ASTRONICS CORP 10-K

ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures The Company carried out an evaluation, under the supervision and with the participation of Company Management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures are effective as of the end of the period covered by this report, to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is made known to them on a timely basis, and that these disclosure controls and procedures are effective to ensure such information is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. Management’s Report on Internal Control over Financial Reporting See the report appearing under Item 8, Financial Statements and Supplemental Data, Managements Report on Internal Control Over Financial Reporting. Changes in Internal Control over Financial Reporting There have been no changes in the Company’s internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. ITEM 9B. OTHER INFORMATION None 75 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information regarding directors is contained under the captions “Election of Directors” and “Security Ownership of Certain Beneficial Owners and Management” and is incorporated herein by reference to the 2021 Proxy to be filed within 120 days of the end of our fiscal year is incorporated herein by reference. The executive officers of the Company, their ages, their positions and offices with the Company, and the date each assumed their office with the Company as of December 31, 2020, are as follows: Name and Age of Executive Officer Positions and Offices with Astronics Year First Elected Officer Peter J. Gundermann Age 58 President, Chief Executive Officer and Director of the Company 2001 David C. Burney Age 58 Executive Vice President, Secretary and Chief Financial Officer of the Company 2003 Mark A. Peabody Age 61 Astronics Advanced Electronic Systems President and Executive Vice President of Astronics Corporation 2010 James S. Kramer Age 57 Luminescent Systems Inc. President and Executive Vice President of Astronics Corporation 2010 James F. Mulato Age 60 President of Astronics Test Systems, Inc. and Executive Vice President of Astronics Corporation 2019 Michael C. Kuehn Age 60 Astronics Connectivity Systems & Certification Corp. and Armstrong Aerospace, Inc. President and Executive Vice President of Astronics Corporation 2019 The principal occupation and employment for Messrs. Gundermann, Burney, Kramer, Mulato and Peabody for the past five years has been with the Company in their respective current roles. Mr. Kuehn and Mr. Mulato became Executive Vice Presidents of the Company on January 1, 2019. Mr. Kuehn has been the President of Astronics Connectivity Systems & Certification Corp. (“ACSC”) since its acquisition by the Company in 2017, and the President of Armstrong Aerospace, Inc. since 2018. Prior to acquisition, Mr. Kuehn ran the ACSC business as President of Telefonix, Incorporated for eight years. The Company has adopted a Code of Business Conduct and Ethics that applies to the Chief Executive Officer, Chief Financial Officer as well as other directors, officers and employees of the Company. This Code of Business Conduct and Ethics is available upon request without charge by contacting Astronics Corporation at (716) 805-1599. The Code of Business Conduct and Ethics is also available on the Investors section of the Company’s website at www.astronics.com. ITEM 11. EXECUTIVE COMPENSATION The information contained under the caption “Executive Compensation” and “Summary Compensation Table” in the Company’s definitive Proxy Statement to be filed within 120 days of the end of our fiscal year is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information contained under the captions “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” and “Executive Compensation” in the Company’s definitive Proxy Statement to be filed within 120 days of the end of our fiscal year is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE The information contained under the captions “Certain Relationships and Related Transactions and Director Independence” and “Proposal One: Election of Directors” in the Company’s definitive Proxy Statement to be filed within 120 days of the end of our fiscal year is incorporated herein by reference. 76 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information contained under the caption “Audit and Non-Audit Fees” in the Company’s definitive Proxy Statement to be filed within 120 days of the end of our fiscal year is incorporated herein by reference. 