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Table of Contents

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 July 5, 2003

 

OR

 

¨  

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

 

For the transition period form                      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
incorporation or organization)		   I.R.S. Employer
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 July 5, 2003, there were outstanding 9,873,551 shares of common stock.

Table of Contents

DUCOMMUN INCORPORATED

FORM 10-Q

INDEX

 

               Page

Part I.

    Financial Information     
    

Item 1.

    Financial Statements     
          Consolidated Balance Sheets at July 5, 2003 and December 31, 2002    3
          Consolidated Statements of Income for Three Months Ended July 5, 2003 and June 29, 2002    4
          Consolidated Statements of Income for Six Months Ended July 5, 2003 and June 29, 2002    5
          Consolidated Statements of Cash Flows for Six Months Ended July 5, 2003 and June 29, 2002    6
          Notes to Consolidated Financial Statements    7 - 16
    

Item 2.

    Management’s Discussion and Analysis of Financial Condition and Results of Operations    17 - 30
    

Item 3.

    Quantitative and Qualitative Disclosures About Market Risk    31
    

Item 4.

    Controls and Procedures    31

Part II.

    Other Information     
    

Item 4.

    Submission of Matters to a Vote of Security Holders    32
    

Item 6.

    Exhibits and Reports on Form 8-K    32

Signatures

         33

Certifications

         34 - 36

 

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Table of Contents

PART I—FINANCIAL INFORMATION

 

Item 1.     Financial Statements

DUCOMMUN INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

 

    

July 5,

2003

    

December 31,

2002

  

ASSETS

                 

Current Assets:

                 

Cash and cash equivalents

    $ 220     $ 174  

Accounts receivable (less allowance for doubtful accounts of $533 and $534)

      26,555       23,968  

Inventories

      43,438       41,336  

Deferred income taxes

      6,782       6,711  

Prepaid income taxes

      —         140  

Other current assets

      4,554       4,400  
    
 

Total Current Assets

      81,549       76,729  

Property, Plant and Equipment, Net

      61,076       61,936  

Deferred Income Taxes

      889       1,049  

Goodwill

      55,532       55,532  

Other Assets

      1,979       2,364  
    
 
     $ 201,025     $ 197,610  
    
 

LIABILITIES AND SHAREHOLDERS’ EQUITY

                 

Current Liabilities:

                 

Current portion of long-term debt

    $ 3,709     $ 1,501  

Accounts payable

      15,256       16,203  

Accrued liabilities

      28,127       25,039  
    
 

Total Current Liabilities

      47,092       42,743  

Long-Term Debt, Less Current Portion

      16,200       24,349  

Deferred Income Taxes

      3,122       3,122  

Other Long-Term Liabilities

      6,937       6,954  
    
 

Total Liabilities

      73,351       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

      92,196       85,097  

Accumulated other comprehensive loss

      (2,679 )     (2,679 )
    
 

Total Shareholders’ Equity

      127,674       120,442  
    
 
     $ 201,025     $ 197,610  
    
 

 

See accompanying notes to consolidated financial statements.

 

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Table of Contents

DUCOMMUN INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

 

     For Three
Months Ended
  
    

July 5,

2003

    

June 29,

2002

  

Net Sales

    $ 56,211     $ 56,148  
    
 

Operating Costs and Expenses:

                 

Cost of goods sold

      43,282       43,227  

Selling, general and administrative expenses

      7,105       8,005  
    
 

Total Operating Costs and Expenses

      50,387       51,232  
    
 

Operating Income from Continuing Operations

      5,824       4,916  

Interest Expense

      (244 )     (467 )
    
 

Income from Continuing Operations Before Taxes

      5,580       4,449  

Income Tax Expense

      (1,589 )     (1,601 )
    
 

Income from Continuing Operations

      3,991       2,848  

Loss From Discontinued Operation, Net of Tax

      —         (201 )
    
 

Net Income

    $ 3,991     $ 2,647  
    
 

Earnings Per Share:

                 

Basic:

                 

Income from continuing operations

    $ 0.40     $ 0.29  

Loss from discontinued operation, net of tax

      —         (0.02 )
    
 
     $ 0.40     $ 0.27  
    
 

Diluted:

                 

Income from continuing operations

    $ 0.40     $ 0.28  

Loss from discontinued operation, net of tax

      —         (0.02 )
    
 
     $ 0.40     $ 0.26  
    
 

Weighted Average Number of Common Shares

                 

Outstanding:

                 

Basic

      9,874       9,802  

Diluted

      9,897       10,040  
                  

Data above have been reclassified to reflect Brice Manufacturing Company, Inc., as a discontinued operation for the three months ended June 29, 2002.

                 

 

See accompanying notes to consolidated financial statements.

 

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Table of Contents

DUCOMMUN INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

 

    

For Six Months

Ended

  
    

July 5,

2003

    

June 29,

2002

  

Net Sales

    $ 111,252     $ 110,780  
    
 

Operating Costs and Expenses:

                 

Cost of goods sold

      86,310       84,970  

Selling, general and administrative expenses

      14,088       14,464  
    
 

Total Operating Costs and Expenses

      100,398       99,434  
    
 

Operating Income from Continuing Operations

      10,854       11,346  

Interest Expense

      (565 )     (982 )
    
 

Income from Continuing Operations Before Taxes

      10,289       10,364  

Income Tax Expense

      (3,190 )     (3,731 )
    
 

Income from Continuing Operations

      7,099       6,633  

Loss From Discontinued Operation, Net of Tax

      —         (431 )

Cumulative Effect of Accounting Change, Net of Tax

      —         (2,325 )
    
 

Net Income

    $ 7,099     $ 3,877  
    
 

Earnings Per Share:

                 

Basic:

                 

Income from continuing operations

    $ 0.72     $ 0.68  

Loss from discontinued operation, net of tax

      —         (0.04 )

Cumulative effect of accounting change, net of tax

      —         (0.24 )
    
 
     $ 0.72     $ 0.40  
    
 

Diluted:

                 

Income from continuing operations

    $ 0.72     $ 0.67  

Loss from discontinued operation, net of tax

      —         (0.04 )

Cumulative effect of accounting change, net of tax

      —         (0.24 )
    
 
     $ 0.72     $ 0.39  
    
 

Weighted Average Number of Common Shares

                 

Outstanding:

                 

Basic

      9,873       9,753  

Diluted

      9,895       9,913  

Data above have been reclassified to reflect Brice Manufacturing Company, Inc., as a discontinued operation for the six months ended June 29, 2002.

                 

 

See accompanying notes to consolidated financial statements.

 

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Table of Contents

DUCOMMUN INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

     For Six Months
Ended
  
    

July 5,

2003

    

June 29,

2002

  

Cash Flows from Operating Activities:

                 

Net Income

    $ 7,099     $ 3,877  

Adjustments to Reconcile Net Income to

                 

Cash Provided by Operating Activities:

                 

Depreciation and amortization

      3,768       4,087  

Deferred income tax provision (benefit)

      89       (2,030 )

Income tax benefit related to the exercise of nonqualified stock options