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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, 1995
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. 0-1222
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.)
23301 South Wilmington Avenue, Carson, California 90745
- ------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 513-7200
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 American Stock Exchange
Pacific Stock Exchange
7-3/4% Convertible Subordinated
Debentures Due 2011 American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
----------------
(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 non-affiliates of the
registrant was approximately $35 million as of January 31, 1996.
The number of shares of common stock outstanding on January 31, 1996 was
5,121,115.
Documents Incorporated by Reference: (a) Annual Report to Shareholders (the
"1995 Annual Report") for the year ended December 31, 1995, incorporated
partially in Part I and Part II hereof (see Exhibit 13.0), and (b) Proxy
Statement for the 1996 Annual Meeting of Shareholders (the "1996 Proxy
Statement"), incorporated partially in Part III hereof.
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PART I
ITEM 1. BUSINESS
During 1995, 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 737, 747,
757, 767 and 777 and the McDonnell Douglas MD-11 and MD-80/90. Foreign
commercial aircraft programs include the Airbus Industrie A330 and A340, de
Havilland Dash 8, and the Canadair Regional Jet. Major military aircraft
programs include the McDonnell Douglas C-17, F-15 and F-18, Lockheed Martin F-16
and C-130, Northrop Grumman F-18, various Sikorsky, Bell and Boeing 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. The Company manufactures components for
Atlas/Centaur, Delta and Titan expendable launch vehicles and various
telecommunications satellites. Through its 3dbm, Inc. ("3dbm") subsidiary, the
Company also sells products for the wireless communications industry.
In December 1994, the Company acquired all of the capital stock of Brice
Manufacturing Company, Inc. ("Brice") and acquired substantially all of the
assets and assumed certain liabilities of Dynatech Microwave Technology, Inc.
("DMT"). In January 1995, the Company acquired all of the capital stock of 3dbm.
Aerochem
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
AHF-Ducommun Incorporated ("AHF"), another Ducommun subsidiary, supplies
aircraft and aerospace prime contractors with
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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 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 a 5-axis
numerically-controlled router to provide computer-controlled machining and
inspection of complex parts up to 82 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.
Jay-El Products
Ducommun's Jay-El Products, Inc. ("Jay-El Products") subsidiary 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.
Jay-El Products 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 Jay-El Products for military applications
are night vision goggle-compatible.
As a result of the acquisition of DMT in December 1994, Jay-El Products
develops, designs and manufactures microwave switches, filters and other
components used principally on commercial and military aircraft. DMT also has
developed several new products that apply its existing microwave technology to
nonaerospace markets, including the wireless communications field.
Jay-El Products sells most of its products pursuant to fixed price
contracts, either directly or as a subcontractor under United States government
defense contracts.
Brice Manufacturing
In December 1994, Ducommun acquired the capital stock of Brice Manufacturing
Company, Inc. ("Brice"). Brice is an after-market
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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. Management believes that Brice is the largest company in the United
States supplying airline seating and other cabin interior components exclusively
for the after-market.
3dbm
In January 1995, Ducommun acquired the capital stock of 3dbm. 3dbm develops,
designs and manufactures high-power expanders, repeaters, bi-directional
amplifiers, microcells and other wireless communication hardware used in
cellular telephone networks. 3dbm also designs and manufactures on a limited
basis microwave components and subsystems for both military and commercial
customers.
Defense and Space Programs
A major portion of sales is derived from United States government defense
programs and space programs. Approximately 36 percent of 1995 sales were related
to defense programs and approximately 9 percent of 1995 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,
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.
Any substantial delay or suspension of production for the Space Shuttle
program would have a significant impact on the results of operations for the
Company.
Commercial Programs
Approximately 55 percent of 1995 sales were related to commercial aircraft
programs, and nonaerospace commercial applications. The Company's commercial
sales depend substantially on aircraft manufacturers' 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
cancellation or deferral by airlines of purchases of ordered aircraft.
