falsedesktopATRO2020-09-26000000806320000049{"tbl_sim": "https://q10k.com/tbl-sim", "search": "https://q10k.com/search"}{"q10k_tbl_0": "Large accelerated filer\t☒\tAccelerated filer\t☐\tEmerging growth company\t☐\nNon-accelerated filer\t☐\tSmaller Reporting Company\t☐\t\t\n", "q10k_tbl_1": "\t\t\t\tPAGE\nPART I\tFINANCIAL INFORMATION\t\t\t\n\tItem 1\tFinancial Statements:\t\t\n\t\t0\tConsolidated Condensed Balance Sheets as of September 26 2020 and December 31 2019\t3\n\t\t0\tConsolidated Condensed Statements of Operations for the Three and Nine Months Ended September 26 2020 and September 28 2019\t4\n\t\t0\tConsolidated Condensed Statements of Comprehensive (Loss) Income for the Three and Nine Months Ended September 26 2020 and September 28 2019\t5\n\t\t0\tConsolidated Condensed Statements of Cash Flows for the Nine Months Ended September 26 2020 and September 28 2019\t6\n\t\t0\tConsolidated Condensed Statements of Shareholders' Equity for the Three and Nine Months Ended September 26 2020 and September 28 2019\t7\n\t\t0\tNotes to Consolidated Condensed Financial Statements\t9\n\tItem 2\tManagement's Discussion and Analysis of Financial Condition and Results of Operations\t\t30\n\tItem 3\tQuantitative and Qualitative Disclosures about Market Risk\t\t38\n\tItem 4\tControls and Procedures\t\t38\nPART II\tOTHER INFORMATION\t\t\t\n\tItem 1\tLegal Proceedings\t\t39\n\tItem 1a\tRisk Factors\t\t39\n\tItem 2\tUnregistered Sales of Equity Securities and Use of Proceeds\t\t40\n\tItem 3\tDefaults Upon Senior Securities\t\t40\n\tItem 4\tMine Safety Disclosures\t\t40\n\tItem 5\tOther Information\t\t40\n\tItem 6\tExhibits\t\t40\nSIGNATURES\t\t\t\t41\n", "q10k_tbl_2": "\tSeptember 26 2020\tDecember 31 2019\nCurrent Assets:\t\t\nCash and Cash Equivalents\t29897\t31906\nAccounts Receivable Net of Allowance for Doubtful Accounts\t92947\t147998\nInventories\t163451\t145787\nPrepaid Expenses and Other Current Assets\t27375\t15853\nAssets Held for Sale\t0\t1537\nTotal Current Assets\t313670\t343081\nProperty Plant and Equipment Net of Accumulated Depreciation\t108111\t112499\nOperating Right-of-Use Assets\t19802\t23602\nOther Assets\t23341\t31271\nIntangible Assets Net of Accumulated Amortization\t114355\t127293\nGoodwill\t58182\t144970\nTotal Assets\t637461\t782716\nCurrent Liabilities:\t\t\nCurrent Maturities of Long-term Debt\t232\t224\nAccounts Payable\t26320\t35842\nCurrent Operating Lease Liabilities\t4969\t4517\nAccrued Expenses and Other Current Liabilities\t42831\t48697\nCustomer Advance Payments and Deferred Revenue\t24916\t31360\nTotal Current Liabilities\t99268\t120640\nLong-term Debt\t168000\t188000\nLong-term Operating Lease Liabilities\t17582\t21039\nOther Liabilities\t62765\t64180\nTotal Liabilities\t347615\t393859\nShareholders' Equity:\t\t\nCommon Stock\t346\t345\nAccumulated Other Comprehensive Loss\t(15068)\t(15628)\nOther Shareholders' Equity\t304568\t404140\nTotal Shareholders' Equity\t289846\t388857\nTotal Liabilities and Shareholders' Equity\t637461\t782716\n", "q10k_tbl_3": "\tNine Months Ended\t\tThree Months Ended\t\n\tSeptember 26 2020\tSeptember 28 2019\tSeptember 26 2020\tSeptember 28 2019\nSales\t387784\t574290\t106506\t177018\nCost of Products Sold\t310059\t445056\t91333\t140224\nGross Profit\t77725\t129234\t15173\t36794\nSelling General and Administrative Expenses\t85941\t90677\t24170\t31691\nImpairment Loss\t87016\t0\t0\t0\n(Loss) Income from Operations\t(95232)\t38557\t(8997)\t5103\nNet (Gain) Loss on Sale of Businesses\t0\t(78801)\t0\t1332\nOther Expense Net of Other Income\t4546\t1197\t369\t464\nInterest Expense Net of Interest Income\t5091\t4576\t1775\t1547\n(Loss) Income Before Income Taxes\t(104869)\t111585\t(11141)\t1760\n(Benefit from) Provision for Income Taxes\t(9073)\t25503\t(5887)\t550\nNet (Loss) Income\t(95796)\t86082\t(5254)\t1210\n(Loss) Earnings Per Share:\t\t\t\t\nBasic\t(3.11)\t2.65\t(0.17)\t0.04\nDiluted\t(3.11)\t2.61\t(0.17)\t0.04\n", "q10k_tbl_4": "\tNine Months Ended\t\tThree Months Ended\t\n\tSeptember 26 2020\tSeptember 28 2019\tSeptember 26 2020\tSeptember 28 2019\nNet (Loss) Income\t(95796)\t86082\t(5254)\t1210\nOther Comprehensive (Loss) Income:\t\t\t\t\nForeign Currency Translation Adjustments\t(85)\t(722)\t1409\t(1336)\nRetirement Liability Adjustment - Net of Tax\t645\t441\t215\t147\nTotal Other Comprehensive (Loss) Income\t560\t(281)\t1624\t(1189)\nComprehensive (Loss) Income\t(95236)\t85801\t(3630)\t21\n", "q10k_tbl_5": "(Unaudited In thousands)\tNine Months Ended\t\nCash Flows from Operating Activities:\tSeptember 26 2020\tSeptember 28 2019\nNet (Loss) Income\t(95796)\t86082\nAdjustments to Reconcile Net (Loss) Income to Cash Flows from