Annual Report — [x] Reg. S-K Item 405 — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K405 Form 10-K for the Year Ended December 31, 1998 21 89K
2: EX-3.2 Cert. of Amendment of Certificate of Incorporation 1 7K
3: EX-4.4 Third Amendment to Fifth Amended Loan Agreement 5 22K
4: EX-10.9 Description of 1999 Executive Officer Bonus Arr. 1 6K
5: EX-11 Earnings Per Share 2± 11K
6: EX-13 1998 Annual Report to Shareholders 21 112K
7: EX-21 Subsidiaries of Registrant 1 6K
8: EX-23 Consent of Indpendent Accountants 1 6K
9: EX-27 Financial Data Schedule 1 7K
10-K405 — Form 10-K for the Year Ended December 31, 1998
Document Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File No. 1-8174
DUCOMMUN INCORPORATED
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-0693330
-------------------------------- ---------------------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
111 West Ocean Boulevard, Suite 900, Long Beach, California 90802-4632
------------------------------------------------------------ ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (562) 624-0800
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
-------------------------------- ---------------------------
Common Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
-----------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant was approximately $115,000,000 as of January 31, 1999.
The number of shares of common stock outstanding on January 31, 1999 was
10,417,349.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference:
(a) Annual Report to Shareholders (the "1998 Annual Report") for the
year ended December 31, 1998, incorporated partially in Part I and Part II
hereof (see Exhibit 13), and
(b) Proxy Statement for the 1999 Annual Meeting of Shareholders (the
"1999 Proxy Statement"), incorporated partially in Part III hereof.
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
Certain statements in the Form 10-K and documents incorporated by
reference contain forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Any such forward-looking statements involve
risks and uncertainties. The Company's future financial results could differ
materially from those anticipated due to the Company's dependence on conditions
in the airline industry, the level of new commercial aircraft orders, the
production rate for the Space Shuttle program, the level of defense spending,
competitive pricing pressures, technology and product development risks and
uncertainties, product performance, risks associated with acquisitions and
dispositions of businesses by the Company, increasing consolidation of customers
and suppliers in the aerospace industry, and other factors beyond the Company's
control.
2
PART I
ITEM 1. BUSINESS
During 1998, Ducommun Incorporated ("Ducommun"), through its
subsidiaries (collectively, the "Company"), manufactured components and
assemblies principally for domestic and foreign commercial and military aircraft
and space programs. Domestic commercial aircraft programs include the Boeing
717, 737, 737NG, 747, 757, 767 and 777. Foreign commercial aircraft programs
include the Airbus Industrie A330, A340 and A340-600 aircraft, Bombardier
Business and Regional Jets and Dash 8. Major military aircraft programs include
the Boeing C-17, F-15 and F-18, Lockheed Martin F-16 and C-130, various
Sikorsky, Bell, Boeing and Augusta helicopter programs, and advanced development
programs. The Company is a subcontractor to Lockheed Martin on the Space Shuttle
external tank and a supplier of components for the Space Shuttle Orbitor, as
well as for Space Station Freedom. The Company manufactures components for
Atlas/Centaur, Delta and Titan expendable launch vehicles, Kistler K-1 reusable
launch vehicles, and various telecommunications satellites.
In June 1998, the Company acquired the capital stock of American
Electronics, Inc. ("AEI"). In June 1996, the Company acquired substantially all
of the assets and assumed certain liabilities of MechTronics of Arizona, Inc.
Aerochem, Inc.
Ducommun's subsidiary, Aerochem, Inc. ("Aerochem"), is a major supplier
of close tolerance chemical milling services for the aerospace and aircraft
industries. Chemical milling removes material in specific patterns to reduce
weight in areas where full material thickness is not required. This
sophisticated etching process enables Aerochem to produce lightweight,
high-strength designs that would be impractical to produce by conventional
means. Jet engine components, wing leading edges and fuselage skins are examples
of products that require chemical milling.
Aerochem offers production-scale chemical milling on aluminum, titanium,
steel, nickel-base and super alloys. Aerochem also specializes in very large and
complex parts up to 50 feet long. Management believes that Aerochem is the
largest independent supplier of chemical milling services in the United States.
