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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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Trading Symbol(s)
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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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DCO
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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 or not being able to detect such 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 30% of our borrowings under our 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 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
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Square
Feet
|
|
Expiration
of Lease
|
Carson, California
|
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Structural Systems
|
|
299,000
|
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Owned
|
Monrovia, California
|
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Structural Systems
|
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274,000
|
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Owned
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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
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Carson, California
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Electronic Systems
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117,000
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2021
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Phoenix, Arizona
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Electronic Systems
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100,000
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2022
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Joplin, Missouri
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Electronic Systems
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92,000
|
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2023
|
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
|
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Electronic Systems
|
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77,000
|
|
Owned
|
Carson, California
|
|
Structural Systems
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|
77,000
|
|
2024
|
Huntsville, Arkansas
|
|
Electronic Systems
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69,000
|
|
2026
|
Joplin, Missouri
|
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Electronic Systems
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55,000
|
|
Owned
|
Tulsa, Oklahoma
|
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Electronic Systems
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55,000
|
|
Owned
|
Orange, California
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Structural Systems
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53,000
|
|
2024
|
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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2019
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2018
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||||||||||||
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High
|
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Low
|
|
High
|
|
Low
|
||||||||
First Quarter
|
|
$
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46.27
|
|
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$
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34.92
|
|
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$
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30.84
|
|
|
$
|
26.30
|
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Second Quarter
|
|
$
|
51.80
|
|
|
$
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39.02
|
|
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$
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35.43
|
|
|
$
|
28.17
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Third Quarter
|
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$
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46.97
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$
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39.33
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|
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$
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40.84
|
|
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$
|
31.63
|
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Fourth Quarter
|
|
$
|
51.67
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|
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$
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39.34
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|
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$
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44.23
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$
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33.83
|
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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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2019(a)
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2018(b)(c)
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2017(d)(e)
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2016(f)
|
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2015(g)(h)
|
||||||||||
Net Revenues
|
|
$
|
721,088
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|
|
$
|
629,307
|
|
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$
|
558,183
|
|
|
$
|
550,642
|
|
|
$
|
666,011
|
|
Gross Profit as a Percentage of Net Revenues
|
|
21.1
|
%
|
|
19.5
|
%
|
|
18.5
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%
|
|
19.3
|
%
|
|
15.1
|
%
|
|||||
Income (Loss) Before Taxes
|
|
37,763
|
|
|
10,271
|
|
|
7,609
|
|
|
38,113
|
|
|
(106,590
|
)
|
|||||
Income Tax Expense (Benefit)
|
|
5,302
|
|
|
1,236
|
|
|
(12,468
|
)
|
|
12,852
|
|
|
(31,711
|
)
|
|||||
Net Income (Loss)
|
|
$
|
32,461
|
|
|
$
|
9,035
|
|
|
$
|
20,077
|
|
|
$
|
25,261
|
|
|
$
|
(74,879
|
)
|
Per Common Share
|
|
|
|
|
|
|
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|
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||||||||||
Basic earnings (loss) per share
|
|
$
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2.82
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|
|
$
|
0.79
|
|
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$
|
1.78
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|
|
$
|
2.27
|
|
|
$
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(6.78
|
)
|
Diluted earnings (loss) per share
|
|
$
|
2.75
|
|
|
$
|
0.77
|
|
|
$
|
1.74
|
|
|
$
|
2.24
|
|
|
$
|
(6.78
|
)
|
Working Capital
|
|
$
|
196,078
|
|
|
$
|
157,547
|
|
|
$
|
140,778
|
|
|
$
|
139,635
|
|
|
$
|
179,655
|
|
Total Assets
|
|
$
|
790,429
|
|
|
$
|
644,739
|
|
|
$
|
566,753
|
|
|
$
|
515,429
|
|
|
$
|
557,081
|
|
Long-Term Debt, Including Current Portion
|
|
$
|
307,887
|
|
|
$
|
231,198
|
|
|
$
|
216,055
|
|
|
$
|
166,899
|
|
|
$
|
240,687
|
|
Total Shareholders’ Equity
|
|
$
|
292,800
|
|
|
$
|
256,825
|
|
|
$
|
235,583
|
|
|
$
|
212,103
|
|
|
$
|
185,734
|
|
(a)
|
The results for 2019 included Nobles’ results of operations since the date of acquisition of October 8, 2019.
|
(b)
|
The results for 2018 included CTP’s results of operations since the date of acquisition in April 2018.
|
(c)
|
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.
|
(d)
|
The results for 2017 included LDS’ results of operations since the date of acquisition in September 2017.
|
(e)
|
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 14 to our consolidated financial statements included in Part IV, Item 15(a) of this Annual Report on Form 10-K for further information.
|
(f)
|
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.
|
(g)
|
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.
|
(h)
|
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.
|
•
|
Net revenues of $721.1 million
|
•
|
Net income of $32.5 million, or $2.75 per diluted share
|
•
|
Adjusted EBITDA of $92.3 million
|
•
|
Completed the acquisition of Nobles Worldwide, Inc.
|
•
|
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; and
|
•
|
Loss on extinguishment of debt may be useful to our investors for determining current cash flow.
|
|
|
(Dollars in thousands)
Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
|
$
|
32,461
|
|
|
$
|
9,035
|
|
|
$
|
20,077
|
|
Interest expense
|
|
18,290
|
|
|
13,024
|
|
|
8,870
|
|
|||
Income tax expense (benefit)
|
|
5,302
|
|
|
1,236
|
|
|
(12,468
|
)
|
|||
Depreciation
|
|
13,519
|
|
|
13,501
|
|
|
13,162
|
|
|||
Amortization
|
|
14,786
|
|
|
11,795
|
|
|
9,683
|
|
|||
Stock-based compensation expense
|
|
7,161
|
|
|
5,040
|
|
|
4,675
|
|
|||
Restructuring charges (1)
|
|
—
|
|
|
14,792
|
|
|
8,838
|
|
|||
Inventory purchase accounting adjustments (2)
|
|
511
|
|
|
622
|
|
|
1,235
|
|
|||
Loss on extinguishment of debt
|
|
180
|
|
|
926
|
|
|
—
|
|
|||
Other debt refinancing costs
|
|
77
|
|
|
697
|
|
|
—
|
|
|||
Adjusted EBITDA
|
|
$
|
92,287
|
|
|
$
|
70,668
|
|
|
$
|
54,072
|
|
% of net revenues
|
|
12.8
|
%
|
|
11.2
|
%
|
|
9.7
|
%
|
(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)
|
2019, 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 Nobles Worldwide, Inc. (“Nobles”), Certified Thermoplastics Co., LLC (“CTP”) and Lightning Diversion Systems, LLC (“LDS”) on October 8, 2019, April 2018, and September 2017, respectively, and is part of our Structural Systems, Structural Systems, and Electronic Systems operating segment, respectively.
