing on September 13,2019, we estimate AES’s potential exposure to be approximately $2.7 million to $6.3 million (including interest). We recorded an incremental reserve of $1.7 million in the three and nine month periods ended September 28, 2019, for a total reserve of $2.7 million associated with this matter. A first instance decision in this matter is expected on November 22, 2019. On December 29, 2017, Lufthansa filed another infringement action against AES in the Regional State Court of Mannheim claiming that sales by AES to its international customers have infringed Lufthansa's patent if AES's customers later shipped the products to Germany (referred to as “indirect sales”). This action, therefore, addresses sales other than those covered by the action filed on December 29, 2010, discussed above. In this action, served on April 11, 2018, Lufthansa seeks an injunction, an order obliging AES to provide information and accounting and a finding that AES owes damages for the attacked indirect sales. AES will vigorously defend against the action. No amount of claimed damages has been specified by Lufthansa and such amount is not quantifiable at this time. A first instance decision in this matter is expected on November 22, 2019. As loss exposure is neither probable nor estimable at this time, the Company has not recorded any liability with respect to this litigation as of September 28, 2019. In December 2017, Lufthansa filed patent infringement cases in the United Kingdom and in France against AES. The Lufhansa patent expired in May 2018. In those cases, Lufthansa accuses AES of having manufactured, used, sold and offered for sale a power supply system, and offered and supplied parts for a power supply system, that infringed upon a Lufthansa patent in those respective countries. In the U.K. matter, a trial has been scheduled for February 2020 to address the issues of infringement and validity. As loss exposure is neither probable nor estimable at this time, in either of these proceedings, the Company has not recorded any liability with respect to these matters as of September 28, 2019. On November 26, 2014, Lufthansa filed a complaint in the United States District for the Western District of Washington. Lufthansa’s complaint in that action alleges that AES manufactures, uses, sells and offers for sale a power supply system that infringes upon a U.S. patent held by Lufthansa. The patent at issue in the U.S. action is based on technology similar to that involved in the German action. On April 25, 2016, the Court issued its ruling on claim construction, holding that the sole independent claim in the patent is indefinite, rendering all claims in the patent indefinite. Based on this ruling, AES filed a motion for summary judgment on the grounds that the Court’s ruling that the patent is indefinite renders the patent invalid and unenforceable. On July 20, 2016, the U.S. District Court granted the motion for summary judgment and issued an order dismissing all claims against AES with prejudice. Lufthansa appealed the District Court's decision to the United States Court of Appeals for the Federal Circuit. On October 19, 2017, the Federal Circuit affirmed the district court’s decision, holding that the sole independent claim of the patent is indefinite, rending all claims on the patent indefinite. Lufthansa did not file a petition for en banc rehearing or petition the U.S. Supreme Court for a writ of certiorari. Therefore, there is no longer a risk of exposure from that lawsuit. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 28, 2019 | |
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. Nine Months Ended Three Months Ended (In thousands) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Sales Aerospace $ 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 Test Systems 53,995 99,956 19,346 43,095 Less Intersegment Sales (195) — (30) — Total Test Systems Sales 53,800 99,956 19,316 43,095 Total Consolidated Sales $ 574,290 $ 600,339 $ 177,018 $ 212,674 Operating Profit and Margins Aerospace $ 48,949 $ 47,525 $ 8,789 $ 16,210 9.4 % 9.5 % 5.6 % 9.6 % Test Systems 4,166 10,151 2,075 5,833 7.7 % 10.2 % 10.7 % 13.5 % Total Operating Profit 53,115 57,676 10,864 22,043 9.2 % 9.6 % 6.1 % 10.4 % Additions/Deductions from Operating Profit 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 Corporate Expenses and Other 15,755 13,662 6,225 3,952 Income Before Income Taxes $ 111,585 $ 36,688 $ 1,760 $ 15,580 Total Assets: (In thousands) September 28, 2019 December 31, 2018 Aerospace $ 657,169 $ 647,870 Test Systems 88,662 97,056 Corporate 32,137 29,714 Total Assets $ 777,968 $ 774,640 |
Fair Value
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. |
Acquisition and Divestiture Act
Acquisition and Divestiture Activities | 9 Months Ended |
