Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended |
Sep. 28, 2013 | |
Document Information [Line Items] | |
Document Type | 10-Q |
Amendment Flag | FALSE |
Document Period End Date | 28-Sep-13 |
Document Fiscal Year Focus | 2013 |
Document Fiscal Period Focus | Q3 |
Trading Symbol | DCO |
Entity Registrant Name | DUCOMMUN INC /DE/ |
Entity Central Index Key | 30305 |
Current Fiscal Year End Date | -19 |
Entity Filer Category | Accelerated Filer |
Entity Common Stock, Shares Outstanding | 10,780,169 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Income (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 28, 2013 | Sep. 29, 2012 | Sep. 28, 2013 | Sep. 29, 2012 |
Net Sales | $181,288 | $184,097 | $548,675 | $553,145 |
Cost of Sales | 148,984 | 148,517 | 446,202 | 447,143 |
Gross Profit | 32,304 | 35,580 | 102,473 | 106,002 |
Selling, General and Administrative Expenses | 20,351 | 21,340 | 65,175 | 65,891 |
Operating Income | 11,953 | 14,240 | 37,298 | 40,111 |
Interest Expense | 7,403 | 8,241 | 22,668 | 24,714 |
Income Before Taxes | 4,550 | 5,999 | 14,630 | 15,397 |
Income tax expense (benefit) | -86 | 894 | 783 | 2,395 |
Net Income | $4,636 | $5,105 | $13,847 | $13,002 |
Earnings Per Share | ||||
Basic earnings per share | $0.43 | $0.48 | $1.30 | $1.23 |
Diluted earnings per share | $0.42 | $0.48 | $1.28 | $1.23 |
Weighted-Average Number of Common Shares Outstanding | ||||
Basic | 10,722 | 10,595 | 10,657 | 10,575 |
Diluted | 10,917 | 10,633 | 10,785 | 10,588 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | 9 Months Ended | ||||
In Thousands, unless otherwise specified | Sep. 28, 2013 | Sep. 29, 2012 | Sep. 28, 2013 | Sep. 29, 2012 | ||
Net Income | $4,636 | $5,105 | $13,847 | $13,002 | ||
Other Comprehensive Loss | ||||||
Amortization of actuarial loss and prior service costs, net of tax benefit of $102 and $306 for the three and nine months of 2013, respectively | -172 | [1] | -516 | [1] | ||
Other Comprehensive Loss | -172 | -516 | ||||
Comprehensive Income | $4,464 | $5,105 | $13,331 | $13,002 | ||
[1] | Amounts in parenthesis indicate reductions to net income upon reclassification from accumulated other comprehensive loss. |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 28, 2013 | Sep. 28, 2013 | ||
Amortization of actuarial loss and prior service costs, tax benefit | $102 | [1] | $306 | [1] |
[1] | Amounts in parenthesis indicate reductions to net income upon reclassification from accumulated other comprehensive loss. |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Sep. 28, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Current Assets | ||
Cash and cash equivalents | $32,597 | $46,537 |
Accounts receivable, net | 92,637 | 97,300 |
Unbilled receivables | 6,615 | 3,556 |
Inventories | 148,524 | 148,318 |
Production cost of contracts | 19,926 | 17,960 |
Deferred income taxes | 7,110 | 10,459 |
Other current assets | 16,890 | 10,441 |
Total Current Assets | 324,299 | 334,571 |
Property and Equipment, Net | 93,840 | 98,383 |
Goodwill | 161,940 | 161,940 |
Intangibles, Net | 168,188 | 176,356 |
Other Assets | 11,779 | 13,824 |
Total Assets | 760,046 | 785,074 |
Current Liabilities | ||
Current portion of long-term debt | 3,029 | 3,042 |
Accounts payable | 49,668 | 52,578 |
Accrued liabilities | 39,320 | 52,716 |
Total Current Liabilities | 92,017 | 108,336 |
Long-Term Debt, Less Current Portion | 340,184 | 362,702 |
Deferred Income Taxes | 64,504 | 67,808 |
Other Long-Term Liabilities | 22,097 | 23,553 |
Total Liabilities | 518,802 | 562,399 |
Commitments and Contingencies | ||
Shareholders' Equity | ||
Common stock - $0.01 par value; authorized 35,000,000 shares; issued 10,923,469 shares in 2013 and 10,738,065 shares in 2012 | 109 | 107 |
Treasury stock - held in treasury 143,300 shares in 2013 and 2012 | -1,924 | -1,924 |
Additional paid-in capital | 70,679 | 66,475 |
Retained earnings | 179,332 | 165,485 |
Accumulated other comprehensive loss | -6,952 | -7,468 |
Total Shareholders' Equity | 241,244 | 222,675 |
Total Liabilities and Shareholders' Equity | $760,046 | $785,074 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 28, 2013 | Dec. 31, 2012 |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 35,000,000 | 35,000,000 |
Common stock, shares issued | 10,923,469 | 10,738,065 |
Treasury stock shares, held in treasury | 143,300 | 143,300 |
Condensed_Consolidated_Stateme3
Condensed Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 28, 2013 | Sep. 29, 2012 |
Cash Flows from Operating Activities | ||
Net Income | $13,847 | $13,002 |
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | ||
Depreciation and amortization | 21,375 | 21,461 |
Stock-based compensation expense | 1,711 | 1,528 |
Deferred income tax provision (benefit) | 45 | -3,600 |
Income tax benefit from stock-based compensation | 1,250 | 324 |
Excess tax benefit from stock-based compensation | -217 | |
Provision for (recovery of) doubtful accounts | -141 | 59 |
Other | 1,434 | 2,080 |
Changes in Assets and Liabilities | ||
Accounts receivable (increase) decrease | 4,804 | -6,934 |
Unbilled receivables increase | -3,059 | -241 |
Inventories increase | -206 | -7,962 |
Production cost of contracts increase | -3,396 | -1,473 |
Other assets (increase) decrease | -5,974 | 6,398 |
Accounts payable decrease | -2,910 | -3,076 |
Accrued and other liabilities decrease | -14,069 | -10,182 |
Net Cash Provided by Operating Activities | 14,494 | 11,384 |
Cash Flows from Investing Activities | ||
Purchases of property and equipment | -7,321 | -12,330 |
Proceeds from the sales of assets | 123 | 18 |
Net Cash Used in Investing Activities | -7,198 | -12,312 |
Cash Flows from Financing Activities | ||
Repayments of term loan and other debt | -22,518 | -11,464 |
Net cash effect of exercise related to stock options | 1,246 | -186 |
Excess tax benefit from stock-based compensation | 217 | |
Deferred financing cost paid | -181 | |
Net Cash Used in Financing Activities | -21,236 | -11,650 |
Net Decrease in Cash and Cash Equivalents | -13,940 | -12,578 |
Cash and Cash Equivalents at Beginning of Period | 46,537 | 41,449 |
Cash and Cash Equivalents at End of Period | $32,597 | $28,871 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended | ||||||||||||||||
Sep. 28, 2013 | |||||||||||||||||
Summary of Significant Accounting Policies | Note 1. Summary of Significant Accounting Policies | ||||||||||||||||
Basis of Presentation | |||||||||||||||||
The consolidated financial statements include the accounts of Ducommun Incorporated and its subsidiaries (“Ducommun”, the “Company”, “we”, “us” or “our”), after eliminating intercompany balances and transactions. The December 31, 2012 condensed consolidated balance sheet data was derived from audited financial statements, but does not contain all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). | |||||||||||||||||
Our significant accounting policies were described in Part II, Item 8. “Note 1. Summary of Significant Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2012. We follow the same accounting policies for interim reporting, with the exception of accounting principles adopted as of January 1, 2013, as discussed below in Recent Accounting Pronouncements. The financial information included in this Quarterly Report on Form 10-Q should be read in conjunction with our consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012. | |||||||||||||||||
In the opinion of management, all adjustments, consisting of recurring accruals, have been made that are necessary to fairly state our condensed consolidated financial position, statements of income, comprehensive income and cash flows in accordance with GAAP for the periods covered by this Quarterly Report on Form 10-Q. The results of operations for the three and nine months ended September 28, 2013 are not necessarily indicative of the results to be expected for the full year ending December 31, 2013. | |||||||||||||||||
Certain prior year reclassifications have been made to conform to the current year financial statement presentation. | |||||||||||||||||
Use of Estimates | |||||||||||||||||
Certain amounts and disclosures included in the condensed consolidated financial statements required management to make estimates and judgments that affect the amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. | |||||||||||||||||
Description of Business | |||||||||||||||||