|
|
|
(Dollars in thousands, except per share data)
Years Ended December 31,
|
||||||||||||
|
|
2019
|
|
%
of Net Revenues
|
|
2018
|
|
%
of Net Revenues
|
||||||
Net Revenues
|
|
$
|
721,088
|
|
|
100.0
|
%
|
|
$
|
629,307
|
|
|
100.0
|
%
|
Cost of Sales
|
|
568,891
|
|
|
78.9
|
%
|
|
506,711
|
|
|
80.5
|
%
|
||
Gross Profit
|
|
152,197
|
|
|
21.1
|
%
|
|
122,596
|
|
|
19.5
|
%
|
||
Selling, General and Administrative Expenses
|
|
95,964
|
|
|
13.3
|
%
|
|
84,007
|
|
|
13.3
|
%
|
||
Restructuring Charges
|
|
—
|
|
|
—
|
%
|
|
14,671
|
|
|
2.3
|
%
|
||
Operating Income
|
|
56,233
|
|
|
7.8
|
%
|
|
23,918
|
|
|
3.9
|
%
|
||
Interest Expense
|
|
(18,290
|
)
|
|
(2.6
|
)%
|
|
(13,024
|
)
|
|
(2.1
|
)%
|
||
Loss on Extinguishment of Debt
|
|
(180
|
)
|
|
—
|
%
|
|
(926
|
)
|
|
(0.1
|
)%
|
||
Other Income, Net
|
|
—
|
|
|
—
|
%
|
|
303
|
|
|
—
|
%
|
||
Income Before Taxes
|
|
37,763
|
|
|
5.2
|
%
|
|
10,271
|
|
|
1.7
|
%
|
||
Income Tax Expense
|
|
5,302
|
|
|
nm
|
|
|
1,236
|
|
|
nm
|
|
||
Net Income
|
|
$
|
32,461
|
|
|
4.5
|
%
|
|
$
|
9,035
|
|
|
1.4
|
%
|
|
|
|
|
|
|
|
|
|
||||||
Effective Tax Rate
|
|
14.0
|
%
|
|
nm
|
|
|
12.0
|
%
|
|
nm
|
|
||
Diluted Earnings Per Share
|
|
$
|
2.75
|
|
|
nm
|
|
|
$
|
0.77
|
|
|
nm
|
|
|
|
|
|
(Dollars in thousands)
Years Ended December 31,
|
|
% of Net Revenues
|
||||||||||||
|
|
Change
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Consolidated Ducommun
|
|
|
|
|
|
|
|
|
|
|
||||||||
Military and space
|
|
$
|
46,208
|
|
|
$
|
323,800
|
|
|
$
|
277,592
|
|
|
44.9
|
%
|
|
44.1
|
%
|
Commercial aerospace
|
|
44,981
|
|
|
348,503
|
|
|
303,522
|
|
|
48.3
|
%
|
|
48.2
|
%
|
|||
Industrial
|
|
592
|
|
|
48,785
|
|
|
48,193
|
|
|
6.8
|
%
|
|
7.7
|
%
|
|||
Total
|
|
$
|
91,781
|
|
|
$
|
721,088
|
|
|
$
|
629,307
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Electronic Systems
|
|
|
|
|
|
|
|
|
|
|
||||||||
Military and space
|
|
$
|
28,526
|
|
|
$
|
244,245
|
|
|
$
|
215,719
|
|
|
67.8
|
%
|
|
63.8
|
%
|
Commercial aerospace
|
|
(6,613
|
)
|
|
67,343
|
|
|
73,956
|
|
|
18.7
|
%
|
|
21.9
|
%
|
|||
Industrial
|
|
592
|
|
|
48,785
|
|
|
48,193
|
|
|
13.5
|
%
|
|
14.3
|
%
|
|||
Total
|
|
$
|
22,505
|
|
|
$
|
360,373
|
|
|
$
|
337,868
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Structural Systems
|
|
|
|
|
|
|
|
|
|
|
||||||||
Military and space
|
|
$
|
17,682
|
|
|
$
|
79,555
|
|
|
$
|
61,873
|
|
|
22.1
|
%
|
|
21.2
|
%
|
Commercial aerospace
|
|
51,594
|
|
|
281,160
|
|
|
229,566
|
|
|
77.9
|
%
|
|
78.8
|
%
|
|||
Total
|
|
$
|
69,276
|
|
|
$
|
360,715
|
|
|
$
|
291,439
|
|
|
100.0
|
%
|
|
100.0
|
%
|
•
|
$46.2 million higher revenues in our military and space end-use markets due to higher build rates on other military and space platforms, higher build rates on various missile platforms, and higher build rates on various military fixed-wing aircraft platforms; and
|
•
|
$45.0 million higher revenues in our commercial aerospace end-use markets due to additional content and higher build rates on large aircraft platforms.
|
|
|
Years Ended December 31,
|
||||
|
|
2019
|
|
2018
|
||
Boeing Company
|
|
16.6
|
%
|
|
17.0
|
%
|
Raytheon Company
|
|
11.0
|
%
|
|
11.7
|
%
|
Spirit AeroSystems Holdings, Inc.
|
|
12.2
|
%
|
|
9.5
|
%
|
Top ten customers(1)
|
|
63.5
|
%
|
|
62.9
|
%
|
|
|
%
|
|
(Dollars in thousands)
Years Ended December 31,
|
|
%
of Net Revenues
|
|
%
of Net Revenues
|
|||||||||
|
|
Change
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||
Net Revenues
|
|
|
|
|
|
|
|
|
|
|
|||||||
Electronic Systems
|
|
6.7
|
%
|
|
$
|
360,373
|
|
|
$
|
337,868
|
|
|
50.0
|
%
|
|
53.7
|
%
|
Structural Systems
|
|
23.8
|
%
|
|
360,715
|
|
|
291,439
|
|
|
50.0
|
%
|
|
46.3
|
%
|
||
Total Net Revenues
|
|
14.6
|
%
|
|
$
|
721,088
|
|
|
$
|
629,307
|
|
|
100.0
|
%
|
|
100.0
|
%
|
Segment Operating Income
|
|
|
|
|
|
|
|
|
|
|
|||||||
Electronic Systems
|
|
|
|
$
|
38,613
|
|
|
$
|
30,916
|
|
|
10.7
|
%
|
|
9.2
|
%
|
|
Structural Systems
|
|
|
|
46,836
|
|
|
19,063
|
|
|
13.0
|
%
|
|
6.5
|
%
|
|||
|
|
|
|
85,449
|
|
|
49,979
|
|
|
|
|
|
|||||
Corporate General and Administrative Expenses (1)
|
|
|
|
(29,216
|
)
|
|
(26,061
|
)
|
|
(4.1
|
)%
|
|
(4.1
|
)%
|
|||
Total Operating Income
|
|
|
|
$
|
56,233
|
|
|
$
|
23,918
|
|
|
7.8
|
%
|
|
3.9
|
%
|
|
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|||||||
Electronic Systems
|
|
|
|
|
|
|
|
|
|
|
|||||||
Operating Income
|
|
|
|
$
|
38,613
|
|
|
$
|
30,916
|
|
|
|
|
|
|||
Other Income
|
|
|
|
—
|
|
|
119
|
|
|
|
|
|
|||||
Depreciation and Amortization
|
|
|
|
14,170
|
|
|
14,223
|
|
|
|
|
|
|||||
Restructuring Charges
|
|
|
|
—
|
|
|
4,776
|
|
|
|
|
|
|||||
|
|
|
|
52,783
|
|
|
50,034
|
|
|
14.6
|
%
|
|
14.8
|
%
|
|||
Structural Systems
|
|
|
|
|
|
|
|
|
|
|
|||||||
Operating Income
|
|
|
|
46,836
|
|
|
19,063
|
|
|
|
|
|
|||||
Other Income
|
|
|
|
—
|
|
|
184
|
|
|
|
|
|
|||||
Depreciation and Amortization
|
|
|
|
13,663
|
|
|
10,525
|
|
|
|
|
|
|||||
Restructuring Charges
|
|
|
|
—
|
|
|
7,897
|
|
|
|
|
|
|||||
Inventory purchase accounting adjustments
|
|
|
|
511
|
|
|
622
|
|
|
|
|
|
|||||
|
|
|
|
61,010
|
|
|
38,291
|
|
|
16.9
|
%
|
|
13.1
|
%
|
|||
Corporate General and Administrative Expenses (1)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Operating Loss
|
|
|
|
(29,216
|
)
|
|
(26,061
|
)
|
|
|
|
|
|||||
Depreciation and Amortization
|
|
|
|
472
|
|
|
548
|
|
|
|
|
|
|||||
Stock-Based Compensation Expense
|
|
|
|
7,161
|
|
|
5,040
|
|
|
|
|
|
|||||
Restructuring Charges
|
|
|
|
—
|
|
|
2,119
|
|
|
|
|
|
|||||
Other Debt Refinancing Costs
|
|
|
|
77
|
|
|
697
|
|
|
|
|
|
|||||
|
|
|
|
(21,506
|
)
|
|
(17,657
|
)
|
|
|
|
|
|||||
Adjusted EBITDA
|
|
|
|
$
|
92,287
|
|
|
$
|
70,668
|
|
|
12.8
|
%
|
|
11.2
|
%
|
|
Capital Expenditures
|
|
|
|
|
|
|
|
|
|
|
|||||||
Electronic Systems
|
|
|
|
$
|
5,508
|
|
|
$
|
6,719
|
|
|
|
|
|
|||
Structural Systems
|
|
|
|
13,338
|
|
|
9,104
|
|
|
|
|
|
|||||
Corporate Administration
|
|
|
|
—
|
|
|
514
|
|
|
|
|
|
|||||
Total Capital Expenditures
|
|
|
|
$
|
18,846
|
|
|
$
|
16,337
|
|
|
|
|
|
(1)
|
Includes costs not allocated to either the Structural Systems or Electronic Systems operating segments.
