UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 29, 2007
DUCOMMUN INCORPORATED
(Exact name of registrant as specified in its charter)
| Delaware | 001-08174 | 95-0693330 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 23301 Wilmington Avenue, Carson, California | 90745-6209 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (310) 513-7280
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02. | Results of Operations and Financial Condition. |
Ducommun Incorporated issued a press release on October 29, 2007 in the form attached hereto as Exhibit 99.1.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
The following exhibit is furnished as part of this report:
| Exhibit Number |
Description of Exhibit | |
| 99.1 | Ducommun Incorporated issued a press release on October 29, 2007 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DUCOMMUN INCORPORATED | ||||
| (Registrant) | ||||
| Date: October 29, 2007 | By: | /s/ James S. Heiser | ||
| James S. Heiser | ||||
| Vice President and General Counsel | ||||
EXHIBIT 99.1
| CONTACT: |
Joseph C. Berenato | |
| Chairman, President and Chief Executive Officer | ||
| (310) 513-7209 |
FOR IMMEDIATE RELEASE
DUCOMMUN INCORPORATED REPORTS RESULTS FOR THE THIRD QUARTER ENDED
SEPTEMBER 29, 2007
LOS ANGELES, California (October 29, 2007) – Ducommun Incorporated (NYSE: DCO) today reported results for its third quarter ended September 29, 2007.
Sales for the third quarter of 2007 were $94.7 million, compared to $81.6 million for the third quarter of 2006. Net income for the third quarter of 2007 was $5.8 million, or $0.55 per diluted share, compared to net income of $4.1 million, or $0.40 per diluted share, for the comparable period last year.
Sales for the third quarter of 2007 increased 16% from the same period last year primarily due to an increase in commercial sales. The Company’s mix of business in the third quarter of 2007 was approximately 60% military, 38% commercial and 2% space, compared to 66% military, 31% commercial and 3% space in the third quarter of 2006.
Gross profit, as a percentage of sales, increased to 21.7% in the third quarter of 2007 from 20.8% in the third quarter of 2006. Selling, general and administrative (SG&A) expenses increased to $11.8 million, compared to $10.4 million in the third quarter of 2006. The increase in SG&A expenses was primarily the result of higher bonus accruals in 2007 and higher expenses related to the growth in sales. Net income for the third quarter of 2007 increased 42% from the third quarter of 2006 primarily due to the reasons stated above. The Company’s effective tax rate for the third quarter of 2007 was 27.7% compared to 30.1% in the third quarter of 2006.
Sales for the first nine months of 2007 were $273.8 million, compared to $231.2 million for the first nine months of 2006. Net income for the first nine months of 2007 was $14.2 million, or $1.36 per diluted share, compared to net income of $10.0 million, or $0.97 per diluted share, for the comparable period last year.
Sales for the first nine months of 2007 increased 18% from the same period last year primarily due to an increase in commercial sales. The Company’s mix of business in the first nine months of 2007 was approximately 61% military, 37% commercial and 2% space, compared to 67% military, 31% commercial and 2% space in the first nine months of 2006.
Gross profit, as a percentage of sales, increased to 21.5% in the first nine months of 2007 from 20.2% in the first nine months of 2006. Selling, general and administrative (SG&A) expenses, as a percentage of sales, increased to 13.2% in the first nine months of 2007 from 12.8% in the first nine months of 2006. The increase in SG&A expenses as a percentage of sales was primarily the result of higher bonus accruals in 2007 and expenses of the WiseWave and CMP businesses which were acquired in the second and third quarters of 2006, respectively.
Net income for the first nine months of 2007 increased 42% from the first nine months of 2006 primarily due to the reasons stated above and a lower effective tax rate, partially offset by higher interest expense in the first nine months of 2007. The Company’s effective tax rate for the first nine months of 2007 was 30.9% compared to 34.1% in the first nine months of 2006.
Joseph C. Berenato, chairman, president and chief executive officer of Ducommun, stated, “Our continued strong operating performance reflects our ongoing efforts to drive Ducommun forward by focusing on our key themes of One Company, Operational Excellence and Profitable Growth. Both our military and commercial markets remain strong. Internally, we are benefiting from the success of our Lean Six Sigma activities. We intend to augment these efforts with acquisitions that will add operational and technological capabilities to our existing businesses. Through these efforts, we are becoming more important to our key customers.”
Founded in 1849, Ducommun Incorporated provides engineering and manufacturing services to the aerospace and defense industry.
A teleconference with Joseph C. Berenato, the Company’s chairman, president and chief executive officer, and Gregory A. Hann, the Company’s vice president, chief financial officer and treasurer, will be held today at 7:30 AM PT (10:30 AM ET). To participate in the teleconference, please call 866-383-8009 (international 617-597-5342) approximately ten minutes prior to the conference time stated above. The participant passcode is 20289123. Mr. Berenato and Mr. Hann will be speaking on behalf of the company and anticipate the meeting and Q&A period to last approximately 40 minutes.