We are a global provider of engineering and manufacturing products and services primarily to the aerospace and defense industry through a wide range of products and services in the primary businesses of electronics, structures and integrated solutions. Our subsidiaries are organized into two strategic businesses, each of which is a reportable operating segment. Ducommun AeroStructures (“DAS”) designs, engineers and manufactures large, complex contoured aerospace structural components and assemblies and supplies composite and metal bonded structures and assemblies. Ducommun LaBarge Technologies (“DLT”) designs, engineers and manufactures high-reliability products used in worldwide technology-driven markets including aerospace and defense, natural resources, industrial and medical and other end-use markets. DLT’s product offerings range from prototype development to complex assemblies. Each reportable operating segment follows the same accounting principles. | |||||||||||||||||
Accumulated Other Comprehensive Loss | |||||||||||||||||
Accumulated other comprehensive loss, as reflected on the condensed consolidated balance sheets, was composed of cumulative pension and liability adjustments of $7.0 million and $7.5 million, net of tax, at September 28, 2013 and December 31, 2012, respectively. | |||||||||||||||||
Earnings per Share | |||||||||||||||||
Basic earnings per share are computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding in each period. Diluted earnings per share are computed by dividing the sum of income available to common shareholders plus income associated with dilutive securities by the weighted-average number of common shares outstanding, plus any potential dilutive shares that could be issued if exercised or converted into common stock in each period. | |||||||||||||||||
The net earnings and weighted-average number of common shares outstanding used to compute earnings per share were as follows: | |||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 28, | September 29, | September 28, | September 29, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Net earnings (a) | $ | 4,636 | $ | 5,105 | $ | 13,847 | $ | 13,002 | |||||||||
Weighted-average number of common shares outstanding | |||||||||||||||||
Basic weighted-average common shares outstanding (b) | 10,722 | 10,595 | 10,657 | 10,575 | |||||||||||||
Dilutive potential common shares | 195 | 38 | 128 | 13 | |||||||||||||
Diluted weighted-average common shares outstanding (c) | 10,917 | 10,633 | 10,785 | 10,588 | |||||||||||||
Earnings per share | |||||||||||||||||
Basic (a/b) | $ | 0.43 | $ | 0.48 | $ | 1.3 | $ | 1.23 | |||||||||
Diluted (a/c) | $ | 0.42 | $ | 0.48 | $ | 1.28 | $ | 1.23 | |||||||||
Potentially dilutive stock options and stock units to purchase common stock, as shown below, were excluded from the computation of diluted earnings per share because their inclusion would have been anti-dilutive. However, these shares may be potentially dilutive common shares in the future. | |||||||||||||||||
(In thousands) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 28, | September 29, | September 28, | September 29, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Stock options and stock units | 219 | 1,012 | 612 | 1,015 | |||||||||||||
Cash Equivalents | |||||||||||||||||
Cash equivalents consist of highly liquid instruments purchased with original maturities of three months or less. These assets are valued at cost, which approximates fair value, which we classify as Level 1. See Fair Value below. | |||||||||||||||||
Out of Period Adjustments | |||||||||||||||||
During the third quarter of 2013, we determined that approximately $1.1 million of inventory had not been valued correctly at our DLT operating segment for periods originating in 2010 through the second quarter of 2013. The errors were attributed to the following quarters; $0.3 million in Q2 2010, $0.5 million in Q2 2011, $0.1 million in Q4 2012, $0.1 million in Q1 2013 and $0.1 million in Q2 2013. We assessed the materiality of these errors and concluded they were immaterial to currently forecasted annual amounts and previously reported annual and interim amounts. We corrected the errors in the third quarter of 2013 and recorded a $1.1 million charge for inventory reserves for the DLT operating segment. | |||||||||||||||||
During the first quarter of 2012, we determined that approximately $0.4 million of engineering research and development costs had been capitalized in error in inventory in prior periods. We assessed the materiality of this error and concluded it was immaterial to currently reported annual and previously reported annual and interim amounts. We corrected the error in the first quarter of 2012 and did not restate our condensed consolidated financial statements for the prior annual or interim periods. | |||||||||||||||||
Fair Value | |||||||||||||||||
Assets and liabilities that are measured, recorded or disclosed at fair value on a recurring basis are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1, the highest level, refers to the values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant observable inputs. Level 3, the lowest level, includes fair values estimated using significant unobservable inputs. | |||||||||||||||||
Recent Accounting Pronouncements | |||||||||||||||||
New Accounting Guidance Adopted in 2013 | |||||||||||||||||
In February 2013, the Financial Accounting Standards Board (the “FASB”) issued guidance to improve the reporting of reclassifications out of accumulated other comprehensive income/loss. The new guidance requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income/loss on the respective line items in net income if the amount being reclassified is required under GAAP to be reclassified in its entirety to net income. For other amounts that are not required under GAAP to be reclassified in their entirety to net income in the same reporting period, cross-reference to other disclosures that provide additional detail is required. Early adoption is permitted. We adopted this new guidance effective January 1, 2013. This guidance affects disclosures only. | |||||||||||||||||
In January 2013, the FASB issued guidance clarifying the scope of disclosures about offsetting assets and liabilities and requires retrospective application for all periods presented. We adopted this new guidance effective January 1, 2013. The adoption of this new guidance did not have any effect on our condensed consolidated financial statements. In December 2011, the FASB issued guidance enhancing disclosure requirements about the nature of an entity’s right to offset and related arrangements associated with its financial instruments and derivative instruments. The new guidance requires the disclosure of the gross amounts subject to rights of set-off, amounts offset in accordance with the accounting standards followed, and the related net exposure. The new guidance requires retrospective application for all comparable periods presented. We adopted this new guidance effective January 1, 2013. The adoption of this new guidance did not have any effect on our condensed consolidated financial statements. | |||||||||||||||||
New Accounting Guidance Not Yet Adopted | |||||||||||||||||
In July 2013, the FASB issued guidance that requires the netting of unrecognized tax benefits against a deferred tax asset for a loss or other carryforward that would apply in settlement of the uncertain tax positions. This guidance will be effective for fiscal years beginning after December 15, 2013, which will be our fiscal year 2014, with early adoption permitted. We currently expect the adoption of this guidance will reduce deferred tax assets by approximately $2.2 million. | |||||||||||||||||
In February 2013, the FASB issued guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, except for obligations addressed within existing guidance in GAAP. The new guidance will be effective for us beginning January 1, 2014. Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our condensed consolidated financial statements. |
Inventories
Inventories | 9 Months Ended | ||||||||
Sep. 28, 2013 | |||||||||
Inventories | Note 2. Inventories | ||||||||
Inventories consisted of the following: | |||||||||
(In thousands) | |||||||||
September 28, | December 31, | ||||||||
2013 | 2012 | ||||||||
Raw materials and supplies | $ | 80,672 | $ | 84,545 | |||||
Work in process | 68,688 | 67,132 | |||||||
