What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-11 compared with 2022-05-09 · 136 added, 119 removed, 435 unchanged (37% of the section changed)

2 unchanged sentences

Consolidated Condensed Balance Sheets

April 2, 2022 with Comparative Figures for December 31, 2021

July 2, 2022 with Comparative Figures for December 31, 2021

(In thousands)

April 2, 2022 December 31, 2021

July 2, 2022 December 31, 2021

Current Assets:

15 unchanged sentences

Current Liabilities:

Current Maturities of Long-term Debt

Accounts Payable

22 unchanged sentences

Consolidated Condensed Statements of Operations

Three Months Ended April 2, 2022 With Comparative Figures for 2021

Three and Six Months Ended July 2, 2022 With Comparative Figures for 2021

(In thousands, except per share data)

Three Months Ended

April 2, 2022 April 3, 2021

Six Months Ended Three Months Ended

July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Sales $ 245,303 $ 217,015 $ 129,127 $ 111,158

6 unchanged sentences

Interest Expense, Net of Interest Income 3,293 3,457 1,662 1,699

Income (Loss) Before Income Taxes 5,024 ( 11,804 )

Provision for Income Taxes 8,125 105

Loss Before Income Taxes ( 5,325 ) ( 19,970 ) ( 10,349 ) ( 8,166 )

Provision for (Benefit from) Income Taxes 8,786 38 661 ( 67 )

Net Loss $ ( 14,111 ) $ ( 20,008 ) $ ( 11,010 ) $ ( 8,099 )

4 unchanged sentences

ASTRONICS CORPORATION

Consolidated Condensed Statements of Comprehensive Loss

Three Months Ended April 2, 2022 With Comparative Figures for 2021

Consolidated Condensed Statements of Comprehensive Income (Loss)

Three and Six Months Ended July 2, 2022 With Comparative Figures for 2021

(In thousands)

Three Months Ended

April 2, 2022 April 3, 2021

Six Months Ended Three Months Ended

July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Net Loss $ ( 14,111 ) $ ( 20,008 ) $ ( 11,010 ) $ ( 8,099 )

3 unchanged sentences

Retirement Liability Adjustment – Net of Tax

Total Other Comprehensive Income (Loss) 170 ( 203 )

698 868 347 434

Total Other Comprehensive (Loss) Income ( 869 ) 846 ( 1,039 ) 1,049

Comprehensive Loss $ ( 14,980 ) $ ( 19,162 ) $ ( 12,049 ) $ ( 7,050 )

2 unchanged sentences

Consolidated Condensed Statements of Cash Flows

Three Months Ended April 2, 2022 With Comparative Figures for 2021

Six Months Ended July 2, 2022 With Comparative Figures for 2021

(Unaudited, In thousands)

Three Months Ended

April 2, 2022 April 3, 2021

Six Months Ended

July 2, 2022 July 3, 2021

Cash Flows from Operating Activities:

8 unchanged sentences

Net Gain on Sale of Business, Before Taxes ( 11,284 ) —

Contingent Consideration Liability Fair Value Adjustment — ( 2,200 )

Other 1,320 2,105

11 unchanged sentences

Cash Flows from Investing Activities:

Proceeds from Sale of Businesses 21,961 —

Proceeds from Sale of Business and Assets 21,977 —

Capital Expenditures ( 2,493 ) ( 3,566 )

14 unchanged sentences

Consolidated Condensed Statements of Shareholders' Equity

Three Months Ended April 2, 2022 With Comparative Figures for 2021

Three and Six Months Ended July 2, 2022 With Comparative Figures for 2021

(In thousands)

Three Months Ended

April 2, 2022 April 3, 2021

Six Months Ended Three Months Ended

July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Beginning of Period $ 289 $ 278 $ 290 $ 279

11 unchanged sentences

End of Period 95,861 85,829 95,861 85,829

Accumulated Comprehensive Loss

Accumulated Comprehensive Income (Loss)

Beginning of Period ( 14,495 ) ( 16,450 ) ( 14,325 ) ( 16,653 )

15 unchanged sentences

Consolidated Condensed Statements of Shareholders' Equity, Continued

Three Months Ended April 2, 2022 With Comparative Figures for 2021

Three and Six Months Ended July 2, 2022 With Comparative Figures for 2021

(In thousands)

Three Months Ended

(Shares) April 2, 2022 April 3, 2021

Six Months Ended Three Months Ended

(Shares) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Beginning of Period 28,911 27,825 29,009 27,897

15 unchanged sentences

Notes to Consolidated Condensed Financial Statements

April 2, 2022

1) Basis of Presentation

7 unchanged sentences

In addition, the COVID-19 pandemic has increased the volatility we experience in our financial results in recent periods and this could continue in future interim and annual periods.