Major Customers
The Company had substantial sales to Lockheed Martin, Northrop Grumman,
McDonnell Douglas, and Boeing. During 1995, sales to
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Lockheed Martin were $8,163,000, or 8.9% of total sales; sales to Northrop
Grumman were $9,623,000, or 10.5% of total sales; sales to McDonnell Douglas
were $9,516,000, or 10.4% of total sales, and sales to Boeing were $5,215,000 or
5.7% of total sales. Sales to Lockheed Martin are primarily for the Space
Shuttle program. Sales to Northrop Grumman, McDonnell Douglas and Boeing are
diversified over a number of different commercial and military 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, 1995, backlog believed to be firm was approximately
$92,600,000, including $26,000,000 for space-related business, compared to
$84,800,000 at December 31, 1994. Approximately $40,000,000 of total backlog
is expected to be delivered during 1996.
Environmental Matters
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 has been notified by the United States Environmental Protection
Agency ("EPA") that Aerochem and other generators of hazardous waste disposed at
the Casmalia Resources Hazardous Waste Facility in California (the "Casmalia
Site"), an inactive hazardous waste treatment, storage and disposal facility,
may be responsible for certain costs associated with the cleanup and closure of
the Casmalia Site. Aerochem contributed less than 1/4 of 1% of the total waste
disposed at the Casmalia Site, and many other substantially larger companies and
governmental entities are involved at the Casmalia Site. The Company has
established a provision, based on currently available information, for
Aerochem's share of the estimated cost of cleanup and closure of the Casmalia
Site.
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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.
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 1996.
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, 1995, the Company employed 808 persons.
Business Segment Information
The Company operates in only one business segment.
Information About Foreign and Domestic Operations and Export Sales
In 1995, 1994 and 1993, foreign sales to manufacturers world-wide were
$23,497,000, $11,515,000 and $8,672,000, 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 Unites States domestic
operations during 1995, 1994 and 1993. Canada is the only country in which the
Company had sales of 5% or more of total sales, with sales of $4,518,000,
$5,944,000 and $3,445,000 in 1995, 1994 and 1993, respectively.
ITEM 2. PROPERTIES
The Company occupies approximately 20 facilities with a total area of over
748,000 square feet, including both owned and leased properties. At December 31,
1995, facilities which were in excess of 60,000 square feet each were occupied
as follows:
Square Expiration
Location Company Feet of Lease
- -------- ------- ------ ----------
El Mirage, California Aerochem 74,300 Owned
Orange, California Aerochem 76,200 Owned
Carson, California AHF-Ducommun 130,400 1996-01
Carson, California AHF-Ducommun 108,000 Owned
Carson, California Jay-El Products 117,000 1997
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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. All of the Company's properties are located in
Southern California, an area subject to frequent and sometimes severe earthquake
activity.
3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS
The information under the caption "Quarterly Common Stock Price Information"
on page 9 of the 1995 Annual Report is incorporated herein by reference. No
dividends were paid during 1994 or 1995 (see Exhibit 13.0).
ITEM 6. SELECTED FINANCIAL DATA
The information under the caption "Selected Financial Data" appearing on
page 9 of the 1995 Annual Report is incorporated herein by reference (see
Exhibit 13.0).
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 10 through 13
of the 1995 Annual Report is incorporated herein by reference (see Exhibit
13.0).
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,"
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"Consolidated Statements of Changes in Shareholders' Equity," and "Notes to
Consolidated Financial Statements," together with the report thereon of Price
Waterhouse LLP dated February 20, 1996, appearing on pages 14 through 25 of the
1995 Annual Report are incorporated herein by reference (see Exhibit 13.0).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
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 1996 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, their terms of office and brief accounts of business
experience during the past five years:
Positions & Offices Other Business
Held with Company Experience
Name (Age) (Year Elected) (Past Five Years)
- ---------- ------------------- -----------------
Norman A. Chairman of the Board -
Barkeley (66) (1989) and Chief
Executive Officer (1988)
Joseph C. President (1996), Executive Vice President (1995)
Berenato (49) Chief Operating Officer of the Company; previously
(1995), and Chief Senior Vice President/Managing Director of
Financial Officer (1991) Manufacturers Hanover Trust Company (Los Angeles)
(1980-1991)
James S. Heiser Vice President (1990), -
(39) General Counsel (1988),
Secretary (1987), and
Treasurer (1995)
Kenneth R. Vice President-Human -
Pearson (60) Resources (1988)
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Positions & Offices Other Business
Held with Company Experience
Name (Age) (Year Elected) (Past Five Years)
- ---------- ------------------- -----------------
Samuel D. Vice President (1991), -
Williams (47) Controller (1988), and
Assistant Treasurer (1990)
Robert A. Borlet President of Jay-El -
(55) Products, Inc. (1988)
Robert B. Hahn President of Aerochem, Inc. -
(52) (1987)
Robert L. Hansen President of AHF- -
(42) Ducommun Incorporated
(1989)
Paul L. Graham President of 3dbm, Inc. President of Dynatech
(51) (1995) Microwave Technology, Inc. (1992-1994); previously,
general and senior management at TRW, Titan Sesco,
Vector General, Hughes and Raytheon
Bruce J.