Many of the parts chemically milled by Aerochem are formed and machined by
AHF-Ducommun Incorporated.
AHF-Ducommun Incorporated
AHF-Ducommun Incorporated ("AHF"), another Ducommun subsidiary, supplies
aircraft and aerospace prime contractors with engineering, manufacturing and
testing of complex components using stretch forming and thermal forming
processes and computer-controlled machining. Stretch forming is a process for
manufacturing large, complex structural shapes primarily from aluminum sheet
metal extrusions. AHF has some of the largest and most sophisticated stretch
forming presses in the United States. Thermal forming is a metal working process
conducted at high temperature for manufacturing close tolerance
3
titanium components. AHF designs and manufactures the tooling required for the
production of parts in both forming processes. Certain components manufactured
by AHF are machined with precision milling equipment designed and constructed by
AHF. AHF also employs computer-aided design/manufacturing systems with three
5-axis gantry profile milling machines and three 5-axis numerically-controlled
routers to provide computer-controlled machining and inspection of complex parts
up to 100 feet long.
AHF has an integrated operation offering a broad range of capabilities.
From the design specifications of a customer, AHF is able to engineer,
manufacture, test and deliver the desired finished components. This process
depends on the skillful execution of several complex subtasks, including the
design and construction of special equipment. Management believes that the
ability of AHF to provide a full range of integrated capabilities represents a
competitive advantage.
Brice Manufacturing Company, Inc.
Brice Manufacturing Company, Inc. ("Brice"), a subsidiary of Ducommun,
is an after-market supplier of aircraft seating products to many of the world's
largest commercial airlines. Products supplied by Brice include plastic and
metal seat parts, overhauled and refurbished seats, components for installation
of in-flight entertainment equipment, and other cabin interior components for
commercial aircraft.
During 1998, Brice introduced an original equipment manufacture ("OEM")
16G aircraft seat. This new aircraft seat represents Brice's first major OEM
product.
Ducommun Technologies, Inc. (formerly Jay-El Products, Inc.)
Ducommun Technologies, Inc. ("DTI"), a subsidiary of Ducommun, develops,
designs and manufactures illuminated switches, switch assemblies and keyboard
panels used in many military aircraft, helicopter, commercial aircraft and
spacecraft programs, as well as ground support equipment and naval vessels. DTI
manufactures switches and panels where high reliability is a prerequisite.
Keyboard panels are lighted, feature push button switches, and are available
with sunlight readable displays. Some of the keyboard panels and illuminated
switches manufactured by DTI for military applications are night vision
goggle-compatible.
DTI also develops, designs and manufactures microwave switches, filters
and other components used principally on commercial and military aircraft and
telecommunications satellites. DTI has developed several new products that apply
its existing microwave technology to nonaerospace markets, including the
wireless telecommunications industry.
In June 1998, DTI acquired the capital stock of American Electronics,
Inc. ("AEI"). AEI is a leading manufacturer of high precision actuators, stepper
motors, fractional horsepower motors and resolvers principally for commercial
and military space applications.
4
MechTronics of Arizona Corp.
In June 1996, the Company acquired substantially all of the assets and
assumed certain liabilities of MechTronics of Arizona, Inc., through a newly
formed subsidiary named MechTronics of Arizona Corp. ("MechTronics").
MechTronics is a leading manufacturer of mechanical and electromechanical
enclosure products for the defense electronics and commercial aviation markets.
MechTronics has a fully integrated manufacturing capability, including
engineering, fabrication, machining, assembly, electronic integration and
related processes. MechTronics' products include sophisticated radar enclosures,
aircraft avionics racks and shipboard communications and control enclosures.
3dbm, Inc.
In August 1998, the Company sold the capital stock of its wireless
communications subsidiary, 3dbm, Inc. ("3dbm"). The Company sold 3dbm because
the level of investment required to ensure the long-term viability of 3dbm in
the wireless system infrastructure business was more than the Company was
willing to commit.