Sep. 28, 2019 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Acquisitions and Divestiture Activities | Acquisition and Divestiture Activities Acquisition 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. The purchase price allocation for this acquisition has not yet been finalized. Purchased intangible assets and goodwill are not expected to be deductible for tax purpose. This transaction was not considered material to the Company’s financial position or results of operations. Divestitures 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. This amount is reported in the Consolidated Condensed Statement of Operations in Net (Gain) Loss on Sale of Businesses in the three and nine month periods ended September 28, 2019. As of September 28, 2019, the Company has agreed to sell certain facilities within the Aerospace segment. Accordingly, the property, plant and equipment assets associated with these facilities of $3.2 million have been classified as held for sale in the consolidated Balance Sheet at September 28, 2019. As of December 31, 2018, the Company’s Board of Directors had approved a plan to sell the semiconductor test business within the Test Systems segment. Accordingly, the assets and liabilities associated with these operations had been classified as held for sale in the consolidated Balance Sheet at December 31, 2018. The carrying value of the disposal group was lower than its fair value, less costs to sell, and accordingly, no impairment loss was required at December 31, 2018. The following is a summary of the assets and liabilities held for sale as of December 31, 2018: (In thousands) December 31, 2018 Assets Held for Sale 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 Liabilities Held for Sale Deferred Income Taxes $ 906 On February 13, 2019, the Company completed the divestiture. 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. The transaction also included two elements of contingent earnouts. The “First Earnout” is calculated based on a multiple of all future sales of existing and certain future derivative products to existing and future customers in each annual period from 2019 through 2022. The First Earnout may not exceed $35.0 million in total. The “Second Earnout” is calculated based on a multiple of future sales related to an existing product and program with an existing customer exceeding an annual threshold for each annual period from 2019 through 2022. The Second Earnout is not capped. For the Second Earnout, if the applicable sales in an annual period do not exceed the annual threshold, no amounts will be paid relative to such annual period; the sales in such annual period do not carry over to the next annual period. Due to the degree of uncertainty associated with estimating the future sales levels of the divested business and its underlying programs, and the lack of reliable predictive market information, the Company will recognize such earnout proceeds, if received, as additional gain on sale when such proceeds are realized or realizable. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 28, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsOn 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. The Company expects to complete a preliminary allocation during the fourth quarter of 2019. The Company is currently evaluating whether any of the goodwill and purchased intangible assets will be deductible for tax purposes. AeroSat has incurred delays and losses related to certain projects in the period ended September 28, 2019. In our third-quarter earnings release on November 5, 2019, we announced initiatives that the Company is undertaking commencing in the fourth quarter of 2019 to reduce losses and minimize costs at our AeroSat reporting unit, which is a component of our Aerospace segment. As part of these initiatives, we are evaluating if we should continue with some of those projects. We expect to formulate a restructuring plan out of these initiatives which will result in restructuring charges which may include severance, relocation costs, inventory writedowns, long-lived asset impairment charges, contract cancellation charges and other expenses. The amount and timing of these charges will not be determinable until the restructuring plan has been determined, but it is possible they will be material. The CCC reporting unit, a component of our Aerospace segment, has also incurred delays and losses related to a significant development project in the period ended September 28, 2019. Contract completion is expected to occur in the fourth quarter. If there are further delays, it is possible that additional losses may be incurred in future periods. As of September 28, 2019, the AeroSat and CCC reporting units had goodwill of $1.6 million and $2.3 