|
•
|
$28.5 million higher revenues in our military and space end-use markets due to increased demand on other military and space platforms, increased demand for military fixed-wing aircraft, increased demand for various missile platforms, partially offset by lower build rates military rotary-wing aircraft; partially offset by
|
•
|
$6.6 million lower revenues in our commercial aerospace end-use markets due to lower build rates on other commercial aerospace and lower build rates on large aircraft platforms, partially offset by higher demand for commercial rotary-wing aircraft.
|
•
|
$51.6 million higher revenues in commercial aerospace end-use markets due to higher build rates on large aircraft platforms; and
|
•
|
$17.7 million higher revenues in military and space end-use markets due to higher build rates on military rotary-wing aircraft platforms and higher build rates on other military and space platforms.
|
|
|
|
|
(Dollars in thousands)
December 31,
|
||||||||
|
|
Change
|
|
2019
|
|
2018
|
||||||
Consolidated Ducommun
|
|
|
|
|
|
|
||||||
Military and space
|
|
$
|
109,213
|
|
|
$
|
451,293
|
|
|
$
|
342,080
|
|
Commercial aerospace
|
|
(53,093
|
)
|
|
430,642
|
|
|
483,735
|
|
|||
Industrial
|
|
(9,488
|
)
|
|
28,286
|
|
|
37,774
|
|
|||
Total
|
|
$
|
46,632
|
|
|
$
|
910,221
|
|
|
$
|
863,589
|
|
|
|
|
|
|
|
|
||||||
Electronic Systems
|
|
|
|
|
|
|
||||||
Military and space
|
|
$
|
67,186
|
|
|
$
|
311,027
|
|
|
$
|
243,841
|
|
Commercial aerospace
|
|
30,332
|
|
|
75,719
|
|
|
45,387
|
|
|||
Industrial
|
|
(9,488
|
)
|
|
28,286
|
|
|
37,774
|
|
|||
Total
|
|
$
|
88,030
|
|
|
$
|
415,032
|
|
|
$
|
327,002
|
|
|
|
|
|
|
|
|
||||||
Structural Systems
|
|
|
|
|
|
|
||||||
Military and space
|
|
$
|
42,027
|
|
|
$
|
140,266
|
|
|
$
|
98,239
|
|
Commercial aerospace
|
|
(83,425
|
)
|
|
354,923
|
|
|
438,348
|
|
|||
Total
|
|
$
|
(41,398
|
)
|
|
$
|
495,189
|
|
|
$
|
536,587
|
|
|
||||||||
|
|
(Dollars in millions)
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Total debt, including long-term portion
|
|
$
|
310.0
|
|
|
$
|
233.0
|
|
Weighted-average interest rate on debt
|
|
6.87
|
%
|
|
4.71
|
%
|
||
Term Loans interest rate
|
|
6.28
|
%
|
|
4.15
|
%
|
||
Cash and cash equivalents
|
|
$
|
39.6
|
|
|
$
|
10.3
|
|
Unused Revolving Credit Facility
|
|
$
|
99.8
|
|
|
$
|
99.7
|
|
|
|
|
|
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
|
|
$
|
310,000
|
|
|
$
|
7,000
|
|
|
$
|
14,000
|
|
|
$
|
119,000
|
|
|
$
|
170,000
|
|
Future interest on long-term debt
|
|
97,088
|
|
|
18,050
|
|
|
34,570
|
|
|
34,024
|
|
|
10,444
|
|
|||||
Purchase orders (1)
|
|
187,428
|
|
|
144,999
|
|
|
42,429
|
|
|
—
|
|
|
—
|
|
|||||
Operating leases
|
|
25,531
|
|
|
4,178
|
|
|
7,903
|
|
|
6,428
|
|
|
7,022
|
|
|||||
Pension liability
|
|
20,865
|
|
|
1,841
|
|
|
3,905
|
|
|
4,105
|
|
|
11,014
|
|
|||||
Total (2)
|
|
$
|
640,912
|
|
|
$
|
176,068
|
|
|
$
|
102,807
|
|
|
$
|
163,557
|
|
|
$
|
198,480
|
|
(1)
|
Purchase orders include non-cancelable commitments as of December 31, 2019 in which a written purchase order has been issued but the goods have not been received.
|
(2)
|
As of December 31, 2019, we have recorded $5.7 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)
|
|
771,815
|
|
|
$
|
34.68
|
|
|
222,132
|
|
Employee stock purchase plan approved by security holders(2)
|
|
—
|
|
|
—
|
|
|
723,479
|
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
771,815
|
|
|
|
|
945,611
|
|
(1)
|
Consists of the 2007 Stock Incentive Plan (“2007 Plan”) and the 2013 Stock Incentive Plan (“2013 Plan”), although the 2007 Plan has expired and no new grants can be made out of the 2007 Plan. The number of securities to be issued consists of 446,818 for stock options, 127,423 for restricted stock units and 197,574 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, 2019, 2018 and 2017 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,
|
||||||
|
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
|
||||
Current Assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
39,584
|
|
|
$
|
10,263
|
|
Accounts receivable (net of allowance for doubtful accounts of $1,321 and $1,135 at December 31, 2019 and 2018, respectively)
|
|
67,133
|
|
|
67,819
|
|
||
Contract assets
|
|
106,670
|
|
|
86,665
|
|
||
Inventories
|
|
112,482
|
|
|
101,125
|
|
||
Production cost of contracts
|
|
9,402
|
|
|
11,679
|
|
||
Other current assets
|
|
5,497
|
|
|
6,531
|
|
||
Total Current Assets
|
|
340,768
|
|
|
284,082
|
|
||
Property and Equipment, Net
|
|
115,216
|
|
|
107,045
|
|
||
Operating lease right-of-use assets
|
|
19,105
|
|
|
—
|
|
||
Goodwill
|
|
170,917
|
|
|
136,057
|
|
||
Intangibles, Net
|
|
138,362
|
|
|
112,092
|
|
||
Non-Current Deferred Income Taxes
|
|
55
|
|
|
308
|
|
||
Other Assets
|
|
6,006
|
|
|
5,155
|
|
||
Total Assets
|
|
$
|
790,429
|
|
|
$
|
644,739
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
||||
Current Liabilities
|
|
|
|
|
||||
Accounts payable
|
|
$
|
82,597
|
|
|
$
|
69,274
|
|
Contract liabilities
|
|
14,517
|
|
|
17,145
|
|
||
Accrued liabilities
|
|
37,620
|
|
|
37,786
|
|
||
Operating lease liabilities
|
|
2,956
|
|
|
—
|
|
||
Current portion of long-term debt
|
|
7,000
|
|
|
2,330
|
|
||
Total Current Liabilities
|
|
144,690
|
|
|
126,535
|
|
||
Long-Term Debt, Less Current Portion
|
|
300,887
|
|
|
228,868
|
|
||
Non-Current Operating Lease Liabilities
|
|
17,565
|
|
|
—
|
|
||
Non-Current Deferred Income Taxes
|
|
16,766
|
|
|
18,070
|
|
||
Other Long-Term Liabilities
|
|
17,721
|
|
|
14,441
|
|
||
Total Liabilities
|
|
497,629
|
|
|
387,914
|
|
||
Commitments and Contingencies (Notes 13, 15)
|
|
|
|
|
||||
Shareholders’ Equity
|
|
|
|
|
||||
Common stock - $0.01 par value; 35,000,000 shares authorized; 11,572,668 and 11,417,863 shares issued and outstanding at December 31, 2019 and 2018, respectively
|
|
116
|
|
|
114
|
|
||
Additional paid-in capital
|
|
88,399
|
|
|
83,712
|
|
||
Retained earnings
|
|
212,553
|
|
|
180,356
|
|
||
Accumulated other comprehensive loss
|
|
(8,268
|
)
|
|
(7,357
|
)
|
||
Total Shareholders’ Equity
|
|
292,800
|
|
|
256,825
|
|
||
Total Liabilities and Shareholders’ Equity
|
|
$
|
790,429
|
|
