Astronics Corp Annual Report 2023

FY2023 Annual Report · Astronics Corp

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2023 Annual Report

Astronics serves the world’s aerospace, defense and
other mission-critical industries with
innovative technology solutions.

We work side-by-side with customers, integrating our array of
power, connectivity, lighting, structures, interiors and
test technologies to solve complex challenges.

For over 50 years, we have delivered creative,
customer-focused solutions with exceptional responsiveness.
Today, global airframe manufacturers, airlines, military branches,
completion centers and Fortune 500 companies rely on our collaborative spirit
and innovation to deliver leading technology and solutions.

Our strategy is to grow value by developing technologies and capabilities that provide
innovative solutions to our targeted markets.

Dear Fellow Shareholders,

2023 was a year of solid progress and we closed on a strong note. Revenue for the year was up
29% to $689 million while our operating loss declined to just $6.7 million, with the fourth quarter
delivering 4% operating margin. The improvement was the result of continued strong demand, an
improved supply chain and a more stable and developed team of people.

Demand for air travel has now largely recovered to levels
prior to the pandemic with the exception of international
travel in and out of China. This recovery has led to
increases in production rates for major aircraft platforms
and increased retrofit demand from airlines that desire to
provide quality inflight entertainment for their passengers.
The high demand drove bookings which resulted in record
aerospace backlog. Our strong backlog, combined with
an improving supply chain and stabilized workforce
enabled the growth in revenue.

Continued Innovation and Major Wins

Innovation is the lifeblood of our organization. We take
calculated risks investing in areas that will drive
sustainable revenue opportunities for Astronics. We
continued doing this through the pandemic and were
highly successful.

Sales
(in millions)

Opening Backlog
(in millions)

One of the new programs, announced in August of 2023,
was our selection by Bell, a Textron Company, to support
development of the V-280 Valor for the U.S. Army Future
Long Range Assault Aircraft (FLRAA) program, which is
the U.S. Army’s planned replacement for the UH-60 Blackhawk. A member of Team Valor, Astronics
has been working with Bell for several years supplying the electrical power and distribution system for
the demonstrator aircraft. The current agreement will further mature the system for qualification and
certification.

Ultimately, if we succeed and the development program turns into a full-blown production contract, this
program will provide a significant revenue stream for our future.

Another example of a significant win during the pandemic was also with the U.S. Army, developing the
Radio Test Set referred to as TS-4549/T that we announced in 2022. This program will replace the
aging GRM-122 radio test equipment for tactical radios in the U.S. Army. We are working with the
Army to define the terms of a production contract which we expect will be completed in the first half of
2024. We believe once finalized and production begins that this could contribute $200 million to
$300 million in revenue over four to five years.

Strengthening Profitability, Driving Cash Generation and Improving Liquidity

As we work through 2024, we are going to have an increased emphasis on margins. The higher
volume will help, but there are many additional actions we are taking that will contribute to this
improvement. Since the beginning of the global pandemic, we have reduced our leased and owned
square footage by 16% and have eliminated four operating locations with a fifth location currently in
process. Simplifying the business in this manner helps take out costs and improve operating leverage.
Another example is our decision to opt out of customer contracts that do not deliver the margin profile
we expect.

While investment in net working capital was elevated through the year, we made significant
improvement in the second half of 2023 managing our inventory, which had grown significantly in the
first half of the year in an attempt to keep up with very strong bookings. We expect continuing
improvement in inventory turnover and are forecasting cash flow from operations to be strong as we
advance through 2024.

Though we refinanced our debt in January of 2023 under terms that reflected the debt markets at that
time, liquidity was tight throughout the year. As a result, we initiated a $30 million “At-the-Market,” or
ATM, equity offering in August 2023. Subsequently, we sold 1,334,228 shares of common stock
under the ATM, generating aggregate net proceeds of $21.3 million. As of year-end, we had
remaining capacity of up to approximately $8.2 million under the ATM.

We expect 2024 will be another solid year of progress for our Company. We have the business and
the backlog to deliver revenue in the expected range of $760 million to $795 million. This implies
13% growth at the mid-point of that range. We expect the higher volume combined with other actions
we are taking will positively impact our margins. We look forward to a year that will finally see us
rebounding to pre-pandemic revenue levels and laying the groundwork to grow profitably well beyond
that.

Sincerely,

Peter J. Gundermann
Chairman, President and CEO

March 26, 2024

FIVE-YEAR PERFORMANCE HIGHLIGHT

($ in thousands, except employee and per share data)PERFORMANCESales:Aerospace Segment$605,001$461,206$365,261$418,079$692,614Less Aerospace Intersegment Sales$(171) $(10) $(23) $(91) $(5) Test Systems Segment$84,376$73,717$80,027$85,589$80,495Less Test Intersegment Sales$---$(19) $(357) $(990) $(402) Total consolidated sales$689,206$534,894$444,908$502,587$772,702Gross profit$120,796$71,540$65,363$96,843$156,142Gross margin17.5%13.4%14.7%19.3%20.2%Impairment loss$---$---$---$87,016 $11,083Net gain on sale of facility$---$---$5,014$---$---Selling, general and administrative expense$127,467 $101,584 $99,051 $110,528 $143,358Income (loss) from operations$(6,671) $(30,044) $(28,674) $(100,701) $1,701Operating margin(1.0)%(5.6)%(6.4)%(20.0)%0.2%Net gain on sale of businesses $3,427$11,284$10,677$---$78,801Net income (loss)$(26,421) $(35,747) $(25,578) $(115,781) $52,017Diluted earnings (loss) per share$(0.80) $(1.11) $(0.82) $(3.76) $1.60Weighted average shares outstanding - Diluted33,10432,16431,06130,79532,459YEAR END FINANCIAL POSITIONTotal assets $633,792$615,031$609,138$619,745$782,716Indebtedness$172,499$164,000$163,000$173,000$188,224Shareholders' equity$249,518$239,920$256,604$270,371$388,857Book Value Per Share$7.23$7.43$8.15$8.75$12.54OTHER YEAR END DATADepreciation and amortization$26,104$27,777$29,005$31,854$33,049Capital expenditures$7,643$7,675$6,034$7,459$12,083Shares outstanding34,52232,28231,47830,89430,999Number of employees2,5002,4002,1002,2002,80020192022202120202023

FIVE-YEAR PERFORMANCE HIGHLIGHT

2023 SALES BY MARKETS AND PRODUCTS

SALES BY MARKETS

SALES BY PRODUCTS

($ in thousands)MARKETSAerospace Segment20232022202120202019Commercial Transport$432,199$314,564$201,990$262,636$523,921Military 61,61754,53470,31267,94476,542General Aviation80,84263,39556,67360,43767,541Other30,17228,70336,26326,97124,605Aerospace Total604,830461,196365,238417,988692,609Test Systems SegmentSemiconductor---3,4839,692Government & Defense84,37673,69879,67081,11670,401Test Systems Total84,37673,69879,67084,59980,093TOTAL$689,206$534,894$444,908$502,587$772,702PRODUCTSAerospace Segment20232022202120202019Electrical Power & Motion$268,049$187,446$141,746$179,245$338,237Lighting & Safety157,434124,347103,749118,928185,462Avionics113,11797,23464,90176,113106,787Systems Certification26,25517,22213,0506,89914,401Structures9,8036,2445,5299,83223,117Other30,17228,70336,26326,97124,605Aerospace Total604,830461,196365,238417,988692,609Test Systems SegmentSemiconductor---3,4839,692Government & Defense84,37673,69879,67081,11670,401Test Systems Total84,37673,69879,67084,59980,093TOTAL$689,206$534,894$444,908$502,587$772,702

2023 Form 10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________________
Form 10-K
___________________________________________________________

☒

☐

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

For the Fiscal Year Ended December 31, 2023
or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the transition period from__________ to __________

Commission File Number 0-7087
___________________________________________________________

Astronics Corporation

(Exact Name of Registrant as Specified in its Charter)
___________________________________________________________

New York
(State or other jurisdiction of
incorporation or organization)

16-0959303
(I.R.S. Employer
Identification No.)

130 Commerce Way, East Aurora, NY 14052
(Address of principal executive office)
Registrant’s telephone number, including area code (716) 805-1599

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $.01 par value per share

ATRO

NASDAQ Stock Market

Securities registered pursuant to Section 12(g) of the Act: None
______________________________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the

Act. Yes ☐ No ☒

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 (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a

smaller reporting company or an emerging growth company. See definition of “large accelerated filer”, an “accelerated filer”, a
“non-accelerated filer”, a “smaller reporting company” and an “emerging growth company” in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer ☐
Non-accelerated filer

Accelerated filer

☐

☒
Smaller Reporting Company ☐
Emerging Growth 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 has filed a report on and attestation to its management’s assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of

the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of
incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant
to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of February 26, 2024, 34,521,519 shares were outstanding, consisting of 28,639,141 shares of Common Stock $0.01 par
value and 5,882,378 shares of Class B Stock $0.01 par value. The aggregate market value as of June 30, 2023, the last business
day of the Company’s most recently completed second fiscal quarter, of the shares of Common Stock and Class B Stock of
Astronics Corporation held by non-affiliates was approximately $593,000,000 (assuming conversion of all of the outstanding
Class B Stock into Common Stock and assuming the affiliates of the Registrant to be its directors, executive officers and persons
known to the Registrant to beneficially own more than 10% of the outstanding capital stock of the Corporation).

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Company’s definitive proxy statement relating to the 2024 Annual Meeting of Shareholders to be held
May 8, 2024 (the “2024 Proxy Statement”) are incorporated by reference into Part III of this Report. The 2024 Proxy Statement
will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this
report relates.

Table of Contents

ASTRONICS CORPORATION
Index to Annual Report
on Form 10-K

Year Ended December 31, 2023

PART I

Business

Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 1C. Cybersecurity
Item 2.

Properties

Legal Proceedings

Item 3.
Item 4. Mine Safety Disclosures

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities

[Reserved]

Item 6.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.

Financial Statements and Supplementary Data

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Item 9.
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections

PART III

Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services

PART IV

Item 15. Exhibits and Financial Statement Schedules
Item 16. Form 10-K Summary

Page

FORWARD LOOKING STATEMENTS

Information included or incorporated by reference in this report that does not consist of historical facts, including statements
accompanied by or containing words such as “may,” “will,” “should,” “believes,” “expects,” “expected,” “intends,” “plans,”
“projects,” “approximate,” “estimates,” “predicts,” “potential,” “outlook,” “forecast,” “anticipates,” “presume,” “assume” and
other words and terms of similar meaning, including their negative counterparts, are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to several
factors, risks and uncertainties that may cause actual results to differ materially from those that we expected, including but not
limited to:

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the loss of Boeing as a major customer or a significant reduction in business with Boeing;
the cyclical nature of the markets we serve and their sensitivity to foreign economic conditions, conflicts and events;
the highly competitive nature of our industry;
our dependence on government contracts and subcontracts with defense prime contractors and subcontractors, and the
possibility that these contracts may be terminated, not fully funded or awarded to our competitors;
the highly-regulated nature of our industry and the potential for fines, penalties, debarment or Federal Aviation
Administration (“FAA”) decertification in the event of noncompliance;
our ability to adapt to technological change;
our ability to successfully develop new products;
the incurring of loss and liabilities as a result of our acquisition strategy;
our ability to protect our information technology infrastructure from cyber-attacks;
our ability to adequately enforce and protect our intellectual property and defend against assertions of infringement;
our ability to successfully procure critical components and raw materials used to manufacture our products and to
manage our supply chains;
our ability to manage the escalating costs of labor and employees benefits;
our ability to manage price inflation for labor and materials;
the possibility that our subcontractors will fail to perform their contractual obligations;
our ability to avoid late delivery penalties;
our ability to avoid increased or unexpected costs relating to our fixed-price contracts;
our ability to avoid product failures or recalls, the costs of which may exceed our insurance coverage;
risks relating to our manufacturing facilities, including natural disasters, war, terrorism, strikes or work stoppages;
our ability to successfully manage our indebtedness, including restrictive financial covenants under our ABL
Revolving Credit Facility and Term Loan Facility (each as defined below);
our ability to successfully manage risks presented by fluctuating interest rates and foreign currency exposure;
our ability to favorably resolve legal proceedings brought against us, including the ongoing Lufthansa Technik AG
patent infringement claim;
our ability to achieve our sustainability objectives;
our ability to maintain our security clearance with the U.S. Department of Defense; and
the volatility of our stock price.

While we believe that the forward-looking statements in this report are reasonable, these statements are not guarantees of future
performance and are subject to several factors, risks and uncertainties, the impact or occurrence of which could cause actual
results to differ materially from the expected results described in the forward-looking statements. Certain of these factors, risks
and uncertainties are discussed in this report in Item 1A, “Risk Factors,” and Item 7, “Management’s Discussion and Analysis
of Financial Condition and Results of Operations.” All written and oral forward-looking statements attributable to us, or
persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements as well as other cautionary
statements that are made from time to time in our other filings with the U.S. Securities and Exchange Commission and public
communications. You should evaluate all forward-looking statements made in this report in the context of these risks and
uncertainties.

The important factors discussed above may not contain all of the factors that are important to you. In addition, new factors,
risks and uncertainties may emerge from time to time that may affect the forward-looking statements made herein. Given these
factors, risks and uncertainties, investors should not place undue reliance on forward-looking statements as predictive of future
results. The forward-looking statements included in this report are made only as of the date hereof and are based on our current
expectations. Except as required by applicable law, we disclaim any obligation to update or revise the forward-looking
statements made in this report as a result of new information, future events or otherwise.

ITEM 1.

BUSINESS

PART I

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
Ukraine and India. Our operation in Ukraine is a small engineering office and we have not experienced any significant
disruption in staffing or services as a result of the Ukrainian and Russian conflict.

Refinancing

On January 19, 2023, the Company completed a financing transaction totaling $205 million, which refinanced its previous
revolving credit facility which was scheduled to mature in November 2023. The new financing consists of a $90 million asset-
based term loan (the “Term Loan Facility”) and a $115 million asset-based revolving credit facility (the “ABL Revolving Credit
Facility”). The Term Loan Facility requires monthly amortization that began in April 2023 and bears interest at the Secured
Overnight Financing Rate (“SOFR”) plus 8.75%. The ABL Revolving Credit Facility bears interest at SOFR plus between
2.25% and 2.75%. For additional information, see discussion in Item 7, Management’s Discussion and Analysis of Financial
Condition and Results of Operations, and Note 8, Long-Term Debt, of Item 8, Financial Statements and Supplementary Data, of
this report.

Impact of the COVID-19 Pandemic

Our business continues to face varying levels of supply chain pressures from the residual impacts of the COVID-19 pandemic.
Domestic air travel has recovered from the impact of the COVID-19 pandemic, and international travel utilizing primarily
widebody aircraft is close to pre-pandemic levels. As economic activity continues to recover, we will continue to monitor the
situation, assessing further possible implications on our operations, supply chain, liquidity, cash flow and customer orders.

See Part I, Item 1A, Risk Factors, for an additional discussion of risk related to supply chain disruptions.

In September 2021, the Company was awarded a grant of up to $14.7 million from the U.S. Department of Transportation
(“USDOT”) under the Aviation Manufacturing Jobs Protection Program (“AMJP”). The Company received $7.3 million and
$7.4 million under the grant in 2022 and 2021, respectively. 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 was
intended to defray. During the years ended December 31, 2022 and 2021, the Company recognized $6.0 million and $8.7
million of the award, respectively.

For additional details regarding government subsidies and grants, and their impact on consolidated results of operations and
financial position, see Note 1 to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary
Data, of this report.

Divestitures

On February 13, 2019, the Company completed a divestiture of its semiconductor test business within the Test Systems
segment. The total proceeds of the divestiture included two elements of contingent purchase consideration (“earnout”). In the
fourth quarter of 2021, the Company agreed to an earnout payment of $10.7 million for the calendar 2020 earnout, which was
recorded in 2021 as a separate line item below operating loss and was received by the Company in early January 2022. In
March 2022, the Company agreed with the earnout calculation for the calendar 2021 earnout in the amount of $11.3 million.
The Company recorded the gain and received the payment in the first quarter of 2022. In March 2023, the Company agreed
with the final earnout calculation for the calendar 2022 earnout in the amount of $3.4 million. The Company recorded the gain
and received the payment in the first quarter of 2023. We are not eligible for any further earnout payments related to this
divestiture. For further information, see Note 21 in Item 8, Financial Statements and Supplementary Data, of this report.

On October 6, 2021, the Company sold one of its Aerospace buildings for $9.2 million. Net cash proceeds were approximately
$8.8 million and a gain on sale of approximately $5.0 million was recorded. The operation has been integrated into another
facility.

Customer Bankruptcy

In November 2023, a non-core contract manufacturing customer reported within the Aerospace segment filed for bankruptcy
under Chapter 11. As a result, the Company recorded a full reserve of $7.5 million for outstanding accounts receivable and
$3.6 million for dedicated inventory. The associated assets existed prior to 2023.

Products and Customers

Our Aerospace segment designs and manufactures products for the global aerospace industry. Product lines include lighting and
safety systems, electrical power generation, distribution and seat motion systems, aircraft structures, avionics products, systems
certification, and other products. Our Aerospace customers are the airframe manufacturers (“OEM”) that build aircraft for the
commercial transport, military and general aviation markets, suppliers to those OEMs, aircraft operators such as airlines,
suppliers to the aircraft operators, and branches of the U.S. Department of Defense. During 2023, this segment’s sales were
divided 72% to the commercial transport market, 10% to the military aircraft market, 13% to the general aviation market and
5% to other markets. Most of this segment’s sales are a result of contracts or purchase orders received from customers, placed
on a day-to-day basis or for single year procurements rather than long-term multi-year contract commitments. On occasion, the
Company does receive contractual commitments or blanket purchase orders from our customers covering multiple-year
deliveries of hardware to our customers.

Our Test Systems segment designs, develops, manufactures and maintains automated test systems that support the aerospace
and defense, communications and mass transit industries as well as training and simulation devices for both commercial and
military applications. In the Test Systems segment, Astronics’ products are sold to a global customer base including OEMs and
prime government contractors for both electronics and military products. The nature of our Test Systems business is such that it
pursues large, often multi-year, projects.

Sales by segment, geographic region, major customer and foreign operations are provided in Note 20 in Item 8, Financial
Statements and Supplementary Data, of this report.

We have a significant concentration of business with one major customer, The Boeing Company (“Boeing”). Sales to Boeing
accounted for 11.0% of sales in 2023, 11.0% of sales in 2022, and 10.0% of sales in 2021. Sales to Boeing are primarily in the
Aerospace segment.

Strategy

Our strategy is to increase our value by developing technologies and capabilities either internally or through acquisition, and
use those capabilities to provide innovative solutions to our targeted markets where our technology can be beneficial.

Practices as to Maintaining Working Capital

Liquidity is discussed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of
Operations, in the Liquidity and Capital Resources section of this report.

Competitive Conditions

We experience considerable competition in the market sectors we serve, principally with respect to product performance and
price, from various competitors, many of which are substantially larger and have greater resources than we do. Success in the
markets we serve depends upon product innovation, customer support, responsiveness and cost management. We continue to
invest in developing the technologies and engineering support critical to competing in our markets.

Government Contracts

All U.S. government contracts, including subcontracts where the U.S. government is the ultimate customer, may be subject to
termination at the election of the government. Our revenue stream relies on military spending. Approximately 12% of our 2023
consolidated sales were made to U.S. government-related markets.

Government Regulation

The FAA regulates the manufacture, repair and operation of all aircraft and aircraft parts operated in the United States. Its
regulations are designed to ensure that all aircraft and aviation equipment are continuously maintained in proper condition to
ensure safe operation of the aircraft. Similar rules apply in other countries. All aircraft must be maintained under a continuous
condition monitoring program and must periodically undergo thorough inspection and maintenance. The inspection,
maintenance and repair procedures for the various types of aircraft and equipment are prescribed by regulatory authorities and
can be performed only by certified repair facilities utilizing certified technicians. Certification and conformance is required

prior to installation of a part on an aircraft. Our operations may in the future be subject to new and more stringent regulatory
requirements. In that regard, we closely monitor the FAA and industry trade groups in an attempt to understand how possible
future regulations might impact us. Our businesses which sell products directly to the U.S. Government or for use in systems
delivered to the U.S. Government can be subject to various laws and regulations governing pricing and other factors.

There has been no material adverse effect to our Consolidated Financial Statements nor competitive positions as a result of
these government regulations.

Raw Materials

Materials, supplies and components are purchased from numerous sources. We believe that the loss of any one source, although
potentially disruptive in the short-term, would not materially affect our operations in the long-term.

Seasonality

Our business is typically not seasonal.

Backlog

At December 31, 2023, our consolidated backlog was $592.3 million. At December 31, 2022, our backlog was $571.4 million.
The increase in backlog is driven primarily by recovering demand from our commercial transport and general aviation
customers, with increased OEM build rates and increased spending by commercial airlines on fleet improvements.

Backlog in the Aerospace segment was $517.2 million at December 31, 2023, of which $474.5 million is expected to be
recognized as revenue in 2024. Backlog in the Test Systems segment was $75.0 million at December 31, 2023. The Test
Systems segment expects to recognize $52.1 million of this backlog as revenue in 2024.

Patents

We have a number of patents. While the aggregate protection of these patents is of value, our only material business that is
dependent upon the protection afforded by these patents is our cabin power distribution products. Our patents and patent
applications relate to electroluminescence, instrument panels, cord reels and handsets, and a broad patent covering the cabin
power distribution technology. We regard our expertise and techniques as proprietary and rely upon trade secret laws and
contractual arrangements to protect our rights. We have trademark protection in our major markets.

Research and Development Expenses

Research and development costs are expensed as incurred and include salaries, benefits, consulting, material costs and
depreciation. Research and development expenses amounted to $53.5 million in 2023, $48.3 million in 2022 and $43.3 million
in 2021. These costs are included in Cost of Products Sold.

Human Capital Resources

Human Capital Management and Corporate Culture

As of December 31, 2023, we employed approximately 2,500 employees, of whom approximately 2,000 were employed in the
United States and approximately 500 were employed outside of the United States. We have approximately 140 non-exempt
production employees at PECO who are subject to collective bargaining agreements. We also leverage temporary workers to
provide flexibility for our business and manufacturing needs.

We greatly value our employees and recognize that, without them, the Company would not have achieved the success it has
accomplished since inception. We strive to provide a positive, supportive work culture with a clear global vision and a
collaborative work style. We strongly believe that a focus on learning and supporting career development can lead to success.
Astronics Corporation regularly earns “best employer” awards.

As it relates to customers, investors, suppliers and partners, our Company is dedicated to conducting business with integrity and
responsibility for the greater good. We promote honest and ethical conduct, compliance with applicable government regulations
and accountability by all of its directors, officers and employees.

When considering an acquisition or partnership, we embed questions specific to human capital management within our due
diligence approach. These questions are in the areas of culture, equal employment opportunity, compliance with governing
bodies, ethics, as well as employee benefits. We ask these in an effort to ensure that the acquisition candidate is a positive
cultural fit and to minimize any risk when assessing the acquisition candidate.

In addition, our Corporate Governance Guidelines outline expectations that the Board establish and promote policies that
encourage a positive, supportive work culture. The Board recognizes that culture is critical to the long-term success of
Astronics and our strategy.

Compensation Programs and Employee Benefits

We believe that future success largely depends upon our continued ability to attract and retain highly skilled employees. We
provide employees with competitive salaries and bonuses, opportunities for equity ownership, development programs that
enable continued learning and growth and a robust employment package that promotes well-being across all aspects of their
lives, including;

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Health and dental insurance
Generous paid time off
401K, profit sharing, and bonus programs
Flexible spending accounts
Employee stock purchase plan
Disability and life insurance
Commute reduction, fitness, and tuition programs
Community service opportunities

Employee Engagement

The lifeblood of any organization is its employee base. We rely on our individual subsidiaries to regularly gather employee
feedback, using the method each subsidiary believes is most appropriate. In some instances that feedback is obtained through
“Town Hall” formats; in other instances, it is obtained through surveys. We also expect our managers to solicit and, where
applicable, use employee feedback to improve its business practices and working environment. We are proud to have received
numerous awards, recognizing both product quality as well as the ability to provide an excellent work environment.

Diversity and Inclusion

The Company believes that diversity and inclusion is critical for the attraction and retention of top talent, and employs policies
and procedures to recruit women and minority talent as well as policies to ensure pay equality. Astronics has an Equal
Employment Opportunity Policy whereby the Company commits to providing equal employment opportunity and affirmative
action plans for all qualified employees and applicants without regard to race, color, sex, sexual orientation, gender identity,
religion, national origin, disability, veteran status, age, marital status, pregnancy, genetic information or other legally protected
status.

Health and Safety

Astronics is committed to the safety of our customers and our employees. Each Astronics operation maintains environmental,
health and safety policies and practices that seek to promote the operation of its businesses in a manner that is protective of the
health and safety of the public and its employees.

Our operations offer several health and welfare programs to employees to promote fitness and wellness and to encourage
preventative healthcare. In addition, our employees are offered a confidential employee assistance program that provides
professional counseling to employees and their family members. Also, many of our operations offer green space for employees
to use during their breaks.

Available information

We file our financial information and other materials as electronically required with the U.S. Securities and Exchange
Commission (“SEC”). These materials can be accessed electronically via the Internet at www.sec.gov. We also make available
free of charge through our website at www.astronics.com our annual report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Exchange Act as soon as reasonably practicable after we electronically file those reports with, or furnish them to, the SEC. The
information contained on our website is not incorporated by reference in this annual report on Form 10-K and should not be
considered a part of this report.

Information About Our Executive Officers

The executive officers of the Company, their ages, their positions and offices with the Company as of December 31, 2023, and
the date each assumed their office with the Company, are as follows:

Name and Age of Executive Officer
Peter J. Gundermann
Age 61
David C. Burney
Age 61
Mark A. Peabody
Age 64
James S. Kramer
Age 60
James F. Mulato
Age 63

Michael C. Kuehn
Age 63

Positions and Offices with Astronics
President, Chief Executive Officer and Director of
the Company
Executive Vice President, Treasurer and Chief
Financial Officer of the Company
President, Aerospace Segment and Executive Vice
President of Astronics Corporation
Luminescent Systems Inc. President and Executive
Vice President of Astronics Corporation
President of Astronics Test Systems, Inc. and
Executive Vice President of Astronics Corporation
Astronics Connectivity Systems & Certification
Corp. President and Executive Vice President of
Astronics Corporation

Year First
Elected Officer

2001

2003

2010

2019

The principal occupation and employment for Messrs. Gundermann, Burney, Kramer, Kuehn, Mulato and Peabody for over
five years have been with the Company in their respective current roles.

