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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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95-0693330
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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200 Sandpointe Avenue, Suite 700, Santa Ana, California
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92707-5759
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(Address of principal executive offices)
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(Zip code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $.01 par value per share
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New York Stock Exchange
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Large accelerated filer
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¨
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Accelerated filer
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x
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Page
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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•
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our ability to manage and otherwise comply with our covenants with respect to our outstanding indebtedness;
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•
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our ability to service our indebtedness;
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•
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our acquisitions, business combinations, joint ventures, divestitures, or restructuring activities may entail certain operational and financial risks;
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•
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the cyclicality of our end-use markets and the level of new commercial and military aircraft orders;
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•
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industry and customer concentration;
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•
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production rates for various commercial and military aircraft programs;
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•
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the level of U.S. Government defense spending;
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•
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compliance with applicable regulatory requirements and changes in regulatory requirements, including regulatory requirements applicable to government contracts and sub-contracts;
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•
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further consolidation of customers and suppliers in our markets;
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•
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product performance and delivery;
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•
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start-up costs, manufacturing inefficiencies and possible overruns on contracts;
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•
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increased design, product development, manufacturing, supply chain and other risks and uncertainties associated with our growth strategy to become a supplier of higher-level assemblies;
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•
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our ability to manage the risks associated with international operations and sales;
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•
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possible goodwill and other asset impairments;
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•
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economic and geopolitical developments and conditions;
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•
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unfavorable developments in the global credit markets;
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•
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our ability to operate within highly competitive markets;
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•
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technology changes and evolving industry and regulatory standards;
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•
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the risk of environmental liabilities;
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•
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the risk of cyber security attacks; and
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•
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litigation with respect to us.
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•
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limit our ability to obtain additional financing to fund capital expenditures, investments or acquisitions or other general corporate requirements;
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•
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require a portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, investments or acquisitions or other general corporate purposes;
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•
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increase our vulnerability to adverse changes in general economic, industry and competitive conditions;
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•
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place us at a disadvantage compared to other, less leveraged competitors;
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•
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expose us to the risk of increased borrowing costs and higher interest rates as almost 60% of our borrowings under our New Credit Facilities bear interest at variable rates, which could further adversely impact our cash flows;
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•
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limit our flexibility to plan for and react to changes in our business and the industry in which we compete;
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•
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restrict us from making strategic acquisitions;
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•
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expose us to risk of unfavorable changes in the global credit markets; and
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•
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make it more difficult for us to satisfy our obligations with respect to the New Credit Facilities and our other debt.
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•
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terminate existing contracts, in whole or in part, for convenience, as well as for default, or if funds for contract performance for any subsequent year become unavailable;
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•
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terminate existing contracts if we are suspended or debarred from doing business with the federal government or with a governmental agency;
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•
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prohibit future procurement awards with a particular agency as a result of a finding of an organizational conflict of interest based upon prior related work performed for the agency that would give a contractor an unfair advantage over competing contractors; and
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•
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claim rights in products and systems produced by us.
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•
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difficulty in integrating the operations and personnel of the acquired company within our existing operations or in maintaining uniform standards;
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•
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loss of key employees or customers of the acquired company;
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•
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the failure to achieve anticipated synergies;
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•
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unrecorded liabilities of acquired companies that we fail to discover during our due diligence investigations or that are not subject to indemnification or reimbursement by the seller; and
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•
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management and other personnel having their time and resources diverted to evaluate, negotiate and integrate acquisitions.
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•
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political instability;
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•
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economic and geopolitical developments and conditions;
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•
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compliance with a variety of international laws, as well as U.S. laws affecting the activities of U.S. companies conducting business abroad, including, but not limited to, the Foreign Corrupt Practices Act;
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•
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imposition of taxes, export controls, tariffs, embargoes and other trade restrictions;
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•
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difficulties repatriating funds or restrictions on cash transfers; and
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•
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potential for new tariffs imposed on imports by the U.S. administration.
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Location
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Segment
|
|
Square
Feet
|
|
Expiration
of Lease
|
Carson, California
|
|
Structural Systems
|
|
299,000
|
|
Owned
|
Monrovia, California
|
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Structural Systems
|
|
274,000
|
|
Owned
|
Parsons, Kansas
|
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Structural Systems
|
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176,000
|
|
Owned
|
Coxsackie, New York
|
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Structural Systems
|
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151,000
|
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Owned
|
Carson, California
|
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Electronic Systems
|
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117,000
|
|
2021
|
Phoenix, Arizona
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Electronic Systems
|
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100,000
|
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2022
|
Joplin, Missouri
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Electronic Systems
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92,000
|
|
Owned
|
Adelanto, California
|
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Structural Systems
|
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88,000
|
|
Owned
|
Orange, California
|
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Structural Systems
|
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80,000
|
|
Owned
|
Appleton, Wisconsin
|
|
Electronic Systems
|
|
77,000
|
|
Owned
|
Carson, California
|
|
Structural Systems
|
|
77,000
|
|
2019
|
Huntsville, Arkansas
|
|
Electronic Systems
|
|
69,000
|
|
2020
|
Joplin, Missouri
|
|
Electronic Systems
|
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55,000
|
|
2021
|
Tulsa, Oklahoma
|
|
Electronic Systems
|
|
55,000
|
|
Owned
|
Orange, California
|
|
Structural Systems
|
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53,000
|
|
2019
|
Berryville, Arkansas
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Electronic Systems
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50,000
|
|
Owned
|
|
|
Years Ended December 31,
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||||||||||||||
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2018
|
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2017
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||||||||||||
|
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High
|
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Low
|
|
High
|
|
Low
|
||||||||
First Quarter
|
|
$
|
30.84
|
|
|
$
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26.30
|
|
|
$
|
32.18
|
|
|
$
|
24.35
|
|
Second Quarter
|
|
$
|
35.43
|
|
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$
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28.17
|
|
|
$
|
34.46
|
|
|
$
|
28.12
|
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Third Quarter
|
|
$
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40.84
|
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$
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31.63
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|
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$
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32.55
|
|
|
$
|
26.24
|
|
Fourth Quarter
|
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$
|
44.23
|
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$
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33.83
|
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$
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35.02
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|
$
|
25.81
|
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|
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(In thousands, except per share amounts)
Years Ended December 31,
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||||||||||||||||||
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2018(a)(b)
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2017(b)(c)(d)
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2016(e)
|
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2015(f)(g)
|
|
2014
|
||||||||||
Net Revenues
|
|
$
|
629,307
|
|
|
$
|
558,183
|
|
|
$
|
550,642
|
|
|
$
|
666,011
|
|
|
$
|
742,045
|
|
Gross Profit as a Percentage of Net Revenues
|
|
19.5
|
%
|
|
18.5
|
%
|
|
19.3
|
%
|
|
15.1
|
%
|
|
18.9
|
%
|
|||||
Income (Loss) Before Taxes
|
|
10,271
|
|
|
7,609
|
|
|
38,113
|
|
|
(106,590
|
)
|
|
26,240
|
|
|||||
Income Tax Expense (Benefit)
|
|
1,236
|
|
|
(12,468
|
)
|
|
12,852
|
|
|
(31,711
|
)
|
|
6,373
|
|
|||||
Net Income (Loss)
|
|
$
|
9,035
|
|
|
$
|
20,077
|
|
|
$
|
25,261
|
|
|
$
|
(74,879
|
)
|
|
$
|
19,867
|
|
Per Common Share
|
|
|
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|
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||||||||||
Basic earnings (loss) per share
|
|
$
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0.79
|
|
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$
|
1.78
|
|
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$
|
2.27
|
|
|
$
|
(6.78
|
)
|
|
$
|
1.82
|
|
Diluted earnings (loss) per share
|
|
$
|
0.77
|
|
|
$
|
1.74
|
|
|
$
|
2.24
|
|
|
$
|
(6.78
|
)
|
|
$
|
1.79
|
|
Working Capital
|
|
$
|
160,855
|
|
|
$
|
140,778
|
|
|
$
|
139,635
|
|
|
$
|
179,655
|
|
|
$
|
217,670
|
|
Total Assets
(h)
|
|
$
|
648,143
|
|
|
$
|
566,753
|
|
|
$
|
515,429
|
|
|
$
|
557,081
|
|
|
$
|
747,599
|
|
Long-Term Debt, Including Current Portion
(h)
|
|
$
|
226,961
|
|
|
$
|
216,055
|
|
|
$
|
166,899
|
|
|
$
|
240,687
|
|
|
$
|
290,052
|
|
Total Shareholders’ Equity
|
|
$
|
256,825
|
|
|
$
|
235,583
|
|
|
$
|
212,103
|
|
|
$
|
185,734
|
|
|
$
|
256,570
|
|
(a)
|
The results for 2018 included CTP’s results of operations since the date of acquisition of April 23, 2018.
|
(b)
|
The results for 2018 and 2017 included restructuring charges of $14.8 million and $8.8 million, respectively. See Note 4 to our consolidated financial statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K for further information.
|
(c)
|
The results for 2017 included LDS’ results of operations since the date of acquisition in September 2017.
|
(d)
|
The results for 2017 included the adoption of the Tax Cuts and Jobs Act and as a result, we recorded a provisional deferred income tax benefit of $13.0 million related to the re-measurement for the year ended December 31, 2017. See Note 15 to our consolidated financial statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K for further information.
|
(e)
|
The results for 2016 included a gain on divestitures, net in our Electronic Systems operating segment of $17.6 million related to the divestitures of our Pittsburgh and Miltec operations.
|
(f)
|
The results for 2015 included a goodwill impairment charge in our Structural Systems operating segment and an indefinite-lived trade name intangible asset impairment charge in our Electronic Systems operating segment of $57.2 million and $32.9 million, respectively, resulting from our annual impairment testing.
|
(g)
|
The results for 2015 included a loss on extinguishment of debt of $14.7 million related to the retirement of the $200.0 million senior unsecured notes and existing credit facility.
|
(h)
|
Total assets and long-term debt for 2014 have not been recasted for the impact of the adoption of Accounting Standards Update 2015-03, as amended by Accounting Standards Update 2015-15, which required the reclassification of certain debt issuance costs from an asset to a liability. See Note 1 to our consolidated financial statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K for further information.
|
•
|
Net revenues of
$629.3 million
|
•
|
Net income of
$9.0 million
, or
$0.77
per diluted share
|
•
|
Adjusted EBITDA of
$70.7 million
|
•
|
Completed the acquisition of Certified Thermoplastics Co., LLC
|
•
|
They do not reflect our cash expenditures, future requirements for capital expenditures or contractual commitments;
|
•
|
They do not reflect changes in, or cash requirements for, our working capital needs;
|
•
|
They do not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt;
|
•
|
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;
|
•
|
They are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows;
|
•
|
They do not reflect the impact on earnings of charges resulting from matters unrelated to our ongoing operations; and
|
•
|
Other companies in our industry may calculate Adjusted EBITDA differently from us, limiting their usefulness as comparative measures.
|
•
|
Are widely used by investors to measure a company’s operating performance without regard to items excluded from the calculation of such terms, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors;
|
•
|
Help investors to evaluate and compare the results of our operations from period to period by removing the effect of our capital structure from our operating performance; and
|
•
|
Are used by our management team for various other purposes in presentations to our Board of Directors as a basis for strategic planning and forecasting.
|
•
|
Interest expense may be useful to investors for determining current cash flow;
|
•
|
Income tax expense may be useful to investors because it represents the taxes which may be payable for the period and the change in deferred taxes during the period, and may reduce cash flow available for use in our business;
|
•
|
Depreciation may be useful to investors because it generally represents the wear and tear on our property and equipment used in our operations;
|
•
|
Amortization expense may be useful to investors because it represents the estimated attrition of our acquired customer base and the diminishing value of product rights;
|
•
|
Stock-based compensation may be useful to our investors for determining current cash flow;
|
•
|
Restructuring charges may be useful to our investors in evaluating our core operating performance;
|
•
|
Purchase accounting inventory step-ups may be useful to our investors as they do not necessarily reflect the current or on-going cash charges related to our core operating performance;
|
•
|
Net gain on divestitures may be useful to our investors in evaluating our on-going operating performance; and
|
•
|
Loss on extinguishment of debt may be useful to our investors for determining current cash flow.
|
|
|
(In thousands)
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
|
$
|
9,035
|
|
|
$
|
20,077
|
|
|
$
|
25,261
|
|
Interest expense
|
|
13,024
|
|
|
8,870
|
|
|
8,922
|
|
|||
Income tax expense (benefit)
|
|
1,236
|
|
|
(12,468
|
)
|
|
12,852
|
|
|||
Depreciation
|
|
13,501
|
|
|
13,162
|
|
|
13,326
|
|
|||
Amortization
|
|
11,795
|
|
|
9,683
|
|
|
9,534
|
|
|||
Stock-based compensation expense
|
|
5,040
|
|
|
4,675
|
|
|
3,007
|
|
|||
Restructuring charges
(1)
|
|
14,792
|
|
|
8,838
|
|
|
182
|
|
|||
Inventory purchase accounting adjustments
(2)
|
|
622
|
|
|
1,235
|
|
|
—
|
|
|||
Gain on divestitures, net
(3)
|
|
—
|
|
|
—
|
|
|
(17,604
|
)
|
|||
Loss on extinguishment of debt
|
|
926
|
|
|
—
|
|
|
—
|
|
|||
Other debt refinancing costs
|
|
697
|
|
|
—
|
|
|
—
|
|
|||
Adjusted EBITDA
|
|
$
|
70,668
|
|
|
$
|
54,072
|
|
|
$
|
55,480
|
|
% of net revenues
|
|
11.2
|
%
|
|
9.7
|
%
|
|
10.1
|
%
|
(1)
|
2018 and 2017 included $0.1 million and $0.5 million, respectively, of restructuring charges that were recorded as cost of goods sold.