|
$
|
644,739
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net Revenues
|
|
$
|
721,088
|
|
|
$
|
629,307
|
|
|
$
|
558,183
|
|
Cost of Sales
|
|
568,891
|
|
|
506,711
|
|
|
455,050
|
|
|||
Gross Profit
|
|
152,197
|
|
|
122,596
|
|
|
103,133
|
|
|||
Selling, General and Administrative Expenses
|
|
95,964
|
|
|
84,007
|
|
|
79,139
|
|
|||
Restructuring Charges
|
|
—
|
|
|
14,671
|
|
|
8,360
|
|
|||
Operating Income
|
|
56,233
|
|
|
23,918
|
|
|
15,634
|
|
|||
Interest Expense
|
|
(18,290
|
)
|
|
(13,024
|
)
|
|
(8,870
|
)
|
|||
Loss on Extinguishment of Debt
|
|
(180
|
)
|
|
(926
|
)
|
|
—
|
|
|||
Other Income, Net
|
|
—
|
|
|
303
|
|
|
845
|
|
|||
Income Before Taxes
|
|
37,763
|
|
|
10,271
|
|
|
7,609
|
|
|||
Income Tax Expense (Benefit)
|
|
5,302
|
|
|
1,236
|
|
|
(12,468
|
)
|
|||
Net Income
|
|
$
|
32,461
|
|
|
$
|
9,035
|
|
|
$
|
20,077
|
|
Earnings Per Share
|
|
|
|
|
|
|
||||||
Basic earnings per share
|
|
$
|
2.82
|
|
|
$
|
0.79
|
|
|
$
|
1.78
|
|
Diluted earnings per share
|
|
$
|
2.75
|
|
|
$
|
0.77
|
|
|
$
|
1.74
|
|
Weighted-Average Number of Shares Outstanding
|
|
|
|
|
|
|
||||||
Basic
|
|
11,518
|
|
|
11,390
|
|
|
11,290
|
|
|||
Diluted
|
|
11,792
|
|
|
11,659
|
|
|
11,558
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net Income
|
|
$
|
32,461
|
|
|
$
|
9,035
|
|
|
$
|
20,077
|
|
Other Comprehensive (Loss) Income, Net of Tax:
|
|
|
|
|
|
|
||||||
Pension Adjustments:
|
|
|
|
|
|
|
||||||
Amortization of actuarial losses and prior service costs, net of tax of $209, $173, and $302 for 2019, 2018, and 2017, respectively
|
|
676
|
|
|
570
|
|
|
508
|
|
|||
Actuarial losses arising during the period, net of tax benefit of $502, $302, and $194 for 2019, 2018, and 2017, respectively
|
|
(1,682
|
)
|
|
(899
|
)
|
|
(304
|
)
|
|||
Change in net unrealized gains (losses) on cash flow hedges, net of tax expense (benefit) of $29, $121, and $(145) for 2019, 2018, and 2017, respectively
|
|
95
|
|
|
407
|
|
|
(242
|
)
|
|||
Other Comprehensive (Loss) Income, Net of Tax
|
|
(911
|
)
|
|
78
|
|
|
(38
|
)
|
|||
Comprehensive Income, Net of Tax
|
|
$
|
31,550
|
|
|
$
|
9,113
|
|
|
$
|
20,039
|
|
|
|
Shares
Outstanding
|
|
Common
Stock
|
|
Treasury
Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
Shareholders’
Equity
|
|||||||||||||
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 income, 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
|
)
|
|
—
|
|
|
(3,371
|
)
|
|
—
|
|
|
—
|
|
|
(3,372
|
)
|
||||||
Stock awards vested
|
|
98,660
|
|
|
1
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,040
|
|
|
—
|
|
|
—
|
|
|
5,040
|
|
||||||
Balance at December 31, 2018
|
|
11,417,863
|
|
|
$
|
114
|
|
|
$
|
—
|
|
|
$
|
83,712
|
|
|
$
|
180,356
|
|
|
$
|
(7,357
|
)
|
|
$
|
256,825
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32,461
|
|
|
—
|
|
|
32,461
|
|
||||||
Other comprehensive loss, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(911
|
)
|
|
(911
|
)
|
||||||
Adoption of ASC 842 adjustment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(264
|
)
|
|
—
|
|
|
(264
|
)
|
||||||
Employee stock purchase plan
|
|
26,521
|
|
|
—
|
|
|
—
|
|
|
1,118
|
|
|
|
|
|
|
|
|
1,118
|
|
||||||
Stock options exercised
|
|
80,693
|
|
|
1
|
|
|
—
|
|
|
2,014
|
|
|
—
|
|
|
—
|
|
|
2,015
|
|
||||||
Stock repurchased related to the exercise of stock options
|
|
(123,192
|
)
|
|
(1
|
)
|
|
—
|
|
|
(5,604
|
)
|
|
—
|
|
|
—
|
|
|
(5,605
|
)
|
||||||
Stock awards vested
|
|
170,783
|
|
|
2
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,161
|
|
|
—
|
|
|
—
|
|
|
7,161
|
|
||||||
Balance at December 31, 2019
|
|
11,572,668
|
|
|
$
|
116
|
|
|
$
|
—
|
|
|
$
|
88,399
|
|
|
$
|
212,553
|
|
|
$
|
(8,268
|
)
|
|
$
|
292,800
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Cash Flows from Operating Activities
|
|
|
|
|
|
|
||||||
Net Income
|
|
$
|
32,461
|
|
|
$
|
9,035
|
|
|
$
|
20,077
|
|
Adjustments to Reconcile Net Income to
|
|
|
|
|
|
|
||||||
Net Cash Provided by Operating Activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
28,305
|
|
|
25,296
|
|
|
22,845
|
|
|||
Non-cash operating lease cost
|
|
2,669
|
|
|
—
|
|
|
—
|
|
|||
Property and equipment impairment due to restructuring
|
|
—
|
|
|
6,207
|
|
|
3,607
|
|
|||
Stock-based compensation expense
|
|
7,161
|
|
|
5,040
|
|
|
4,675
|
|
|||
Deferred income taxes
|
|
(1,830
|
)
|
|
2,042
|
|
|
(15,411
|
)
|
|||
Provision for doubtful accounts
|
|
186
|
|
|
267
|
|
|
373
|
|
|||
Noncash loss on extinguishment of debt
|
|
180
|
|
|
926
|
|
|
—
|
|
|||
Other
|
|
942
|
|
|
11,659
|
|
|
(1,182
|
)
|
|||
Changes in Assets and Liabilities:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
2,380
|
|
|
7,495
|
|
|
2,720
|
|
|||
Contract assets
|
|
(20,005
|
)
|
|
(86,665
|
)
|
|
—
|
|
|||
Inventories
|
|
(8,491
|
)
|
|
23,243
|
|
|
(533
|
)
|
|||
Production cost of contracts
|
|
(1,079
|
)
|
|
(1,569
|
)
|
|
(267
|
)
|
|||
Other assets
|
|
1,358
|
|
|
1,881
|
|
|
40
|
|
|||
Accounts payable
|
|
11,620
|
|
|
18,496
|
|
|
(4,015
|
)
|
|||
Contract liabilities
|
|
(2,628
|
)
|
|
17,145
|
|
|
—
|
|
|||
Accrued and other liabilities
|
|
(2,198
|
)
|
|
5,739
|
|
|
2,505
|
|
|||
Net Cash Provided by Operating Activities
|
|
51,031
|
|
|
46,237
|
|
|
35,434
|
|
|||
Cash Flows from Investing Activities
|
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
|
(18,290
|
)
|
|
(17,617
|
)
|
|
(27,610
|
)
|
|||
Proceeds from sale of assets
|
|
3
|
|
|
396
|
|
|
913
|
|
|||
Insurance recoveries related to property and equipment
|
|
—
|
|
|
—
|
|
|
288
|
|
|||
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
|
)
|
|
—
|
|
|||
Payments for acquisition of Nobles Worldwide, Inc. net of cash acquired
|
|
(76,647
|
)
|
|
—
|
|
|
—
|
|
|||
Net Cash Used in Investing Activities
|
|
(94,934
|
)
|
|
(47,933
|
)
|
|
(86,207
|
)
|
|||
Cash Flows from Financing Activities
|
|
|
|
|
|
|
||||||
Borrowings from senior secured revolving credit facility
|
|
298,400
|
|
|
296,400
|
|
|
395,900
|
|
|||
Repayment of senior secured revolving credit facility
|
|
(298,400
|
)
|
|
(354,500
|
)
|
|
(337,800
|
)
|
|||
Borrowings from term loans
|
|
140,000
|
|
|
240,000
|
|
|
—
|
|
|||
Repayments of term loans