Operating results for the three months ended April 2, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Operating results for the six months ended July 2, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

The balance sheet at December 31, 2021 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.

21 unchanged sentences

The grants are recognized as income over the periods in which the Company recognizes as expenses the costs the grants are intended to defray.

The amount recognized in the first quarter of 2022 was immaterial.

The amount recognized during the three and six months ended July 2, 2022 was immaterial.

In September 2021 the Company was awarded a grant of up to $ 14.7 million from the U.S.

3 unchanged sentences

The receipt of the full award is primarily conditioned upon the Company committing to not furlough, lay off or reduce the compensation levels of a defined group of employees during the six-month period of performance between September 2021 and March 2022.

The grant benefit is being recognized ratably over the six-month performance period as a reduction to cost of products sold in proportion to the compensation expense that the award is intended to defray.

During the quarter ended April 2, 2022, the Company recognized $ 6.0 million of the award.

The following table presents the COVID-19 related government assistance, including AMJP, recorded during the three months ended April 2, 2022:

Three Months Ended

(In thousands) April 2, 2022 April 3, 2021

The grant benefit was recognized ratably over the six-month performance period as a reduction to cost of products sold in proportion to the compensation expense that the award is intended to defray.

During the six months ended July 2, 2022, the Company recognized $ 6.0 million of the award.

The following table presents the COVID-19 related government assistance, including AMJP, recorded during the three and six months ended July 2, 2022 and July 3, 2021:

Six Months Ended Three Months Ended

(In thousands) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Cost of Products Sold $ 6,101 $ 1,478 $ 16 $ 933

4 unchanged sentences

The Company regularly reviews the allowance by considering factors such as the age of the receivable balances, historical experience, credit quality, current economic conditions, and reasonable and supportable forecasts of future economic conditions that may affect a customer’s ability to pay.

The allowance for estimated credit losses balance was $ 2.9 million and $ 3.2 million at April 2, 2022 and December 31, 2021, respectively.

The Company’s bad debt included insignificant expense during the three months ended April 2, 2022, and expense of $ 0.3 million in the three months ended April 3, 2021.

Total write offs charged against the allowance were $ 0.1 million in the three months ended April 2, 2022, and insignificant in the three months ended April 3, 2021.

Total recoveries were $ 0.2 million and insignificant in the three months ended April 2, 2022 and April 3, 2021, respectively.

The allowance for estimated credit losses balance was $ 3.1 million and $ 3.2 million at July 2, 2022 and December 31, 2021, respectively.

The Company’s bad debt expense were insignificant during the three and six months ended July 2, 2022 and the three and six months ended July 3, 2021.

Total write offs charged against the allowance were insignificant in the three and six months ended July 2, 2022 and the three and six months ended July 3, 2021.

Total recoveries were insignificant in the three and six months ended July 2, 2022 and the three and six months ended July 3, 2021.

The Company's exposure to credit losses may increase if its customers are adversely affected by global economic recessions, disruption associated with the current COVID-19 pandemic, industry conditions, or other customer-specific factors.

2 unchanged sentences

Research and development costs are expensed as incurred and include salaries, benefits, consulting, material costs and depreciation.

Research and development expenses amounted to $ 12.2 million and $ 10.3 million for the three-month periods ended April 2, 2022 and April 3, 2021, respectively.

Research and development expenses amounted to $ 12.6 million and $ 10.3 million for the three months ended and $ 24.8 million and $ 20.6 million for the six months ended July 2, 2022 and July 3, 2021, respectively.

These costs are included in Cost of products sold.

1 unchanged sentence

The Company tests goodwill at the reporting unit level on an annual basis or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

As of April 2, 2022, the Company concluded that no indicators of impairment relating to intangible assets or goodwill existed and an interim test was not performed in the three months then ended.

As of July 2, 2022, the Company concluded that no indicators of impairment relating to intangible assets or goodwill existed and an interim test was not performed in the three or six months then ended.