Operating Activities Excluding the Effects of Acquisitions/Divestitures:\t\t\nDepreciation and Amortization\t24095\t24183\nProvisions for Non-Cash Losses on Inventory and Receivables\t4535\t4613\nEquity-based Compensation Expense\t3924\t2943\nDeferred Tax Expense (Benefit)\t1127\t(3820)\nNon-cash Severance Expense\t3007\t0\nOperating Lease Amortization Expense\t3352\t2993\nNon-cash Litigation Provision\t0\t1700\nNet Gain on Sale of Businesses Before Taxes\t0\t(78801)\nEquity Investment Other Than Temporary Impairment\t3493\t0\nImpairment Loss\t87016\t0\nOther\t6622\t(5485)\nCash Flows from Changes in Operating Assets and Liabilities:\t\t\nAccounts Receivable\t53604\t23423\nInventories\t(19807)\t(18963)\nAccounts Payable\t(9589)\t(5494)\nAccrued Expenses\t(11340)\t(5867)\nOther Current Assets and Liabilities\t(224)\t(697)\nCustomer Advanced Payments and Deferred Revenue\t(6474)\t(3266)\nIncome Taxes\t(12316)\t5581\nOperating Lease Liabilities\t(3412)\t(2824)\nSupplemental Retirement and Other Liabilities\t(304)\t3940\nCash Flows from Operating Activities\t31513\t30241\nCash Flows from Investing Activities:\t\t\nAcquisition of Business Net of Cash Acquired\t0\t(21785)\nProceeds on Sale of Business\t0\t104792\nCapital Expenditures\t(5575)\t(8850)\nProceeds on Sale of Assets\t1600\t0\nCash Flows from Investing Activities\t(3975)\t74157\nCash Flows from Financing Activities:\t\t\nProceeds from Long-term Debt\t150000\t99000\nPayments for Long-term Debt\t(170000)\t(146080)\nPurchase of Outstanding Shares for Treasury\t(7732)\t(50000)\nStock Options Activity\t33\t423\nFinance Lease Principal Payments\t(1425)\t(1284)\nFinancing Fees\t(360)\t0\nCash Flows from Financing Activities\t(29484)\t(97941)\nEffect of Exchange Rates on Cash\t(63)\t(284)\n(Decrease) Increase in Cash and Cash Equivalents\t(2009)\t6173\nCash and Cash Equivalents at Beginning of Period\t31906\t16622\nCash and Cash Equivalents at End of Period\t29897\t22795\n", "q10k_tbl_6": "\tNine Months Ended\t\tThree Months Ended\t\n\tSeptember 26 2020\tSeptember 28 2019\tSeptember 26 2020\tSeptember 28 2019\nCommon Stock\t\t\t\t\nBeginning of Period\t269\t260\t274\t264\nNet Exercise of Stock Options\t0\t1\t0\t0\nClass B Stock Converted to Common Stock\t8\t4\t3\t1\nEnd of Period\t277\t265\t277\t265\nConvertible Class B Stock\t\t\t\t\nBeginning of Period\t76\t83\t72\t80\nNet Exercise of Stock Options\t1\t0\t0\t0\nClass B Stock Converted to Common Stock\t(8)\t(4)\t(3)\t(1)\nEnd of Period\t69\t79\t69\t79\nAdditional Paid in Capital\t\t\t\t\nBeginning of Period\t76340\t73044\t79179\t75604\nNet Exercise of Stock Options and Equity-based Compensation Expense\t3956\t3365\t1117\t805\nEnd of Period\t80296\t76409\t80296\t76409\nAccumulated Comprehensive Loss\t\t\t\t\nBeginning of Period\t(15628)\t(13329)\t(16692)\t(12421)\nForeign Currency Translation Adjustments\t(85)\t(722)\t1409\t(1336)\nRetirement Liability Adjustment - Net of Taxes\t645\t441\t215\t147\nEnd of Period\t(15068)\t(13610)\t(15068)\t(13610)\nRetained Earnings\t\t\t\t\nBeginning of Period\t428584\t376567\t338042\t461439\nNet (Loss) Income\t(95796)\t86082\t(5254)\t1210\nEnd of Period\t332788\t462649\t332788\t462649\nTreasury Stock\t\t\t\t\nBeginning of Period\t(100784)\t(50000)\t(108516)\t(50000)\nPurchase of Shares\t(7732)\t(50000)\t0\t(50000)\nEnd of Period\t(108516)\t(100000)\t(108516)\t(100000)\nTotal Shareholders' Equity\t289846\t425792\t289846\t425792\n", "q10k_tbl_7": "\tNine Months Ended\t\tThree Months Ended\t\n\tSeptember 26 2020\tSeptember 28 2019\tSeptember 26 2020\tSeptember 28 2019\nCommon Stock\t\t\t\t\nBeginning of Period\t26874\t25978\t27355\t26343\nNet Issuance from Exercise of Stock Options\t69\t53\t44\t19\nClass B Stock Converted to Common Stock\t790\t444\t334\t113\nEnd of Period\t27733\t26475\t27733\t26475\nConvertible Class B Stock\t\t\t\t\nBeginning of Period\t7650\t8290\t7209\t8007\nNet Issuance from Exercise of Stock Options\t16\t50\t1\t2\nClass B Stock Converted to Common Stock\t(790)\t(444)\t(334)\t(113)\nEnd of Period\t6876\t7896\t6876\t7896\nTreasury Stock\t\t\t\t\nBeginning of Period\t3526\t1675\t3808\t1675\nPurchase of Shares\t282\t1823\t0\t1823\nEnd of Period\t3808\t3498\t3808\t3498\n", "q10k_tbl_8": "Standard\tDescription\tFinancial Statement Effect or Other Significant Matters\nASU No. 2016-13 Financial Instruments - Credit Losses (Topic 326)\tThe standard replaces the incurred loss model with the current expected credit loss (CECL) model to estimate credit losses for financial assets measured at amortized cost and certain off-balance sheet credit exposures. The CECL model requires a Company to estimate credit losses expected over the life of the financial assets based on historical experience current conditions and reasonable and supportable forecasts. The provisions of the standard are effective for fiscal years beginning after December 15 2019 and interim periods within those fiscal years. Early adoption is permitted. The amendment requires a modified retrospective approach by recording a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption.\tThe Company adopted this guidance as of January 1 2020. The standard changed the way entities recognize impairment of most financial assets. Short-term and long-term financial assets as defined by the standard are impacted by immediate recognition of estimated credit losses in the financial statements reflecting the net amount expected to be collected. The adoption of this standard had an immaterial impact on our condensed consolidated financial statements. Date of adoption: Q1 2020\nASU No. 2018-13 Fair Value Measurement (Topic 820)\tThe 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.\tThis ASU did not have a significant impact on our consolidated financial statements as it only includes changes to disclosure requirements. Date of adoption: Q1 2020\n", "q10k_tbl_9": "Standard\tDescription\tFinancial Statement Effect or Other Significant Matters\nASU No. 2018-14 Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20)\tThe 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.\tThis ASU does not have a significant impact on our consolidated financial statements as it only includes changes to disclosure requirements. Planned date of adoption: Q1 2021\nASU No. 2019-12 Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes\tThe amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and improve consistent application by clarifying and amending existing guidance. The amendments of this standard are effective for fiscal years beginning after December 15 2020 including interim periods within those fiscal years. Early adoption is permitted including adoption in any interim period for which financial statements have not been issued with the amendments to be applied on a respective modified retrospective or prospective basis depending on the specific amendment.\tThe Company is currently evaluating the requirements of this standard. The standard is not expected to have a material impact on the Company's financial statements. Planned date of adoption: Q1 2021\nASU No. 2020-04 Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting\tThe amendments in Update 2020-04 are elective and apply to all entities that have contracts hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. The new guidance provides the following optional expedients: simplify accounting analyses under current U.S. GAAP for contract modifications simplify the assessment of hedge effectiveness allow hedging relationships affected by reference rate reform to continue and allow a one-time election to sell or transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform.\tThe amendments are effective for all entities from the beginning of an interim period that includes the issuance date of the ASU. An entity may elect to apply the amendments prospectively through December 31 2022. After 2021 it is unclear whether banks will continue to provide LIBOR submissions to the administrator of LIBOR and no consensus currently exists as to what benchmark rate or rates may become accepted alternatives to LIBOR. The Company is currently evaluating the impact of adopting this guidance. Planned date of adoption: Before December 31 2022\n", "q10k_tbl_10": "(In thousands)\tContract Assets\tContract Liabilities\nBeginning Balance January 1 2020\t19567\t38758\nEnding Balance September 26 2020\t19460\t29392\n", "q10k_tbl_11": "\tNine Months Ended\t\tThree Months Ended\t\n(In thousands)\tSeptember 26 2020\tSeptember 28 2019\tSeptember 26 2020\tSeptember 28 2019\nAerospace Segment\t\t\t\t\nCommercial Transport\t214390\t393721\t44067\t122212\nMilitary\t50329\t57753\t18164\t17255\nBusiness Jet\t45259\t49555\t14711\t12432\nOther\t16213\t19461\t5606\t5803\nAerospace Total\t326191\t520490\t82548\t157702\nTest Systems Segment\t\t\t\t\nSemiconductor\t3407\t7815\t585\t2219\nAerospace & Defense\t58186\t45985\t23373\t17097\nTest Systems Total\t61593\t53800\t23958\t19316\nTotal\t387784\t574290\t106506\t177018\n", "q10k_tbl_12": "\tNine Months Ended\t\tThree Months Ended\t\n(In thousands)\tSeptember 26 2020\tSeptember 28 2019\tSeptember 26 2020\tSeptember 28 2019\nAerospace Segment\t\t\t\t\nElectrical Power & Motion\t148500\t255007\t32481\t78428\nLighting & Safety\t90973\t139502\t25320\t44127\nAvionics\t57381\t79414\t16104\t19871\nSystems