Greenbaum (40) President of Brice President and/or
Manufacturing Company, General Manager of
Inc. (1994) Brice during five years prior to acquisition by Ducommun
ITEM 11. EXECUTIVE COMPENSATION
The information under the caption "Compensation of Executive Officers" in
the 1996 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 1996 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 1996 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 1995 Annual Report,
are incorporated by reference in Item 8 of this report. Page numbers
refer to the 1995 Annual Report:
Page
----
Consolidated Statements of Income - Years 14
ended December 31, 1995, 1994 and 1993
Consolidated Balance Sheets - December 31, 1995 15
and 1994
Consolidated Statements of Cash Flows - Years 16
ended December 31, 1995, 1994 and 1993
Consolidated Statements of Changes in 17
Shareholders' Equity - Years ended
December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements 18-24
Report of Independent Accountants 25
2. Financial Statement Schedule
The following schedule for the years ended December 31, 1995, 1994
and 1993 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
During the last quarter of 1995, no reports on Form 8-K were filed.
(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.
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3.2 Bylaws as amended and restated on October 21, 1992. Incorporated
by reference to Exhibit 3.2 to Form 10-K for the year ended December
31, 1992.
4.1 Third Amended and Restated Loan Agreement dated January 20, 1995
between Ducommun and Bank of America NT&SA. Incorporated by reference
to Exhibit 4.1 to Form 10-K for the year ended December 31, 1994.
4.2 Amended and Restated Security Agreement dated January 20, 1995
between Ducommun and Bank of America NT&SA. Incorporated by reference
to Exhibit 4.2 to Form 10-K for the year ended December 31, 1994.
4.3 Amended and Restated Security Agreement dated January 20, 1995
between the subsidiaries of Ducommun and Bank of America NT&SA.
Incorporated by reference to Exhibit 4.3 to Form 10-K for the year
ended December 31, 1994.
4.4 First Amendment to Third Amended and Restated Loan Agreement
dated as of June 30, 1995. Incorporated by reference to Exhibit 4 to
Form 10-Q for the quarter ended September 30, 1995.
4.5 Second Amendment to Third Amended and Restated Loan Agreement
dated as of November 3, 1995.
4.6 Form of Indenture and Debentures for 7 3/4% Convertible
Subordinated Debentures due 2011 (the "Debentures"). Incorporated by
reference to Exhibit 4.1 to Form S-2 Registration Statement (File No.
33-4313).
4.7 Officer's Certificate dated March 14, 1988 addressed to Bankers
Trust Company reducing the conversion price for the Debentures.
Incorporated by reference to Exhibit 4.12 to Form 10-K for the year
ended December 31, 1989.
4.8 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.
4.9 Loan and Security Agreement dated December 1, 1992 between
AHF-Ducommun Incorporated ("AHF"), a subsidiary of Ducommun, and the
CIT Group/Equipment Financing, Inc., as amended. The Company will
furnish a copy of such agreement to the Securities and Exchange
Commission upon request.
4.10 Standing Loan Agreement dated December 17, 1993 between AHF and
Bank of America NT&SA. The Company will furnish a copy of such
agreement to the Securities and Exchange Commission upon request.
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* 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.
* 10.3 Form of Stock Option Agreement under 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.
* 10.4 1994 Stock Incentive Plan. Incorporated by reference to Exhibit
10.4 to Form 10-K for the year ended December 31, 1994.