ITEM 1A.

RISK FACTORS

Our business faces many risks, and you should carefully consider the following risk factors, together with all of the other
information included in this report, including the financial statements and related notes contained in Item 8, Financial
Statements and Supplementary Data, of this report, when deciding to invest in us. Any of the risks discussed below, or
elsewhere in this report or in our other SEC filings, could have a material impact on our business, financial condition or results
of operations. Additional risks not currently known to us or that we currently consider immaterial also may materially adversely
affect our business, financial condition or results of operations in the future.

Market Risks

The loss of Boeing as a major customer or a significant reduction in business with this customer would reduce our sales
and earnings. In 2023, 2022, and 2021 we had a concentration of sales to Boeing representing approximately 11.0%, 11.0%,
and 10.0% of our sales, respectively. Revenue earned from sales to Boeing may decline or fluctuate significantly in the future.
We may not be able to offset any decline in sales from Boeing with sales from new customers or other existing customers. The
loss of this customer or a significant reduction in business with them would significantly reduce our sales and earnings.
Accordingly, a portion of our potential for success will depend on our continued ability to develop and manage our relationship
with Boeing.

The markets we serve are cyclical and sensitive to domestic and foreign economic conditions, conflicts and events, which
may cause our operating results to fluctuate. The markets we serve are sensitive to fluctuations in general business cycles,
global pandemics, domestic and foreign governmental tariffs, trade and monetary policies, national and international conflicts,
and economic conditions and events, and are facing varying levels of supply chain pressures from the residual impacts of the
COVID-19 pandemic. Domestic air travel has recovered from the impact of the COVID-19 pandemic, and international travel
utilizing primarily widebody aircraft is close to pre-pandemic levels. If a global health crisis, similar to the COVID-19
pandemic, we to occur in the future, we may find it difficult to access our existing financing or obtain additional financing and/
or fund our operations and meet our debt service obligations. Any new pandemic or other future public health crisis, or a
resurgence of COVID-19 or variants could materially impact our financial condition or results of operations.

In our Aerospace segment, demand by the general aviation markets for our products is dependent upon several factors,
including capital investment, product innovations, economic growth and wealth creation and technology upgrades. In addition,
the commercial airline industry is highly cyclical with significant downturns in the past and sensitive to such things as fuel price
increases, labor disputes, global economic conditions, availability of capital to fund new aircraft purchase and upgrades of
existing aircraft and passenger demand. A change in any of these factors could result in a further reduction in the amount of air
travel and the ability of airlines to invest in new aircraft or to upgrade existing aircraft. Therefore, our business is directly
affected by economic factors and other trends that affect our customers in the commercial aerospace industry. These factors
would reduce orders for new aircraft and would likely reduce airlines’ spending for cabin upgrades for which we supply

products, thus reducing our sales and profits. A reduction in air travel may also result in our commercial airline customers being
unable to pay our invoices on a timely basis or at all.

We are a supplier on various new aircraft programs just entering or expected to begin production in the future. As with any new
program, there is risk as to whether the aircraft or program will be successful and accepted by the market. As is customary for
our business, we purchase inventory and invest in specific capital equipment to support our production requirements generally
based on delivery schedules provided by our customer. If a program or aircraft is not successful, we may have to write-off all or
a part of the inventory, accounts receivable and capital equipment related to the program. A write-off of these assets could
result in a significant reduction of earnings and cause covenant violations relating to our debt agreements. This could result in
our being unable to borrow additional funds under our bank credit facility or being obliged to refinance or renegotiate the terms
of our indebtedness.

In our Test Systems segment, the market for our products is concentrated with a limited number of significant customers
accounting for a substantial portion of the purchases of test equipment. In any one reporting period, a single customer or several
customers may contribute an even larger percentage of our consolidated sales. In addition, our ability to increase sales will
depend, in part, on our ability to obtain orders from current or new significant customers. The opportunities to obtain orders
from these customers may be limited, which may impair our ability to grow sales. We expect that sales of our Test Systems
products will continue to be concentrated with a limited number of significant customers for the foreseeable future.
Additionally, demand for some of our test products is dependent upon government funding levels for our products, our ability
to compete successfully for those contracts and our ability to develop products to satisfy the demands of our customers.

Our products are sold in highly competitive markets. Some of our competitors are larger, more diversified corporations and
have greater financial, marketing, production and research and development resources than we do. As a result, they may be
better able to withstand the effects of periodic economic downturns or other market changing events. Our operations and
financial performance will be negatively impacted if our competitors:

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develop products that are superior to our products;
develop products that are more competitively priced than our products;
develop methods of more efficiently and effectively providing products and services; or
adapt more quickly than we do to new technologies or evolving customer requirements.

We believe that the principal points of competition in our markets are product quality, price, design and engineering
capabilities, product development, conformity to customer specifications, quality of support after the sale, timeliness of delivery
and effectiveness of the distribution organization. Maintaining and improving our competitive position will require continued
investment in manufacturing, engineering, quality standards, marketing, customer service and support and our distribution
networks. If we do not maintain, or are otherwise unable to maintain, sufficient resources to make these investments, or are not
successful in maintaining our competitive position, our business operations and financial performance will suffer.

We depend on government contracts and subcontracts with defense prime contractors and subcontractors that may not
be fully funded, may be terminated, or may be awarded to our competitors. The failure to be awarded these contracts,
the failure to receive funding or the termination of one or more of these contracts could reduce our sales. Sales to the
U.S. government and its prime contractors and subcontractors represent a significant portion of our business. The funding of
these programs is generally subject to annual congressional appropriations, and congressional priorities are subject to change.
We cannot be certain that current levels of congressional funding for programs involving our products or services will continue
and that our business related to these products and services will not decline or increase at currently anticipated levels, or that we
will not be subject to delays in the negotiation of contracts or increased costs due to changes in the funding of U.S. government
programs or government shutdowns. In addition, government expenditures for defense programs may decline or these defense
programs may be terminated. A decline in governmental expenditures, a change in spending priorities (e.g., shifting funds to
assist Ukraine in the Russia and Ukraine conflict), or the termination of existing contracts may result in a reduction in the
volume of contracts awarded to us. Furthermore, on contracts for which we are a subcontractor and not the prime contractor, the
U.S. government could terminate the prime contract for convenience or otherwise, irrespective of our performance as a
subcontractor. Also, sales to the U.S. government and its contractors as well as foreign military and government customers,
either directly or as a subcontractor to other contractors, often use a competitive bidding process and have unique purchasing
and delivery requirements, which often makes the timing of sales to these customers unpredictable. We have resources applied
to specific government contracts and if any of those contracts were terminated, we may incur substantial costs redeploying
those resources.

Contracting in the defense industry is subject to significant regulation, including rules related to bidding, billing and
accounting kickbacks and false claims, and any non-compliance could subject us to fines and penalties or possible
debarment. Like all government contractors, we are subject to risks associated with this contracting. These risks include the

potential for substantial civil and criminal fines and penalties. These fines and penalties could be imposed for failing to follow
procurement integrity and bidding rules, employing improper billing practices or otherwise failing to follow cost accounting
standards, receiving or paying kickbacks or filing false claims. We have been, and expect to continue to be, subjected to audits
and investigations by government agencies. The failure to comply with the terms of our government contracts could harm our
business reputation, which could significantly reduce our sales and earnings. It could also result in our suspension or debarment
from future government contracts, which would adversely affect our business, financial condition, results of operations, and
cash flows.

Strategic Risks

If we are unable to adapt to technological change, demand for our products may be reduced. The technologies related to
our products have undergone, and in the future may undergo, significant changes. To succeed in the future, we will need to
continue to design, develop, manufacture, assemble, test, market and support new products and enhancements on a timely and
cost-effective basis, and we cannot be certain that we will be able to do so successfully, if at all, or on a timely, cost effective,
or repeatable basis. Our competitors may develop technologies and products that are more effective than those we develop or
that render our technology and products obsolete or noncompetitive. Furthermore, our products could become unmarketable if
new industry standards emerge. We may have to modify our products significantly in the future to remain competitive, and new
products we introduce may not be accepted by our customers.

Our new product development efforts may not be successful, which would result in a reduction in our sales and
earnings. We may experience difficulties that could delay or prevent the successful development of new products or product
enhancements, and new products or product enhancements may not be accepted by our customers. Because it is generally not
possible to predict the amount of time required and the costs involved in achieving certain research, development, and
engineering objectives, the development expenses we incur may exceed our cost estimates and estimated product development
schedules may be extended. Furthermore, any new products we develop may not generate sales sufficient to offset our costs. If
any of these events occur, our sales and profits could be adversely affected.

We may incur losses and liabilities as a result of our acquisition strategy. Growth by acquisition involves risks that could
adversely affect our financial condition and operating results, including:

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the potential exposure to unanticipated liabilities;
the potential that expected benefits or synergies are not realized and that operating costs increase;
the risks associated with incurring additional acquisition indebtedness, including that additional indebtedness could
limit our cash flow availability for operations and our flexibility;
difficulties in integrating the operations and personnel of acquired companies;
the potential loss of key employees, suppliers or customers of acquired businesses; and
diversion of management time and attention from our core business.

In addition, any acquisition, once successfully integrated, could negatively impact our financial performance if it does not
perform as planned, does not increase earnings, or does not prove otherwise to be beneficial to us.

Operational Risks

Our business and operations could be adversely impacted in the event of a failure of our information technology
infrastructure or adversely impacted by a successful cyber-attack. We are dependent on various information technologies
throughout our Company to administer, store and support multiple business activities. We routinely experience various
cybersecurity threats, threats to our information technology infrastructure, unauthorized attempts to gain access to our Company
sensitive information, and denial-of-service attacks as do our customers, suppliers and subcontractors. We conduct regular
periodic training of our employees as to the protection of sensitive information which includes security awareness training
intended to prevent the success of “phishing” attacks.

The threats we face vary from attacks common to most industries, such as ransomware attacks to disable critical infrastructure
and extort companies for ransom payments, to more advanced and persistent, highly organized adversaries, including nation
states, which target us and other defense contractors because we protect sensitive information. If we are unable to protect
sensitive information, our customers or governmental authorities could question the adequacy of our threat mitigation and
detection processes and procedures, and depending on the severity of the incident, our customers’ data, our employees’ data,
our intellectual property, and other third-party data (such as subcontractors, suppliers and vendors) could be compromised. As a
consequence of their persistence, sophistication and volume, we may not be successful in defending against all such attacks.
Due to the evolving nature of these security threats, the impact of any future incident cannot be predicted.

Although we work cooperatively with our customers, suppliers, and subcontractors to seek to minimize the impact of cyber
threats, other security threats or business disruptions, we must rely on the safeguards put in place by these entities, which may
affect the security of our information. These entities have varying levels of cybersecurity expertise and safeguards and their
relationships with U.S. government contractors, such as Astronics, may increase the likelihood that they are targeted by the
same cyber threats we face.

If we experience a data security breach from an external source or from an insider threat, we may have a loss in sales or
increased costs arising from the restoration or implementation of additional security measures, either of which could adversely
affect our business and financial results. Other potential costs could include damage to our reputation, loss of brand value,
incident response costs, loss of stock market value, regulatory inquiries, litigation and management distraction. A security
breach that involves classified information could subject us to civil or criminal penalties, loss of a government contract, loss of
access to classified information, or debarment as a government contractor. Similarly, a breach that involves loss of customer-
provided data could subject us to loss of a customer, loss of a contract, litigation costs and legal damages and reputational harm.

Our inability to adequately enforce and protect our intellectual property or defend against assertions of infringement
could prevent or restrict our ability to compete. We rely on patents, trademarks and proprietary knowledge and technology,
both internally developed and acquired, in order to maintain a competitive advantage. Our inability to defend against the
unauthorized use of these rights and assets could have an adverse effect on our results of operations and financial condition. We
cannot assure you that our means of protecting our proprietary rights in the United States or abroad will be adequate, or that
others will not develop technologies similar or superior to our technology or design around our proprietary rights. Litigation
may be necessary to protect our intellectual property rights or defend against claims of infringement. This litigation could result
in significant costs and divert our management’s focus away from operations. Refer to the risk factor related to pending patent
infringement litigation below and Note 19 to the Consolidated Financial Statements in Item 8, Financial Statements and
Supplementary Data, of this report for further discussion.

If critical components or raw materials used to manufacture our products or used in our development programs become
scarce or unavailable, then we may incur delays in manufacturing and delivery of our products and in completing our
development programs, which has damaged, and could continue to damage, our business, results of operations and
financial condition. Due to increased demand across a range of industries, the global supply chain for certain critical
components or raw materials used in the manufacture of our products and used in our development programs has experienced,
and may in future periods experience, significant strain in recent periods. Residual impacts of the COVID-19 pandemic have
contributed to and exacerbated this strain to varying degrees. This constrained supply environment has adversely affected, and
could further affect, availability, lead times and the cost of components, and could impact our ability to timely complete
development programs, respond to accelerated or quick-turn delivery requests from customers, or meet customer demand and
product delivery dates for our end customers in situations where we cannot timely secure adequate supply of these components.
Moreover, if any of our suppliers become financially unstable, or otherwise unable or unwilling to provide us with raw
materials or components, then we may have to find new suppliers. It may take several months to locate alternative suppliers, if
required, or to redesign our products to accommodate components from different suppliers. We may experience significant
delays in manufacturing and shipping our products to customers and incur additional development, manufacturing and other
costs to establish alternative sources of supply if we lose any of these sources or are required to redesign our products. We
cannot predict if we will be able to obtain replacement components within the time frames that we require at an acceptable cost,
if at all.

In an effort to mitigate these risks, in some cases, we have incurred higher costs to secure available inventory, or have extended
or placed non-cancellable purchase commitments with suppliers, which introduces inventory risk if our forecasts and
assumptions prove inaccurate. While we may attempt to recover the increased costs through price increases to our customers,
we may be unable to mitigate the effect on our results of operations. We have also multi-sourced and pre-ordered components
and raw materials inventory in some cases in an effort to reduce the impact of the adverse supply chain conditions we have
experienced. Despite our attempts to mitigate the impact on our business, these constrained supply conditions are expected to
adversely impact our costs of goods sold, including our ability to continue to reduce the cost to produce our products in a
manner consistent with prior periods. In addition, some suppliers have indicated that, as a result of current shortages, they
intend to cease manufacture of certain components used in our products. Limits on manufacturing availability or capacity or
delays in production or delivery of components or raw materials could further delay or inhibit our ability to obtain supply of
components and produce finished goods. These supply chain constraints and their related challenges could result in shortages,
increased material costs or use of cash, engineering design changes, and delays in new product introductions, each of which
could adversely impact our growth, gross margin and financial results. These types of negative financial impacts on our
business may become more acute if supply chain pressures increase.

Our financial results could continue to be adversely impacted by the escalation of labor and benefit costs. Consistent with
the experience of other employers, our labor, medical and workers’ compensation costs have increased substantially in recent

years and are expected to continue to rise. If this trend continues, the cost of labor and to provide healthcare and other benefits
to our employees could continue to increase, adversely impacting our future profitability. Competition for employees has
escalated in the labor market which has increased costs associated with attracting and retaining employees. We cannot be
certain that we will be able to maintain an adequately skilled labor force necessary to operate efficiently or that our labor costs
will not increase as a result of a shortage in the availability of skilled employees. Changes to healthcare regulations involving
the Patient Protection and Affordable Care Act may also increase the cost of providing such benefits to our employees. We
cannot predict the ultimate content, timing, or effect of any healthcare reform legislation or the impact of potential legislation or
related proposals and policies on our results. Any significant increases in the costs attributable to our self-insured health and
workers’ compensation plans could adversely impact our business, results of operations, financial condition and cash flows.

Price inflation for labor and materials, further exacerbated by the Russian invasion of Ukraine or the Israel-Hamas
war, could adversely affect our business, results of operations and financial condition. We have experienced considerable
price inflation in our costs for labor and materials in recent years, which has adversely affected our business, results of
operations and financial condition. We may not be able to pass through inflationary cost increases under our existing fixed-
price contracts. Our ability to raise prices to reflect increased costs may be limited by competitive conditions in the market for
our products and services. Russia’s invasion of Ukraine and the Israel-Hamas war, and prolonged conflict in either such
situation, may continue to result in increased inflation, escalating energy and commodity prices and increasing costs of
materials. We continue to work to mitigate such pressures on our business operations as they develop. To the extent the war in
Ukraine or the Israel-Hamas war adversely affects our business as discussed above, it may also have the effect of heightening
many of the other risks described herein, such as those relating to cybersecurity, supply chain, volatility in prices and market
conditions, any of which could negatively affect our business and financial condition.

If our subcontractors fail to perform their contractual obligations, our prime contract performance and our ability to
obtain future business could be materially and adversely impacted. Many of our contracts involve subcontracts with other
companies upon which we rely to perform a portion of the services we must provide to our customers. There is a risk that we
may have disputes with our subcontractors, including disputes regarding the quality and timeliness of work performed by the
subcontractor or customer concerns about the subcontractor. Failure by our subcontractors to satisfactorily provide, on a timely
basis, the agreed-upon supplies or perform the agreed-upon services may materially and adversely impact our ability to perform
our obligations with our customer and could result in the assessment of late delivery penalties. Subcontractor performance
deficiencies could result in a customer terminating our contract for default. A default termination could expose us to liability
and substantially impair our ability to compete for future contracts and orders.

Some of our contracts contain late delivery penalties. Failure to deliver in a timely manner due to supplier and supply chain
problems, labor availability, development schedule slides, manufacturing difficulties, or similar schedule-related events could
have a material adverse effect on our business. No significant penalties have been incurred to date.

Our results of operations are affected by our fixed-price contracts, which could subject us to losses in the event that we
have cost overruns. For the year ended December 31, 2023, fixed-price contracts represented almost all of the Company’s
sales. On fixed-price contracts, we agree to perform the scope of work specified in the contract for a predetermined price.
Depending on the fixed price negotiated, these contracts may provide us with an opportunity to achieve higher profits based on
the relationship between our costs and the contract’s fixed price. However, we bear the risk that increased or unexpected costs
may reduce our profit or cause us to incur a loss on the contract, which would reduce our net earnings. Because our ability to
terminate contracts is generally limited, we may not be able to terminate our performance requirements under these contracts at
all or without substantial liability and, therefore, in the event we are sustaining reduced profits or losses, we could continue to
sustain these reduced profits or losses for the duration of the contract term.

The failure of our products may damage our reputation, necessitate a product recall or result in claims against us that
exceed our insurance coverage, thereby requiring us to pay significant damages. Defects in the design and manufacture of
our products may necessitate a product recall. We include complex system design and components in our products that could
contain errors or defects, particularly when we incorporate new technology into our products. If any of our products are
defective, we could be required to redesign or recall those products or pay substantial damages or warranty claims. Such an
event could result in significant expenses, disrupt sales and affect our reputation and that of our products. We are also exposed
to product liability claims. We carry aircraft and non-aircraft product liability insurance consistent with industry norms.
However, this insurance coverage may not be sufficient to fully cover the payment of any potential claim. Additionally, should
insurance market conditions change, aircraft and non-aircraft product liability insurance coverage may not be available in the
future at a cost acceptable to us. A product recall or a product liability claim not covered by insurance could have a material
adverse effect on our business, financial condition and results of operations.

Our operations depend on our manufacturing facilities, which are subject to physical and other risks that could disrupt
production. Our manufacturing facilities or our customers' facilities could be damaged or disrupted by a natural disaster, war,

or terrorist activity. We maintain property damage and business interruption insurance at the levels typical in our industry or for
our customers and suppliers, however, a pandemic or other major catastrophe, such as an earthquake, hurricane, fire, flood,
tornado or other natural disaster at any of our sites, or war or terrorist activities in any of the areas where we conduct operations
could result in a prolonged interruption of our business. Any disruption resulting from these events could cause significant
delays in shipments of products and the loss of sales and customers, and we may not have insurance to adequately compensate
us for any of these events. For leased facilities, timely renewal of leases and risk mitigation from the sale of our leased facilities
is required to avoid any business interruption.

We may be subject to work stoppages at our facilities or those of our principal customers and suppliers, which could
seriously impact the profitability of our business. Many aircraft manufacturers, airlines, and aerospace suppliers have
unionized work forces. Any strikes, work stoppages, or slowdowns experienced by aircraft manufacturers, airlines, or aerospace
suppliers could reduce our customers’ demand for additional aircraft structures or prevent us from completing production of our
products.

A small percentage of our workforce is represented by unions. If we were unable to renew our labor agreements at expiration,
or if our workers were to engage in a strike, work stoppage, or other slowdown, we could experience a disruption of our
operations, which could cause us to be unable to deliver products to certain of our customers on a timely basis and could result
in a breach of such supply agreements. This could negatively impact our results. In addition, our non-unionized labor force may
become subject to labor union organizing efforts, which could cause us to incur additional labor costs and increase the related
risks that we now face.

The construction of aircraft is heavily regulated, and failure to comply with applicable laws could reduce our sales or
require us to incur additional costs to achieve compliance, and we may incur significant expenses to comply with new or
more stringent governmental regulation. The aerospace industry is highly regulated in the United States by the FAA and in
other countries by similar agencies. We must be certified by the FAA and, in some cases, by individual OEMs in order to
engineer and service parts, components and aerostructures used in specific aircraft models. If any of our material authorizations
or approvals were revoked or suspended, our operations would be adversely affected. New or more stringent governmental
regulations may be adopted, or industry oversight heightened in the future, and we may incur significant expenses to comply
with any new regulations or any heightened industry oversight. In addition, in January 2024, the FAA ordered the temporary
grounding of Boeing 737-9 MAX aircraft as a result of an incident where a Boeing 737-9 MAX lost a “door plug.” This
incident and the subsequent investigation, and the potential for more issues to be identified during further investigations, could
result in a suspension or reduction of manufacturing of 737 MAX aircraft by Boeing. Air travelers may also respond negatively
to the 737 MAX aircraft due to perceived safety concerns, which would negatively impact Boeing. Boeing is a major customer
of ours and any financial or customer losses it suffers may result in a negative impact on our business, financial condition and
results of operations.

Financial Risks

We have incurred losses in prior fiscal years and our future profitability is not certain. For the year ended December 31,
2023, we incurred net loss of $26.4 million. Our operating results for future periods are subject to numerous uncertainties and
we cannot be certain that we will be profitable or that we will not experience substantial net losses in the future. If we are not
able to increase revenue or reduce our costs, we may not be able to achieve profitability in future periods and our business,
financial condition, results of operations and cash flows may be adversely affected.

Our ABL Revolving Credit Facility and Term Loan Facility contain financial and restrictive covenants that we may be
unable to satisfy, and that, if not satisfied, could result in the acceleration of any outstanding indebtedness thereunder
and limit our ability to borrow additional funds. In addition, the terms of our ABL Revolving Credit Facility and Term
Loan Facility contain covenants that restrict our current and future operations, particularly our ability to take certain
actions. Our ABL Revolving Credit Facility and Term Loan Facility each subject us to various financial and other affirmative
and negative covenants with which we must comply on an ongoing or periodic basis. These include financial covenants
pertaining to minimum trailing four quarter EBITDA requirements, minimum liquidity requirements, minimum fixed charge
coverage ratio requirements, maximum capital expenditure requirements, and excess cash flow repayment provisions. An
unexpected decline in our revenues or operating income, including occurring as a result of events beyond our control, could
cause us to violate our financial covenants. A covenant violation could result in a default under the ABL Revolving Credit
Facility and Term Loan Facility. If any such default occurs, the lenders may elect to declare all outstanding borrowings,
together with accrued interest and other amounts payable thereunder, to be immediately due and payable. Further, as the amount
available to us under our credit facilities is subject to borrowing base calculations determined by the value of accounts
receivable and inventory (under our ABL Revolving Credit Facility) and real estate and fixed assets (under our Term Loan
Facility), an unexpected decline in the value of these assets would require a mandatory prepayment. If any of these events were
to occur, we may not be able to pay our debts and other monetary obligations as they come due, and our ability to continue to

operate as a going concern could be impaired, which could in turn cause a significant decline in our stock price and could result
in a significant loss of value for our shareholders. Furthermore, the lenders also have the right in these circumstances to
terminate any commitments they have to provide further borrowings, which could leave us without access to sufficient liquidity
to operate our business. In addition, following an event of default, the lenders under the ABL Revolving Credit Facility and
Term Loan Facility will have the right to proceed against the collateral granted to them to secure the debt, which includes our
available accounts receivable, inventory, machinery and equipment, real estate and intellectual property. If the debt under the
ABL Revolving Credit Facility and Term Loan Facility were to be accelerated, we cannot assure you that our assets would be
sufficient to repay in full our debt.

Additionally, our ABL Revolving Credit Facility and Term Loan Facility also contain a number of restrictive covenants that
impose significant operating and financial restrictions on the Company and our subsidiaries and may limit our ability to engage
in acts that we believe to be in our long-term best interests. The ABL Revolving Credit Facility and Term Loan Facility include
covenants restricting, among other things, the ability of the Company and our subsidiaries to:

incur additional indebtedness;
pay dividends on or repurchase our capital stock;

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• make certain acquisitions or investments;
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sell assets; and
engage in certain business activities.

The amount of debt we have outstanding, as well as any debt we may incur in the future, could have an adverse effect on
our operational and financial flexibility. As of December 31, 2023, we had approximately $172.5 million of debt outstanding.
Changes to our level of debt subsequent to December 31, 2023 could have significant consequences to our business, including
the following:

•

•
•

Depending on interest rates and debt maturities, a substantial portion of our cash flow from operations could be
dedicated to paying principal and interest on our debt, thereby reducing funds available for our acquisition strategy,
capital expenditures or other purposes;
A significant amount of additional debt could make us more vulnerable to changes in economic conditions or increases
in prevailing interest rates;
Our ability to obtain additional financing for acquisitions, capital expenditures or for other purposes could be impaired;
The increase in the amount of debt we have outstanding and the associated interest expense increases the risk of non-
compliance with some of the covenants in our debt agreements which require us to maintain specified financial ratios;
and

• We may be more leveraged than some of our competitors, which may result in a competitive disadvantage.

Subject to the limits contained in our ABL Revolving Credit Facility and Term Loan Facility, we may incur additional debt
from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we do
so, the risks described above related to our debt could intensify.

We are subject to financing and interest rate exposure risks that could adversely affect our business, liquidity and
operating results. Changes in the availability, terms and cost of capital, and increases in interest rates could cause our cost of
doing business to increase and place us at a competitive disadvantage. At December 31, 2023, all of our debt was subject to
variable interest rates.