million, respectively, and intangible and long-lived assets totaling $8.9 million and $4.9 million, respectively. The percentage by which the AeroSat and CCC reporting units’ fair values exceeded their carrying values in the last annual goodwill impairment test (as of September 30, 2018) was 35% and 43%, respectively. Based on the Company’s evaluation, no significant events occurred or circumstances changed during the period ended September 28, 2019 that would suggest it is more likely than not that the fair values of these reporting unit have declined below their carrying values or that there were indicators of impairment for our long-lived assets in these reporting units, however, as we formulate our restructuring plan and reassess the long-range prospects for these businesses, factors could arise that result in a decline in the fair value of these reporting units and the indicators of impairment and the Company may be required to perform the applicable impairment tests and record impairment charges. |
Basis of Presentation (Policies
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. |
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. |
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. |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
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: (In thousands) Contract Assets Contract Liabilities Beginning Balance, January 1, 2019 $ 33,030 $ 27,347 Ending Balance, September 28, 2019 $ 25,952 $ 23,959 |
Disaggregation of Revenue | The following table presents our revenue disaggregated by Market Segments as follows: Nine Months Ended Three Months Ended (In thousands) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Aerospace Segment 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 Aerospace Total 520,490 500,383 157,702 169,579 Test Systems Segment Semiconductor 7,815 72,061 2,219 33,596 Aerospace & Defense 45,985 27,895 17,097 9,499 Test Systems Total 53,800 99,956 19,316 43,095 Total $ 574,290 $ 600,339 $ 177,018 $ 212,674 The following table presents our revenue disaggregated by Product Lines as follows: 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 $ 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 Aerospace Total 520,490 500,383 157,702 169,579 Test Systems 53,800 99,956 19,316 43,095 Total $ 574,290 $ 600,339 $ 177,018 $ 212,674 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | Inventories are as follows: ( In thousands ) September 28, 2019 December 31, 2018 Finished Goods $ 33,275 $ 33,100 Work in Progress 26,611 27,409 Raw Material 89,735 78,176 $ 149,621 $ 138,685 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property, Plant and Equipment | Property, Plant and Equipment are as follows: (In thousands) September 28, 2019 December 31, 2018 Land $ 9,778 $ 11,191 Buildings and Improvements 73,988 83,812 Machinery and Equipment 114,190 106,327 Construction in Progress 5,676 6,404 203,632 207,734 Less Accumulated Depreciation 90,495 86,872 $ 113,137 $ 120,862 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Acquired Intangible Assets | The following table summarizes acquired intangible assets as follows: September 28, 2019 December 31, 2018 (In thousands) Weighted Average Life Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Patents 11 years $ 2,146 $ 1,782 $ 2,146 $ 1,716 Non-compete Agreement 4 years 10,900 6,925 10,900 4,680 Trade Names 10 years 11,419 5,983 11,454 5,182 Completed and Unpatented Technology 10 years 42,904 17,782 36,406 14,964 Customer Relationships 15 years 142,113 44,577 136,894 37,875 Total Intangible Assets 13 years $ 209,482 $ 77,049 $ 197,800 $ 64,417 |
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: Nine Months Ended Three Months Ended (In thousands) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Amortization Expense $ 12,746 $ 15,144 $ 4,394 $ 4,276 |
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: (In thousands) 2019 $ 17,131 2020 16,888 2021 14,978 2022 14,554 2023 13,386 2024 11,920 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Changes in Carrying Amount of Goodwill | The following table summarizes the changes in the carrying amount of goodwill for the nine months ended September 28, 2019: (In thousands) December 31, 2018 Acquisition/Divestiture/Adjustments Foreign Currency Translation September 28, 2019 Aerospace $ 124,952 $ (262) $ (225) $ 124,465 Test Systems — 9,129 — 9,129 $ 124,952 $ 8,867 $ (225) $ 133,594 |
Product Warranties (Tables)
Product Warranties (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
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: 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 $ 5,027 $ 5,136 $ 4,806 $ 5,180 Warranties Divested or Acquired (103) — 20 — Warranties Issued 2,014 2,102 769 801 Warranties Settled (1,850) (2,219) (670) (934) Reassessed Warranty Exposure 138 (77) 301 (105) Balance at End of Period $ 5,226 $ 4,942 $ 5,226 $ 4,942 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Leases [Abstract] | |