Defense and Space Programs
A major portion of sales is derived from United States government
defense programs and space programs. Approximately 29 percent of 1998 sales were
related to defense programs and approximately 11 percent of 1998 sales were
related to space programs. These programs could be adversely affected by
reductions in defense spending and other government budgetary pressures which
would result in reductions, delays or stretch-outs of existing and future
programs. In addition, many of the Company's contracts covering defense and
space programs are subject to termination at the convenience of the customer (as
well as for default). In the event of termination for convenience, the customer
generally is required to pay the costs incurred by the Company and certain other
fees through the date of termination.
Commercial Programs
Approximately 60 percent of 1998 sales were related to commercial
aircraft programs, and nonaerospace commercial applications. The Company's
commercial sales depend substantially on aircraft manufacturer's production
rates, which in turn depend upon deliveries of new aircraft. Deliveries of new
aircraft by aircraft manufacturers are dependent on the financial capacity of
the airlines and leasing companies to purchase the aircraft. Sales of commercial
aircraft could be affected as a result of changes in new aircraft orders, or the
cancellation or deferral by airlines of purchases of ordered aircraft. The
Company's sales for commercial aircraft programs also could be affected by
changes in its customers' inventory levels and changes in its customers'
aircraft production build rates.
Major Customers
The Company had substantial sales to Boeing, Lockheed Martin and
Raytheon. During 1998, sales to Boeing were $48,334,000, or 28.3% of total
sales; sales to Lockheed Martin were $18,465,000, or 10.8% of total sales, and
sales to Raytheon were $12,596,000, or
5
7.4% of total sales. Sales to Boeing, Lockheed Martin and Raytheon are
diversified over a number of different commercial, military and space programs.
Competition
The Company competes with various companies, some of which are
substantially larger and have greater financial, technical and personnel
resources. The Company's ability to compete depends on the quality of goods and
services, competitive pricing and the ability to solve specific customer
problems.
Backlog
At December 31, 1998, backlog believed to be firm was approximately
$138,200,000, compared to $155,700,000 at December 31, 1997. Approximately
$93,000,000 of total backlog is expected to be delivered during 1999.
Environmental Matters
Aerochem uses various acid and alkaline solutions in the chemical
milling process, resulting in potential environmental hazards. Despite existing
waste recovery systems and continuing capital expenditures for waste reduction
and management, at least for the immediate future, Aerochem will remain
dependent on the availability and cost of remote hazardous waste disposal sites
or other alternative methods of disposal.
The Aerochem facility located in El Mirage, California has been directed
by California environmental agencies to investigate and take corrective action
for groundwater contamination. Based upon currently available information, the
Company has established a provision for the cost of such investigation and
corrective action. Aerochem expects to spend approximately $1 million for future
investigation and corrective action for groundwater contamination at its El
Mirage location. However, the Company's ultimate liability in connection with
the contamination will depend upon a number of factors, including changes in
existing laws and regulations, and the design and cost of the construction,
operation and maintenance of the corrective action.
Ducommun's other subsidiaries are also subject to environmental laws and
regulations. However, the quantities of hazardous materials handled, hazardous
wastes generated and air emissions released by these subsidiaries are relatively
small.
The Company anticipates that capital expenditures will continue to be
required for the foreseeable future to upgrade and maintain its environmental
compliance efforts. The Company does not expect to spend a material amount on
capital expenditures for environmental compliance during 1999.
In the normal course of business, Ducommun and its subsidiaries are
defendants in certain other litigation, claims and inquiries, including matters
relating to environmental laws. In addition, the Company makes various
commitments and incurs contingent liabilities. While it is not feasible to
predict the outcome of these matters, the Company does not
6
presently expect that any sum it may be required to pay in connection with these
matters would have a material adverse effect on its consolidated financial
position or results of operations.
Employees
At December 31, 1998, the Company employed 1,218 persons.
Business Segment Information
The Company operates principally in only one business segment.
Information About Foreign and Domestic Operations and Export Sales
In 1998, 1997 and 1996, foreign sales to manufacturers worldwide were
$29,007,000, 29,978,000 and $21,155,000, respectively.
The amounts of revenue, profitability and identifiable assets
attributable to foreign operations are not material when compared with the
revenue, profitability and identifiable assets attributed to United States
domestic operations during 1998, 1997 and 1996. Canada is the only foreign
country in which the Company had sales of 3.5% or more of total sales, with
sales of $6,173,000, $7,950,000 and $4,906,000 in 1998, 1997 and 1996,
respectively.