A write-off of all or part of our goodwill or other intangible assets could adversely affect our operating results and net
worth. At December 31, 2023, goodwill and net intangible assets were approximately 9.2% and 10.3% of our total assets,
respectively. We had no goodwill impairment charges during 2023, 2022 or 2021. Our goodwill and other intangible assets may
increase in the future since our strategy includes growing through acquisitions. We may have to write-off all or part of our
goodwill or purchased intangible assets if their value becomes impaired. Although this write-off would not result in an outlay of
cash and is not included in the financial covenant calculation, it could reduce our earnings and net worth significantly.

Our future operating results could be impacted by estimates used to calculate impairment losses on goodwill and long-
lived assets. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires
management to make significant and subjective estimates and assumptions that may affect the reported amounts of tangible and
intangible long-lived assets, including goodwill, in the financial statements. These estimates are integral in the determination of
whether a potential non-cash impairment loss exists as well as the calculation of that loss. Actual future results could differ
from those estimates. We had no such asset impairment charges in 2023, 2022 or 2021.

Changes in discount rates and other estimates could affect our future earnings and equity. Our goodwill asset impairment
evaluations are determined using valuations that involve several assumptions, including discount rates, cash flow estimates,

growth rates and terminal values. Certain of these assumptions, particularly the discount rate, are based on market conditions
and are outside of our control. Changes in these assumptions could affect our future earnings and equity.

Additionally, pension obligations and the related costs are determined using actual results and actuarial valuations that involve
several assumptions. The most critical assumption is the discount rate. Other assumptions include mortality, salary and bonus
levels and retirement age. The discount rate assumptions are based on current market conditions and are outside of our control.
Changes in these assumptions could affect our future earnings and equity.

Changes in tax laws and regulations or exposure to additional tax liabilities could adversely affect our financial results.
Changes in U.S. (federal or state) or foreign tax laws and regulations, or their interpretation and application, including those
with retroactive effect, could result in increases in our tax expense and affect profitability and cash flows. For example,
beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures
immediately in the year incurred and requires taxpayers to amortize such expenditures over five years for tax purposes. The
most significant impact of this provision is to the cash tax liability for 2023 (as the liability for 2022 is partially offset by certain
tax credits and loss carryforwards); the impact will decline annually thereafter over the five-year amortization period to an
immaterial amount in year six.

Legal and Compliance Risks

We currently are involved in, and may become involved in the future in, legal proceedings that, if adversely adjudicated
or settled, could materially and adversely impact our financial condition. As an aerospace company, we may become a
party to litigation, including, among others, matters alleging product liability, warranty claims, intellectual property
infringement, breach of commercial or government contract or other legal actions. In general, litigation claims can be expensive
and time consuming to bring or defend against and could result in settlements or damages that could significantly and adversely
impact our results of operations and financial condition.

Currently, our AES subsidiary is a defendant in actions filed in various jurisdictions by Lufthansa Technik AG relating
to an allegation of patent infringement and based on rulings to date we have concluded that losses related to these
proceedings are probable. If these actions are decided adversely against the Company, the associated damages could result in
a material adverse effect on our results of operations or financial condition.

Refer to Note 19 of our Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this
report for discussion on this and other legal proceedings. 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 results of operations or
financial condition.

Our operations in foreign countries expose us to political and currency risks and adverse changes in local legal and
regulatory environments. In 2023, approximately 10% of our sales were made by our subsidiaries in foreign countries,
predominately in our subsidiaries in France and Canada. Net assets held by our foreign subsidiaries total $39.1 million at
December 31, 2023. Approximately 25% of our consolidated sales in 2023 were made to customers outside of the United
States. Our financial results may be adversely affected by fluctuations in foreign currencies and by the translation of the
financial statements of our foreign subsidiaries from local currencies into U.S. dollars. We expect international operations and
export sales to continue to contribute to our earnings for the foreseeable future. Both the sales from international operations and
export sales are subject in varying degrees to risks inherent in doing business outside of the U.S. Such risks include the
possibility of unfavorable circumstances arising from host country laws or regulations, changes in tariff and trade barriers and
import or export licensing requirements, and political or economic reprioritization, insurrection, civil disturbance or war.

Government regulations could limit our ability to sell our products outside the U.S. and could otherwise adversely affect
our business. Certain of our sales are subject to compliance with U.S. export regulations. Our failure to obtain, or fully adhere
to the limitations contained in, the requisite licenses, meet registration standards or comply with other government export
regulations would hinder our ability to generate sales of our products outside the U.S. Compliance with these government
regulations may also subject us to additional fees and operating costs. The absence of comparable restrictions on competitors in
other countries may adversely affect our competitive position. In order to sell our products in European Union countries, we
must satisfy certain technical requirements. If we are unable to comply with those requirements with respect to a significant
quantity of our products, our sales in Europe would be restricted. Doing business internationally also subjects us to numerous
U.S. and foreign laws and regulations, including regulations relating to import-export control, technology transfer restrictions,
foreign corrupt practices and anti-boycott provisions. Our failure, or failure by an authorized agent or representative that is
attributable to us, to comply with these laws and regulations could result in administrative, civil or criminal liabilities and could,
in the extreme case, result in monetary penalties, suspension or debarment from government contracts or suspension of our
export privileges, which would have a material adverse effect on us.

Trade policies, treaties, and tariffs could have a material adverse effect on our business. Our business is dependent on the
availability of raw materials and components for our products, particularly electrical components common in the semiconductor
industry. There is continued uncertainty about the future relationship between the United States and various other countries,
most significantly China, with respect to trade policies, treaties, tariffs, and taxes. Changes in U.S. administrative policy could
lead to changes in existing trade agreements, greater restrictions on free trade generally, and significant increases in tariffs on
goods imported into the United States, particularly tariffs on products manufactures in China and Mexico, among other possible
changes. These developments, or the perception that any of them could occur, could have a material effect on global economic
conditions and the stability of global financial markets, and could significantly reduce global trade and, in particular, trade
between the impacted nations and the United States.

This uncertainty includes: (i) the possibility of altering the existing tariffs or penalties on products manufactured outside the
United States, including the U.S. government’s 25% tariff on a range of products from China; (ii) the effects stemming from the
removal of such previously imposed tariffs; (iii) subsequent tariffs imposed by the United States on any other U.S. trading
partners such as Russia; and (iv) potential tariffs imposed by trading partners on U.S. goods. The institution of trade tariffs on
items imported by us from other countries could increase our costs, which could have a negative impact on our business.

We cannot predict whether, and to what extent, there may be changes to international trade agreements or whether quotas,
duties, tariffs, exchange controls or other restrictions on our products will be changed or imposed. In addition, an open conflict
or war across any region could affect our ability to obtain raw materials. For example, the current military conflict between
Russia and Ukraine, and related sanctions, export controls or other actions that may be initiated by nations, including the United
States, the European Union or Russia (e.g., potential cyberattacks, disruption of energy flows, etc.) or potential sanctions or
relevant export controls related to China or Taiwan could adversely affect our business and/or our supply chain or our business
partners or customers in other countries beyond Russia and Ukraine. Although we currently maintain alternative sources for raw
materials, if we are unable to source our products from the countries where we wish to purchase them, either because of the
occurrence or threat of wars or other conflicts, regulatory changes or for any other reason, or if the cost of doing so increases, it
could have a material adverse effect on our business, financial condition and results of operations. Disruptions in the supply of
raw materials and components could temporarily impair our ability to manufacture our products for our customers or require us
to pay higher prices to obtain these raw materials or components from other sources, which could have a material adverse effect
on our business and our results of operations.

We may face reputational, regulatory or financial risks from a perceived, or an actual, failure to achieve our
sustainability goals. The increased focus on sustainability practices and disclosures is rapidly evolving, as is the criteria to
measure our sustainability performance; both of which could result in greater expectations and may cause us to undertake costly
initiatives to satisfy the evolving criteria. As we advance our sustainable business model, we are pursuing programs that we
believe will improve our environmental practices, social engagement and how we govern ourselves. We periodically publish
information about our sustainability goals, standards and frameworks. Achievement of these objectives is subject to risks and
uncertainties, many of which are outside of our direct control, and it is possible we may fail, or be perceived to have failed, in
the achievement of our sustainability goals. Also, certain customers, associates, shareholders, investors, suppliers, business
partners, government agencies and non-governmental organizations may not be satisfied with our sustainability efforts. A
failure or perceived failure of our sustainability goals could negatively affect our reputation and our results of operations.

We are subject to extensive regulation and audit by the Defense Contract Audit Agency. The accuracy and appropriateness
of certain costs and expenses used to substantiate our direct and indirect costs for the U.S. Government contracts are subject to
extensive regulation and audit by the Defense Contract Audit Agency, an arm of the U.S. Department of Defense (“USDOD”).
Such audits and reviews could result in adjustments to our contract costs and profitability. However, we cannot ensure the
outcome of any future audits and adjustments may be required to reduce net sales or profits upon completion and final
negotiation of audits. If any audit or review were to uncover inaccurate costs or improper activities, we could be subject to
penalties and sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension
or prohibition from conducting future business with the U.S. Government. Any such outcome could have a material adverse
effect on our financial results.

We are subject to the requirements of the National Industrial Security Program Operating Manual for facility security
clearance, which is a prerequisite for our ability to perform on classified contracts for the U.S. Government. USDOD
facility security clearance is required in order to be awarded and be able to perform on classified contracts for the USDOD and
certain other agencies of the U.S. Government, which is a significant part of our business. We have obtained clearance at
appropriate levels that require stringent qualifications, and we may be required to seek higher level clearances in the future. We
cannot assure you that we will be able to maintain our security clearance. If for some reason our security clearance is
invalidated or terminated, we may not be able to continue to perform our present classified contracts or be able to enter into new
classified contracts, which could affect our ability to compete for and capture new business.

Our business is subject to regulation in the United States and internationally. The manufacturing of our products is subject
to numerous federal, state and foreign governmental regulations. The number of laws and regulations that are being enacted or
proposed by various governmental bodies and authorities is increasing. Compliance with these regulations is difficult and
expensive. If we fail to adhere, or are alleged to have failed to adhere, to any applicable federal, state, or foreign laws or
regulations, or if such laws or regulations negatively affect sales of our products, our business, prospects, results of operations,
financial condition or cash flows may be adversely affected. In addition, our future results could be adversely affected by
changes in applicable federal, state, and foreign laws and regulations, or the interpretation or enforcement thereof, including
those relating to manufacturing processes, product liability, government contracts, trade rules and customs regulations,
intellectual property, consumer laws, privacy laws, environmental protection, climate change, as well as accounting standards
and taxation requirements (including tax-rate changes, new tax laws or revised tax law interpretations).

General Risks

Our future success depends to a significant degree upon the continued contributions of our management team and
technical personnel. The loss of members of our management team could have a material and adverse effect on our business.
In addition, competition for qualified technical personnel in our industry is intense, and we believe that our future growth and
success will depend on our ability to attract, train and retain such personnel.

Future terror attacks, war, or other civil disturbances could negatively impact our business. Continued terror attacks, war
or other disturbances could lead to economic instability and decreases in demand for our products, which could negatively
impact our business, financial condition and results of operations. Terrorist attacks world-wide have caused instability from
time to time in global financial markets and the aviation industry. The long-term effects of terrorist attacks on us are unknown.
These attacks and the U.S. government’s continued efforts against terrorist organizations may lead to additional armed
hostilities or to further acts of terrorism and civil disturbance in the U.S. or elsewhere, which may further contribute to
economic instability.

If we fail to meet expectations of securities analysts or investors due to fluctuations in our sales or operating results, our
stock price could decline significantly. Our sales and earnings may fluctuate from quarter to quarter due to a number of
factors, including delays or cancellations of programs and supply chain challenges on revenues and costs. It is likely that in
some future quarters our operating results may fall below the expectations of securities analysts or investors. In this event, the
trading price of our stock could decline significantly.

Our stock price is volatile. For the year ended December 31, 2023, our stock price ranged from a low of $10.14 to a high of
$22.01. The price of our common stock has been and likely will continue to be subject to wide fluctuations in response to a
number of events and factors, such as:

•

•
•
•
•
•
•
•

our ability to comply with the financial and other affirmative and negative covenants included in our ABL Revolving
Credit Facility and Term Loan Facility;
quarterly variations in operating results;
variances of our quarterly results of operations from securities analyst estimates;
changes in financial estimates;
announcements of technological innovations and new products;
news reports relating to trends in our markets or adverse happenings at our customers;
the cancellation of major contracts or programs with our customers; and
residual impacts of the COVID-19 pandemic on the aerospace industry and our Company.

In addition, the stock market in general, and the market prices for companies in the aerospace and defense industry in particular,
have experienced significant price and volume fluctuations that often have been unrelated to the operating performance of the
companies affected by these fluctuations. These broad market fluctuations may adversely affect the market price of our
common stock, regardless of our operating performance. Global health crises, similar to the COVID-19 pandemic, with the
breadth of its impact worldwide, and particularly on the aerospace industry, could also cause significant volatility in the market
price.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

None.

ITEM 1C.

CYBERSECURITY

We recognize the critical importance of assessing, identifying, and managing material risks associated with cybersecurity
threats. Our cybersecurity strategy prioritizes detection, analysis and response to known, anticipated or unexpected threats,
effective management of security risks, and resiliency against incidents. This strategy is supported by both management and our
Board of Directors.

We continuously strive to surpass industry best practices by implementing robust risk-based controls aimed at safeguarding
both our partners’ and the Company’s information systems. In order to protect both commercial and defense-related businesses
and support our production operations, the Company has adopted security principles in accordance with the National Institute of
Standards and Technology Cybersecurity Framework, contractual requirements and other global standards. We conduct
comprehensive annual security assessments, including external and internal penetration tests, social engineering attacks, and
vulnerability assessments. These assessments provide critical insights into our security posture and help us identify and address
potential weaknesses proactively. Leveraging the expertise of multiple vendors, we ensure a thorough evaluation from diverse
perspectives, enhancing the effectiveness of our security measures. Furthermore, as we implement solutions, we engage with
industry-leading partners to receive guidance on best practices for solution use and overall security. This collaboration ensures
that our cybersecurity strategies align with the latest industry standards and best practices. We also maintain regular
communication with external partners to stay abreast of current cybersecurity trends and emerging threats. This proactive
approach enables us to continuously enhance our security posture and adapt our defenses to evolving cyber risks.

The Company’s Director of Information Technology (“IT”), who reports to our CFO, has over 20 years of experience leading
cyber security oversight and is responsible for management of cybersecurity risk and the protection and defense of our networks
and systems. Our IT security team, lead by the Director of IT, consists of professionals with broad cybersecurity experiences,
including a number of cybersecurity certifications and degrees. Our cybersecurity initiatives benefit from a wealth of practical
knowledge and strategic insight. The IT security teams’ comprehensive understanding of industry best practices, combined with
hands-on experience in implementing cybersecurity solutions, ensures that our networks and systems are effectively protected
against emerging threats. As a result, cybersecurity remains a top priority across the organization, with resources allocated
efficiently to mitigate risks and enhance our overall security posture.

The Board of Directors oversees an enterprise-wide approach to risk management, designed to support the achievement of
organizational objectives, including strategic objectives, to improve long-term organizational performance and enhance
shareholder value. The Director of IT provides a report to the Board of Directors on an annual basis, or more frequently as
needed, with respect to information security activity, security assessments, controls and investments.

We have a set of Company-wide policies and procedures concerning cybersecurity matters. The Company’s Incident
Management Policy provides a framework for reporting and managing security incidents affecting the Company’s information
and business computing devices and systems, losses of information, and information security concerns. All users, including
employees, contractors, consultants, suppliers, customers, government, and all personnel affiliated with third parties that
perform work for the Company, are obligated to report information security incidents in order to mitigate the consequences and
reduce the risk of future breaches of security. Our incident response process consists of several principal steps, including 1)
preparation for a cybersecurity incident, 2) detection of a security incident and assignment to the appropriate IT personnel, 3)
identification and preservation of evidence, and 4) risk assessment. Depending on the nature and severity of an incident,
notifications are escalated to our CEO and the Board of Directors and, if determined to be material, externally. The incident
management process is overseen by the Director of IT. The Company maintains additional policies that directly or indirectly
relate to cybersecurity, such as policies related to encryption standards, mobile devices and data destruction. These policies go
through an internal review process and are approved by appropriate members of management.

Our IT security team reviews enterprise risk management-level cybersecurity risks annually. The following key risk elements
are evaluated:

•

Insiders – Whether intentional or unintentional, individuals within our Company may cause damage to our systems.
We have processes in place to seek to mitigate these threats, including but not limited to controls over access to our
systems and access to network resources.
External threats – We recognize the risk that hackers, vandals, and saboteurs may seek to gain access to information
contained in our systems. We employ multi-layered defense and continuous monitoring to seek to mitigate the risk
associated with these threats. The Company also conducts regular periodic training of its employees as to the
protection of sensitive information which includes security awareness training intended to prevent the success of
“phishing” attacks.

•

Third-party risks – We also consider and evaluate cybersecurity risks associated with use of third-party service
providers. User access to third-party systems is reviewed annually, and we obtain and review a System and
Organization Controls (SOC) 1 or SOC 2 report from key third-party service providers.

Key cybersecurity risks and mitigating responses are addressed within our Company-wide policies.

While we have experienced cybersecurity incidents in the past, to date none have materially affected the Company or our
financial position, results of operations and/or cash flows. However, the risks from cybersecurity threats and incidents continue
to increase, and the preventative actions we have taken and continue to take to reduce the risk of cybersecurity threats and
incidents may not successfully protect against all such threats and incidents. We continue to invest in the cybersecurity and
resiliency of our networks and to enhance our internal controls and processes, which are designed to help protect our systems
and infrastructure, and the information they contain. For more information regarding the risks we face from cybersecurity
threats, please see Item 1A, Risk Factors, under the heading “Our business and operations could be adversely impacted in the
event of a failure of our information technology infrastructure or adversely impacted by a successful cyber-attack.”

ITEM 2.

PROPERTIES

On December 31, 2023, we own or lease 1.1 million square feet of space, distributed by segment as follows:

Aerospace
Test Systems

Total Square Feet

Owned

Leased

Total

625,000

—

625,000

367,000

138,000

505,000

992,000

138,000

1,130,000

We have principal operations in the U.S., Canada, France and the UK, as well as engineering offices in Ukraine and India.

Upon the expiration of our current leases, we believe that we will be able to either secure renewal terms or enter into leases for
or purchases of alternative locations at market terms. We believe that our properties have been adequately maintained and are
generally in good condition.

ITEM 3.

LEGAL PROCEEDINGS

Currently, we are involved in legal proceedings relating to allegations of patent infringement and, based on rulings to date, we
have concluded that losses related to certain of these proceedings are probable. For a discussion of contingencies related to legal
proceedings, see Note 19 to our Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of
this report.

ITEM 4.

MINE SAFETY DISCLOSURES

Not Applicable.

PART II

ITEM 5.
ISSUER PURCHASES OF EQUITY SECURITIES

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND

The Company’s Common Stock is traded on the Nasdaq Global Select Market under the symbol “ATRO”. The approximate
number of shareholders of record as of February 26, 2024, was 717 for Common Stock and 1,878 for Class B Stock.

The Company has not paid any cash dividends in the three-year period ended December 31, 2023. The Company has no plans
to pay cash dividends in the future as it plans to retain all cash from operations as a source of capital to service debt and finance
working capital and growth in the business.

The following table summarizes our purchases of our common stock for the three months ended December 31, 2023:

Period
October 1 - October 28

October 29 - November 25

November 26 - December 31

Total Number of
Shares
Purchased

Average Price
Paid Per Share

Total Number of
Shares (or Units)
Purchased as
Part of Publicly
Announced Plans
or Programs

Maximum
Numbers (or
approximate
Dollar Value) of
Shares that may
yet be Purchased
Under the
Program (1)

— $

—

— $ 41,483,815

(1) On September 17, 2019, the Board of Directors authorized an additional share repurchase program. This program authorizes
repurchases of up to $50 million of common stock. Cumulative repurchases under this plan were approximately 310,000 shares
at a cost of $8.5 million before the 10b5-1 plan associated with the share repurchase program was terminated on February 3,
2020.

The following graph compares the Company’s annual percentage change in cumulative total return on common shares over the
past five years with the cumulative total return of companies comprising the S&P 500 Index and the NASDAQ Composite
Index. This presentation assumes that $100 was invested in shares of the relevant issuers on December 31, 2018, and that
dividends received were immediately invested in additional shares. The graph plots the value of the initial $100 investment at
one-year intervals for the fiscal years shown.

Astronics Corp.

2018

2019

2020

2021

2022

2023

Return % —

(8.21) (52.67)

(9.30) (14.18) 69.10

Cum $

100.00

91.79

43.45

39.41

33.82

57.19

S&P 500 Index - Total Returns

Return % —

31.49

18.40

28.71

(18.11) 26.29

NASDAQ Composite-Total Return

Return % —

36.69

44.92

22.18

(32.54) 44.64

Cum $

100.00

131.49

155.68

200.37

164.08

207.21

Cum $

100.00

136.69

198.10

242.03

163.28

236.17

ITEM 6.

[Reserved]

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

OVERVIEW

Astronics Corporation, through its subsidiaries, is a leading supplier of advanced technologies and products to the global
aerospace and defense industries. Our products and services include advanced, high-performance electrical power generation
and distribution systems, seat motion solutions, lighting and safety systems, avionics products, aircraft structures, systems
certification, and automated test systems.

We have two reportable segments, Aerospace and Test Systems. Our Aerospace segment has principal operating facilities in the
United States, Canada and France. Our Test Systems segment has principal operating facilities in the United States and the
United Kingdom. We have engineering offices in Ukraine and India.

Our Aerospace segment designs and manufactures products for the global aerospace industry. Product lines include lighting and
safety systems, electrical power generation, distribution and seat motion systems, aircraft structures, avionics products, systems
certification, and other products. Our primary Aerospace customers are the airframe manufacturers (“OEM”) that build aircraft
for the commercial transport, military and general aviation markets, suppliers to those OEMs, aircraft operators such as airlines,
suppliers to the aircraft operators, and branches of the U.S. Department of Defense (“USDOD”). Our Test Systems segment
designs, develops, manufactures and maintains automated test systems that support the aerospace and defense and mass transit
industries as well as training and simulation devices for both commercial and military applications. In the Test Systems
segment, Astronics’ products are sold to a global customer base including OEMs and prime government contractors for both
electronics and military products.

Our strategy is to increase our value by developing technologies and capabilities, either internally or through acquisition, and
using those capabilities to provide innovative solutions to our targeted markets where our technology can be beneficial.

Important factors affecting our growth and profitability are the rate at which new aircraft are produced, government funding and
timing of awards of military programs, our ability to have our products designed into new aircraft, the rates at which aircraft
owners, including commercial airlines, refurbish or install upgrades to their aircraft and supply chain and labor market
pressures. New aircraft build rates and aircraft owners spending on upgrades and refurbishments is cyclical and dependent on
the strength of the global economy. Once one of our products is designed into a new aircraft, the spare parts business
associated thereto is also frequently retained by the Company. Future growth and profitability of the Test Systems business is
dependent on developing and procuring new and follow-on business. The nature of our Test Systems business is such that it
pursues large, often multi-year, projects. There can be significant periods of time between orders in this business, which may
result in large fluctuations of sales and profit levels and backlog from period to period. Test Systems segment customers include
the USDOD, prime contractors to the USDOD, mass transit operators and prime contractors to mass transit operators.

Each of the markets that we serve presents opportunities that we expect will provide growth for the Company over the long-
term. We continue to look for opportunities in all of our markets to capitalize on our core competencies to expand our existing
business and to grow through strategic acquisitions.

The main challenges that we continue to face include varying levels of supply chain pressures from the residual impacts of the
COVID-19 pandemic, material availability and cost increases, labor availability and cost, and improving shareholder value
through increasing profitability. Increasing profitability is dependent on many things, primarily sales growth, both acquired and
organic, and the Company’s ability to pass cost increases along to customers and control operating expenses, and to identify
means of creating improved productivity. Sales are driven by increased build rates for existing aircraft, market acceptance and
economic success of new aircraft and our products, continued government funding of defense programs, the Company’s ability
to obtain production contracts for parts we currently supply or have been selected to design and develop for new aircraft
platforms and continually identifying and winning new business for our Test Systems segment.

Reduced aircraft build rates driven by a weak economy, aircraft groundings, tight credit markets, reduced air passenger travel,
and an increasing supply of used aircraft on the market would likely result in reduced demand for our products, which will
result in lower profits. Reduction of defense spending may result in fewer opportunities for us to compete, which could result in
lower profits in the future. Many of our newer development programs are based on new and unproven technology and at the
same time we are challenged to develop the technology on a schedule that is consistent with specific programs. Delays in
delivery schedules and incremental costs resulting from supply chain and labor rate pressures have in the past resulted, and
could in the future also result in, lower profits. We will continue to address these challenges by working to improve operating
efficiencies and focusing on executing on the growth opportunities currently in front of us.

Our ABL Revolving Credit Facility and Term Loan Facility each subject us to various financial and other affirmative and
negative covenants with which we must comply on an ongoing or periodic basis. These include financial covenants pertaining
to minimum trailing four-quarter EBITDA requirements, minimum liquidity requirements, minimum fixed charge coverage
ratio requirements, and excess cash flow repayment provisions. An unexpected decline in our revenues or operating income,
including occurring as a result of events beyond our control, could cause us to violate our financial covenants. Our ability to
satisfy the tight financial covenants in our ABL Revolving Credit Facility and Term Loan Facility is expected to be challenging
in 2024 and is an item that our management team continues to closely monitor. While the Company expects to remain in
compliance with the required financial covenants for the duration of the agreements, any unexpected negative impacts to our
business, including as a result of additional supply chain pressures, the timing of customer orders, and our ability to meet
customer delivery schedules, or labor availability and cost pressures, could result in lower revenues and reduced financial
profits, and, as a result thereof, our inability to satisfy the financial covenants in our ABL Revolving Credit Facility and Term
Loan Facility.

See Part I, Item 1A, Risk Factors, for an additional discussion of risks associated with our potential inability to satisfy the
financial and restrictive covenants set forth in the ABL Revolving Credit Facility and Term Loan Facility.

In September 2021, the Company was awarded a grant of up to $14.7 million from the U.S. Department of Transportation
(“USDOT”) under the Aviation Manufacturing Jobs Protection Program (“AMJP”). The Company received $7.3 million and
$7.4 million under the grant in 2022 and 2021, respectively. 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 years ended December 31, 2022 and 2021, the Company recognized $6.0 million and $8.7
million of the award, respectively.