Summary of Lease Costs and Cash Paid | The following is a summary of the Company's total lease costs: Nine months ended Three months ended (In thousands) September 28, 2019 September 28, 2019 Finance Lease Cost: Amortization of Right-of-use Assets $ 765 $ 255 Interest on Lease Liabilities 243 76 Total Finance Lease Cost 1,008 331 Operating Lease Cost 3,622 1,216 Variable Lease Cost 958 279 Short-term Lease Cost (excluding month-to-month) 118 33 Less Sublease and Rental (Income) Expense (301) 216 Total Operating Lease Cost $ 4,397 $ 1,744 Total Net Lease Cost $ 5,405 $ 2,075 The following is a summary of cash paid for amounts included in the measurement of lease liabilities: Nine months ended (In thousands) September 28, 2019 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 |
Summary of Maturity of Lease Liabilities, Operating Leases | The following is a summary of the Company's maturity of lease liabilities: (In thousands) Operating Leases Financing Leases 2019 $ 1,192 $ 522 2020 4,142 2,128 2021 4,121 2,181 2022 3,904 743 2023 3,677 — Thereafter 11,981 — Total Lease Payments $ 29,017 $ 5,574 Less: Interest 3,624 380 Total Lease Liability $ 25,393 $ 5,194 |
Summary of Maturity of Lease Liabilities, Financing Leases | The following is a summary of the Company's maturity of lease liabilities: (In thousands) Operating Leases Financing Leases 2019 $ 1,192 $ 522 2020 4,142 2,128 2021 4,121 2,181 2022 3,904 743 2023 3,677 — Thereafter 11,981 — Total Lease Payments $ 29,017 $ 5,574 Less: Interest 3,624 380 Total Lease Liability $ 25,393 $ 5,194 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Earnings Per Share [Abstract] | |
Summary of Basic and Diluted Weighted-Average Shares Outstanding | Basic and diluted weighted-average shares outstanding are as follows: Nine Months Ended Three Months Ended (In thousands) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Weighted Average Shares - Basic 32,427 32,304 31,964 32,317 Net Effect of Dilutive Stock Options 575 731 619 652 Weighted Average Shares - Diluted 33,002 33,035 32,583 32,969 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
Equity [Abstract] | |
Components of Accumulated Other Comprehensive Loss | The components of accumulated other comprehensive loss are as follows: (In thousands) September 28, 2019 December 31, 2018 Foreign Currency Translation Adjustments $ (7,878) $ (7,156) Retirement Liability Adjustment – Before Tax (7,256) (7,814) Tax Benefit of Retirement Liability Adjustment 1,524 1,641 Retirement Liability Adjustment – After Tax (5,732) (6,173) Accumulated Other Comprehensive Loss $ (13,610) $ (13,329) |
Components of Other Comprehensive Income | The components of other comprehensive income (loss) are as follows: Nine Months Ended Three Months Ended (In thousands) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Foreign Currency Translation Adjustments $ (722) $ (1,346) $ (1,336) $ 226 Retirement Liability Adjustments: Reclassifications to General and Administrative Expense: Amortization of Prior Service Cost 302 303 101 101 Amortization of Net Actuarial Losses 256 515 85 172 Tax Benefit (117) (172) (39) (57) Retirement Liability Adjustment 441 646 147 216 Other Comprehensive Income (Loss) $ (281) $ (700) $ (1,189) $ 442 |
Supplemental Retirement Plan _2
Supplemental Retirement Plan and Related Post Retirement Benefits (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
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. Nine Months Ended Three Months Ended (In thousands) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Service Cost $ 136 $ 150 $ 45 $ 50 Interest Cost 687 675 229 225 Amortization of Prior Service Cost 290 291 97 97 Amortization of Net Actuarial Losses 224 471 74 157 Net Periodic Cost $ 1,337 $ 1,587 $ 445 $ 529 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: Nine Months Ended Three Months Ended (In thousands) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Service Cost $ 10 $ 12 $ 3 $ 4 Interest Cost 35 34 12 11 Amortization of Prior Service Cost 12 12 4 4 Amortization of Net Actuarial Losses 32 44 11 15 Net Periodic Cost $ 89 $ 102 $ 30 $ 34 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