Valuation of Long-Lived Assets

2 unchanged sentences

Should the carrying amount exceed undiscounted projected cash flows, an impairment loss would be recognized to the extent the carrying amount exceeds fair value.

As of April 2, 2022 and for the three month period then ended, the Company concluded that no indicators of impairment relating to long-lived assets existed.

As of July 2, 2022 and for the three and six month periods then ended, the Company concluded that no indicators of impairment relating to long-lived assets existed.

Foreign Currency Translation

The aggregate foreign currency transaction gain or loss included in operations was insignificant for the three months ended April 2, 2022 and April 3, 2021.

Recent Accounting Pronouncement

The aggregate foreign currency transaction gain or loss included in operations was insignificant for the three and six months ended July 2, 2022 and July 3, 2021.

Newly Adopted Accounting Pronouncement

Recent Accounting Pronouncement Adopted

10 unchanged sentences

ASUs not listed above were assessed and determined to be either not applicable, or had or are expected to have minimal impact on our financial statements and related disclosures.

On April 2, 2022, we had $ 475.1 million of remaining performance obligations, which we refer to as total backlog.

On July 2, 2022, we had $ 494.4 million of remaining performance obligations, which we refer to as total backlog.

We expect to recognize approximately $ 278.0 million of our remaining performance obligations as revenue in the remainder of 2022.

We recognized $ 6.0 million and $ 8.3 million during the three months ended April 2, 2022 and April 3, 2021, respectively, in revenues that were included in the contract liability balance at the beginning of the period.

We recognized $ 8.9 million and $ 11.3 million during the three months ended and $ 11.2 million and $ 14.4 million during the six months ended July 2, 2022 and July 3, 2021, 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 and profits in excess of billings and billings in excess of cost and profits, respectively.

The following table presents the beginning and ending balances of contract assets and contract liabilities during the three months ended April 2, 2022:

The following table presents the beginning and ending balances of contract assets and contract liabilities during the six months ended July 2, 2022:

(In thousands) Contract Assets Contract Liabilities

1 unchanged sentence

$ 25,941 $ 28,495

Ending Balance, April 2, 2022

Ending Balance, July 2, 2022

$ 26,278 $ 27,748

The following table presents our revenue disaggregated by Market Segments as follows:

Three Months Ended

(In thousands) April 2, 2022 April 3, 2021

Six Months Ended Three Months Ended

(In thousands) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Aerospace Segment

2 unchanged sentences

28,873 37,783 13,897 16,801

General Aviation

33,997 29,022 18,130 14,994

14,482 17,830 8,020 9,632

Aerospace Total 210,684 170,636 109,290 89,220

5 unchanged sentences

The following table presents our revenue disaggregated by Product Lines as follows:

Three Months Ended

(In thousands) April 2, 2022 April 3, 2021

Six Months Ended Three Months Ended

(In thousands) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Aerospace Segment

5 unchanged sentences

Systems Certification

2,671 1,838 1,669 960

3,049 2,544 1,672 1,491

14,482 17,830 8,020 9,632

Aerospace Total 210,684 170,636 109,290 89,220

4 unchanged sentences

( In thousands )

April 2, 2022 December 31, 2021

July 2, 2022 December 31, 2021

Finished Goods

10 unchanged sentences

(In thousands)

April 2, 2022 December 31, 2021

July 2, 2022 December 31, 2021

$ 8,554 $ 8,632

10 unchanged sentences

The following table summarizes acquired intangible assets as follows:

April 2, 2022 December 31, 2021

July 2, 2022 December 31, 2021

(In thousands) Weighted

9 unchanged sentences

Amortization expense for acquired intangibles is summarized as follows:

Three Months Ended

Six Months Ended Three Months Ended

(In thousands)

April 2, 2022 April 3, 2021

July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Amortization Expense

6 unchanged sentences

2025 $ 10,935

The following table summarizes the changes in the carrying amount of goodwill for the three months ended April 2, 2022:

The following table summarizes the changes in the carrying amount of goodwill for the six months ended July 2, 2022:

(In thousands) December 31, 2021 Foreign

April 2, 2022

Aerospace $ 36,648 $ ( 30 ) $ 36,618

2 unchanged sentences

As of April 2, 2022 and April 3, 2021, the Company concluded that no indicators of impairment relating to intangible assets or goodwill existed and an interim test was not performed in the three months then ended.