77 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES a. The documents filed as a part of this report are as follows: 1. The following financial statements are included: i. Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018 ii. Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2020, 2019 and 2018 iii. Consolidated Balance Sheets as of December 31, 2020 and 2019 iv. Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018 v. Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2020, 2019 and 2018 vi. Notes to Consolidated Financial Statements vii. Reports of Independent Registered Public Accounting Firm viii. Management’s Report on Internal Control Over Financial Reporting 2. Financial Statement Schedule Schedule II. Valuation and Qualifying Accounts All other consolidated financial statement schedules are omitted because they are inapplicable, not required, or the information is included elsewhere in the consolidated financial statements or the notes thereto. 3. Exhibits 78 Exhibit No. Description 3 (a) Restated Certificate of Incorporation, incorporated by reference to the registrant’s 2013 Annual Report on Form 10-K, Exhibit 3(a), filed March 7, 2014 (File No. 000-07087). (b) By-Laws, as amended, incorporated by reference to the registrant’s 2008 Annual Report on Form 10-K, Exhibit 3(b), filed March 11, 2009 (File No. 000-07087). (c) Certificate of Amendment of the Certificate of Incorporation of Astronics Corporation, incorporated by reference to the registrant’s Form 8-K, Exhibit 3.1, filed July 1, 2016 (File No. 000-07087). 10.1* Restated Thrift and Profit Sharing Retirement Plan, incorporated by reference to the registrant’s 2010 Annual Report on Form 10-K, Exhibit 10.1, filed March 3, 2011 (File No. 000-07087). 10.2* 2001 Stock Option Plan, incorporated by reference to the registrant’s 2010 Annual Report on Form 10-K, Exhibit 10.4, filed March 3, 2011 (File No. 000-07087). 10.3* Non-Qualified Supplemental Retirement Plan, incorporated by reference to the registrant’s 2010 Annual Report on Form 10-K, Exhibit 10.5, filed March 3, 2011 (File No. 000-07087). 10.4* Employment Termination Benefits Agreement dated December 16, 2003 between Astronics Corporation and Peter J. Gundermann, President and Chief Executive Officer of Astronics Corporation, incorporated by reference to the registrant’s 2010 Annual Report on Form 10-K, Exhibit 10.6, filed March 3, 2011 (File No. 000-07087). 10.5* Employment Termination Benefits Agreement dated December 16, 2003 between Astronics Corporation and David C. Burney, Vice President and Chief Financial Officer of Astronics Corporation, incorporated by reference to the registrant’s 2010 Annual Report on Form 10-K, Exhibit 10.7, filed March 3, 2011 (File No. 000-07087). 10.6* 2005 Director Stock Option Plan, incorporated by reference to the registrant’s 2010 Annual Report on Form 10-K, Exhibit 10.8, filed March 3, 2011 (File No. 000-07087). 10.7* Supplemental Retirement Plan, Amended and Restated, March 6, 2012, incorporated by reference to the registrant’s 2012 Annual Report on Form 10-K, Exhibit 10.10, filed February 22, 2013 (File No. 000-07087). 10.8* First Amendment of the Employment Termination Benefits Agreement dated December 30, 2008 between Astronics Corporation and Peter J. Gundermann, President and Chief Executive Officer of Astronics, incorporated by reference to the registrant’s 2008 Annual Report on Form 10-K, Exhibit 10.11, filed March 11, 2009 (File No. 000-07087). 10.9* First Amendment of the Employment Termination Benefits Agreement dated December 30, 2008 between Astronics Corporation and David C. Burney, Vice President and Chief Financial Officer of Astronics Corporation, incorporated by reference to the registrant’s 2008 Annual Report on Form 10-K, Exhibit 10.12, filed March 11, 2009 (File No. 000-07087). 10.10* Employment Termination Benefits Agreement Dated February 18, 2005 between Astronics Corporation and Mark A. Peabody, Executive Vice President of Astronics Advanced Electronic Systems, Inc., incorporated by reference to the registrant’s 2010 Annual Report on Form 10-K, Exhibit 10.13, filed March 3, 2011 (File No. 000-07087). 10.11* First Amendment of the Employment Termination Benefits Agreement dated December 31, 2008 between Astronics Corporation and Mark A. Peabody, Executive Vice President of Astronics Advanced Electronic Systems, Inc., incorporated by reference to the registrant’s 2010 Annual Report on Form 10-K, Exhibit 10.14, filed March 3, 2011 (File No. 000-07087). 10.12* Form of Indemnification Agreement as executed by each of Astronics Corporation’s Directors and Executive Officers, incorporated by reference to the registrant’s 2010 Annual Report on Form 10-K, Exhibit 10.15, filed March 3, 2011 (File No. 000-07087). 