The Company is not subject to any foreign currency risks since all sales
are made in United States dollars.
ITEM 2. PROPERTIES
The Company occupies approximately 16 facilities with a total office and
manufacturing area of over 812,000 square feet, including both owned and leased
properties. At December 31, 1998, facilities which were in excess of 60,000
square feet each were occupied as follows:
[Download Table]
Square Expiration
Location Company Feet of Lease
----------------------- ------------------------ --------- -----------
El Mirage, California Aerochem 74,300 Owned
Orange, California Aerochem 76,200 Owned
Carson, California AHF-Ducommun 65,000 1999
Carson, California AHF-Ducommun 108,000 Owned
Carson, California Ducommun Technologies 117,000 2002
Phoenix, Arizona MechTronics 90,900 2006
The Company's facilities are, for the most part, fully utilized,
although excess capacity exists from time to time based on product mix and
demand. Management believes that these properties are in good condition and
suitable for their present use.
Although the Company maintains standard property casualty insurance
covering its properties, the Company does not carry any earthquake insurance
because of the cost of such
7
insurance. Most of the Company's properties are located in Southern California,
an area subject to frequent and sometimes severe earthquake activity.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information under the caption "Quarterly Common Stock Price
Information" on page 18 of the 1998 Annual Report is incorporated herein by
reference. No dividends were paid during 1997 or 1998 (see Exhibit 13).
ITEM 6. SELECTED FINANCIAL DATA
The information under the caption "Selected Financial Data" appearing on
page 18 of the 1998 Annual Report is incorporated herein by reference (see
Exhibit 13).
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information under the caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations" appearing on pages 19 through
22 of the 1998 Annual Report is incorporated herein by reference (see Exhibit
13).
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data under the captions
"Consolidated Statements of Income," "Consolidated Balance Sheets,"
"Consolidated Statements of Cash Flows," "Consolidated Statements of Changes in
Shareholders' Equity," and "Notes to Consolidated Financial Statements,"
together with the report thereon of PricewaterhouseCoopers LLP dated February
12, 1999, appearing on pages 23 through 37 of the 1998 Annual Report are
incorporated herein by reference (see Exhibit 13).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
8
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors of the Registrant
The information under the caption "Election of Directors" in the 1999
Proxy Statement is incorporated herein by reference.
Executive Officers of the Registrant
The following table sets forth the names and ages of all executive
officers of the Company (including subsidiary presidents), all positions and
offices held with the Company and brief accounts of business experience during
the past five years. Executive officers do not serve for any specified terms,
but are typically elected annually by the Board of Directors of the Company or,
in the case of subsidiary presidents, by the Board of Directors of the
respective subsidiaries.
[Enlarge/Download Table]
Positions and Offices Other Business
Held With Company Experience
Name (Age) (Year Elected) (Past Five Years)
----------------------------- ----------------------------- ---------------------------
Norman A. Barkeley (69) Chairman Emeritus of the Chairman of the Board
Board (1999) (1989); Chief Executive
Officer (1988-1996) and
President (1988-1995)
Joseph C. Berenato (52) President (1996), Chief Executive Vice President
Executive Officer (1997) (1995), Chief Operating
and Chairman of the Board Officer (1995-1996), and
(1999) Chief Financial Officer
(1991-1996) of the Company
James S. Heiser (42) Vice President (1990), --
Chief Financial Officer
(1996), General Counsel
(1988), Secretary (1987),
and Treasurer (1995)
Kenneth R. Pearson (63) Vice President-Human --
Resources (1988)
Michael W. Williams (44) Vice President, Corporate VP Operations at H.R.
Development (1998) Textron; operations posit-
ions with Crane Valve
Group, ITT Corp. and
Parker Hannifin
9
[Enlarge/Download Table]
Positions and Offices Other Business
Held With Company Experience
Name (Age) (Year Elected) (Past Five Years)
----------------------------- ----------------------------- ---------------------------
Samuel D. Williams (50) Vice President (1991) and --
Controller (1988)
Robert A. Borlet (58) President of Ducommun --
Technologies, Inc. (1988)
Bruce J. Greenbaum (43) President of Brice --
Manufacturing Company, Inc.