|
(2)
|
2018 and 2017 included inventory purchase accounting adjustments of inventory that was stepped up as part of our purchase price allocation from our acquisitions of Certified Thermoplastics Co., LLC (“CTP”) and Lightning Diversion Systems, LLC (“LDS”) on April 23, 2018 and September 2017, respectively, and is part of our Structural Systems and Electronic Systems operating segment, respectively.
|
(3)
|
2016 included gain on divestitures, net in our Electronic Systems operating segment related to the divestitures of our Pittsburgh and Miltec operations.
|
|
|
(in thousands, except per share data)
Years Ended December 31,
|
||||||||||||
|
|
2018
|
|
%
of Net Revenues
|
|
2017
|
|
%
of Net Revenues
|
||||||
Net Revenues
|
|
$
|
629,307
|
|
|
100.0
|
%
|
|
$
|
558,183
|
|
|
100.0
|
%
|
Cost of Sales
|
|
506,711
|
|
|
80.5
|
%
|
|
455,050
|
|
|
81.5
|
%
|
||
Gross Profit
|
|
122,596
|
|
|
19.5
|
%
|
|
103,133
|
|
|
18.5
|
%
|
||
Selling, General and Administrative Expenses
|
|
84,007
|
|
|
13.3
|
%
|
|
79,139
|
|
|
14.2
|
%
|
||
Restructuring Charges
|
|
14,671
|
|
|
2.3
|
%
|
|
8,360
|
|
|
1.5
|
%
|
||
Operating Income
|
|
23,918
|
|
|
3.9
|
%
|
|
15,634
|
|
|
2.8
|
%
|
||
Interest Expense
|
|
(13,024
|
)
|
|
(2.1
|
)%
|
|
(8,870
|
)
|
|
(1.6
|
)%
|
||
Loss on Extinguishment of Debt
|
|
(926
|
)
|
|
(0.1
|
)%
|
|
—
|
|
|
—
|
%
|
||
Other Income, Net
|
|
303
|
|
|
—
|
%
|
|
845
|
|
|
0.2
|
%
|
||
Income Before Taxes
|
|
10,271
|
|
|
1.7
|
%
|
|
7,609
|
|
|
1.4
|
%
|
||
Income Tax Expense (Benefit)
|
|
1,236
|
|
|
nm
|
|
|
(12,468
|
)
|
|
nm
|
|
||
Net Income
|
|
$
|
9,035
|
|
|
1.4
|
%
|
|
$
|
20,077
|
|
|
3.6
|
%
|
|
|
|
|
|
|
|
|
|
||||||
Effective Tax (Benefit) Rate
|
|
12.0
|
%
|
|
nm
|
|
|
(163.8
|
)%
|
|
nm
|
|
||
Diluted Earnings Per Share
|
|
$
|
0.77
|
|
|
nm
|
|
|
$
|
1.74
|
|
|
nm
|
|
|
|
|
|
(In thousands)
Years Ended December 31,
|
|
% of Net Revenues
|
||||||||||||
|
|
Change
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Consolidated Ducommun
|
|
|
|
|
|
|
|
|
|
|
||||||||
Military and space
|
|
$
|
8,901
|
|
|
$
|
276,659
|
|
|
$
|
267,758
|
|
|
44.0
|
%
|
|
48.0
|
%
|
Commercial aerospace
|
|
68,101
|
|
|
304,455
|
|
|
236,354
|
|
|
48.4
|
%
|
|
42.3
|
%
|
|||
Industrial
|
|
(5,878
|
)
|
|
48,193
|
|
|
54,071
|
|
|
7.6
|
%
|
|
9.7
|
%
|
|||
Total
|
|
$
|
71,124
|
|
|
$
|
629,307
|
|
|
$
|
558,183
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Electronic Systems
|
|
|
|
|
|
|
|
|
|
|
||||||||
Military and space
|
|
$
|
3,684
|
|
|
$
|
214,786
|
|
|
$
|
211,102
|
|
|
63.6
|
%
|
|
66.6
|
%
|
Commercial aerospace
|
|
23,339
|
|
|
74,889
|
|
|
51,550
|
|
|
22.2
|
%
|
|
16.3
|
%
|
|||
Industrial
|
|
(5,878
|
)
|
|
48,193
|
|
|
54,071
|
|
|
14.2
|
%
|
|
17.1
|
%
|
|||
Total
|
|
$
|
21,145
|
|
|
$
|
337,868
|
|
|
$
|
316,723
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Structural Systems
|
|
|
|
|
|
|
|
|
|
|
||||||||
Military and space
|
|
$
|
5,217
|
|
|
$
|
61,873
|
|
|
$
|
56,656
|
|
|
21.2
|
%
|
|
23.5
|
%
|
Commercial aerospace
|
|
44,762
|
|
|
229,566
|
|
|
184,804
|
|
|
78.8
|
%
|
|
76.5
|
%
|
|||
Total
|
|
$
|
49,979
|
|
|
$
|
291,439
|
|
|
$
|
241,460
|
|
|
100.0
|
%
|
|
100.0
|
%
|
•
|
$68.1 million higher revenues in our commercial aerospace end-use markets due to additional content and higher build rates on large aircraft platforms; and
|
•
|
$8.9 million higher revenues in our military and space end-use markets due to increased shipments on various missile platforms; partially offset by
|
•
|
$5.9 million lower revenues in our industrial end-use markets.
|
|
|
Years Ended December 31,
|
||||
|
|
2018
|
|
2017
|
||
Boeing Company
|
|
17.0
|
%
|
|
16.3
|
%
|
Lockheed Martin Corporation
|
|
4.4
|
%
|
|
5.5
|
%
|
Raytheon Company
|
|
11.7
|
%
|
|
13.5
|
%
|
Spirit AeroSystems Holdings, Inc.
|
|
9.5
|
%
|
|
8.2
|
%
|
Top ten customers
(1)
|
|
62.9
|
%
|
|
62.5
|
%
|
|
|
%
|
|
(In thousands)
Years Ended December 31,
|
|
%
of Net Revenues
|
|
%
of Net Revenues
|
|||||||||
|
|
Change
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||
Net Revenues
|
|
|
|
|
|
|
|
|
|
|
|||||||
Electronic Systems
|
|
6.7
|
%
|
|
$
|
337,868
|
|
|
$
|
316,723
|
|
|
53.7
|
%
|
|
56.7
|
%
|
Structural Systems
|
|
20.7
|
%
|
|
291,439
|
|
|
241,460
|
|
|
46.3
|
%
|
|
43.3
|
%
|
||
Total Net Revenues
|
|
12.7
|
%
|
|
$
|
629,307
|
|
|
$
|
558,183
|
|
|
100.0
|
%
|
|
100.0
|
%
|
Segment Operating Income
|
|
|
|
|
|
|
|
|
|
|
|||||||
Electronic Systems
|
|
|
|
$
|
30,916
|
|
|
$
|
31,236
|
|
|
9.2
|
%
|
|
9.9
|
%
|
|
Structural Systems
|
|
|
|
19,063
|
|
|
5,790
|
|
|
6.5
|
%
|
|
2.4
|
%
|
|||
|
|
|
|
49,979
|
|
|
37,026
|
|
|
|
|
|
|||||
Corporate General and Administrative Expenses
(1)
|
|
|
|
(26,061
|
)
|
|
(21,392
|
)
|
|
(4.1
|
)%
|
|
(3.8
|
)%
|
|||
Total Operating Income
|
|
|
|
$
|
23,918
|
|
|
$
|
15,634
|
|
|
3.8
|
%
|
|
2.8
|
%
|
|
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|||||||
Electronic Systems
|
|
|
|
|
|
|
|
|
|
|
|||||||
Operating Income
|
|
|
|
$
|
30,916
|
|
|
$
|
31,236
|
|
|
|
|
|
|||
Other Income
|
|
|
|
119
|
|
|
645
|
|
|
|
|
|
|||||
Depreciation and Amortization
|
|
|
|
14,223
|
|
|
13,888
|
|
|
|
|
|
|||||
Restructuring Charges
|
|
|
|
4,776
|
|
|
1,190
|
|
|
|
|
|
|||||
Inventory purchase accounting adjustments
|
|
|
|
—
|
|
|
1,235
|
|
|
|
|
|
|||||
|
|
|
|
50,034
|
|
|
48,194
|
|
|
14.8
|
%
|
|
15.2
|
%
|
|||
Structural Systems
|
|
|
|
|
|
|
|
|
|
|
|||||||
Operating Income
|
|
|
|
19,063
|
|
|
5,790
|
|
|
|
|
|
|||||
Other Income
|
|
|
|
184
|
|
|
200
|
|
|
|
|
|
|||||
Depreciation and Amortization
|
|
|
|
10,525
|
|
|
8,860
|
|
|
|
|
|
|||||
Restructuring Charges
|
|
|
|
7,897
|
|
|
5,866
|
|
|
|
|
|
|||||
Inventory purchase accounting adjustments
|
|
|
|
622
|
|
|
—
|
|
|
|
|
|
|||||
|
|
|
|
38,291
|
|
|
20,716
|
|
|
13.1
|
%
|
|
8.6
|
%
|
|||
Corporate General and Administrative Expenses
(1)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Operating Loss
|
|
|
|
(26,061
|
)
|
|
(21,392
|
)
|
|
|
|
|
|||||
Depreciation and Amortization
|
|
|
|
548
|
|
|
97
|
|
|
|
|
|
|||||
Stock-Based Compensation Expense
|
|
|
|
5,040
|
|
|
4,675
|
|
|
|
|
|
|||||
Restructuring Charges
|
|
|
|
2,119
|
|
|
1,782
|
|
|
|
|
|
|||||
Other Debt Refinancing Costs
|
|
|
|
697
|
|
|
—
|
|
|
|
|
|
|||||
|
|
|
|
(17,657
|
)
|
|
(14,838
|
)
|
|
|
|
|
|||||
Adjusted EBITDA
|
|
|
|
$
|
70,668
|
|
|
$
|
54,072
|
|
|
11.2
|
%
|
|
9.7
|
%
|
|
Capital Expenditures
|
|
|
|
|
|
|
|
|
|
|
|||||||
Electronic Systems
|
|
|
|
$
|
6,719
|
|
|
$
|
5,019
|
|
|
|
|
|
|||
Structural Systems
|
|
|
|
9,104
|
|
|
20,679
|
|
|
|
|
|
|||||
Corporate Administration
|
|
|
|
514
|
|
|
775
|
|
|
|
|
|
|||||
Total Capital Expenditures
|
|
|
|
$
|
16,337
|
|
|
$
|
26,473
|
|
|
|
|
|
(1)
|
Includes costs not allocated to either the Structural Systems or Electronic Systems operating segments.
|
•
|
$23.3 million higher revenues in our commercial aerospace end-use markets due to additional content and higher build rates on large aircraft platforms; and
|
•
|
$3.7 million higher revenues in our military and space end-use markets due to increased shipments on various missile platforms; partially offset by
|
•
|
$5.9 million lower revenues in our Industrial end-use markets.
|
•
|
$44.8 million higher revenues in commercial aerospace end-use markets due to higher build rates on large aircraft platforms; and
|
•
|
$5.2 million higher revenues in military and space end-use markets due to increased shipments on military rotary-wing aircraft platforms.