We are monitoring the ongoing conflict between Russia and Ukraine and the related export controls and financial and economic
sanctions imposed on certain industry sectors, including the aviation sector, and parties in Russia by the U.S., the U.K., the
European Union and others. Although the conflict has not resulted in a direct material adverse impact on our business to date,
the implications of the Russia and Ukraine conflict in the short-term and long-term are difficult to predict at this time. Factors
such as increased energy costs, the availability of certain raw materials for aircraft manufacturers, embargoes on flights from
Russian airlines, sanctions on Russian companies, and the stability of Ukrainian customers could impact the global economy
and aviation sector.

In November 2023, a non-core contract manufacturing customer reported within the Aerospace segment filed for bankruptcy
under Chapter 11. As a result, the Company recorded a full reserve of $7.5 million for outstanding accounts receivable and a
$3.6 million reserve against dedicated inventory. The associated assets existed prior to 2023.

DIVESTITURES

On February 13, 2019, the Company completed a divestiture of its semiconductor test business within the Test Systems
segment. The transaction included two elements of contingent earnouts. In the fourth quarter of 2021, the Company agreed to
an earnout payment of $10.7 million for the calendar 2020 earnout, which was recorded in 2021 as a separate line item below
operating loss and was received by the Company in early January 2022. In March 2022, the Company agreed with the earnout
calculation for the calendar 2021 earnout for $11.3 million. The Company recorded the gain and received the payment in the
first quarter of 2022. In March 2023, the Company agreed with the final earnout calculation for the calendar 2022 earnout for
$3.4 million. The Company recorded the gain and received the payment in the first quarter of 2023. See further information in
Note 21 in Item 8, Financial Statements and Supplementary Data, of this report.

MARKETS

Commercial Transport Market

The commercial transport market is our largest end market with sales driven by new aircraft production and aftermarket airline
retrofit programs. In the commercial transport market, while many of our key long-term fundamentals remain intact, we
continue to see residual, though improving, near-term market pressure due to effects of certain supply chain challenges. We
have experienced improvement throughout 2023 driven by the increased production rate of the 737 MAX and improved activity
with our airline customers. Aircraft build rates are expected to continue to improve during 2024 and 2025 from current levels as
production of the 737 MAX and A-320 is expected to increase, and the aftermarket is expected to strengthen over the course of

the year as aircraft utilization and load factors increase. International travel utilizing primarily widebody aircraft is close to pre-
pandemic levels and we believe widebody aircraft production rates will continue to directionally match air traffic volumes.

Sales to the commercial transport market include sales of lighting and safety systems, electrical power and seat motion systems,
aircraft structures, avionics products and systems certification. Sales to this market totaled approximately $432.2 million or
62.8% of our consolidated sales in 2023.

Maintaining and growing sales to the commercial transport market will depend not only on continued market recovery post-
pandemic, but also on airlines’ capital spending budgets for cabin upgrades as well as the purchase of new aircraft by global
airlines. This spending by the airlines is impacted by their profits, cash flow and available financing as well as competitive
pressures between the airlines to improve the travel experience for their passengers. We expect that new aircraft will be
equipped with more passenger and aircraft connectivity and in-seat power than previous generation aircraft which drives
demand for our avionics and power products. This market has historically experienced strong growth from airlines installing in-
seat passenger power systems on their existing and newly delivered aircraft. Our ability to maintain and grow sales to this
market depends on our ability to maintain our technological advantages over our competitors and maintain our relationships
with major in-flight entertainment suppliers and global airlines.

Military Aerospace Market

Sales to the military aerospace market include sales of lighting and safety products, avionics products, electrical power and seat
motion products and structures products. Sales to this market totaled approximately 8.9% of our consolidated sales and
amounted to $61.6 million in 2023.

The military market is dependent on governmental funding which can change from year to year. Risks are that overall spending
may be reduced in the future, specific programs may be eliminated or that we fail to win new business through the competitive
bid process. Astronics does not have significant reliance on any one program such that cancellation of a particular program will
cause material financial loss. We believe that we will continue to have opportunities similar to past years with respect to this
market.

General Aviation Market

Sales to the general aviation market consist mostly of line-fit products driven by aircraft build rates although there are some
aftermarket sales as well. We have seen notable improvement in the current year and expect that to continue into 2024 as build
rates are expected to increase post-pandemic.

Sales to the general aviation market include sales of lighting and safety products, avionics products, and electrical power and
seat motion products. Sales to this market totaled approximately 11.7% of our consolidated sales in 2023 and amounted to
$80.8 million.

Sales to the general aviation market are driven by our ship set content on new aircraft and build rates of new aircraft. General
aviation OEM build rates are impacted by global wealth creation and corporate profitability. We continue to see opportunities
on new aircraft currently in the design phase to employ our lighting and safety, electrical power and avionics technologies in
this market. There is risk involved in the development of products for any new aircraft including the risk that the aircraft will
not ultimately be produced or that it will be produced in lower quantities than originally expected and thus impacting our return
on our engineering and development efforts.

Test Systems Products

Sales by our Test Systems segment accounted for approximately 12.2% of our consolidated sales in 2023 and amounted to
$84.4 million. This segment designs, develops, manufactures and maintains automated test systems that support the aerospace
and defense, communications and mass transit industries as well as training and simulation devices for both commercial and
military applications. Sales to the aerospace and defense market were $48.2 million in 2023. Sales to the mass transit market
were $18.9 million and sales to other markets were $17.3 million in 2023.

Sales to the military and mass transit markets are subject to fluctuations resulting from changes in governmental spending,
elimination of certain programs, or failure to win new business through the competitive bid process. Consistent with the
Aerospace segment, the Test Systems segment does not significantly rely on any one program such that cancellation of a
particular program will cause material financial loss, and we believe that we will continue to have opportunities similar to past
years regarding this market.

CRITICAL ACCOUNTING ESTIMATES

Our financial statements and accompanying notes are prepared in accordance with U.S. generally accepted accounting
principles. The preparation of the Company’s financial statements requires management to make estimates, assumptions and
judgments that affect the amounts reported. These estimates, assumptions and judgments are affected by management’s
application of accounting policies, which are discussed in the Notes to Consolidated Financial Statements, Note 1 in Item 8,
Financial Statements and Supplementary Data, of this report. The critical accounting policies have been reviewed with the
Audit Committee of our Board of Directors.

Revenue Recognition

Astronics recognizes revenue when it transfers control of a promised good or service to a customer in an amount that reflects
the consideration it expects to receive in exchange for the good or service. Our performance obligations are satisfied and control
is transferred either at a point-in-time or over-time. The majority of our revenue is recognized at a point-in-time when control is
transferred, which is generally evidenced by the shipment or delivery of the product to the customer, a transfer of title, a
transfer of the significant risks and rewards of ownership, and customer acceptance. For certain contracts under which we
produce products with no alternative use and for which we have an enforceable right to recover costs incurred plus a reasonable
profit margin for work completed to date and for certain other contracts under which we create or enhance a customer-owned
asset while performing repair and overhaul services, control is transferred to the customer over time. The Company recognizes
revenue using an over time recognition model for these types of contracts.

We utilize the cost-to-cost method as a measure of progress for performance obligations that are satisfied over time as we
believe this input method best represents the transfer of control to the customer. Under the cost-to-cost method, the extent of
progress toward completion is measured based on the proportion of costs incurred to date to the total estimated costs at
completion of the performance obligation. These projections require management to make numerous assumptions and estimates
relating to items such as the complexity of design and related development costs, performance of subcontractors, availability
and cost of materials, labor productivity and cost, overhead, capital costs, and manufacturing efficiency. We review our cost
estimates on a periodic basis, or when circumstances change and warrant a modification to a previous estimate. Cost estimates
are largely based on negotiated or estimated purchase contract terms, historical performance trends and other economic
projections.

See Note 2 to the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this report for
a further description of revenue recognition under ASC 606.

Reviews for Impairment of Goodwill

Our goodwill is the result of the excess of purchase price over net assets acquired from acquisitions. We had approximately
$58.2 million of goodwill as of December 31, 2023 and 2022.

We identify our reporting units by assessing whether the components of our operating segments constitute businesses for which
discrete financial information is available and segment management regularly reviews the operating results of those
components. The Test Systems operating segment is its own reporting unit while the other reporting units are one level below
our Aerospace operating segment.

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.

We use the discounted cash flow method to estimate the fair value of each of our reporting units. The discounted cash flow
method incorporates various assumptions, the most significant being projected sales growth rates, operating profit margins and
cash flows, the terminal growth rate and the discount rate. Management projects sales growth rates, operating margins and cash
flows based on each reporting unit’s current business, expected developments and operational strategies. If the carrying value of
the reporting unit exceeds its fair value, goodwill is considered impaired and the impairment loss is recorded for the amount by
which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value of goodwill.

The Company’s four reporting units remaining with goodwill as of the first day of our fourth quarter were subject to the annual
goodwill impairment test. Based on our quantitative assessments of our reporting units, we concluded that goodwill was not
impaired in 2023, 2022 or 2021.

CONSOLIDATED RESULTS OF OPERATIONS AND PERFORMANCE

(In thousands, except percentages, employees and per share data)
RESULTS OF OPERATIONS:

Sales

Gross Margin

SG&A Expenses as a Percentage of Sales

Loss from Operations

Operating Margin

Net Gain on Sale of Businesses

Other (Income) Expense, Net

Interest Expense, Net

Effective Tax Rate

Net Loss

Net Loss Margin

Diluted Loss Per Share
Weighted Average Shares Outstanding – Diluted
OTHER YEAR-END DATA:

Number of Employees

2023

2022

$ 689,206

$ 534,894

17.5 %

18.5 %

13.4 %

19.0 %

(6,671)

(30,044)

(1.0) %

(5.6) %

3,427

(261)

23,328

11,284

1,611

9,422

(0.4) %

(20.0) %

(26,421)

(35,747)

(3.8) %

(6.7) %

(0.80)

(1.11)

33,104

32,164

2,500

2,400

A discussion by segment can be found at “Segment Results of Operations” in this MD&A.

CONSOLIDATED OVERVIEW OF OPERATIONS

2023 Compared With 2022

Consolidated sales were up $154.3 million, or 28.8%, to $689.2 million compared to the prior year. Aerospace sales increased
$143.6 million, or 31.1%, driven by increased demand across our range of aerospace product lines. Test System sales increased
$10.7 million, due primarily to the reversal of a $5.8 million deferred revenue liability assumed with an acquisition and
associated with a customer program which is no longer expected to occur, and higher radio test product revenue.

Consolidated Cost of Products Sold in 2023 was $568.4 million, compared with $463.4 million in the prior year. The increase
was primarily due to higher volume as well a $3.6 million inventory reserve charge associated with the bankruptcy of a
customer and $1.4 million in non-cash stock bonuses reinstated in the current year. The prior-year period benefited from the
AMJP Program grant which provided a $6.0 million offset to Cost of Products Sold. Research and development expenses
increased $5.2 million due to higher innovation spend. Margins remained under pressure in the year because of inflation and
supply chain workarounds. We are passing on increased costs where we can although it will take time to be reflected in sales.
We are expecting continued improvement in pricing as well as stabilization in certain input costs as we advance into 2024.

Selling, General and Administrative (“SG&A”) expenses were $127.5 million in 2023 compared with $101.6 million in the
prior-year period primarily due to increased wages and benefits, an accounts receivable reserve charge of $7.5 million
associated with the bankruptcy of a customer, a net increase of $7.9 million in litigation-related legal expenses and reserve
adjustments, and a $2.8 million increase of incentive compensation expenses recorded in SG&A. The prior-year period reflects
$2.6 million in expense related to a customer accommodation dispute and a lease termination settlement.

In 2023, the Company recognized a final earnout of $3.4 million for the 2019 sale of its semiconductor test business, compared
with $11.3 million recognized in the prior year. Other Income in 2023 included $1.8 million associated with the reversal of a
liability related to an equity investment.

Interest expense was $23.3 million in the current year, compared with $9.4 million in the prior year, primarily driven by higher
interest rates on credit facilities entered into in January 2023.

Consolidated net loss was $26.4 million, or $0.80 per diluted share, compared with net loss of $35.7 million, or $1.11 per
diluted share, in the prior year.

2023:
•

2022:
•

•

At December 31, 2023, our consolidated backlog was $592.3 million. At December 31, 2022, our backlog was $571.4 million.
Backlog in the Aerospace segment was $517.2 million at December 31, 2023. Backlog in the Test Systems segment was
$75.0 million at December 31, 2023.

Income Taxes

Our effective tax rates for 2023 and 2022 were (0.4)% and (20.0)%, respectively. In the past, research and development costs
were deducted as incurred. However, beginning with the 2022 tax year, these costs are required to be capitalized for tax
purposes and amortized over 5 years. While this would typically result in the creation of an associated deferred tax asset, due to
our cumulative three-year pre-tax loss, a valuation allowance was applied against the deferred tax asset. In addition to state
income taxes, the following items had the most significant impact on the difference between our statutory U.S. federal income
tax rate (21% in 2023 and 2022) and our effective tax rate:

Recognition of approximately $6.8 million of valuation allowance against federal deferred tax assets. See Note 11 of
the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this report for
additional information.
Recognition of approximately $3.4 million of 2023 U.S. R&D tax credits.

Recognition of approximately $13.2 million of valuation allowance against federal deferred tax assets. See Note 11 of
the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this report for
additional information.
Recognition of approximately $2.6 million of 2022 U.S. R&D tax credits.

Impact of the COVID-19 Pandemic

See Part I, Item 1A, Risk Factors, for an additional discussion of risk related to supply chain disruptions.

2022 Compared With 2021

For a comparison of our results of operations for the years ended December 31, 2022 and 2021, see Item 7, Management’s
Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year
ended December 31, 2022 filed with the SEC on March 10, 2023.

SEGMENT RESULTS OF OPERATIONS

Operating profit (loss), as presented below, is sales less cost of products sold and other operating expenses, excluding interest
expense, other corporate expenses and other non-operating sales and expenses. Cost of products sold and other operating
expenses are directly identifiable to the respective segment. Operating profit (loss) is reconciled to loss before income taxes in
Note 20 of Item 8, Financial Statements and Supplementary Data, of this report.

We do not have material off-balance sheet arrangements that have or are reasonably likely to have a material future effect on
our results of operations or financial condition.

AEROSPACE SEGMENT

(In thousands, except percentages)
Sales

Operating Profit (Loss)
Operating Margin

Total Assets
Backlog

2023

2022

$ 604,830

$ 461,196

24,629

(1,883)

4.1 %

(0.4) %

2023

2022

493,660 $

517,240 $

481,416

477,660

Sales by Market
Commercial Transport

Military

General Aviation

Other

Total

Sales by Product Line
Electrical Power & Motion

Lighting & Safety

Avionics

Systems Certification

Structures

Other

Total

2023 Compared With 2022

2023

2022

432,199 $

314,564

61,617

80,842

30,172

54,534

63,395

28,703

604,830 $

461,196

2023

2022

268,049 $

157,434

113,117

26,255

9,803

30,172

187,446

124,347

97,234

17,222

6,244

28,703

604,830 $

461,196

Aerospace segment sales increased $143.6 million, or 31.1%, to $604.8 million. The improvement was driven by a 37.4%, or
$117.6 million, increase in commercial transport sales. Sales to this market were $432.2 million, or 62.8% of consolidated sales
in 2023, compared with $314.6 million, or 58.8% of consolidated sales in 2022. Higher airline spending and increasing OEM
build rates drove the increased demand.

General Aviation sales increased $17.4 million, or 27.5%, to $80.8 million due in part to higher demand in the business jet
market for electrical power and motion and avionics products. The Company expects strong demand in the business jet industry
to drive higher OEM production rates in the near future, resulting in further increases in demand for its products.

Military Aircraft sales increased $7.1 million, or 13.0%, to $61.6 million from increased production of higher sales of lighting
and safety and avionics products.

Aerospace segment operating profit improved to $24.6 million compared with an operating loss of $1.9 million last year, which
included an Aviation Manufacturing Jobs Protection (“AMJP”) Program grant offset to Cost of Products Sold of $6.0 million.
Operating margin expansion reflects the leverage gained on higher volume, partially offset by the $11.1 million in charges
related to the customer bankruptcy, an increase in litigation-related legal expenses and reserve adjustments of $2.9 million, and
an increase in incentive compensation expense of $2.8 million.

Aerospace bookings in 2023 were $664.3 million, for a book-to-bill ratio of 1.10:1. The book-to-bill ratio is calculated as total
orders received during the period compared with total revenue recognized during the period. The Aerospace segment’s backlog
at December 31, 2023 was $517.2 million, compared to $477.7 million at December 31, 2022. Approximately $474.5 million of
the December 31, 2023 backlog is expected to be recognized as revenue over the next twelve months.

2022 Compared With 2021

For a comparison of Aerospace segment results for the years ended December 31, 2022 and 2021, see Item 7, Management’s
Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year
ended December 31, 2022 filed with the SEC on March 10, 2023.

TEST SYSTEMS SEGMENT

(In thousands, except percentages)
Sales

Operating Loss

Operating Margin

Total Assets

Backlog

2023 Compared With 2022

2023

84,376

(8,745)

2022

73,698

(8,118)

(10.4) %

(11.0) %

2023

2022

122,681 $

111,513

75,036 $

93,696

Test Systems segment sales were $84.4 million, up $10.7 million compared with the prior year as a result of the reversal of a
$5.8 million deferred revenue liability recorded with a previous acquisition and higher radio test revenue.

Test Systems operating loss was $8.7 million compared with operating loss of $8.1 million in 2022. Absent the non-operating
sales adjustment resulting from the reversal of the deferred revenue liability, Test Systems operating loss for the current period
was $14.5 million and continued to be negatively affected by mix and under absorption of fixed costs due to volume, a
$5.0 million increase in litigation-related legal expenses, and $0.7 million of non-cash bonuses. The Test Systems segment has
been investing in significant new development programs which are expected to result in more profitable business in the near
future.

Bookings for the Test Systems segment in 2023 were $59.9 million, for a book-to-bill ratio of 0.76:1 for the year. Backlog in
the Test Systems segment was $75.0 million at December 31, 2023, compared to $93.7 million at December 31, 2022. The Test
Systems segment expects to recognize $52.1 million of backlog as revenue in 2024.

2022 Compared With 2021

For a comparison of Test Systems segment results for the years ended December 31, 2022 and 2021, see Item 7 “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year
ended December 31, 2022 filed with the SEC on March 10, 2023.

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

For further information on our contractual obligations and other commitments as of December 31, 2023 and estimated timing
thereof, see the notes referenced below, in Item 8, Financial Statements and Supplementary Data, of this report.

Long-term Debt and Interest Payments — Refer to Note 8, Long-Term Debt, in this report. The Company completed a
financing transaction totaling $205 million on January 19, 2023, which refinanced its previous revolving credit facility that was
scheduled to mature in November 2023. The new financing consists of a $90 million asset-based Term Loan Facility and a
$115 million asset-based revolving credit facility, which was later amended to temporarily increase the limit to $120 million
until January 31, 2024 and then returning to the original $115 million. The maturity date of the Term Loan Facility is the earlier
of the stated maturity date of the ABL Revolving Credit Facility or January 19, 2027, provided the ABL Revolving Credit
Facility is extended beyond that date. The Term Loan Facility has an interest rate of SOFR plus 8.75% and is collateralized
primarily by real estate, fixed assets and intellectual property. Amortization of the term loan principal has a monthly
amortization rate of 0.833% until maturity, at which time the remaining outstanding balance is due. Scheduled principal
payments of $9.0 million are due under the Term Loan Facility during 2024. The Term Loan Facility required a commitment
fee of $4.5 million, $0.9 million of which is due in the second quarter of 2024. The ABL Revolving Credit Facility has a
scheduled maturity of January 19, 2026, an interest rate of SOFR plus 2.25% to 2.75% and is collateralized primarily by
inventory and accounts receivable. The ABL Revolving Credit Facility requires payment of a quarterly commitment fee of
0.25% or 0.375% based on the Company’s average excess availability. Future interest payments under the two credit facilities
of approximately $35.5 million have been estimated using the applicable interest rate of each debt facility based on expected
future borrowings and scheduled term loan repayments. Actual future ABL borrowings and rates may differ from those used to
estimate the amounts discussed above.

Purchase Obligations — Purchase obligations are comprised of the Company’s commitments for goods and services in the
normal course of business and amount to approximately $191.1 million payable over the next twelve months.

Supplemental Retirement Plan and Post Retirement Obligations — Anticipated payments related with the Company’s defined
benefit plans are detailed in Note 13, Retirement Plans and Related Post Retirement Benefits in Item 8, Financial Statements
and Supplementary Data, of this report.

Lease Obligations — Refer to Note 10, Leases in Item 8, Financial Statements and Supplementary Data, of this report for
details on obligations and timing of expected future lease payments, including a five-year maturity schedule.

Legal Reserves — Refer to Note 19, Legal Proceeding in Item 8, Financial Statements and Supplementary Data, of this report
for management’s estimate of damages to be paid related to our ongoing litigation with Lufthansa Technik and timing thereof.

LIQUIDITY AND CAPITAL RESOURCES

(In thousands)
Cash Flow Data

Net Cash Flows from:

Operating Activities

Investing Activities

Financing Activities
Year-end Financial Position

Working Capital (1)

Indebtedness

Other Year-end Data

Capital Expenditures

2023

2022

(23,950) $

(28,312)

(4,106) $

25,435 $

14,386

(1,412)

246,448 $

172,499 $

213,682

164,000

7,643 $

7,675

(1) Working capital is calculated as the difference between Current Assets and Current Liabilities.

Our cash flow from operations, available borrowing capacity, and proceeds under our ATM Program (as defined below) are
expected to provide us with the financial resources needed to run our operations and reinvest in our business for at least the next
12 months.

Our ability to maintain sufficient liquidity is highly dependent upon achieving expected operating results. Failure to achieve
expected operating results could have a material adverse effect on our liquidity, our ability to obtain financing or access our
existing financing, and our operations in the future.

Operating Activities

Cash used for operating activities totaled $24.0 million in 2023, as compared with $28.3 million cash used for operating
activities in 2022. Cash flow from operating activities improved compared with 2022 primarily related to improvement in our
financial results, coupled with accounts receivable and inventory using less cash as supply chain challenges have improved,
partially offset by increased outflows related to accounts payable. The $3.4 million and $11.3 million earnouts in 2023 and
2022, respectively, from the sale of the semiconductor business are treated as investing activities and thus are shown as non-
cash gains removed from the calculation of cash flow from operations. Additional non-cash items in 2023 include $12.6 million
incremental provisions for inventory and receivables, primarily the result of the customer bankruptcy previously discussed, and
a $5.8 million deferred liability recovery. Operating cash flows in 2022 benefited from the receipt of income tax refunds and
AMJP grant proceeds.

Our cash flows from operations are primarily dependent on our net loss adjusted for non-cash expenses and income and the
timing of collections of receivables, inventory levels and payments to suppliers and employees. Sales and operating results of
our Aerospace segment are influenced by build rates of new aircraft, which are subject to general economic conditions, airline
passenger travel and spending for government and military programs. Our Test Systems segment sales depends in part on
capital expenditures of the aerospace and defense industry which, in turn, depend on current and future demand for those
products. A reduction in demand for our customers’ products would adversely affect our operating results and cash flows.

Investing Activities

Cash used for investing activities in 2023 was $4.1 million compared to $14.4 million cash provided by investing activities in
2022. Investing cash flows in 2023 were positively impacted by the receipt of $3.4 million related to the calendar 2022 earnout
from the sales of the semiconductor business compared to the receipt of $10.7 million and $11.3 million related to the calendar
2020 and 2021 earnouts, respectively, in 2022.

Future requirements for PP&E depend on numerous factors, including expansion of existing product lines and introduction of
new products. Management believes that our cash flow from operations and current borrowing arrangements will provide for
these capital expenditures. We expect to continue to evaluate acquisition opportunities in the future.

Financing Activities

Cash provided by financing activities totaled $25.4 million for 2023, as compared with cash used for financing activities of
$1.4 million for 2022. The Company received proceeds from our at-the-market equity offering program (the “ATM Program”)
of $21.3 million in 2023. Additionally, the Company made net borrowings under our credit facilities of $8.5 million in 2023
compared with net repayments of $1.0 million in 2022, partially offset by an increase in costs associated with amending and
refinancing our credit facilities.

The Company amended the existing revolving credit facility on January 19, 2023 by entering into the Sixth Amended and
Restated Credit Agreement (the “ABL Revolving Credit Facility”). The ABL Revolving Credit Facility set the maximum
aggregate amount that the Company can borrow under the revolving credit line at $115 million, with borrowings subject to a
borrowing base determined primarily by certain domestic inventory and accounts receivable. The maturity date of borrowings
under the ABL Revolving Credit Facility is January 19, 2026. Under the terms of the ABL Revolving Credit Facility, the
Company pays interest on the unpaid principal amount of the facility at a rate equal to SOFR (which is required to be at least
1.00%) plus 2.25% to 2.75%. The Company must pay a quarterly commitment fee under the ABL Revolving Credit Facility in
an amount equal to 0.25% or 0.375% based on the Company’s average excess availability.

On June 28, 2023, the Company amended the ABL Revolving Credit Facility, temporarily increasing the maximum aggregate
amount that the Company can borrow under the revolving credit line by $5 million from $115 million to $120 million until
October 31, 2023, at which time the limit was to return to $115 million. On October 31, 2023, the Company executed a second
amendment to extend the temporary limit of $120 million until January 31, 2024 at which time the limit returned to
$115 million. Under the provisions of the ABL Revolving Credit Facility, the Company has a cash dominion arrangement with
the lead banking institution whereby eligible daily cash receipts are contractually utilized to pay down outstanding borrowings
and any ending cash balances subject to the dominion arrangement collateralize the outstanding borrowings under the ABL
Revolving Credit Facility. Eligible cash receipts that have not yet been applied to outstanding debt balances are classified as
restricted cash in the accompanying Consolidated Balance Sheets. The Company is also required to maintain minimum liquidity
of $20 million through the date of delivery of the compliance certificate for the quarter ended March 31, 2024, and $10 million
thereafter. On December 31, 2023, there was $87.0 million outstanding on the ABL Revolving Credit Facility and there
remained $32.7 million available, net of outstanding letters of credit (though subject to the minimum liquidity requirement).