As of July 2, 2022 and July 3, 2021, the Company concluded that no indicators of impairment relating to intangible assets or goodwill existed and an interim test was not performed in the three or six months then ended.

7) Long-term Debt and Notes Payable

1 unchanged sentence

On March 1, 2022, the Company executed an amendment to the Agreement, which reduced the revolving credit line from $ 375 million to $ 225 million and extended the maturity date of the loans under the facility from February 16, 2023 to May 30, 2023.

The definition of Adjusted EBITDA was modified to exclude income from earnout payments and asset sales.

On August 9, 2022, the Company executed a further amendment to the Agreement (the “Amended Facility”), which reduced the revolving credit line from $ 225 million to $ 190 million until September 12, 2022 with further reductions to $ 180 million effective September 12, 2022 and $ 170 million effective October 11, 2022.

The Amended Facility extended the maturity date of the loans under the facility from May 30, 2023 to August 31, 2023.

Interest is payable on the unpaid principal amount of the facility at a rate equal to the Secured Overnight Financing Rate (“SOFR”, which shall be at least 1.00 %), plus between 1.50 % to 4.75 % based upon the Company’s leverage ratio.

The Company also pays a commitment fee to the lenders in an amount equal to 0.10 % to 0.40 % on the undrawn portion of the Amended Facility, based upon the Company’s leverage ratio.

The amendment provided for the payment of a consent fee of 10 basis points of the commitment for each consenting lender.

At April 2, 2022, there was $ 137.0 million outstanding on the revolving credit facility and there remained $ 86.9 million available subject to the minimum liquidity covenant discussed below, net of outstanding letters of credit.

Both amendments provided for the payment of a consent fee of 10 basis points of the commitment for each consenting lender.

At July 2, 2022, there was $ 136.0 million outstanding on the revolving credit facility and there remained $ 87.9 million available subject to the minimum liquidity covenant discussed below, net of outstanding letters of credit.

The credit facility allocates up to $ 20 million of the $ 225 million revolving credit line for the issuance of letters of credit, including certain existing letters of credit.

At April 2, 2022, outstanding letters of credit totaled $ 1.1 million.

The amendment will require the Company to maintain minimum liquidity, defined as unrestricted cash plus the unused revolving credit commitments, of $ 35 million.

The maximum net leverage ratio is set at 4.75 to 1 for the first and second quarters of 2022 and 3.75 to 1 thereafter, and the definition of Adjusted EBITDA has been modified to exclude income from earnout payments and asset sales.

The Company was in compliance with its financial covenants at April 2, 2022 .

The Amended Facility temporarily restricts certain activities, including dividend payments, acquisitions and share repurchases, through the third quarter of 2022.

At July 2, 2022, outstanding letters of credit totaled $ 1.1 million.

The Company is required to maintain minimum liquidity, defined as unrestricted cash plus the unused revolving credit commitments, of $ 35 million.

The maximum net leverage ratio is set at 4.75 to 1 for the first and second quarters of 2022 under the previous facility.

The Amended Facility includes a maximum net leverage ratio of 4.25 to 1 for the third quarter of 2022 and 3.75 to 1 thereafter.

The Company was in compliance with its financial covenants at July 2, 2022 .

The Amended Facility temporarily restricts acquisitions through the third quarter of 2022, as well as dividend payments and share repurchases through the maturity date of the Amended Facility.

The Company’s obligations under the Amended Facility are jointly and severally guaranteed by each domestic subsidiary of the Company other than non-material subsidiaries.

2 unchanged sentences

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.

While we expect to be able to refinance, replace or extend the maturity date of our credit facility before it matures, we cannot be sure that we will be able to obtain such debt refinancing on commercially reasonable terms or at all.

We are currently in the process of evaluating terms and conditions for a new long-term financing arrangement.

The extent to which we will be able to effect such refinancing, replacement or maturity extension on terms that are favorable to us or at all is dependent on a number of highly uncertain factors, including then-prevailing credit and other market conditions, economic conditions, particularly in the aerospace and defense markets, disruptions or volatility caused by factors such as COVID-19, regional conflicts, inflation, and supply chain disruptions.

We are currently in the process of evaluating terms and conditions for a new long-term financing arrangement, which includes an asset-based lending agreement and separate agreement that would monetize our real estate as collateral.