This call is being webcast by Thomson/CCBN and can be accessed at Ducommun’s web site at www.ducommun.com. Conference call replay will be available from the Company’s web site at www.ducommun.com. The statements made in this press release include forward-looking statements that 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, production rates for Boeing commercial aircraft, the C-17 and Apache helicopter rotor blade programs, the level of defense spending, competitive pricing pressures, manufacturing inefficiencies, start-up costs and possible overruns on new contracts, 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, possible goodwill impairment, availability of raw materials and components from suppliers, and other factors beyond the Company’s control. See the Company’s Form 10-K for the year ended December 31, 2006 and Form 10-Q for the quarter ended September 29, 2007 for a more detailed discussion of these and other risk factors and contingencies.
[Financial Table Follows]
DUCOMMUN INCORPORATED AND SUBSIDIARIES
COMPARATIVE DATA
CONSOLIDATED INCOME STATEMENT
| Three Months Ended | Nine Months Ended | |||||||||||||||
| Sept. 29, 2007 | Sept. 30, 2006 | Sept. 29, 2007 | Sept. 30, 2006 | |||||||||||||
| Net Sales |
$ | 94,665,000 | $ | 81,557,000 | $ | 273,821,000 | $ | 231,195,000 | ||||||||
| Operating Costs and Expenses: |
||||||||||||||||
| Cost of Goods Sold |
74,135,000 | 64,612,000 | 215,020,000 | 184,508,000 | ||||||||||||
| Selling, General & Administrative Expenses |
11,831,000 | 10,374,000 | 36,191,000 | 29,609,000 | ||||||||||||
| Total |
85,966,000 | 74,986,000 | 251,211,000 | 214,117,000 | ||||||||||||
| Operating Income |
8,699,000 | 6,571,000 | 22,610,000 | 17,078,000 | ||||||||||||
| Interest Expense |
(628,000 | ) | (704,000 | ) | (2,045,000 | ) | (1,868,000 | ) | ||||||||
| Income Tax Expense |
(2,239,000 | ) | (1,768,000 | ) | (6,362,000 | ) | (5,181,000 | ) | ||||||||
| Net Income |
$ | 5,832,000 | $ | 4,099,000 | $ | 14,203,000 | $ | 10,029,000 | ||||||||
| Earnings Per Share: |
||||||||||||||||
| Basic Earnings Per Share |
$ | 0.56 | $ | 0.40 | $ | 1.37 | $ | 0.98 | ||||||||
| Diluted Earnings Per Share |
0.55 | 0.40 | 1.36 | 0.97 | ||||||||||||
| Weighted Averaged Number of Common Shares Outstanding: |
||||||||||||||||
| Basic |
10,409,000 | 10,231,000 | 10,357,000 | 10,195,000 | ||||||||||||
| Diluted |
10,560,000 | 10,292,000 | 10,440,000 | 10,287,000 | ||||||||||||
DUCOMMUN INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
| (Unaudited) September 29, 2007 |
December 31, 2006 | |||||||
| Assets |
||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
387 | 378 | ||||||
| Accounts receivable, less allowance for doubtful accounts |
46,273 | 42,658 | ||||||
| Unbilled receivables |
4,170 | 3,482 | ||||||
| Inventories |
75,277 | 64,587 | ||||||
| Deferred income taxes |
5,967 | 6,116 | ||||||
| Other current assets |
6,269 | 5,521 | ||||||
| Total Current Assets |
138,343 | 122,742 | ||||||
| Property and Equipment, Net |
55,475 | 52,987 | ||||||
| Goodwill, Net |
106,632 | 106,628 | ||||||
| Other Assets |
12,797 | 14,676 | ||||||
| $ | 313,247 | $ | 297,033 | |||||
| Liabilities and Shareholders’ Equity |
||||||||
| Current Liabilities: |
||||||||
| Current portion of long-term debt |
$ | 1,855 | $ | 1,196 | ||||
| Accounts payable |
20,885 | 32,948 | ||||||
| Accrued liabilities |
35,482 | 33,243 | ||||||
| Total Current Liabilities |
58,222 | 67,387 | ||||||
| Long-Term Debt, Less Current Portion |
32,480 | 29,240 | ||||||
| Deferred Income Taxes |
5,705 | 6,670 | ||||||
| Other Long-Term Liabilities |
9,892 | 6,711 | ||||||
| Total Liabilities |
106,299 | 110,008 | ||||||
| Commitments and Contingencies |
||||||||
| Shareholders’ Equity: |
||||||||
| Common Stock |
105 | 103 | ||||||
| Additional paid-in-capital |
51,711 | 46,320 | ||||||
| Retained earnings |
156,773 | 142,760 | ||||||
| Accumulated other comprehensive loss |
(1,641 | ) | (2,158 | ) | ||||
| Total Shareholders’ Equity |
206,948 | 187,025 | ||||||
| $ | 313,247 | $ | 297,033 | |||||
###