|
|
|
|
|
(In thousands)
December 31,
|
||||||||
|
|
Change
|
|
2018
|
|
2017
|
||||||
Consolidated Ducommun
|
|
|
|
|
|
|
||||||
Military and space
|
|
$
|
63,784
|
|
|
$
|
339,443
|
|
|
$
|
275,659
|
|
Commercial aerospace
|
|
69,159
|
|
|
487,232
|
|
|
418,073
|
|
|||
Industrial
|
|
5,028
|
|
|
37,774
|
|
|
32,746
|
|
|||
Total
|
|
$
|
137,971
|
|
|
$
|
864,449
|
|
|
$
|
726,478
|
|
|
|
|
|
|
|
|
||||||
Electronic Systems
|
|
|
|
|
|
|
||||||
Military and space
|
|
$
|
26,621
|
|
|
$
|
241,196
|
|
|
$
|
214,575
|
|
Commercial aerospace
|
|
(8,618
|
)
|
|
48,032
|
|
|
56,650
|
|
|||
Industrial
|
|
5,028
|
|
|
37,774
|
|
|
32,746
|
|
|||
Total
|
|
$
|
23,031
|
|
|
$
|
327,002
|
|
|
$
|
303,971
|
|
|
|
|
|
|
|
|
||||||
Structural Systems
|
|
|
|
|
|
|
||||||
Military and space
|
|
$
|
37,163
|
|
|
$
|
98,247
|
|
|
$
|
61,084
|
|
Commercial aerospace
|
|
77,777
|
|
|
439,200
|
|
|
361,423
|
|
|||
Total
|
|
$
|
114,940
|
|
|
$
|
537,447
|
|
|
$
|
422,507
|
|
|
|
(in thousands, except per share data)
Years Ended December 31,
|
||||||||||||
|
|
2017
|
|
%
of Net Revenues 2017
|
|
2016
|
|
%
of Net Revenues 2016
|
||||||
Net Revenues
|
|
$
|
558,183
|
|
|
100.0
|
%
|
|
$
|
550,642
|
|
|
100.0
|
%
|
Cost of Sales
|
|
455,050
|
|
|
81.5
|
%
|
|
444,102
|
|
|
80.7
|
%
|
||
Gross Profit
|
|
103,133
|
|
|
18.5
|
%
|
|
106,540
|
|
|
19.3
|
%
|
||
Selling, General and Administrative Expenses
|
|
79,139
|
|
|
14.2
|
%
|
|
77,142
|
|
|
14.0
|
%
|
||
Restructuring Charges
|
|
8,360
|
|
|
1.5
|
%
|
|
182
|
|
|
—
|
%
|
||
Operating Income
|
|
15,634
|
|
|
2.8
|
%
|
|
29,216
|
|
|
5.3
|
%
|
||
Interest Expense
|
|
(8,870
|
)
|
|
(1.6
|
)%
|
|
(8,922
|
)
|
|
(1.6
|
)%
|
||
Gain on Divestitures, Net
|
|
—
|
|
|
—
|
%
|
|
17,604
|
|
|
3.2
|
%
|
||
Other Income, Net
|
|
845
|
|
|
0.2
|
%
|
|
215
|
|
|
—
|
%
|
||
Income Before Taxes
|
|
7,609
|
|
|
1.4
|
%
|
|
38,113
|
|
|
6.9
|
%
|
||
Income Tax (Benefit) Expense
|
|
(12,468
|
)
|
|
nm
|
|
|
12,852
|
|
|
nm
|
|
||
Net Income
|
|
$
|
20,077
|
|
|
3.6
|
%
|
|
$
|
25,261
|
|
|
4.6
|
%
|
|
|
|
|
|
|
|
|
|
||||||
Effective (Benefit) Tax Rate
|
|
(163.8
|
)%
|
|
nm
|
|
|
33.7
|
%
|
|
nm
|
|
||
Diluted Earnings Per Share
|
|
$
|
1.74
|
|
|
nm
|
|
|
$
|
2.24
|
|
|
nm
|
|
|
|
|
|
(In thousands)
Years Ended December 31,
|
|
% of Net Revenues
|
||||||||||||
|
|
Change
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Consolidated Ducommun
|
|
|
|
|
|
|
|
|
|
|
||||||||
Military and space
|
|
$
|
38,843
|
|
|
$
|
267,758
|
|
|
$
|
228,915
|
|
|
48.0
|
%
|
|
41.6
|
%
|
Commercial aerospace
|
|
(20,280
|
)
|
|
236,354
|
|
|
256,634
|
|
|
42.3
|
%
|
|
46.6
|
%
|
|||
Industrial
|
|
(11,022
|
)
|
|
54,071
|
|
|
65,093
|
|
|
9.7
|
%
|
|
11.8
|
%
|
|||
Total
|
|
$
|
7,541
|
|
|
$
|
558,183
|
|
|
$
|
550,642
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Electronic Systems
|
|
|
|
|
|
|
|
|
|
|
||||||||
Military and space
|
|
$
|
33,917
|
|
|
$
|
211,102
|
|
|
$
|
177,185
|
|
|
66.6
|
%
|
|
58.3
|
%
|
Commercial aerospace
|
|
(10,349
|
)
|
|
51,550
|
|
|
61,899
|
|
|
16.3
|
%
|
|
20.3
|
%
|
|||
Industrial
|
|
(11,022
|
)
|
|
54,071
|
|
|
65,093
|
|
|
17.1
|
%
|
|
21.4
|
%
|
|||
Total
|
|
$
|
12,546
|
|
|
$
|
316,723
|
|
|
$
|
304,177
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Structural Systems
|
|
|
|
|
|
|
|
|
|
|
||||||||
Military and space
|
|
$
|
4,926
|
|
|
$
|
56,656
|
|
|
$
|
51,730
|
|
|
23.5
|
%
|
|
21.0
|
%
|
Commercial aerospace
|
|
(9,931
|
)
|
|
184,804
|
|
|
194,735
|
|
|
76.5
|
%
|
|
79.0
|
%
|
|||
Total
|
|
$
|
(5,005
|
)
|
|
$
|
241,460
|
|
|
$
|
246,465
|
|
|
100.0
|
%
|
|
100.0
|
%
|
•
|
$38.8 million higher revenues in our military and space end-use markets mainly due to increased demand, which favorably impacted our helicopter, missile, and fixed-wing platforms that was partially offset by the divestiture of our Miltec operations in March 2016; partially offset by
|
•
|
$20.3 million lower revenues in our commercial aerospace end-use markets mainly due to the winding down of a regional jet program and continued softness in demand within the regional and business jet end-use markets; and
|
•
|
$11.0 million lower revenues in our industrial end-use markets.
|
|
|
Years Ended December 31,
|
||||
|
|
2017
|
|
2016
|
||
Boeing
|
|
16.3
|
%
|
|
17.3
|
%
|
Lockheed Martin
|
|
5.5
|
%
|
|
5.6
|
%
|
Raytheon
|
|
13.5
|
%
|
|
8.4
|
%
|
Spirit
|
|
8.2
|
%
|
|
8.2
|
%
|
United Technologies Corporation
|
|
4.7
|
%
|
|
5.3
|
%
|
Top ten customers
(1)
|
|
62.5
|
%
|
|
58.7
|
%
|
•
|
Prior year included a pre-tax gain on divestitures, net of our Pittsburgh and Miltec operations of $17.6 million;
|
•
|
Higher restructuring charges of $8.7 million (of which $0.5 million is included in cost of sales);
|
•
|
Lower gross profit of $2.9 million (which excludes $0.5 million of restructuring charges in cost of sales); and
|
•
|
Higher SG&A expenses of $2.0 million; partially offset by
|
•
|
Lower income tax expense of $25.3 million.
|
|
|
%
|
|
(In thousands)
Years Ended December 31,
|
|
%
of Net Revenues
|
|
%
of Net Revenues
|
|||||||||
|
|
Change
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||
Net Revenues
|
|
|
|
|
|
|
|
|
|
|
|||||||
Electronic Systems
|
|
4.1
|
%
|
|
$
|
316,723
|
|
|
$
|
304,177
|
|
|
56.7
|
%
|
|
55.2
|
%
|
Structural Systems
|
|
(2.0
|
)%
|
|
241,460
|
|
|
246,465
|
|
|
43.3
|
%
|
|
44.8
|
%
|
||
Total Net Revenues
|
|
1.4
|
%
|
|
$
|
558,183
|
|
|
$
|
550,642
|
|
|
100.0
|
%
|
|
100.0
|
%
|
Segment Operating Income
|
|
|
|
|
|
|
|
|
|
|
|||||||
Electronic Systems
|
|
|
|
$
|
31,236
|
|
|
$
|
29,284
|
|
|
9.9
|
%
|
|
9.6
|
%
|
|
Structural Systems
|
|
|
|
5,790
|
|
|
16,844
|
|
|
2.4
|
%
|
|
6.8
|
%
|
|||
|
|
|
|
37,026
|
|
|
46,128
|
|
|
|
|
|
|||||
Corporate General and Administrative Expenses
(1)
|
|
|
|
(21,392
|
)
|
|
(16,912
|
)
|
|
(3.8
|
)%
|
|
(3.1
|
)%
|
|||
Total Operating Income
|
|
|
|
$
|
15,634
|
|
|
$
|
29,216
|
|
|
2.8
|
%
|
|
5.3
|
%
|
|
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|||||||
Electronic Systems
|
|
|
|
|
|
|
|
|
|
|
|||||||
Operating Income
|
|
|
|
$
|
31,236
|
|
|
$
|
29,284
|
|
|
|
|
|
|||
Other Income
|
|
|
|
645
|
|
|
—
|
|
|
|
|
|
|||||
Depreciation and Amortization
|
|
|
|
13,888
|
|
|
14,087
|
|
|
|
|
|
|||||
Restructuring Charges
|
|
|
|
1,190
|
|
|
182
|
|
|
|
|
|
|||||
Inventory Purchase Accounting Adjustments
|
|
|
|
1,235
|
|
|
—
|
|
|
|
|
|
|||||
|
|
|
|
48,194
|
|
|
43,553
|
|
|
15.2
|
%
|
|
14.3
|
%
|
|||
Structural Systems
|
|
|
|
|
|
|
|
|
|
|
|||||||
Operating Income
|
|
|
|
5,790
|
|
|
16,844
|
|
|
|
|
|
|||||
Other Income
|
|
|
|
200
|
|
|
141
|
|
|
|
|
|
|||||
Depreciation and Amortization
|
|
|
|
8,860
|
|
|
8,688
|
|
|
|
|
|
|||||
Restructuring Charges
|
|
|
|
5,866
|
|
|
—
|
|
|
|
|
|
|||||
|
|
|
|
20,716
|
|
|
25,673
|
|
|
8.6
|
%
|
|
10.4
|
%
|
|||
Corporate General and Administrative Expenses
(1)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Operating Loss
|
|
|
|
(21,392
|
)
|
|
(16,912
|
)
|
|
|
|
|
|||||
Other Income
|
|
|
|
—
|
|
|
74
|
|
|
|
|
|
|||||
Depreciation and Amortization
|
|
|
|
97
|
|
|
85
|
|
|
|
|
|
|||||
Stock-Based Compensation Expense
|
|
|
|
4,675
|
|
|
3,007
|
|
|
|
|
|
|||||
Restructuring Charges
|
|
|
|
1,782
|
|
|
—
|
|
|
|
|
|
|||||
|
|
|
|
(14,838
|
)
|
|
(13,746
|
)
|
|
|
|
|
|||||
Adjusted EBITDA
|
|
|
|
$
|
54,072
|
|
|
$
|
55,480
|
|
|
9.7
|
%
|
|
10.1
|
%
|
|
Capital Expenditures
|
|
|
|
|
|
|
|
|
|
|
|||||||
Electronic Systems
|
|
|
|
$
|
5,019
|
|
|
$
|
3,032
|
|
|
|
|
|
|||
Structural Systems
|
|
|
|
20,679
|
|
|
15,661
|
|
|
|
|
|
|||||
Corporate Administration
|
|
|
|
775
|
|
|
—
|
|
|
|
|
|
|||||
Total Capital Expenditures
|
|
|
|
$
|
26,473
|
|
|
$
|
18,693
|
|
|
|
|
|
(1)
|
Includes costs not allocated to either the Electronic Systems or Structural Systems operating segments.
|
•
|
$33.9 million higher revenues in our military and space end-use markets mainly due to increased demand, which favorably impacted our missile, fixed-wing, and helicopter platforms; partially offset by
|
•
|
$11.0 million lower revenues in our Industrial end-use markets; and
|
•
|
$10.3 million lower revenues in our commercial aerospace end-use markets mainly due to continued softness in demand in the business jet market.
|
•
|
$9.9 million lower revenues in commercial aerospace end-use markets mainly due to the wind down of a regional jet program and continued softness in demand within the regional and business jet end-use markets; partially offset by
|
•
|
$4.9 million higher revenues in military and space end-use markets mainly due to increased demand which favorably impacted our helicopter platforms.
|
|
||||||||
|
|
(In millions)
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Total debt, including long-term portion
|
|
$
|
233.0
|
|
|
$
|
218.1
|
|
Weighted-average interest rate on debt
|
|
4.71
|
%
|
|
3.73
|
%
|
||
Term Loan interest rate
|
|
4.15
|
%
|
|
3.74
|
%
|
||
Cash and cash equivalents
|
|
$
|
10.3
|
|
|
$
|
2.2
|
|
Unused Revolving Credit Facility
|
|
$
|
99.7
|
|
|
$
|
141.6
|
|
|
|
|
|
Payments Due by Period
|
||||||||||||||||
|
|
Total
|
|
Less Than
1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More Than
5 Years
|
||||||||||
Long-term debt, including current portion
|
|
$
|
233,000
|
|
|
$
|
2,330
|
|
|
$
|
4,660
|
|
|
$
|
4,660
|
|
|
$
|
221,350
|
|
Future interest on long-term debt
|
|
71,910
|
|
|
16,200
|
|
|
26,310
|
|
|
18,860
|
|
|
10,540
|
|
|||||
Operating leases
|
|
12,838
|
|
|
3,680
|
|
|
6,194
|
|
|
2,384
|
|
|
580
|
|
|||||
Pension liability
|
|
20,274
|
|
|
1,787
|
|
|
3,759
|
|
|
3,996
|
|
|
10,732
|
|
|||||
Total
(1)
|
|
$
|
338,022
|
|
|
$
|
23,997
|
|
|
$
|
40,923
|
|
|
$
|
29,900
|
|
|
$
|
243,202
|
|
(1)
|
As of December 31, 2018, we have recorded $5.3 million in long-term liabilities related to uncertain tax positions. We are not able to reasonably estimate the timing of the long-term payments, or the amount by which our liability may increase or decrease over time, therefore, the liability or uncertain tax positions has not been included in the contractual obligations table.
|
|
|
Number of Securities
to be Issued Upon
Exercise of
Outstanding
Options,
Warrants and Rights
(a)
|
|
Weighted-Average
Exercise Price of
Outstanding
Options,
Warrants and Rights
(b)
|
|
Number of Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected
in Column
(a))(c)(3)
|
||||
Equity Compensation Plans approved by security holders
(1)
|
|
757,862
|
|
|
$
|
28.33
|
|
|
490,930
|
|
Employee stock purchase plan approved by security holders
(2)
|
|
—
|
|
|
—
|
|
|
750,000
|
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
757,862
|
|
|
|
|
1,240,930
|
|
(1)
|
Consists of the 2007 Stock Incentive Plan and the 2013 Stock Incentive Plan. The number of securities to be issued consists of
363,225
for stock options,
157,937
for restricted stock units and
236,700
for performance stock units at target. The weighted average exercise price applies only to the stock options.
|
(2)
|
The 2018 Employee Stock Purchase Plan enables employees to purchase our common stock at a 15% discount to the lower of the market value at the beginning or end of each six month offering period. As such, the number of share that may be issued during a given six month period and the purchase price of such shares cannot be determined in advance. See Note 11 to our consolidated financial statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K.
|
(3)
|
Awards are not restricted to any specified form or structure and may include, without limitation, sales or bonuses of stock, restricted stock, stock options, reload stock options, stock purchase warrants, other rights to acquire stock, securities convertible into or redeemable for stock, stock appreciation rights, limited stock appreciation rights, phantom stock, dividend equivalents, performance units or performance shares, and an award may consist of one such security or benefit, or two or more of them in tandem or in alternative.
|
(a)
|
1.