The extent to which we will be able to effect such refinancing, replacement or maturity extension on terms that are favorable to us or at all is dependent on a number of uncertain factors, including then-prevailing credit and other market conditions, economic conditions, particularly in the aerospace and defense markets, disruptions or volatility caused by factors such as COVID-19, regional conflicts, inflation, and supply chain disruptions.

In addition, rising interest rates could limit our ability to refinance our existing credit facility when it matures or cause us to pay higher interest rates upon refinancing.

As the Company’s long-term debt approaches maturity, if the Company is unable to refinance, replace or extend the maturity on its credit facility, the Company’s liquidity, results of operations, and financial condition could be materially adversely impacted.

If we are unable to obtain a new long-term financing facility before we file our second quarter 2022 Form 10-Q to replace our existing debt facility, borrowings outstanding under our existing credit facility will come due within 12 months of that filing date and could result in substantial doubt about our ability to continue as a going concern in the event that we are not reasonably assured to have sufficient cash balances to repay the remaining obligations at maturity.

If we are unable to obtain a new long-term financing facility before we file our third quarter 2022 Form 10-Q to replace our existing debt facility, borrowings outstanding under our existing credit facility will come due within 12 months of that filing date and could result in substantial doubt about our ability to continue as a going concern in the event that we are not reasonably assured to have sufficient cash balances to repay the remaining obligations at maturity.

8) Product Warranties

2 unchanged sentences

Activity in the warranty accrual is summarized as follows:

Three Months Ended

(In thousands) April 2, 2022 April 3, 2021

Six Months Ended Three Months Ended

(In thousands) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Balance at Beginning of Period $ 8,183 $ 7,018 $ 8,049 $ 6,842

4 unchanged sentences

9) Income Taxes

The effective tax rates were approximately 161.7 % and ( 0.9 )% for the three months ended April 2, 2022 and April 3, 2021, respectively.

The effective tax rates were approximately ( 6.4 )% and 0.8 % for the three months ended and ( 165.0 )% and ( 0.2 )% for the six months ended July 2, 2022 and July 3, 2021, respectively.

Beginning with the 2022 tax year, certain research and development costs are required to be capitalized and amortized over sixty months for income tax purposes.

The tax rate in the 2022 period was impacted by a valuation allowance applied against the deferred tax asset associated with the research and development costs that are expected to be capitalized and was partially offset by the removal of valuation allowances related to net operating losses, tax credit carryovers, and certain timing differences that are expected to reverse during 2022.

In addition, the tax rate in the 2022 period was also impacted by state income taxes and the federal research and development credit expected for 2022.

The Company records a valuation allowance against the deferred tax assets if and to the extent it is more likely than not that the Company will not recover the deferred tax assets.

In evaluating the need for a valuation allowance, the Company weights all relevant positive and negative evidence, and considers among other factors, historical financial performance, projected future taxable income, scheduled reversals of deferred tax liabilities, the overall business environment, and tax planning strategies.

In evaluating the need for a valuation allowance, the Company weighs all relevant positive and negative evidence, and considers among other factors, historical financial performance, projected future taxable income, scheduled reversals of deferred tax liabilities, the overall business environment, and tax planning strategies.

Losses in recent periods and cumulative pre-tax losses in the three year period ending with the current year, combined with the significant uncertainty brought about by the COVID-19 pandemic, is collectively considered significant negative evidence under ASC 740 when assessing whether an entity can use projected income as a basis for concluding that deferred tax assets are realizable on a more-likely than not basis.

For purposes of assessing the recoverability of deferred tax assets, the Company determined that it could not include future projected earnings in the analysis due to recent history of losses and therefore had insufficient objective positive evidence that the Company will generate sufficient future taxable income to overcome the negative evidence of cumulative losses.

Accordingly, during the years ended December 31, 2021 and 2020, the Company determined that a portion of its deferred tax assets are not expected to be realizable in the future and the Company continues to maintain the valuation allowance against its deferred tax assets as of April 2, 2022.

10) Earnings Per Share

Basic and diluted weighted-average shares outstanding are as follows:

Three Months Ended

Six Months Ended Three Months Ended

(In thousands)

April 2, 2022 April 3, 2021

July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Weighted Average Shares - Basic 32,007 30,914 32,082 30,926

31,933 30,903

Net Effect of Dilutive Stock Options — — — —

Weighted Average Shares - Diluted 32,007 30,914 32,082 30,926

31,933 30,903

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 848,000 shares as of April 2, 2022 and 652,000 shares as of April 3, 2021.