* 10.5 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, 1989.
* 10.6 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.
* 10.7 Description of 1996 Executive Officer Bonus Arrangement.
* 10.8 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.
* 10.9 Amended and Restated Employment Agreement dated as of May 5,
1993 between Ducommun and Norman A. Barkeley. Incorporated by
reference to Exhibit 10.1 to Form 10-Q for the quarter ended July 3,
1993.
* 10.10 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.
* 10.11 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.
* 10.12 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.
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10.13 Stock Purchase and Sale Agreement among Ducommun Incorporated
and each of the shareholders of J. Nelson Hoffman Manufacturing,
Inc., d/b/a Brice Manufacturing Company, dated December 6, 1994.
Incorporated by reference to Exhibit 1 to Form 8-K dated December 20,
1994.
10.14 Asset Purchase Agreement by and among Jay-El Products, Inc., as
buyer, and Dynatech Microwave Technology, Inc., as seller, and
Ducommun Incorporated and Dynatech Corporation, dated December 30,
1994. Incorporated by reference to Exhibit 1 to Form 8-K dated
January 13, 1995.
11.1 Computation of Income (Loss) Per Common and Common Equivalent
Share.
13.0 1995 Annual Report to Shareholders (not deemed to be filed
except as previously incorporated by reference).
21.0 Subsidiaries of registrant.
23.1 Consent of Price Waterhouse LLP.
27.0 Financial Data Schedule.
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* 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 March 13, 1996 By /s/ Norman A. Barkeley
-------------- ----------------------
Norman A. Barkeley
Chairman of the Board 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 March 13, 1996 By /s/ Joseph C. Berenato
-------------- ----------------------
Joseph C. Berenato
President, Chief Operating
Officer and Chief Financial
Officer
(Principal Financial Officer)
Date March 13, 1996 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 March 13, 1996
-------------------------- ------------------
Norman A. Barkeley
By /s/ H. Frederick Christie Date March 13, 1996
-------------------------- ------------------
H. Frederick Christie
By /s/ Robert C. Ducommun Date March 13, 1996
-------------------------- ------------------
Robert C. Ducommun
By /s/ Kevin S. Moore Date March 13, 1996
-------------------------- ------------------
Kevin S. Moore
By /s/ Thomas P. Mullaney Date March 13, 1996
-------------------------- ------------------
Thomas P. Mullaney
By /s/ Richard J. Pearson Date March 13, 1996
-------------------------- ------------------
Richard J. Pearson
By /s/ Arthur W. Schmutz Date March 13, 1996
-------------------------- ------------------
Arthur W. Schmutz
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REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To the Board of Directors
of Ducommun Incorporated
Our audits of the consolidated financial statements referred to in our report
dated February 20, 1996 appearing on page 25 of the 1995 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)
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.
Price Waterhouse LLP
Los Angeles, California
February 20, 1996
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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 at
Beginning Costs and Other End of
Description of Period Expenses Accounts Deductions Period
- ------------------------ ---------- ---------- ---------- -------------- ----------
FOR THE YEAR ENDED DECEMBER 31, 1995
Allowance for
Doubtful Accounts $ 182,000 $ 216,000 $ 13,000(a) $ 45,000(c) $ 366,000
Deferred Tax Assets
Valuation Allowance $5,150,000 $ - $ - $2,717,000(e) $2,433,000
FOR THE YEAR ENDED DECEMBER 31, 1994
Allowance for
Doubtful Accounts $ 314,000 $ - $ 11,000(a) $ 143,000(c) $ 182,000
Deferred Tax Assets
Valuation Allowance $9,962,000 $ - $ - $4,812,000(d) $5,150,000
FOR THE YEAR ENDED DECEMBER 31, 1993
Allowance for
Doubtful Accounts $ 371,000 $ 20,000 $ 15,000(a) $ 92,000(c) $ 314,000
Deferred Tax Assets
Valuation Allowance $ - $ - $9,962,000(b) $ - $9,962,000
(a) Collections on previously written off accounts.
(b) Per adoption of Statement of Financial Accounting Standards No. 109.
(c) Write-offs on uncollectible accounts.