(1994)
Robert B. Hahn (55) President of MechTronics of President of Aerochem,
Arizona Corp. (1997) Inc. (1987-1997)
Robert L. Hansen (45) President, AHF-Ducommun --
Incorporated (1989)
ITEM 11. EXECUTIVE COMPENSATION
The information under the caption "Compensation of Executive Officers"
in the 1999 Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the 1999 Proxy Statement is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the caption "Election of Directors" contained in
the paragraph immediately following the table in the 1999 Proxy Statement is
incorporated herein by reference.
10
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) 1. Financial Statements
The following consolidated financial statements of Ducommun
Incorporated and subsidiaries, included in the 1998 Annual Report,
are incorporated by reference in Item 8 of this report. Page
numbers refer to the 1998 Annual Report:
[Download Table]
Page
----
Consolidated Statements of Income - Years ended December 31, 23
1998, 1997 and 1996
Consolidated Balance Sheets - December 31, 1998 and 1997 24
Consolidated Statements of Cash Flows - Years ended December 31, 25
1998, 1997 and 1996
Consolidated Statements of Changes in Shareholders' Equity - Years 26
Ended December 31, 1998, 1997 and 1996
Notes to Consolidated Financial Statements 27-36
Report of Independent Accountants 37
2. Financial Statement Schedule
The following schedule for the years ended December 31, 1998, 1997
and 1996 is filed herewith:
Schedule VIII - Valuation and Qualifying Accounts and Reserves
All other schedules have been omitted because they are not
applicable, not required, or the information has been otherwise
supplied in the financial statements or notes thereto.
(b) Reports on Form 8-K
During the last quarter of 1998, no reports on Form 8-K were filed.
11
(c) Exhibits
3.1 Restated Certificate of Incorporation filed with the Delaware
Secretary of State on May 29, 1990. Incorporated by reference to
Exhibit 3.1 to Form 10-K for the year ended December 31, 1990.
3.2 Certificate of Amendment of Certificate of Incorporation
filed with the Delaware Secretary of State on May 27, 1998.
3.3 Bylaws as amended and restated on October 19, 1996.
Incorporated by reference to Exhibit 3.2 to Form 10-K for the year
ended December 31, 1996.
4.1 Fifth Amended and Restated Loan Agreement between Ducommun
Incorporated, as Borrower, and Bank of America National Trust and
Savings Association, as Bank, dated June 23, 1998. Incorporated by
reference to Exhibit 10.1 to Form 10-Q for the quarter ended June
28, 1998.
4.2 First Amendment to Fifth Amended and Restated Loan Agreement
between Ducommun Incorporated, as Borrower, and Bank of America
National Trust and Savings Association, as Bank, dated as of
October 1, 1998. Incorporated by reference to Exhibit 4.2 to Form
10-K for the year ended December 31, 1997.
4.3 Second Amendment to Fifth Amended and Restated Loan Agreement
dated August 10, 1998. Incorporated by reference to Exhibit 10.1 to
the Form 10-Q for the quarter ended October 3, 1998.
4.4 Third Amendment to Fifth Amended and Restated Loan Agreement
dated February 11, 1999.
4.5 Conversion Agreement dated July 22, 1992 between Ducommun and
the holders of the 9% Convertible Subordinated Notes due 1998.
Incorporated by reference to Exhibit 1 to Form 8-K dated July 29,
1992.
* 10.1 1981 Stock Incentive Plan as amended and restated March 21,
1990. Incorporated by reference to Exhibit 10.2 to Form 10-K for
the year ended December 31, 1989.
* 10.2 1990 Stock Option Plan. Incorporated by reference to Exhibit
10.4 to Form 10-K for the year ended December 31, 1990.
* 10.3 1994 Stock Incentive Plan, as amended May 7, 1998.
Incorporated by reference to Exhibit 10.3 to Form 10-K for the year
ended December 31, 1997.
* 10.4 Form of Nonqualified Stock Option Agreement for employees
under the 1994 Stock Incentive Plan, the 1990 Stock Option Plan and
the 1981 Stock Incentive Plan. Incorporated by reference to Exhibit
10.5 to Form 10-K for the year ended December 31, 1990.