|
|
(63,000
|
)
|
|
(167,000
|
)
|
|
(10,000
|
)
|
|||
Repayments of other debt
|
|
(169
|
)
|
|
—
|
|
|
(3
|
)
|
|||
Debt issuance costs
|
|
(1,135
|
)
|
|
(3,541
|
)
|
|
—
|
|
|||
Net cash paid from issuance of common stock under stock plans
|
|
(2,472
|
)
|
|
(1,550
|
)
|
|
(2,606
|
)
|
|||
Net Cash Provided by Financing Activities
|
|
73,224
|
|
|
9,809
|
|
|
45,491
|
|
|||
Net Increase (Decrease) in Cash and Cash Equivalents
|
|
29,321
|
|
|
8,113
|
|
|
(5,282
|
)
|
|||
Cash and Cash Equivalents at Beginning of Year
|
|
10,263
|
|
|
2,150
|
|
|
7,432
|
|
|||
Cash and Cash Equivalents at End of Year
|
|
$
|
39,584
|
|
|
$
|
10,263
|
|
|
$
|
2,150
|
|
|
|
(Dollars in thousands)
Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Interest paid
|
|
$
|
16,474
|
|
|
$
|
11,573
|
|
|
$
|
7,307
|
|
Taxes paid
|
|
$
|
5,699
|
|
|
$
|
316
|
|
|
$
|
3,125
|
|
Non-cash activities:
|
|
|
|
|
|
|
||||||
Purchases of property and equipment not paid
|
|
$
|
1,380
|
|
|
$
|
824
|
|
|
$
|
2,104
|
|
|
|
(In thousands, except per share data)
Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
|
$
|
32,461
|
|
|
$
|
9,035
|
|
|
$
|
20,077
|
|
Weighted-average number of common shares outstanding
|
|
|
|
|
|
|
||||||
Basic weighted-average common shares outstanding
|
|
11,518
|
|
|
11,390
|
|
|
11,290
|
|
|||
Dilutive potential common shares
|
|
274
|
|
|
269
|
|
|
268
|
|
|||
Diluted weighted-average common shares outstanding
|
|
11,792
|
|
|
11,659
|
|
|
11,558
|
|
|||
Earnings per share
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
2.82
|
|
|
$
|
0.79
|
|
|
$
|
1.78
|
|
Diluted
|
|
$
|
2.75
|
|
|
$
|
0.77
|
|
|
$
|
1.74
|
|
|
|
(In thousands)
Years Ended December 31,
|
|||||||
|
|
2019
|
|
2018
|
|
2017
|
|||
Stock options and stock units
|
|
127
|
|
|
208
|
|
|
126
|
|
•
|
July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements” (“ASU 2018-11”); and
|
•
|
July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”)
|
•
|
Need not reassess whether any expired or existing contracts are or contain leases;
|
•
|
Need not reassess the lease classification for any expired or existing leases;
|
•
|
Need not reassess initial direct costs for any existing leases;
|
•
|
As an accounting policy election by class of underlying asset, choose not to separate nonlease components from lease components and instead to account for each separate lease component and the nonlease components associated with that lease component as a single lease component; and
|
•
|
As an accounting policy election not to apply the recognition requirements in ASC 842 to short term leases (a lease at commencement date has a lease term of 12 months or less and does not contain a purchase option that the lessee is reasonably certain to exercise).
|
|
(In years)
|
Operating leases
|
7
|
Finance leases
|
4
|
Operating leases
|
6.5
|
%
|
Finance leases
|
6.5
|
%
|
|
|
Estimated
Fair Value
|
||
Cash
|
|
$
|
658
|
|
Accounts receivable
|
|
1,880
|
|
|
Inventories
|
|
2,866
|
|
|
Other current assets
|
|
168
|
|
|
Property and equipment
|
|
2,319
|
|
|
Intangible assets
|
|
37,700
|
|
|
Goodwill
|
|
34,860
|
|
|
Other non-current assets
|
|
675
|
|
|
Total assets acquired
|
|
81,126
|
|
|
Current liabilities
|
|
(2,285
|
)
|
|
Net non-current deferred tax liability
|
|
(861
|
)
|
|
Other non-current liabilities
|
|
(675
|
)
|
|
Total liabilities assumed
|
|
(3,821
|
)
|
|
Total purchase price allocation
|
|
$
|
77,305
|
|
|
|
Useful Life
(In years) |
|
Estimated
Fair Value
(In thousands)
|
||
Intangible assets:
|
|
|
|
|
||
Customer relationships
|
|
15-16
|
|
$
|
34,700
|
|
Trade names and trademarks
|
|
15
|
|
3,000
|
|
|
|
|
|
|
$
|
37,700
|
|
|
|
December 31, 2018
|
|
2019
|
|
December 31, 2019
|
||||||||||||||||||
|
|
Balance
|
|
Charges
|
|
Cash Payments
|
|
Adoption of ASC 842 Adjustment
|
|
Change in Estimates
|
|
Balance
|
||||||||||||
Severance and benefits
|
|
$
|
2,631
|
|
|
$
|
—
|
|
|
$
|
(2,631
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Lease termination
|
|
861
|
|
|
—
|
|
|
(126
|
)
|
|
(735
|
)
|
|
—
|
|
|
—
|
|
||||||
Professional service fees
|
|
43
|
|
|
—
|
|
|
(43
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other
|
|
416
|
|
|
—
|
|
|
(416
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total charged to restructuring charges
|
|
3,951
|
|
|
—
|
|
|
(3,216
|
)
|
|
(735
|
)
|
|
—
|
|
|
—
|
|
||||||
Inventory reserve
|
|
50
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
||||||
Total charged to cost of sales
|
|
50
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
||||||
Ending balance
|
|
$
|
4,001
|
|
|
$
|
—
|
|
|
$
|
(3,216
|
)
|
|
$
|
(735
|
)
|
|
$
|
(50
|
)
|
|
$
|
—
|
|
|
|
(In thousands)
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Raw materials and supplies
|
|
$
|
98,151
|
|
|
$
|
89,767
|
|
Work in process
|
|
10,887
|
|
|
9,199
|
|
||
Finished goods
|
|
3,444
|
|
|
2,159
|
|
||
Total
|
|
$
|
112,482
|
|
|
$
|
101,125
|
|
|
|
(In thousands)
December 31,
|
|
Range of
Estimated
|
||||||
|
|
2019
|
|
2018
|
|
Useful Lives
|
||||
Land
|
|
$
|
15,765
|
|
|
$
|
15,662
|
|
|
|
Buildings and improvements
|
|
61,626
|
|
|
57,642
|
|
|
5 - 40 Years
|
||
Machinery and equipment
|
|
167,688
|
|
|
160,163
|
|
|
2 - 20 Years
|
||
Furniture and equipment
|
|
18,714
|
|
|
19,676
|
|
|
2 - 10 Years
|
||
Construction in progress
|
|
14,343
|
|
|
8,742
|
|
|
|
||
|
|
278,136
|
|
|
261,885
|
|
|
|
||
Less accumulated depreciation
|
|
162,920
|
|
|
154,840
|
|
|
|
||
Total
|
|
$
|
115,216
|
|
|
$
|
107,045
|
|
|
|
|
|
(In thousands)
|
||||||||||
|
|
Electronic
Systems
|
|
Structural
Systems
|
|
Consolidated
Ducommun
|
||||||
Gross goodwill
|
|
$
|
199,157
|
|
|
$
|
18,622
|
|
|
$
|
217,779
|
|
Accumulated goodwill impairment
|
|
(81,722
|
)
|
|
—
|
|
|
(81,722
|
)
|
|||
Balance at December 31, 2018
|
|
117,435
|
|
|
18,622
|
|
|
136,057
|
|
|||
Goodwill from acquisition during the period
|
|
—
|
|
|
34,860
|
|
|
34,860
|
|
|||
Balance at December 31, 2019
|
|
$
|
117,435
|
|
|
$
|
53,482
|
|
|
$
|
170,917
|
|
|
|
|
(In thousands)
|
||||||||||||||||||||||
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