Finished goods | 10,816 | 13,031 | |||||||
160,176 | 164,708 | ||||||||
Less progress payments | 11,652 | 16,390 | |||||||
Total | $ | 148,524 | $ | 148,318 | |||||
Goodwill
Goodwill | 9 Months Ended | ||||||||||||
Sep. 28, 2013 | |||||||||||||
Goodwill | Note 3. Goodwill | ||||||||||||
Goodwill was as follows: | |||||||||||||
(In thousands) | |||||||||||||
Ducommun | |||||||||||||
Ducommun | LaBarge | Consolidated | |||||||||||
AeroStructures | Technologies | Ducommun | |||||||||||
Gross goodwill | $ | 57,243 | $ | 184,970 | $ | 242,213 | |||||||
Accumulated goodwill impairment | — | (80,273 | ) | (80,273 | ) | ||||||||
Balance at December 31, 2012 | $ | 57,243 | $ | 104,697 | $ | 161,940 | |||||||
Balance at September 28, 2013 | $ | 57,243 | $ | 104,697 | $ | 161,940 | |||||||
LongTerm_Debt
Long-Term Debt | 9 Months Ended | ||||||||
Sep. 28, 2013 | |||||||||
Long-Term Debt | Note 4. Long-Term Debt | ||||||||
Long-term debt and the current period interest rates were as follows: | |||||||||
(In thousands) | |||||||||
September 28, | December 31, | ||||||||
2013 | 2012 | ||||||||
Senior unsecured notes (fixed 9.75%) | $ | 200,000 | $ | 200,000 | |||||
Senior secured term loan (floating 4.75%) | 140,125 | 162,625 | |||||||
Promissory note (fixed 5.0%) and other debt (fixed 5.41%) | 3,088 | 3,119 | |||||||
Total Debt | 343,213 | 365,744 | |||||||
Less Current Portion | 3,029 | 3,042 | |||||||
Total Long-Term Debt | $ | 340,184 | $ | 362,702 | |||||
Weighted-average interest rate | 7.67 | % | 7.82 | % | |||||
We made voluntary principal prepayments of $7.5 million each on our senior secured term loan on September 27, 2013, April 30, 2013 and March 28, 2013. | |||||||||
On March 28, 2013, we executed an amendment to our Credit Agreement dated June 11, 2011 (“Credit Agreement”) which completed a repricing of our senior secured term loan and revolving credit facility. The repricing reduced the interest rate spread on the senior secured term loan and revolving credit facility by 50 basis points and the interest rate floor by 25 basis points. In connection with this repricing, we recognized $0.5 million of financing and legal costs which were included in selling, general and administrative expenses in the first quarter of 2013. | |||||||||
At September 28, 2013, we had $58.4 million of unused borrowing capacity under the revolving credit facility, after deducting $1.6 million for standby letters of credit. | |||||||||
At September 28, 2013, we were in compliance with all covenants required by the Credit Agreement. At September 28, 2013, there were no amounts outstanding that would have triggered the leverage covenant under the Credit Agreement. However, we would have been in compliance with such leverage covenant. Under the terms of the Credit Agreement, if, during a given fiscal quarter, (i) the sum of (a) any amounts outstanding under the revolving credit facility plus (b) the amount drawn under any letters of credit exceeds $1.0 million; or (ii) the aggregate amount of outstanding letters of credit exceeds $5.0 million, the revolving credit facility will be subject to a maximum total leverage ratio. | |||||||||
On October 18, 2013, we executed an amendment to our Credit Agreement, which increases the maximum leverage ratio, as defined, by 0.75 in all future periods. | |||||||||
The carrying amount of long-term debt approximates fair value, except for the senior unsecured notes for which the fair value was $223.5 million. Fair value was estimated using Level 2 inputs, based on the terms of the related debt, recent transactions and estimates using interest rates currently available to us for debt with similar terms and remaining maturities. |
Shareholders_Equity
Shareholders' Equity | 9 Months Ended |
Sep. 28, 2013 | |
Shareholders' Equity | Note 5. Shareholders’ Equity |
We are authorized to issue five million shares of preferred stock. At September 28, 2013 and December 31, 2012, no preferred shares were issued or outstanding. |
Employee_Benefit_Plans
Employee Benefit Plans | 9 Months Ended | ||||||||||||||||
Sep. 28, 2013 | |||||||||||||||||
Employee Benefit Plans | Note 6. Employee Benefit Plans | ||||||||||||||||
The components of net periodic pension expense were as follows: | |||||||||||||||||
(In thousands) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 28, | September 29, | September 28, | September 29, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Service cost | $ | 211 | $ | 241 | $ | 633 | $ | 723 | |||||||||
Interest cost | 290 | 238 | 870 | 714 | |||||||||||||
Expected return on plan assets | (306 | ) | (265 | ) | (918 | ) | (795 | ) | |||||||||
Amortization of actuarial loss and prior service costs | 274 | 287 | 822 | 861 | |||||||||||||
Net periodic pension cost | $ | 469 | $ | 501 | $ | 1,407 | $ | 1,503 | |||||||||
The components of the reclassifications from accumulated other comprehensive loss to net income during the three and nine months ended September 28, 2013 were as follows: | |||||||||||||||||
(In thousands) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 28, | September 28, | ||||||||||||||||
2013 (a) | 2013 (a) | ||||||||||||||||
Amortization of actuarial loss and prior service costs-total before tax (b) | $ | (274 | ) | $ | (822 | ) | |||||||||||
Tax benefit | 102 | 306 | |||||||||||||||
Net of tax | $ | (172 | ) | $ | (516 | ) | |||||||||||
(a) | Amounts in parenthesis indicate reductions to net income upon reclassification from accumulated other comprehensive loss. | ||||||||||||||||
(b) | The amount is included in the computation of net periodic pension cost. |
Indemnification
Indemnification | 9 Months Ended |
Sep. 28, 2013 | |
Indemnification | Note 7. Indemnification |
We have made guarantees and indemnities under which we may be required to make payments to a guaranteed or indemnified party, in relation to certain transactions, including revenue transactions in the ordinary course of business. In connection with certain facility leases, we have indemnified our lessors for certain claims arising from the facility or the lease. We indemnify our directors and officers to the maximum extent permitted under the laws of the State of Delaware. However, we have a directors and officers insurance policy that may reduce our exposure in certain circumstances and may enable us to recover a portion of future amounts that may be payable, if any. The duration of the guarantees and indemnities varies and, in many cases, is indefinite but subject to statute of limitations. The majority of guarantees and indemnities do not provide any limitations of the maximum potential future payments we could be obligated to make. Historically, payments related to these guarantees and indemnities have been immaterial. We estimate the fair value of our indemnification obligations as insignificant based on this history and insurance coverage and have, therefore, not recorded any liability for these guarantees and indemnities in the accompanying condensed consolidated balance sheets. |
Income_Taxes
Income Taxes | 9 Months Ended |
Sep. 28, 2013 | |
Income Taxes | Note 8. Income Taxes |
We recorded an income tax benefit of $0.1 million (an effective tax benefit of 1.9%) in the third quarter of 2013, compared to an income tax expense of $0.9 million (an effective tax rate of 14.9%) in the third quarter of 2012. We recorded an income tax expense of $0.8 million (an effective tax rate of 5.4%) in the first nine months of 2013, compared to an income tax expense of $2.4 million (an effective tax rate of 15.6%) in the comparable period of 2012. | |
The effective tax rate in the nine months ended September 28, 2013 included $2.0 million of 2012 federal research and development tax credit benefits recognized in the first quarter of 2013 as a result of the American Taxpayer Relief Act of 2012, passed in January 2013. This Act includes an extension of the federal research and development tax credit for the amounts paid or incurred after December 31, 2011 and before January 1, 2014. We recognized total federal research and development tax credit benefits of $2.5 million in the first quarter of 2013, $0.5 million in the second quarter of 2013, and $0.7 million in the third quarter of 2013. We expect to recognize approximately $0.5 million for these benefits in the fourth quarter of 2013. The effective tax rate for the three and nine months ended September 29, 2012 included no federal research and development tax credit benefits. The effective tax rate for the third quarters of both 2013 and 2012 benefitted from expiring statutes and other favorable tax adjustments. In addition, the first nine months of 2012 included a tax benefit of $1.6 million as a result of the 2011 acquisition of LaBarge Inc., which allowed us to file state consolidated tax returns in certain states. | |