Further, due to our net loss in the three month periods ended April 2, 2022 and April 3, 2021, the assumed exercise of stock compensation had an antidilutive effect and therefore was excluded from the computation of diluted loss per share.

Currently, the Company expects to fund the 401K contribution for the quarter ended April 2, 2022 with treasury stock in lieu of cash.

The earnings per share calculation for the quarter ended April 2, 2022 is inclusive of the approximately 0.1 million in shares outstanding for the equivalent shares needed to fulfill the obligation using the closing share price as of April 2, 2022.

The number of common shares covered by out-of-the-money stock options was approximately 1,338,000 shares as of July 2, 2022 and 645,000 shares as of July 3, 2021.

Further, due to our net loss in the three and six month periods ended July 2, 2022 and July 3, 2021, the assumed exercise of stock compensation had an antidilutive effect and therefore was excluded from the computation of diluted loss per share.

Currently, the Company expects to fund the 401K contribution for the quarter ended July 2, 2022 with treasury stock in lieu of cash.

The earnings per share calculation for the quarter ended July 2, 2022 is inclusive of the approximately 0.1 million in shares outstanding for the equivalent shares needed to fulfill the obligation using the closing share price as of July 2, 2022.

Actual shares issued may differ based on the sale price on the settlement date.

5 unchanged sentences

When treasury shares are reissued, the Company determines the cost using an average cost method.

The difference between the cost of the treasury shares and reissuance price is included in Additional paid-in capital or Retained earnings.

During the three months ended April 2, 2022, the Company reissued 325,000 treasury shares and recorded the difference between the cost and the reissuance price, $ 5.1 million, as a reduction to Retained earnings.

Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss)

The difference between the average cost of the treasury shares and reissuance price is included in Additional paid-in capital or Retained earnings.

During the six months ended July 2, 2022, the Company reissued 421,000 treasury shares and recorded the difference between the average cost and the reissuance price, $ 6.8 million, as a reduction to Retained earnings.

Comprehensive (Loss) Income and Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are as follows:

(In thousands) April 2, 2022 December 31, 2021

(In thousands) July 2, 2022 December 31, 2021

Foreign Currency Translation Adjustments $ ( 6,974 ) $ ( 5,407 )

3 unchanged sentences

Accumulated Other Comprehensive Loss $ ( 15,364 ) $ ( 14,495 )

The components of other comprehensive income (loss) are as follows:

Three Months Ended

(In thousands) April 2, 2022 April 3, 2021

The components of other comprehensive (loss) income are as follows:

Six Months Ended Three Months Ended

(In thousands) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Foreign Currency Translation Adjustments $ ( 1,567 ) $ ( 22 ) $ ( 1,386 ) $ 615

2 unchanged sentences

Amortization of Prior Service Cost

201 201 100 100

Amortization of Net Actuarial Losses

497 667 247 334

Retirement Liability Adjustment 698 868 347 434

Other Comprehensive Income (Loss) $ 170 $ ( 203 )

Other Comprehensive (Loss) Income $ ( 869 ) $ 846 $ ( 1,039 ) $ 1,049

12) Supplemental Retirement Plan and Related Post Retirement Benefits

1 unchanged sentence

The following table sets forth information regarding the net periodic pension cost for the plans.

Three Months Ended

(In thousands) April 2, 2022 April 3, 2021

Six Months Ended Three Months Ended

(In thousands) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Service Cost $ 69 $ 97 $ 35 $ 48

5 unchanged sentences

The Company also has a defined benefit plan related to its subsidiary in France.

The net periodic cost for both plans for the three months ended April 2, 2022 and April 3, 2021 is immaterial.

The net periodic cost for both plans for the three and six months ended July 2, 2022 and July 3, 2021 is immaterial.

The service cost component of net periodic benefit costs above is recorded in Selling, General and Administrative Expenses within the Consolidated Condensed Statements of Operations, while the remaining components are recorded in Other Expense, Net of Other Income.

1 unchanged sentence

The loss of major customers or a significant reduction in business with a major customer would significantly, negatively impact our sales and earnings.