Certification\t5596\t9050\t605\t3384\nStructures\t7528\t18056\t2432\t6089\nOther\t16213\t19461\t5606\t5803\nAerospace Total\t326191\t520490\t82548\t157702\nTest Systems\t61593\t53800\t23958\t19316\nTotal\t387784\t574290\t106506\t177018\n", "q10k_tbl_13": "(In thousands)\tSeptember 26 2020\tDecember 31 2019\nFinished Goods\t29257\t33434\nWork in Progress\t26911\t25594\nRaw Material\t107283\t86759\n\t163451\t145787\n", "q10k_tbl_14": "(In thousands)\tSeptember 26 2020\tDecember 31 2019\nLand\t9837\t9802\nBuildings and Improvements\t75188\t74723\nMachinery and Equipment\t119688\t115202\nConstruction in Progress\t6030\t5453\n\t210743\t205180\nLess Accumulated Depreciation\t102632\t92681\n\t108111\t112499\n", "q10k_tbl_15": "\t\tSeptember 26 2020\t\tDecember 31 2019\t\n(In thousands)\tWeighted Average Life\tGross Carrying Amount\tAccumulated Amortization\tGross Carrying Amount\tAccumulated Amortization\nPatents\t11 years\t2146\t1869\t2146\t1804\nNon-compete Agreement\t4 years\t11091\t9627\t11318\t7696\nTrade Names\t10 years\t11467\t7290\t11438\t6550\nCompleted and Unpatented Technology\t9 years\t48250\t24633\t48201\t21196\nCustomer Relationships\t15 years\t142528\t57708\t142212\t50776\nTotal Intangible Assets\t12 years\t215482\t101127\t215315\t88022\n", "q10k_tbl_16": "\tNine Months Ended\t\tThree Months Ended\t\n(In thousands)\tSeptember 26 2020\tSeptember 28 2019\tSeptember 26 2020\tSeptember 28 2019\nAmortization Expense\t13024\t12746\t4382\t4394\n", "q10k_tbl_17": "(In thousands)\t\n2020\t17220\n2021\t15404\n2022\t14973\n2023\t13939\n2024\t12917\n2025\t10996\n", "q10k_tbl_18": "(In thousands)\tDecember 31 2019\tAcquisition Adjustments\tImpairment Charges\tForeign Currency Translation\tSeptember 26 2020\nAerospace\t123038\t0\t(86312)\t(178)\t36548\nTest Systems\t21932\t(298)\t0\t0\t21634\n\t144970\t(298)\t(86312)\t(178)\t58182\n", "q10k_tbl_19": "\tNine Months Ended\t\tThree Months Ended\t\n(In thousands)\tSeptember 26 2020\tSeptember 28 2019\tSeptember 26 2020\tSeptember 28 2019\nBalance at Beginning of Period\t7660\t5027\t6965\t4806\nWarranties Divested or Acquired\t0\t(103)\t0\t20\nWarranties Issued\t1618\t2014\t95\t769\nWarranties Settled\t(1324)\t(1850)\t(16)\t(670)\nReassessed Warranty Exposure\t(596)\t138\t314\t301\nBalance at End of Period\t7358\t5226\t7358\t5226\n", "q10k_tbl_20": "(In thousands)\tSeptember 26 2020\tDecember 31 2019\nOperating Leases:\t\t\nOperating Right-of-Use Assets Gross\t28549\t28788\nLess Accumulated Right-of-Use Asset Impairment\t1710\t1019\nLess Accumulated Amortization\t7037\t4167\nOperating Right-of-Use Assets Net\t19802\t23602\nShort-term Operating Lease Liabilities\t4969\t4517\nLong-term Operating Lease Liabilities\t17582\t21039\nOperating Lease Liabilities\t22551\t25556\nFinance Leases:\t\t\nFinance Right-of-Use Assets Gross\t3484\t3484\nLess Accumulated Amortization\t1784\t1020\nFinance Right-of-Use Assets Net - Included in Other Assets\t1700\t2464\nShort-term Finance Lease Liabilities - Included in Accrued Expenses and Other Current Liabilities\t2041\t1922\nLong-term Finance Lease Liabilities - Included in Other Liabilities\t1272\t2815\nFinance Lease Liabilities\t3313\t4737\n", "q10k_tbl_21": "\tNine Months Ended\t\tThree Months Ended\t\n(In thousands)\tSeptember 26 2020\tSeptember 28 2019\tSeptember 26 2020\tSeptember 28 2019\nFinance Lease Cost:\t\t\t\t\nAmortization of Right-of-Use Assets\t765\t765\t255\t255\nInterest on Lease Liabilities\t170\t243\t50\t76\nTotal Finance Lease Cost\t935\t1008\t305\t331\nOperating Lease Cost\t3957\t3622\t1314\t1216\nRight-of-Use Asset Impairment\t691\t0\t0\t0\nVariable Lease Cost\t1010\t958\t377\t279\nShort-term Lease Cost (excluding month-to-month)\t155\t118\t41\t33\nLess Sublease and Rental (Income) Expense\t(1085)\t(301)\t(348)\t216\nTotal Operating Lease Cost\t4728\t4397\t1384\t1744\nTotal Net Lease Cost\t5663\t5405\t1689\t2075\n", "q10k_tbl_22": "(In thousands)\tOperating Leases\tFinance Leases\n2020\t1490\t537\n2021\t5373\t2181\n2022\t5062\t743\n2023\t3692\t0\n2024\t2844\t0\nThereafter\t6297\t0\nTotal Lease Payments\t24758\t3461\nLess: Interest\t2207\t148\nTotal Lease Liability\t22551\t3313\n", "q10k_tbl_23": "\tNine Months Ended\t\tThree Months Ended\t\n(In thousands)\tSeptember 26 2020\tSeptember 28 2019\tSeptember 26 2020\tSeptember 28 2019\nWeighted Average Shares - Basic\t30780\t32427\t30770\t31964\nNet Effect of Dilutive Stock Options\t0\t575\t0\t619\nWeighted Average Shares - Diluted\t30780\t33002\t30770\t32583\n", "q10k_tbl_24": "(In thousands)\tSeptember 26 2020\tDecember 31 2019\nForeign Currency Translation Adjustments\t(7127)\t(7042)\nRetirement Liability Adjustment - Before Tax\t(10051)\t(10868)\nTax Benefit