Our unrecognized tax benefits were $2.5 million and $1.7 million at September 28, 2013 and December 31, 2012, respectively. Most of these amounts, if recognized, would affect our annual income tax rate. |
Contingencies
Contingencies | 9 Months Ended |
Sep. 28, 2013 | |
Contingencies | Note 9. Contingencies |
Ducommun is a defendant in a lawsuit entitled United States of America ex rel Taylor Smith, Jeannine Prewitt and James Ailes v. The Boeing Company and Ducommun Inc., filed in the United States District Court for the District of Kansas (the “District Court”). The lawsuit is a qui tam action brought by three former Boeing employees (“Relators”) against Boeing and Ducommun on behalf of the United States of America for violations of the United States False Claims Act. The lawsuit alleges that Ducommun sold unapproved parts to the Boeing Company (“Boeing”), which were installed by Boeing in aircraft ultimately sold to the United States Government and that Boeing and Ducommun submitted or caused to be submitted false claims for payment relating to 21 aircraft sold by Boeing to the United States Government. The lawsuit seeks damages in an amount equal to three times the amount of damages the United States Government sustained because of the defendants’ actions, plus a civil penalty of $10 thousand for each false claim made on or before September 28, 1999, and $11 thousand for each false claim made on or after September 28, 1999, together with attorneys’ fees and costs. The Relators claim that the United States Government sustained damages of $1.6 billion (the contract purchase price of 21 aircraft) or, alternatively, $851 million (the alleged diminished value and increased maintenance cost of the 21 aircraft). After investigating the allegations, the United States Government has declined to intervene in the lawsuit. Ducommun and Boeing have filed motions for summary judgment to dismiss the lawsuit. The motions for summary judgment are pending before the District Court. Ducommun intends to defend itself vigorously against the lawsuit. Ducommun, at this time, is unable to estimate what, if any, liability it may have in connection with the lawsuit. | |
DAS has been directed by California environmental agencies to investigate and take corrective action for groundwater contamination at its facilities located in El Mirage and Monrovia, California. Based on currently available information, Ducommun has established a reserve for its estimated liability for such investigation and corrective action of approximately $1.5 million at September 28, 2013, which is reflected in other long-term liabilities on its condensed consolidated balance sheet. | |
DAS also faces liability as a potentially responsible party for hazardous waste disposed at landfills located in Casmalia and West Covina, California. DAS and other companies and government entities have entered into consent decrees with respect to these landfills with the United States Environmental Protection Agency and/or California environmental agencies under which certain investigation, remediation and maintenance activities are being performed. Based on currently available information, Ducommun preliminarily estimates that the range of its future liabilities in connection with the landfill located in West Covina, is between approximately $0.4 million and $3.1 million. Ducommun has established a reserve for its estimated liability, in connection with the West Covina landfill of approximately $0.4 million at September 28, 2013, which is reflected in other long-term liabilities on its condensed consolidated balance sheet. Ducommun’s ultimate liability in connection with these matters will depend upon a number of factors, including changes in existing laws and regulations, the design and cost of construction, operation and maintenance activities, and the allocation of liability among potentially responsible parties. | |
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, Ducommun makes various commitments and incurs contingent liabilities. While it is not feasible to predict the outcome of these matters, Ducommun does not presently expect that any sum it may be required to pay in connection with these matters would have a material adverse effect on its consolidated financial position, results of operations or cash flows. |
Business_Segment_Information
Business Segment Information | 9 Months Ended | ||||||||||||||||||||||||
Sep. 28, 2013 | |||||||||||||||||||||||||
Business Segment Information | Note 10. Business Segment Information | ||||||||||||||||||||||||
We supply products and services primarily to the aerospace and defense industries. Our subsidiaries are organized into two strategic businesses, DAS and DLT, each of which is a reportable operating segment. | |||||||||||||||||||||||||
Financial information by reportable segment was as follows: | |||||||||||||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
% | September 28, | September 29, | % | September 28, | September 29, | ||||||||||||||||||||
Change | 2013 | 2012 | Change | 2013 | 2012 | ||||||||||||||||||||
Net Sales | |||||||||||||||||||||||||
DAS | 1.4 | % | $ | 77,740 | $ | 76,655 | 2.9 | % | $ | 234,437 | $ | 227,832 | |||||||||||||
DLT | (3.6 | )% | 103,548 | 107,442 | (3.4 | )% | 314,238 | 325,313 | |||||||||||||||||
Total Net Sales | (1.5 | )% | $ | 181,288 | $ | 184,097 | (0.8 | )% | $ | 548,675 | $ | 553,145 | |||||||||||||
Segment Operating Income | |||||||||||||||||||||||||
DAS | $ | 7,633 | $ | 7,410 | $ | 23,766 | $ | 21,575 | |||||||||||||||||
DLT (2) | 7,596 | 10,472 | 26,772 | 29,260 | |||||||||||||||||||||
15,229 | 17,882 | 50,538 | 50,835 | ||||||||||||||||||||||
Corporate General and | |||||||||||||||||||||||||
Administrative Expenses (1) (2) (3) | (3,276 | ) | (3,642 | ) | (13,240 | ) | (10,724 | ) | |||||||||||||||||
Total Operating Income | $ | 11,953 | $ | 14,240 | $ | 37,298 | $ | 40,111 | |||||||||||||||||
Depreciation and Amortization | |||||||||||||||||||||||||
Expenses | |||||||||||||||||||||||||
DAS | $ | 2,621 | $ | 2,903 | $ | 7,386 | $ | 7,200 | |||||||||||||||||
DLT | 4,540 | 4,710 | 13,863 | 14,139 | |||||||||||||||||||||
Corporate Administration | 41 | 42 | 126 | 122 | |||||||||||||||||||||
Total Depreciation and | |||||||||||||||||||||||||
Amortization Expenses | $ | 7,202 | $ | 7,655 | $ | 21,375 | $ | 21,461 | |||||||||||||||||
Capital Expenditures | |||||||||||||||||||||||||
DAS | $ | 1,159 | $ | 2,074 | $ | 4,208 | $ | 6,360 | |||||||||||||||||
DLT | 866 | 1,472 | 3,046 | 5,921 | |||||||||||||||||||||
Corporate Administration | 43 | 21 | 67 | 49 | |||||||||||||||||||||
Total Capital Expenditures | $ | 2,068 | $ | 3,567 | $ | 7,321 | $ | 12,330 | |||||||||||||||||
(1) | Includes costs not allocated to either the DLT or DAS operating segments. | ||||||||||||||||||||||||
(2) | The nine-month period of 2012 includes merger-related transaction costs of $0.3 million in Corporate General and Administrative Expenses and $0.4 million in DLT resulting from a change in control provision for certain key executives and employees arising in connection with the acquisition of LaBarge Inc. in June 2011. | ||||||||||||||||||||||||
(3) | The three- and nine-month periods of 2013 include $0.1 million and $1.2 million, respectively, of workers’ compensation insurance expenses included in gross profit and not allocated to the operating segments. The three- and nine-month periods of 2012 include $(0.2) million and $0.4 million, respectively, of workers’ compensation insurance expenses (credits) included in gross profit and not allocated to the operating segments. | ||||||||||||||||||||||||
Segment assets include assets directly identifiable with each segment. Corporate Administration assets include assets not specifically identified with a business segment, including cash. | |||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
September 28, | December 31, | ||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Total Assets | |||||||||||||||||||||||||
DAS | $ | 252,476 | $ | 248,326 | |||||||||||||||||||||