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. Nine Months Ended Three Months Ended (In thousands) September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Sales Aerospace $ 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 Test Systems 53,995 99,956 19,346 43,095 Less Intersegment Sales (195) — (30) — Total Test Systems Sales 53,800 99,956 19,316 43,095 Total Consolidated Sales $ 574,290 $ 600,339 $ 177,018 $ 212,674 Operating Profit and Margins Aerospace $ 48,949 $ 47,525 $ 8,789 $ 16,210 9.4 % 9.5 % 5.6 % 9.6 % Test Systems 4,166 10,151 2,075 5,833 7.7 % 10.2 % 10.7 % 13.5 % Total Operating Profit 53,115 57,676 10,864 22,043 9.2 % 9.6 % 6.1 % 10.4 % Additions/Deductions from Operating Profit 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 Corporate Expenses and Other 15,755 13,662 6,225 3,952 Income Before Income Taxes $ 111,585 $ 36,688 $ 1,760 $ 15,580 Total Assets: (In thousands) September 28, 2019 December 31, 2018 Aerospace $ 657,169 $ 647,870 Test Systems 88,662 97,056 Corporate 32,137 29,714 Total Assets $ 777,968 $ 774,640 |
Acquisition and Divestiture A_2
Acquisition and Divestiture Activities (Tables) | 9 Months Ended |
Sep. 28, 2019 | |
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: (In thousands) December 31, 2018 Assets Held for Sale 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 Liabilities Held for Sale Deferred Income Taxes $ 906 |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) | Oct. 04, 2019 | Jul. 01, 2019 | Feb. 13, 2019 | Sep. 28, 2019 | Mar. 30, 2019 | Sep. 29, 2018 | Mar. 31, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | Jan. 01, 2019 | Dec. 31, 2018 |
Business Acquisition [Line Items] | |||||||||||
Acquisition of business, net of cash acquired | $ 21,785,000 | $ 0 | |||||||||
Research and development, design and related engineering | $ 25,600,000 | $ 31,200,000 | 80,000,000 | $ 89,000,000 | |||||||
Adoption of ASU 2018-02 | $ 1,400,000 | ||||||||||
Right-of-use assets | 25,100,000 | 25,100,000 | |||||||||
Lease liability | 25,393,000 | 25,393,000 | |||||||||
Property, plant and equipment, net | $ 113,137,000 | $ 113,137,000 | $ 120,862,000 | ||||||||
Accounting Standards Update 2016-02 | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Right-of-use assets | $ 18,400,000 | ||||||||||
Lease liability | 18,500,000 | ||||||||||
Accounting Standards Update 2016-02 | Reclassification | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Property, plant and equipment, net | $ (3,500,000) | ||||||||||
Freedom Communication Technologies, Inc. | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Acquisition of business, net of cash acquired | $ 21,800,000 | ||||||||||
Cash acquired | $ 600,000 | ||||||||||
Diagnosys | Subsequent Event | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Cash paid to acquire stock | $ 7,000,000 | ||||||||||
Potential additional earn-out | $ 13,000,000 | ||||||||||
Achievement period | 3 years | ||||||||||
Earn-out achievement benchmark | $ 72,000,000 | ||||||||||
Divestiture by Sale | Test Systems Segment | |||||||||||
Business Acquisition [Line Items] | |||||||||||
Total cash proceeds of divesture | $ 103,800,000 | ||||||||||
Gain on sale, net of tax | $ 80,100,000 | ||||||||||
Income taxes from divesture | $ 21,300,000 |
Revenue - Cumulative Effect of
Revenue - Cumulative Effect of Changes (Details) $ in Thousands | Jan. 01, 2018USD ($) |
Accounting Standards Update 2014-09 | Retained Earnings | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Transition adjustment | $ 3,268 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||
Revenue recognized included in contract liability balance | $ 5.1 | $ 6.3 | $ 15.7 | $ 6.3 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: (nil) | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | ||||
Remaining performance obligation | $ 175 | $ 175 | ||
Period of recognition | 3 months | 3 months |
Revenue - Summary of Contract A
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 |
Revenue - Revenue Disaggregated
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 |
Revenue - Disaggregated by Prod
Revenue - Disaggregated by Product Lines (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 |
Aerospace Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 157,702 | 169,579 | 520,490 | 500,383 |
Test Systems Segment | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 19,316 | 43,095 | 53,800 | 99,956 |
Electrical Power & Motion | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 78,428 | 78,610 | 255,007 | 218,931 |
Lighting & Safety | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 44,127 | 43,481 | 139,502 | 129,244 |
Avionics | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 19,871 | 31,059 | 79,414 | 100,354 |
Systems Certification | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 3,384 | 2,373 | 9,050 | 12,028 |
Structures | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 6,089 | 6,583 | 18,056 | 18,683 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | $ 5,803 | $ 7,473 | $ 19,461 | $ 21,143 |
Inventories - Summary of Invent
Inventories - Summary of Inventories (Details) - USD ($) $ in Thousands | Sep. 28, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Finished Goods | $ 33,275 | $ 33,100 |