12
* 10.5 Form of Incentive Stock Option Agreement under the 1994
Stock Incentive Plan. Incorporated by reference to Exhibit 10.5 to
Form 10-K for the year ended December 31, 1996.
10.6 Form of Nonqualified Stock Option Agreement for nonemployee
directors under the 1994 Stock Incentive Plan. Incorporated by
reference to Exhibit 10.6 to Form 10-K for the year ended December
31, 1997.
* 10.7 Form of Key Executive Severance Agreement entered with eight
current executive officers of Ducommun or its subsidiaries.
Incorporated by reference to Exhibit 10.7 to Form 10-K for the year
ended December 31, 1989. All of the Key Executive Severance
Agreements are identical except for the name of the executive
officer and the date of the Agreement:
[Download Table]
Executive Officer Date of Agreement
----------------- -----------------
Joseph C. Berenato November 4, 1991
Robert A. Borlet July 27, 1988
Bruce J. Greenbaum December 6, 1995
Robert B. Hahn July 27, 1988
Robert L. Hansen May 5, 1993
James S. Heiser July 27, 1988
Kenneth R. Pearson July 27, 1988
Samuel D. Williams June 21, 1989
* 10.8 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:
[Download Table]
Director/Officer Date of Agreement
---------------- -----------------
Norman A. Barkeley July 29, 1987
Joseph C. Berenato November 4, 1991
James S. Heiser May 6, 1987
Kenneth R. Pearson July 27, 1988
Michael W. Williams February 26, 1999
Samuel D. Williams November 11, 1988
H. Frederick Christie October 23, 1985
Robert C. Ducommun December 31, 1985
Kevin S. Moore October 15, 1994
Thomas P. Mullaney April 8, 1987
Richard J. Pearson October 23, 1985
Arthur W. Schmutz December 31, 1985
13
* 10.9 Description of 1999 Executive Officer Bonus Arrangement.
* 10.10 Directors' Deferred Compensation and Retirement Plan, as
amended October 29, 1993. Incorporated by reference to Exhibit 10.9
to Form 10-K for the year ended December 31, 1993.
* 10.11 Ducommun Incorporated Executive Retirement Plan dated
May 5, 1993. Incorporated by reference to Exhibit 10.2 to Form 10-Q
for the quarter ended July 3, 1993.
* 10.12 Ducommun Incorporated Executive Compensation Deferral Plan
dated May 5, 1993. Incorporated by reference to Exhibit 10.3 to
Form 10-Q for the quarter ended July 3, 1993.
* 10.13 Ducommun Incorporated Executive Compensation Deferral Plan
No. 2 dated October 15, 1994. Incorporated by reference to Exhibit
10.12 to Form 10-K for the year ended December 31, 1994.
11 Reconciliation of the Numerators and Denominators of the
Basic and Diluted Earnings Per Share Computations
13 1998 Annual Report to Shareholders (not deemed to be filed
except as previously incorporated by reference).
21 Subsidiaries of Registrant
23 Consent of PricewaterhouseCoopers LLP
27 Financial Data Schedule
-------------------
* Indicates an executive compensation plan or arrangement.