Financial Statements
|
|
|
|
|
||
|
The following consolidated financial statements of Ducommun Incorporated and subsidiaries, are incorporated by reference in Item 8 of this report.
|
||
|
|
|
|
|
|
Page
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
2.
Financial Statement Schedule
|
|
|
|
|
|
|
|
The following schedule for the years ended December 31, 2018, 2017 and 2016 is filed herewith:
|
|
|
|
|
|
|
|
Schedule II - Consolidated Valuation and Qualifying Accounts
|
|
|
|
|
|
|
|
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.
|
|
|
|
|
|
|
|
3.
Exhibits
|
|
|
|
|
||
See Item 15(b) for a list of exhibits.
|
—
|
|
ITEM 16. FORM 10-K SUMMARY
|
—
|
|
Signatures
|
—
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
|
||||
Current Assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
10,263
|
|
|
$
|
2,150
|
|
Accounts receivable (less allowance for doubtful accounts of $1,135 and $868 at December 31, 2018 and 2017, respectively)
|
|
67,819
|
|
|
74,064
|
|
||
Contract assets
|
|
86,665
|
|
|
—
|
|
||
Inventories
|
|
101,125
|
|
|
122,161
|
|
||
Production cost of contracts
|
|
11,679
|
|
|
11,204
|
|
||
Other current assets
|
|
9,839
|
|
|
11,435
|
|
||
Total Current Assets
|
|
287,390
|
|
|
221,014
|
|
||
Property and Equipment, Net
|
|
107,045
|
|
|
110,252
|
|
||
Goodwill
|
|
136,057
|
|
|
117,435
|
|
||
Intangibles, Net
|
|
112,092
|
|
|
114,693
|
|
||
Non-Current Deferred Income Taxes
|
|
308
|
|
|
261
|
|
||
Other Assets
|
|
5,251
|
|
|
3,098
|
|
||
Total Assets
|
|
$
|
648,143
|
|
|
$
|
566,753
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
||||
Current Liabilities
|
|
|
|
|
||||
Accounts payable
|
|
$
|
69,274
|
|
|
$
|
51,907
|
|
Contract liabilities
|
|
17,145
|
|
|
—
|
|
||
Accrued liabilities
|
|
37,786
|
|
|
28,329
|
|
||
Current portion of long-term debt
|
|
2,330
|
|
|
—
|
|
||
Total Current Liabilities
|
|
126,535
|
|
|
80,236
|
|
||
Long-Term Debt, Less Current Portion
|
|
226,961
|
|
|
216,055
|
|
||
Non-Current Deferred Income Taxes
|
|
18,070
|
|
|
15,981
|
|
||
Other Long-Term Liabilities
|
|
19,752
|
|
|
18,898
|
|
||
Total Liabilities
|
|
391,318
|
|
|
331,170
|
|
||
Commitments and Contingencies (Notes 13, 16)
|
|
|
|
|
||||
Shareholders’ Equity
|
|
|
|
|
||||
Common stock - $0.01 par value; 35,000,000 shares authorized; 11,417,863 and 11,332,841 shares issued and outstanding at December 31, 2018 and 2017, respectively
|
|
114
|
|
|
113
|
|
||
Additional paid-in capital
|
|
83,712
|
|
|
80,223
|
|
||
Retained earnings
|
|
180,356
|
|
|
161,364
|
|
||
Accumulated other comprehensive loss
|
|
(7,357
|
)
|
|
(6,117
|
)
|
||
Total Shareholders’ Equity
|
|
256,825
|
|
|
235,583
|
|
||
Total Liabilities and Shareholders’ Equity
|
|
$
|
648,143
|
|
|
$
|
566,753
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net Revenues
|
|
$
|
629,307
|
|
|
$
|
558,183
|
|
|
$
|
550,642
|
|
Cost of Sales
|
|
506,711
|
|
|
455,050
|
|
|
444,102
|
|
|||
Gross Profit
|
|
122,596
|
|
|
103,133
|
|
|
106,540
|
|
|||
Selling, General and Administrative Expenses
|
|
84,007
|
|
|
79,139
|
|
|
77,142
|
|
|||
Restructuring Charges
|
|
14,671
|
|
|
8,360
|
|
|
182
|
|
|||
Operating Income
|
|
23,918
|
|
|
15,634
|
|
|
29,216
|
|
|||
Interest Expense
|
|
(13,024
|
)
|
|
(8,870
|
)
|
|
(8,922
|
)
|
|||
Gain on Divestitures, Net
|
|
—
|
|
|
—
|
|
|
17,604
|
|
|||
Loss on Extinguishment of Debt
|
|
(926
|
)
|
|
—
|
|
|
—
|
|
|||
Other Income, Net
|
|
303
|
|
|
845
|
|
|
215
|
|
|||
Income Before Taxes
|
|
10,271
|
|
|
7,609
|
|
|
38,113
|
|
|||
Income Tax Expense (Benefit)
|
|
1,236
|
|
|
(12,468
|
)
|
|
12,852
|
|
|||
Net Income
|
|
$
|
9,035
|
|
|
$
|
20,077
|
|
|
$
|
25,261
|
|
Earnings Per Share
|
|
|
|
|
|
|
||||||
Basic earnings per share
|
|
$
|
0.79
|
|
|
$
|
1.78
|
|
|
$
|
2.27
|
|
Diluted earnings per share
|
|
$
|
0.77
|
|
|
$
|
1.74
|
|
|
$
|
2.24
|
|
Weighted-Average Number of Shares Outstanding
|
|
|
|
|
|
|
||||||
Basic
|
|
11,390
|
|
|
11,290
|
|
|
11,151
|
|
|||
Diluted
|
|
11,659
|
|
|
11,558
|
|
|
11,299
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net Income
|
|
$
|
9,035
|
|
|
$
|
20,077
|
|
|
$
|
25,261
|
|
Other Comprehensive Income (Loss), Net of Tax:
|
|
|
|
|
|
|
||||||
Pension Adjustments:
|
|
|
|
|
|
|
||||||
Amortization of actuarial losses included in net income, net of tax benefit of $173, $302, and $283 for 2018, 2017, and 2016, respectively
|
|
570
|
|
|
508
|
|
|
479
|
|
|||
Actuarial losses arising during the period, net of tax benefit of $302, $194, and $413 for 2018, 2017, and 2016, respectively
|
|
(899
|
)
|
|
(304
|
)
|
|
(650
|
)
|
|||
Change in net unrealized gains (losses) on cash flow hedges, net of tax expense (benefit) of $121, $(145), and $(180) for 2018, 2017, and 2016, respectively
|
|
407
|
|
|
(242
|
)
|
|
(305
|
)
|
|||
Other Comprehensive (Loss) Income, Net of Tax
|
|
78
|
|
|
(38
|
)
|
|
(476
|
)
|
|||
Comprehensive Income, Net of Tax
|
|
$
|
9,113
|
|
|
$
|
20,039
|
|
|
$
|
24,785
|
|
|
|
Shares
Outstanding
|
|
Common
Stock
|
|
Treasury
Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
Shareholders’
Equity
|
|||||||||||||
Balance at December 31, 2015
|
|
11,084,318
|
|
|
$
|
111
|
|
|
$
|
—
|
|
|
$
|
75,200
|
|
|
$
|
116,026
|
|
|
$
|
(5,603
|
)
|
|
$
|
185,734
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,261
|
|
|
—
|
|
|
25,261
|
|
||||||
Other comprehensive loss, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(476
|
)
|
|
(476
|
)
|
||||||
Stock options exercised
|
|
132,325
|
|
|
1
|
|
|
—
|
|
|
2,121
|
|
|
—
|
|
|
—
|
|
|
2,122
|
|
||||||
Stock repurchased related to the exercise of stock options
|
|
(151,916
|
)
|
|
(1
|
)
|
|
—
|
|
|
(3,464
|
)
|
|
—
|
|
|
—
|
|
|
(3,465
|
)
|
||||||
Stock awards vested
|
|
129,086
|
|
|
1
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,007
|
|
|
—
|
|
|
—
|
|
|
3,007
|
|
||||||
Tax shortfall from share-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(80
|
)
|
|
—
|
|
|
—
|
|
|
(80
|
)
|
||||||
Balance at December 31, 2016
|
|
11,193,813
|
|
|
$
|
112
|
|
|
$
|
—
|
|
|
$
|
76,783
|
|
|
$
|
141,287
|
|
|
$
|
(6,079
|
)
|
|
$
|
212,103
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,077
|
|
|
—
|
|
|
20,077
|
|
||||||
Other comprehensive loss, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38
|
)
|
|
(38
|
)
|
||||||
Stock options exercised
|
|
212,775
|
|
|
2
|
|
|
—
|
|
|
4,334
|
|
|
—
|
|
|
—
|
|
|
4,336
|
|
||||||
Stock repurchased related to the exercise of stock options
|
|
(219,164
|
)
|
|
(2
|
)
|
|
—
|
|
|
(6,902
|
)
|
|
—
|
|
|
—
|
|
|
(6,904
|
)
|
||||||
Stock awards vested
|
|
145,417
|
|
|
1
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,009
|
|
|
—
|
|
|
—
|
|
|
6,009
|
|
||||||
Balance at December 31, 2017
|
|
11,332,841
|
|
|
$
|
113
|
|
|
$
|
—
|
|
|
$
|
80,223
|
|
|
$
|
161,364
|
|
|
$
|
(6,117
|
)
|
|
$
|
235,583
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,035
|
|
|
—
|
|
|
9,035
|
|
||||||
Other comprehensive loss, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
78
|
|
|
78
|
|
||||||
Adoption of ASC 606 adjustment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,665
|
|
|
—
|
|
|
8,665
|
|
||||||
Adoption of ASU 2018-02 adjustment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,292
|
|
|
(1,318
|
)
|
|
(26
|
)
|
||||||
Stock options exercised
|
|
84,800
|
|
|
1
|
|
|
—
|
|
|
1,821
|
|
|
—
|
|
|
—
|
|
|
1,822
|
|
||||||
Stock repurchased related to the exercise of stock options
|
|
(98,438
|
)
|
|
(1
|
)
|
|
—
|
|
|
(6,344
|
)
|
|
—
|
|
|
—
|
|
|
(6,345
|
)
|
||||||
Stock awards vested
|
|
98,660
|
|
|
1
|
|
|
—
|
|
|
2,972
|
|
|
—
|
|
|
—
|
|
|
2,973
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,040
|
|
|
—
|
|
|
—
|
|
|
5,040
|
|
||||||
Balance at December 31, 2018
|
|
11,417,863
|
|
|
$
|
114
|
|
|
$
|
—
|
|
|
$
|
83,712
|
|
|
$
|
180,356
|
|
|
$
|
(7,357
|
)
|
|
$
|
256,825
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Cash Flows from Operating Activities
|
|
|
|
|
|
|
||||||
Net Income
|
|
$
|
9,035
|
|
|
$
|
20,077
|
|
|
$
|
25,261
|
|
Adjustments to Reconcile Net Income to
|
|
|
|
|
|
|
||||||
Net Cash Provided by Operating Activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
25,296
|
|
|
22,845
|
|
|
22,860
|
|
|||
Gain on divestitures, net
|
|
—
|
|
|
—
|
|
|
(17,604
|
)
|
|||
Property and equipment impairment due to restructuring
|
|
6,207
|
|
|
3,607
|
|
|
—
|
|
|||
Stock-based compensation expense
|
|
5,040
|
|
|
4,675
|
|
|
3,007
|
|
|||
Deferred income taxes
|
|
2,042
|
|
|
(15,411
|
)
|
|
3,519
|
|
|||
Excess tax benefits from stock-based compensation
|
|
—
|
|
|
—
|
|
|
(248
|
)
|
|||
Provision for doubtful accounts
|
|
267
|
|
|
373
|
|
|
112
|
|
|||