Work in Progress | 26,611 | 27,409 |
Raw Material | 89,735 | 78,176 |
Inventory, net | $ 149,621 | $ 138,685 |
Inventories - Narrative (Detail
Inventories - Narrative (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Held for Sale | Test Systems Segment | |
Inventory [Line Items] | |
Inventories | $ 14,385 |
Property, Plant and Equipment -
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 |
Intangible Assets - Summary of
Intangible Assets - Summary of Acquired Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 28, 2019 | Dec. 31, 2018 | |
Finite-Lived Intangible Assets | ||
WeightedAverage Life | 13 years | |
Gross Carrying Amount | $ 209,482 | $ 197,800 |
Accumulated Amortization | $ 77,049 | 64,417 |
Held for Sale | Test Systems Segment | ||
Finite-Lived Intangible Assets | ||
Intangible Assets, Net of Accumulated Amortization | 651 | |
Patents | ||
Finite-Lived Intangible Assets | ||
WeightedAverage Life | 11 years | |
Gross Carrying Amount | $ 2,146 | 2,146 |
Accumulated Amortization | $ 1,782 | 1,716 |
Non-compete Agreement | ||
Finite-Lived Intangible Assets | ||
WeightedAverage Life | 4 years | |
Gross Carrying Amount | $ 10,900 | 10,900 |
Accumulated Amortization | $ 6,925 | 4,680 |
Trade Names | ||
Finite-Lived Intangible Assets | ||
WeightedAverage Life | 10 years | |
Gross Carrying Amount | $ 11,419 | 11,454 |
Accumulated Amortization | $ 5,983 | 5,182 |
Completed and Unpatented Technology | ||
Finite-Lived Intangible Assets | ||
WeightedAverage Life | 10 years | |
Gross Carrying Amount | $ 42,904 | 36,406 |
Accumulated Amortization | $ 17,782 | 14,964 |
Customer Relationships | ||
Finite-Lived Intangible Assets | ||
WeightedAverage Life | 15 years | |
Gross Carrying Amount | $ 142,113 | 136,894 |
Accumulated Amortization | $ 44,577 | $ 37,875 |
Intangible Assets - Summary o_2
Intangible Assets - Summary of Amortization Expense for Acquired Intangibles (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization Expense | $ 4,394 | $ 4,276 | $ 12,746 | $ 15,144 |
Intangible Assets - Summary o_3
Intangible Assets - Summary of Future Amortization Expense for Intangible Assets (Details) $ in Thousands | Sep. 28, 2019USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2019 | $ 17,131 |
2020 | 16,888 |
2021 | 14,978 |
2022 | 14,554 |
2023 | 13,386 |
2024 | $ 11,920 |
Goodwill - Summary of Changes i
Goodwill - Summary of Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 28, 2019USD ($) | |
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 |
Long-Term Debt and Notes Paya_2
Long-Term Debt and Notes Payable - Narrative (Details) | 9 Months Ended |
Sep. 28, 2019USD ($)fiscal_quarter | |
Amended and Restated Credit Agreement | |
Debt Instrument | |
Ratio of funded debt to Adjusted EBITDA | 3.75 |
Duration of permitted leverage ratio following acquisition, number of fiscal quarters | fiscal_quarter | 4 |
Amended and Restated Credit Agreement | Maximum | |
Debt Instrument | |
Ratio of funded debt to Adjusted EBITDA | 4.50 |
Line of Credit | Fourth Amended And Restated Credit Agreement | Revolving Credit Facility | |
Debt Instrument | |
Maximum borrowing capacity | $ 350,000,000 |
Line of credit facility increase amount | $ 150,000,000 |
Line of Credit | Fourth Amended And Restated Credit Agreement | Revolving Credit Facility | Minimum | |
Debt Instrument | |
Basis points for commitment fee | 0.10% |
Line of Credit | Fourth Amended And Restated Credit Agreement | Revolving Credit Facility | Maximum | |
Debt Instrument | |
Basis points for commitment fee | 0.20% |
Line of Credit | Fourth Amended And Restated Credit Agreement | Revolving Credit Facility | LIBOR | Minimum | |
Debt Instrument | |
Basis points for variable interest rate | 1.00% |
Line of Credit | Fourth Amended And Restated Credit Agreement | Revolving Credit Facility | LIBOR | Maximum | |
Debt Instrument | |
Basis points for variable interest rate | 1.50% |
Line of Credit | Fifth Amended and Restated Credit Agreement | Letter of Credit | |
Debt Instrument | |
Credit facility allocated (up to) | $ 20,000,000 |
Outstanding letters of credit | 1,100,000 |
Line of Credit | Fifth Amended and Restated Credit Agreement | Revolving Credit Facility | |
Debt Instrument | |
Maximum borrowing capacity | 500,000,000 |
Line of credit facility increase amount | 150,000,000 |
Credit facility outstanding | 180,000,000 |
Revolving line of credit | $ 318,900,000 |
Product Warranties - Summary of
Product Warranties - Summary of Activity in Warranty Accrual (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
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 |
Leases - Narrative (Details)
Leases - Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 28, 2019USD ($) | Sep. 28, 2019USD ($) | |