14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
DUCOMMUN INCORPORATED
Date: February 26, 1999 By: /s/ Joseph C. Berenato
-----------------------------------------
Joseph C. Berenato
Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been duly signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
[Download Table]
Date: February 26, 1999 By: /s/ Joseph C. Berenato
-----------------------------------------
Joseph C. Berenato
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)
Date: February 26, 1999 By: /s/ James S. Heiser
-----------------------------------------
James S. Heiser
Vice President, Chief Financial Officer,
General Counsel, Secretary and Treasurer
(Principal Financial Officer)
Date: February 26, 1999 By: /s/ Samuel D. Williams
-----------------------------------------
Samuel D. Williams
Vice President, Controller and Assistant
Treasurer
(Principal Accounting Officer)
15
DIRECTORS
[Download Table]
By: /s/ Norman A. Barkeley Date February 26, 1999
------------------------------ --------------------------
Norman A. Barkeley
By: /s/ Joseph C. Berenato Date February 26, 1999
------------------------------ --------------------------
Joseph C. Berenato
By: /s/ H. Frederick Christie Date February 26, 1999
------------------------------ --------------------------
H. Frederick Christie
By: /s/ Robert C. Ducommun Date February 26, 1999
------------------------------ --------------------------
Robert C. Ducommun
By: /s/ Kevin S. Moore Date February 26, 1999
------------------------------ --------------------------
Kevin S. Moore
By: /s/ Thomas P. Mullaney Date February 26, 1999
------------------------------ --------------------------
Thomas P. Mullaney
By: /s/ Richard J. Pearson Date February 26, 1999
------------------------------ --------------------------
Richard J. Pearson
By: /s/ Arthur W. Schmutz Date February 26, 1999
------------------------------ --------------------------
Arthur W. Schmutz
16
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
of Ducommun Incorporated
Our audits of the consolidated financial statements referred to in our report
dated February 12, 1999 appearing on page 37 of the 1998 Annual Report to
Shareholders of Ducommun Incorporated (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedule listed in Item 14(a)
of this Form 10-K. In our opinion, this Financial Statement Schedule presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PricewaterhouseCoopers LLP
Los Angeles, California
February 12, 1999
17
DUCOMMUN INCORPORATED
AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
[Enlarge/Download Table]
SCHEDULE VIII
Column A Column B Column C Column D Column E
------------------------ ------------- ----------------------------- -------------- -----------
Additions
-----------------------------
Balance at Charged to Charged to Balance
Beginning Costs and Other at End of
Description of Period Expenses Accounts Deductions Period
------------------------ ------------- ----------- -------------- -------------- -----------
FOR THE YEAR ENDED DECEMBER 31, 1998
Allowance for $ 194,000(a)
Doubtful Accounts $ 359,000 $ 7,000 $ - 47,000(b) $ 125,000
FOR THE YEAR ENDED DECEMBER 31, 1997
Allowance for
Doubtful Accounts $ 206,000 $ 290,000 $ - $ 137,000(b) $ 359,000
FOR THE YEAR ENDED DECEMBER 31, 1996
Allowance for
Doubtful Accounts $ 366,000 $ 28,000 $ - $ 188,000(b) $ 206,000
Deferred Tax Assets $ 665,000(c)
Valuation Allowance $2,433,000 $ - $ - 1,768,000(d) $ -
(a) Collections on previously written off accounts.
(b) Write-offs on uncollectible accounts.
(c) Change in valuation allowance due to reevaluation of realizability of
future income tax benefit occasioned by the acquisition of MechTronics.
(d) Change in valuation allowance due to reevaluation of realizability of
future income tax benefit.
18
EXHIBIT INDEX
3.1 Restated Certificate of Incorporation filed with the Delaware
Secretary of State on May 29, 1990. Incorporated by reference to
Exhibit 3.1 to Form 10-K for the year ended December 31, 1990.
3.2 Certificate of Amendment of Certificate of Incorporation filed with
the Delaware Secretary of State on May 27, 1998.
3.3 Bylaws as amended and restated on October 19, 1996. Incorporated by
reference to Exhibit 3.2 to Form 10-K for the year ended December 31,
1996.
4.1 Fifth Amended and Restated Loan Agreement between Ducommun
Incorporated, as Borrower, and Bank of America National Trust and
Savings Association, as Bank, dated June 23, 1998. Incorporated by
reference to Exhibit 10.1 to Form 10-Q for the quarter ended June 28,
1998.
4.2 First Amendment to Fifth Amended and Restated Loan Agreement between
Ducommun Incorporated, as Borrower, and Bank of America National Trust
and Savings Association, as Bank, dated as of October 1, 1998.
Incorporated by reference to Exhibit 4.2 to Form 10-K for the year
ended December 31, 1997.
4.3 Second Amendment to Fifth Amended and Restated Loan Agreement dated
August 10, 1998. Incorporated by reference to Exhibit 10.1 to the Form
10-Q for the quarter ended October 3, 1998.
4.4 Third Amendment to Fifth Amended and Restated Loan Agreement dated
February 11, 1999.
4.5 Conversion Agreement dated July 22, 1992 between Ducommun and the
holders of the 9% Convertible Subordinated Notes due 1998.
Incorporated by reference to Exhibit 1 to Form 8-K dated July 29,
1992.