Noncash loss on extinguishment of debt
|
|
926
|
|
|
—
|
|
|
—
|
|
|||
Other
|
|
11,659
|
|
|
(1,182
|
)
|
|
(7,204
|
)
|
|||
Changes in Assets and Liabilities:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
7,495
|
|
|
2,720
|
|
|
3,220
|
|
|||
Contract assets
|
|
(86,665
|
)
|
|
—
|
|
|
—
|
|
|||
Inventories
|
|
23,243
|
|
|
(533
|
)
|
|
(5,182
|
)
|
|||
Production cost of contracts
|
|
(1,569
|
)
|
|
(267
|
)
|
|
(1,536
|
)
|
|||
Other assets
|
|
1,881
|
|
|
40
|
|
|
2,974
|
|
|||
Accounts payable
|
|
18,496
|
|
|
(4,015
|
)
|
|
15,055
|
|
|||
Contract liabilities
|
|
17,145
|
|
|
—
|
|
|
—
|
|
|||
Accrued and other liabilities
|
|
5,739
|
|
|
2,505
|
|
|
(966
|
)
|
|||
Net Cash Provided by Operating Activities
|
|
46,237
|
|
|
35,434
|
|
|
43,268
|
|
|||
Cash Flows from Investing Activities
|
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
|
(17,617
|
)
|
|
(27,610
|
)
|
|
(17,001
|
)
|
|||
Proceeds from sale of assets
|
|
396
|
|
|
913
|
|
|
16
|
|
|||
Insurance recoveries related to property and equipment
|
|
—
|
|
|
288
|
|
|
—
|
|
|||
Proceeds from divestitures
|
|
—
|
|
|
—
|
|
|
51,893
|
|
|||
Payments for acquisition of Lightning Diversion Systems, LLC, net of cash acquired
|
|
—
|
|
|
(59,798
|
)
|
|
—
|
|
|||
Payments for acquisition of Certified Thermoplastics Co., LLC, net of cash acquired
|
|
(30,712
|
)
|
|
—
|
|
|
—
|
|
|||
Net Cash (Used in) Provided by Investing Activities
|
|
(47,933
|
)
|
|
(86,207
|
)
|
|
34,908
|
|
|||
Cash Flows from Financing Activities
|
|
|
|
|
|
|
||||||
Borrowings from senior secured revolving credit facility
|
|
296,400
|
|
|
395,900
|
|
|
71,800
|
|
|||
Repayment of senior secured revolving credit facility
|
|
(354,500
|
)
|
|
(337,800
|
)
|
|
(71,800
|
)
|
|||
Borrowings from term loan
|
|
240,000
|
|
|
—
|
|
|
—
|
|
|||
Repayments of term loan
|
|
(167,000
|
)
|
|
(10,000
|
)
|
|
(75,000
|
)
|
|||
Repayments of other debt
|
|
—
|
|
|
(3
|
)
|
|
(23
|
)
|
|||
Debt issuance costs
|
|
(3,541
|
)
|
|
—
|
|
|
—
|
|
|||
Excess tax benefits from stock-based compensation
|
|
—
|
|
|
—
|
|
|
248
|
|
|||
Net cash paid from issuance of common stock under stock plans
|
|
(1,550
|
)
|
|
(2,606
|
)
|
|
(1,423
|
)
|
|||
Net Cash Provided by (Used in) Financing Activities
|
|
9,809
|
|
|
45,491
|
|
|
(76,198
|
)
|
|||
Net (Decrease) Increase in Cash and Cash Equivalents
|
|
8,113
|
|
|
(5,282
|
)
|
|
1,978
|
|
|||
Cash and Cash Equivalents at Beginning of Year
|
|
2,150
|
|
|
7,432
|
|
|
5,454
|
|
|||
Cash and Cash Equivalents at End of Year
|
|
$
|
10,263
|
|
|
$
|
2,150
|
|
|
$
|
7,432
|
|
|
|
(In thousands)
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Interest paid
|
|
$
|
11,573
|
|
|
$
|
7,307
|
|
|
$
|
6,877
|
|
Taxes paid
|
|
$
|
316
|
|
|
$
|
3,125
|
|
|
$
|
9,778
|
|
Non-cash activities:
|
|
|
|
|
|
|
||||||
Purchases of property and equipment not paid
|
|
$
|
824
|
|
|
$
|
2,104
|
|
|
$
|
3,241
|
|
|
|
(In thousands, except per share data)
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
|
$
|
9,035
|
|
|
$
|
20,077
|
|
|
$
|
25,261
|
|
Weighted-average number of common shares outstanding
|
|
|
|
|
|
|
||||||
Basic weighted-average common shares outstanding
|
|
11,390
|
|
|
11,290
|
|
|
11,151
|
|
|||
Dilutive potential common shares
|
|
269
|
|
|
268
|
|
|
148
|
|
|||
Diluted weighted-average common shares outstanding
|
|
11,659
|
|
|
11,558
|
|
|
11,299
|
|
|||
Earnings per share
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
0.79
|
|
|
$
|
1.78
|
|
|
$
|
2.27
|
|
Diluted
|
|
$
|
0.77
|
|
|
$
|
1.74
|
|
|
$
|
2.24
|
|
|
|
(In thousands)
Years Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Stock options and stock units
|
|
208
|
|
|
126
|
|
|
553
|
|
•
|
December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” (“ASU 2016-20”);
|
•
|
May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”);
|
•
|
May 2016, the FASB issued ASU 2016-11, “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-06 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting” (“ASU 2016-11”);
|
•
|
April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”); and
|
•
|
August 2015, the FASB issued ASU 2015-14, “Revenue From Contracts With Customers (Topic 606)” (“ASU 2015-14”).
|
•
|
Short term (12 months or less) leases practical expedient;
|
•
|
Package of three practical expedients;
|
•
|
Existing or expired land easements assessment practical expedient;
|
•
|
Separate lease and non-lease components practical expedient; and
|
•
|
Sale and leaseback transactions before the effective date practical expedient.
|
•
|
July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements” (“ASU 2018-11”);
|
•
|
July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”); and
|
•
|
January 2018, the FASB issued ASU 2018-01, “Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842” (“ASU 2018-01”).
|
|
|
(In thousands)
|
||||||||||
|
|
December 31, 2017
|
|
|
|
January 1, 2018
|
||||||
Unaudited Consolidated Balance Sheets
|
|
Balances Without Adoption of ASC 606
|
|
Effect of Adoption
|
|
Balances With Adoption of ASC 606
|
||||||
Assets
|
|
|
|
|
|
|
||||||
Contract assets
|
|
$
|
—
|
|
|
$
|
68,739
|
|
|
$
|
68,739
|
|
Inventories
|
|
$
|
122,161
|
|
|
$
|
(39,002
|
)
|
|
$
|
83,159
|
|
Non-current deferred income taxes
|
|
$
|
261
|
|
|
$
|
(95
|
)
|
|
$
|
166
|
|
Liabilities
|
|
|
|
|
|
|
||||||
Contract liabilities
|
|
$
|
—
|
|
|
$
|
24,460
|
|
|
$
|
24,460
|
|
Accrued liabilities
|
|
$
|
28,329
|
|
|
$
|
(6,091
|
)
|
|
$
|
22,238
|
|
Non-current deferred income taxes
|
|
$
|
15,981
|
|
|
$
|
2,608
|
|
|
$
|
18,589
|
|
Shareholders’ Equity
|
|
|
|
|
|
|
||||||
Retained earnings
|
|
$
|
161,364
|
|
|
$
|
8,665
|
|
|
$
|
170,029
|
|
|
|
December 31, 2018
|
||||||||||
Consolidated Balance Sheets
|
|
As Reported
|
|
Effect of Adoption
|
|
Balances Without Adoption of ASC 606
|
||||||
Assets
|
|
|
|
|
|
|
||||||
Current Assets
|
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
|
$
|
10,263
|
|
|
$
|
—
|
|
|
$
|
10,263
|
|
Accounts receivable, net of allowance for doubtful accounts of $1,135 at December 31, 2018
|
|
67,819
|
|
|
—
|
|
|
67,819
|
|
|||
Contract assets
|
|
86,665
|
|
|
(86,665
|
)
|
|
—
|
|
|||
Inventories
|
|
101,125
|
|
|
57,527
|
|
|
158,652
|
|
|||
Production cost of contracts
|
|
11,679
|
|
|
—
|
|
|
11,679
|
|
|||
Other current assets
|
|
9,839
|
|
|
1,085
|
|
|
10,924
|
|
|||
Total Current Assets
|
|
287,390
|
|
|
(28,053
|
)
|
|
259,337
|
|
|||
Property and equipment, net
|
|
107,045
|
|
|
—
|
|
|
107,045
|
|
|||
Goodwill
|
|
136,057
|
|
|
—
|
|
|
136,057
|
|
|||
Intangibles, net
|
|
112,092
|
|
|
—
|
|
|
112,092
|
|
|||
Non-current deferred income taxes
|
|
308
|
|
|
8
|
|
|
316
|
|
|||
Other assets
|
|
5,251
|
|
|
—
|
|
|
5,251
|
|
|||
Total Assets
|
|
$
|
648,143
|
|
|
$
|
(28,045
|
)
|
|
$
|
620,098
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
||||||
Current Liabilities
|
|
|
|
|
|
|
||||||
Accounts payable
|
|
$
|
69,274
|
|
|
$
|
—
|
|
|
$
|
69,274
|
|
Contract liabilities
|
|
17,145
|
|
|
(17,145
|
)
|
|
—
|
|
|||
Accrued liabilities
|
|
37,786
|
|
|
4,994
|
|
|
42,780
|
|
|||
Current portion of long-term debt
|
|
2,330
|
|
|
—
|
|
|
2,330
|
|
|||
Total Current Liabilities
|
|
126,535
|
|
|
(12,151
|
)
|
|
114,384
|
|
|||
Long-term debt, less current portion
|
|
226,961
|
|
|
—
|
|
|
226,961
|
|
|||
Non-current deferred income taxes
|
|
18,070
|
|
|
(2,570
|
)
|
|
15,500
|
|
|||
Other long-term liabilities
|
|
19,752
|
|
|
—
|
|
|
19,752
|
|
|||
Total Liabilities
|
|
391,318
|
|
|
(14,721
|
)
|
|
376,597
|
|
|||
Commitments and contingencies (Notes 13, 16)
|
|
|
|
|
|
|
||||||
Shareholders’ Equity
|
|
|
|
|
|
|
||||||
Common stock - $0.01 par value; 35,000,000 shares authorized; 11,417,863 shares issued and outstanding at December 31, 2018
|
|
114
|
|
|
—
|
|
|
114
|
|
|||
Additional paid-in capital
|
|
83,712
|
|
|
—
|
|
|
83,712
|
|
|||
Retained earnings
|
|
180,356
|
|
|
(13,324
|
)
|
|
167,032
|
|
|||
Accumulated other comprehensive loss
|
|
(7,357
|
)
|
|
—
|
|
|
(7,357
|
)
|
|||
Total Shareholders’ Equity
|
|
256,825
|
|
|
(13,324
|
)
|
|
243,501
|
|
|||
Total Liabilities and Shareholders’ Equity
|
|
$
|
648,143
|
|
|
$
|
(28,045
|
)
|
|
$
|
620,098
|
|
|
|
Year Ended December 31, 2018
|
||||||||||
Consolidated Statements of Income
|
|
As Reported
|
|
Effect of Adoption
|
|
Balances Without Adoption of ASC 606
|
||||||
Net Revenues
|
|
$
|
629,307
|
|
|
$
|
(15,712
|
)
|
|
$
|
613,595
|
|
Cost of Sales
|
|
506,711
|
|
|
(11,458
|
)
|
|
495,253
|
|
|||
Gross Profit
|
|
122,596
|
|
|
(4,254
|
)
|
|
118,342
|
|
|||
Selling, General and Administrative Expenses
|
|
84,007
|
|
|
—
|
|
|
84,007
|
|
|||
Restructuring Charges
|
|
14,671
|
|