Leases [Abstract] | ||
Weighted-average incremental borrowing rate (as a percentage) | 3.70% | 3.70% |
Right-of-use assets | $ 25,100 | $ 25,100 |
Lease liability | 25,393 | 25,393 |
Increase in operating lease liability | 4,100 | 9,700 |
Financing lease, right-of-use asset | 2,700 | 2,700 |
Financing lease, liability | $ 5,194 | $ 5,194 |
Operating leases, weighted-average remaining term | 8 years | 8 years |
Financing leases, weighted-average remaining term | 3 years | 3 years |
Leases - Summary of Lease Cost
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 |
Leases - Summary of Maturity of
Leases - Summary of Maturity of Lease Liabilities (Details) $ in Thousands | Sep. 28, 2019USD ($) |
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 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 31.30% | (9.10%) | 22.90% | 6.50% |
Earnings Per Share - Earnings P
Earnings Per Share - Earnings Per Share Computations (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Earnings Per Share [Abstract] | ||||
Weighted Average Shares - Basic (in shares) | 31,964 | 32,317 | 32,427 | 32,304 |
Net Effect of Dilutive Stock Options (in shares) | 619 | 652 | 575 | 731 |
Weighted Average Shares - Diluted (in shares) | 32,583 | 32,969 | 33,002 | 33,035 |
Out-of-the-money stock options | 279 | 19 |
Shareholders' Equity - Narrativ
Shareholders' Equity - Narrative (Details) - USD ($) | Sep. 28, 2019 | Dec. 12, 2017 | Feb. 24, 2016 | Sep. 28, 2019 | Sep. 28, 2019 | Sep. 17, 2019 |
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 |
Shareholders' Equity - Componen
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) |
Shareholders' Equity - Compon_2
Shareholders' Equity - Components of Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other Comprehensive Income | $ (1,189) | $ 442 | $ (281) | $ (700) |
Total Other Comprehensive Income (Loss) | (1,189) | 442 | (281) | (700) |
Foreign Currency Translation Adjustments | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other Comprehensive Income | (1,336) | 226 | (722) | (1,346) |
Total Other Comprehensive Income (Loss) | (1,336) | 226 | (722) | (1,346) |
Amortization of Prior Service Cost | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Reclassification to General and Administrative Expense | 101 | 101 | 302 | 303 |
Amortization of Net Actuarial Losses | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Reclassification to General and Administrative Expense | 85 | 172 | 256 | 515 |
Retirement Liability Adjustment | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Other Comprehensive Income | 147 | 216 | 441 | 646 |
Tax Benefit | (39) | (57) | (117) | (172) |
Total Other Comprehensive Income (Loss) | $ 147 | $ 216 | $ 441 | $ 646 |
Supplemental Retirement Plan _3
Supplemental Retirement Plan and Related Post Retirement Benefits - Summary of the Components of Net Periodic Cost (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019USD ($) | Sep. 29, 2018USD ($) | Sep. 28, 2019USD ($)retirement_plan | Sep. 29, 2018USD ($) | |
Retirement Benefits [Abstract] | ||||
Number of non-qualified supplemental retirement defined benefit plans | retirement_plan | 2 | |||
SERP | ||||
Defined Benefit Plan Disclosure | ||||
Service Cost | $ 45 | $ 50 | $ 136 | $ 150 |
Interest Cost | 229 | 225 | 687 | 675 |
Amortization of Prior Service Cost | 97 | 97 | 290 | 291 |
Amortization of Net Actuarial Losses | 74 | 157 | 224 | 471 |
Net Periodic Cost | 445 | 529 | 1,337 | 1,587 |
SERP | SERP Medical | ||||
Defined Benefit Plan Disclosure | ||||
Service Cost | 3 | 4 | 10 | 12 |
Interest Cost | 12 | 11 | 35 | 34 |
Amortization of Prior Service Cost | 4 | 4 | 12 | 12 |
Amortization of Net Actuarial Losses | 11 | 15 | 32 | 44 |
Net Periodic Cost | $ 30 | $ 34 | $ 89 | $ 102 |
Sales to Major Customers (Detai
Sales to Major Customers (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 28, 2019USD ($) | Sep. 29, 2018 | Sep. 28, 2019USD ($)customer | Sep. 29, 2018customer | |
Segment Reporting, Asset Reconciling Item | ||||
Number of major customers | customer | 2 | 2 | ||
Sales Revenue, Net | Customer Concentration Risk | Major Customer One | ||||
Segment Reporting, Asset Reconciling Item | ||||
Percent of consolidated revenue | 14.00% | 14.00% | 14.00% | 15.00% |
Sales Revenue, Net | Customer Concentration Risk | Major Customer Two | ||||
Segment Reporting, Asset Reconciling Item | ||||
Percent of consolidated revenue | 12.00% | 13.00% | 13.00% | 15.00% |
Sales Revenue, Net | Customer Concentration Risk | Two Major Customers | ||||
Segment Reporting, Asset Reconciling Item | ||||
Accounts receivable from major customers | $ | $ 39.7 | $ 39.7 |
Legal Proceedings (Details)
Legal Proceedings (Details) - Germany - Lufthansa Technik AG - Patent Infringement - AES $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 28, 2019USD ($) | Sep. 28, 2019USD ($) | |