The Company also entered into a $90 million asset-based Term Loan Facility on January 19, 2023. The Term Loan Facility is
secured primarily by fixed assets, real estate and intellectual property. The maturity date of the Term Loan Facility is the earlier
of the stated maturity date of the ABL Revolving Credit Facility or January 19, 2027, if the ABL Revolving Credit Facility is
extended beyond that date. The Company pays interest under the Term Loan Facility at a rate equal to SOFR (which is required
to be at least 2.50%) plus 8.75%. The Company must pay a commitment fee under the Term Loan Facility of 5% of the total
aggregate commitment, or $4.5 million, $1.8 million of which was paid on the closing date, $1.8 million of which was paid on
June 19, 2023 and $0.9 million of which is due in the second quarter of 2024.

Amortization of the principal under the Term Loan Facility began in April with a monthly amortization rate of 0.292% of the
outstanding term loan principal balance for the period April 1, 2023 through June 1, 2023, increasing to 0.542% per month for
the period July 1, 2023 through September 1, 2023 and 0.833% monthly thereafter. Total scheduled principal payments of
$9.0 million are payable in 2024 and as such, have been classified as current in the accompanying Consolidated Balance Sheets
as of December 31, 2023. The interest rate on current maturities of long-term debt is variable at SOFR plus 8.75%, and was
14.2% at December 31, 2023. The remaining balance of $76.5 million as of December 31, 2023, is recorded as long-term in the
accompanying Consolidated Balance Sheets.

Pursuant to the ABL Revolving Credit Facility and the Term Loan Facility, the Company was required to comply with a
minimum trailing four quarter Adjusted EBITDA, as defined in the ABL Revolving Credit Facility and Term Loan Facility
Agreements, of $51.7 million in the Company’s fourth quarter of 2023, increasing to $57.6 million in the first quarter of 2024,
$65.2 million in the second quarter of 2024 and $70 million thereafter. The non-cash accounts receivable reserve associated
with the customer bankruptcy recorded in 2023 was not required to be included in the calculation of EBITDA pursuant to our
ABL Revolving Credit Facility and the Term Loan Facility. Mandatory prepayment of a portion of excess cash flow, as defined
by the Term Loan Facility, is payable towards the principal amount outstanding on an annual basis. No such amounts are
payable for the year ended December 31, 2023. Any voluntary prepayments made are subject to a prepayment fee, as defined
by the Term Loan Facility. Beginning with the first quarter of 2024, the Company is subject to a minimum fixed charge
coverage ratio of 1.10 to 1.00. Further, the Company is subject to excess cash flow repayment provisions, restrictions on

additional indebtedness, share repurchases and dividend payments, and a limitation on capital expenditures. The Company was
in compliance with debt covenants under the ABL Revolving Credit Facility and Term Loan Facility as of and for the year
ended December 31, 2023. The Company was in compliance with debt covenants under the ABL Revolving Credit Facility and
Term Loan Facility as of and for the year ended December 31, 2023.

The Company incurred $8.8 million in incremental debt issuance costs related to the new facilities, allocated between the ABL
Revolving Credit Facility and the Term Loan Facility. All costs are amortized to interest expense over the term of the respective
agreement. Unamortized deferred debt issuance costs associated with the ABL Revolving Credit Facility ($2.0 million as of
December 31, 2023) are recorded within Other Assets and those associated with the Term Loan Facility ($4.3 million as of
December 31, 2023) are recorded as a reduction of the carrying value of the debt on the Consolidated Balance Sheets.

Certain of the Company’s subsidiaries are borrowers or guarantors under the ABL Revolving Credit Facility and the Term Loan
Facility.

In the event of voluntary or involuntary bankruptcy of the Company or any subsidiary, all unpaid principal and other amounts
owing under the credit facilities automatically become due and payable. Other events of default, such as failure to make
payments as they become due and breach of financial and other covenants, change of control, cross default under other material
debt agreements, and a going concern qualification for any reason other than loan maturity date give the agent the option to
declare all such amounts immediately due and payable.

On June 5, 2023, the Company filed a shelf registration statement on Form S-3 with the SEC, which allows us to issue shares of
common stock, preferred stock, warrants, subscription rights, purchase contracts and debt securities in one or more offerings up
to an aggregate offering price of $150 million and on terms to be determined at the time of the offering. On August 8, 2023, the
Company initiated an at-the-market equity offering program (the “ATM Program”) for the sale from time to time of shares of
the Company’s common stock, par value $0.01 per share having an aggregate offering price of up to $30 million. Shares of
Common Stock under the ATM Program are offered using Wells Fargo Securities, LLC and HSBC Securities (USA) Inc., as
sales agents (the “Sales Agents” and each a “Sales Agent”), pursuant to the equity distribution agreement, dated August 8,
2023, by and among the Company and the Sales Agents.

During the year ended December 31, 2023, the Company sold 1,334,228 shares of our common stock under the ATM Program,
generating aggregate net proceeds of $21.3 million after deducting related expenses. The Company currently is obligated to use
the net proceeds from any sale of shares of common stock pursuant to the ATM Program to pay down the outstanding principal
amount of, and any unpaid interest on, the ABL Revolving Credit Facility. However, any principal amount paid down on our
ABL Revolving Credit Facility using the proceeds of the ATM Program will be, subject to compliance with the requirements
and conditions set forth in the ABL Revolving Credit Facility, available to be reborrowed by the Company and used for, among
other items, working capital and general corporate purposes. If the outstanding principal amount balance of the ABL Revolving
Credit Facility has been reduced to zero, then the Company intends to use the net proceeds of the ATM Program for general
corporate purposes. As of December 31, 2023, the Company had remaining capacity under the ATM Program to sell shares of
common stock having an aggregate offering price up to approximately $8.2 million.

Cash on hand at the end of the year was $11.3 million. Net debt was $161.2 million, compared with $150.2 million at the end of
2022.

The Company expects its cash flow from operations will provide sufficient cash flows to fund operations. However, the
Company may also evaluate various actions and alternatives to enhance its profitability and cash generation from operating
activities, which could include manufacturing efficiency initiatives, cost-reduction measures, working with vendors and
suppliers to reduce lead times and expedite shipment of critical components, and working with customers to expedite receivable
collections. The Company may also utilize available capacity under the ABL Revolving Credit Facility and sales proceeds from
the ATM Program.

Our ability to maintain sufficient liquidity and comply with financial debt covenants is highly dependent upon achieving
expected operating results. Failure to achieve expected operating results could have a material adverse effect on our liquidity,
our ability to obtain financing or access our existing financing, and our operations in the future and could allow our debt holders
to demand payment of all outstanding amounts. Refer to Item 1A, Risk Factors, for further discussion.

Refer to Note 8 of our Consolidated Financial Statements in Item 8, Financial Statement and Supplementary Data, of this report
for additional information regarding our credit facility.

DIVIDENDS

Management believes that it should retain the capital generated from operating activities for investment in advancing
technologies, acquisitions and debt retirement. Accordingly, there are no plans to institute a cash dividend program. Further, we
are precluded from payment of dividends under our credit facilities.

RELATED-PARTY TRANSACTIONS

Information regarding certain relationships and related transactions is incorporated herein by reference to the information
included in the Company’s 2024 Proxy Statement which will be filed with the SEC within 120 days after the end of the
Company’s 2023 fiscal year.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 1 of the Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this report.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has limited exposure to fluctuation in foreign currency exchange rates to U.S. dollar, primarily in Canadian
dollars and Euros currency. Approximately 90% of the Company’s consolidated sales are transacted in U.S. dollars. Net assets
held in or measured in Canadian dollars amounted to $11.1 million at December 31, 2023. A 10% change in the value of the
U.S. dollar versus the Canadian dollar would have had an immaterial impact to 2023 net loss. Net assets held in or measured in
Euros amounted to $24.8 million at December 31, 2023. A 10% change in the value of the U.S. dollar versus the Euros would
have had an immaterial impact to 2023 net loss.

Risk due to fluctuation in interest rates is a function of the Company’s floating rate debt obligations, which total approximately
$172.5 million as of December 31, 2023. A change of 1% in interest rates of all variable rate debt would impact annual net loss
by approximately $1.7 million, before income taxes.

As disclosed elsewhere in this report, the future impacts of the Russia and Ukraine conflict and the COVID-19 pandemic and
their residual effects, including economic uncertainty, inflationary environment and disruption within the global supply chain,
labor markets and aerospace industry, on our business remain uncertain. As we cannot anticipate the ultimate duration or scope
of the Russia-Ukraine war and the residual effects of the COVID-19 pandemic, the ultimate financial impact to our results
cannot be reasonably estimated, but could be material.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Astronics Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Astronics Corporation (the Company) as of December 31,
2023 and 2022, the related consolidated statements of operations, comprehensive loss, shareholders’ equity and cash flows for
each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in
the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and
2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in
conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework), and our report dated March 4, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that
were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as
a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.

Description of
the Matter

Valuation of Goodwill
As of December 31, 2023, the Company’s goodwill balance was $58.2 million. As discussed in Notes 1
and 7 of the consolidated financial statements, the Company tests goodwill for impairment 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. For each
reporting unit, the Company performed a quantitative test using the discounted cash flow method to
estimate fair value. The discounted cash flow method incorporates various assumptions, the most
significant being projected sales growth rates, operating margins and cash flows, the terminal growth rate
and the weighted-average cost of capital. If the carrying value of the reporting unit exceeds its fair value,
goodwill impairment is measured as the amount by which the reporting unit’s carrying value exceeds its
fair value, not to exceed the carrying value of goodwill.

Auditing management’s assumptions was especially challenging due to the estimation required in
determining the fair value of certain of the Company’s reporting units with goodwill. The fair value
estimates for certain reporting units were sensitive to the significant assumptions of the sales growth rates
and operating margins. These assumptions are affected by expectations about future market and economic
conditions, particularly those in the aerospace industry.

How We
Addressed the
Matter in Our
Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls
over the Company’s goodwill impairment testing process. This included the determination of the
underlying significant assumptions described above, and the completeness and accuracy of the
impairment analysis.

Description of
the Matter

To test the estimated fair value of the Company’s reporting units, we performed audit procedures with the
assistance of our valuation professionals that included, among others, assessing the methodology used,
testing the significant assumptions discussed above and testing the underlying data used in the impairment
analysis. We performed sensitivity analyses of significant assumptions to evaluate the changes in the fair
value of the reporting units that would result from changes in the assumptions. We compared the
significant assumptions used by management to current industry and economic trends, historical trends of
the Company, and other relevant factors and assessed the historical accuracy of management’s estimates.
We also involved our valuation professionals to assist in our evaluation of the weighted-average cost of
capital used in the fair value estimates. In addition, we tested the reconciliation of the fair value of the
Company’s reporting units to the market capitalization of the Company as of the annual impairment
testing date.

Revenue Recognition
For the year ended December 31, 2023, the Company’s sales totaled $689.2 million. As discussed in
Note 2 to the consolidated financial statements, some of the Company’s contracts with customers contain
multiple performance obligations. 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 product, which is generally upon
delivery and acceptance by the customer. For contracts with customers in which the Company satisfies its
promise to the customer to provide a service or a product 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 recognizes revenue over time as it satisfies the performance obligation.

Auditing management’s evaluation of contracts with customers was especially challenging due to the
judgment required to analyze the terms and conditions of the Company’s various customer contracts
given that such terms and conditions are nonstandard. This included the identification and determination
of the performance obligations and assessment of whether a product has alternative use.

How We
Addressed the
Matter in Our
Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls
over the Company’s revenue recognition process. We tested controls over management’s review of the
terms and conditions of contracts with customers which included an analysis of the distinct performance
obligations and a review of the conclusion as to whether revenue from such performance obligations
should be recognized over time or at a point in time.

We performed procedures to test the identification and determination of the performance obligations and
the timing of revenue recognition which included, among others, reading a sample of executed contracts
and purchase orders to understand the contract and performing an independent assessment of the
identification of distinct performance obligations and whether a product has alternative use. We tested the
completeness and accuracy of the Company’s contract summary documentation, specifically related to the
identification and determination of distinct performance obligations and the timing of revenue
recognition.

We have served as the Company’s auditor since 1992.
Buffalo, New York
March 4, 2024

/s/ Ernst & Young LLP

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term
is defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act. Under the supervision and with the participation of our
management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the
effectiveness of our internal control over financial reporting as of December 31, 2023 based upon the framework in Internal
Control – Integrated Framework originally issued in 2013 by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based on that evaluation, our management concluded that our internal control over financial reporting is
effective as of December 31, 2023.

Ernst & Young LLP, independent registered public accounting firm, has audited our Consolidated Financial Statements
included in this Annual Report on Form 10-K and, as part of their audit, has issued their report, included herein, on the
effectiveness of our internal control over financial reporting.

By:

/s/ Peter J. Gundermann

Peter J. Gundermann

President & Chief Executive Officer

(Principal Executive Officer)

/s/ David C. Burney

David C. Burney

Executive Vice President and Chief Financial
Officer
(Principal Financial Officer)

March 4, 2024

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Astronics Corporation

Opinion on Internal Control Over Financial Reporting

We have audited Astronics Corporation’s internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). In our opinion, Astronics Corporation (the Company) maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated
statements of operations, comprehensive loss, shareholders’ equity and cash flows for each of the three years in the period
ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our
report dated March 4, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report
on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Buffalo, New York
March 4, 2024

/s/ Ernst & Young LLP

ASTRONICS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)
Sales

Cost of Products Sold

Gross Profit

Selling, General and Administrative Expenses

Net Gain on Sale of Facility

Loss from Operations

Net Gain on Sale of Businesses

Other (Income) Expense, Net

Interest Expense, Net of Interest Income

Loss Before Income Taxes

Provision for (Benefit from) Income Taxes

Net Loss
Basic Loss Per Share

Diluted Loss Per Share

Year Ended December 31,

2023

2022

2021

689,206 $

534,894 $

568,410

120,796

127,467

—

463,354

71,540

101,584

—

444,908

379,545

65,363

99,051

5,014

(6,671)

(30,044)

(28,674)

3,427

(261)

23,328

11,284

1,611

9,422

(26,311)

(29,793)

110

5,954

10,677

2,159

6,804

(26,960)

(1,382)

(26,421) $

(35,747) $

(25,578)

(0.80) $

(1.11) $

(0.82)

See notes to Consolidated Financial Statements.

ASTRONICS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)
Net Loss

Other Comprehensive Income:

Foreign Currency Translation Adjustments

Retirement Liability Adjustment – Net of Tax

Total Other Comprehensive Income

Comprehensive Loss

Year Ended December 31,

2023

2022

2021

(26,421) $

(35,747) $

(25,578)

984

(884)

100

(1,928)

6,897

4,969

(939)

2,894

1,955

(26,321) $

(30,778) $

(23,623)

See notes to Consolidated Financial Statements.

ASTRONICS CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)
ASSETS
Current Assets:

Cash and Cash Equivalents
Restricted Cash
Accounts Receivable, Net of Allowance for Estimated Credit Losses
Inventories
Prepaid Expenses and Other Current Assets

Total Current Assets

Property, Plant and Equipment, Net of Accumulated Depreciation
Operating Right-of-Use Assets
Other Assets
Intangible Assets, Net of Accumulated Amortization
Goodwill
Total Assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:

Current Maturities of Long-term Debt
Accounts Payable
Accrued Payroll and Employee Benefits
Accrued Income Taxes
Current Operating Lease Liabilities
Other Accrued Expenses
Customer Advanced Payments and Deferred Revenue

Total Current Liabilities

Long-term Debt
Supplemental Retirement Plan and Other Liabilities for Pension Benefits
Long-term Operating Lease Liabilities
Other Liabilities
Deferred Income Taxes
Total Liabilities
Shareholders’ Equity:
Common Stock, $.01 par value, Authorized 40,000,000 Shares
31,402,141 Shares Issued and 28,569,316 Outstanding at December 31, 2023
29,121,924 Shares Issued and 25,967,233 Outstanding at December 31, 2022

Convertible Class B Stock, $.01 par value, Authorized 15,000,000 Shares
5,952,203 Shares Issued and Outstanding at December 31, 2023
6,314,430 Shares Issued and Outstanding at December 31, 2022

Additional Paid-in Capital
Accumulated Other Comprehensive Loss
Retained Earnings
Treasury Stock, 2,832,825 Shares at December 31, 2023
3,154,691 Shares at December 31, 2022
Total Shareholders’ Equity
Total Liabilities and Shareholders’ Equity

December 31,

2023

2022

4,756 $
6,557
172,108
191,801
14,560
389,782
85,436
27,909
7,035
65,420
58,210
633,792 $

8,996 $
61,134
22,038
3,045
5,069
21,023
22,029
143,334
159,237
29,290
24,376
26,730
1,307
384,274

13,778
—
147,790
187,983
15,743
365,294
90,658
13,028
8,605
79,277
58,169
615,031

4,500
64,193
15,588
6,410
4,441
23,913
32,567
151,612
159,500
26,604
9,942
25,583
1,870
375,111

314

291

59
129,544

(9,426)

209,753

(80,726)
249,518
633,792 $

63
98,630
(9,526)
240,360

(89,898)
239,920
615,031

See notes to Consolidated Financial Statements.

ASTRONICS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)
Cash Flows from Operating Activities
Net Loss

Year Ended December 31,

2023

2022

2021

(26,421) $

(35,747) $

(25,578)

Adjustments to Reconcile Net Loss to Cash Flows from Operating
Activities:

Non-cash Items:

26,104
3,023

16,003
7,198
146
5,088
—
—
5,106
4,249
(3,427)
(1,305)
(5,824)
1,913

(31,872)
(13,283)
(4,495)
4,634
(1,949)
(4,835)
(4,880)
(408)
1,285
(23,950)

27,777
—

3,415
6,497
19
6,028
—
—
4,512
—

(11,284)
500
—
3,086

(41,646)
(34,058)
27,843
1,193
16,134
5,264
(7,295)
(405)
(145)
(28,312)

3,537
(7,643)
(4,106) $

22,061
(7,675)
14,386 $

29,005
—

3,942
6,460
(441)
5,198
(5,083)
(2,200)
4,199
—
(10,677)
8,374
—
4,179

(14,832)
(5,150)
8,610
(5,344)
156
(235)
(6,036)
(404)
327
(5,530)

9,213
(6,034)
3,179

Depreciation and Amortization
Amortization of Deferred Financing Fees
Provisions for Non-Cash Losses on Inventory and Receivables
Equity-based Compensation Expense
Deferred Tax Expense (Benefit)
Operating Lease Non-cash Expense
Net Gain on Sales of Assets
Contingent Consideration Liability Fair Value Adjustment
Non-cash Accrued 401K Contribution
Non-cash Accrued Stock Bonus Expense
Net Gain on Sale of Business, Before Taxes
Non-cash Litigation Provision Adjustment
Non-cash Deferred Liability Recovery
Other

Changes in Operating Assets and Liabilities:

Accounts Receivable
Inventories
Accounts Payable
Accrued Expenses
Income Taxes
Customer Advanced Payments and Deferred Revenue
Operating Lease Liabilities
Supplemental Retirement Plan Liabilities
Other Assets and Liabilities

Net Cash from Operating Activities
Cash Flows from Investing Activities

Proceeds from Sale of Businesses and Assets
Capital Expenditures

Net Cash from Investing Activities

ASTRONICS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED

(In thousands)
Cash Flows from Financing Activities

Proceeds from Long-term Debt

Principal Payments on Long-term Debt

Stock Award and Employee Stock Purchase Plan (“ESPP”) activity

Proceeds from At-the-Market (“ATM”) Stock Sales

Finance Lease Principal Payments

Debt Acquisition Costs

Net Cash from Financing Activities

Effect of Exchange Rates on Cash

Year Ended December 31,

2023

2022

2021

139,732 $

125,825 $

20,000

(131,233)

(124,825)

(30,000)

2,476

21,269

(47)

(6,762)

25,435

156

—

(93)

(2,416)

(1,412)

(641)

3,396

—

(901)

—

(7,505)

(799)

Decrease in Cash and Cash Equivalents and Restricted Cash

(2,465)

(15,979)

(10,655)

Cash and Cash Equivalents and Restricted Cash at Beginning of Year

13,778

29,757

Cash and Cash Equivalents and Restricted Cash at End of Year

11,313 $

13,778 $

40,412

29,757

Supplemental Disclosure of Cash Flow Information

Interest Paid

Income Taxes Paid (Refunded), Net of (Refunds) Payments

17,689 $

7,605 $

1,964 $

(9,978) $

5,951

(1,250)

See notes to Consolidated Financial Statements.

ASTRONICS CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands)
Common Stock

Beginning of Year

Year Ended December 31,

2023

2022

2021

291 $

289 $

Issuance of Common Stock Through At-the-Market Offering

Net Exercise of Stock Options, including ESPP

Net Issuance of Common Stock for Restricted Stock Units (“RSUs”)

Class B Stock Converted to Common Stock

—

278

—

End of Year

Convertible Class B Stock

Beginning of Year

Class B Stock Converted to Common Stock

End of Year

Additional Paid in Capital

Beginning of Year

Issuance of Common Stock Through ATM Offering, Net of Offering
Costs
Net Exercise of Stock Options, including ESPP, and Equity-based
Compensation Expense
Tax Withholding Related to Issuance of RSUs

End of Year

Accumulated Comprehensive Loss

Beginning of Year

Foreign Currency Translation Adjustments

Retirement Liability Adjustment – Net of Taxes

End of Year

Retained Earnings

Beginning of Year

Net Loss

Reissuance of Treasury Shares for 401K Contribution

End of Year

Treasury Stock

Beginning of Year

Shares Issued to Fund 401K Obligation

End of Year

Total Shareholders’ Equity

314 $

291 $

289

63 $

(4)

59 $

64 $

(1)

63 $

(5)

98,630 $

92,037 $

82,187

21,246

—

10,309

(641)

6,897

(304)

10,029

(179)

129,544 $

98,630 $

92,037

(9,526) $

(14,495) $

(16,450)

984

(884)

(1,928)

6,897

(939)

2,894

(9,426) $

(9,526) $

(14,495)

240,360 $

287,225 $

312,803

(26,421)

(4,186)

(35,747)

(11,118)

(25,578)

—

209,753 $

240,360 $

287,225

(89,898) $

(108,516) $

(108,516)

9,172

18,618

—

(80,726) $

(89,898) $

(108,516)

249,518 $

239,920 $

256,604

See notes to Consolidated Financial Statements.

ASTRONICS CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY, CONTINUED

(Share data, in thousands)
Common Stock

Beginning of Year

Issuance of Common Stock Through ATM Offering

Net Issuance from Exercise of Stock Options, including ESPP

Net Issuance of Common Stock for RSUs

Class B Stock Converted to Common Stock

End of Year

Convertible Class B Stock

Beginning of Year

Net Issuance of Restricted Stock

Net Issuance from Exercise of Stock Options
Class B Stock Converted to Common Stock
End of Year

Treasury Stock

Beginning of Year

Shares Issued to Fund 401K Obligation

End of Year

Year Ended December 31,

2023

2022

2021

29,122

1,334

437

147

362

28,911

27,825

—

106

—

485

531

31,402

29,122

28,911

6,314

6,375

6,877

—

(362)

5,952

3,155

(322)

2,833

—

(85)

6,314

3,808

(653)

3,155

(531)

6,375

3,808

—

3,808

See notes to Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES AND PRACTICES

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 seat 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
Ukraine and India.

The Company has two reportable segments, Aerospace and Test Systems. The Aerospace segment designs and manufactures
products for the global aerospace and defense industry. Our Test Systems segment designs, develops, manufactures and
maintains automated test systems that support the aerospace and defense, communications and mass transit industries as well as
training and simulation devices for both commercial and military applications.

See Note 21 for details of our divestiture related activities in 2023, 2022 and 2021. There was no acquisition activity in 2023,
2022 or 2021.

Impact of the COVID-19 Pandemic

In September 2021, the Company was awarded a grant of up to $14.7 million from the U.S. Department of Transportation
(“USDOT”) under the Aviation Manufacturing Jobs Protection Program (“AMJP”). The Company received $7.3 million and
$7.4 million under the grant in 2022 and 2021, respectively. 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 years ended December 31, 2022 and 2021, the Company recognized $6.0 million and $8.7
million of the award, respectively.

Additionally, the Company qualified for government subsidies from the Canadian and French governments as a result of the
COVID-19 pandemic’s impact on our foreign operations. The Canadian and French subsidies are income-based grants intended
to reimburse the Company for certain employee wages. The grants are recognized as income over the periods in which the
Company recognizes as expenses the costs the grants are intended to defray, primarily during 2021 with an immaterial amount
recognized during 2022.

The following table presents the COVID-19 related government assistance, including AMJP, recorded during the years
ended December 31, 2023, 2022 and 2021:

(In thousands)
Reduction in Cost of Products Sold

Reduction in Selling, General and Administrative Expenses

Total

Principles of Consolidation

Year Ended December 31,

2023

2022

2021

— $

6,062 $

10,682

—

228

— $

6,073 $

10,910

The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All
intercompany transactions and balances have been eliminated.

The Company accounts for its acquisitions under ASC Topic 805, Business Combinations and Reorganizations (“ASC Topic
805”). ASC Topic 805 provides guidance on how the acquirer recognizes and measures the consideration transferred,
identifiable assets acquired, liabilities assumed, non-controlling interests, and goodwill acquired in a business combination.
ASC Topic 805 also expands required disclosures surrounding the nature and financial effects of business combinations. There
were no acquisitions in 2023, 2022 or 2021.

Cost of Products Sold, Research and Development 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 developmental costs. The Company is engaged in a variety of research and development activities
directed to the substantial improvement or new application of the Company’s existing technologies. Research and development
costs are expensed as incurred and include salaries, benefits, consulting, material costs and depreciation. Research and
development expenses amounted to $53.5 million in 2023, $48.3 million in 2022 and $43.3 million in 2021. These costs are
included in Cost of Products Sold. SG&A expenses include costs primarily related to our sales, marketing and administrative
departments. Interest expense is shown net of interest income. Interest income was insignificant for the years ended December
31, 2023, 2022 and 2021.

Shipping and Handling

Shipping and handling costs are included in Cost of Products Sold.

Equity-Based Compensation

The Company accounts for its stock options following Accounting Standards Codification (“ASC”) Topic 718, Compensation –
Stock Compensation (“ASC Topic 718”). ASC Topic 718 requires all equity-based payments to employees, including grants of
employee stock options and restricted stock units (“RSUs”), to be recognized in the statement of earnings based on the grant
date fair value of the award. For awards with graded vesting, the Company uses a straight-line method of attributing the value
of stock-based compensation expense, subject to minimum levels of expense, based on vesting. The Company accounts for
forfeitures as they occur.

