UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 3, 2010
DUCOMMUN INCORPORATED
(Exact name of registrant as specified in its charter)
| Delaware | 001-08174 | 95-0693330 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
| 23301 Wilmington Avenue, Carson, California | 90745-6209 | |||
| (Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code (310) 513-7200
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition. |
Ducommun Incorporated issued a press release on May 3, 2010 in the form attached hereto as Exhibit 99.1.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
99.1 Ducommun Incorporated press release issued on May 3, 2010.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DUCOMMUN INCORPORATED (Registrant) | ||||||||
| Date: May 3, 2010 | By: | /s/ James S. Heiser | ||||||
| James S. Heiser | ||||||||
| Vice President and General Counsel | ||||||||
|
EXHIBIT 99.1 |
FOR IMMEDIATE RELEASE
Ducommun Incorporated Reports Results for the
First Quarter Ended April 3, 2010
LOS ANGELES, California (May 3, 2010) — Ducommun Incorporated (NYSE:DCO) today reported results for its first quarter ended April 3, 2010.
Sales for the first quarter of 2010 decreased 6% to $104.3 million, as compared to sales of $111.4 million for the first quarter of 2009. Net income for the first quarter of 2010 increased to $4.2 million, or $0.40 per diluted share, compared to net income of $2.6 million, or $0.25 per diluted share, for the comparable period last year. The first quarter 2009 results were impacted by an after-tax charge of $2.9 million, or $0.27 per diluted share, for an inventory reserve related to the Eclipse Aviation Corporation bankruptcy filing in March, 2009.
“While still experiencing some softness this quarter in aftermarket demand and engineering services, our overall commercial end markets appear to be strengthening, and we continue to invest in new business development initiatives that will benefit Ducommun in the quarters to come,” said Anthony J. Reardon, president and chief executive officer. “We saw margin compression due to start-up expenses associated with several new programs, but we expect this impact to be short term in nature. As commercial demand recovers, we will continue to keep Ducommun focused on productivity improvements, further penetration on key programs, and cash flow generation.”
The 6% decrease in revenue for the first quarter of 2010 was due to lower year-over-year sales for the Apache helicopter and regional and business aircraft, and lower revenues from engineering services, partially offset by growth in sales of large commercial and military aircraft and commercial helicopter products. The Company’s mix of business in the first quarter of 2010 was approximately 58% military, 40% commercial and 2% space, compared to 61% military, 37% commercial and 2% space in the first quarter of 2009.
Gross profit, as a percentage of sales, was 18.5% in the first quarter of 2010, compared to 15.5% in the first quarter of 2009. Gross profit in the first quarter of 2009 was negatively impacted by the pre-tax inventory reserve of $4.4 million, or 3.9 percentage points, as discussed above. Gross profit in the first quarter of 2010 was negatively impacted by $1.8 million, or 2.4 percentage points, due to start-up and development costs associated with several new programs which generated approximately $3.1 million in sales.
Selling, general and administration (SG&A) expenses decreased to $12.5 million, or 11.9% of sales, in the first quarter of 2010, compared to $12.8 million, or 11.5% of sales, in the first quarter of 2009. The decrease in SG&A resulted mainly from lower people related expenses and cost controls, partially offset by a $0.6 million increase in expenses related to amortization of intangible assets.
The Company’s net income for the first quarter of 2010 increased 63% from the first quarter of 2009. The Company’s effective tax rate was 33.0% in both the first quarter of 2010 and 2009.
Mr. Reardon concluded, “As the overall aerospace recovery becomes more apparent, we are positioning Ducommun for stronger operating performance heading into 2011. We remain optimistic that the Company will benefit from a rebound in the regional jet market, growth in aftermarket demand, and new commercial programs such as the Boeing 787. In the meantime, new program wins, operational excellence and effective working capital management will serve as our tools for improving Ducommun’s financial results going forward.”
About Ducommun Incorporated
Founded in 1849, Ducommun Incorporated provides engineering and manufacturing services to the aerospace and defense industry. The Company is a supplier of critical components and assemblies for commercial aircraft, military aircraft, and missile and space programs through its three business units: Ducommun AeroStructures (DAS), Ducommun Technologies (DTI), and Miltec. Additional information can be found at www.ducommun.com.
A teleconference hosted by Anthony J. Reardon, the Company’s president and chief executive officer, and Joseph P. Bellino, the Company’s vice president and chief financial officer, will be held tomorrow, May 4, at 8:00 AM PT (11:00 AM ET). To participate in the teleconference, please call 866-383-8003 (international 617-597-5330) approximately ten minutes prior to the conference time stated above. The participant passcode is 22993301. Mr. Reardon and Mr. Bellino will be speaking on behalf of the Company and anticipate the meeting and Q&A period to last approximately 40 minutes. This call is being webcast by Thomson/CCBN and can be accessed directly at the Thomson Reuters website. Conference call replay will be available after that time at the same link or at the Company’s web site, www.ducommun.com.
| CONTACT: | Joseph P. Bellino | or | Chris Witty | |||||
| Vice President and Chief Financial Officer | Investor Relations | |||||||
| (310) 513-7211 | (646) 438-9385 / cwitty@darrowir.com |
The statements made in this press release include forward-looking statements that involve risks and uncertainties. The Company’s future financial results could differ materially from those anticipated due to the Company’s dependence on conditions in the airline industry, the level of new commercial aircraft orders, production rates for Boeing commercial aircraft, the C-17 and Apache helicopter rotor blade programs, the level of defense spending, competitive pricing pressures, manufacturing inefficiencies, start-up costs and possible overruns on new contracts, technology and product development risks and uncertainties, product performance, risks associated with acquisitions and dispositions of businesses by the Company, increasing consolidation of customers and suppliers in the aerospace industry, possible goodwill impairment, and other factors beyond the Company’s control. See the Company’s Form 10-K for the year ended December 31, 2009 for a more detailed discussion of these and other risk factors and contingencies.
[Financial Table Follows]
DUCOMMUN INCORPORATED AND SUBSIDIARIES
COMPARATIVE DATA
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share amounts)
| Three Months Ended | ||||||||
| April 3, 2010 |
April 4, 2009 |
|||||||
| Sales and Service Revenues |
||||||||
| Product sales |
$ | 92,388 | $ | 93,977 | ||||
| Service revenues |
11,868 | 17,378 | ||||||
| Total |
104,256 | 111,355 | ||||||
| Operating Costs and Expenses: |
||||||||
| Cost of product sales |
75,601 | 79,972 | ||||||
| Cost of service revenues |
9,337 | 14,077 | ||||||
| Selling, general & administrative expenses |
12,463 | 12,809 | ||||||
| Total |
97,401 | 106,858 | ||||||
| Operating Income |
6,855 | 4,497 | ||||||
| Interest Expense |
(552 | ) | (639 | ) | ||||
| Income Tax Expense |
(2,080 | ) | (1,273 | ) | ||||
| Net Income |
$ | 4,223 | $ | 2,585 | ||||
| Earnings Per Share: |
||||||||
| Basic earnings per share |
$ | 0.40 | $ | 0.25 | ||||
| Diluted earnings per shares |
$ | 0.40 | $ | 0.25 | ||||
| Weighted Average Number of Common Shares Outstanding: |
||||||||
| Basic |
10,465 | 10,495 | ||||||
| Diluted |
10,502 | 10,502 | ||||||
DUCOMMUN INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
| (Unaudited) | ||||||||
| April 3, 2010 |
December 31, 2009 |
|||||||
| Assets |
||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 1,497 | $ | 18,629 | ||||
| Accounts receivable |
57,127 | 48,378 | ||||||
| Unbilled receivables |
4,684 | 4,207 | ||||||
| Inventories |
71,860 | 67,749 | ||||||
| Production cost of contracts |
15,358 | 12,882 | ||||||
| Deferred income taxes |
5,252 | 4,794 | ||||||
| Other current assets |
4,775 | 7,452 | ||||||
| Total Current Assets |
160,553 | 164,091 | ||||||
| Property and Equipment, Net |
60,276 | 60,923 | ||||||
| Goodwill, Net |
100,442 | 100,442 | ||||||
| Other Assets |
27,341 | 28,453 | ||||||
| $ | 348,612 | $ | 353,909 | |||||
| Liabilities and Shareholders' Equity |
||||||||
| Current Liabilities: |
||||||||
| Current portion of long-term debt |
$ | 4,951 | $ | 4,963 | ||||
| Accounts payable |
34,044 | 39,434 | ||||||
| Accrued liabilities |
23,681 | 33,869 | ||||||
| Total Current Liabilities |
62,676 | 78,266 | ||||||
| Long-Term Debt, Less Current Portion |
29,482 | 23,289 | ||||||
| Deferred Income Taxes |
8,247 | 7,732 | ||||||
| Other Long-Term Liabilities |
10,409 | 10,736 | ||||||
| Total Liabilities |
110,814 | 120,023 | ||||||
| Commitments and Contingencies |
||||||||
| Shareholders' Equity: |
||||||||
| Common stock |
106 | 106 | ||||||
| Treasury stock |
(1,924 | ) | (1,924 | ) | ||||
| Additional paid-in capital |
58,841 | 58,498 | ||||||
| Retained earnings |
184,198 | 180,760 | ||||||
| Accumulated other comprehensive loss |
(3,423 | ) | (3,554 | ) | ||||
| Total Shareholders’ Equity |
237,798 | 233,886 | ||||||
| $ | 348,612 | $ | 353,909 | |||||