of Retirement Liability Adjustment\t2110\t2282\nRetirement Liability Adjustment - After Tax\t(7941)\t(8586)\nAccumulated Other Comprehensive Loss\t(15068)\t(15628)\n", "q10k_tbl_25": "\tNine Months Ended\t\tThree Months Ended\t\n(In thousands)\tSeptember 26 2020\tSeptember 28 2019\tSeptember 26 2020\tSeptember 28 2019\nForeign Currency Translation Adjustments\t(85)\t(722)\t1409\t(1336)\nRetirement Liability Adjustments:\t\t\t\t\nReclassifications to General and Administrative Expense:\t\t\t\t\nAmortization of Prior Service Cost\t302\t302\t101\t101\nAmortization of Net Actuarial Losses\t515\t256\t171\t85\nTax Benefit\t(172)\t(117)\t(57)\t(39)\nRetirement Liability Adjustment\t645\t441\t215\t147\nOther Comprehensive (Loss) Income\t560\t(281)\t1624\t(1189)\n", "q10k_tbl_26": "\tNine Months Ended\t\tThree Months Ended\t\n(In thousands)\tSeptember 26 2020\tSeptember 28 2019\tSeptember 26 2020\tSeptember 28 2019\nService Cost\t167\t136\t56\t45\nInterest Cost\t627\t687\t209\t229\nAmortization of Prior Service Cost\t290\t290\t97\t97\nAmortization of Net Actuarial Losses\t486\t224\t162\t74\nNet Periodic Cost\t1570\t1337\t524\t445\n", "q10k_tbl_27": "\tNine Months Ended\t\tThree Months Ended\t\n(In thousands)\tSeptember 26 2020\tSeptember 28 2019\tSeptember 26 2020\tSeptember 28 2019\nService Cost\t11\t10\t4\t3\nInterest Cost\t26\t35\t9\t12\nAmortization of Prior Service Cost\t12\t12\t4\t4\nAmortization of Net Actuarial Losses\t29\t32\t9\t11\nNet Periodic Cost\t78\t89\t26\t30\n", "q10k_tbl_28": "\tNine Months Ended\t\tThree Months Ended\t\n(In thousands)\tSeptember 26 2020\tSeptember 28 2019\tSeptember 26 2020\tSeptember 28 2019\nSales\t\t\t\t\nAerospace\t326282\t520495\t82548\t157702\nLess Intersegment Sales\t(91)\t(5)\t0\t0\nTotal Aerospace Sales\t326191\t520490\t82548\t157702\nTest Systems\t62391\t53995\t24406\t19346\nLess Intersegment Sales\t(798)\t(195)\t(448)\t(30)\nTotal Test Systems Sales\t61593\t53800\t23958\t19316\nTotal Consolidated Sales\t387784\t574290\t106506\t177018\nSegment Measure of Operating (Loss) Profit and Margins\t\t\t\t\nAerospace\t(86567)\t48949\t(6332)\t8789\n\t(26.5)%\t9.4%\t(7.7)%\t5.6%\nTest Systems\t4270\t4166\t936\t2075\n\t6.9%\t7.7%\t3.9%\t10.7%\nTotal Segment Measure of Operating (Loss) Profit\t(82297)\t53115\t(5396)\t10864\n\t(21.2)%\t9.2%\t(5.1)%\t6.1%\nAdditions/Deductions from Segment Measure of Operating (Loss) Profit\t\t\t\t\nNet (Gain) Loss on Sale of Businesses\t0\t(78801)\t0\t1332\nInterest Expense Net of Interest Income\t5091\t4576\t1775\t1547\nCorporate Expenses and Other\t17481\t15755\t3970\t6225\n(Loss) Income Before Income Taxes\t(104869)\t111585\t(11141)\t1760\n", "q10k_tbl_29": "(In thousands)\tSeptember 26 2020\tDecember 31 2019\nAerospace\t490927\t629371\nTest Systems\t102087\t110994\nCorporate\t44447\t42351\nTotal Assets\t637461\t782716\n", "q10k_tbl_30": "\t\tRestructuring Charges in the nine months ended September 26 2020\t\t\t\n(In thousands)\tAccrual as of December 31 2019\tCost of Products Sold\tSelling General and Administrative\tCash Paid\tAccrual as of September 26 2020\nAccrued Expenses and Other Current Liabilities\t613\t280\t5278\t(3133)\t3038\nOther Liabilities\t4577\t0\t0\t0\t4577\n\t5190\t280\t5278\t(3133)\t7615\n", "q10k_tbl_31": "\tNine Months Ended\t\tThree Months Ended\t\n($ in thousands)\tSeptember 26 2020\tSeptember 28 2019\tSeptember 26 2020\tSeptember 28 2019\nSales\t387784\t574290\t106506\t177018\nGross Profit (sales less cost of products sold)\t77725\t129234\t15173\t36794\nGross Margin\t20.0%\t22.5%\t14.2%\t20.8%\nSelling General and Administrative Expenses\t85941\t90677\t24170\t31691\nSG&A Expenses as a Percentage of Sales\t22.2%\t15.8%\t22.7%\t17.9%\nImpairment Loss\t87016\t0\t0\t0\nNet (Gain) Loss on Sale of Businesses\t0\t(78801)\t0\t1332\nInterest Expense Net of Interest Income\t5091\t4576\t1775\t1547\nEffective Tax Rate\t8.7%\t22.9%\t52.8%\t31.3%\nNet (Loss) Income\t(95796)\t86082\t(5254)\t1210\n", "q10k_tbl_32": "\tNine Months Ended\t\tThree Months Ended\t\n(In thousands)\tSeptember 26 2020\tSeptember 28 2019\tSeptember 26 2020\tSeptember 28 2019\nSales\t326282\t520495\t82548\t157702\nLess Intersegment Sales\t(91)\t(5)\t0\t0\nTotal Aerospace Sales\t326191\t520490\t82548\t157702\nOperating (Loss) Profit\t(86567)\t48949\t(6332)\t8789\nOperating Margin\t(26.5)%\t9.4%\t(7.7)%\t5.6%\nAerospace Sales by Market\t\t\t\t\n(In thousands)\t\t\t\t\nCommercial Transport\t214390\t393721\t44067\t122212\nMilitary\t50329\t57753\t18164\t17255\nBusiness Jet\t45259\t49555\t14711\t12432\nOther\t16213\t19461\t5606\t5803\n\t326191\t520490\t82548\t157702\nAerospace Sales by Product Line\t\t\t\t\n(In thousands)\t\t\t\t\nElectrical Power & Motion\t148500\t255007\t32481\t78428\nLighting & Safety\t90973\t139502\t25320\t44127\nAvionics\t57381\t79414\t16104\t19871\nSystems Certification\t5596\t9050\t605\t3384\nStructures\t7528\t18056\t2432\t6089\nOther\t16213\t19461\t5606\t5803\n\t326191\t520490\t82548\t157702\n", "q10k_tbl_33": "(In thousands)\tSeptember 26 2020\tDecember 31 2019\nTotal Assets\t490927\t629371\nBacklog\t208772\t275754\n", "q10k_tbl_34": "\tNine Months Ended\t\tThree Months Ended\t\n(In thousands)\tSeptember 26 2020\tSeptember 28 2019\tSeptember 26 2020\tSeptember 28 2019\nSales\t62391\t53995\t24406\t19346\nLess Intersegment Sales\t(798)\t(195)\t(448)\t(30)\nNet Sales\t61593\t53800\t23958\t19316\nOperating profit\t4270\t4166\t936\t2075\nOperating Margin\t6.9%\t7.7%\t3.9%\t10.7%\nTest Systems Sales by Market\t\t\t\t\n(In thousands)\t\t\t\t\nSemiconductor\t3407\t7815\t585\t2219\nAerospace & Defense\t58186\t45985\t23373\t17097\n\t61593\t53800\t23958\t19316\n", "q10k_tbl_35": "(In thousands)\tSeptember 26 2020\tDecember 31 2019\nTotal Assets\t102087\t110994\nBacklog\t73466\t83837\n", "q10k_tbl_36": "\tPayments Due by Period\t\t\t\t\n(In thousands)\tTotal\t2020\t2021-2022\t2023-2024\tAfter 2024\nLong-term Debt\t168232\t232\t0\t168000\t0\nInterest on Long-term Debt\t14810\t1727\t12369\t714\t0\nPurchase Obligations\t92146\t51949\t39787\t30\t380\nSupplemental Retirement Plan and Post Retirement Obligations\t27348\t101\t753\t973\t25521\nLease Obligations\t28219\t2026\t13359\t6537\t6297\nOther Liabilities\t3846\t1901\t768\t744\t433\nTotal Contractual Obligations\t334601\t57936\t67036\t176998\t32631\n", "q10k_tbl_37": "Period\t(a) Total Number of Shares Purchased\t(b) Average Price Paid Per Share\t(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs\t(d) Maximum Dollar Value of Shares that may yet be Purchased Under the Program (1)\nJune 28 2020 - September 26 2020\t0\t0\t0\t41483815\n", "q10k_tbl_38": "Exhibit 31.1\tSection 302 Certification - Chief Executive Officer\nExhibit 31.2\tSection 302 Certification - Chief Financial Officer\nExhibit 32\tCertification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002\nExhibit 101.1*\tInstance Document\nExhibit 101.2*\tSchema Document\nExhibit 101.3*\tCalculation Linkbase Document\nExhibit 101.4*\tLabels Linkbase Document\nExhibit 101.5*\tPresentation Linkbase Document\nExhibit 101.6*\tDefinition Linkbase Document\n"}{"bs": "q10k_tbl_2", "is": "q10k_tbl_3", "cf": "q10k_tbl_5"}None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yesý No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesý No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “large accelerated filer”, an “accelerated filer”, a “non-accelerated filer” and a “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
☒
Accelerated filer
☐
Emerging growth company
☐
Non-accelerated filer
☐
Smaller Reporting Company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)
of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý
As of October 28, 2020, 30,800,663 shares of common stock were outstanding consisting of 23,927,431 shares of common stock ($.01 par value) and 6,873,232 shares of Class B common stock ($.01 par value).
Notes to Consolidated Condensed Financial Statements
September 26, 2020
(Unaudited)
1) 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. 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 nine months ended September 26, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.
The balance sheet at December 31, 2019 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 2019 annual report on Form 10-K.
Description of the Business
Astronics Corporation (“Astronics” or the “Company”) is a leading provider of advanced technologies to the global aerospace, defense and electronics industries. Our products and services include advanced, high-performance electrical power generation, distribution and motion systems, lighting and safety systems, avionics products, systems and certification, aircraft structures and automated test systems.
We have principal operations in the United States (“U.S.”), Canada, France and England, as well as engineering offices in the Ukraine and India.
On February 13, 2019, the Company completed a divestiture of its semiconductor test business within the Test Systems segment. The business was not core to the future of the Test Systems segment. The total proceeds of the divestiture amounted to $103.8 million plus certain contingent purchase consideration (“earn-out”) as described in Note 18. The Company recorded a pre-tax gain on the sale of $80.1 million in the first quarter of 2019. The Company recorded income tax expense relating to the gain of $19.7 million.
