Item 9A. Controls and Procedures
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 SEC’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, Management’s 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
Securities Trading Plans of Directors and Officers
During the three months ended December 31, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information regarding directors is contained under the captions “Proposal 1: Election of Directors” and “Security Ownership of Certain Beneficial Owners and Management” and is incorporated herein by reference to the Company’s 2024 Proxy Statement to be filed with the SEC within 120 days after the end of the fiscal year to which this report relates.
The Company has adopted a Code of Business Conduct and Ethics that applies to the Chief Executive Officer and 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.
The other information required by Item 10 is incorporated herein by reference from the Company’s 2024 Proxy Statement to be filed with the SEC within 120 days after the end of the fiscal year to which this report relates.
ITEM 11. EXECUTIVE COMPENSATION
The information contained under the caption “Executive Compensation”, “Summary Compensation Table” and “Compensation Committee Interlocks and Insider Participation” in the Company’s 2024 Proxy Statement to be filed with the SEC within 120 days after the end of the fiscal year to which this report relates 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 “Equity Compensation Plan Information” in the Company’s 2024 Proxy Statement to be filed with the SEC within 120 days after the end of the fiscal year to which this report relates 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 Party Transactions and Director Independence” and “Proposal 1: Election of Directors” in the Company’s 2024 Proxy Statement to be filed with the SEC within 120 days after the end of the fiscal year to which this report relates is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information contained under the caption “Audit and Non-Audit Fees” in the Company’s 2024 Proxy Statement to be filed with the SEC within 120 days after the end of the fiscal year to which this report relates is incorporated herein by reference.
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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, 2023, 2022 and 2021
ii. Consolidated Statements of Comprehensive Loss for the years ended December 31, 2023, 2022 and 2021
iii. Consolidated Balance Sheets as of December 31, 2023 and 2022
iv. Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
v. Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2023, 2022 and 2021
vi. Notes to Consolidated Financial Statements
vii. Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42 )
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
75
Exhibit
No.
Description
1 .1
Equity Distribution Agreement, incorporated by reference to Exhibit 1.1 on the registrant’s Current Report on Form 8-K filed on August 8, 2023 (File No. 000-07087).
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
(c)
Certificate of Amendment of the Certificate of Incorporation of Astronics Corporation, incorporated by reference to the registrant’s Current Report on Form 8-K, Exhibit 3.1, filed May 24, 2023 (File No. 000-07087).
4 (a)
Description of Registrant’s Securities, incorporated by reference to the registrant’s 2022 Annual Report on Form 10-K, Exhibit 4(a), filed March 10, 2023 (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*
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).
10.3*
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).
10.4*
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).
10.5*
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).
10.6*
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).
10.7*
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).
10.8*
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).
10.9*
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).
10.10*
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).
10.11*
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).
10.12*
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).
10.13*
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).
76
10.1 4 *
Astronics Corporation Amended and Restated 2017 Long Term Incentive Plan, (incorporated by reference to Exhibit A to the Registrant’s Definitive Proxy Statement on Schedule 14A, as filed with the SEC on April 13, 2021).
10.1 5 *
Form of Stock Option Agreement (Named Executive Officers) under Amended and Restated 2017 Long Term Incentive Plan, incorporated by reference to the registrant’s 2022 Annual Report on Form 10-K, Exhibit 10.18, filed March 10, 2023 (File No. 000-07087).
10.1 6 *
Form of Performance Based Vesting RSU Agreement (Named Executive Officers) under Amended and Restated 2017 Long Term Incentive Plan, incorporated by reference to the registrant’s 2022 Annual Report on Form 10-K, Exhibit 10.19, filed March 10, 2023 (File No. 000-07087).
10.1 7 *
Form of Time-Based Vesting RSU Agreement (Directors) under Amended and Restated 2017 Long Term Incentive Plan, incorporated by reference to the registrant’s 2022 Annual Report on Form 10-K, Exhibit 10.20, filed March 10, 2023 (File No. 000-07087).
