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DEVELOPMENT COSTS AND BAD DEBT CAUSE BIGGER LOSS FOR ASTRONICS

Astronics Corp., the East Aurora-based maker of aircraft lighting systems, saw sales grow 11 percent while losses deepened in the third quarter, as costs to develop future programs swelled.

Losses widened to $359,000, up from $297,000 a year ago. Engineering and development expenses were high, as they have been through the first half -- and will continue that way through the fourth quarter, chief executive Peter J. Gundermann said in a conference call.

"It was a stressful quarter as far as our income statement is concerned," he said, "but we believe we're increasingly positioned to come out of the phase we're in."

Sales rose 8 percent to $8.4 million from $7.6 million a year ago.

"We're very pleased to see activity in the business jet market and transport market increasing around the world," Gundermann said.

The company makes aircraft lighting and other electronics for business, military and commercial transport aircraft.

The backlog of orders was $25.6 million, up 50 percent from a year ago.

Astronics employs about 170 people at its plant off Rte. 20A in East Aurora, and 230 more at sister locations in Lebanon, N.H. and Montreal.

Adding to the quarterly loss was a $150,000 write-down on a note owed by Aurora Ventures, a development company that acquired Astronics' former plant in 2001. The bad debt expense was recognized because of missed interest payments on the note, said chief financial officer David Burney.

The note is now valued at $300,000, about half its face value. Astronics has filed an action in state supreme court in Erie County to collect on the debt, Burney said.

The development company, headed by Paul Bandrowski, acquired the property for the development of a Hampton Inn hotel, which is in foreclosure proceedings by lender Wyoming County Bank.

Aurora Ventures has been unable to make interest payments on the note to Astronics because of the dispute with the bank, which has effectively frozen the developer's account, Bandrowski said in an interview.

However, Aurora Ventures is pursuing a lawsuit against the bank, charging that the loan was mishandled, he said. Although the hotel is performing well, responsibility for construction overruns set off the dispute over the bank loan, he said. Budgeted for $7.5 million, the hotel wound up costing $9 million.

e-mail: fwilliams@buffnews.com

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