*10.1 1981 Stock Incentive Plan as amended and restated March 21, 1990.
Incorporated by reference to Exhibit 10.2 to Form 10-K for the year
ended December 31, 1989.
*10.2 1990 Stock Option Plan. Incorporated by reference to Exhibit 10.4 to
Form 10-K for the year ended December 31, 1990.
*10.3 1994 Stock Incentive Plan, as amended May 7, 1998. Incorporated by
reference to Exhibit 10.3 to Form 10-K for the year ended December 31,
1997.
*10.4 Form of Nonqualified Stock Option Agreement for employees under the
1994 Stock Incentive Plan, the 1990 Stock Option Plan and the 1981
Stock Incentive Plan. Incorporated by reference to Exhibit 10.5 to
Form 10-K for the year ended December 31, 1990.
*10.5 Form of Incentive Stock Option Agreement under the 1994 Stock
Incentive Plan. Incorporated by reference to Exhibit 10.5 to Form 10-K
for the year ended December 31, 1996.
10.6 Form of Nonqualified Stock Option Agreement for nonemployee directors
under the 1994 Stock Incentive Plan. Incorporated by reference to
Exhibit 10.6 to Form 10-K for the year ended December 31, 1997.
*10.7 Form of Key Executive Severance Agreement entered with eight current
executive officers of Ducommun or its subsidiaries. Incorporated by
reference to Exhibit 10.7 to Form 10-K for the year ended December 31,
1989. All of the Key Executive Severance Agreements are identical
except for the name of the executive officer and the date of the
Agreement:
[Download Table]
Executive Officer Date of Agreement
----------------- -----------------
Joseph C. Berenato November 4, 1991
Robert A. Borlet July 27, 1988
Bruce J. Greenbaum December 6, 1995
Robert B. Hahn July 27, 1988
Robert L. Hansen May 5, 1993
James S. Heiser July 27, 1988
Kenneth R. Pearson July 27, 1988
Samuel D. Williams June 21, 1989
*10.8 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:
[Download Table]
Director/Officer Date of Agreement
---------------- -----------------
Norman A. Barkeley July 29, 1987
Joseph C. Berenato November 4, 1991
James S. Heiser May 6, 1987
Kenneth R. Pearson July 27, 1988
Michael W. Williams February 26, 1999
Samuel D. Williams November 11, 1988
H. Frederick Christie October 23, 1985
Robert C. Ducommun December 31, 1985
Kevin S. Moore October 15, 1994
Thomas P. Mullaney April 8, 1987
Richard J. Pearson October 23, 1985
Arthur W. Schmutz December 31, 1985
*10.9 Description of 1999 Executive Officer Bonus Arrangement.
*10.10 Directors' Deferred Compensation and Retirement Plan, as amended
October 29, 1993. Incorporated by reference to Exhibit 10.9 to Form
10-K for the year ended December 31, 1993.
*10.11 Ducommun Incorporated Executive Retirement Plan dated May 5, 1993.
Incorporated by reference to Exhibit 10.2 to Form 10-Q for the quarter
ended July 3, 1993.
*10.12 Ducommun Incorporated Executive Compensation Deferral Plan dated May
5, 1993. Incorporated by reference to Exhibit 10.3 to Form 10-Q for
the quarter ended July 3, 1993.
*10.13 Ducommun Incorporated Executive Compensation Deferral Plan No. 2 dated
October 15, 1994. Incorporated by reference to Exhibit 10.12 to Form
10-K for the year ended December 31, 1994.
11 Reconciliation of the Numerators and Denominators of the Basic and
Diluted Earnings Per Share Computations
13 1998 Annual Report to Shareholders (not deemed to be filed except as
previously incorporated by reference).
21 Subsidiaries of Registrant
23 Consent of PricewaterhouseCoopers LLP
27 Financial Data Schedule
-------------------
* Indicates an executive compensation plan or arrangement.
Dates Referenced Herein and Documents Incorporated by Reference
17 Subsequent Filings that Reference this Filing
↑Top
Filing Submission 0000892569-99-000620 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
About — Privacy — Redactions — Help —
Mon., Apr. 29, 5:58:20.1pm ET 