|
—
|
|
|
14,671
|
|
|||
Operating Income
|
|
23,918
|
|
|
(4,254
|
)
|
|
19,664
|
|
|||
Interest Expense
|
|
(13,024
|
)
|
|
(1,526
|
)
|
|
(14,550
|
)
|
|||
Loss on Extinguishment of Debt
|
|
(926
|
)
|
|
—
|
|
|
(926
|
)
|
|||
Other Income
|
|
303
|
|
|
—
|
|
|
303
|
|
|||
Income Before Taxes
|
|
10,271
|
|
|
(5,780
|
)
|
|
4,491
|
|
|||
Income Tax Expense
|
|
1,236
|
|
|
(1,120
|
)
|
|
116
|
|
|||
Net Income
|
|
$
|
9,035
|
|
|
$
|
(4,660
|
)
|
|
$
|
4,375
|
|
Earnings Per Share
|
|
|
|
|
|
|
||||||
Basic earnings per share
|
|
$
|
0.79
|
|
|
|
|
$
|
0.38
|
|
||
Diluted earnings per share
|
|
$
|
0.77
|
|
|
|
|
$
|
0.38
|
|
||
Weighted-Average Number of Common Shares Outstanding
|
|
|
|
|
|
|
||||||
Basic
|
|
11,390
|
|
|
|
|
11,390
|
|
||||
Diluted
|
|
11,659
|
|
|
|
|
11,659
|
|
|
|
Year Ended December 31, 2018
|
||||||||||
Consolidated Statements of Comprehensive Income
|
|
As Reported
|
|
Effect of Adoption
|
|
Balances Without Adoption of ASC 606
|
||||||
Net Income
|
|
$
|
9,035
|
|
|
$
|
(4,660
|
)
|
|
$
|
4,375
|
|
Other Comprehensive Income (Loss), Net of Tax:
|
|
|
|
|
|
|
||||||
Amortization of actuarial losses included in net income, net of tax benefit of $173, for the year ended December 31, 2018
|
|
570
|
|
|
—
|
|
|
570
|
|
|||
Actuarial loss arising during the period, net of tax benefit of $302, for the year ended December 31, 2018
|
|
(899
|
)
|
|
—
|
|
|
(899
|
)
|
|||
Change in unrealized gains on cash flow hedges, net of tax of $121 for the year ended December 31, 2018
|
|
407
|
|
|
—
|
|
|
407
|
|
|||
Other Comprehensive Income (Loss), Net of Tax
|
|
78
|
|
|
—
|
|
|
78
|
|
|||
Comprehensive Income
|
|
$
|
9,113
|
|
|
$
|
(4,660
|
)
|
|
$
|
4,453
|
|
|
|
Year Ended December 31, 2018
|
||||||||||
Consolidated Statements of Cash Flows
|
|
As Reported
|
|
Effect of Adoption
|
|
Balances Without Adoption of ASC 606
|
||||||
Cash Flows from Operating Activities
|
|
|
|
|
|
|
||||||
Net Income
|
|
$
|
9,035
|
|
|
$
|
(4,660
|
)
|
|
$
|
4,375
|
|
Adjustments to Reconcile Net Income to
|
|
|
|
|
|
|
||||||
Net Cash Provided by Operating Activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
25,296
|
|
|
—
|
|
|
25,296
|
|
|||
Property and equipment impairment due to restructuring
|
|
6,207
|
|
|
—
|
|
|
6,207
|
|
|||
Stock-based compensation expense
|
|
5,040
|
|
|
—
|
|
|
5,040
|
|
|||
Deferred income taxes
|
|
2,042
|
|
|
(2,578
|
)
|
|
(536
|
)
|
|||
Provision for doubtful accounts
|
|
267
|
|
|
—
|
|
|
267
|
|
|||
Noncash loss on extinguishment of debt
|
|
926
|
|
|
—
|
|
|
926
|
|
|||
Other
|
|
11,659
|
|
|
(8,364
|
)
|
|
3,295
|
|
|||
Changes in Assets and Liabilities:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
7,495
|
|
|
—
|
|
|
7,495
|
|
|||
Contract assets
|
|
(86,665
|
)
|
|
86,665
|
|
|
—
|
|
|||
Inventories
|
|
23,243
|
|
|
(57,527
|
)
|
|
(34,284
|
)
|
|||
Production cost of contracts
|
|
(1,569
|
)
|
|
—
|
|
|
(1,569
|
)
|
|||
Other assets
|
|
1,881
|
|
|
(1,084
|
)
|
|
797
|
|
|||
Accounts payable
|
|
18,496
|
|
|
—
|
|
|
18,496
|
|
|||
Contract liabilities
|
|
17,145
|
|
|
(17,145
|
)
|
|
—
|
|
|||
Accrued and other liabilities
|
|
5,739
|
|
|
4,693
|
|
|
10,432
|
|
|||
Net Cash Provided by Operating Activities
|
|
46,237
|
|
|
—
|
|
|
46,237
|
|
|||
Cash Flows from Investing Activities
|
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
|
(17,617
|
)
|
|
—
|
|
|
(17,617
|
)
|
|||
Proceeds from sale of assets
|
|
396
|
|
|
—
|
|
|
396
|
|
|||
Payments for purchase of Certified Thermoplastics Co., LLC, net of cash acquired
|
|
(30,712
|
)
|
|
—
|
|
|
(30,712
|
)
|
|||
Net Cash Used in Investing Activities
|
|
(47,933
|
)
|
|
—
|
|
|
(47,933
|
)
|
|||
Cash Flows from Financing Activities
|
|
|
|
|
|
|
||||||
Borrowings from senior secured revolving credit facility
|
|
296,400
|
|
|
—
|
|
|
296,400
|
|
|||
Repayments of senior secured revolving credit facility
|
|
(354,500
|
)
|
|
—
|
|
|
(354,500
|
)
|
|||
Borrowings from term loan
|
|
240,000
|
|
|
—
|
|
|
240,000
|
|
|||
Repayments of term loan
|
|
(167,000
|
)
|
|
—
|
|
|
(167,000
|
)
|
|||
Debt issuance costs
|
|
(3,541
|
)
|
|
—
|
|
|
(3,541
|
)
|
|||
Net cash paid upon issuance of common stock under stock plans
|
|
(1,550
|
)
|
|
—
|
|
|
(1,550
|
)
|
|||
Net Cash Provided by Financing Activities
|
|
9,809
|
|
|
—
|
|
|
9,809
|
|
|||
Net Increase in Cash and Cash Equivalents
|
|
8,113
|
|
|
—
|
|
|
8,113
|
|
|||
Cash and Cash Equivalents at Beginning of Period
|
|
2,150
|
|
|
—
|
|
|
2,150
|
|
|||
Cash and Cash Equivalents at End of Period
|
|
$
|
10,263
|
|
|
$
|
—
|
|
|
$
|
10,263
|
|
|
|
Year Ended December 31, 2018
|
||||||||||
Consolidated Statements of Changes in Shareholders’ Equity
|
|
As Reported
|
|
Effect of Adoption
|
|
Balances Without Adoption of ASC 606
|
||||||
Net Income
|
|
$
|
9,035
|
|
|
$
|
(4,660
|
)
|
|
$
|
4,375
|
|
Other Comprehensive Loss, Net of Tax
|
|
$
|
78
|
|
|
$
|
—
|
|
|
$
|
78
|
|
Adoption of ASC 606 Adjustment
|
|
$
|
8,665
|
|
|
$
|
(8,665
|
)
|
|
$
|
—
|
|
Adoption of ASU 2018-02 adjustment
|
|
$
|
(26
|
)
|
|
$
|
—
|
|
|
$
|
(26
|
)
|
Stock Options Exercised
|
|
$
|
1,822
|
|
|
$
|
—
|
|
|
$
|
1,822
|
|
Stock Repurchased Related to the Exercise of Stock Options
|
|
$
|
(6,345
|
)
|
|
$
|
—
|
|
|
$
|
(6,345
|
)
|
Stock Awards Vested
|
|
$
|
2,973
|
|
|
$
|
—
|
|
|
$
|
2,973
|
|
Stock-Based Compensation
|
|
$
|
5,040
|
|
|
$
|
—
|
|
|
$
|
5,040
|
|
|
|
Estimated
Fair Value
|
||
Cash
|
|
$
|
98
|
|
Accounts receivable
|
|
1,517
|
|
|
Inventories
|
|
2,207
|
|
|
Other current assets
|
|
27
|
|
|
Property and equipment
|
|
603
|
|
|
Intangible assets
|
|
8,100
|
|
|
Goodwill
|
|
18,622
|
|
|
Total assets acquired
|
|
31,174
|
|
|
Current liabilities
|
|
(364
|
)
|
|
Total liabilities assumed
|
|
(364
|
)
|
|
Total purchase price allocation
|
|
$
|
30,810
|
|
|
|
Useful Life
(In years)
|
|
Estimated
Fair Value
(In thousands)
|
||
Intangible assets:
|
|
|
|
|
||
Customer relationships
|
|
10
|
|
$
|
6,900
|
|
Trade names and trademarks
|
|
10
|
|
1,200
|
|
|
|
|
|
|
$
|
8,100
|
|
|
|
December 31, 2017
|
|
2018
|
|
December 31, 2018
|
||||||||||||||||||
|
|
Balance
|
|
Charges
|
|
Cash Payments
|
|
Non-Cash Payments
|
|
Change in Estimates
|
|
Balance
|
||||||||||||
Severance and benefits
|
|
$
|
2,659
|
|
|
$
|
5,018
|
|
|
$
|
(4,346
|
)
|
|
$
|
—
|
|
|
$
|
(700
|
)
|
|
$
|
2,631
|
|
Modification of stock-based compensation awards
|
|
—
|
|
|
105
|
|
|
—
|
|
|
(105
|
)
|
|
—
|
|
|
—
|
|
||||||
Lease termination
|
|
66
|
|
|
864
|
|
|
(69
|
)
|
|
—
|
|
|
—
|
|
|
861
|
|
||||||
Property and equipment impairment due to restructuring
|
|
—
|
|
|
6,207
|
|
|
—
|
|
|
(6,207
|
)
|
|
—
|
|
|
—
|
|
||||||
Professional service fees
|
|
—
|
|
|
1,165
|
|
|
(1,122
|
)
|
|
—
|
|
|
—
|
|
|
43
|
|
||||||
Other
|
|
—
|
|
|
1,312
|
|
|
(896
|
)
|
|
—
|
|
|
—
|
|
|
416
|
|
||||||
Total charged to restructuring charges
|
|
2,725
|
|
|
14,671
|
|
|
(6,433
|
)
|
|
(6,312
|
)
|
|
(700
|
)
|
|
3,951
|
|
||||||
Inventory reserve
|
|
—
|
|
|
121
|
|
|
—
|
|
|
—
|
|
|
(71
|
)
|
|
50
|
|
||||||
Total charged to cost of sales
|
|
—
|
|
|
121
|
|
|
—
|
|
|
—
|
|
|
(71
|
)
|
|
50
|
|
||||||
Ending balance
|
|
$
|
2,725
|
|
|
$
|
14,792
|
|
|
$
|
(6,433
|
)
|
|
$
|
(6,312
|
)
|
|
$
|
(771
|
)
|
|
$
|
4,001
|
|
|
|
(In thousands)
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Raw materials and supplies
|
|
$
|
89,767
|
|
|
$
|
65,221
|
|
Work in process
|
|
9,199
|
|
|
62,584
|
|
||
Finished goods
|
|
2,159
|
|
|
10,665
|
|
||
|
|
101,125
|
|
|
138,470
|
|
||
Less progress payments
|
|
—
|
|
|
16,309
|
|
||
Total
|
|
$
|
101,125
|
|
|
$
|
122,161
|
|
|
|
(In thousands)
December 31,
|
|
Range of
Estimated
|
||||||
|
|
2018
|
|
2017
|
|
Useful Lives
|
||||
Land
|
|
$
|
15,662
|
|
|
$
|
15,662
|
|
|
|
Buildings and improvements
|
|
57,642
|
|
|
57,024
|
|
|
5 - 40 Years
|
||
Machinery and equipment
|
|
160,163
|
|
|
146,175
|
|
|
2 - 20 Years
|
||
Furniture and equipment
|
|
19,676
|
|
|
21,127
|
|
|
2 - 10 Years
|
||
Construction in progress
|
|
8,742
|
|
|
13,480
|
|
|
|
||
|
|
261,885
|
|
|
253,468
|
|
|
|
||
Less accumulated depreciation
|
|
154,840
|
|
|
143,216
|
|
|
|
||
Total
|
|
$
|
107,045
|
|
|
$
|
110,252
|
|
|
|
|
|
(In thousands)
|
||||||||||
|
|
Electronic
Systems
|
|
Structural
Systems
|
|
Consolidated
Ducommun
|
||||||
Gross goodwill
|
|
$
|
199,157
|
|
|
$
|
—
|
|
|
$
|
199,157
|
|
Accumulated goodwill impairment
|
|
(81,722
|
)
|
|
—
|
|
|
(81,722
|
)
|
|||
Balance at December 31, 2017
|
|
117,435
|
|
|
—
|
|
|
117,435
|
|
|||
Goodwill from acquisition during the period
|
|
—
|
|
|
18,622
|
|
|
18,622
|
|
|||
Balance at December 31, 2018
|
|
$
|
117,435
|
|
|
$
|
18,622
|
|
|
$
|
136,057
|