Under ASC Topic 718, stock compensation expense recognized during the period is based on the value of the portion of share-
based payment awards that is ultimately expected to vest during the period. Equity-based compensation expense is included in
SG&A Expenses.

Cash and Cash Equivalents

All highly liquid instruments with a maturity of three months or less at the time of purchase are considered cash equivalents.

Restricted Cash

Under the provisions of the ABL Revolving Credit Facility (as defined and discussed below in Note 8), the Company has a cash
dominion arrangement with the banking institution for its accounts within the United States whereby daily cash receipts are
contractually utilized to pay down outstanding balances on the ABL Revolving Credit Facility. Account balances that have not
yet been applied to the ABL Revolving Credit Facility are classified as restricted cash in the accompanying Consolidated
Balance Sheets. The following table provides a reconciliation of cash and restricted cash included in Consolidated Balance
Sheets to the amounts included in the Consolidated Statements of Cash Flows.

(In thousands)
Cash and Cash Equivalents

Restricted Cash

Total Cash and Restricted Cash Shown in Statements of Cash Flows

Accounts Receivable and Allowance for Estimated Credit Losses

December 31,

2023

2022

4,756 $

6,557

11,313 $

13,778

—
13,778

Accounts receivable are composed of trade and contract receivables recorded at either the invoiced amount or costs in excess of
billings, are expected to be collected within one year, and do not bear interest. The Company records a valuation allowance to
account for estimated credit losses. The estimate for credit losses 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. Balances are written off when determined to be uncollectible.

Although the Company has historically not experienced significant credit losses, the Company’s exposure to credit losses may
increase if its customers are adversely affected by global economic recessions, industry conditions, or other customer-specific
factors.

Inventories

We record our inventories at the lower of cost or net realizable value. We determine the cost basis of our inventory on a first-in,
first-out or weighted average basis using a standard cost methodology that approximates actual cost. The Company records
reserves to provide for excess, slow moving or obsolete inventory. In determining the appropriate reserve, the Company
considers the age of inventory on hand, the overall inventory levels in relation to forecasted demands as well as reserving for
specifically identified inventory that the Company believes is no longer salable or whose value has diminished.

Cloud Computing Arrangements

The Company incurs costs to implement cloud computing arrangements that are hosted by third party vendors. Implementation
costs associated with cloud computing arrangements are capitalized when incurred during the application development phase.
Amortization is calculated on a straight-line basis over the contractual term of the cloud computing arrangement. Capitalized
amounts related to such arrangements are recorded within Other Current Assets and other non-current assets in the
Consolidated Balance Sheets and were insignificant as of December 31, 2023 and December 31, 2022.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost less accumulated depreciation. Depreciation of property, plant and
equipment (“PP&E”) is computed using the straight-line method for financial reporting purposes and using accelerated methods
for income tax purposes. Estimated useful lives of the assets are as follows: buildings, 25-40 years; and machinery and
equipment, 4-10 years. Leased buildings and associated leasehold improvements are amortized over the shorter of the terms of
the lease or the estimated useful lives of the assets, with the amortization of such assets included within depreciation expense.

The cost of properties sold or otherwise disposed of and the accumulated depreciation thereon are eliminated from the accounts
and the resulting gain or loss, as well as maintenance and repair expenses, is reflected within operating income. Replacements
and improvements are capitalized.

Depreciation expense was approximately $12.2 million, $12.0 million and $12.7 million in 2023, 2022 and 2021, respectively.

Deferred Financing Costs

The Company incurs debt issuance costs in connection with amending or entering into new credit facilities. These costs are
amortized as an adjustment to interest expense over term of the credit facility on a straight-line basis, which approximates the
effective interest method. Debt issuance amortization expense was approximately $3.0 million, $0.8 million and $0.4 million in
2023, 2022 and 2021, respectively.

On January 19, 2023, the Company completed a financing transaction, which refinanced its previous revolving credit facility
which was scheduled to mature in November 2023. The new financing consists of a $90 million asset-based term loan (the
“Term Loan Facility”) and a $115 million asset-based revolving credit facility (the “ABL Revolving Credit Facility”). The
Company incurred $8.8 million in debt issuance costs related to the new facilities, allocated between the ABL Revolving Credit
Facility and the Term Loan Facility. Unamortized deferred debt issuance costs associated with the ABL Revolving Credit
Facility ($2.0 million as of December 31, 2023) are recorded within Other Assets and those associated with the Term Loan
Facility ($4.3 million as of December 31, 2023) are recorded as a reduction of the carrying value of the debt on the
Consolidated Balance Sheets. The unamortized balance of deferred financing costs on our previous credit facility of
$3.2 million is recorded within Other Assets on the Consolidated Balance Sheet at December 31, 2022.

Long-Lived Assets

Long-lived assets to be held and used are initially recorded at cost. The carrying value of these assets is evaluated for
recoverability whenever adverse effects or changes in circumstances indicate that the carrying amount may not be recoverable.
Impairments are recognized if future undiscounted cash flows from operations are not expected to be sufficient to recover long-
lived assets. The carrying amounts are then reduced to fair value, which is typically determined by using a discounted cash flow
model.

Assets held for sale are to be reported at lower of its carrying amount or fair value less cost to sell. Judgment is required in
estimating the sales price of assets held for sale and the time required to sell the assets. These estimates are based upon
available market data and operating cash flows of the assets held for sale. During the fourth quarter of 2021, we sold a facility
resulting in a gain of $5.0 million. Refer to Note 21.

Goodwill

We may elect to perform a qualitative assessment that considers economic, industry and company-specific factors for all or
selected reporting units. If, after completing the assessment, it is determined that it is more likely than not that the fair value of a
reporting unit is less than its carrying value, we proceed to a quantitative test. We may also elect to perform a quantitative test
instead of a qualitative test for any or all of our reporting units.

Quantitative testing requires a comparison of the fair value of each reporting unit to its carrying value. We use the discounted
cash flow method to estimate the fair value of our reporting units. The discounted cash flow method incorporates various
assumptions, the most significant being projected sales growth rates, operating margins and cash flows, the terminal growth rate
and the weighted average cost of capital. If the carrying value of the reporting unit exceeds its fair value, goodwill impairment
is measured as the amount by which the reporting unit’s carrying value exceeds its fair value, not to exceed the carrying value
of goodwill.

The 2023, 2022 and 2021 assessments indicated no impairment to the carrying value of goodwill in any of the Company’s
reporting units and no impairment charges were recognized.

Intangible Assets

The estimated fair values of acquired intangibles are generally determined based upon future economic benefits such as
earnings and cash flows. Acquired identifiable intangible assets are recorded at fair value and are amortized over their estimated
useful lives. Acquired intangible assets with an indefinite life are not amortized, but are reviewed for impairment at least
annually or more frequently whenever events or changes in circumstances indicate that the carrying amounts of those assets are
below their estimated fair values. Impairment is tested under ASC Topic 350, Intangibles - Goodwill and Other, as amended by
Accounting Standards Update (“ASU”) 2012-2.

Financial Instruments

The Company’s financial instruments consist primarily of cash and cash equivalents, restricted cash, accounts receivable,
accounts payable and long-term debt. The Company performs periodic credit evaluations of its customers’ financial condition
and generally does not require collateral. The Company does not hold or issue financial instruments for trading purposes. Due
to their short-term nature, the carrying values of cash and equivalents, restricted cash, accounts receivable and accounts payable
approximate fair value. The carrying value of the Company’s variable rate long-term debt instruments also approximates fair
value due to the variable rate feature of these instruments.

From time to time, the Company makes long-term, strategic equity investments in companies to promote business and strategic
objectives. These investments as classified within other assets in the Consolidated Balance Sheets. For investments requiring
equity method accounting, we recognize our share of the investee’s earnings or losses within Other Expense, Net of Other
Income in the Consolidated Statements of Operations. For investments not requiring equity method accounting, if the
investment has no readily determinable fair value, we have elected the practicability exception of ASU 2016-01, under which
the investment is measured at cost, less impairment, plus or minus observable price changes from orderly transactions of an
identical or similar investment of the same issuer.

We recognized income of $1.8 million associated with the reversal of a liability related to an equity investment, as we will no
longer be required to make an associated payment. This amount is included in Other Expense, Net of Other Income in the
Consolidated Statement of Operations as of December 31, 2023. Our ownership percentage in this company was diluted during
2023, thus our equity investment was converted to the cost method.

Deferred Tax Asset Valuation Allowance

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 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.
After considering the losses in recent periods and cumulative pre-tax losses in the three-year period ending with the current
year, the Company determined that projections of future taxable income could not be relied upon as a source of income to
realize its deferred tax assets. However, the Company is relying on a significant portion of its existing deferred tax liabilities for
the realizability of deferred tax assets. As a result, the Company has valuation allowances against its deferred tax assets of

approximately $65.6 million, $57.4 million, and $43.5 million during the years ended December 31, 2023, 2022 and 2021,
respectively, for the portion of deferred tax asset not realizable by the Company’s existing deferred tax liabilities.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”)
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure
of contingent liabilities and the reported amounts of sales and expenses during the reporting periods in the financial statements
and accompanying notes. Actual results could differ from those estimates.

Foreign Currency Translation

The Company accounts for its foreign currency translation in accordance with ASC Topic 830, Foreign Currency Translation.
The aggregate transaction gains and losses included in operations were insignificant in 2023, 2022 and 2021.

Dividends

The Company has not paid any cash dividends in the three-year period ended December 31, 2023.

Loss Contingencies

Loss contingencies may from time to time arise from situations such as claims and other legal actions. Loss contingencies are
recorded as liabilities when it is probable that a liability has been incurred and the amount of the loss is reasonably estimable. In
all other instances, legal fees are expensed as incurred. Disclosure is required when there is a reasonable possibility that the
ultimate loss will exceed the recorded provision. Contingent liabilities are often resolved over long time periods. In recording
liabilities for probable losses, management is required to make estimates and judgments regarding the amount or range of the
probable loss. Management continually assesses the adequacy of estimated loss contingencies and, if necessary, adjusts the
amounts recorded as better information becomes known.

Newly Adopted and Recent Accounting Pronouncements

Recent Accounting Pronouncements Not Yet Adopted

Standard
ASU No. 2023-06
Disclosure Improvements:
Codification Amendments in
Response to the SEC’s
Disclosure Update and
Simplification Initiative

Description
This ASU amends the disclosure or presentation
requirements related to various subtopics in the
FASB Accounting Standards Codification. The
effective date for each amendment will be the
date on which the SEC’s removal of that related
disclosure requirement from Regulation S-X or
Regulation S-K becomes effective, with early
adoption prohibited.

Financial Statement Effect or Other
Significant Matters
The Company will monitor
the
removal of various requirements from
the current regulations in order to
determine when to adopt the related
amendments, but does not anticipate
the adoption of the new guidance will
the
have a material
Company’s Consolidated Financial
Statements.

impact on

ASU No. 2023-07
Segment Reporting (Topic 280),
Improvements to Reportable
Segment Disclosure

ASU No. 2023-09
Income Taxes (Topic 740),
Improvements to Income Tax
Disclosures

The standard includes updates to the disclosure
requirements for a public entity’s reportable
segments and provides more detailed information
about a reportable segment’s expenses. The new
standard is effective for fiscal years beginning
after December 15, 2023 and interim periods
beginning after December 15, 2024, with
retrospective application required.
The amendments in this update require enhanced
disclosures within the annual rate reconciliation,
including
present
reconciling items on a gross basis in specified
categories, disclosure of both percentages and
dollar amounts, and disaggregation of
the
reconciling items by nature when they meet a
quantitative threshold. The update also includes
enhanced disclosure requirements for income
taxes paid. The new standard is effective for
annual periods beginning after December 15,
2024; early adoption is permitted.

requirements

new

The Company is currently evaluating
the impact of adopting this guidance.
in
We expect adoption
additional disclosures in the notes to
our Consolidated Financial Statements.

result

The Company is currently evaluating
the impact of adopting this guidance.
We expect adoption
in
additional disclosures in the notes to
our Consolidated Financial Statements.

result

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.

NOTE 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 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 receipt of consideration, 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. The Company has elected the
practical expedient available under ASC 340-40-25-4 to immediately expense the incremental cost of obtaining a contract when
the expected benefit of those costs is less than one year. As of December 31, 2023 and 2022, the Company did 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 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. The Company has capitalized $4.7 million and $2.5 million of costs as of December 31, 2023 and 2022, respectively.

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. In general, the customer has obtained control when they have legal title, significant
risks and rewards of ownership of the asset, and the Company has a present right to payment for the product. 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 over time using a cost-
to-cost method, where revenues are recognized proportionally as costs are incurred, or on a straight-line basis throughout the
contract period.

On December 31, 2023, we had $592.3 million of remaining performance obligations, which we refer to as total backlog. We
expect to recognize approximately $526.5 million of our remaining performance obligations as revenue in 2024.

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
Estimated Credit Losses on our Consolidated Balance Sheets.

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 Balance Sheets 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 $27.6 million and $14.8 million during the year ended December 31, 2023 and 2022, 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 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:

(In thousands)

Beginning Balance, January 1, 2023
Ending Balance, December 31, 2023

Contract Assets

Contract Liabilities

$
$

27,349 $
46,321 $

33,209
22,888

The increase in contract assets reflects the net impact of new revenue recognized in excess of billings exceeding billing of
previously unbilled revenue during the period. The decrease in contract liabilities reflects the net impact of revenue recognized
in excess of new customer advances or deferred revenues recorded, as well as a $5.8 million reversal of a deferred revenue
liability assumed with an acquisition and associated with a customer program within our Test Systems Segment which is no
longer expected to occur, resulting in revenue recognized during the year ended December 31, 2023.

The following table presents our revenue disaggregated by Market Segments as of December 31 as follows:

(In thousands)
Aerospace Segment

Commercial Transport

Military Aircraft

General Aviation

Other

Aerospace Total

Test Systems Segment

Government & Defense

Test Systems Total

2023

2022

2021

432,199 $

314,564 $

201,990

61,617

80,842

30,172

54,534

63,395

28,703

70,312

56,673

36,263

604,830

461,196

365,238

84,376

73,698

79,670

Total

689,206 $

534,894 $

444,908

The following table presents our revenue disaggregated by Product Lines as of December 31 as follows:

(In thousands)
Aerospace Segment

Electrical Power & Motion

Lighting & Safety

Avionics

Systems Certification

Structures

Other

Aerospace Total

Test Systems

Total

NOTE 3 — ACCOUNTS RECEIVABLE

Accounts receivable at December 31 consists of:

(In thousands)
Trade Accounts Receivable

Unbilled Recoverable Costs and Accrued Profits

Total Receivables, Gross

Less Allowance for Estimated Credit Losses

Total Receivables, Net

2023

2022

2021

268,049 $
157,434

187,446 $
124,347

141,746
103,749

113,117

26,255

9,803

30,172

97,234

17,222

6,244

28,703

64,901

13,050

5,529

36,263

604,830

461,196

365,238

84,376

73,698

79,670

689,206 $

534,894 $

444,908

2023

2022

134,980 $

123,071

46,321

181,301

27,349

150,420

(9,193)

(2,630)

172,108 $

147,790

The following table provides a rollforward of the allowance for estimated credit losses that is deducted from accounts
receivable to present the net amount expected to be collected at December 31:

(In thousands)
Balance at December 31, 2021

Bad Debt Expense, Net of Recoveries

Write-off Charges Against the Allowance and Other Adjustments

Balance at December 31, 2022

Bad Debt Expense, Net of Recoveries

Write-off Charges Against the Allowance and Other Adjustments

Balance at December 31, 2023

3,183

565

(1,118)

2,630

7,772

(1,209)

9,193

NOTE 4 — INVENTORIES

Inventories at December 31 are as follows:

(In thousands)
Finished Goods

Work in Progress

Raw Material

Total Inventories

2023

2022

29,013 $

32,118

130,670

191,801 $

30,703

29,895

127,385

187,983

At December 31, 2023, the Company’s reserve for inventory valuation was $38.5 million, or 16.7% of gross inventory. At
December 31, 2022, the Company’s reserve for inventory valuation was $36.8 million, or 16.4% of gross inventory.

NOTE 5 — PROPERTY, PLANT AND EQUIPMENT

Property, Plant and Equipment at December 31 are as follows:

(In thousands)
Land

Building and Improvements

Machinery and Equipment

Construction in Progress

Total Property, Plant and Equipment, Gross

Less Accumulated Depreciation

Total Property, Plant and Equipment, Net

NOTE 6 — INTANGIBLE ASSETS

2023

2022

8,606 $
71,480

126,725

4,219

211,030

125,594

85,436 $

8,578
73,744

123,071

6,415

211,808

121,150

90,658

The following table summarizes acquired intangible assets at December 31 as follows:

(In thousands)
Patents

Non-compete Agreement

Trade Names

Completed and Unpatented Technology

Customer Relationships

Total Intangible Assets

Weighted
Average Life

Gross Carrying
Amount

Accumulated
Amortization

Gross Carrying
Amount

Accumulated
Amortization

2023

2022

11 years $

2,146 $

4 years

10 years

9 years

11,082

11,426

47,896

11,072

9,973

38,961

11,082

11,402

47,855

2,066

11,052

9,350

34,877

15 years
12 years $

142,208
214,758 $

87,186
149,338 $

142,133
214,618 $

77,996
135,341

Amortization is computed on the straight line method for financial reporting purposes. Amortization expense for intangibles
was $13.9 million, $14.9 million and $15.4 million for 2023, 2022 and 2021, respectively.

Based upon acquired intangible assets at December 31, 2023, amortization expense for each of the next five years is estimated
to be:

(In thousands)
2024

2025

2026

2027

2028

$
$
$
$

12,856

10,935
9,533
7,825
7,037

NOTE 7 — GOODWILL

The following table summarizes the changes in the carrying amount of goodwill at December 31 as follows:

(In thousands)
Balance at December 31, 2021

Foreign Currency Translations and Other

Balance at December 31, 2022

Foreign Currency Translations and Other

Balance at December 31, 2023

Goodwill, Gross

Accumulated Impairment Losses

Goodwill, Net

Aerospace

Test Systems

Total

36,648 $

21,634 $

58,282

(114)

36,534

21,635

—

(113)

58,169

36,575 $

21,635 $

58,210

157,276 $

21,635 $

178,911

(120,701)

—

(120,701)

36,575 $

21,635 $

58,210

The Company’s four reporting units with goodwill as of the first day of our fourth quarters of 2023, 2022 and 2021 were
subject to the annual goodwill impairment test. Based on our quantitative assessments of our reporting units performed during
our annual goodwill impairment tests, the Company concluded that no impairment to the carrying value of goodwill in any of
the Company’s reporting units was indicated and no impairment charges were recognized in 2023, 2022 and 2021.

NOTE 8 — LONG-TERM DEBT

On June 28, 2023, the Company amended the ABL Revolving Credit Facility, temporarily increasing the maximum aggregate
amount that the Company can borrow under the revolving credit line by $5 million from $115 million to $120 million until
October 31, 2023, at which time the limit was to return to $115 million. On October 31, 2023, the Company executed a second
amendment to extend the temporary limit of $120 million until January 31, 2024, at which time the limit returned to
$115 million. Under the provisions of the ABL Revolving Credit Facility, the Company has a cash dominion arrangement with
the lead banking institution whereby eligible daily cash receipts are contractually utilized to pay down outstanding borrowings
and any cash balances subject to the dominion arrangement collateralize the outstanding borrowings under the ABL Revolving
Credit Facility. Eligible cash balances that have not yet been applied to outstanding debt balances are classified as restricted
cash in the accompanying Consolidated Balance Sheets. The Company is also required to maintain minimum liquidity of
$20 million through the date of delivery of the compliance certificate for the quarter ended March 31, 2024, and $10 million
thereafter. On December 31, 2023, there was $87.0 million outstanding on the ABL Revolving Credit Facility and there
remained $32.7 million available, net of outstanding letters of credit (though subject to the minimum liquidity requirement).

Amortization of the principal under the Term Loan Facility began in April with a monthly amortization rate of 0.292% of the
outstanding term loan principal balance for the period April 1, 2023 through June 1, 2023, 0.542% per month for the period
July 1, 2023 through September 1, 2023 and 0.833% monthly thereafter. Total scheduled principal payments of $9.0 million are
payable in 2024 and as such, have been classified as current in the accompanying Consolidated Balance Sheets as of December
31, 2023. The interest rate on current maturities of long-term debt is variable at SOFR plus 8.75%, and was 14.2% at December
31, 2023. The remaining balance of $76.5 million as of December 31, 2023, is recorded as long-term in the accompanying
Consolidated Balance Sheets.

Certain of the Company’s subsidiaries are borrowers or guarantors under the ABL Revolving Credit Facility and the Term Loan
Facility.

The Company expects its sales growth and reductions in working capital will provide sufficient cash flows to fund operations.
However, the Company may also evaluate various actions and alternatives to enhance its profitability and cash generation from
operating activities, which could include manufacturing efficiency initiatives, cost-reduction measures, working with vendors
and suppliers to reduce lead times and expedite shipment of critical components, and working with customers to expedite
receivable collections.

NOTE 9 — WARRANTY

In the ordinary course of business, the Company warrants its products against defects in design, materials and workmanship
typically over periods ranging from twelve to sixty months. The Company determines warranty reserves needed by product line
based on experience and current facts and circumstances. Activity in the warranty accrual, which is included in Other Accrued
Expenses on the Consolidated Balance Sheets, is summarized as follows:

(In thousands)
Balance at Beginning of the Year

Warranties Issued

Reassessed Warranty Exposure

Warranties Settled

Balance at End of the Year

NOTE 10 — LEASES

2023

2022

2021

8,009 $

8,183 $

6,260

(397)

(4,121)

3,407

(65)

(3,516)

9,751 $

8,009 $

7,018

6,083

(1,474)

(3,444)

8,183

The Company has operating and finance leases for leased office and manufacturing facilities and equipment leases. We have
concluded that when an agreement grants us the right to substantially all of the economic benefits associated with an identified
asset, and we are able to direct the use of that asset throughout the term of the agreement, we have a lease. We lease certain

office equipment under finance leases, and we lease certain production facilities, office equipment and vehicles under operating
leases. Some of our leases include options to extend or terminate the leases and these options have been included in the relevant
lease term to the extent that they are reasonably certain to be exercised.

If the lease arrangement also contains non-lease components, the Company elected the practical expedient not to separate any
combined lease and non-lease components for all lease contracts. For our real estate leases, the payments used in the calculation
of a new lease liability include fixed payments and variable payments (if the variable payments are based on an index) over the
remaining lease term. Variable lease payments based on indices have been included in the related right-of-use assets and lease
liabilities on our Consolidated Balance Sheets, while variable lease payments based on usage of the underlying asset have been
excluded and are expensed in the period they are incurred, as they do not represent present rights or obligations. Variable lease
components for leases relate primarily to common area maintenance charges and other separately billed lessor services, sales
and real estate taxes.

Any new additional operating and financing lease liabilities and corresponding right-of-use (“ROU”) assets are based on the
present value of the remaining minimum rental payments. The Company’s operating lease liability increased approximately
$19.9 million as a result of acquiring ROU assets from new leases entered into during the year ended December 31, 2023. In
determining the incremental borrowing rate, we have considered borrowing data for secured debt obtained from our lending
institution.

The following is a summary of the Company’s ROU assets and lease liabilities at December 31:

(In thousands)

Operating Leases:

Operating Right-of-Use Assets, Gross

Less Accumulated Right-of-Use Asset Impairment

Less Accumulated Amortization

Operating Right-of-Use Assets, Net

Short-term Operating Lease Liabilities

Long-term Operating Lease Liabilities

Operating Lease Liabilities

Finance Leases:

Finance Right-of-Use Assets, Gross

Less Accumulated Amortization

Finance Right-of-Use Assets, Net — Included in Other Assets

Short-term Finance Lease Liabilities — Included in Other Accrued Expenses

Long-term Finance Lease Liabilities — Included in Other Liabilities

Finance Lease Liabilities

The following is a summary of the Company’s total lease costs as of December 31:

(In thousands)

Finance Lease Cost:

Amortization of ROU Assets

Interest on Lease Liabilities
Total Finance Lease Cost

Operating Lease Cost

Impairment Charge of Operating Lease ROU Asset

Variable Lease Cost

Short-term Lease Cost (excluding month-to-month)

Less Sublease and Rental Income
Total Operating Lease Cost

Total Net Lease Cost

2023

2022

43,528 $

15,566

27,909 $

5,069 $

24,376

29,466

1,710

14,728

13,028

4,441

9,942

29,445 $

14,383

274 $

194 $

97 $

104

201 $

231

138

2023

2022

54 $

9
63

6,352

2,240
251
(548)
8,348

4
98

6,627

—

1,757
602
(1,329)
7,657

7,755

8,411 $

The following is a summary of cash paid for amounts included in the measurement of lease liabilities as of December 31:

(In thousands)

Operating Cash Flow for Finance Leases

Operating Cash Flow for Operating Leases

Financing Cash Flow for Finance Leases

2023

2022

9 $

6,180 $

47 $

7,873

As permitted by ASC 842, leases with expected durations of less than 12 months from inception (i.e. short-term leases) were
excluded from the Company’s calculation of its lease liability and ROU asset.

The weighted-average remaining term for the Company’s operating and financing leases are approximately 8 years and 2 years,
respectively. The weighted-average discount rates for the Company’s operating and financing leases are approximately 5.7%
and 5.8%, respectively.

The following is a summary of the Company’s maturity of lease liabilities:

(In thousands)

2024

2025

2026

2027

2028

Thereafter

Total Lease Payments

Less: Interest

Total Lease Liability

NOTE 11 — INCOME TAXES

Operating Leases

Financing Leases

6,511 $

122

5,728

4,303

3,579

3,404

13,183

36,708

7,263

29,445 $

—

211

201

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences
between the financial reporting and tax basis of assets and liabilities. Deferred tax assets are reduced, if deemed necessary, by a
valuation allowance for the amount of tax benefits which are not more likely than not to be realized.