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 |
Segment Information - Summary o
Segment Information - Summary of Segment Reporting Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 28, 2019 | Sep. 29, 2018 | Sep. 28, 2019 | Sep. 29, 2018 | Dec. 31, 2018 | |
Segment Reporting Information | |||||
Sales | $ 177,018 | $ 212,674 | $ 574,290 | $ 600,339 | |
Operating Profit and Margins | |||||
Total Operating Profit | 5,103 | 18,344 | 38,557 | 45,105 | |
Additions/Deductions from Operating Profit | |||||
Net (Gain) Loss on Sale of Businesses | 1,332 | 0 | (78,801) | 0 | |
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 | |
Total Assets | 777,968 | 777,968 | $ 774,640 | ||
Aerospace Segment | |||||
Segment Reporting Information | |||||
Sales | 157,702 | 169,579 | 520,490 | 500,383 | |
Test Systems Segment | |||||
Segment Reporting Information | |||||
Sales | 19,316 | 43,095 | 53,800 | 99,956 | |
Operating Segments | |||||
Operating Profit and Margins | |||||
Total Operating Profit | $ 10,864 | $ 22,043 | $ 53,115 | $ 57,676 | |
Operating margins, percentage | 6.10% | 10.40% | 9.20% | 9.60% | |
Operating Segments | Aerospace Segment | |||||
Segment Reporting Information | |||||
Sales | $ 157,702 | $ 169,588 | $ 520,495 | $ 500,445 | |
Operating Profit and Margins | |||||
Total Operating Profit | $ 8,789 | $ 16,210 | $ 48,949 | $ 47,525 | |
Operating margins, percentage | 5.60% | 9.60% | 9.40% | 9.50% | |
Additions/Deductions from Operating Profit | |||||
Total Assets | $ 657,169 | $ 657,169 | 647,870 | ||
Operating Segments | Test Systems Segment | |||||
Segment Reporting Information | |||||
Sales | 19,346 | $ 43,095 | 53,995 | $ 99,956 | |
Operating Profit and Margins | |||||
Total Operating Profit | $ 2,075 | $ 5,833 | $ 4,166 | $ 10,151 | |
Operating margins, percentage | 10.70% | 13.50% | 7.70% | 10.20% | |
Additions/Deductions from Operating Profit | |||||
Total Assets | $ 88,662 | $ 88,662 | 97,056 | ||
Less Intersegment Sales | Aerospace Segment | |||||
Segment Reporting Information | |||||
Sales | 0 | $ (9) | (5) | $ (62) | |
Less Intersegment Sales | Test Systems Segment | |||||
Segment Reporting Information | |||||
Sales | (30) | 0 | (195) | 0 | |
Corporate Expenses and Other | |||||
Additions/Deductions from Operating Profit | |||||
Corporate Expenses and Other | 6,225 | $ 3,952 | 15,755 | $ 13,662 | |
Total Assets | $ 32,137 | $ 32,137 | $ 29,714 |
Fair Value - Financial Assets a
Fair Value - Financial Assets and Liabilities Carried at Fair Value Measured on Recurring Basis (Details) - Recurring Basis - USD ($) | Sep. 28, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | ||
Financial assets carried at fair value | $ 0 | $ 0 |
Financial liabilities carried at fair value | $ 0 | $ 0 |
Acquisition and Divestiture A_3
Acquisition and Divestiture Activities - Narrative (Details) - USD ($) | Jul. 12, 2019 | Jul. 01, 2019 | Feb. 13, 2019 | Sep. 28, 2019 | Mar. 30, 2019 | Sep. 28, 2019 | Sep. 29, 2018 | Dec. 31, 2018 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Acquisition of business, net of cash acquired | $ 21,785,000 | $ 0 | ||||||
Freedom Communication Technologies, Inc. | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Acquisition of business, net of cash acquired | $ 21,800,000 | |||||||
Cash acquired | $ 600,000 | |||||||
Disposed by Sale | Airfield Lighting Product Line Assets | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Proceeds from sale | $ 1,000,000 | |||||||
Percentage of revenue (as a percentage) | 1.00% | |||||||
Loss on sale | $ 1,300,000 | 1,300,000 | ||||||
Held for Sale | First Earnout | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Maximum total earnout proceeds | 35,000,000 | |||||||
Held for Sale | Second Earnout | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Maximum total earnout proceeds | 0 | |||||||
Held for Sale | Aerospace Segment | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Net Property, Plant and Equipment | $ 3,186,000 | $ 3,186,000 | ||||||
Held for Sale | Test Systems Segment | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Net Property, Plant and Equipment | $ 3,521,000 | |||||||
Impairment loss | $ 0 | |||||||
Divestiture by Sale | Test Systems Segment | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Total cash proceeds of divesture | $ 103,800,000 | |||||||
Gain on sale, net of tax | $ 80,100,000 | |||||||
Income taxes from divesture | $ 21,300,000 |
Acquisition and Divestiture A_4
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 |
Subsequent Events (Details)
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 | |||
Potential additional earn-out | $ 13,000,000 | |||
Achievement period | 3 years | |||
Earn-out achievement benchmark | $ 72,000,000 |