FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
| x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE | |
| SECURITIES AND EXCHANGE ACT OF 1934 |
For the quarterly period ended April 5, 2003
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 1-8174
DUCOMMUN INCORPORATED
(Exact name of registrant as specified in its charter)
| Delaware |
95-0693330 | |
| (State or other jurisdiction of |
I.R.S. Employer | |
| incorporation or organization) |
Identification No. |
111 W. Ocean Boulevard, Suite 900, Long Beach, California 90802
(Address of principal executive offices) (Zip Code)
(562) 624-0800
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
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 x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes x No ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of April 5, 2003, there were outstanding 9,873,551 shares of common stock.
DUCOMMUN INCORPORATED
FORM 10-Q
| Page | ||||||
| Part I. |
Financial Information |
|||||
| Item 1. |
Financial Statements |
|||||
| Consolidated Balance Sheets at April 5, 2003 and December 31, 2002 |
3 | |||||
| Consolidated Statements of Income for Three Months Ended April 5, 2003 and March 30, 2002 |
4 | |||||
| Consolidated Statements of Cash Flows for Three Months Ended April 5, 2003 and March 30, 2002 |
5 | |||||
| 6 - 16 | ||||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
17 - 28 | ||||
| Item 3. |
29 | |||||
| Item 4. |
29 | |||||
| Part II. |
Other Information |
|||||
| Item 6. |
30 | |||||
| 31 | ||||||
| 32 - 33 | ||||||
-2-
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
DUCOMMUN INCORPORATED AND SUBSIDIARIES
(In thousands, except share data)
| April 5, 2003 |
December 31, 2002 |
|||||||
| ASSETS |
||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ |
322 |
|
$ |
174 |
| ||
| Accounts receivable (less allowance for doubtful accounts of $455 and $534) |
|
27,230 |
|
|
23,968 |
| ||
| Inventories |
|
42,338 |
|
|
41,336 |
| ||
| Deferred income taxes |
|
7,404 |
|
|
6,711 |
| ||
| Prepaid income taxes |
|
63 |
|
|
140 |
| ||
| Other current assets |
|
4,355 |
|
|
4,400 |
| ||
| Total Current Assets |
|
81,712 |
|
|
76,729 |
| ||
| Property, Plant and Equipment, Net |
|
61,487 |
|
|
61,936 |
| ||
| Deferred Income Taxes |
|
889 |
|
|
1,049 |
| ||
| Goodwill (Net of Accumulated Amortization of $10,996 and $10,996) |
|
55,532 |
|
|
55,532 |
| ||
| Other Assets |
|
2,191 |
|
|
2,364 |
| ||
| $ |
201,811 |
|
$ |
197,610 |
| |||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current Liabilities: |
||||||||
| Current portion of long-term debt |
$ |
3,338 |
|
$ |
1,501 |
| ||
| Accounts payable |
|
17,483 |
|
|
16,203 |
| ||
| Accrued liabilities |
|
28,131 |
|
|
25,039 |
| ||
| Total Current Liabilities |
|
48,952 |
|
|
42,743 |
| ||
| Long-Term Debt, Less Current Portion |
|
17,985 |
|
|
24,349 |
| ||
| Deferred Income Taxes |
|
3,122 |
|
|
3,122 |
| ||
| Other Long-Term Liabilities |
|
8,069 |
|
|
6,954 |
| ||
| Total Liabilities |
|
78,128 |
|
|
77,168 |
| ||
| Commitments and Contingencies |
||||||||
| Shareholders’ Equity: |
||||||||
| Common stock—$.01 par value; authorized 35,000,000 shares; issued 9,873,551 shares in 2003 and 9,863,985 shares in 2002 |
|
99 |
|
|
99 |
| ||
| Additional paid-in capital |
|
38,058 |
|
|
37,925 |
| ||
| Retained earnings |
|
88,205 |
|
|
85,097 |
| ||
| Accumulated other comprehensive loss |
|
(2,679 |
) |
|
(2,679 |
) | ||
| Total Shareholders’ Equity |
|
123,683 |
|
|
120,442 |
| ||
| $ |
201,811 |
|
$ |
197,610 |
| |||
See accompanying notes to consolidated financial statements.
-3-
DUCOMMUN INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
| For Three Months Ended |
||||||||
| April 5, 2003 |
March 30, 2002 |
|||||||
| Net Sales |
$ |
55,041 |
|
$ |
54,632 |
| ||
| Operating Costs and Expenses: |
||||||||
| Cost of goods sold |
|
43,028 |
|
|
41,743 |
| ||
| Selling, general and administrative expenses |
|
6,983 |
|
|
6,459 |
| ||
| Total Operating Costs and Expenses |
|
50,011 |
|
|
48,202 |
| ||
| Operating Income from Continuing Operations |
|
5,030 |
|
|
6,430 |
| ||
| Interest Expense |
|
(321 |
) |
|
(515 |
) | ||
| Income from Continuing Operations Before Taxes |
|
4,709 |
|
|
5,915 |
| ||
| Income Tax Expense |
|
(1,601 |
) |
|
(2,130 |
) | ||
| Income from Continuing Operations |
|
3,108 |
|
|
3,785 |
| ||
| Loss From Discontinued Operation, Net of Tax |
|
— |
|
|
(230 |
) | ||
| Cumulative Effect of Accounting Change, Net of Tax |
|
— |
|
|
(2,325 |
) | ||
| Net Income |
$ |
3,108 |
|
$ |
1,230 |
| ||
| Earnings Per Share: |
||||||||
| Basic earnings per share: |
||||||||
| Income from continuing operations |
$ |
0.31 |
|
$ |
0.39 |
| ||
| Loss from discontinued operation, net of tax |
|
— |
|
|
(0.02 |
) | ||
| Cumulative effect of accounting change, net of tax |
|
— |
|
|
(0.24 |
) | ||
| Basic earnings per share |
$ |
0.31 |
|
$ |
0.13 |
| ||
| Diluted earnings per share: |
||||||||
| Income from continuing operations |
$ |
0.31 |
|
$ |
0.39 |
| ||
| Loss from discontinued operation, net of tax |
|
— |
|
|
(0.02 |
) | ||
| Cumulative effect of accounting change, net of tax |
|
— |
|
|
(0.24 |
) | ||
| Diluted earnings per share |
$ |
0.31 |
|
$ |
0.13 |
| ||
| Weighted Average Number of Common Shares |
||||||||
| Outstanding: |
||||||||
| Basic |
|
9,873 |
|
|
9,703 |
| ||
| Diluted |
|
9,894 |
|
|
9,750 |
| ||
| Data above have been reclassified to reflect Brice Manufacturing Company, Inc., as a discontinued operation for the three months ended March 30, 2002. |
||||||||
See accompanying notes to consolidated financial statements.
-4-
DUCOMMUN INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| For Three Months Ended |
||||||||
| April 5, 2003 |
March 30, 2002 |
|||||||
| Cash Flows from Operating Activities: |
||||||||
| Net Income |
$ |
3,108 |
|
$ |
1,230 |
| ||
| Adjustments to Reconcile Net Income to |
||||||||
| Cash Provided by Operating Activities: |
||||||||
| Depreciation and amortization |
|
1,886 |
|
|
2,047 |
| ||
| Deferred income tax benefit |
|
(533 |
) |
|
(1,461 |
) | ||
| Income tax benefit related to the exercise of nonqualified stock options |
|
7 |
|
|
402 |
| ||
| Provision for doubtful accounts |
|
— |
|
|
45 |
| ||
| Cumulative effect of accounting change, net of tax |
|
— |
|
|
2,325 |
| ||
| Changes in Assets and Liabilities: |
||||||||
| Accounts receivable |
|
(3,262 |
) |
|
(2,212 |
) | ||
| Inventories |
|
(1,002 |
) |
|
(2,143 |
) | ||
| Other assets |
|
295 |
|
|
388 |
| ||
| Accounts payable |
|
1,280 |
|
|
(120 |
) | ||
| Accrued and other liabilities |
|
4,207 |
|
|
(154 |
) | ||
| Net Cash Provided by Operating Activities from Continuing Operations |
|
|||||||