The provision for (benefit from) income taxes at December 31 consists of the following:

(In thousands)
Current

U.S. Federal

State

Foreign

Current

Deferred

U.S. Federal

State

Foreign

Deferred

Total

2023

2022

2021

(2,573) $

5,338 $

(1,713)

937

1,600

(36)

(336)

583

(101)

146

(153)

750

5,935

113

(239)

145

(667)

1,439

(941)

(237)

(87)

(117)

(441)

110 $

5,954 $

(1,382)

The effective tax rates differ from the statutory federal income tax rate as follows:

Statutory Federal Income Tax Rate

Permanent Items

Stock Compensation Expense

Contingent Consideration Liability Fair Value Adjustment

Other

Foreign Tax Rate Differential

State Income Tax, Net of Federal Income Tax Effect

Research and Development Tax Credits

Change in Valuation Allowance

Net GILTI and FDII Tax (Benefit) Expense

Foreign Tax Credit for Dividend Withholding

Tax Rate Change on 2020 Federal Net Operating Loss (NOL) Carryback

Other

Effective Tax Rate

2023

2022

2021

21.0 %

(1.4) %

— %

(1.4) %

(0.4) %

(4.6) %

14.1 %

(26.1) %

(1.0) %

— %

(0.6) %

(0.4) %

(2.2) %

— %

(0.3) %

(2.8) %

1.0 %

7.7 %

(44.6) %

1.8 %

(1.5) %

— %

(0.1) %

(20.0) %

(2.1) %

1.7 %

(0.7) %

(2.7) %

2.2 %

12.8 %

(29.8) %

— %

1.7 %

0.9 %

0.1 %

5.1 %

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes as well as tax attributes.

Significant components of the Company’s deferred tax assets and liabilities at December 31, are as follows:

(In thousands)
Deferred Tax Assets:

Asset Reserves

Deferred Compensation

Section 163(j) - Interest Expense Limitation

State Investment and Research and Development Tax Credit Carryforwards, Net of
Federal Tax
Customer Advanced Payments and Deferred Revenue

Net Operating Loss Carryforwards and Other

Goodwill and Intangible Assets

ASC 606 Revenue Recognition

Research & Development Costs

Lease Liabilities

Other

Total Gross Deferred Tax Assets

Valuation Allowance

Deferred Tax Assets

Deferred Tax Liabilities:

Depreciation

ASC 606 Revenue Recognition - Section 481(a) Adjustment

Lease Assets

Earnout Income Accrual

Other

Deferred Tax Liabilities

Net Deferred Tax Liabilities

2023

2022

19,609 $

6,968

1,777

1,430

870

11,178

1,001

25,659

6,952

5,308

80,844

(65,640)

15,204

8,593

227

6,595

997
16,511
(1,307) $

17,680

6,798

—

1,128

1,917

11,307

1,277

197

19,892

3,201

6,135

69,532

(57,369)

12,163

8,886

525

2,905

—

1,005
13,321
(1,158)

The net deferred tax assets and liabilities presented in the Consolidated Balance Sheets are as follows at December 31:

(In thousands)
Other Assets — Long-term

Deferred Tax Liabilities — Long-term

Net Deferred Tax Liabilities

2023

2022

— $

(1,307)

(1,307) $

712

(1,870)

(1,158)

Beginning January 1, 2022, the Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the option to deduct research and
development expenditures in the current year and now requires taxpayers to capitalize and amortize research and development
costs pursuant to Internal Revenue Code (“IRC”) Section 174. The capitalized expenses are amortized over a 5-year period for
domestic expenses and a 15-year period for foreign expenses. As a result of this provision of the TCJA, deferred tax assets
related to capitalized research expenses increased by approximately $5.8 million and $19.9 million during the years ended
December 31, 2023 and 2022, respectively. The Company maintains a full valuation allowance against this deferred tax asset.

At December 31, 2023, gross federal net operating losses amounted to approximately $1.9 million, which are subject to annual
limitations under Internal Revenue Code Section 382. Of these net operating losses, $1.5 million expire in 2038 and the
remaining $0.4 million will carryforward indefinitely. The Company maintains a full valuation allowance against this deferred
tax asset.

At December 31, 2023, gross state net operating loss carryforwards amounted to approximately $138.6 million. These state net
operating loss carryforwards begin to expire at various dates from 2023 through 2043. The Company maintains a full valuation
allowance against this deferred tax asset.

At December 31, 2023, state income tax credit carryforwards amounted to approximately $0.9 million and begin to expire at
various dates from 2023 to 2040. Additionally, the Company has approximately $0.2 million of foreign tax credits that it can
carry forward through 2027 and approximately $0.5 million of research and development tax credits that it can carry forward
through 2043. The Company maintains a full valuation allowance against these credits.

The Company has analyzed its filing positions in all of the federal and state jurisdictions where it is required to file income tax
returns, as well as all open tax years in these jurisdictions. Should the Company need to accrue a liability for uncertain tax
benefits, any interest and penalties associated with that liability would be recorded as income tax expense. A reconciliation of
the total amounts of unrecognized tax benefits, excluding interest and penalties, is as follows:

(in thousands)
Balance at Beginning of the Year

Decreases as a Result of Tax Positions Taken in Prior Years

Balance at End of the Year

2023

2022

2021

443 $

(343)

100 $

1,412 $

(969)

443 $

1,890

(478)

1,412

There are no material penalties or interest liabilities accrued as of December 31, 2023, 2022, or 2021, nor are any material
penalties or interest costs included in expense for each of the years ended December 31, 2023, 2022 and 2021. The years under
which we conducted our evaluation coincided with the tax years currently still subject to examination by major federal and state
tax jurisdictions, those being 2019 through 2023 for federal purposes and 2017 through 2023 for state purposes.

Pretax income (loss) from the Company’s foreign subsidiaries amounted to approximately $6.5 million, $0.1 million and
$(3.3) million for 2023, 2022 and 2021, respectively. The balance of pretax earnings or loss for each of those years were
domestic.

Historically, we have asserted that the unremitted earnings of our foreign subsidiaries were indefinitely reinvested. However,
for the years ended December 31, 2023 and 2022, we determined that we can no longer assert indefinite reinvestment on

approximately $1.9 million and $3.4 million of the unremitted earnings of Luminescent Systems Canada Inc, respectively. As a
result, we have recorded a deferred tax liability of approximately $0.1 million and $0.2 million at December 31, 2023 and 2022,
respectively, related to local country withholding taxes that are expected to be incurred upon ultimate repatriation of such
earnings. All other foreign unremitted earnings, which total approximately $13.6 million, continue to be indefinitely reinvested.
We continue to be permanently reinvested in outside basis differences other than unremitted earnings as we have no plans to
liquidate or sell any foreign subsidiaries. In addition, we have not provided deferred taxes on any outside basis differences of
our domestic subsidiaries as we have the ability and intent to recover these basis differences in a tax-free manner. It is not
practicable to determine the amount of unrecognized deferred tax related to these basis differences.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the
economic uncertainty resulting from the COVID-19 pandemic. The CARES Act includes many measures to assist companies,
including temporary changes to income and non-income based laws, some of which were enacted as part of the Tax Cuts and
Jobs Act of 2017 (“TCJA”). Some of the key changes include eliminating the 80% of taxable income limitation by allowing
corporate entities to fully utilize NOLs to offset taxable income in 2018, 2019 and 2020, allowing NOLs originating in 2018,
2019 and 2020 to be carried back five years, enhanced interest deductibility, and retroactively clarifying the immediate recovery
of qualified improvement property costs rather than over a 39-year recovery period. During the year ended December 31, 2021,
the Company recorded a tax benefit relating to the NOL carryback provisions and the technical correction for qualified
improvement property provided for in the CARES Act of approximately $0.3 million. No tax benefit was recorded for the years
ending December 31, 2023 and 2022.

The Inflation Reduction Act of 2022 (IRA) was signed into law on August 16, 2022. Key provisions under the IRA include a
15% corporate alternative minimum tax imposed on certain large corporations and the extension and expansion of clean energy
tax incentives. There were no impacts related to the IRA recorded for the years ending December 31, 2023 and 2022.

Under an Organization for Economic Co-operation and Development Inclusive Framework, countries that agreed to enact a
two-pillar solution aim to address the challenges arising from the digitalization of the world economy (Pillar Two). Pillar Two
sets out global minimum Effective Tax Rate (ETR) rules to ensure that large multinational businesses with consolidated
revenue over €750 million are subject to a minimum ETR of 15% on income arising in low-tax jurisdictions. Rules under Pillar
Two are expected to be enacted beginning January 1, 2024. The Company will continue to monitor the impact of Pillar Two;
however, the Pillar Two is currently not applicable as the Company does not meet the threshold of having consolidated revenue
over €750 million.

NOTE 12 — PROFIT SHARING/401K PLAN

The Company offers eligible domestic full-time employees participation in a safe harbor 401K plan. The plan provides for an
annual company contribution. In addition, employees may contribute a portion of their salary to the plan. In response to the
impact of the COVID-19 pandemic, Company contributions were temporarily suspended beginning in the second quarter of
2020. The Company contributions were reinstated in the fourth quarter of 2021. The plan may be amended or terminated at any
time.

Total charges to income before income taxes for this plan was approximately $5.3 million, $4.7 million and $4.3 million in
2023, 2022 and 2021, respectively. The Company has funded the 2022 and 2023 contributions to date with treasury stock in
lieu of cash and will fund the remaining 2023 contribution with treasury stock in the first quarter of 2024.

NOTE 13 — RETIREMENT PLANS AND RELATED POST RETIREMENT BENEFITS

The Company has two non-qualified supplemental retirement defined benefit plans (“SERP” and “SERP II”) for certain current
and retired executive officers. The accumulated benefit obligation of the plans as of December 31, 2023 and 2022 amounts to
$22.0 million and $20.5 million, respectively.

The plans provide for benefits based upon average annual compensation and years of service and, in the case of SERP, there are
offsets for social security and profit sharing benefits. It is the Company’s intent to fund the plans as plan benefits become
payable, since no assets exist at December 31, 2023 or 2022 for either of the plans.

The Company accounts for the funded status (i.e., the difference between the fair value of plan assets and the projected benefit
obligations) of its pension plans in accordance with the recognition and disclosure provisions of ASC Topic 715,
Compensation, Retirement Benefits, which requires the Company to recognize the funded status in its balance sheet, with a
corresponding adjustment to Accumulated Other Comprehensive Income (“AOCI”), net of tax. These amounts will be
subsequently recognized as net periodic pension cost pursuant to the Company’s historical policy for amortizing such amounts.
Further, actuarial gains and losses that arise in subsequent periods and are not recognized as net periodic pension cost in the

same periods will be recognized as a component of AOCI. Those amounts will be subsequently recognized as a component of
net periodic pension cost on the same basis as the amounts recognized in AOCI.

Unrecognized prior service costs of $0.6 million ($1.2 million net of $0.6 million in taxes) and unrecognized actuarial losses of
$2.0 million ($3.6 million net of $1.6 million in taxes) are included in AOCI at December 31, 2023 and have not yet been
recognized in net periodic pension cost.

The reconciliation of the beginning and ending balances of the projected benefit obligation of the plans for the years ended
December 31 is as follows:

(In thousands)
Funded Status

Projected Benefit Obligation

Beginning of the Year — January 1

Service Cost

Interest Cost

Actuarial Loss (Gain)

Benefits Paid
End of the Year — December 31

2023

2022

26,210 $

30,503

105

1,302

1,529

(348)

138

834

(4,917)

(348)

28,798 $

26,210

In 2023, the net actuarial loss of $1.5 million is due to the change in the salary scale and the decrease of 21 basis points in the
discount rate used to measure the benefit obligation as of December 31, 2023 compared to the prior year. The assumptions used
to calculate the projected benefit obligation as of December 31 are as follows:

Discount Rate

Future Average Compensation Increases

2023

4.79%

3.00%

2022

5.00%

2.00% - 3.00%

The plans are unfunded at December 31, 2023 and are recognized in the accompanying Consolidated Balance Sheets as a
current accrued pension liability of $0.3 million and a long-term accrued pension liability of $28.4 million.

The service cost component of net periodic benefit cost is included in SG&A expenses, and all other net periodic benefit costs
components (such as interest cost, prior service cost amortization and actuarial gain/loss amortization) are reported outside of
operating income, within Other (Income) Expense, Net in the accompanying Consolidated Statements of Operations.

The following table summarizes the components of the net periodic cost for the years ended December 31:

(In thousands)
Net Periodic Cost

2023

2022

2021

Service Cost — Benefits Earned During Period

105 $

Interest Cost

Amortization of Prior Service Cost

Amortization of Losses

Net Periodic Cost

1,302

386

358

138 $
834

386

949

195
764

386

1,292

2,637

2,151 $

2,307 $

The assumptions used to determine the net periodic cost are as follows:

Discount Rate

2023

5.00%

2022

2.75%

2021

2.42%

Future Average Compensation Increases

2.00% - 3.00% 2.00% - 3.00% 2.00% - 3.00%

Benefit payments expected in each of the next five years are as follows: 2024 - $0.7 million, 2025 - $0.6 million, 2026 -
$0.6 million, 2027 - $0.9 million, and 2028 - $1.9 million. Benefits expected to be paid in the aggregate between 2029 and 2033
are $11.1 million. Given that the plans are unfunded, these amounts are what the Company expects to contribute to the plans in
each respective year.

Participants in the SERP are entitled to paid medical, dental and long-term care insurance benefits upon retirement under the
plan. The measurement date for determining the plan obligation and cost is December 31. The accumulated postretirement
benefit obligation is $0.8 million at December 31, 2023 and 2022. The plan is recognized in the accompanying Consolidated
Balance Sheets as a current accrued pension liability of less than $0.1 million and a long-term accrued pension liability of
$0.8 million. The net periodic cost for the years ended December 31, 2023, 2022 and 2021 was not material.

The Company is a participating employer in a trustee-managed multiemployer defined benefit pension plan for employees who
participate in collective bargaining agreements. The plan generally provides retirement benefits to employees based on years of
service to the Company. Contributions are based on the hours worked and are expensed on a current basis. The plan is 99.2%
funded as of January 1, 2023. The Company’s contributions to the plan were $0.7 million in 2023, $0.5 million in 2022 and
$0.4 million in 2021. These contributions represent less than 1% of total contributions to the plan.

NOTE 14 — SHAREHOLDERS’ EQUITY

Share Buyback Program

The Company’s Board of Directors from time to time authorizes the repurchase of common stock, which allows the Company
to purchase shares of its common stock in accordance with applicable securities laws on the open market or through privately
negotiated transactions. The Company has the capacity under the currently authorized program to repurchase additional shares
of its common stock with a maximum dollar value of $41.5 million. Under its current credit agreement, and as described further
in Note 8, the Company is currently restricted from further stock repurchases under this program.

At-the-Market Equity Offering

On August 8, 2023, the Company initiated an at-the-market equity offering program (the “ATM Program”) for the sale from
time to time of shares of the Company’s common stock, par value $0.01 per share (“Common Stock”) having an aggregate
offering price of up to $30.0 million. Shares of Common Stock under the ATM Program are offered using Wells Fargo
Securities, LLC and HSBC Securities (USA) Inc., as sales agents (the “Sales Agents” and each a “Sales Agent”), pursuant to
the equity distribution agreement, dated August 8, 2023, by and among the Company and the Sales Agents (the “Equity
Distribution Agreement”).

During the year ended December 31, 2023, the Company sold 1,334,228 shares of our Common Stock under the ATM
Program. The Company generated $21.8 million in aggregate gross proceeds from sales under the ATM Program at an average
sale price of $16.31 per share of Common Stock. Aggregate net proceeds from the ATM Program were $21.3 million after
deducting related expenses, including commissions to the Sales Agents and issuance costs. As of December 31, 2023, the
Company had remaining capacity under the ATM Program to sell shares of Common Stock having an aggregate offering price
up to approximately $8.2 million.

Reserved Common Stock

At December 31, 2023, approximately 9.7 million shares of Common Stock were reserved for issuance upon conversion of the
Class B stock, exercise of stock options, issuance of restricted stock and purchases under the Employee Stock Purchase Plan.
Class B Stock is identical to Common Stock, except Class B Stock has ten votes per share, is automatically converted to
Common Stock on a one-for-one basis when sold or transferred other than via gift, devise or bequest and cannot receive
dividends unless an equal or greater amount of dividends is declared on Common Stock.

Comprehensive Loss and Accumulated Other Comprehensive Loss

Comprehensive income or loss consists of net income or loss and the after-tax impact of retirement liability adjustments. No
income tax effect is recorded for currency translation adjustments.

The components of accumulated other comprehensive loss are as follows:

(In thousands)
Foreign Currency Translation Adjustments
Retirement Liability Adjustment – Before Tax

Tax Benefit

Retirement Liability Adjustment – After Tax

Accumulated Other Comprehensive Loss

2023

2022

(6,351) $
(5,357)
2,282
(3,075)
(9,426) $

(7,335)
(4,473)
2,282
(2,191)
(9,526)

In 2023, 2022 and 2021, no tax benefit was recognized as the Company had recorded a full valuation allowance on the deferred
tax asset associated with the retirement liability.

The components of other comprehensive income are as follows:

(In thousands)
Foreign Currency Translation Adjustments

Retirement Liability Adjustment

Other Comprehensive Income

NOTE 15 — LOSS PER SHARE

Loss per share computations are based upon the following table:

(In thousands, except per share data)
Net Loss

Basic Earnings Weighted Average Shares

Net Effect of Dilutive Stock Options

Diluted Earnings Weighted Average Shares
Basic Loss Per Share
Diluted Loss Per Share

2023

2022

2021

984 $

(1,928) $

(884)

100 $

6,897

4,969 $

(939)

2,894

1,955

2023

2022

2021

(26,421) $

(35,747) $

(25,578)

33,104

—

33,104

32,164

—

32,164

(0.80) $

(1.11) $

31,061

—

31,061

(0.82)

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 Company incurred a net loss for the years ended December 31, 2023, 2022, and 2021, therefore all outstanding
stock options and unvested restricted stock units are excluded from the computation of diluted loss per share because the effect
of their inclusion would be antidilutive. The number of common shares excluded from the computation was approximately
0.8 million shares for the year ended December 31, 2023, 1.4 million shares for the year ended December 31, 2022, and
1.4 million shares for the year ended December 31, 2021.

The Company has funded substantially all of its 2022 and 2023 401K contributions, and will fund the remaining 2023 401K
contributions outstanding with treasury stock in lieu of cash. The earnings per share computations for the years ended
December 31, 2023 and 2022 are each inclusive of approximately 0.1 million in shares outstanding for the equivalent shares
needed to fulfill the respective period’s 401K obligation using the closing share price as of December 31, 2023 and 2022.
Actual shares issued may differ based on the share price on the settlement date.

NOTE 16 — EQUITY COMPENSATION

The Company has equity compensation plans that authorize the issuance of restricted stock units or options for shares of
Common Stock to directors, officers and key employees. Equity-based compensation is designed to reward long-term
contributions to the Company and provide incentives for recipients to join and to remain with the Company. The exercise price
of stock options, determined by a committee of the Board of Directors, is equal to the fair market value of the Common Stock
on the grant date. Options become exercisable over periods not exceeding ten years, and must be exercised within ten years
from the grant date. The Company’s practice has been to issue new shares upon the exercise of the options.

The Company established its Incentive Stock Option Plans for the purpose of attracting and retaining executive officers and key
employees, and to align management’s interest with those of the shareholders. At December 31, 2023, the Company had
options outstanding for 587,482 shares under the plans.

The Company established the Directors Stock Option Plans for the purpose of attracting and retaining the services of
experienced and knowledgeable outside directors, and to align their interest with those of the shareholders. At December 31,
2023, the Company had options outstanding for 31,906 shares under the plans.

During 2017, the Company established the Long Term Incentive Plan for the purpose of attracting and retaining directors,
executive officers and key employees, and to align management’s interest with those of the shareholders. The Long Term
Incentive Plan contemplates the use of a mix of equity award types. For stock options, the exercise price is equal to the share
price on the date of grant. Upon inception, the remaining options available for future grant under the 2011 Incentive Stock
Option Plan and the Directors Stock Option Plans were rolled in the Long Term Incentive Plan, and no further grants may be

made out of those plans. At December 31, 2023, the Company had stock options and RSUs outstanding that covered 1,445,256
shares under the Long Term Incentive Plan, and there were 835,076 shares available for future grant under this plan.

Stock compensation expense recognized during the period is based on the value of the portion of share-based payment awards
that is ultimately expected to vest during the period. Vesting requirements vary for directors, officers and key employees. In
general, options or RSUs granted to outside directors vest six months from the date of grant and options granted to officers and
key employees straight line vest over a three- to five-year period from the date of grant. RSUs granted to officers and key
employees generally cliff vest three years from the date of grant.

The following table provides compensation expense information based on the fair value of stock options and RSUs for the years
ended December 31 as follows:

(In thousands)
Equity-based Compensation Expense

Tax Benefit

Equity-based Compensation Expense, Net of Tax

2023

2022

2021

7,198 $

6,497 $

(1,259)

(1,068)

5,939 $

5,429 $

6,460

(924)

5,536

Tax benefit excludes the impact of valuation allowances recorded against deferred tax assets.

Stock Options

Weighted Average Fair Value of the Options Granted

8.39 $

5.97 $

7.05

2023

2022

2021

The weighted average fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model
with the following assumptions:

Risk-free Interest Rate

Dividend Yield

Volatility Factor

Expected Life in Years

2023

2022

2021

4.20% - 4.33%

3.48% - 3.62%

0.45% - 1.52%

—%

0.58

—%

0.61

—%

0.58

3 - 7 years

5 - 9 years

5 - 10 years

To determine expected volatility, the Company uses historical volatility based on weekly closing prices of its Common Stock
and considers currently available information to determine if future volatility is expected to differ over the expected terms of the
options granted. The risk-free rate is based on the U.S. Treasury yield curve at the time of grant for the appropriate term of the
options granted. Expected dividends are based on the Company’s history and expectation of dividend payouts. The expected
term of stock options is based on vesting schedules, expected exercise patterns and contractual terms.

A summary of the Company’s stock option activity and related information for the year ended December 31 is as follows:

(Aggregate intrinsic value in thousands)
Outstanding at January 1

Options Granted

Options Exercised

Options Forfeited / Expired

Outstanding at December 31

Exercisable at December 31

2023

Weighted
Average
Exercise
Price

Aggregate
Intrinsic
Value

20.37 $

15.15 $

12.64 $

28.23 $

19.47 $

23.42 $

—

Options

1,376,718 $

125,400 $

(6,570) $

(84,564) $

1,410,984 $

860,637 $

The aggregate intrinsic value in the preceding table represents the total pretax option holder’s intrinsic value, based on the
closing stock price of the Company’s Common Stock which would have been received by the option holders had all option
holders exercised their options as of that date. The closing stock price of the Company’s Common Stock was $17.42, $10.30
and $12.00 as of December 31, 2023, 2022 and 2021, respectively. As the stock price of $17.42 was below the weighted
average exercise price, intrinsic value is zero.

The weighted average fair value of options vested during 2023, 2022 and 2021 was $11.53, $12.89 and $14.58, respectively.
The total fair value of options that vested during the year amounted to $3.0 million, $2.4 million and $1.2 million for the years
ended December 31, 2023, 2022 and 2021, respectively. At December 31, 2023, total compensation costs related to non-vested
option awards not yet recognized amounts to $3.6 million and will be recognized over a weighted average period of
approximately 2 years.

The following is a summary of weighted average exercise prices and contractual lives for outstanding and exercisable stock
options as of December 31, 2023:

Outstanding

Exercisable

Weighted Average
Remaining Life
in Years

Weighted
Average
Exercise Price

Weighted Average
Remaining Life
in Years

Weighted
Average
Exercise Price

8.3 $

3.9 $

1.2 $

6.6 $

12.08

347,364

31.23

508,709

45.89

4,564

19.47

860,637

8.0 $

3.8 $

1.2 $

5.5 $

11.58

31.30

45.89

23.42

870,050

536,370

4,564

1,410,984

Exercise Price Range
$9.74 – $15.15

$22.93 – $35.82

$45.89 – $45.89

Restricted Stock Units

The fair value of each RSU granted is equal to the fair market value of the Company’s Common Stock on the date of grant. The
RSUs granted to employees generally cliff vest three years from the date of grant, while RSUs granted to directors cliff vest six
months from the date of grant.

Unvested at January 1

Granted

Vested

Forfeited

Unvested at December 31

2023

Weighted
Average
Grant Date Fair
Value

RSU Shares

578,214 $

293,704 $

(190,135) $

(28,123) $

653,660 $

15.85

14.79

17.81

16.75

14.77

Included in total equity-based compensation expense for the year ended December 31, 2023 was $4.0 million related to RSUs.
At December 31, 2023, total compensation costs related to non-vested awards not yet recognized amounts to $3.5 million and
will be recognized over a weighted average period of approximately 2 years.

Employee Stock Purchase Plan

In addition to the stock options and RSUs discussed above, the Company has established the Employee Stock Purchase Plan to
encourage employees to invest in the Company. The plan provides employees the opportunity to invest up to the IRS annual
maximum of approximately $25,000 in the Company’s common stock at a price equal to 85% of the fair market value of the
Company’s common stock, determined each October 1. Employees are allowed to enroll annually. Employees indicate the
number of shares they wish to obtain through the program and their intention to pay for the shares through payroll deductions
over the annual cycle of October 1 through September 30. Employees can withdraw anytime during the annual cycle, and all
money withheld from the employees’ pay is returned. If an employee remains enrolled in the program, enough money will have
been withheld from the employees’ pay during the year to pay for all the shares that the employee opted for under the program.
At December 31, 2023, employees had subscribed to purchase 235,140 shares at $13.50 per share. The weighted average fair
value of the options was approximately $4.94, $2.39 and $5.00 for options granted during the year ended December 31, 2023,
2022 and 2021, respectively.

The fair value for the options granted under the Employee Stock Purchase Plan was estimated at the date of grant using a Black-
Scholes option pricing model with the following assumptions:

Risk-free Interest Rate

Dividend Yield

Volatility Factor

Expected Life in Years

NOTE 17 — FAIR VALUE

2023

5.49 %

— %

0.56

1.0

2022

4.01 %

— %

0.50

1.0

2021

0.09 %

— %

0.71

1.0

ASC Topic 820, Fair Value Measurements and Disclosures, (“ASC Topic 820”) defines fair value, establishes a framework for
measuring fair value and expands the related disclosure requirements. This statement applies under other accounting
pronouncements that require or permit fair value measurements. The statement indicates, among other things, that a fair value
measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or
liability or, in the absence of a principal market, the most advantageous market for the asset or liability. ASC Topic 820 defines
fair value based upon an exit price model. The Company’s assessment of the significance of a particular input to the fair value
measurement in its entirety requires judgment, and involves consideration of factors specific to the asset or liability.

ASC Topic 820 establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This
hierarchy prioritizes the inputs into three broad levels as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the
asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the
financial instrument.

Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair
value.

On a Recurring Basis:

A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant
to the fair value measurement.