(d) Change in valuation allowance due to re-evaluation of realizability of
future income tax benefit occasioned by the acquisitions of Brice and
DMT.
(e) Change in valuation allowance due to re-evaluation of realizability of
future income tax benefit occasioned by the acquisition of 3dbm.
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INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ------------
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 Bylaws as amended and restated on October 21, 1992.
Incorporated by reference to Exhibit 3.2 to Form 10-K
for the year ended December 31, 1992.
4.1 Third Amended and Restated Loan Agreement dated
January 20, 1995 between Ducommun and Bank of America
NT&SA. Incorporated by reference to Exhibit 4.1 to Form
10-K for the year ended December 31, 1994.
4.2 Amended and Restated Security Agreement dated January
20, 1995 between Ducommun and Bank of America NT&SA.
Incorporated by reference to Exhibit 4.2 to Form 10-K
for the year ended December 31, 1994.
4.3 Amended and Restated Security Agreement dated January
20, 1995 between the subsidiaries of Ducommun and Bank
of America NT&SA. Incorporated by reference to Exhibit
4.3 to Form 10-K for the year ended December 31, 1994.
4.4 First Amendment to Third Amended and Restated Loan
Agreement dated as of June 30, 1995. Incorporated by
reference to Exhibit 4 to Form 10-Q for the quarter
ended September 30, 1995.
4.5 Second Amendment to Third Amended and Restated Loan
Agreement dated as of November 3, 1995.
4.6 Form of Indenture and Debentures for 7 3/4% Convertible
Subordinated Debentures due 2011 (the "Debentures").
Incorporated by reference to Exhibit 4.1 to Form S-2
Registration Statement (File No. 33-4313).
4.7 Officer's Certificate dated March 14, 1988 addressed
to Bankers Trust Company reducing the conversion price
for the Debentures. Incorporated by reference to Exhibit
4.12 to Form 10-K for the year ended December 31, 1989.
4.8 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.
4.9 Loan and Security Agreement dated December 1, 1992
between AHF-Ducommun Incorporated ("AHF"), a subsidiary
of Ducommun, and the CIT Group/Equipment Financing, Inc.,
as amended. The Company will furnish a copy of such
agreement to the Securities and Exchange Commission upon
request.
4.10 Standing Loan Agreement dated December 17, 1993 between
AHF and Bank of America NT&SA. The Company will furnish
a copy of such agreement to the Securities and Exchange
Commission upon request.
20
Sequentially
Exhibit Numbered
Number Description Page
------- ----------- ------------
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.
10.3* Form of Stock Option Agreement under 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.
10.4* 1994 Stock Incentive Plan. Incorporated by reference
to Exhibit 10.4 to Form 10-K for the year ended
December 31, 1994.
10.5* 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, 1989.
10.6* 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.
10.7* Description of 1996 Executive Officer Bonus Arrangement.
10.8* 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.
10.9* Amended and Restated Employment Agreement dated as
of May 5, 1993 between Ducommun and Norman A. Barkeley.
Incorporated by reference to Exhibit 10.1 to Form 10-Q
for the quarter ended July 3, 1993.
10.10* 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.
10.11* 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.
10.12* 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.
10.13 Stock Purchase and Sale Agreement among Ducommun
Incorporated and each of the shareholders of J.
Nelson Hoffman Manufacturing, Inc., d/b/a Brice
Manufacturing Company, dated December 6, 1994.
Incorporated by reference to Exhibit 1 to Form 8-K
dated December 20, 1994.
10.14 Asset Purchase Agreement by and among Jay-El Products,
Inc., as buyer, and Dynatech Microwave Technology, Inc.,
as seller, and Ducommun Incorporated and Dynatech
Corporation, dated December 30, 1994. Incorporated by
reference to Exhibit 1 to Form 8-K dated January 13, 1995.
11.1 Computation of Income (Loss) Per Common and Common
Equivalent Share.
13.0 1995 Annual Report to Shareholders (not deemed to
be filed except as previously incorporated by
reference).
21.0 Subsidiaries of registrant.
23.1 Consent of Price Waterhouse LLP.
27.0 Financial Data Schedule.
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* Indicates an executive compensation plan or arrangement.