10.13* 2011 Employee Stock Option Plan, incorporated by reference to the registrant’s Form S-8, Exhibit 4.1 filed on August 4, 2011 (File No. 000-07087). 10.14* Supplemental Retirement Plan II, incorporated by reference to the registrant’s 2012 Annual Report on Form 10-K, Exhibit 10.18, filed February 22, 2013 (File No. 000-07087). 10.15* Astronics Corporation 2017 Long Term Incentive Plan (incorporated by reference as Exhibit A to the Registrant’s Definitive Proxy Statement on Schedule 14A, as filed with the Commission on April 17, 2017). 79 10.16 Asset Purchase Agreement entered as of October 26, 2017, by and among Talon Acquisition Corp., Telefonix, Incorporated, Product Development Technologies, LLC, and Paul Burke filed as Exhibit 10.1 on Form 8-K filed on October 27, 2017 (File No. 000-07087). 10.17 Fifth Amended and Restated Credit Agreement entered into by and among Astronics Corporation, HSBC Bank USA, National Association, HSBC Securities (USA) Inc. and Merrill Lynch, Pierce, Fenner & Smith Inc., and Suntrust Bank, filed as Exhibit 10.1 on Form 8-K filed on February 21, 2018 (File No. 000-07087). 10.18 Amended and Restated Asset Purchase Agreement dated as of February 13, 2019 by and Among Astronics Test Systems, Inc., Astronics Corporation and Advantest Test Solutions, Inc., filed as Exhibit 10.1 on Form 8-K filed on February 19, 2019 (File No. 000-07087). 10.19 Amendment to the Astronics Corporation 2017 Long Term Incentive Plan, dated December 14, 2018. 10.20 Amendment No. 1 to the Fifth Amended and Restated Credit Agreement, filed as Exhibit 10.1 on Form 8-K filed on May 4, 2020 (File No. 000-07087). 21** Subsidiaries of the Registrant; filed herewith. 23** Consent of Independent Registered Public Accounting Firm; filed herewith. 31.1** Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002; filed herewith. 31.2** Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002; filed herewith. 32** Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002; filed herewith. 101.INS** XBRL Instance Document 101.SCH** XBRL Taxonomy Extension Schema Document 101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF** XBRL Taxonomy Extension Definition Linkbase Document 101.LAB** XBRL Taxonomy Extension Label Linkbase Document 101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document * Identifies a management contract or compensatory plan or arrangement as required by Item 15(a) (3) of Form 10-K. ** Submitted electronically herewith 80 SCHEDULE II Valuation and Qualifying Accounts Year Description Balance at the Beginning of Period Additions Charged to Cost and Expense Write-Offs/Other Balance at End of Period (In thousands) 2020 Allowance for Estimated Credit Losses $ 3,559 $ 1,913 $ ( 2,254 ) $ 3,218 Reserve for Inventory Valuation $ 33,606 $ 4,166 $ ( 4,362 ) $ 33,410 Deferred Tax Valuation Allowance $ 13,303 $ 23,152 $ 713 $ 37,168 2019 Allowance for Estimated Credit Losses $ 1,486 $ 2,144 $ ( 71 ) $ 3,559 Reserve for Inventory Valuation $ 20,826 $ 14,803 $ ( 2,023 ) $ 33,606 Deferred Tax Valuation Allowance $ 8,098 $ 5,205 $ — $ 13,303 2018 Allowance for Estimated Credit Losses $ 960 $ 589 $ ( 63 ) $ 1,486 Reserve for Inventory Valuation $ 18,013 $ 2,682 $ 131 $ 20,826 Deferred Tax Valuation Allowance $ 7,823 $ 275 $ — $ 8,098 81 ITEM 16. FORM 10-K SUMMARY None. 82 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned; thereunto duly authorized, on March 1, 2021. Astronics Corporation By /s/ Peter J. Gundermann By /s/ David C. Burney Peter J. Gundermann President and Chief Executive Officer David C. Burney, Executive Vice President, Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Peter J. Gundermann President and Chief Executive Officer (Principal Executive Officer) March 1, 2021 Peter J. Gundermann /s/ David C. Burney Executive Vice President, Chief Financial Officer (Principal Financial Officer) March 1, 2021 David C. Burney /s/ Nancy L. Hedges Corporate Controller and Principal Accounting Officer March 1, 2021 Nancy L. Hedges /s/ Raymond W. Boushie Director March 1, 2021 Raymond W. Boushie /s/ Robert T. Brady Director March 1, 2021 Robert T. Brady /s/ Tonit Calaway Director March 1, 2021 Tonit Calaway /s/ Jeffry D. Frisby Director March 1, 2021 Jeffry D. Frisby /s/ Peter J. Gundermann Director March 1, 2021 Peter J. Gundermann /s/ Warren C. Johnson Director March 1, 2021 Warren C. Johnson /s/ Robert S. Keane Director March 1, 2021 Robert S. Keane /s/ Neil Kim Director March 1, 2021 Neil Kim /s/ Mark J. Moran Director March 1, 2021 Mark J. Moran 83