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
|
|
$
|
221,900
|
|
|
$
|
88,838
|
|
|
$
|
133,062
|
|
|
$
|
187,200
|
|
|
$
|
77,824
|
|
|
$
|
109,376
|
|
Trade names and trademarks
|
14
|
|
5,500
|
|
|
450
|
|
|
5,050
|
|
|
2,500
|
|
|
193
|
|
|
2,307
|
|
||||||
Contract renewal
|
14
|
|
1,845
|
|
|
1,757
|
|
|
88
|
|
|
1,845
|
|
|
1,625
|
|
|
220
|
|
||||||
Technology
|
15
|
|
400
|
|
|
238
|
|
|
162
|
|
|
400
|
|
|
211
|
|
|
189
|
|
||||||
Total
|
|
|
$
|
229,645
|
|
|
$
|
91,283
|
|
|
$
|
138,362
|
|
|
$
|
191,945
|
|
|
$
|
79,853
|
|
|
$
|
112,092
|
|
|
|
(In thousands)
|
||||||||||||||||||||||
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
||||||||||||
Other intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Electronic Systems
|
|
$
|
164,545
|
|
|
$
|
71,527
|
|
|
$
|
93,018
|
|
|
$
|
164,545
|
|
|
$
|
62,108
|
|
|
$
|
102,437
|
|
Structural Systems
|
|
65,100
|
|
|
19,756
|
|
|
45,344
|
|
|
27,400
|
|
|
17,745
|
|
|
9,655
|
|
||||||
Total
|
|
$
|
229,645
|
|
|
$
|
91,283
|
|
|
$
|
138,362
|
|
|
$
|
191,945
|
|
|
$
|
79,853
|
|
|
$
|
112,092
|
|
|
|
(In thousands)
|
||||||||||
|
|
Electronic
Systems
|
|
Structural
Systems
|
|
Consolidated
Ducommun
|
||||||
2020
|
|
$
|
9,348
|
|
|
$
|
3,719
|
|
|
$
|
13,067
|
|
2021
|
|
9,287
|
|
|
3,614
|
|
|
12,901
|
|
|||
2022
|
|
9,288
|
|
|
3,553
|
|
|
12,841
|
|
|||
2023
|
|
9,287
|
|
|
3,495
|
|
|
12,782
|
|
|||
2024
|
|
9,288
|
|
|
3,260
|
|
|
12,548
|
|
|||
Thereafter
|
|
46,520
|
|
|
27,703
|
|
|
74,223
|
|
|||
|
|
$
|
93,018
|
|
|
$
|
45,344
|
|
|
$
|
138,362
|
|
|
|
(In thousands)
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Accrued compensation
|
|
$
|
31,342
|
|
|
$
|
29,616
|
|
Accrued income tax and sales tax
|
|
163
|
|
|
82
|
|
||
Other
|
|
6,115
|
|
|
8,088
|
|
||
Total
|
|
$
|
37,620
|
|
|
$
|
37,786
|
|
|
|
(In thousands)
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Term loans
|
|
$
|
310,000
|
|
|
$
|
233,000
|
|
Revolving credit facility
|
|
—
|
|
|
—
|
|
||
Total debt
|
|
310,000
|
|
|
233,000
|
|
||
Less current portion
|
|
7,000
|
|
|
2,330
|
|
||
Total long-term debt, less current portion
|
|
303,000
|
|
|
230,670
|
|
||
Less debt issuance costs - term loans
|
|
2,113
|
|
|
1,802
|
|
||
Total long-term debt, net of debt issuance costs - term loans
|
|
$
|
300,887
|
|
|
$
|
228,868
|
|
Debt issuance costs - revolving credit facility (1)
|
|
$
|
1,894
|
|
|
$
|
1,907
|
|
Weighted-average interest rate
|
|
6.87
|
%
|
|
4.71
|
%
|
|
(In thousands)
|
||
2020
|
$
|
7,000
|
|
2021
|
7,000
|
|
|
2022
|
7,000
|
|
|
2023
|
7,000
|
|
|
2024
|
112,000
|
|
|
Thereafter
|
170,000
|
|
|
Total
|
$
|
310,000
|
|
|
|
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, 2019
|
|
363,225
|
|
|
$
|
28.33
|
|
|
|
|
|
||
Granted
|
|
189,170
|
|
|
$
|
41.97
|
|
|
|
|
|
||
Exercised
|
|
(80,693
|
)
|
|
$
|
24.97
|
|
|
|
|
|
||
Expired
|
|
(2,857
|
)
|
|
$
|
20.09
|
|
|
|
|
|
||
Forfeited
|
|
(22,027
|
)
|
|
$
|
29.99
|
|
|
|
|
|
||
Outstanding at December 31, 2019
|
|
446,818
|
|
|
$
|
34.68
|
|
|
7.7
|
|
$
|
7,319
|
|
Exerciseable at December 31, 2019
|
|
96,947
|
|
|
$
|
27.70
|
|
|
5.3
|
|
$
|
2,265
|
|
|
|
Number of Stock Options
|
|
Weighted-
Average
Grant
Date Fair Value
|
|||
Nonvested at January 1, 2019
|
|
292,013
|
|
|
$
|
12.20
|
|
Granted
|
|
189,170
|
|
|
$
|
15.95
|
|
Vested
|
|
(109,285
|
)
|
|
$
|
11.95
|
|
Forfeited
|
|
(22,027
|
)
|
|
$
|
10.24
|
|
Nonvested at December 31, 2019
|
|
349,871
|
|
|
$
|
14.33
|
|
|
|
Years Ended December 31,
|
|||||||
|
|
2019
|
|
2018
|
|
2017
|
|||
Risk-free interest rate
|
|
1.92
|
%
|
|
2.65
|
%
|
|
1.75
|
%
|
Expected volatility
|
|
40.44
|
%
|
|
53.66
|
%
|
|
50.37
|
%
|
Expected dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
Expected term (in months)
|
|
60
|
|
|
36
|
|
|
48
|
|
|
|
Number of Restricted Stock Units
|
|
Weighted-
Average
Grant
Date Fair Value
|
|||
Outstanding at January 1, 2019
|
|
157,937
|
|
|
$
|
28.96
|
|
Granted
|
|
62,520
|
|
|
$
|
41.04
|
|
Vested
|
|
(85,279
|
)
|
|
$
|
27.94
|
|
Forfeited
|
|
(7,755
|
)
|
|
$
|
30.80
|
|
Outstanding at December 31, 2019
|
|
127,423
|
|
|
$
|
36.22
|
|
|
|
Number of Performance Stock Units
|
|
Weighted-
Average
Grant
Date Fair Value
|
|||
Outstanding at January 1, 2019
|
|
236,700
|
|
|
$
|
26.21
|
|
Granted
|
|
58,178
|
|
|
$
|
43.80
|
|
Vested
|
|
(85,504
|
)
|
|
$
|
19.05
|
|
Forfeited
|
|
(11,800
|
)
|
|
$
|
33.21
|
|
Outstanding at December 31, 2019
|
|
197,574
|
|
|
$
|
33.98
|
|
(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,
|
||||||
|
|
2019
|
|
2018
|
||||
Change in benefit obligation(1)
|
|
|
|
|
||||
Beginning benefit obligation (January 1)
|
|
$
|
33,951
|
|
|
$
|
36,002
|
|
Service cost
|
|
503
|
|
|
601
|
|
||
Interest cost
|
|
1,388
|
|
|
1,268
|
|
||
Actuarial (gain) loss
|
|
4,769
|
|
|
(2,415
|
)
|
||
Benefits paid
|
|
(1,526
|
)
|
|
(1,505
|
)
|
||
Ending benefit obligation (December 31)
|
|
$
|
39,085
|
|
|
$
|
33,951
|
|
Change in plan assets
|
|
|
|
|
||||
Beginning fair value of plan assets (January 1)
|
|
$
|
23,749
|
|
|
$
|
25,646
|
|
Return on assets
|
|
4,347
|
|
|
(1,951
|
)
|
||
Employer contribution
|
|
1,873
|
|
|
1,559
|
|
||
Benefits paid
|
|
(1,526
|
)
|
|
(1,505
|
)
|
||
Ending fair value of plan assets (December 31)
|
|
$
|
28,443
|
|
|
$
|
23,749
|
|
Funded status (underfunded)
|
|
$
|
(10,642
|
)
|
|
$
|
(10,202
|
)
|
Amounts recognized in the consolidated balance sheet
|
|
|
|
|
||||
Current liabilities
|
|
$
|
—
|
|
|
$
|
580
|
|
Non-current liabilities
|
|
$
|
10,642
|
|
|
$
|
9,622
|
|
Unrecognized loss included in accumulated other comprehensive loss
|
|
|
|
|
||||
Beginning unrecognized loss, before tax (January 1)
|
|
$
|
9,485
|
|
|
$
|
8,908
|
|
Amortization
|
|
(885
|
)
|
|
(743
|
)
|
||
Liability (gain) loss
|
|
4,769
|
|
|
(2,415
|
)
|
||
Asset loss (gain)
|
|
(2,709
|
)
|
|
3,735
|
|
||
Ending unrecognized loss, before tax (December 31)
|
|
10,660
|
|
|
9,485
|
|
||
Tax impact
|
|
(2,544
|
)
|
|
(2,263
|
)
|
||
Unrecognized loss included in accumulated other comprehensive loss, net of tax
|
|
$
|
8,116
|
|
|
$
|
7,222
|
|
(1)
|
Projected benefit obligation equals the accumulated benefit obligation for the plans.