On July 1, 2019, the Company acquired all of the issued and outstanding capital stock of Freedom Communication Technologies, Inc. (“Freedom”). Freedom, located in Kilgore, Texas, is a leader in wireless communication testing, primarily for the civil land mobile radio market. Freedom 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, was not core to the business and represented less than 1% of revenue. The Company recorded a pre-tax loss on the sale of approximately $1.3 million in the third quarter of 2019.
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 Test Systems Limited, for $7.0 million in cash, plus earn-outs estimated at a fair value of $2.5 million. Diagnosys Inc. and its affiliates (“Diagnosys”) is included in our Test Systems segment. 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 three years post-acquisition 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.
For additional information regarding these acquisitions and divestitures see Note 18.
Impact of the COVID-19 Pandemic
On March 11, 2020, the World Health Organization classified the COVID-19 outbreak as a pandemic. The COVID-19 pandemic has had a sudden and significant impact on the global economy, and particularly in the aerospace industry, resulting in the grounding of the majority of the global commercial transportation fleet and significant cost cutting and cash preservation actions by the global airlines. This in turn has resulted in a significant reduction in airlines spending for both new aircraft and on upgrading their existing fleet with the Company’s products. We expect this low level of investment by the airlines will continue at least into 2021, however, the ultimate impact of COVID-19 on our business results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic and the related length of its impact on the global economy and the aerospace industry, which are uncertain and cannot be predicted at this time.
In response to the global COVID-19 pandemic, we have implemented actions to maintain our financial health and liquidity, as discussed in detail in our Form 8-K’s filed on March 31, 2020, May 6, 2020 and July 31, 2020. In addition to these measures, we amended our revolving credit facility on May 4, 2020, as further described in Note 7. We are also monitoring the impacts of COVID-19 on the fair value of assets. Refer to Note 6 for a discussion of goodwill impairment charges. Should future changes in sales, earnings and cash flows differ significantly from our expectations, long-lived assets to be held and used and goodwill could become impaired in the future.
Trade Accounts Receivable and Contract Assets
The allowance for doubtful accounts is based on the Company’s assessment of the collectability of customer accounts. 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 doubtful accounts balance was $3.9 million and $3.6 million at September 26, 2020 and December 31, 2019, respectively. The Company’s bad debt expense was insignificant and $1.7 million in the three and nine months ended September 26, 2020, respectively, and insignificant in the three and nine months ended September 28, 2019. Total writeoffs charged against the allowance were $1.1 million and $1.2 million in the three month and nine months ended September 26, 2020, and insignificant in the three and nine months ended September 28, 2019. Total recoveries collected were insignificant in both the three and nine months ended September 26, 2020 and September 28, 2019.
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. Although the Company has historically not experienced significant credit losses, it is possible that there could be a material adverse impact from potential adjustments of the carrying amount of trade receivables and contract assets as airlines and other aerospace company’s cash flows are impacted by the COVID-19 pandemic.
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 $16.4 million and $25.6 million for the three months ended and $65.0 million and $80.0 million for the nine months ended September 26, 2020 and September 28, 2019, 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 26, 2020 and September 28, 2019.
Goodwill Impairment
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 a result of the qualitative factors related to the COVID-19 pandemic, as discussed above, we performed interim quantitative assessments for the reporting units which had goodwill as of March 28, 2020, and an additional quantitative assessment for our PECO reporting unit as of June 27, 2020. Based on our quantitative assessments, the Company recorded goodwill impairment charges associated with four Aerospace reporting units, totaling $86.3 million within the Impairment Loss line in the Consolidated Condensed Statement of Operations in the nine months ended September 26, 2020. As of September 26, 2020, the
Company concluded that no indicators of additional impairment relating to intangible assets or goodwill existed and an interim test was not performed in the three months then ended.
For additional information regarding the quantitative test and the related goodwill impairment see Note 6.
Valuation of Long-Lived Assets
Long-lived assets 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. In conjunction with the deteriorating economic conditions associated with the COVID-19 pandemic, we recorded an impairment charge to right-of-use (“ROU”) assets of approximately $0.7 million incurred in one reporting unit in the Aerospace segment within the Impairment Loss line in the Consolidated Condensed Statement of Operations in the nine months ended September 26, 2020. No other long-lived asset impairments were warranted based on the quantitative analysis performed.
Financial Instruments
The Company determined there were indicators of impairment over one of its investments in the second quarter of 2020 as a result of declining revenues and cash flows of the investee as well as significant uncertainties over the investee’s ability to raise additional capital or to finance its own activities. There were no observable price changes for this investment during 2020. We determined that the fair value of this investment was de minimus and we recorded an impairment charge of $3.5 million recorded within Other Expense, Net of Other Income in the accompanying Consolidated Condensed Statement Operations in the nine months ended September 26, 2020.
Foreign Currency Translation
The aggregate foreign currency transaction gain or loss included in operations was insignificant for the three and nine months ended September 26, 2020 and September 28, 2019.
Newly Adopted and Recent Accounting Pronouncements
Recent Accounting Pronouncements Adopted
Standard
Description
Financial Statement Effect or Other Significant Matters
The standard replaces the incurred loss model with the current expected credit loss (CECL) model to estimate credit losses for financial assets measured at amortized cost and certain off-balance sheet credit exposures. The CECL model requires a Company to estimate credit losses expected over the life of the financial assets based on historical experience, current conditions and reasonable and supportable forecasts. The provisions of the standard are effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. The amendment requires a modified retrospective approach by recording a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption.