|
|
|
|
(In thousands)
|
||||||||||||||||||||||
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Wtd. Avg Life (Yrs)
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||||||||
Finite-lived assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
17
|
|
$
|
187,200
|
|
|
$
|
77,824
|
|
|
$
|
109,376
|
|
|
$
|
180,300
|
|
|
$
|
67,449
|
|
|
$
|
112,851
|
|
Trade names
|
13
|
|
2,500
|
|
|
193
|
|
|
2,307
|
|
|
1,300
|
|
|
26
|
|
|
1,274
|
|
||||||
Contract renewal
|
14
|
|
1,845
|
|
|
1,625
|
|
|
220
|
|
|
1,845
|
|
|
1,493
|
|
|
352
|
|
||||||
Technology
|
15
|
|
400
|
|
|
211
|
|
|
189
|
|
|
400
|
|
|
184
|
|
|
216
|
|
||||||
Total
|
|
|
$
|
191,945
|
|
|
$
|
79,853
|
|
|
$
|
112,092
|
|
|
$
|
183,845
|
|
|
$
|
69,152
|
|
|
$
|
114,693
|
|
|
|
(In thousands)
|
||||||||||||||||||||||
|
|
December 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
||||||||||||
Other intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Electronic Systems
|
|
$
|
164,545
|
|
|
$
|
62,108
|
|
|
$
|
102,437
|
|
|
$
|
164,545
|
|
|
$
|
52,688
|
|
|
$
|
111,857
|
|
Structural Systems
|
|
27,400
|
|
|
17,745
|
|
|
9,655
|
|
|
19,300
|
|
|
16,464
|
|
|
2,836
|
|
||||||
Total
|
|
$
|
191,945
|
|
|
$
|
79,853
|
|
|
$
|
112,092
|
|
|
$
|
183,845
|
|
|
$
|
69,152
|
|
|
$
|
114,693
|
|
|
|
(In thousands)
|
||||||||||
|
|
Electronic
Systems
|
|
Structural
Systems
|
|
Consolidated
Ducommun
|
||||||
2019
|
|
$
|
9,419
|
|
|
$
|
1,401
|
|
|
$
|
10,820
|
|
2020
|
|
9,348
|
|
|
1,300
|
|
|
10,648
|
|
|||
2021
|
|
9,287
|
|
|
1,191
|
|
|
10,478
|
|
|||
2022
|
|
9,288
|
|
|
1,130
|
|
|
10,418
|
|
|||
2023
|
|
9,287
|
|
|
1,072
|
|
|
10,359
|
|
|||
Thereafter
|
|
55,808
|
|
|
3,561
|
|
|
59,369
|
|
|||
|
|
$
|
102,437
|
|
|
$
|
9,655
|
|
|
$
|
112,092
|
|
|
|
(In thousands)
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Accrued compensation
|
|
$
|
29,616
|
|
|
$
|
18,925
|
|
Accrued income tax and sales tax
|
|
82
|
|
|
71
|
|
||
Customer deposits
|
|
—
|
|
|
3,970
|
|
||
Provision for forward loss reserves
|
|
—
|
|
|
1,226
|
|
||
Other
|
|
8,088
|
|
|
4,137
|
|
||
Total
|
|
$
|
37,786
|
|
|
$
|
28,329
|
|
|
|
(In thousands)
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Term loan
|
|
$
|
233,000
|
|
|
$
|
160,000
|
|
Revolving credit facility
|
|
—
|
|
|
58,100
|
|
||
Total debt
|
|
233,000
|
|
|
218,100
|
|
||
Less current portion
|
|
2,330
|
|
|
—
|
|
||
Total long-term debt
|
|
230,670
|
|
|
218,100
|
|
||
Less debt issuance costs
|
|
3,709
|
|
|
2,045
|
|
||
Total long-term debt, net of debt issuance costs
|
|
$
|
226,961
|
|
|
$
|
216,055
|
|
Weighted-average interest rate
|
|
4.71
|
%
|
|
3.73
|
%
|
|
(In thousands)
|
||
2019
|
$
|
2,330
|
|
2020
|
2,330
|
|
|
2021
|
2,330
|
|
|
2022
|
2,330
|
|
|
2023
|
2,330
|
|
|
Thereafter
|
221,350
|
|
|
Total
|
$
|
233,000
|
|
|
|
Number
of Stock Options
|
|
Weighted-
Average
Exercise
Price Per Share
|
|
Weighted-Average Remaining Contractual Life (Years)
|
|
Aggregate Intrinsic Value (in thousands)
|
|||||
Outstanding at January 1, 2018
|
|
306,225
|
|
|
$
|
23.38
|
|
|
|
|
|
||
Granted
|
|
176,940
|
|
|
$
|
33.41
|
|
|
|
|
|
||
Exercised
|
|
(84,800
|
)
|
|
$
|
21.48
|
|
|
|
|
|
||
Expired
|
|
(6,075
|
)
|
|
$
|
19.45
|
|
|
|
|
|
||
Forfeited
|
|
(29,065
|
)
|
|
$
|
28.90
|
|
|
|
|
|
||
Outstanding at December 31, 2018
|
|
363,225
|
|
|
$
|
28.33
|
|
|
6.9
|
|
$
|
2,934
|
|
Exerciseable at December 31, 2018
|
|
71,212
|
|
|
$
|
23.09
|
|
|
3.8
|
|
$
|
942
|
|
|
|
Number of Stock Options
|
|
Weighted-
Average
Grant
Date Fair Value
|
|||
Nonvested at January 1, 2018
|
|
219,800
|
|
|
$
|
11.07
|
|
Granted
|
|
176,940
|
|
|
$
|
12.87
|
|
Vested
|
|
(75,662
|
)
|
|
$
|
10.71
|
|
Forfeited
|
|
(29,065
|
)
|
|
$
|
11.54
|
|
Nonvested at December 31, 2018
|
|
292,013
|
|
|
$
|
12.20
|
|
|
|
Years Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Risk-free interest rate
|
|
2.65
|
%
|
|
1.75
|
%
|
|
1.20
|
%
|
Expected volatility
|
|
53.66
|
%
|
|
50.37
|
%
|
|
51.79
|
%
|
Expected dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
Expected term (in months)
|
|
36
|
|
|
48
|
|
|
48
|
|
|
|
Number of Restricted Stock Units
|
|
Weighted-
Average
Grant
Date Fair Value
|
|||
Outstanding at January 1, 2018
|
|
185,344
|
|
|
$
|
25.14
|
|
Granted
|
|
81,230
|
|
|
$
|
32.36
|
|
Vested
|
|
(89,513
|
)
|
|
$
|
24.57
|
|
Forfeited
|
|
(19,124
|
)
|
|
$
|
26.85
|
|
Outstanding at December 31, 2018
|
|
157,937
|
|
|
$
|
28.96
|
|
|
|
Number of Performance Stock Units
|
|
Weighted-
Average
Grant
Date Fair Value
|
|||
Outstanding at January 1, 2018
|
|
221,500
|
|
|
$
|
23.52
|
|
Granted
|
|
64,700
|
|
|
$
|
35.16
|
|
Adjustment for target performance
|
|
3,000
|
|
|
$
|
20.72
|
|
Vested
|
|
(9,146
|
)
|
|
$
|
25.04
|
|
Forfeited
|
|
(43,354
|
)
|
|
$
|
26.29
|
|
Outstanding at December 31, 2018
|
|
236,700
|
|
|
$
|
26.21
|
|
(1)
|
The amortization expense is included in the computation of periodic pension cost and is a decrease to net income upon reclassification from accumulated other comprehensive loss.
|
|
|
(In thousands)
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Change in benefit obligation
(1)
|
|
|
|
|
||||
Beginning benefit obligation (January 1)
|
|
$
|
36,002
|
|
|
$
|
33,154
|
|
Service cost
|
|
601
|
|
|
531
|
|
||
Interest cost
|
|
1,268
|
|
|
1,329
|
|
||
Actuarial (gain) loss
|
|
(2,415
|
)
|
|
2,449
|
|
||
Benefits paid
|
|
(1,505
|
)
|
|
(1,461
|
)
|
||
Ending benefit obligation (December 31)
|
|
$
|
33,951
|
|
|
$
|
36,002
|
|
Change in plan assets
|
|
|
|
|
||||
Beginning fair value of plan assets (January 1)
|
|
$
|
25,646
|
|
|
$
|
22,015
|
|
Return on assets
|
|
(1,951
|
)
|
|
3,481
|
|
||
Employer contribution
|
|
1,559
|
|
|
1,611
|
|
||
Benefits paid
|
|
(1,505
|
)
|
|
(1,461
|
)
|
||
Ending fair value of plan assets (December 31)
|
|
$
|
23,749
|
|
|
$
|
25,646
|
|
Funded status (underfunded)
|
|
$
|
(10,202
|
)
|
|
$
|
(10,356
|
)
|
Amounts recognized in the consolidated balance sheet
|
|
|
|
|
||||
Current liabilities
|
|
$
|
580
|
|
|
$
|
560
|
|
Non-current liabilities
|
|
$
|
9,622
|
|
|
$
|
9,796
|
|
Unrecognized loss included in accumulated other comprehensive loss
|
|
|
|
|
||||
Beginning unrecognized loss, before tax (January 1)
|
|
$
|
8,908
|
|
|
$
|
9,220
|
|
Amortization
|
|
(743
|
)
|
|
(810
|
)
|
||
Liability (gain) loss
|
|
(2,415
|
)
|
|
2,449
|
|
||
Asset loss (gain)
|
|
3,735
|
|
|
(1,951
|
)
|
||
Ending unrecognized loss, before tax (December 31)
|
|
9,485
|
|
|
8,908
|
|
||
Tax impact
|
|
(2,263
|
)
|
|
(3,309
|
)
|
||
Unrecognized loss included in accumulated other comprehensive loss, net of tax
|
|
$
|
7,222
|
|
|
$
|
5,599
|
|
(1)
|
Projected benefit obligation equals the accumulated benefit obligation for the plans.
|
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||
Equity securities
|
|
57
|
%
|
|
70
|
%
|
Cash and equivalents
|
|
1
|
%
|
|
1
|
%
|
Debt securities
|
|
42
|
%
|
|
29
|
%
|
Total
(1)
|
|
100
|
%
|
|
100
|
%
|
(1)
|
Our overall investment strategy is to achieve an asset allocation within the following ranges to achieve an appropriate rate of return relative to risk.
|
Cash
|
0-5%
|
Fixed income securities
|
15-75%
|
Equities
|
30-80%
|
|
|
(In thousands)
Year Ended December 31, 2018
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash and cash equivalents
|
|
$
|
153
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
153
|
|
Fixed income securities
|
|
3,647
|
|
|
—
|
|
|
—
|
|
|
3,647
|
|
||||
Equities
(1)
|
|
1,475
|
|
|
—
|
|
|
—
|
|
|
1,475
|
|
||||
Other investments
|
|
851
|
|
|
—
|
|
|
—
|
|
|
851
|
|
||||
Total plan assets at fair value
|
|
$
|
6,126
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
6,126
|
|
|
Pooled funds
|
|
|
|
|
|
|
|
17,623
|
|
|||||||
Total fair value of plan assets
|
|
|
|
|
|
|
|
|
|
|
$
|
23,749
|
|
|
|
(In thousands)
Year Ended December 31, 2017
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash and cash equivalents
|
|
$
|
135
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
135
|
|
Fixed income securities
|
|
3,494
|
|
|
—
|
|
|
—
|
|
|
3,494
|
|
||||
Equities
(1)
|
|
1,625
|
|
|
—
|
|
|
—
|
|
|
1,625
|
|
||||
Other investments
|
|
910
|
|
|
—
|
|
|
—
|
|
|
910
|
|
||||
Total plan assets at fair value
|
|
$
|
6,164
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
6,164
|
|
|
Pooled funds
|
|
|
|
|
|
|
|
19,482
|
|
|||||||
Total fair value of plan assets
|
|
|
|
|
|
|
|
|
|
|
$
|
25,646
|
|
(1)
|
Represents mutual funds and commingled accounts which invest primarily in equities, but may also hold fixed income securities, cash and other investments. Commingled funds with publicly quoted prices and actively traded are classified as Level 1 investments.