|
|
|
December 31,
|
||||
|
|
2019
|
|
2018
|
||
Equity securities
|
|
69
|
%
|
|
57
|
%
|
Cash and equivalents
|
|
1
|
%
|
|
1
|
%
|
Debt securities
|
|
30
|
%
|
|
42
|
%
|
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
|
0-10%
|
Fixed income securities
|
15-75%
|
Equities
|
30-80%
|
|
|
(In thousands)
Year Ended December 31, 2019
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash and cash equivalents
|
|
$
|
232
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
232
|
|
Fixed income securities
|
|
3,247
|
|
|
—
|
|
|
—
|
|
|
3,247
|
|
||||
Equities(1)
|
|
2,645
|
|
|
—
|
|
|
—
|
|
|
2,645
|
|
||||
Other investments
|
|
1,552
|
|
|
—
|
|
|
—
|
|
|
1,552
|
|
||||
Total plan assets at fair value
|
|
$
|
7,676
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
7,676
|
|
|
Pooled funds
|
|
|
|
|
|
|
|
20,767
|
|
|||||||
Total fair value of plan assets
|
|
|
|
|
|
|
|
|
|
|
$
|
28,443
|
|
|
|
(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
|
|
(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,
|
|||||||
|
|
2019
|
|
2018
|
|
2017
|
|||
Discount rate used to determine pension expense
|
|
|
|
|
|
|
|||
Pension Plan
|
|
3.22
|
%
|
|
3.64
|
%
|
|
4.18
|
%
|
LaBarge Retirement Plan
|
|
2.85
|
%
|
|
3.40
|
%
|
|
3.75
|
%
|
|
|
December 31,
|
|||||||
|
|
2019
|
|
2018
|
|
2017
|
|||
Discount rate used to determine value of obligations
|
|
|
|
|
|
|
|||
Pension Plan
|
|
4.23
|
%
|
|
4.23
|
%
|
|
3.64
|
%
|
LaBarge Retirement Plan
|
|
4.00
|
%
|
|
4.00
|
%
|
|
3.40
|
%
|
Long-term rate of return - Pension Plan only
|
|
7.00
|
%
|
|
7.00
|
%
|
|
7.00
|
%
|
|
|
(In thousands)
|
||||||
|
|
Pension Plan
|
|
LaBarge
Retirement
Plan
|
||||
2020
|
|
$
|
1,252
|
|
|
$
|
589
|
|
2021
|
|
1,339
|
|
|
569
|
|
||
2022
|
|
1,452
|
|
|
545
|
|
||
2023
|
|
1,495
|
|
|
517
|
|
||
2024
|
|
1,607
|
|
|
486
|
|
||
2025 - 2029
|
|
9,002
|
|
|
2,012
|
|
|
|
(In thousands)
Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Current tax expense
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
5,802
|
|
|
$
|
474
|
|
|
$
|
2,387
|
|
State
|
|
1,067
|
|
|
1,260
|
|
|
525
|
|
|||
|
|
6,869
|
|
|
1,734
|
|
|
2,912
|
|
|||
Deferred tax (benefit) expense
|
|
|
|
|
|
|
||||||
Federal
|
|
(650
|
)
|
|
(789
|
)
|
|
(15,515
|
)
|
|||
State
|
|
(917
|
)
|
|
291
|
|
|
135
|
|
|||
|
|
(1,567
|
)
|
|
(498
|
)
|
|
(15,380
|
)
|
|||
Income tax expense (benefit)
|
|
$
|
5,302
|
|
|
$
|
1,236
|
|
|
$
|
(12,468
|
)
|
|
|
Years Ended December 31,
|
||||
|
|
2019
|
|
2018
|
|
2017
|
Statutory federal income tax rate
|
|
21.0%
|
|
21.0%
|
|
35.0%
|
State income taxes (net of federal benefit)
|
|
3.6
|
|
5.3
|
|
2.5
|
Foreign derived intangible income deduction
|
|
(1.2)
|
|
—
|
|
—
|
Qualified domestic production activities
|
|
—
|
|
—
|
|
(2.6)
|
Stock-based compensation expense
|
|
(2.1)
|
|
(1.9)
|
|
(8.2)
|
Research and development tax credits
|
|
(7.8)
|
|
(32.0)
|
|
(50.6)
|
Other tax credits
|
|
—
|
|
(1.2)
|
|
(7.5)
|
Changes in valuation allowance
|
|
(1.6)
|
|
0.7
|
|
10.6
|
Non-deductible book expenses
|
|
3.9
|
|
8.2
|
|
1.1
|
Changes in deferred tax assets
|
|
(2.2)
|
|
12.1
|
|
15.4
|
Re-measurement of deferred taxes for 2017 Tax Act
|
|
—
|
|
—
|
|
(171.3)
|
Changes in tax reserves
|
|
1.2
|
|
1.2
|
|
11.4
|
Other
|
|
(0.8)
|
|
(1.4)
|
|
0.4
|
Effective income tax (benefit) rate
|
|
14.0%
|
|
12.0%
|
|
(163.8)%
|
|
|
Years Ended December 31,
|
|||||||
|
|
2019
|
|
2018
|
|
2017
|
|||
Boeing
|
|
16.6
|
%
|
|
17.0
|
%
|
|
16.3
|
%
|
Lockheed Martin
|
|
4.0
|
%
|
|
4.4
|
%
|
|
5.5
|
%
|
Raytheon
|
|
11.0
|
%
|
|
11.7
|
%
|
|
13.5
|
%
|
Spirit
|
|
12.2
|
%
|
|
9.5
|
%
|
|
8.2
|
%
|
Top ten customers (1)
|
|
63.5
|
%
|
|
62.9
|
%
|
|
62.5
|
%
|
(1)
|
The results for 2019 includes Nobles’ 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.
|
(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.
|
(4)
|
Includes cost not allocated to either the Electronic Systems or Structural Systems operating segments.