10.1 8 *
Form of Time-Based Vesting RSU Agreement (Key Employees) under Amended and Restated 2017 Long Term Incentive Plan, incorporated by reference to the registrant’s 2022 Annual Report on Form 10-K, Exhibit 10.21, filed March 10, 2023 (File No. 000-07087).
10 .19
Sixth Amended and Restated Credit Agreement entered into by and among Astronics Corporation, HSBC Bank USA, National Association, Wells Fargo Bank, N.A., incorporated by reference to Exhibit 10.1 on the registrant’s Current Report on Form 8-K on January 19, 2023 (File No. 000-07087).
10.2 0
Credit Agreement dated as of January 19, 2023 by and among Astronics Corporation, Great Rock Capital Partners Management, LLC, incorporated by reference to Exhibit 10.2 on the registrant’s Current Report on Form 8-K on January 19, 2023 (File No. 000-07087).
10. 21
First Amendment to Sixth Amended and Restated Credit Agreement, incorporated by reference to Exhibit 10.1 on the registrant’s Current Report on Form 8-K filed on June 28, 2023 (File No. 000-07087).
10. 2 2
Second Amendment to Sixth Amended and Restated Credit Agreement, incorporated by reference to Exhibit 10.1 on the registrant’s Current Report on Form 8-K filed on November 1, 2023 (File No. 000-07087).
10. 23
First Amendment to the Credit Agreement by and among Astronics Corporation, Great Rock Capital Partners Management, LLC.
21**
Subsidiaries of the Registrant.
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**
Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002; filed herewith.
97**
Compensation Clawback Policy, dated December 1, 2023; 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
77
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)
2023 Allowance for Estimated Credit Losses $ 2,630 $ 7,772 $ ( 1,209 ) $ 9,193
Reserve for Excess and Obsolete Inventories $ 36,817 $ 8,229 $ ( 6,507 ) $ 38,539
Deferred Tax Valuation Allowance $ 57,369 $ 8,096 $ 175 $ 65,640
2022 Allowance for Estimated Credit Losses $ 3,183 $ 565 $ ( 1,118 ) $ 2,630
Reserve for Excess and Obsolete Inventories $ 33,775 $ 2,850 $ 192 $ 36,817
Deferred Tax Valuation Allowance $ 43,519 $ 15,236 $ ( 1,386 ) $ 57,369
2021 Allowance for Estimated Credit Losses $ 3,218 $ 90 $ ( 125 ) $ 3,183
Reserve for Excess and Obsolete Inventories $ 33,410 $ 3,852 $ ( 3,487 ) $ 33,775
Deferred Tax Valuation Allowance $ 37,168 $ 7,100 $ ( 749 ) $ 43,519
78
ITEM 16. FORM 10-K SUMMARY
None.
79
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 4, 2024.
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 4, 2024
Peter J. Gundermann
/s/ David C. Burney Executive Vice President, Chief Financial Officer (Principal Financial Officer) March 4, 2024
David C. Burney
/s/ Nancy L. Hedges Corporate Controller and Principal Accounting Officer March 4, 2024
Nancy L. Hedges
/s/ Robert T. Brady
Director
March 4, 2024
Robert T. Brady
/s/ Linda O’Brien
Director
March 4, 2024
Linda O’Brien
/s/ Jeffry D. Frisby
Director
March 4, 2024
Jeffry D. Frisby
/s/ Peter J. Gundermann
Director
March 4, 2024
Peter J. Gundermann
/s/ Warren C. Johnson
Director
March 4, 2024
Warren C. Johnson
/s/ Robert S. Keane
Director
March 4, 2024
Robert S. Keane
/s/ Neil Kim
Director
March 4, 2024
Neil Kim
/s/ Mark J. Moran
Director
March 4, 2024
Mark J. Moran
80