FY2021 10-K Document - FINAL 11 15 21 - Flipbook - Page 21
Table of Contents
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read together with
our consolidated financial statements and the related notes appearing elsewhere in this report.
This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many
factors, including but not limited to those under the heading “Risk Factors” in Item 1A of this report.
OVERVIEW
We are a worldwide designer, manufacturer and systems integrator of high performance precision motion and fluid
controls and control systems for a broad range of applications in aerospace and defense and industrial markets.
Within the aerospace and defense market, our products and systems include:
•
•
•
Defense market - primary and secondary flight controls for military aircraft, stabilization and automatic
ammunition loading controls for armored combat vehicles, tactical and strategic missile steering controls and
gun aiming controls.
Commercial aircraft market - primary and secondary flight controls for commercial aircraft.
Commercial space market - satellite positioning controls and thrust vector controls, as well as integrated
space vehicles.
In the industrial market, our products are used in a wide range of applications including:
•
•
•
Industrial automation market - components and systems for injection and blow molding machinery, heavy
industry applications for steel and aluminum production, metal forming presses, flight simulation motion
control systems and material and automotive structural and fatigue testing systems.
Medical market - components and systems for enteral clinical nutrition and infusion therapy pumps, CT scan
medical equipment, ultrasonic sensors and surgical handpieces and sleep apnea equipment.
Energy market - control and safety components for steam and gas power generation turbines and oil and gas
exploration components and systems.
We operate under three segments, Aircraft Controls, Space and Defense Controls and Industrial Systems. Our
principal manufacturing facilities are located in the United States, Philippines, United Kingdom, Germany, Czech
Republic, Italy, Costa Rica, China, Netherlands, Luxembourg, Japan, Canada, India and Lithuania.
Under ASC 606, 63% of revenue was recognized over time for the year ended October 2, 2021, using the cost-to-cost
method of accounting. The over-time method of revenue recognition is predominantly used in Aircraft Controls and
Space and Defense Controls. We use this method for U.S. Government contracts and repair and overhaul
arrangements as we are creating or enhancing assets that the customer controls. In addition, many of our large
commercial contracts qualify for over-time accounting as our performance does not create an asset with an alternative
use and we have an enforceable right to payment for performance completed to date.
For the year ended October 2, 2021, 37% of revenue was recognized at the point in time control transferred to the
customer. This method of revenue recognition is used most frequently in Industrial Systems. We use this method for
commercial contracts in which the asset being created has an alternative use. We determine the point in time control
transfers to the customer by weighing the five indicators provided by ASC 606. When control has transferred to the
customer, profit is generated as cost of sales is recorded and as revenue is recognized.
We concentrate on providing our customers with products designed and manufactured to the highest quality
standards. Our technical experts work collaboratively around the world, delivering capabilities for mission-critical
solutions. These core operational principles are necessary as our products are applied in demanding applications,
"When Performance Really Matters®." By capitalizing on these core foundational strengths, we believe we have
achieved a leadership position in the high performance, precision controls market. Additionally, these strengths yield a
broad control product portfolio, across a diverse base of customers and end markets.
21