DLT | 447,827 | 465,217 | |||||||||||||||||||||||
Corporate Administration | 59,743 | 71,531 | |||||||||||||||||||||||
Total Assets | $ | 760,046 | $ | 785,074 | |||||||||||||||||||||
Goodwill and Intangibles | |||||||||||||||||||||||||
DAS | $ | 65,775 | $ | 67,459 | |||||||||||||||||||||
DLT | 264,353 | 270,837 | |||||||||||||||||||||||
Total Goodwill and Intangibles | $ | 330,128 | $ | 338,296 |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | ||||||||||||||||
Sep. 28, 2013 | |||||||||||||||||
Basis of Presentation | Basis of Presentation | ||||||||||||||||
The consolidated financial statements include the accounts of Ducommun Incorporated and its subsidiaries (“Ducommun”, the “Company”, “we”, “us” or “our”), after eliminating intercompany balances and transactions. The December 31, 2012 condensed consolidated balance sheet data was derived from audited financial statements, but does not contain all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). | |||||||||||||||||
Our significant accounting policies were described in Part II, Item 8. “Note 1. Summary of Significant Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2012. We follow the same accounting policies for interim reporting, with the exception of accounting principles adopted as of January 1, 2013, as discussed below in Recent Accounting Pronouncements. The financial information included in this Quarterly Report on Form 10-Q should be read in conjunction with our consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012. | |||||||||||||||||
In the opinion of management, all adjustments, consisting of recurring accruals, have been made that are necessary to fairly state our condensed consolidated financial position, statements of income, comprehensive income and cash flows in accordance with GAAP for the periods covered by this Quarterly Report on Form 10-Q. The results of operations for the three and nine months ended September 28, 2013 are not necessarily indicative of the results to be expected for the full year ending December 31, 2013. | |||||||||||||||||
Certain prior year reclassifications have been made to conform to the current year financial statement presentation. | |||||||||||||||||
Use of Estimates | Use of Estimates | ||||||||||||||||
Certain amounts and disclosures included in the condensed consolidated financial statements required management to make estimates and judgments that affect the amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. | |||||||||||||||||
Description of Business | Description of Business | ||||||||||||||||
We are a global provider of engineering and manufacturing products and services primarily to the aerospace and defense industry through a wide range of products and services in the primary businesses of electronics, structures and integrated solutions. Our subsidiaries are organized into two strategic businesses, each of which is a reportable operating segment. Ducommun AeroStructures (“DAS”) designs, engineers and manufactures large, complex contoured aerospace structural components and assemblies and supplies composite and metal bonded structures and assemblies. Ducommun LaBarge Technologies (“DLT”) designs, engineers and manufactures high-reliability products used in worldwide technology-driven markets including aerospace and defense, natural resources, industrial and medical and other end-use markets. DLT’s product offerings range from prototype development to complex assemblies. Each reportable operating segment follows the same accounting principles. | |||||||||||||||||
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss | ||||||||||||||||
Accumulated other comprehensive loss, as reflected on the condensed consolidated balance sheets, was composed of cumulative pension and liability adjustments of $7.0 million and $7.5 million, net of tax, at September 28, 2013 and December 31, 2012, respectively. | |||||||||||||||||
Earnings Per Share | Earnings per Share | ||||||||||||||||
Basic earnings per share are computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding in each period. Diluted earnings per share are computed by dividing the sum of income available to common shareholders plus income associated with dilutive securities by the weighted-average number of common shares outstanding, plus any potential dilutive shares that could be issued if exercised or converted into common stock in each period. | |||||||||||||||||
The net earnings and weighted-average number of common shares outstanding used to compute earnings per share were as follows: | |||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 28, | September 29, | September 28, | September 29, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Net earnings (a) | $ | 4,636 | $ | 5,105 | $ | 13,847 | $ | 13,002 | |||||||||
Weighted-average number of common shares outstanding | |||||||||||||||||
Basic weighted-average common shares outstanding (b) | 10,722 | 10,595 | 10,657 | 10,575 | |||||||||||||
Dilutive potential common shares | 195 | 38 | 128 | 13 | |||||||||||||
Diluted weighted-average common shares outstanding (c) | 10,917 | 10,633 | 10,785 | 10,588 | |||||||||||||
Earnings per share | |||||||||||||||||
Basic (a/b) | $ | 0.43 | $ | 0.48 | $ | 1.3 | $ | 1.23 | |||||||||
Diluted (a/c) | $ | 0.42 | $ | 0.48 | $ | 1.28 | $ | 1.23 | |||||||||
Potentially dilutive stock options and stock units to purchase common stock, as shown below, were excluded from the computation of diluted earnings per share because their inclusion would have been anti-dilutive. However, these shares may be potentially dilutive common shares in the future. | |||||||||||||||||
(In thousands) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 28, | September 29, | September 28, | September 29, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Stock options and stock units | 219 | 1,012 | 612 | 1,015 | |||||||||||||
Cash Equivalents | Cash Equivalents | ||||||||||||||||
Cash equivalents consist of highly liquid instruments purchased with original maturities of three months or less. These assets are valued at cost, which approximates fair value, which we classify as Level 1. See Fair Value below. | |||||||||||||||||
Out of Period Adjustments | Out of Period Adjustments | ||||||||||||||||
During the third quarter of 2013, we determined that approximately $1.1 million of inventory had not been valued correctly at our DLT operating segment for periods originating in 2010 through the second quarter of 2013. The errors were attributed to the following quarters; $0.3 million in Q2 2010, $0.5 million in Q2 2011, $0.1 million in Q4 2012, $0.1 million in Q1 2013 and $0.1 million in Q2 2013. We assessed the materiality of these errors and concluded they were immaterial to currently forecasted annual amounts and previously reported annual and interim amounts. We corrected the errors in the third quarter of 2013 and recorded a $1.1 million charge for inventory reserves for the DLT operating segment. | |||||||||||||||||
During the first quarter of 2012, we determined that approximately $0.4 million of engineering research and development costs had been capitalized in error in inventory in prior periods. We assessed the materiality of this error and concluded it was immaterial to currently reported annual and previously reported annual and interim amounts. We corrected the error in the first quarter of 2012 and did not restate our condensed consolidated financial statements for the prior annual or interim periods. | |||||||||||||||||
Fair Value | Fair Value | ||||||||||||||||
Assets and liabilities that are measured, recorded or disclosed at fair value on a recurring basis are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1, the highest level, refers to the values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant observable inputs. Level 3, the lowest level, includes fair values estimated using significant unobservable inputs. | |||||||||||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | ||||||||||||||||
New Accounting Guidance Adopted in 2013 | |||||||||||||||||
In February 2013, the Financial Accounting Standards Board (the “FASB”) issued guidance to improve the reporting of reclassifications out of accumulated other comprehensive income/loss. The new guidance requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income/loss on the respective line items in net income if the amount being reclassified is required under GAAP to be reclassified in its entirety to net income. For other amounts that are not required under GAAP to be reclassified in their entirety to net income in the same reporting period, cross-reference to other disclosures that provide additional detail is required. Early adoption is permitted. We adopted this new guidance effective January 1, 2013. This guidance affects disclosures only. | |||||||||||||||||