The Company adopted this guidance as of January 1, 2020. The standard changed the way entities recognize impairment of most financial assets. Short-term and long-term financial assets, as defined by the standard, are impacted by immediate recognition of estimated credit losses in the financial statements, reflecting the net amount expected to be collected. The adoption of this standard had an immaterial impact on our condensed consolidated financial statements.
Date of adoption: Q1 2020
ASU No. 2018-13 Fair Value Measurement (Topic 820)
The 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.
This ASU did not have a significant impact on our consolidated financial statements, as it only includes changes to disclosure requirements.
The 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.
This ASU does not have a significant impact on our consolidated financial statements, as it only includes changes to disclosure requirements.
Planned date of adoption: Q1 2021
ASU No. 2019-12
Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes
The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and improve consistent application by clarifying and amending existing guidance. The amendments of this standard are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period for which financial statements have not been issued, with the amendments to be applied on a respective, modified retrospective or prospective basis, depending on the specific amendment.
The Company is currently evaluating the requirements of this standard. The standard is not expected to have a material impact on the Company's financial statements.
Planned date of adoption: Q1 2021
ASU No. 2020-04
Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting
The amendments in Update 2020-04 are elective and apply to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. The new guidance provides the following optional expedients: simplify accounting analyses under current U.S. GAAP for contract modifications, simplify the assessment of hedge effectiveness, allow hedging relationships affected by reference rate reform to continue and allow a one-time election to sell or transfer debt securities classified as held to maturity that reference a rate affected by reference rate reform.
The amendments are effective for all entities from the beginning of an interim period that includes the issuance date of the ASU. An entity may elect to apply the amendments prospectively through December 31, 2022. After 2021, it is unclear whether banks will continue to provide LIBOR submissions to the administrator of LIBOR, and no consensus currently exists as to what benchmark rate or rates may become accepted alternatives to LIBOR. The Company is currently evaluating the impact of adopting this guidance.
Planned date of adoption: Before December 31, 2022
We consider the applicability and impact of all ASUs. 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.
2) Revenue
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 90 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 26, 2020, 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 an anticipated contract 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 26, 2020, 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. 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. Thus, the contract's transaction price is the revenue recognized when or as that performance obligation is satisfied. 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 26, 2020, we had $282.2 million of remaining performance obligations, which we refer to as total backlog. We expect to recognize approximately $115.5 million of our remaining performance obligations as revenue in 2020.
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 other elements of deferred revenue, which includes advanced payments, up-front payments, and progress billing payments. Billings in excess of cost are reported in our Consolidated Condensed Balance Sheet, classified as current liabilities, within Customer Advance Payments and Deferred Revenue, and non-current liabilities, within Other Liabilities. 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 $8.5 million and $5.1 million during the three months ended and $20.1 million and $15.7 million for the nine months ended September 26, 2020 and September 28, 2019, 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 nine months ended September 26, 2020:
(In thousands)
Contract Assets
Contract Liabilities
Beginning Balance, January 1, 2020
$
19,567
$
38,758
Ending Balance, September 26, 2020
$
19,460
$
29,392
The following table presents our revenue disaggregated by Market Segments as follows:
The following table presents our revenue disaggregated by Product Lines as follows:
Nine Months Ended
Three Months Ended
(In thousands)
September 26, 2020
September 28, 2019
September 26, 2020
September 28, 2019
Aerospace Segment
Electrical Power & Motion
$
148,500
$
255,007
$
32,481
$
78,428
Lighting & Safety
90,973
139,502
25,320
44,127
Avionics
57,381
79,414
16,104
19,871
Systems Certification
5,596
9,050
605
3,384
Structures
7,528
18,056
2,432
6,089
Other
16,213
19,461
5,606
5,803
Aerospace Total
326,191
520,490
82,548
157,702
Test Systems
61,593
53,800
23,958
19,316
Total
$
387,784
$
574,290
$
106,506
$
177,018
3) Inventories
Inventories consisted of the following:
(In thousands)
September 26, 2020
December 31, 2019
Finished Goods
$
29,257
$
33,434
Work in Progress
26,911
25,594
Raw Material
107,283
86,759
$
163,451
$
145,787
The Company has evaluated the carrying value of existing inventories and believe they are properly reflected at their lower of carrying value or net realizable value. Future changes in demand or other market developments could result in future inventory charges. The Company is actively managing inventories and aligning them to meet known current and future demand.
4) Property, Plant and Equipment
Property, Plant and Equipment consisted of the following:
(In thousands)
September 26, 2020
December 31, 2019
Land
$
9,837
$
9,802
Buildings and Improvements
75,188
74,723
Machinery and Equipment
119,688
115,202
Construction in Progress
6,030
5,453
210,743
205,180
Less Accumulated Depreciation
102,632
92,681
$
108,111
$
112,499
Additionally, net Property, Plant and Equipment of $1.5 million are classified in Assets Held for Sale at December 31, 2019. Refer to Note 18.
The following table summarizes acquired intangible assets as follows:
September 26, 2020
December 31, 2019
(In thousands)
Weighted
Average Life
Gross Carrying
Amount
Accumulated
Amortization
Gross Carrying
Amount
Accumulated
Amortization
Patents
11 years
$
2,146
$
1,869
$
2,146
$
1,804
Non-compete Agreement
4 years
11,091
9,627
11,318
7,696
Trade Names
10 years
11,467
7,290
11,438
6,550
Completed and Unpatented Technology
9 years
48,250
24,633
48,201
21,196
Customer Relationships
15 years
142,528
57,708
142,212
50,776
Total Intangible Assets
12 years
$
215,482
$
101,127
$
215,315
$
88,022
All acquired intangible assets other than goodwill and one trade name are being amortized. Amortization expense for acquired intangibles is summarized as follows: