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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
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 No. 1-8174
DUCOMMUN INCORPORATED
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(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 West Ocean Boulevard, Suite 900, Long Beach, California 90802-7901
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (562) 624-0800
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- -------------------------------- ------------------------------
Common Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
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The aggregate market value of the voting stock held by nonaffiliates of the
registrant was approximately $78,000,000 as of January 31, 2000.
The number of shares of common stock outstanding on January 31, 2000 was
9,568,510.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference:
(a) Annual Report to Shareholders (the "1999 Annual Report") for the year
ended December 31, 1999, incorporated partially in Part I and Part II hereof
(see Exhibit 13), and
(b) Proxy Statement for the 2000 Annual Meeting of Shareholders (the "2000
Proxy Statement"), incorporated partially in Part III hereof.
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
Certain statements in the Form 10-K and documents incorporated by reference
contain forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Any such forward-looking statements 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, the production
rate for the Space Shuttle and other space programs, the level of defense
spending, competitive pricing pressures, 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, availability of raw materials
and components from suppliers, and other factors beyond the Company's control.
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PART I
ITEM 1. BUSINESS
During 1999, Ducommun Incorporated ("Ducommun"), through its subsidiaries
(collectively, the "Company"), manufactured components and assemblies
principally for domestic and foreign commercial and military aircraft and space
programs. Domestic commercial aircraft programs include the Boeing 717, 737,
737NG, 747, 757, 767 and 777. Foreign commercial aircraft programs include the
Airbus Industrie A330, A340 and A340-600 aircraft, Bombardier Business and
Regional Jets and Dash 8. Major military aircraft programs include the Boeing
C-17, F-15 and F-18, Lockheed Martin F-16 and C-130, various Sikorsky, Bell,
Boeing and Augusta helicopter programs, and advanced development programs. The
Company is a subcontractor to Lockheed Martin on the Space Shuttle external tank
and a supplier of components for the Space Shuttle Orbitor, as well as for Space
Station Freedom. The Company manufactures components for Atlas/Centaur, Delta
and Titan expendable launch vehicles, Kistler K-1 reusable launch vehicles, and
various telecommunications satellites.
In November 1999, Ducommun, through a wholly-owned subsidiary, acquired the
assets and assumed certain liabilities of Parsons Precision Products, Inc.
("Parsons"). In April 1999, Ducommun acquired the capital stock of Sheet Metal
Specialties Company ("SMS"). In August 1998, Ducommun sold the capital stock of
3dbm, Inc. ("3dbm"). In June 1998, Ducommun Technologies, Inc., a subsidiary of
Ducommun, acquired the capital stock of American Electronics, Inc. ("AEI").
Aerochem, Inc.
Ducommun's subsidiary, Aerochem, Inc. ("Aerochem"), is a major supplier of
close tolerance chemical milling services for the aerospace and aircraft
industries. Chemical milling removes material in specific patterns to reduce
weight in areas where full material thickness is not required. This
sophisticated etching process enables Aerochem to produce lightweight,
high-strength designs that would be impractical to produce by conventional
means. Jet engine components, wing leading edges and fuselage skins are examples
of products that require chemical milling.
Aerochem offers production-scale chemical milling on aluminum, titanium,
steel, nickel-base and super alloys. Aerochem also specializes in very large and
complex parts up to 50 feet long. Management believes that Aerochem is the
largest independent supplier of chemical milling services in the United States.
Many of the parts chemically milled by Aerochem are formed and machined by
AHF-Ducommun Incorporated.
AHF-Ducommun Incorporated
AHF-Ducommun Incorporated ("AHF"), another Ducommun subsidiary, supplies
aircraft and aerospace prime contractors with engineering, manufacturing and
testing of complex components using stretch forming and thermal forming
processes and computer-controlled machining. Stretch forming is a process for
manufacturing large, complex
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structural shapes primarily from aluminum sheet metal extrusions. AHF has some
of the largest and most sophisticated stretch forming presses in the United
States. Thermal forming is a metal working process conducted at high temperature
for manufacturing close tolerance titanium components. AHF designs and
manufactures the tooling required for the production of parts in both forming
processes. Certain components manufactured by AHF are machined with precision
milling equipment designed and constructed by AHF. AHF also employs
computer-aided design/manufacturing systems with three 5-axis gantry profile
milling machines and three 5-axis numerically-controlled routers to provide
computer-controlled machining and inspection of complex parts up to 100 feet
long.
AHF has an integrated operation offering a broad range of capabilities.
From the design specifications of a customer, AHF is able to engineer,
manufacture, test and deliver the desired finished components. This process
depends on the skillful execution of several complex subtasks, including the
design and construction of special equipment. Management believes that the
ability of AHF to provide a full range of integrated capabilities represents a
competitive advantage.
In November 1999, Ducommun, through a wholly-owned subsidiary, acquired the
assets and assumed certain liabilities of Parsons. Parsons is a leading
manufacturer of complex titanium hot-formed subassemblies and components for
commercial and military aerospace applications. Parsons' management team
remained with the Company at its existing Parsons, Kansas facility and reports
through AHF-Ducommun Incorporated.
Brice Manufacturing Company, Inc.
Brice Manufacturing Company, Inc. ("Brice"), a subsidiary of Ducommun, is
an after-market supplier of aircraft seating products to many of the world's
largest commercial airlines. Products supplied by Brice include plastic and
metal seat parts, overhauled and refurbished seats, components for installation
of in-flight entertainment equipment, and other cabin interior components for
commercial aircraft.
In 1998, Brice introduced an original equipment manufacture ("OEM") 16G
aircraft seat. This new aircraft seat represents Brice's first major OEM
product.
Ducommun Technologies, Inc. (formerly Jay-El Products, Inc.)
Ducommun Technologies, Inc. ("DTI"), a subsidiary of Ducommun, develops,
designs and manufactures illuminated switches, switch assemblies and keyboard
panels used in many military aircraft, helicopter, commercial aircraft and
spacecraft programs, as well as ground support equipment and naval vessels. DTI
manufactures switches and panels where high reliability is a prerequisite.
Keyboard panels are lighted, feature push button switches, and are available
with sunlight readable displays. Some of the keyboard panels and illuminated
switches manufactured by DTI for military applications are night vision
goggle-compatible.
DTI also develops, designs and manufactures microwave switches, filters and
other components used principally on commercial and military aircraft and
telecommunications
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satellites. DTI has developed several new products that apply its existing
microwave technology to nonaerospace markets, including the wireless
telecommunications industry.
In June 1998, DTI acquired the capital stock of AEI. AEI is a leading
manufacturer of high precision actuators, stepper motors, fractional horsepower
motors and resolvers principally for commercial and military space
applications.
MechTronics of Arizona Corp.
MechTronics is a leading manufacturer of mechanical and electromechanical
enclosure products for the defense electronics and commercial aviation markets.
MechTronics has a fully integrated manufacturing capability, including
engineering, fabrication, machining, assembly, electronic integration and
related processes. MechTronics' products include sophisticated radar enclosures,
aircraft avionics racks and shipboard communications and control enclosures.
In April 1999, Ducommun acquired the capital stock of SMS. SMS is a
manufacturer of subassemblies for commercial and military aerospace
applications. SMS remained at its existing Chatsworth, California facility and
reports through MechTronics of Arizona Corp.
3dbm, Inc.
In August 1998, Ducommun sold the capital stock of its wireless
communications subsidiary, 3dbm, Inc. ("3dbm"). The Company sold 3dbm because
the level of investment required to ensure the long-term viability of 3dbm in
the wireless system infrastructure business was more than the Company was
willing to commit.
Defense and Space Programs
A major portion of sales is derived from United States government defense
programs and space programs. Approximately 31 percent of 1999 sales were related
to defense programs and approximately 11 percent of 1999 sales were related to
space programs. These programs could be adversely affected by reductions in
defense spending and other government budgetary pressures which would result in
reductions, delays or stretch-outs of existing and future programs. In addition,
many of the Company's contracts covering defense and space programs are subject
to termination at the convenience of the customer (as well as for default). In
the event of termination for convenience, the customer generally is required to
pay the costs incurred by the Company and certain other fees through the date of
termination.
Commercial Programs
Approximately 58 percent of 1999 sales were related to commercial aircraft
programs, and nonaerospace commercial applications. The Company's commercial
sales depend substantially on aircraft manufacturer's production rates, which in
turn depend upon deliveries of new aircraft. Deliveries of new aircraft by
aircraft manufacturers are dependent on the financial capacity of the airlines
and leasing companies to purchase the aircraft. Sales of commercial aircraft
could be affected as a result of changes in new aircraft orders, or the
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cancellation or deferral by airlines of purchases of ordered aircraft. The
Company's sales for commercial aircraft programs also could be affected by
changes in its customers' inventory levels and changes in its customers'
aircraft production build rates.
Major Customers
The Company had substantial sales to Boeing, Lockheed Martin and Raytheon.
During 1999, sales to Boeing were $40,310,000, or 28% of total sales; sales to
Lockheed Martin were $15,470,000, or 11% of total sales, and sales to Raytheon
were $10,138,000, or 7% of total sales. Sales to Boeing, Lockheed Martin and
Raytheon are diversified over a number of different commercial, military and
space programs.
Competition
The Company competes with various companies, some of which are
substantially larger and have greater financial, technical and personnel
resources. The Company's ability to compete depends on the quality of goods and
services, competitive pricing and the ability to solve specific customer
problems.
Backlog
At December 31, 1999, backlog believed to be firm was approximately
$213,100,000, compared to $138,200,000 at December 31, 1998. Approximately
$95,000,000 of total backlog is expected to be delivered during 2000.
Environmental Matters and Legal
Aerochem uses various acid and alkaline solutions in the chemical milling
process, resulting in potential environmental hazards. Despite existing waste
recovery systems and continuing capital expenditures for waste reduction and
management, at least for the immediate future, Aerochem will remain dependent on
the availability and cost of remote hazardous waste disposal sites or other
alternative methods of disposal.
The Aerochem facility located in El Mirage, California has been directed by
California environmental agencies to investigate and take corrective action for
groundwater contamination. Based upon currently available information, the
Company has established a provision for the cost of such investigation and
corrective action. Aerochem expects to spend approximately $1 million for future
investigation and corrective action for groundwater contamination at its El
Mirage location. However, the Company's ultimate liability in connection with
the contamination will depend upon a number of factors, including changes in
existing laws and regulations, and the design and cost of the construction,
operation and maintenance of the corrective action.
Ducommun's other subsidiaries are also subject to environmental laws and
regulations. However, the quantities of hazardous materials handled, hazardous
wastes generated and air emissions released by these subsidiaries are relatively
small.
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The Company anticipates that capital expenditures will continue to be
required for the foreseeable future to upgrade and maintain its environmental
compliance efforts. The Company does not expect to spend a material amount on
capital expenditures for environmental compliance during 2000.
In the normal course of business, Ducommun and its subsidiaries are
defendants in certain other litigation, claims and inquiries, including matters
relating to environmental laws. In addition, the Company makes various
commitments and incurs contingent liabilities. While it is not feasible to
predict the outcome of these matters, the Company does not presently expect that
any sum it may be required to pay in connection with these matters would have a
material adverse effect on its consolidated financial position or results of
operations.
Employees
At December 31, 1999, the Company employed 1,202 persons.
Business Segment Information
The Company operates principally in only one business segment.
Information About Foreign and Domestic Operations and Export Sales
In 1999, 1998 and 1997, foreign sales to manufacturers worldwide were
$28,313,000, $29,007,000 and $29,978,000, respectively.
The amounts of revenue, profitability and identifiable assets attributable
to foreign operations are not material when compared with the revenue,
profitability and identifiable assets attributed to United States domestic
operations during 1999, 1998 and 1997. The Company had no sales to a foreign
country greater than 4.2% of total sales in 1999, 1998 and 1997.
The Company is not subject to any foreign currency risks since all sales
are made in United States dollars.
ITEM 2. PROPERTIES
The Company occupies approximately 17 facilities with a total office and
manufacturing area of over 956,000 square feet, including both owned and leased
properties. At December 31, 1999, facilities which were in excess of 60,000
square feet each were occupied as follows:
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Square Expiration
Location Company Feet of Lease
- ----------------------- ------------------------- ---------- -----------
El Mirage, California Aerochem 74,300 Owned
Orange, California Aerochem 76,200 Owned
Carson, California AHF-Ducommun 65,000 2001
Carson, California AHF-Ducommun 108,000 Owned
Carson, California Ducommun Technologies 117,000 2002
Phoenix, Arizona MechTronics 90,900 2006
Parsons, Kansas Parsons Precision Products 120,000 Owned
The Company's facilities are, for the most part, fully utilized, although
excess capacity exists from time to time based on product mix and demand.
Management believes that these properties are in good condition and suitable for
their present use.
Although the Company maintains standard property casualty insurance
covering its properties, the Company does not carry any earthquake insurance
because of the cost of such insurance. Most of the Company's properties are
located in Southern California, an area subject to frequent and sometimes severe
earthquake activity.
ITEM 3. LEGAL PROCEEDINGS
On October 25, 1999, Com Dev Consulting Ltd. ("Com Dev") filed a complaint,
which was subsequently amended on December 22, 1999, against Ducommun and
certain officers of the Company in the United States Court for the Central
District of California. The complaint alleged violation of the federal
securities laws, intentional misrepresentation, negligent misrepresentation,
unfair business practices and breach of contract in connection with the sale of
the capital stock of 3dbm by Ducommun to Com Dev in August 1998, and sought
unspecified general and punitive damages from the defendants. On February 3,
2000, the United States District Court dismissed the complaint without
prejudice. The Company intends to vigorously defend the matter if Com Dev
attempts to reassert its claims. While it is not feasible to predict the outcome
of this matter, the Company presently believes that the final resolution of the
matter will not have a material adverse effect on its consolidated financial
position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information under the caption "Quarterly Common Stock Price
Information" on page 12 of the 1999 Annual Report is incorporated herein by
reference. No dividends were paid during 1998 or 1999 (see Exhibit 13).
ITEM 6. SELECTED FINANCIAL DATA
The information under the caption "Selected Financial Data" appearing on
page 12 of the 1999 Annual Report is incorporated herein by reference (see
Exhibit 13).
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" appearing on pages 13 through 16
of the 1999 Annual Report is incorporated herein by reference (see Exhibit 13).
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data under the captions
"Consolidated Statements of Income," "Consolidated Balance Sheets,"
"Consolidated Statements of Cash Flows," "Consolidated Statements of Changes in
Shareholders' Equity," and "Notes to Consolidated Financial Statements,"
together with the report thereon of PricewaterhouseCoopers LLP dated February
17, 2000, appearing on pages 17 through 27 of the 1999 Annual Report are
incorporated herein by reference (see Exhibit 13).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors of the Registrant
The information under the caption "Election of Directors" in the 2000 Proxy
Statement is incorporated herein by reference.
Executive Officers of the Registrant
The following table sets forth the names and ages of all executive officers
of the Company (including subsidiary presidents), all positions and offices held
with the Company and brief accounts of business experience during the past five
years. Executive officers do not serve for any specified terms, but are
typically elected annually by the Board of Directors of the Company or, in the
case of subsidiary presidents, by the Board of Directors of the respective
subsidiaries.
Positions and Offices Other Business
Held With Company Experience
Name (Age) (Year Elected) (Past Five Years)
- ----------------------------- ----------------------------- ---------------------------
Joseph C. Berenato (53) President (1996), Chief Executive Vice President
Executive Officer (1997) (1995), Chief Operating
and Chairman of the Board Officer (1995-1996), and
(1999) Chief Financial Officer
(1991-1996) of the Company
Robert A. Borlet (59) Vice President, President of Ducommun
Manufacturing Operations Technologies, Inc. (1988-1999)
(1999)
James S. Heiser (43) Vice President (1990), --
Chief Financial Officer
(1996), General Counsel
(1988), Secretary (1987),
and Treasurer (1995)
Kenneth R. Pearson (64) Vice President-Human --
Resources (1988)
Michael W. Williams (45) Vice President, Corporate Vice President of
Development (1998) Operations at H.R.
Textron; operations
positions with Crane
Valve Group, ITT Corp. and
Parker Hannifin
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Positions and Offices Other Business
Held With Company Experience
Name (Age) (Year Elected) (Past Five Years)
- ----------------------------- ----------------------------- ---------------------------
Samuel D. Williams (51) Vice President (1991) and --
Controller (1988)
Jeffrey P. Abbott (48) President, Aerochem, Inc. Vice President of
(1998) Operations (1992-1997);
Executive Vice President
and General Manager
(1997-1998) of Aerochem
Paul L. Graham (55) President of Ducommun President of 3dbm, Inc.
Technologies, Inc. (1999) (1995-1998); President of
Com Dev Wireless Systems
(1998-1999)
Bruce J. Greenbaum (44) President of Brice --
Manufacturing Company, Inc.
(1994)
Robert B. Hahn (57) President of MechTronics of President of Aerochem,
Arizona Corp. (1997) Inc. (1987-1997)
Robert L. Hansen (46) President, AHF-Ducommun --
Incorporated (1989)
ITEM 11. EXECUTIVE COMPENSATION
The information under the caption "Compensation of Executive Officers" in
the 2000 Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the caption "Security Ownership of Certain Beneficial
Owners and Management" in the 2000 Proxy Statement is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the caption "Election of Directors" contained in the
paragraph immediately following the table in the 2000 Proxy Statement is
incorporated herein by reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following consolidated financial statements of Ducommun
Incorporated and subsidiaries, included in the 1999 Annual Report, are
incorporated by reference in Item 8 of this report. Page numbers refer
to the 1999 Annual Report:
Page
----
Consolidated Statements of Income -- Years ended December 31, 17
1999, 1998 and 1997
Consolidated Balance Sheets -- December 31, 1999 and 1998 18
Consolidated Statements of Cash Flows -- Years ended December 31, 19
1999, 1998 and 1997
Consolidated Statements of Changes in Shareholders' Equity -- Years 20
Ended December 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements 22-26
Report of Independent Accountants 27
2. Financial Statement Schedule
The following schedule for the years ended December 31, 1999, 1998 and
1997 is filed herewith:
Schedule VIII -- Valuation and Qualifying Accounts and Reserves
All other schedules have been omitted because they are not applicable,
not required, or the information has been otherwise supplied in the
financial statements or notes thereto.
(b) Reports on Form 8-K
A report on Form 8-K dated November 23, 1999 was filed during the last
quarter of 1999 with respect to the acquisition of Parsons, reported
under Item 2 thereto.
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(c) Exhibits
3.1 Restated Certificate of Incorporation filed with the Delaware
Secretary of State on May 29, 1990. Incorporated by reference to
Exhibit 3.1 to Form 10-K for the year ended December 31, 1990.
3.2 Certificate of Amendment of Certificate of Incorporation
filed with the Delaware Secretary of State on May 27, 1998.
Incorporated by reference to Exhibit 3.2 to Form 10-K for the year
ended December 31, 1998.
3.3 Bylaws as amended and restated on January 26, 2000.
4.1 Fifth Amended and Restated Loan Agreement between Ducommun
Incorporated, as Borrower, and Bank of America National Trust and
Savings Association, as Bank, dated June 23, 1997. Incorporated by
reference to Exhibit 10.1 to Form 10-Q for the quarter ended June
28, 1997.
4.2 First Amendment to Fifth Amended and Restated Loan Agreement
between Ducommun Incorporated, as Borrower, and Bank of America
National Trust and Savings Association, as Bank, dated as of
October 1, 1997. Incorporated by reference to Exhibit 4.2 to Form
10-K for the year ended December 31, 1997.
4.3 Second Amendment to Fifth Amended and Restated Loan Agreement
dated August 10, 1998. Incorporated by reference to Exhibit 10.1 to
the Form 10-Q for the quarter ended October 3, 1998.
4.4 Third Amendment to Fifth Amended and Restated Loan Agreement
dated February 11, 1999.
4.5 Fourth Amendment to Fifth Amended and Restated Loan Agreement
dated October 29, 1999.
4.6 Conversion Agreement dated July 22, 1992 between Ducommun and
the holders of the 9% Convertible Subordinated Notes due 1998.
Incorporated by reference to Exhibit 1 to Form 8-K dated July 29,
1992.
* 10.1 1981 Stock Incentive Plan as amended and restated March 21,
1990. Incorporated by reference to Exhibit 10.2 to Form 10-K for the
year ended December 31, 1989.
* 10.2 1990 Stock Option Plan. Incorporated by reference to Exhibit
10.4 to Form 10-K for the year ended December 31, 1990.
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* 10.3 1994 Stock Incentive Plan, as amended May 7, 1998. Incorporated
by reference to Exhibit 10.3 to Form 10-K for the year ended December
31, 1997.
* 10.4 Form of Nonqualified Stock Option Agreement, for grants to
employees prior to January 1, 1999, under the 1994 Stock Incentive
Plan, the 1990 Stock Option Plan and the 1981 Stock Incentive Plan.
Incorporated by reference to Exhibit 10.5 to Form 10-K for the year
ended December 31, 1990.
* 10.5 Form of Nonqualified Stock option Agreement, for grants to
employees after January 1, 1999, under the 1994 Stock Incentive Plan
and the 1990 Stock Option Plan.
* 10.6 Form of Incentive Stock Option Agreement under the 1994 Stock
Incentive Plan. Incorporated by reference to Exhibit 10.5 to Form 10-K
for the year ended December 31, 1996.
10.7 Form of Nonqualified Stock Option Agreement for nonemployee
directors under the 1994 Stock Incentive Plan.
* 10.8 Form of Key Executive Severance Agreement entered with nine
current executive officers of Ducommun or its subsidiaries.
Incorporated by reference to Exhibit 10.7 to Form 10-K for the year
ended December 31, 1999. All of the Key Executive Severance Agreements
are identical except for the name of the executive officer and the
date of the Agreement:
Executive Officer Date of Agreement
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Joseph C. Berenato November 4, 1991
Robert A. Borlet July 27, 1988
Bruce J. Greenbaum December 6, 1995
Robert B. Hahn July 27, 1988
Robert L. Hansen May 5, 1993
James S. Heiser July 27, 1988
Kenneth R. Pearson July 27, 1988
Michael W. Williams October 25, 1999
Samuel D. Williams June 21, 1989
* 10.9 Form of Indemnity Agreement entered with all directors and
officers of Ducommun. Incorporated by reference to Exhibit 10.8 to
Form 10-K for the year ended December 31, 1990. All of the Indemnity
Agreements are identical except for the name of the director or
officer and the date of the Agreement:
Director/Officer Date of Agreement
---------------- -----------------
Norman A. Barkeley July 29, 1987
Joseph C. Berenato November 4, 1991
Eugene P. Conese, Jr. January 26, 2000
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Ralph D. Crosby, Jr. January 26, 2000
James S. Heiser May 6, 1987
Kenneth R. Pearson July 27, 1988
Michael W. Williams February 26, 1999
Samuel D. Williams November 11, 1988
H. Frederick Christie October 23, 1985
Robert C. Ducommun December 31, 1985
Kevin S. Moore October 15, 1994
Thomas P. Mullaney April 8, 1987
Richard J. Pearson October 23, 1985
Arthur W. Schmutz December 31, 1985
* 10.10 Description of 2000 Executive Officer Bonus Arrangement.
* 10.11 Directors' Deferred Compensation and Retirement Plan, as
amended October 29, 1993. Incorporated by reference to Exhibit 10.9 to
Form 10-K for the year ended December 31, 1993.
* 10.12 Ducommun Incorporated Executive Retirement Plan dated May 5,
1993. Incorporated by reference to Exhibit 10.2 to Form 10-Q for the
quarter ended July 3, 1993.
* 10.13 Ducommun Incorporated Executive Compensation Deferral Plan
dated May 5, 1993. Incorporated by reference to Exhibit 10.3 to Form
10-Q for the quarter ended July 3, 1993.
* 10.14 Ducommun Incorporated Executive Compensation Deferral Plan No.
2 dated October 15, 1994. Incorporated by reference to Exhibit 10.12
to Form 10-K for the year ended December 31, 1994.
10.15 Asset Purchase and Sale Agreement dated as of November 8, 1999
among Ducommun Incorporated, Ducommun Acquisition Corporation, Jordan
Industries, Inc., and Parsons Precision Products, Inc. Incorporated by
reference to Exhibit 2.1 to Form 8-K dated November 23, 1999.
11 Reconciliation of the Numerators and Denominators of the Basic
and Diluted Earnings Per Share Computations
13 1999 Annual Report to Shareholders (not deemed to be filed
except as previously incorporated by reference).
21 Subsidiaries of registrant
23 Consent of PricewaterhouseCoopers LLP
27 Financial Data Schedule
- ----------
* Indicates an executive compensation plan or arrangement.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
DUCOMMUN INCORPORATED
Date: February 23, 2000 By: /s/ Joseph C. Berenato
------------------------------------
Joseph C. Berenato
Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been duly signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: February 23, 2000 By: /s/ Joseph C. Berenato
------------------------------------
Joseph C. Berenato
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)
Date: February 23, 2000 By: /s/ James S. Heiser
------------------------------------
James S. Heiser
Vice President, Chief Financial
Officer, General Counsel,
Secretary and Treasurer
(Principal Financial Officer)
Date: February 23, 2000 By: /s/ Samuel D. Williams
------------------------------------
Samuel D. Williams
Vice President, Controller and
Assistant Treasurer
(Principal Accounting Officer)
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DIRECTORS
By: /s/ Norman A. Barkeley Date: February 23, 2000
------------------------------------
Norman A. Barkeley
By: /s/ Joseph C. Berenato Date: February 23, 2000
------------------------------------
Joseph C. Berenato
By: /s/ Eugene P. Conese, Jr. Date: February 23, 2000
------------------------------------
Eugene P. Conese, Jr.
By: /s/ Ralph D. Crosby, Jr. Date: February 23, 2000
------------------------------------
Ralph D. Crosby, Jr.
By: /s/ H. Frederick Christie Date: February 23, 2000
------------------------------------
H. Frederick Christie
By: /s/ Robert C. Ducommun Date: February 23, 2000
------------------------------------
Robert C. Ducommun
By: /s/ Kevin S. Moore Date: February 23, 2000
------------------------------------
Kevin S. Moore
By: /s/ Thomas P. Mullaney Date: February 23, 2000
------------------------------------
Thomas P. Mullaney
By: /s/ Richard J. Pearson Date: February 23, 2000
------------------------------------
Richard J. Pearson
By: /s/ Arthur W. Schmutz Date: February 23, 2000
------------------------------------
Arthur W. Schmutz
17
18
Report of Independent Accountants on
Financial Statement Schedule
To the Board of Directors
of Ducommun Incorporated
Our audits of the consolidated financial statements referred to in our report
dated February 17, 2000 appearing in the 1999 Annual Report to Shareholders of
Ducommun Incorporated (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the financial statement schedule listed in Item 14(a)(2) of this Form
10-K. In our opinion, this financial statement schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.
PricewaterhouseCoopers LLP
Los Angeles, California
February 17, 2000
18
19
DUCOMMUN INCORPORATED
AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
SCHEDULE VIII
Column A Column B Column C Column D Column E
- ------------------------ ------------- --------------------------- -------------- -----------
Additions
---------------------------
Balance at Charged to Charged to Balance
Beginning Costs and Other at End of
Description of Period Expenses Accounts Deductions Period
- ------------------------ ------------- ----------- -------------- -------------- -----------
FOR THE YEAR ENDED DECEMBER 31, 1999
Allowance for
Doubtful Accounts $ 125,000 $ 25,000 $ 39,000(c) $ 36,000(b) $ 153,000
FOR THE YEAR ENDED DECEMBER 31, 1998
Allowance for
Doubtful Accounts $ 359,000 $ 7,000 $ -- $ 194,000(a) $ 125,000
$ 47,000(b)
FOR THE YEAR ENDED DECEMBER 31, 1997
Allowance for
Doubtful Accounts $ 206,000 $ 290,000 $ -- $ 137,000(b) $ 359,000
- -------------
(a) Collections on previously written off accounts.
(b) Write-offs on uncollectible accounts.
(c) Change in allowance for doubtful accounts related to acquisitions in 1999.
19
20
EXHIBIT INDEX
(c) Exhibits
3.1 Restated Certificate of Incorporation filed with the Delaware
Secretary of State on May 29, 1990. Incorporated by reference to
Exhibit 3.1 to Form 10-K for the year ended December 31, 1990.
3.2 Certificate of Amendment of Certificate of Incorporation
filed with the Delaware Secretary of State on May 27, 1998.
Incorporated by reference to Exhibit 3.2 to Form 10-K for the year
ended December 31, 1998.
3.3 Bylaws as amended and restated on January 26, 2000.
4.1 Fifth Amended and Restated Loan Agreement between Ducommun
Incorporated, as Borrower, and Bank of America National Trust and
Savings Association, as Bank, dated June 23, 1997. Incorporated by
reference to Exhibit 10.1 to Form 10-Q for the quarter ended June
28, 1997.
4.2 First Amendment to Fifth Amended and Restated Loan Agreement
between Ducommun Incorporated, as Borrower, and Bank of America
National Trust and Savings Association, as Bank, dated as of
October 1, 1997. Incorporated by reference to Exhibit 4.2 to Form
10-K for the year ended December 31, 1997.
4.3 Second Amendment to Fifth Amended and Restated Loan Agreement
dated August 10, 1998. Incorporated by reference to Exhibit 10.1 to
the Form 10-Q for the quarter ended October 3, 1998.
4.4 Third Amendment to Fifth Amended and Restated Loan Agreement
dated February 11, 1999.
4.5 Fourth Amendment to Fifth Amended and Restated Loan Agreement
dated October 29, 1999.
4.6 Conversion Agreement dated July 22, 1992 between Ducommun and
the holders of the 9% Convertible Subordinated Notes due 1998.
Incorporated by reference to Exhibit 1 to Form 8-K dated July 29,
1992.
* 10.1 1981 Stock Incentive Plan as amended and restated March 21,
1990. Incorporated by reference to Exhibit 10.2 to Form 10-K for the
year ended December 31, 1989.
* 10.2 1990 Stock Option Plan. Incorporated by reference to Exhibit
10.4 to Form 10-K for the year ended December 31, 1990.