In January 2013, the FASB issued guidance clarifying the scope of disclosures about offsetting assets and liabilities and requires retrospective application for all periods presented. We adopted this new guidance effective January 1, 2013. The adoption of this new guidance did not have any effect on our condensed consolidated financial statements. In December 2011, the FASB issued guidance enhancing disclosure requirements about the nature of an entity’s right to offset and related arrangements associated with its financial instruments and derivative instruments. The new guidance requires the disclosure of the gross amounts subject to rights of set-off, amounts offset in accordance with the accounting standards followed, and the related net exposure. The new guidance requires retrospective application for all comparable periods presented. We adopted this new guidance effective January 1, 2013. The adoption of this new guidance did not have any effect on our condensed consolidated financial statements. | |||||||||||||||||
New Accounting Guidance Not Yet Adopted | |||||||||||||||||
In July 2013, the FASB issued guidance that requires the netting of unrecognized tax benefits against a deferred tax asset for a loss or other carryforward that would apply in settlement of the uncertain tax positions. This guidance will be effective for fiscal years beginning after December 15, 2013, which will be our fiscal year 2014, with early adoption permitted. We currently expect the adoption of this guidance will reduce deferred tax assets by approximately $2.2 million. | |||||||||||||||||
In February 2013, the FASB issued guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, except for obligations addressed within existing guidance in GAAP. The new guidance will be effective for us beginning January 1, 2014. Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our condensed consolidated financial statements. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 28, 2013 | |||||||||||||||||
Weighted Average Number of Shares Outstanding Used to Compute Earnings Per Share | The net earnings and weighted-average number of common shares outstanding used to compute earnings per share were as follows: | ||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 28, | September 29, | September 28, | September 29, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Net earnings (a) | $ | 4,636 | $ | 5,105 | $ | 13,847 | $ | 13,002 | |||||||||
Weighted-average number of common shares outstanding | |||||||||||||||||
Basic weighted-average common shares outstanding (b) | 10,722 | 10,595 | 10,657 | 10,575 | |||||||||||||
Dilutive potential common shares | 195 | 38 | 128 | 13 | |||||||||||||
Diluted weighted-average common shares outstanding (c) | 10,917 | 10,633 | 10,785 | 10,588 | |||||||||||||
Earnings per share | |||||||||||||||||
Basic (a/b) | $ | 0.43 | $ | 0.48 | $ | 1.3 | $ | 1.23 | |||||||||
Diluted (a/c) | $ | 0.42 | $ | 0.48 | $ | 1.28 | $ | 1.23 | |||||||||
Weighted Average Number of Shares Outstanding Excluded from Computation of Diluted Earnings | Potentially dilutive stock options and stock units to purchase common stock, as shown below, were excluded from the computation of diluted earnings per share because their inclusion would have been anti-dilutive. However, these shares may be potentially dilutive common shares in the future. | ||||||||||||||||
(In thousands) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 28, | September 29, | September 28, | September 29, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Stock options and stock units | 219 | 1,012 | 612 | 1,015 | |||||||||||||
Inventories_Tables
Inventories (Tables) | 9 Months Ended | ||||||||
Sep. 28, 2013 | |||||||||
Summary of Inventories | Inventories consisted of the following: | ||||||||
(In thousands) | |||||||||
September 28, | December 31, | ||||||||
2013 | 2012 | ||||||||
Raw materials and supplies | $ | 80,672 | $ | 84,545 | |||||
Work in process | 68,688 | 67,132 | |||||||
Finished goods | 10,816 | 13,031 | |||||||
160,176 | 164,708 | ||||||||
Less progress payments | 11,652 | 16,390 | |||||||
Total | $ | 148,524 | $ | 148,318 | |||||
Goodwill_Tables
Goodwill (Tables) | 9 Months Ended | ||||||||||||
Sep. 28, 2013 | |||||||||||||
Schedule of Goodwill | Goodwill was as follows: | ||||||||||||
(In thousands) | |||||||||||||
Ducommun | |||||||||||||
Ducommun | LaBarge | Consolidated | |||||||||||
AeroStructures | Technologies | Ducommun | |||||||||||
Gross goodwill | $ | 57,243 | $ | 184,970 | $ | 242,213 | |||||||
Accumulated goodwill impairment | — | (80,273 | ) | (80,273 | ) | ||||||||
Balance at December 31, 2012 | $ | 57,243 | $ | 104,697 | $ | 161,940 | |||||||
Balance at September 28, 2013 | $ | 57,243 | $ | 104,697 | $ | 161,940 | |||||||
LongTerm_Debt_Tables
Long-Term Debt (Tables) | 9 Months Ended | ||||||||
Sep. 28, 2013 | |||||||||
Long-Term Debt and Current Period Interest Rates | Long-term debt and the current period interest rates were as follows: | ||||||||
(In thousands) | |||||||||
September 28, | December 31, | ||||||||
2013 | 2012 | ||||||||
Senior unsecured notes (fixed 9.75%) | $ | 200,000 | $ | 200,000 | |||||
Senior secured term loan (floating 4.75%) | 140,125 | 162,625 | |||||||
Promissory note (fixed 5.0%) and other debt (fixed 5.41%) | 3,088 | 3,119 | |||||||
Total Debt | 343,213 | 365,744 | |||||||
Less Current Portion | 3,029 | 3,042 | |||||||
Total Long-Term Debt | $ | 340,184 | $ | 362,702 | |||||
Weighted-average interest rate | 7.67 | % | 7.82 | % |
Employee_Benefit_Plans_Tables
Employee Benefit Plans (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 28, 2013 | |||||||||||||||||
Components of Net Periodic Pension Expense | The components of net periodic pension expense were as follows: | ||||||||||||||||
(In thousands) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 28, | September 29, | September 28, | September 29, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Service cost | $ | 211 | $ | 241 | $ | 633 | $ | 723 | |||||||||
Interest cost | 290 | 238 | 870 | 714 | |||||||||||||
Expected return on plan assets | (306 | ) | (265 | ) | (918 | ) | (795 | ) | |||||||||
Amortization of actuarial loss and prior service costs | 274 | 287 | 822 | 861 | |||||||||||||
Net periodic pension cost | $ | 469 | $ | 501 | $ | 1,407 | $ | 1,503 | |||||||||
Components of Reclassifications from Accumulated Other Comprehensive Income | The components of the reclassifications from accumulated other comprehensive loss to net income during the three and nine months ended September 28, 2013 were as follows: | ||||||||||||||||
(In thousands) | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 28, | September 28, | ||||||||||||||||
2013 (a) | 2013 (a) | ||||||||||||||||
Amortization of actuarial loss and prior service costs-total before tax (b) | $ | (274 | ) | $ | (822 | ) | |||||||||||
Tax benefit | 102 | 306 | |||||||||||||||
Net of tax | $ | (172 | ) | $ | (516 | ) | |||||||||||
(a) | Amounts in parenthesis indicate reductions to net income upon reclassification from accumulated other comprehensive loss. | ||||||||||||||||
(b) | The amount is included in the computation of net periodic pension cost. |
Business_Segment_Information_T
Business Segment Information (Tables) | 9 Months Ended | ||||||||||||||||||||||||
Sep. 28, 2013 | |||||||||||||||||||||||||
Financial Information by Reportable Segment | Financial information by reportable segment was as follows: | ||||||||||||||||||||||||
(In thousands) | (In thousands) | ||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
% | September 28, | September 29, | % | September 28, | September 29, | ||||||||||||||||||||
Change | 2013 | 2012 | Change | 2013 | 2012 | ||||||||||||||||||||
Net Sales | |||||||||||||||||||||||||
DAS | 1.4 | % | $ | 77,740 | $ | 76,655 | 2.9 | % | $ | 234,437 | $ | 227,832 | |||||||||||||
DLT | (3.6 | )% | 103,548 | 107,442 | (3.4 | )% | 314,238 | 325,313 | |||||||||||||||||
Total Net Sales | (1.5 | )% | $ | 181,288 | $ | 184,097 | (0.8 | )% | $ | 548,675 | $ | 553,145 | |||||||||||||