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. The purchase consideration included
an earnout estimated at a fair value of $2.5 million at the time of acquisition. The terms of the Diagnosys acquisition allow for a
potential earnout 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 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 December 31, 2021, with the contingent consideration liability fair value adjustment of
$2.2 million recorded within SG&A expenses in the Consolidated Statements of Operations in the year ended December 31,
2021. The earnout period has expired and no amounts were paid or are payable related to this earnout.

There were no other financial assets or liabilities carried at fair value measured on a recurring basis at December 31, 2023 or
2022.

On a Non-recurring Basis:

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 of
the asset or asset group (which are Level 3 inputs) with the asset of asset group’s 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. There were no impairment charges related to long-lived assets in 2023, 2022 or 2021 and no long-lived assets are
required to be measured at fair value for purposes of the long-lived asset recoverability test.

Due to their short-term nature, the carrying value of cash and equivalents, restricted cash, accounts receivable and accounts
payable approximate fair value. The carrying value of the Company’s variable rate long-term debt instruments also
approximates fair value due to the variable rate feature of these instruments.

NOTE 18 — SELECTED QUARTERLY FINANCIAL INFORMATION

The following table summarizes selected quarterly financial information for 2023 and 2022:

(Unaudited)

(In thousands, except for per share data)
Sales
Gross Profit (Sales Less Cost of Products Sold)
Income (Loss) Before Income Taxes
Net Income (Loss)
Basic Earnings (Loss) Per Share
Diluted Earnings (Loss) Per Share

Quarter Ended

December 31,

2023
195,292 $
39,973 $
1,534 $
6,976 $
0.20 $
0.20 $

2022
158,153
21,510
(7,208)
(6,779)
(0.21)
(0.21)

$
$
$
$
$
$

Non-cash stock bonus expense increased $4.2 million in the fourth quarter of 2023 compared to zero in the prior year,
$1.5 million was recorded to Cost of Products Sold and $2.8 million was recorded as SG&A expense. In 2019, a former
customer filed a lawsuit alleging damages associated with defective product. Mediation of the matter was held in November
2022 and the Company was indemnified by other parties for approximately $1.5 million and recorded a gain as an offset to
SG&A expense in the fourth quarter of 2022. These increases in SG&A were more than offset by increased gross profit
compared to the prior year fourth quarter resulting from the higher sales volume.

NOTE 19 — LEGAL PROCEEDINGS

Lufthansa

On December 29, 2010, Lufthansa Technik AG (“Lufthansa”) filed a Statement of Claim in the Regional State Court of
Mannheim, Germany. Lufthansa’s claim asserted that a subsidiary of the Company, AES, sold, marketed, and brought into use
in Germany a power supply system that infringes upon a German patent held by Lufthansa. Lufthansa sought an order requiring
AES to stop selling and marketing the allegedly infringing power supply system, a recall of allegedly infringing products sold
to commercial customers in Germany since November 26, 2003, and compensation for damages related to direct sales of the
allegedly infringing power supply system in Germany (referred to as “direct sales”).

AES modified the outlet units at the end of 2014 and the overwhelming majority of the modified outlet units sold from 2015 do
not infringe the patent of Lufthansa.

In February 2015, the Regional State Court of Mannheim, Germany held that the patent was infringed. The judgment did not
require AES to recall products that are already installed in aircraft or had been sold to other end users.

The Company appealed to the Higher Regional Court of Karlsruhe. On November 15, 2016, the Higher Regional Court of
Karlsruhe upheld the lower court’s decision. The Company sought permission to appeal to the German Federal Supreme Court.
By judgment of March 26, 2019, the German Federal Supreme Court dismissed AES's appeal. With this decision, the above-
mentioned proceedings are complete.

In July 2017, Lufthansa filed an action in the Regional State Court of Mannheim for payment of damages caused by AES’s
direct sales of the product into Germany. A first instance decision in this matter was handed down on December 6, 2019.
According to this ruling, Lufthansa was awarded damages in the amount of approximately $3.2 million plus interest. In 2020,
AES made payment of $4.7 million, inclusive of interest, in satisfaction of the first instance judgment. On July 12, 2023, the
Higher Regional Court of Karlsruhe in Germany reduced the Company’s liability for direct damages on appeal from
approximately $3.2 million plus interest to approximately $2.8 million plus interest. Additionally, in its judgment, the Court
reduced the interest rate on damages from 5% (as held by the Regional Court of Mannheim) to 4%. Accordingly, the Company
reclaimed overpaid damages and interest from LHT in the amount of approximately $1.2 million. This was recorded as an
offset to Selling, General and Administrative expenses in the third quarter of 2023, upon receipt of the refund.

Both Lufthansa and AES have filed requests with the German Federal Supreme Court to be granted leave to file appeals against
this decision.

On December 29, 2017, Lufthansa filed another infringement action against AES in the Regional State Court of Mannheim
claiming that sales by AES to its international customers have infringed Lufthansa's patent if AES's customers later shipped the
products to Germany (referred to as “indirect sales”). This action, therefore, addresses sales other than those covered by the
action filed on December 29, 2010, discussed above. No amount of claimed damages has been specified by Lufthansa.

A first instance decision in this matter was issued on December 6, 2019. The Court found that indirect sales (as defined above)
by AES to international customers infringe the patent under the conditions specified in the judgment and that the sale of
components of the EmPower system to Germany constitutes an indirect patent infringement. The Court rejected Lufthansa's
claim that AES is also liable for damages for the sale of modified products. This means that AES is not liable for damages
based on the sale of modified outlet units that removed the infringing feature. AES and Lufthansa both appealed this decision.
On July 12, 2023, the Higher Regional Court of Karlsruhe essentially upheld the first instance ruling.

According to the Higher Regional Court of Karlsruhe ruling, AES is responsible for payment of damages for indirect sales of
patent-infringing EmPower in-seat power supply systems in the period from December 29, 2007 to May 22, 2018. However,
because the outlet units were modified at the end of 2014, the period for which AES is liable for damages in connection with
indirect sales into Germany substantially finished at the end of 2014.

Both Lufthansa and AES have filed requests with the German Federal Supreme Court to be granted leave to file appeals against
this decision.

After the accounting, Lufthansa is expected to enforce its claim for damages in separate court proceedings. These proceedings
would most likely be tried before the Mannheim Court again, which makes it probable that the Mannheim Court will determine
the damages for the indirect sales based on the same principles as in the direct sales proceedings (unless the latter ruling of the
Mannheim Court is reversed on appeal). Based on the information available and the determination of the damages in the direct
sales claim discussed above, we estimated that the Company’s total exposure related to these matters that was probable and that
could be reasonably estimated at December 31, 2019, was approximately $11.6 million plus accrued interest. Accrued interest
on the indirect damages reserve was estimated using the same interest rate as the direct damages. Given the reduction in the
direct damages interest rate as discussed above, we recorded a reduction to the indirect damages reserve of $1.3 million in the
year ended December 31, 2023, as an offset to Selling, General and Administrative Expenses. Approximately $0.7 million,
$0.6 million and $0.6 million was recorded within Selling, General and Administrative Expenses in the Company’s
Consolidated Statements of Operations for each of 2023, 2022 and 2021, respectively, for additional interest accrued during
such periods.

In connection with the indirect sales claims, we currently believe it is unlikely that the appeals process will be completed and
any damages and related interest will be paid before December 31, 2024. Therefore, the liability related to this matter (inclusive
of accrued interest), totaling $17.1 million and $17.8 million, is classified within other liabilities (non-current) in the
Consolidated Balance Sheets at December 31, 2023 and 2022, respectively. This amount may be adjusted depending on the
decision of the Court on the direct sales damages appeal referred to previously.

In December 2017, Lufthansa filed patent infringement cases in the United Kingdom (“UK”) and in France. The Lufthansa
patent expired in May 2018. In those cases, Lufthansa accuses AES and certain of its customers of having manufactured, used,
sold and offered for sale a power supply system, and offered and supplied parts for a power supply system that infringed upon a
Lufthansa patent in those respective countries. In the normal course of its supply arrangements, AES has indemnified its
customers from liability arising from such matters, and as such will bear responsibility for any monetary damages arising from
such claims.

On December 4, 2020, the Court held the French patent invalid for all asserted claims. There can consequently be no finding of
infringement on first instance. Lufthansa has appealed this judgment. The appeal hearing took place on December 8, 2022, and
on February 24, 2023, the Court upheld the first instance judgment in favor of AES. Lufthansa lodged an appeal before the
French Supreme Court; the French Supreme Court will review the Court of Appeal of Paris reasoning around the nullification
of one of the claims of the patent. AES filed a brief with the French Supreme Court on January 22, 2024 in response to
Lufthansa’s appeal and awaits guidance on further briefing or a decision from the Court. As loss exposure is not probable and
estimable at this time, the Company has not recorded any liability with respect to the French matter as of December 31, 2023 or
2022.

In the UK matter, the Court held the UK patent valid and 3 out of 4 asserted claims infringed in June 2020. In contrast to the
decisions in Germany, the UK Court found that the modified components infringed a valid claim of the patent, and accordingly,
the period for which AES or its customers would be liable for damages in connection with direct sales into the UK extends until
the expiration of the patent in May 2018. While AES appealed the ruling, the Court dismissed the appeal on all grounds. The
damages trial is scheduled for October 2024. The case for monetary compensation will require extensive data gathering and
analysis which is ongoing. This analysis includes evaluating whether any units sold into the UK were subsequently shipped into

Germany, where they would be subject to the indirect sales claim discussed above. If this is the case, compensation may be
assessed in either the UK, or in the indirect sales matter in Germany, but not in both matters.

Lufthansa has elected to pursue a claim in relation to the defendants’ profits from their infringing activities. We have estimated
compensation of approximately $6.2 million, plus accrued interest, for AES and its indemnified customers. Interest will accrue
until final payment to Lufthansa. A reserve of $7.3 million was recorded within Selling, General & Administrative expenses in
the accompanying Consolidated Statement of Operations for the year ended December 31, 2021. This amount is subject to
change as additional data is received and evaluated, and as additional information regarding the damages methodology is
claimed by Lufthansa in advance of the damages trial. The damages trial is scheduled to be heard starting in October 2024, with
payment likely due in early 2025. Therefore, the liability related to this matter, totaling $7.4 million and $7.0 million, is
classified within other liabilities (non-current) in the Consolidated Balance Sheets at December 31, 2023 and 2022,
respectively. The variance is due to currency fluctuation.

Separate from any such damages Lufthansa may seek in connection with the UK infringement decision discussed above, as a
result of the first instance judgement in their favor, Lufthansa was entitled to reimbursement from AES of a proportion of its
legal expenditures in the UK case. An interim reimbursement was paid to Lufthansa in August 2020. As a result of the appeal
decision, Lufthansa will be entitled to reimbursement from AES of a larger proportion of its first instance legal expenditures, as
well as a portion of its legal expenditures associated with the appeal. We recorded an estimated liability of approximately
$1.0 million in our Consolidated Balance Sheets at December 31, 2021. The associated expense is recorded within Selling,
General & Administrative Expenses in the Consolidated Statement of Operations for the year then ended. A payment of
$0.3 million was made in 2022. It is likely the remaining amount will be payable within the next twelve months, and as such,
the liability of $0.7 million has been classified as a current liability in the accompanying Consolidated Balance Sheets within
other accrued expenses at December 31, 2023.

Each of the German, France and UK claims are separate and distinct. Validity and infringement of the Lufthansa patent in each
country is a matter for the courts in each of these countries, whose laws differ from each other. In addition, the principles of
calculating damages in each jurisdiction differ substantially. Therefore, the Company has assessed each matter separately and
cannot apply the same calculation methodology as in the German direct and indirect matters. However, it is reasonably possible
that additional damages and interest could be incurred if the appellate court in France was to rule in favor of Lufthansa, or if
damages in the UK matter are calculated on a different basis than our estimate or using information not currently available.

Other

On March 23, 2020, Teradyne, Inc. filed a complaint against the Company and its subsidiary, Astronics Test Systems (“ATS”)
(together, “the Defendants”) in the United States District Court for the Central District of California alleging patent and
copyright infringement, and certain other related claims. The Defendants moved to dismiss certain claims from the case. On
November 6, 2020, the Court dismissed the Company from the case, and also dismissed a number of claims, though the patent
and copyright infringement claims remained. The case proceeded to discovery. In addition, on December 21, 2020, ATS filed a
petition for inter partes review (“IPR”) with the US Patent Trial and Appeal Board (“PTAB”), seeking to invalidate the subject
patent, and on July 21, 2021, the PTAB instituted IPR. The PTAB issued its decision on July 20, 2022, in which it invalidated
all of Teradyne’s patent claims. Teradyne did not appeal the decision. On June 5, 2023, the parties attended a court-ordered
mediation but did not reach a settlement. After the mediation, Teradyne agreed to drop its remaining state law claims in
exchange for ATS dropping one of its defenses, leaving only its copyright claim. On December 7, 2023, the District Court
granted ATS’s motion for summary judgment on its affirmative defense of fair use. The Court subsequently entered final
judgment in favor of ATS on December 14, 2023. Teradyne filed a Notice of Appeal to the Ninth Circuit Court of Appeals on
January 12, 2024. Teradyne’s opening brief on its appeal is currently scheduled to be due on April 9, 2024 with ATS’s
answering brief due on May 9, 2024, though those dates may be extended. No amounts have been accrued for this matter in the
December 31, 2023 or 2022 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. Accrued legal fees were $7.9 million as of
December 31, 2023 and were insignificant as of December 31, 2022.

NOTE 20 — SEGMENTS

Segment information and reconciliations to consolidated amounts for the years ended December 31 are as follows:

(In thousands)
Sales:

Aerospace

Less Inter-segment Sales

Total Aerospace Sales

Test Systems

Less Inter-segment Sales

Test Systems

Total Consolidated Sales

Operating Income (Loss) and Margins:

Aerospace

Test Systems

Total Operating Income (Loss)

Additions to (Deductions from) Operating Profit:

Net Gain on Sale of Businesses

Interest Expense, Net of Interest Income

Corporate and Other Expenses, Net

Loss before Income Taxes

Depreciation and Amortization:

Aerospace

Test Systems

Corporate

Total Depreciation and Amortization

Assets:

Aerospace

Test Systems

Corporate

Total Assets

Capital Expenditures:

Aerospace

Test Systems

Corporate

Total Capital Expenditures

2023

2022

2021

605,001

461,206

365,261

(171)

(10)

(23)

604,830

461,196

365,238

84,376

—

84,376

73,717

(19)

73,698

80,027

(357)

79,670

689,206

534,894

444,908

24,629

(1,883)

(8,614)

4.1 %

(8,745)

(10.4) %

(0.4) %

(8,118)

(11.0) %

(2.4) %

(3,765)

(4.7) %

15,884

(10,001)

(12,379)

2.3 %

(1.9) %

(2.8) %

3,427

11,284

10,677

(23,328)

(22,294)

(9,422)

(21,654)

(6,804)

(18,454)

(26,311)

(29,793)

(26,960)

20,801

22,384

23,349

5,068

235

4,341

1,052

5,022

634

26,104

27,777

29,005

493,660

481,416

122,681

17,451

111,513

22,102

633,792

615,031

5,003

2,640

—

4,289

3,299

4,932

1,082

7,643

7,675

6,034

Operating income (loss) is sales less cost of products sold and other operating expenses, excluding interest expense and other
corporate expenses. Cost of products sold and other operating expenses are directly identifiable to the respective segment.

During the year ended December 31, 2023, a $3.6 million inventory reserve and a $7.5 million allowance for estimated credit
losses associated with a bankrupt customer was recorded as an expense, negatively impacting Aerospace Operating Income.
During the year ended December 31, 2023, $5.8 million was recognized in sales related to the reversal of a deferred revenue
liability assumed with an acquisition and associated with a customer program within our Test Systems Segment which is no
longer expected to occur, which also benefits Test Systems’ operating loss for the year. Corporate expenses and other for the
year ended December 31, 2023, includes income of $1.8 million associated with the reversal of a liability related to an equity

investment, as we are no longer required to make the associated payment. This amount is included in Other Income, Net. In the
year ended December 31, 2022, $6.0 million of the AMJP grant was recognized as an offset to the cost of products sold in the
Aerospace segment.

The following table summarizes the Company’s sales into the following geographic regions for the years ended December 31:

(In thousands)
United States

North America (excluding United States)

Asia

Europe

South America

Other

Total

2023

2022

2021

518,096 $

419,431 $

350,428

14,878

26,165

123,682

2,071

4,314

9,222

21,242

78,625

3,629

2,745

6,990

21,089

62,138

1,082

3,181

689,206 $

534,894 $

444,908

The following table summarizes the Company’s property, plant and equipment by country for the years ended December 31:

(In thousands)
United States
France
India
Canada
Total

2023

2022

77,939 $

82,317

6,417
487
593

6,974
653
714

85,436 $

90,658

Sales recorded by the Company’s foreign operations were $69.3 million, $50.0 million and $36.6 million in 2023, 2022 and
2021, respectively. Net income (loss) from foreign operations was $5.3 million, $(0.2) million and $(3.8) million in 2023, 2022
and 2021, respectively. Net assets held outside of the U.S. total $39.1 million and $36.6 million at December 31, 2023 and
2022, respectively. The exchange gain (loss) included in determining net income (loss) was insignificant in 2023, 2022 and
2021. Cumulative translation adjustments amounted to $6.4 million and $7.3 million at December 31, 2023 and 2022,
respectively.

The Company has a significant concentration of business with The Boeing Company (“Boeing”). Sales to Boeing are primarily
in the Aerospace segment. The following is information relating to the activity with this customer:

Percent of Consolidated Sales

Boeing

(In thousands)
Accounts Receivable at December 31,

Boeing

NOTE 21 — DIVESTITURE ACTIVITIES

Semiconductor Test Business

2023

2022

2021

11.0%

10.0%

2023

2022

17,314 $

16,860

On February 13, 2019, the Company completed a divestiture of its semiconductor business within the Test Systems segment.
The total proceeds of the divestiture included two elements of contingent earnouts. The “First Earnout” is calculated based on a
multiple of all future sales of existing and certain future derivative products to existing and future customers in each annual
period from 2019 through 2022. The First Earnout may not exceed $35.0 million in total. The “Second Earnout” is calculated
based on a multiple of future sales related to an existing product and program with an existing customer exceeding an annual
threshold for each annual period from 2019 through 2022. The Second Earnout is not capped. For the Second Earnout, if the
applicable sales in an annual period do not exceed the annual threshold, no amounts will be paid relative to such annual period;
the sales in such annual period do not carry over to the next annual period. Due to the degree of uncertainty associated with
estimating the future sales levels of the divested business and its underlying programs, and the lack of reliable predictive market
information, the Company has elected an accounting policy to recognize such earnout proceeds, if received, as additional gain
on sale when such proceeds are realized or realizable. We consider the proceeds realizable when we have received

communication from the purchaser of its calculation of the earnout and the parties reach agreement on the calculation. No
amounts were payable to the Company under either earnout for the calendar 2019 earnout. The Company agreed to an earnout
payment of $10.7 million for the calendar 2020 earnout, which was recorded in the fourth quarter of 2021 as Other Income and
was paid to the Company in early January 2022. In March 2022, the Company agreed with the earnout calculation for the
calendar 2021 earnout in the amount of $11.3 million. The Company recorded the gain and received the payment in the first
quarter of 2022. In March 2023, the Company agreed with the final earnout calculation for the calendar 2022 earnout for
$3.4 million. The Company recorded the gain and received the payment in the first quarter of 2023.

Other Disposal Activity

On October 6, 2021, as part of a planned consolidation effort, the Company sold one of its Aerospace buildings for
$9.2 million. Net cash proceeds were approximately $8.8 million. A gain on sale of approximately $5.0 million was recorded in
the Consolidated Statements of Operations as a Net Gain on Sale of Facility in the year ended December 31, 2021. The
operation has been integrated into another facility.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.

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.

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.

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

PART IV

The documents filed as a part of this report are as follows:

The following financial statements are included:

i.
ii.

iii.
iv.
v.

vi.
vii.
viii.

Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2023, 2022
and 2021
Consolidated Balance Sheets as of December 31, 2023 and 2022
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2023, 2022
and 2021
Notes to Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42)
Management’s Report on Internal Control Over Financial Reporting

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.

Exhibits

Exhibit
No.

Description

1.1

3 (a)

(b)

(c)

4 (a)

10.1*

10.2*

10.3*

10.4*

10.5*

10.6*

10.7*

10.8*

10.9*

10.10*

10.11*

10.12*

10.13*

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).

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).

By-Laws, as amended

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).

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).

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).

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).

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).

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).

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).

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).

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).

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).

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).

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).

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).

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).

Supplemental Retirement Plan II, incorporated by reference to the registrant’s 2012 Annual Report on
Form 10-K, Exhibit 10.18, filed February 22, 2013 (File No. 000-07087).

10.14*

10.15*

10.16*

10.17*

10.18*

10.19

10.20

10.21

10.22

10.23

21**

23**

31.1**

31.2**

32**

97**

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).

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).

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).

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).

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).

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).

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).

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).

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).

First Amendment to the Credit Agreement by and among Astronics Corporation, Great Rock Capital
Partners Management, LLC.

Subsidiaries of the Registrant.

Consent of Independent Registered Public Accounting Firm; filed herewith.

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.

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.

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.

Compensation Clawback Policy, dated December 1, 2023; filed herewith.

101.INS**

101.SCH**

101.CAL**

101.DEF**

101.LAB**

101.PRE**

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

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

SCHEDULE II

Valuation and Qualifying Accounts

Description

Balance at the
Beginning of
Period

Additions
Charged to
Cost and
Expense

Write-Offs/
Other

Balance at
End of
Period

2,630 $

7,772 $

(1,209) $

36,817 $

8,229 $

(6,507) $

57,369 $

8,096 $

175 $

3,183 $

565 $

(1,118) $

33,775 $

2,850 $

192 $

43,519 $

15,236 $

(1,386) $

3,218 $

90 $

(125) $

33,410 $

3,852 $

(3,487) $

37,168 $

7,100 $

(749) $

9,193

38,539

65,640

2,630

36,817

57,369

3,183

33,775

43,519

Year

(In thousands)
2023

Allowance for Estimated Credit Losses

Reserve for Excess and Obsolete Inventories
Deferred Tax Valuation Allowance

2022

Allowance for Estimated Credit Losses

Reserve for Excess and Obsolete Inventories

Deferred Tax Valuation Allowance

2021

Allowance for Estimated Credit Losses

Reserve for Excess and Obsolete Inventories

Deferred Tax Valuation Allowance

ITEM 16.

FORM 10-K SUMMARY

None.

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

/s/ Peter J. Gundermann

/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
Peter J. Gundermann

/s/ David C. Burney
David C. Burney

/s/ Nancy L. Hedges
Nancy L. Hedges

/s/ Robert T. Brady
Robert T. Brady

/s/ Linda O’Brien
Linda O’Brien

/s/ Jeffry D. Frisby
Jeffry D. Frisby

/s/ Peter J. Gundermann
Peter J. Gundermann

/s/ Warren C. Johnson
Warren C. Johnson

/s/ Robert S. Keane
Robert S. Keane

/s/ Neil Kim
Neil Kim

/s/ Mark J. Moran
Mark J. Moran

President and Chief Executive Officer
(Principal Executive Officer)

March 4, 2024

Executive Vice President, Chief Financial Officer
(Principal Financial Officer)

March 4, 2024

Corporate Controller and Principal Accounting Officer

March 4, 2024

Director

SHAREHOLDER INFORMATION

EXECUTIVE LEADERSHIP

DIRECTORS AND OFFICERS

Corporate Headquarters

Astronics Corporation
130 Commerce Way
East Aurora, New York 14052
716.805.1599
www.astronics.com

2024 Annual Meeting

The Annual Meeting will be held on Wednesday,
May 8, 2024, at 10:00 a.m. Pacific Time at:

PECO, Inc.
11241 SE Highway 212
Clackamas, Oregon 97015

Investor Relations

Investors, stockbrokers, security analysts and others
seeking information about Astronics Corporation should
contact:

David C. Burney
Executive Vice President and Chief Financial Officer
716.805.1599
invest@astronics.com

Deborah K. Pawlowski
Kei Advisors LLC
716.843.3908
dpawlowski@keiadvisors.com

Transfer Agent

For services, such as reporting a change of address,
replacement of lost stock certificates, conversion of
Class B shares, changes in registered ownership, or
for inquiries about your account, contact:

EQ Shareowner Services
1110 Centre Pointe Curve, Suite 101
Mendota Heights, MN 55120
Tel: 800.468.9716
651.450.4064
www.shareowneronline.com

Attorneys

Hodgson Russ LLP
Buffalo, New York

Independent Auditors

Ernst & Young LLP
Buffalo, New York

Peter J. Gundermann
Chairman, President and Chief Executive Officer,
Astronics Corporation

David C. Burney
Executive Vice President- Finance, and Chief Financial Officer,
Astronics Corporation

James S. Kramer
Executive Vice President, Astronics Corporation
President, Luminescent Systems Inc.

Michael C. Kuehn
Executive Vice President, Astronics Corporation
President, Astronics Connectivity Systems & Certification Corp.

James F. Mulato
Executive Vice President, Astronics Corporation
President, Astronics Test Systems

Mark A. Peabody
Executive Vice President, Astronics Corporation
President, Astronics Aerospace

BOARD OF DIRECTORS

Peter J. Gundermann
President and Chief Executive Officer, Astronics Corporation
Chairman of the Board, Astronics Corporation

Robert T. Brady 1C, 4
Lead Independent Director, Astronics Corporation
Executive Chairman of the Board, retired, Moog Inc.

Jeffry D. Frisby 1, 4C
Executive Chairman, PCX Aerostructures, LLC
Former President and Chief Executive Officer, Triumph Group, Inc.

Warren C. Johnson 3, 4
President, Aircraft Group, retired, Moog Inc.

Robert S. Keane 2, 3
Chairman and Chief Executive Officer, Cimpress plc

Neil Y. Kim 1, 2C
Executive Vice President, Operations and Central Engineering,
retired, Broadcom Corporation

Mark Moran 2, 3C
Chief Operations Officer, retired, Continental Airlines

Linda G. O’Brien 2, 3
Vice President and Chief Engineer-Aeronautics, Lockheed
Martin Aeronautics

1 Audit Committee 2 Compensation Committee
3 Nominating/Governance Committee 4 Sustainability Committee
C Committee Chairman

Nasdaq: ATRO

130 Commerce Way ● East Aurora, New York 14052
716.805.1599 ● www.astronics.com

BR046433-0324-10K