|
|
|
(In thousands, except per share amounts)
|
||||||||||||||||||||||||||||||
|
|
Three Months Ended
2019 |
|
Three Months Ended
2018 |
||||||||||||||||||||||||||||
|
|
Dec 31
|
|
Sep 28
|
|
Jun 29
|
|
Mar 30
|
|
Dec 31
|
|
Sep 29
|
|
Jun 30
|
|
Mar 31
|
||||||||||||||||
Net Revenues
|
|
$
|
186,926
|
|
|
$
|
181,101
|
|
|
$
|
180,495
|
|
|
$
|
172,566
|
|
|
$
|
164,183
|
|
|
$
|
159,842
|
|
|
$
|
154,827
|
|
|
$
|
150,455
|
|
Gross Profit
|
|
40,111
|
|
|
38,327
|
|
|
38,065
|
|
|
35,694
|
|
|
32,697
|
|
|
31,116
|
|
|
32,028
|
|
|
26,755
|
|
||||||||
Income Before Taxes
|
|
9,848
|
|
|
10,240
|
|
|
9,178
|
|
|
8,497
|
|
|
1,791
|
|
|
4,290
|
|
|
1,833
|
|
|
2,357
|
|
||||||||
Income Tax Expense (Benefit)
|
|
977
|
|
|
1,937
|
|
|
1,363
|
|
|
1,025
|
|
|
1,118
|
|
|
119
|
|
|
242
|
|
|
(243
|
)
|
||||||||
Net Income
|
|
$
|
8,871
|
|
|
$
|
8,303
|
|
|
$
|
7,815
|
|
|
$
|
7,472
|
|
|
$
|
673
|
|
|
$
|
4,171
|
|
|
$
|
1,591
|
|
|
$
|
2,600
|
|
Earnings Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic earnings per share
|
|
$
|
0.77
|
|
|
$
|
0.72
|
|
|
$
|
0.68
|
|
|
$
|
0.65
|
|
|
$
|
0.06
|
|
|
$
|
0.37
|
|
|
$
|
0.14
|
|
|
$
|
0.23
|
|
Diluted earnings per share
|
|
$
|
0.75
|
|
|
$
|
0.70
|
|
|
$
|
0.66
|
|
|
$
|
0.64
|
|
|
$
|
0.06
|
|
|
$
|
0.36
|
|
|
$
|
0.14
|
|
|
$
|
0.22
|
|
Description
|
|
Balance at
Beginning
of Period
|
|
Charged to
(Reduction of) Costs and
Expenses
|
|
Deductions/(Recoveries)
|
|
Other(1)
|
|
Balance at End of Period
|
||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for Doubtful Accounts
|
|
$
|
1,135
|
|
|
$
|
219
|
|
|
$
|
33
|
|
|
$
|
—
|
|
|
$
|
1,321
|
|
Valuation Allowance on Deferred Tax Assets
|
|
$
|
9,083
|
|
|
$
|
(593
|
)
|
|
$
|
—
|
|
|
$
|
885
|
|
|
$
|
9,375
|
|
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
|
|
*10.17
|
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
|
|
|
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
|
|
|
Rajiv A. Tata
|
|
January 24, 2020
|
|
|
Christopher D. Wampler
|
|
January 1, 2016
|
|
|
Person
|
|
Date of Agreement
|
|
|
Jerry L. Redondo
|
|
January 23, 2017
|
|
|
Rosalie F. Rogers
|
|
January 23, 2017
|
|
|
Rajiv A. Tata
|
|
January 24, 2020
|
|
|
Christopher D. Wampler
|
|
January 23, 2017
|
|
101.INS
|
XBRL Instance Document
|
|
|
|
DUCOMMUN INCORPORATED
|
|
|
|
|
Date: February 20, 2020
|
By:
|
|
/s/ Stephen G. Oswald
|
|
|
|
Stephen G. Oswald
|
|
|
|
Chairman, President and Chief Executive Officer
|
Signature
|
|
|
Title
|
|
|
|
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/s/ Stephen G. Oswald
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Chairman, President and Chief Executive Officer
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Stephen G. Oswald
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(Principal Executive Officer)
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/s/ Christopher D. Wampler
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Vice President, Interim Chief Financial Officer and Treasurer, and Controller and Chief Accounting Officer
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Christopher D. Wampler
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(Principal Financial and Principal Accounting Officer)
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/s/ Richard A. Baldridge
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Director
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Richard A. Baldridge
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/s/ Gregory S. Churchill
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Director
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Gregory S. Churchill
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/s/ Shirley G. Drazba
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Director
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Shirley G. Drazba
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/s/ Robert C. Ducommun
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Director
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Robert C. Ducommun
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/s/ Dean M. Flatt
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Director
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Dean M. Flatt
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/s/ Jay L. Haberland
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Director
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Jay L. Haberland
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/s/ Robert D. Paulson
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Director
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Robert D. Paulson
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•
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a provision in our Charter that our Bylaws may not be amended by our stockholders except by the affirmative vote of at least 75% of the total voting power of all outstanding shares of our voting stock;
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•
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a provision in our Charter that requires the affirmative vote of at least 75% of the total voting power of all outstanding shares of our voting stock to amend the provisions of our charter relating to our classified board, stockholders’ ability to only act at a meeting, cumulative voting and the approval of certain transactions;
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•
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a provision in our Charter that our board of directors will be a classified board pursuant to which one-third of our directors will be elected each year to serve for a three-year term;
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•
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a provision in our Charter prohibiting stockholder action by written consent;
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•
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a provision in our Charter requiring that any proposal for (i) the merger or consolidation of our Company and another company that owns (together with its affiliates), directly or indirectly, 10% of more of our outstanding shares of common stock (a “significant stockholder”), or (ii) our sale to a significant stockholder of substantially all of our assets or business, be approved by the affirmative vote of at least 75% of the total voting power of all outstanding shares of our stock, unless (a) our board of directors approved the merger, consolidation or sale prior to the other company’s acquisition of 10% of our outstanding shares or (b) we own 50% or more of the other company;
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•
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a provision in our Bylaws limiting the persons who may call special meetings of stockholders to our board of directors; and
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•
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provisions in our Bylaws establishing an advance written notice procedure for stockholders seeking to nominate candidates for election to the board of directors or for proposing matters which can be acted upon at stockholders’ meetings.
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•
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before that person became an interested stockholder, our board of directors approved the transaction in which the interested stockholder became an interested stockholder or approved the business combination;
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•
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upon completion of the transaction that resulted in the interested stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding stock held by persons who are both directors and officers of our corporation and by certain employee stock plans; or
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•
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on or following the date on which that person became an interested stockholder, the business combination is approved by our board of directors and authorized at a meeting of stockholders by the affirmative vote of the holders of at least 66 2/3% of our outstanding voting stock excluding shares held by the interested stockholder.
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•
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the title of the series of preferred stock;
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•
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any limit upon the number of shares of the series of preferred stock that may be issued;
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•
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the preference, if any, to which holders of the series of preferred stock would be entitled upon our liquidation;
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•
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the date or dates on which we will be required or permitted to redeem the preferred stock;
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•
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the terms, if any, on which we or holders of the preferred stock would have the option to cause the preferred stock to be redeemed or purchased;
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•
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the voting rights, if any, of the holders of the preferred stock;
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•
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the dividends, if any, that would be payable with regard to the series of preferred stock, which could be fixed dividends or participating dividends and could be cumulative or non-cumulative;
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•
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the right, if any, of holders of the preferred stock to convert it into another class of our stock or securities, including provisions intended to prevent dilution of those conversion rights;
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•
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any provisions by which we would be required or permitted to make payments to a sinking fund to be used to redeem preferred stock or a purchase fund to be used to purchase preferred stock; and
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•
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any other material terms of the preferred stock.
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Name of Subsidiary
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Jurisdiction of Incorporation
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Certified Thermoplastics Company, LLC
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Delaware
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CMP Display Systems, Inc.(2)
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California
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Composite Structures, LLC
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Delaware
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Ducommun AeroStructures, Inc.
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Delaware
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Ducommun AeroStructures Mexico, LLC
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Delaware
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Ducommun AeroStructures New York, Inc.
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New York
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Ducommun (England) LTD
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England
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Ducommun LaBarge Technologies, Inc.
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Arizona
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Ducommun LaBarge Technologies, Inc.
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Delaware
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Ducommun Technologies (Thailand) Ltd.
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Thailand
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LaBarge Acquisition Company, Inc.
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Missouri
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LaBarge/STC, Inc.(2)
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Texas
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Lightning Diversion Systems, LLC
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Delaware
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LS Holdings Company, LLC
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Delaware
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Nobles Holdings Inc.
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Delaware
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Nobles Parent Inc.
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Delaware
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Nobles Worldwide, Inc.
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Minnesota
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/s/ PricewaterhouseCoopers LLP
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Irvine, California
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February 20, 2020
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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, 2019;
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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.
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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
|
Stephen G. Oswald
|
Chairman, President and Chief Executive Officer
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1.
|
I have reviewed this Annual Report of Ducommun Incorporated (the “registrant”) on Form 10-K for the period ended December 31, 2019;
|
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;
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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;
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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;
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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.
|
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.
|
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.
|
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
|
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.
|
|
/s/ Christopher D. Wampler
|
Christopher D. Wampler
|
Vice President, Interim Chief Financial Officer and Treasurer, and Controller and Chief Accounting Officer
|
|
|
|
|
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By:
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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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|
|
|
February 20, 2020
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|
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By:
|
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/s/ Christopher D. Wampler
|
|
|
|
Christopher D. Wampler
|
|
|
|
Vice President, Interim Chief Financial Officer and Treasurer, and Controller and Chief Accounting Officer
|
|
|
|
February 20, 2020
|