21
* 10.3 1994 Stock Incentive Plan, as amended May 7, 1998. Incorporated
by reference to Exhibit 10.3 to Form 10-K for the year ended December
31, 1997.
* 10.4 Form of Nonqualified Stock Option Agreement, for grants to
employees prior to January 1, 1999, under the 1994 Stock Incentive
Plan, the 1990 Stock Option Plan and the 1981 Stock Incentive Plan.
Incorporated by reference to Exhibit 10.5 to Form 10-K for the year
ended December 31, 1990.
* 10.5 Form of Nonqualified Stock option Agreement, for grants to
employees after January 1, 1999, under the 1994 Stock Incentive Plan
and the 1990 Stock Option Plan.
* 10.6 Form of Incentive Stock Option Agreement under the 1994 Stock
Incentive Plan. Incorporated by reference to Exhibit 10.5 to Form 10-K
for the year ended December 31, 1996.
10.7 Form of Nonqualified Stock Option Agreement for nonemployee
directors under the 1994 Stock Incentive Plan.
* 10.8 Form of Key Executive Severance Agreement entered with nine
current executive officers of Ducommun or its subsidiaries.
Incorporated by reference to Exhibit 10.7 to Form 10-K for the year
ended December 31, 1999. All of the Key Executive Severance Agreements
are identical except for the name of the executive officer and the
date of the Agreement:
Executive Officer Date of Agreement
----------------- -----------------
Joseph C. Berenato November 4, 1991
Robert A. Borlet July 27, 1988
Bruce J. Greenbaum December 6, 1995
Robert B. Hahn July 27, 1988
Robert L. Hansen May 5, 1993
James S. Heiser July 27, 1988
Kenneth R. Pearson July 27, 1988
Michael W. Williams October 25, 1999
Samuel D. Williams June 21, 1989
* 10.9 Form of Indemnity Agreement entered with all directors and
officers of Ducommun. Incorporated by reference to Exhibit 10.8 to
Form 10-K for the year ended December 31, 1990. All of the Indemnity
Agreements are identical except for the name of the director or
officer and the date of the Agreement:
Director/Officer Date of Agreement
---------------- -----------------
Norman A. Barkeley July 29, 1987
Joseph C. Berenato November 4, 1991
Eugene P. Conese, Jr. January 26, 2000
22
Ralph D. Crosby, Jr. January 26, 2000
James S. Heiser May 6, 1987
Kenneth R. Pearson July 27, 1988
Michael W. Williams February 26, 1999
Samuel D. Williams November 11, 1988
H. Frederick Christie October 23, 1985
Robert C. Ducommun December 31, 1985
Kevin S. Moore October 15, 1994
Thomas P. Mullaney April 8, 1987
Richard J. Pearson October 23, 1985
Arthur W. Schmutz December 31, 1985
* 10.10 Description of 2000 Executive Officer Bonus Arrangement.
* 10.11 Directors' Deferred Compensation and Retirement Plan, as
amended October 29, 1993. Incorporated by reference to Exhibit 10.9 to
Form 10-K for the year ended December 31, 1993.
* 10.12 Ducommun Incorporated Executive Retirement Plan dated May 5,
1993. Incorporated by reference to Exhibit 10.2 to Form 10-Q for the
quarter ended July 3, 1993.
* 10.13 Ducommun Incorporated Executive Compensation Deferral Plan
dated May 5, 1993. Incorporated by reference to Exhibit 10.3 to Form
10-Q for the quarter ended July 3, 1993.
* 10.14 Ducommun Incorporated Executive Compensation Deferral Plan No.
2 dated October 15, 1994. Incorporated by reference to Exhibit 10.12
to Form 10-K for the year ended December 31, 1994.
10.15 Asset Purchase and Sale Agreement dated as of November 8, 1999
among Ducommun Incorporated, Ducommun Acquisition Corporation, Jordan
Industries, Inc., and Parsons Precision Products, Inc. Incorporated by
reference to Exhibit 2.1 to Form 8-K dated November 23, 1999.
11 Reconciliation of the Numerators and Denominators of the Basic
and Diluted Earnings Per Share Computations
13 1999 Annual Report to Shareholders (not deemed to be filed
except as previously incorporated by reference).
21 Subsidiaries of registrant
23 Consent of PricewaterhouseCoopers LLP
27 Financial Data Schedule
- ----------
* Indicates an executive compensation plan or arrangement.