In the three months ended April 2, 2022, the Company had one customer in excess of 10% of consolidated sales.

Sales to The Boeing Company (“Boeing”) accounted for 13.4 % of sales in the three months ended April 2, 2022.

Accounts receivable from Boeing at April 2, 2022 were approximately $ 13.3 million.

In the three months ended April 3, 2021, the Company had no customers in excess of 10% of consolidated sales.

In the three and six months ended July 2, 2022, the Company had one customer in excess of 10% of consolidated sales.

Sales to The Boeing Company (“Boeing”) accounted for 11 % and 12 % of sales in the three and six months ended July 2, 2022.

Accounts receivable from Boeing at July 2, 2022 were approximately $ 12.5 million.

In the three and six months ended July 3, 2021, the Company had no customers in excess of 10% of consolidated sales.

14) Legal Proceedings

2 unchanged sentences

Additional information about these legal proceedings can be found in Note 19 “Legal Proceedings” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

The reserve for the German indirect claim and UK damages and interest was approximately $ 24.8 million at April 2, 2022, which included an additional $ 0.2 million in interest accrued during the three months then ended.

The reserve for the German indirect claim and UK damages and interest was approximately $ 24.4 million at July 2, 2022, which included an additional $ 0.2 million and $ 0.4 million in interest accrued during the three and six months then ended.

We currently believe it is unlikely that the appeals process will be completed or the damages and related interest will be paid within the next twelve months.

Therefore, the liability related to these matters is classified within Other Liabilities (non-current) in the Consolidated Condensed Balance Sheets at April 2, 2022 and December 31, 2021.

There were no other significant developments in any of these matters during the three months ended April 2, 2022.

Therefore, the liability related to these matters is classified within Other Liabilities (non-current) in the Consolidated Condensed Balance Sheets at July 2, 2022 and December 31, 2021.

There were no other significant developments in any of these matters during the three and six months ended July 2, 2022.

At December 31, 2021, we had recorded a liability of $ 1.0 million for reimbursement of Lufthansa’s legal expenses associated with the UK matter.

During the quarter ended April 2, 2022, $ 0.2 million was paid.

The remaining liability of $ 0.8 million is expected to be paid within the next twelve months and, as such, is classified in Accrued Expenses and Other Current Liabilities in the accompanying Consolidated Condensed Balance Sheet as of April 2, 2022.

During the six months ended July 2, 2022, $ 0.3 million was paid.

The remaining liability of $ 0.7 million is expected to be paid within the next twelve months and, as such, is classified in Accrued Expenses and Other Current Liabilities in the accompanying Consolidated Condensed Balance Sheet as of July 2, 2022.

On March 23, 2020, Teradyne, Inc.

5 unchanged sentences

ATS requested and, on August 26, 2021, the District Court granted, a stay of litigation during the IPR proceeding.

Oral arguments on the IPR were held on April 21, 2022 and a final written decision is expected by July 2022.

No amounts have been accrued for this matter in the April 2, 2022 or December 31, 2021 financial statements, as loss exposure was neither probable nor estimable at such times.

Oral arguments on the IPR were held on April 21, 2022.

The PTAB issued its decision on July 20, 2022, in which it invalidated all of Teradyne’s patent claims.

The decision is subject to appeal by Teradyne.

It is anticipated that stay of litigation will be lifted with respect to the remaining claims in August 2022.

No amounts have been accrued for this matter in the July 2, 2022 or December 31, 2021 financial statements, as loss exposure was neither probable nor estimable at such times.

Other than these proceedings, we are not party to any significant pending legal proceedings that management believes will result in a material adverse effect on our financial condition or results of operations.

15) Segment Information

Below are the sales and operating profit (loss) by segment for the three months ended April 2, 2022 and April 3, 2021 and a reconciliation of segment operating profit (loss) to income before income taxes.

Below are the sales and operating (loss) profit by segment for the three and six months ended July 2, 2022 and July 3, 2021 and a reconciliation of segment operating loss 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.