|
|
|
Years Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Discount rate used to determine pension expense
|
|
|
|
|
|
|
|||
Pension Plan
|
|
3.64
|
%
|
|
4.18
|
%
|
|
4.55
|
%
|
LaBarge Retirement Plan
|
|
3.40
|
%
|
|
3.75
|
%
|
|
4.00
|
%
|
|
|
December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Discount rate used to determine value of obligations
|
|
|
|
|
|
|
|||
Pension Plan
|
|
4.23
|
%
|
|
3.64
|
%
|
|
4.18
|
%
|
LaBarge Retirement Plan
|
|
4.00
|
%
|
|
3.40
|
%
|
|
3.75
|
%
|
Long-term rate of return - Pension Plan only
|
|
7.00
|
%
|
|
7.00
|
%
|
|
7.50
|
%
|
|
|
(In thousands)
|
||||||
|
|
Pension Plan
|
|
LaBarge
Retirement
Plan
|
||||
2019
|
|
$
|
1,206
|
|
|
$
|
581
|
|
2020
|
|
1,282
|
|
|
561
|
|
||
2021
|
|
1,378
|
|
|
538
|
|
||
2022
|
|
1,479
|
|
|
512
|
|
||
2023
|
|
1,522
|
|
|
483
|
|
||
2024 - 2028
|
|
8,741
|
|
|
1,991
|
|
|
(In thousands)
|
||
2019
|
$
|
3,680
|
|
2020
|
3,405
|
|
|
2021
|
2,789
|
|
|
2022
|
1,404
|
|
|
2023
|
980
|
|
|
Thereafter
|
580
|
|
|
Total
|
$
|
12,838
|
|
|
|
(In thousands)
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Current tax expense
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
474
|
|
|
$
|
2,387
|
|
|
$
|
5,953
|
|
State
|
|
1,260
|
|
|
525
|
|
|
2,982
|
|
|||
|
|
1,734
|
|
|
2,912
|
|
|
8,935
|
|
|||
Deferred tax (benefit) expense
|
|
|
|
|
|
|
||||||
Federal
|
|
(789
|
)
|
|
(15,515
|
)
|
|
3,876
|
|
|||
State
|
|
291
|
|
|
135
|
|
|
41
|
|
|||
|
|
(498
|
)
|
|
(15,380
|
)
|
|
3,917
|
|
|||
Income tax expense (benefit)
|
|
$
|
1,236
|
|
|
$
|
(12,468
|
)
|
|
$
|
12,852
|
|
|
|
Years Ended December 31,
|
||||
|
|
2018
|
|
2017
|
|
2016
|
Statutory federal income tax rate
|
|
21.0%
|
|
35.0%
|
|
35.0%
|
State income taxes (net of federal benefit)
|
|
5.3
|
|
2.5
|
|
5.7
|
Qualified domestic production activities
|
|
—
|
|
(2.6)
|
|
(2.0)
|
Stock-based compensation expense
|
|
(1.9)
|
|
(8.2)
|
|
—
|
Research and development tax credits
|
|
(32.0)
|
|
(50.6)
|
|
(8.6)
|
Other tax credits
|
|
(1.2)
|
|
(7.5)
|
|
—
|
Changes in valuation allowance
|
|
0.7
|
|
10.6
|
|
0.9
|
Non-deductible book expenses
|
|
8.2
|
|
1.1
|
|
0.2
|
Changes in deferred tax assets
|
|
12.1
|
|
15.4
|
|
1.5
|
Re-measurement of deferred taxes for 2017 Tax Act
|
|
—
|
|
(171.3)
|
|
—
|
Changes in tax reserves
|
|
1.2
|
|
11.4
|
|
—
|
Other
|
|
(1.4)
|
|
0.4
|
|
1.0
|
Effective income tax (benefit) rate
|
|
12.0%
|
|
(163.8)%
|
|
33.7%
|
|
|
Years Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
Boeing
|
|
17.0
|
%
|
|
16.3
|
%
|
|
17.3
|
%
|
Lockheed Martin
|
|
4.4
|
%
|
|
5.5
|
%
|
|
5.6
|
%
|
Raytheon
|
|
11.7
|
%
|
|
13.5
|
%
|
|
8.4
|
%
|
Spirit
|
|
9.5
|
%
|
|
8.2
|
%
|
|
8.2
|
%
|
United Technologies
|
|
4.6
|
%
|
|
4.7
|
%
|
|
5.3
|
%
|
Top ten customers
(1)
|
|
62.9
|
%
|
|
62.5
|
%
|
|
58.7
|
%
|
|
|
(In thousands)
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
Net Revenues
|
|
|
|
|
|
|
||||||
Electronic Systems
|
|
$
|
337,868
|
|
|
$
|
316,723
|
|
|
$
|
304,177
|
|
Structural Systems
|
|
291,439
|
|
|
241,460
|
|
|
246,465
|
|
|||
Total Net Revenues
|
|
$
|
629,307
|
|
|
$
|
558,183
|
|
|
$
|
550,642
|
|
Segment Operating Income (Loss)
(2)(3)
|
|
|
|
|
|
|
||||||
Electronic Systems
|
|
$
|
30,916
|
|
|
$
|
31,236
|
|
|
$
|
29,284
|
|
Structural Systems
|
|
19,063
|
|
|
5,790
|
|
|
16,844
|
|
|||
|
|
49,979
|
|
|
37,026
|
|
|
46,128
|
|
|||
Corporate General and Administrative Expenses
(1)(2)(3)
|
|
(26,061
|
)
|
|
(21,392
|
)
|
|
(16,912
|
)
|
|||
Operating Income
|
|
$
|
23,918
|
|
|
$
|
15,634
|
|
|
$
|
29,216
|
|
Depreciation and Amortization Expenses
|
|
|
|
|
|
|
||||||
Electronic Systems
|
|
$
|
14,223
|
|
|
$
|
13,888
|
|
|
$
|
14,087
|
|
Structural Systems
|
|
10,525
|
|
|
8,860
|
|
|
8,688
|
|
|||
Corporate Administration
|
|
548
|
|
|
97
|
|
|
85
|
|
|||
Total Depreciation and Amortization Expenses
|
|
$
|
25,296
|
|
|
$
|
22,845
|
|
|
$
|
22,860
|
|
Capital Expenditures
|
|
|
|
|
|
|
||||||
Electronic Systems
|
|
$
|
6,719
|
|
|
$
|
5,019
|
|
|
$
|
3,032
|
|
Structural Systems
|
|
9,104
|
|
|
20,679
|
|
|
15,661
|
|
|||
Corporate Administration
|
|
514
|
|
|
775
|
|
|
—
|
|
|||
Total Capital Expenditures
|
|
$
|
16,337
|
|
|
$
|
26,473
|
|
|
$
|
18,693
|
|
(1)
|
Includes cost not allocated to either the Electronic Systems or Structural Systems operating segments.
|
(2)
|
The results for 2018 includes CTP’s results of operations which have been included in our consolidated statements of income since the date of acquisition as part of the Structural Systems segment. See Note 3.
|
(3)
|
The results for 2017 includes LDS’ results of operations which have been included in our consolidated statements of income since the date of acquisition as part of the Electronic Systems segment. See Note 3.
|
|
|
(In thousands, except per share amounts)
|
||||||||||||||||||||||||||||||
|
|
Three Months Ended
2018
|
|
Three Months Ended
2017
|
||||||||||||||||||||||||||||
|
|
Dec 31
|
|
Sep 29
|
|
Jun 30
|
|
Mar 31
|
|
Dec 31
|
|
Sep 30
|
|
Jul 1
|
|
Apr 1
|
||||||||||||||||
Net Revenues
|
|
$
|
164,183
|
|
|
$
|
159,842
|
|
|
$
|
154,827
|
|
|
$
|
150,455
|
|
|
$
|
142,258
|
|
|
$
|
138,690
|
|
|
$
|
140,938
|
|
|
$
|
136,297
|
|
Gross Profit
|
|
32,697
|
|
|
31,116
|
|
|
32,028
|
|
|
26,755
|
|
|
25,772
|
|
|
26,087
|
|
|
26,269
|
|
|
25,005
|
|
||||||||
Income (Loss) Before Taxes
|
|
1,791
|
|
|
4,290
|
|
|
1,833
|
|
|
2,357
|
|
|
(5,057
|
)
|
|
5,595
|
|
|
4,564
|
|
|
2,507
|
|
||||||||
Income Tax Expense (Benefit)
|
|
1,118
|
|
|
119
|
|
|
242
|
|
|
(243
|
)
|
|
(14,541
|
)
|
|
940
|
|
|
741
|
|
|
392
|
|
||||||||
Net Income
|
|
$
|
673
|
|
|
$
|
4,171
|
|
|
$
|
1,591
|
|
|
$
|
2,600
|
|
|
$
|
9,484
|
|
|
$
|
4,655
|
|
|
$
|
3,823
|
|
|
$
|
2,115
|
|
Earnings Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic earnings per share
|
|
$
|
0.06
|
|
|
$
|
0.37
|
|
|
$
|
0.14
|
|
|
$
|
0.23
|
|
|
$
|
0.84
|
|
|
$
|
0.41
|
|
|
$
|
0.34
|
|
|
$
|
0.19
|
|
Diluted earnings per share
|
|
$
|
0.06
|
|
|
$
|
0.36
|
|
|
$
|
0.14
|
|
|
$
|
0.22
|
|
|
$
|
0.82
|
|
|
$
|
0.41
|
|
|
$
|
0.33
|
|
|
$
|
0.18
|
|
Description
|
|
Balance at
Beginning
of Period
|
|
Charged to
Costs and
Expenses
|
|
Deductions/(Recoveries)
|
|
Balance at End
of Period
|
||||||||
2018
|
|
|
|
|
|
|
|
|
||||||||
Allowance for Doubtful Accounts
|
|
$
|
868
|
|
|
$
|
776
|
|
|
$
|
509
|
|
|
$
|
1,135
|
|
Valuation Allowance on Deferred Tax Assets
|
|
$
|
9,013
|
|
|
$
|
70
|
|
|
$
|
—
|
|
|
$
|
9,083
|
|
2017
|
|
|
|
|
|
|
|
|
||||||||
Allowance for Doubtful Accounts
|
|
$
|
495
|
|
|
$
|
334
|
|
|
$
|
(39
|
)
|
|
$
|
868
|
|
Valuation Allowance on Deferred Tax Assets
|
|
$
|
6,607
|
|
|
$
|
2,406
|
|
|
$
|
—
|
|
|
$
|
9,013
|
|
2016
|
|
|
|
|
|
|
|
|
||||||||
Allowance for Doubtful Accounts
|
|
$
|
359
|
|
|
$
|
233
|
|
|
$
|
97
|
|
|
$
|
495
|
|
Valuation Allowance on Deferred Tax Assets
|
|
$
|
7,477
|
|
|
$
|
(870
|
)
|
|
$
|
—
|
|
|
$
|
6,607
|
|
*10.16
|
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
|
|
|
Richard A. Baldridge
|
|
March 19, 2013
|
|
|
Gregory S. Churchill
|
|
March 19, 2013
|
|
|
Shirley G. Drazba
|
|
October 18, 2018
|
|
|
Robert C. Ducommun
|
|
December 31, 1985
|
|
|
Dean M. Flatt
|
|
November 5, 2009
|
|
|
Douglas L. Groves
|
|
February 12, 2013
|
|
|
Jay L. Haberland
|
|
February 2, 2009
|
|
|
Stephen G. Oswald
|
|
January 23, 2017
|
|
|
Robert D. Paulson
|
|
March 25, 2003
|
|
|
Jerry L. Redondo
|
|
October 1, 2015
|
|
|
Rosalie F. Rogers
|
|
July 24, 2008
|
|
|
Christopher D. Wampler
|
|
January 1, 2016
|
|
|
Person
|
|
Date of Agreement
|
|
|
Douglas L. Groves
|
|
January 23, 2017
|
|
|
Jerry L. Redondo
|
|
January 23, 2017
|
|
|
Rosalie F. Rogers
|
|
January 23, 2017
|
|
|
Christopher D. Wampler
|
|
January 23, 2017
|
|
101.INS
|
XBRL Instance Document
|
|
|
|
DUCOMMUN INCORPORATED
|
|
|
|
|
Date: February 28, 2019
|
By:
|
|
/s/ Stephen G. Oswald
|
|
|
|
Stephen G. Oswald
|
|
|
|
Chairman, President and Chief Executive Officer
|
Signature
|
|
|
Title
|
|
|
|
|
/s/ Stephen G. Oswald
|
|
|
Chairman, President and Chief Executive Officer
|
Stephen G. Oswald
|
|
|
(Principal Executive Officer)
|
|
|
|
|
/s/ Douglas L. Groves
|
|
|
Vice President, Chief Financial Officer and Treasurer
|
Douglas L. Groves
|
|
|
(Principal Financial Officer)
|
|
|
|
|
/s/ Christopher D. Wampler
|
|
|
Vice President, Controller and Chief Accounting Officer
|
Christopher D. Wampler
|
|
|
(Principal Accounting Officer)
|
|
|
|
|
/s/ Richard A. Baldridge
|
|
|
Director
|
Richard A. Baldridge
|
|
|
|
|
|
|
|
/s/ Gregory S. Churchill
|
|
|
Director
|
Gregory S. Churchill
|
|
|
|
|
|
|
|
/s/ Shirley G. Drazba
|
|
|
Director
|
Shirley G. Drazba
|
|
|
|
|
|
|
|
/s/ Robert C. Ducommun
|
|
|
Director
|
Robert C. Ducommun
|
|
|
|
|
|
|
|
/s/ Dean M. Flatt
|
|
|
Director
|
Dean M. Flatt
|
|
|
|
|
|
|
|
/s/ Jay L. Haberland
|
|
|
Director
|
Jay L. Haberland
|
|
|
|
|
|
|
|
/s/ Robert D. Paulson
|
|
|
Director
|
Robert D. Paulson
|
|
|
|
Name of Subsidiary
|
|
Jurisdiction of Incorporation
|
CMP Display Systems, Inc.
|
|
California
|
Composite Structures, LLC
|
|
Delaware
|
Ducommun AeroStructures, Inc.
|
|
Delaware
|
Ducommun AeroStructures Mexico, LLC
|
|
Delaware
|
Ducommun AeroStructures New York, Inc.
|
|
New York
|
Ducommun (England) LTD
|
|
England
|
Ducommun LaBarge Technologies, Inc.
|
|
Arizona
|
Ducommun LaBarge Technologies, Inc.
|
|
Delaware
|
Ducommun Technologies (Thailand) Ltd.
|
|
Thailand
|
LaBarge/STC, Inc.
|
|
Texas
|
LaBarge Acquisition Company, Inc.
|
|
Missouri
|
Lightning Diversion Systems, LLC
|
|
Delaware
|
LS Holdings Company, LLC
|
|
Delaware
|
/s/ PricewaterhouseCoopers LLP
|
Irvine, California
|
February 28, 2019
|
1.
|
I have reviewed this Annual Report of Ducommun Incorporated (the “registrant”) on Form 10-K for the period ended
December 31, 2018
;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f), and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Stephen G. Oswald
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Stephen G. Oswald
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Chairman, President and Chief Executive Officer
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1.
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I have reviewed this Annual Report of Ducommun Incorporated (the “registrant”) on Form 10-K for the period ended
December 31, 2018
;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
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/s/ Douglas L. Groves
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Douglas L. Groves
|
Vice President, Chief Financial Officer and Treasurer
|
|
|
|
|
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By:
|
|
/s/ Stephen G. Oswald
|
|
|
|
Stephen G. Oswald
|
|
|
|
Chairman, President and Chief Executive Officer
|
|
|
|
February 28, 2019
|
|
|
|
|
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By:
|
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/s/ Douglas L. Groves
|
|
|
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Douglas L. Groves
|
|
|
|
Vice President, Chief Financial Officer and Treasurer
|
|
|
|
February 28, 2019
|