Segment Operating Income | |||||||||||||||||||||||||
DAS | $ | 7,633 | $ | 7,410 | $ | 23,766 | $ | 21,575 | |||||||||||||||||
DLT (2) | 7,596 | 10,472 | 26,772 | 29,260 | |||||||||||||||||||||
15,229 | 17,882 | 50,538 | 50,835 | ||||||||||||||||||||||
Corporate General and | |||||||||||||||||||||||||
Administrative Expenses (1) (2) (3) | (3,276 | ) | (3,642 | ) | (13,240 | ) | (10,724 | ) | |||||||||||||||||
Total Operating Income | $ | 11,953 | $ | 14,240 | $ | 37,298 | $ | 40,111 | |||||||||||||||||
Depreciation and Amortization | |||||||||||||||||||||||||
Expenses | |||||||||||||||||||||||||
DAS | $ | 2,621 | $ | 2,903 | $ | 7,386 | $ | 7,200 | |||||||||||||||||
DLT | 4,540 | 4,710 | 13,863 | 14,139 | |||||||||||||||||||||
Corporate Administration | 41 | 42 | 126 | 122 | |||||||||||||||||||||
Total Depreciation and | |||||||||||||||||||||||||
Amortization Expenses | $ | 7,202 | $ | 7,655 | $ | 21,375 | $ | 21,461 | |||||||||||||||||
Capital Expenditures | |||||||||||||||||||||||||
DAS | $ | 1,159 | $ | 2,074 | $ | 4,208 | $ | 6,360 | |||||||||||||||||
DLT | 866 | 1,472 | 3,046 | 5,921 | |||||||||||||||||||||
Corporate Administration | 43 | 21 | 67 | 49 | |||||||||||||||||||||
Total Capital Expenditures | $ | 2,068 | $ | 3,567 | $ | 7,321 | $ | 12,330 | |||||||||||||||||
(1) | Includes costs not allocated to either the DLT or DAS operating segments. | ||||||||||||||||||||||||
(2) | The nine-month period of 2012 includes merger-related transaction costs of $0.3 million in Corporate General and Administrative Expenses and $0.4 million in DLT resulting from a change in control provision for certain key executives and employees arising in connection with the acquisition of LaBarge Inc. in June 2011. | ||||||||||||||||||||||||
(3) | The three- and nine-month periods of 2013 include $0.1 million and $1.2 million, respectively, of workers’ compensation insurance expenses included in gross profit and not allocated to the operating segments. The three- and nine-month periods of 2012 include $(0.2) million and $0.4 million, respectively, of workers’ compensation insurance expenses (credits) included in gross profit and not allocated to the operating segments. | ||||||||||||||||||||||||
Segment assets include assets directly identifiable with each segment. Corporate Administration assets include assets not specifically identified with a business segment, including cash. | |||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
September 28, | December 31, | ||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||
Total Assets | |||||||||||||||||||||||||
DAS | $ | 252,476 | $ | 248,326 | |||||||||||||||||||||
DLT | 447,827 | 465,217 | |||||||||||||||||||||||
Corporate Administration | 59,743 | 71,531 | |||||||||||||||||||||||
Total Assets | $ | 760,046 | $ | 785,074 | |||||||||||||||||||||
Goodwill and Intangibles | |||||||||||||||||||||||||
DAS | $ | 65,775 | $ | 67,459 | |||||||||||||||||||||
DLT | 264,353 | 270,837 | |||||||||||||||||||||||
Total Goodwill and Intangibles | $ | 330,128 | $ | 338,296 | |||||||||||||||||||||
Summary_of_Significant_Account3
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) | 1 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
In Millions, unless otherwise specified | Jul. 31, 2013 | Sep. 28, 2013 | Dec. 31, 2012 | Mar. 31, 2012 | Jun. 29, 2013 | Mar. 30, 2013 | Dec. 31, 2012 | Jul. 02, 2011 | Jul. 03, 2010 | Sep. 28, 2013 |
Segment | Ducommun LaBarge Technologies | Ducommun LaBarge Technologies | Ducommun LaBarge Technologies | Ducommun LaBarge Technologies | Ducommun LaBarge Technologies | Ducommun LaBarge Technologies | ||||
Significant Accounting Policies [Line Items] | ||||||||||
Number of reportable segments | 2 | |||||||||
Accumulated pension liability adjustment, net of tax | $7 | $7.50 | ||||||||
Cash equivalent maturity period | Three months or less | |||||||||
Inventory that had not been previously valued correctly and corrected in the third quarter | 0.1 | 0.1 | 0.1 | 0.5 | 0.3 | 1.1 | ||||
Inventory valuation reserves | 1.1 | |||||||||
Inventory capitalized cost | 0.4 | |||||||||
Reduction in deferred tax assets | $2.20 |
Weighted_Average_Number_of_Sha
Weighted Average Number of Shares Outstanding Used to Compute Earnings Per Share (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 28, 2013 | Sep. 29, 2012 | Sep. 28, 2013 | Sep. 29, 2012 |
Weighted Average Number of Shares Outstanding [Line Items] | ||||
Net earnings | $4,636 | $5,105 | $13,847 | $13,002 |
Weighted-Average Number of Common Shares Outstanding | ||||
Basic weighted-average common shares outstanding | 10,722 | 10,595 | 10,657 | 10,575 |
Dilutive potential common shares | 195 | 38 | 128 | 13 |
Diluted weighted-average common shares outstanding | 10,917 | 10,633 | 10,785 | 10,588 |
Basic | $0.43 | $0.48 | $1.30 | $1.23 |
Diluted | $0.42 | $0.48 | $1.28 | $1.23 |
Weighted_Average_Number_of_Sha1
Weighted Average Number of Shares Outstanding Excluded from Computation of Diluted Earnings (Detail) (Stock Options And Restricted Stock Units) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 28, 2013 | Sep. 29, 2012 | Sep. 28, 2013 | Sep. 29, 2012 |
Stock Options And Restricted Stock Units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Stock options and stock units | 219 | 1,012 | 612 | 1,015 |
Summary_of_Inventories_Detail
Summary of Inventories (Detail) (USD $) | Sep. 28, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Inventory [Line Items] | ||
Raw materials and supplies | $80,672 | $84,545 |
Work in process | 68,688 | 67,132 |
Finished goods | 10,816 | 13,031 |
Net Inventories Before Progress Payments, Total | 160,176 | 164,708 |
Less progress payments | 11,652 | 16,390 |
Total | $148,524 | $148,318 |
Schedule_of_Goodwill_Detail
Schedule of Goodwill (Detail) (USD $) | Sep. 28, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Goodwill [Line Items] | ||
Gross goodwill | $242,213 | |
Accumulated goodwill impairment | -80,273 | |
Goodwill Ending Balance | 161,940 | 161,940 |
Ducommun AeroStructures | ||
Goodwill [Line Items] | ||
Gross goodwill | 57,243 | |
Goodwill Ending Balance | 57,243 | 57,243 |
Ducommun LaBarge Technologies | ||
Goodwill [Line Items] | ||
Gross goodwill | 184,970 | |
Accumulated goodwill impairment | -80,273 | |
Goodwill Ending Balance | $104,697 | $104,697 |
Long_Term_Debt_and_Current_Per
Long Term Debt and Current Period Interest Rates (Detail) (USD $) | Sep. 28, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Long Term Debt [Line Items] | ||
Total Debt | $343,213 | $365,744 |
Less Current Portion | 3,029 | 3,042 |
Total Long-Term Debt | 340,184 | 362,702 |
Weighted-average interest rate | 7.67% | 7.82% |
Senior Unsecured Notes | ||
Long Term Debt [Line Items] | ||
Long-Term Debt | 200,000 | 200,000 |
Senior Secured Term Loan | ||
Long Term Debt [Line Items] | ||
Long-Term Debt | 140,125 | 162,625 |
Promissory note and Other Debt | ||
Long Term Debt [Line Items] | ||
Long-Term Debt | $3,088 | $3,119 |
Long_Term_Debt_and_Current_Per1
Long Term Debt and Current Period Interest Rates (Parenthetical) (Detail) | Sep. 28, 2013 |
Senior Unsecured Notes | |
Long Term Debt [Line Items] | |
Fixed rate, note | 9.75% |
Senior Secured Term Loan | |
Long Term Debt [Line Items] | |
Floating rate, Note | 4.75% |
Promissory Note | |
Long Term Debt [Line Items] | |
Fixed rate, note | 5.00% |
Other Debt | |
Long Term Debt [Line Items] | |
Fixed rate, note | 5.41% |
LongTerm_Debt_Additional_infor
Long-Term Debt - Additional information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 1 Months Ended | 1 Months Ended | |||||||
Sep. 28, 2013 | Sep. 29, 2012 | Sep. 28, 2013 | Sep. 29, 2012 | Oct. 18, 2013 | Sep. 28, 2013 | Mar. 28, 2013 | Mar. 28, 2013 | Sep. 27, 2013 | Apr. 30, 2013 | Mar. 28, 2013 | |
Subsequent Event | Debt Covenant | Senior Secured Term Loan and Revolving Credit Facility | Financing and legal costs | Voluntary Principal Pre-Payments | Voluntary Principal Pre-Payments | Voluntary Principal Pre-Payments | |||||
Debt Instrument [Line Items] | |||||||||||
Voluntary principal payments made during the annual reporting period | $7,500,000 | $7,500,000 | $7,500,000 | ||||||||
Debt Instrument, Reduction in interest rate | 0.50% | ||||||||||
Debt Instrument, Reduction in interest rate floor | 0.25% | ||||||||||
Selling, General and Administrative Expenses | 20,351,000 | 21,340,000 | 65,175,000 | 65,891,000 | 500,000 | ||||||
Unused revolving lines of credit | 58,400,000 | 58,400,000 | |||||||||
Outstanding standby letters of credit | 1,600,000 | 1,600,000 | |||||||||
Credit facilities description | Under the terms of the Credit Agreement, if, during a given fiscal quarter, (i) the sum of (a) any amounts outstanding under the revolving credit facility plus (b) the amount drawn under any letters of credit exceeds $1.0 million; or (ii) the aggregate amount of outstanding letters of credit exceeds $5.0 million, the revolving credit facility will be subject to a maximum total leverage ratio. | ||||||||||
Limit for amount drawn under any letters of credit where Revolving Credit Facility will be subject to a maximum total leverage ratio | 1,000,000 | ||||||||||
Limit for outstanding letters of credit where Revolving Credit Facility will be subject to a maximum total leverage ratio | 5,000,000 | ||||||||||
Increases in leverage ratio | 0.75 | ||||||||||
Fair value debt | $223,500,000 | $223,500,000 |
Shareholders_Equity_Additional
Shareholders' Equity - Additional Information (Detail) | Sep. 28, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Class of Stock [Line Items] | ||
Preferred stock, shares authorized | 5 | 5 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding |
Components_of_Net_Periodic_Pen
Components of Net Periodic Pension Expense (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 28, 2013 | Sep. 29, 2012 | Sep. 28, 2013 | Sep. 29, 2012 |
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $211 | $241 | $633 | $723 |
Interest cost | 290 | 238 | 870 | 714 |
Expected return on plan assets | -306 | -265 | -918 | -795 |
Amortization of actuarial loss and prior service costs | 274 | 287 | 822 | 861 |
Net periodic pension cost | $469 | $501 | $1,407 | $1,503 |
Components_of_Reclassification
Components of Reclassifications from Accumulated Other Comprehensive Income (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 28, 2013 | Sep. 28, 2013 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Amortization of actuarial loss and prior service costs-total before tax | ($274) | [1],[2] | ($822) | [1],[2] |
Tax benefit | 102 | [1] | 306 | [1] |
Net of tax | ($172) | [1] | ($516) | [1] |
[1] | Amounts in parenthesis indicate reductions to net income upon reclassification from accumulated other comprehensive loss. | |||
[2] | The amount is included in the computation of net periodic pension cost. |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Sep. 28, 2013 | Jun. 29, 2013 | Mar. 30, 2013 | Sep. 29, 2012 | Sep. 28, 2013 | Sep. 29, 2012 | Dec. 31, 2012 | Dec. 31, 2013 | Sep. 29, 2012 | Sep. 28, 2013 | |
Scenario, Forecast | Ducommun LaBarge Technologies | Federal Research and Development | ||||||||
Income Taxes [Line Items] | ||||||||||
Effective income tax rate | 1.90% | 14.90% | 5.40% | 15.60% | ||||||
Income tax expense (benefit) | ($86,000) | $894,000 | $783,000 | $2,395,000 | ||||||
Research and development tax credit benefits | 700,000 | 500,000 | 2,500,000 | 0 | 0 | 500,000 | 2,000,000 | |||
Tax benefit from filling state consolidated tax returns | 1,600,000 | |||||||||
Unrecognized tax benefits | $2,500,000 | $2,500,000 | $1,700,000 |
Contingencies_Additional_Infor
Contingencies - Additional Information (Detail) (USD $) | 9 Months Ended |
Sep. 28, 2013 | |
Aircraft | |
Loss Contingencies [Line Items] | |
Number of Boeing aircraft subject to lawsuit | 21 |
Scenario 1 | |
Loss Contingencies [Line Items] | |
Estimate of Possible Loss | 1,600,000,000 |
Scenario 2 | |
Loss Contingencies [Line Items] | |
Estimate of Possible Loss | 851,000,000 |
Ducommun AeroStructures | El Mirage and Monrovia, California | |
Loss Contingencies [Line Items] | |
Reserve for estimated liability | 1,500,000 |
Ducommun AeroStructures | Casmalia and West Covina, California | |
Loss Contingencies [Line Items] | |
Reserve for estimated liability | 400,000 |
Possible Loss, minimum | 400,000 |
Possible Loss, maximum | 3,100,000 |
For each false claim made on or before September 28, 1999 | |
Loss Contingencies [Line Items] | |
Civil penalty | 10,000 |
For each false claim made on or after September 28, 1999 | |
Loss Contingencies [Line Items] | |
Civil penalty | 11,000 |
Business_Segment_Information_A
Business Segment Information - Additional Information (Detail) | 9 Months Ended |
Sep. 28, 2013 | |
Segment | |
Segment Reporting Information [Line Items] | |
Number of reportable segments | 2 |
Financial_Information_by_Repor
Financial Information by Reportable Segment (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, unless otherwise specified | Sep. 28, 2013 | Sep. 29, 2012 | Sep. 28, 2013 | Sep. 29, 2012 | ||||
Segment Reporting Information [Line Items] | ||||||||
Net Sales, Percentage Change | -1.50% | -0.80% | ||||||
Net Sales | $181,288 | $184,097 | $548,675 | $553,145 | ||||
Segment Operating Income (Loss) | 15,229 | 17,882 | 50,538 | 50,835 | ||||
Corporate General and Administrative Expenses | -3,276 | [1],[2],[3] | -3,642 | [1],[2],[3] | -13,240 | [1],[2],[3] | -10,724 | [1],[2],[3] |
Operating Income | 11,953 | 14,240 | 37,298 | 40,111 | ||||
Depreciation and Amortization Expenses | 7,202 | 7,655 | 21,375 | 21,461 | ||||
Capital Expenditures | 2,068 | 3,567 | 7,321 | 12,330 | ||||
Ducommun AeroStructures | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Net Sales, Percentage Change | 1.40% | 2.90% | ||||||
Net Sales | 77,740 | 76,655 | 234,437 | 227,832 | ||||
Segment Operating Income (Loss) | 7,633 | 7,410 | 23,766 | 21,575 | ||||
Depreciation and Amortization Expenses | 2,621 | 2,903 | 7,386 | 7,200 | ||||
Capital Expenditures | 1,159 | 2,074 | 4,208 | 6,360 | ||||
Ducommun LaBarge Technologies | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Net Sales, Percentage Change | -3.60% | -3.40% | ||||||
Net Sales | 103,548 | 107,442 | 314,238 | 325,313 | ||||
Segment Operating Income (Loss) | 7,596 | [1] | 10,472 | [1] | 26,772 | [1] | 29,260 | [1] |
Depreciation and Amortization Expenses | 4,540 | 4,710 | 13,863 | 14,139 | ||||
Capital Expenditures | 866 | 1,472 | 3,046 | 5,921 | ||||
Corporate Administration | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Depreciation and Amortization Expenses | 41 | 42 | 126 | 122 | ||||
Capital Expenditures | $43 | $21 | $67 | $49 | ||||
[1] | The nine-month period of 2012 includes merger-related transaction costs of $0.3 million in Corporate General and Administrative Expenses and $0.4 million in DLT resulting from a change in control provision for certain key executives and employees arising in connection with the acquisition of LaBarge Inc. in June 2011. | |||||||
[2] | Includes costs not allocated to either the DLT or DAS operating segments. | |||||||
[3] | The three- and nine-month periods of 2013 include $0.1 million and $1.2 million, respectively, of workers' compensation insurance expenses included in gross profit and not allocated to the operating segments. The three- and nine-month periods of 2012 include $(0.2) million and $0.4 million, respectively, of workers' compensation insurance expenses (credits) included in gross profit and not allocated to the operating segments. |
Financial_Information_by_Repor1
Financial Information by Reportable Segment (Parenthetical) (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 28, 2013 | Sep. 29, 2012 | Sep. 28, 2013 | Sep. 29, 2012 |
Segment Reporting Information [Line Items] | ||||
Workers compensation insurance expenses (credits) | $0.10 | ($0.20) | $1.20 | $0.40 |
General and Administrative Expense | ||||
Segment Reporting Information [Line Items] | ||||
Business acquisition, transaction costs | 0.3 | |||
Ducommun LaBarge Technologies | ||||
Segment Reporting Information [Line Items] | ||||
Business acquisition, transaction costs | $0.40 |
Segment_Assets_Detail
Segment Assets (Detail) (USD $) | Sep. 28, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Segment Reporting Information [Line Items] | ||
Total Assets | $760,046 | $785,074 |
Total Goodwill and Intangibles | 330,128 | 338,296 |
Ducommun AeroStructures | ||
Segment Reporting Information [Line Items] | ||
Total Assets | 252,476 | 248,326 |
Total Goodwill and Intangibles | 65,775 | 67,459 |
Ducommun LaBarge Technologies | ||
Segment Reporting Information [Line Items] | ||
Total Assets | 447,827 | 465,217 |
Total Goodwill and Intangibles | 264,353 | 270,837 |
Corporate Administration | ||
Segment Reporting Information [Line Items] | ||
Total Assets | $59,743 | $71,531 |