Three Months Ended

(In thousands) April 2, 2022 April 3, 2021

Six Months Ended Three Months Ended

(In thousands) July 2, 2022 July 3, 2021 July 2, 2022 July 3, 2021

Aerospace $ 210,694 $ 170,650 $ 109,300 $ 89,220

5 unchanged sentences

Total Consolidated Sales $ 245,303 $ 217,015 $ 129,127 $ 111,158

Segment Measure of Operating Profit (Loss) and Margins

Segment Measure of Operating (Loss) Profit and Margins

$ ( 226 ) $ ( 8,269 ) $ ( 3,276 ) $ ( 2,706 )

2 unchanged sentences

( 5.2 ) % 0.5 % ( 0.1 ) % ( 4.3 ) %

Total Segment Measure of Operating Profit (Loss) 1,263 ( 4,374 )

Total Segment Measure of Operating Loss ( 2,039 ) ( 8,026 ) ( 3,302 ) ( 3,652 )

( 0.8 ) % ( 3.7 ) % ( 2.6 ) % ( 3.3 ) %

Deductions from Segment Measure of Operating Profit (Loss)

Deductions from Segment Measure of Operating Loss

Net Gain on Sale of Business ( 11,284 ) — — —

Interest Expense, Net of Interest Income

3,293 3,457 1,662 1,699

Corporate Expenses and Other

Profit (Loss) Before Income Taxes $ 5,024 $ ( 11,804 )

11,277 8,487 5,385 2,815

Loss Before Income Taxes $ ( 5,325 ) $ ( 19,970 ) $ ( 10,349 ) $ ( 8,166 )

Total Assets:

(In thousands)

April 2, 2022 December 31, 2021

July 2, 2022 December 31, 2021

$ 463,715 $ 458,334

16 unchanged sentences

The fair value assigned to the earnout was determined using the real options method, which requires Level 3 inputs such as new order forecasts, discount rate, volatility factors, and other market variables to assess the probability of Diagnosys achieving certain order levels over the period.

Based on actual and forecasted new orders, the fair value was zero as of April 2, 2022 and December 31, 2021.

There were no other financial assets or liabilities carried at fair value measured on a recurring basis at December 31, 2021 or April 2, 2022.

Based on actual and forecasted new orders, the fair value was zero as of July 2, 2022 and December 31, 2021.

The fair value was reduced to zero as of July 3, 2021, with the contingent consideration liability fair value adjustment of $ 2.2 million recorded within the Selling, General and Administrative line in the Consolidated Condensed Statement of Operations in the three and six months ended July 3, 2021.

There were no other financial assets or liabilities carried at fair value measured on a recurring basis at December 31, 2021 or July 2, 2022.

On a Non-recurring Basis:

There were no non-recurring fair value measurements performed in the quarters ending April 2, 2022 and April 3, 2021.

There were no non-recurring fair value measurements performed in the six months ended July 2, 2022 and July 3, 2021.

Due to their short-term nature, the carrying value of cash and equivalents, accounts receivable, accounts payable, and notes payable approximate fair value.

4 unchanged sentences

Additional restructuring activities occurred during 2021 to align the workforce to expected activities and to consolidate certain facilities.

There were $ 0.1 million and in restructuring-related severance charges and other charges recorded in the three months ended April 2, 2022.

There were no restructuring charges recorded in the three months ended April 3, 2021.

The following tables reconcile the beginning and ending liability for restructuring charges:

There were $ 0.1 million and $ 0.2 million in restructuring-related severance charges and other charges recorded in the three and six months ended July 2, 2022, respectively.

There were $ 0.2 million in restructuring-related non-severance charges recorded in the three and six months ended July 3, 2021.

The following table reconciles the beginning and ending liability for restructuring charges:

(In thousands) 2022

Balance as of January 1 $ 2,400

1 unchanged sentence

Cash Paid ( 2,130 )

Balance as of April 2 $ 1,209

The liability is recorded within Accounts Payable ($ 0.9 million) and Accrued Expenses and Other Current Liabilities ($ 0.3 million) and is comprised of payments to be made under AeroSat’s non-cancelable inventory purchase commitments as well as employee termination benefits expected to be paid within the next 12 months.

The non-cancelable purchase commitments are for inventory which was not expected to be purchased prior to the expiration date of such agreements as a result of the restructuring plan.

Balance as of July 2 $ 443

The liability is recorded within Accrued Expenses and Other Current Liabilities and is comprised of employee termination benefits expected to be paid within the next 12 months.

The cash paid in the six month period ended July 2, 2022 primarily consists of payments under non-cancelable purchase commitments for inventory which was not expected to be purchased prior to the expiration date of such agreements as a result of the restructuring plan.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements