Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Oct. 03, 2015 | Oct. 21, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Oct. 3, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | DCO | |
Entity Registrant Name | DUCOMMUN INC /DE/ | |
Entity Central Index Key | 30,305 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 11,083,369 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Oct. 03, 2015 | Dec. 31, 2014 | Sep. 27, 2014 | Dec. 31, 2013 |
Current Assets | ||||
Cash and cash equivalents | $ 12,241 | $ 45,627 | $ 40,852 | $ 48,814 |
Accounts receivable, net of allowance for doubtful accounts of $241 and $252 at October 3, 2015 and December 31, 2014, respectively | 86,235 | 91,060 | 104,396 | |
Inventories | 137,317 | 142,842 | 145,468 | |
Production cost of contracts | 11,609 | 11,727 | 10,375 | |
Deferred income taxes | 12,432 | 13,783 | 15,185 | |
Other current assets | 22,700 | 23,702 | 21,930 | |
Total Current Assets | 282,534 | 328,741 | 338,206 | |
Property and equipment, net of accumulated depreciation of $137,556 and $128,457 at October 3, 2015 and December 31, 2014, respectively | 98,335 | 99,068 | 93,181 | |
Goodwill | 157,569 | 157,569 | 157,569 | |
Intangibles, net | 147,580 | 155,104 | 157,694 | |
Other assets | 6,383 | 7,117 | 7,657 | |
Total Assets | 692,401 | 747,599 | 754,307 | |
Current Liabilities | ||||
Current portion of long-term debt | 2,215 | 26 | 26 | 26 |
Accounts payable | 50,852 | 58,979 | 55,083 | |
Accrued liabilities | 43,434 | 52,066 | 46,787 | |
Total Current Liabilities | 96,501 | 111,071 | 101,896 | |
Long-term debt, less current portion | 257,820 | 290,026 | 310,157 | $ 290,026 |
Deferred income taxes | 69,696 | 69,448 | 72,578 | |
Other long-term liabilities | 18,913 | 20,484 | 16,558 | |
Total Liabilities | $ 442,930 | $ 491,029 | $ 501,189 | |
Commitments and contingencies (Notes 10, 12) | ||||
Shareholders’ Equity | ||||
Common stock - $0.01 par value; 35,000,000 shares authorized; 11,083,369 and 10,952,268 issued at October 3, 2015 and December 31, 2014, respectively | $ 111 | $ 110 | $ 109 | |
Additional paid-in capital | 74,395 | 72,206 | 70,930 | |
Retained earnings | 181,199 | 190,905 | 185,749 | |
Accumulated other comprehensive loss | (6,234) | (6,651) | (3,670) | |
Total Shareholders’ Equity | 249,471 | 256,570 | 253,118 | |
Total Liabilities and Shareholders’ Equity | $ 692,401 | $ 747,599 | $ 754,307 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Oct. 03, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts | $ 241 | $ 252 |
Property and equipment, accumulated depreciation | $ 137,556 | $ 128,457 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 35,000,000 | 35,000,000 |
Common stock, shares issued | 11,083,369 | 10,952,268 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2015 | Sep. 27, 2014 | Oct. 03, 2015 | Sep. 27, 2014 | |
Income Statement [Abstract] | ||||
Net Revenues | $ 161,670 | $ 188,164 | $ 509,435 | $ 554,433 |
Cost of Sales | 141,642 | 155,052 | 431,439 | 447,728 |
Gross Profit | 20,028 | 33,112 | 77,996 | 106,705 |
Selling, General and Administrative Expenses | 21,205 | 23,050 | 64,707 | 65,005 |
Operating (Loss) Income | (1,177) | 10,062 | 13,289 | 41,700 |
Interest Expense | (3,392) | (6,975) | (16,499) | (21,094) |
Loss on Extinguishment of Debt | (11,878) | 0 | (14,720) | 0 |
Other Income | 0 | 1,600 | 1,510 | 1,600 |
(Loss) Income Before Taxes | (16,447) | 4,687 | (16,420) | 22,206 |
Income Tax (Benefit) Expense | (6,932) | 1,754 | (6,714) | 7,495 |
Net (Loss) Income | $ (9,515) | $ 2,933 | $ (9,706) | $ 14,711 |
(Loss) earnings per share | ||||
Basic (loss) earnings per share (in dollars per share) | $ (0.86) | $ 0.27 | $ (0.88) | $ 1.35 |
Diluted (loss) earnings per share (in dollars per share) | $ (0.86) | $ 0.26 | $ (0.88) | $ 1.31 |
Weighted-Average Number of Common Shares Outstanding | ||||
Basic (in shares) | 11,083 | 10,921 | 11,035 | 10,902 |
Diluted (in shares) | 11,083 | 11,150 | 11,035 | 11,202 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2015 | Sep. 27, 2014 | Oct. 03, 2015 | Sep. 27, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net (Loss) Income | $ (9,515) | $ 2,933 | $ (9,706) | $ 14,711 |
Other Comprehensive Loss | ||||
Amortization of actuarial losses and prior service costs, net of tax benefit of approximately $83 and $40 for the three months ended October 3, 2015 and September 27, 2014, respectively, and approximately $248 and $124 for the nine months ended October 3, 2015 and September 27, 2014, respectively | (139) | (66) | (417) | (192) |
Other Comprehensive Loss | (139) | (66) | (417) | (192) |
Comprehensive (Loss) Income | $ (9,376) | $ 2,999 | $ (9,289) | $ 14,903 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2015 | Sep. 27, 2014 | Oct. 03, 2015 | Sep. 27, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Amortization of actuarial loss and prior service costs, tax benefits | $ 83 | $ 40 | $ 248 | $ 124 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 03, 2015 | Sep. 27, 2014 | |
Cash Flows from Operating Activities | ||
Net (Loss) Income | $ (9,706) | $ 14,711 |
Adjustments to Reconcile Net (Loss) Income to Net Cash Provided by (Used in) Operating Activities | ||
Depreciation and amortization | 20,064 | 21,829 |
Stock-based compensation expense | 2,792 | 2,520 |
Deferred income taxes | 1,599 | 2,073 |
Excess tax benefits from stock-based compensation | (516) | (139) |
Recovery of doubtful accounts | (11) | (214) |
Noncash loss on extinguishment of debt | 4,970 | 0 |
Other | 7,180 | (149) |
Changes in Assets and Liabilities: | ||
Accounts receivable | 4,836 | (12,273) |
Inventories | 5,525 | (4,961) |
Production cost of contracts | (560) | (1,408) |
Other assets | 1,614 | 6,633 |
Accounts payable | (7,626) | (2,447) |
Accrued and other liabilities | (18,076) | (5,400) |
Net Cash Provided by Operating Activities | 12,085 | 20,775 |
Cash Flows from Investing Activities | ||
Purchases of property and equipment | (11,803) | (9,329) |
Proceeds from sale of assets | 289 | 83 |
Insurance recoveries related to property and equipment | 1,510 | 1,600 |
Net Cash Used in Investing Activities | (10,004) | (7,646) |
Cash Flows from Financing Activities | ||
Borrowings from senior secured revolving credit facility | 65,000 | 0 |
Repayment of senior secured revolving credit facility | (65,000) | 0 |
Borrowings from term loan | 275,000 | 0 |
Repayments of senior unsecured notes and term loans | (305,000) | (22,500) |
Repayments of other debt | (17) | (19) |
Debt issuance costs | (4,848) | 0 |
Excess tax benefits from stock-based compensation | 516 | 139 |
Net proceeds from issuance of common stock under stock plans | (1,118) | 1,289 |
Net Cash Used in Financing Activities | (35,467) | (21,091) |
Net (Decrease) Increase in Cash and Cash Equivalents | (33,386) | (7,962) |
Cash and Cash Equivalents at Beginning of Period | 45,627 | 48,814 |
Cash and Cash Equivalents at End of Period | $ 12,241 | $ 40,852 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Oct. 03, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The unaudited condensed 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, 2014 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 IV, Item 15(a)(1), “Note 1. Summary of Significant Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2014. We followed the same accounting policies for interim reporting. The financial information included in this Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2014. 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 October 3, 2015 are not necessarily indicative of the results to be expected for the full year ending December 31, 2015. Our fiscal quarters typically end on the Saturday closest to the end of March, June and September for the first three fiscal quarters of each year, and ends on December 31 for our fourth fiscal quarter. As a result of using fiscal quarters for the first three quarters combined with leap years, our first and fourth fiscal quarters can range between 12 1/2 weeks to 13 1/2 weeks while the second and third fiscal quarters remain at a constant 13 weeks per fiscal quarter. Certain reclassifications have been made to prior period amounts to conform to the current year’s presentation. Supplemental Cash Flow Information Nine Months Ended October 3, 2015 September 27, 2014 As Restated Interest paid $ 24,066 $ 24,090 Taxes paid 1,150 3,410 Non-cash activities: Purchases of property and equipment not paid 957 418 Use of Estimates Certain amounts and disclosures included in the unaudited condensed consolidated financial statements required management to make estimates and judgments that affect the amounts of assets, liabilities (including forward loss reserves), 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. Restatement of Previously Issued Consolidated Financial Statements As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014, we have restated our consolidated financial statements as of December 31, 2013, and for the years ended December 31, 2013 and 2012 and our unaudited quarterly financial information for the first three quarters in the year ended December 31, 2014 and for each of the quarters in the year ended December 31, 2013, to correct errors in prior periods primarily related to (i) a long-term contract following the discovery of misconduct by employees in the recording of direct labor costs to the contract from 2009 through the third quarter 2014 which resulted in the identification of a forward loss provision that should have been recorded in 2009 and the impact on subsequent periods of adjustments to the forward loss provision based on information available at the time; and (ii) the year end reconciliation of income taxes payable and deferred tax balances identified errors primarily in 2013, 2012, and 2011. In addition, the restated amounts include previously identified and disclosed immaterial adjustments. We have reflected our restated unaudited quarterly condensed consolidated financial information as of and for the three and nine months ended September 27, 2014 herein. See Note 2 for additional information. Description of Business We are a leading global provider of engineering and manufacturing services for high-performance products and high-cost-of failure applications used primarily in the aerospace, defense, industrial, natural resources, medical and other industries. Our subsidiaries are organized into two strategic businesses: Ducommun AeroStructures (“DAS”) and Ducommun LaBarge Technologies (“DLT”), each of which is a reportable operating segment. DAS designs, engineers and manufactures large, complex contoured aerospace structural components and assemblies and supplies composite and metal bonded structures and assemblies. DAS products are used on commercial aircraft, military fixed-wing aircraft and military and commercial rotary-wing aircraft. 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. All reportable operating segments follow the same accounting principles. (Loss) Earnings Per Share Basic (loss) earnings per share are computed by dividing (loss) 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 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 (loss) earnings, weighted-average number of common shares outstanding used to compute (loss) earnings per share were as follows: (In thousands, except per share data) Three Months Ended (In thousands, except per share data) Nine Months Ended October 3, September 27, October 3, September 27, As Restated As Restated Net (loss) earnings $ (9,515 ) $ 2,933 $ (9,706 ) $ 14,711 Weighted-average number of common shares outstanding Basic weighted-average common shares outstanding 11,083 10,921 11,035 10,902 Dilutive potential common shares — 229 — 300 Diluted weighted-average common shares outstanding 11,083 11,150 11,035 11,202 (Loss) earnings per share Basic $ (0.86 ) $ 0.27 $ (0.88 ) $ 1.35 Diluted $ (0.86 ) $ 0.26 $ (0.88 ) $ 1.31 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 (In thousands) Nine Months Ended October 3, September 27, October 3, September 27, Stock options and stock units 885 229 902 187 Cash and Cash Equivalents Our cash accounts are not reduced for checks written until the checks are presented for payment and paid by our bank. 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. Provision for Estimated Losses on Contracts We record provisions for the total anticipated losses on contracts considering total estimated costs to complete the contract compared to total anticipated revenues in the period in which such losses are identified. The provisions for estimated losses on contracts require us to make certain estimates and assumptions, including those with respect to the future revenue under a contract and the future cost to complete the contract. Our estimate of the future cost to complete a contract may include assumptions as to improvements in manufacturing efficiency, reductions in operating and material costs, and our ability to resolve claims and assertions with our customers. If any of these or other assumptions and estimates do not materialize in the future, we maybe required to record additional provisions for estimated losses on contracts. Inventory Valuation Inventories are stated at the lower of cost or market, cost being determined on a first-in, first-out basis. Market value for raw materials is based on replacement costs, and is based on net realizable value for other inventory classifications. Inventoried costs include raw materials, outside processing, direct labor and allocated overhead, adjusted for any abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) incurred. Costs under long-term contracts are accumulated into, and removed from, inventory on the same basis as other contracts. We assess the inventory carrying value and reduce it, if necessary, to its net realizable value based on customer orders on hand, and internal demand forecasts using management’s best estimates given information currently available. We maintain an allowance for potentially excess and obsolete inventories and inventories that are carried at costs that are higher than their estimated net realizable values. Production Cost of Contracts Production cost of contracts includes non-recurring production costs, such as design and engineering costs, and tooling and other special-purpose machinery necessary to build parts as specified in a contract. Production costs of contracts are recorded to cost of goods sold using the units of delivery method. We review long-lived assets within production costs of contracts for impairment on an annual basis (in the fourth quarter for us) or when events or changes in circumstances indicate that the carrying value of our long-lived assets may not be recoverable. An impairment charge is recognized when the carrying value of an asset exceeds the projected undiscounted future cash flows expected from its use and disposal. 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. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss, as reflected in the condensed consolidated balance sheets under the equity section, was comprised of cumulative pension and retirement liability adjustments, net of tax. Recent Accounting Pronouncements Recently Issued Accounting Standards In August 2015, the FASB issued ASU 2015-15, “Imputation of Interest (Subtopic 835-30)” (“ASU 2015-15”), which provides guidance on the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. In ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” it requires entities to present debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt liability but does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Thus, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The new guidance is effective for annual and interim periods within those annual periods, beginning after December 15, 2015, which will be our interim period beginning January 1, 2016. Early adoption is permitted. We had approximately $4.6 million of debt issuance costs and approximately $260.0 million of total debt as of October 3, 2015, and thus, we do not believe that adoption of this new guidance will have a significant impact on our condensed consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330)” (“ASU 2015-11”), which requires inventory within the scope of ASU 2015-11 to be measured at the lower of cost and net realizable value. Subsequent measurement is unchanged for inventory measured using last-in, first-out (“LIFO”) or the retail inventory value. The new guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, which will be our interim period beginning January 1, 2017. Early adoption is permitted as of the beginning of an interim or annual reporting period. We are evaluating the impact of this standard but currently do not anticipate it will have a significant impact on our condensed consolidated financial statements. In June 2015, the FASB issued ASU 2015-10, “Technical Corrections and Improvements” (“ASU 2015-10”), which covers a wide range of Topics in the Codification. The amendments in ASU 2015-10 represent changes to make minor corrections or minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost on most entities. The amendments in this new guidance that require transition guidance are effective for annual and interim periods within those annual periods, beginning after December 15, 2015, which was our interim period beginning January 1, 2016. All other amendments are effective upon issuance of ASU 2015-10. Early adoption is permitted. We do not anticipate this standard will have a significant impact on our condensed consolidated financial statements. In April 2015, the FASB issued ASU 2015-05, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement” (“ASU 2015-05”), which provides guidance on fees paid by a customer in a cloud computing arrangement. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The new guidance is effective for annual and interim periods within those annual periods, beginning after December 15, 2015, which will be our interim period beginning January 1, 2016. Early adoption is permitted. We are evaluating the impact of this standard but currently do not anticipate it will have a significant impact on our condensed consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”), which changes the presentation of debt issuance costs in financial statements. Under ASU 2015-03, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of those costs is reported as interest expense. The new guidance is effective for annual and interim periods within those annual periods, beginning after December 15, 2015, which will be our interim period beginning January 1, 2016. Early adoption is permitted. We had approximately $4.6 million of debt issuance costs and approximately $260.0 million of total debt as of October 3, 2015, and thus, we do not believe that adoption of this new guidance will have a significant impact on our condensed consolidated financial statements. In January 2015, the FASB issued ASU 2015-01, “Income Statement - Extraordinary and Unusual Items (Subtopic 225-20)” (“ASU 2015-01”), which eliminates from U.S. GAAP the concept of extraordinary items. Current guidance requires separate classification, presentation, and disclosure of extraordinary events and transactions. In addition, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item. The new guidance is effective for annual and interim periods within those annual periods, beginning after December 15, 2015, which will be our interim period beginning January 1, 2016. Early adoption is permitted provided it is applied from the beginning of the annual period of adoption. We are evaluating the impact of this standard but currently do not anticipate it will have a significant impact on our condensed consolidated financial statements. In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”), which defines management’s responsibility to evaluate whether there is substantial doubt about a company’s ability to continue as a going concern. ASU 2014-15 also provide principles and definitions that are intended to reduce diversity in the timing and content of disclosures in the financial statement footnotes. The new guidance is effective for annual periods ending after December 15, 2016, which will be our year ending December 31, 2016, and interim periods beginning after December 15, 2016, which will be our interim period beginning January 1, 2017. Early adoption is permitted. We are evaluating the impact of this standard but currently do not anticipate it will have a significant impact on our condensed consolidated financial statements. In June 2014, the FASB issued ASU 2014-12, “Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period” (“ASU 2014-12”), which requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. Thus, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The new guidance is effective for us beginning January 1, 2016. Early adoption is permitted. We currently do not anticipate the adoption of this standard will have a material impact on our condensed consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), which outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. It requires entities to exercise judgment when considering the terms of the contract(s) which include (i) identifying the contract(s) with the customer, (ii) identifying the separate performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the separate performance obligations, and (v) recognizing revenue when each performance obligation is satisfied. Thus, it depicts the transfer of promised goods or services to customers in an amount that reflects the consideration an entity expects to receive in exchange for those goods or services. Companies have the option of applying the provisions of ASU 2014-09 either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this guidance recognized at the date of initial application. In August 2015, the FASB issued ASU 2015-14, “Revenue From Contracts With Customers (Topic 606)” (“ASU 2015-14”), which defer the effective date of ASU 2014-09 by one year to annual periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The new guidance is effective for us beginning January 1, 2018 and will provide us additional time to evaluate the method and impact that ASU 2014-09 will have on our condensed consolidated financial statements. |
Restatement
Restatement | 9 Months Ended |
Oct. 03, 2015 | |
Accounting Changes and Error Corrections [Abstract] | |
Restatement | Restatement As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014, we restated our consolidated financial statements for the years ended December 31, 2013 and 2012 and our unaudited quarterly financial information for the first three quarters in the year ended December 31, 2014 and for each of the quarters in the year ended December 31, 2013, to correct errors in prior periods primarily related to (i) a long-term contract (“Contract”) following the discovery of misconduct by employees in the recording of direct labor costs to the Contract from 2009 through the third quarter 2014 which resulted in the identification of a forward loss provision that should have been recorded in 2009 and the impact on subsequent periods of adjustments to the forward loss provision based on information available at the time (“Forward Loss Adjustments”); and (ii) the year end reconciliation of income taxes payable and deferred tax balances identified errors primarily in 2013, 2012, and 2011 (“Tax Adjustments”). The misconduct and its related financial impact were concealed from our senior management, internal auditors, and external auditors. Also as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014, the Forward Loss Adjustments were based on certain assumptions and estimates. To determine the loss on the Contract, we estimated the number of units we would have expected to ship over the life of the Contract at inception of the Contract using external market industry data for fiscal years 2009, 2010, 2011, 2012, and 2013. We used data obtained directly from the customer for 2014 and 2015. The total estimated costs at any given point in time would typically include actual historical costs up to that time plus the estimated cost to produce units to be delivered. In addition, the estimated total cost for the life of the Contract includes certain inefficiencies on labor, material, and overhead costs during the initial start-up period. However, as we progress along the learning curve, the direct labor hours and overhead rates are expected to decrease as we gain technical knowhow and efficiency in producing the product. As a result of the misconduct by the employees in the recording of direct labor hours to the Contract, the historical actual direct labor hours charged to the Contract were inaccurate. As a result, we estimated the costs to complete future units at the end of each period based on an estimate of the direct labor hours chargeable to the Contract, including consideration of anticipated learning curve efficiencies that would decrease the direct labor hours over the remaining term of the Contract. Further, we used the actual direct labor hours incurred by the employees assigned to the Contract as a basis for projecting future hours, less an estimate of the time not allocable to the Contract. Using this model, we calculated the Forward Loss Adjustments from the inception of the Contract in 2009 through the expected life of the Contract. As a result of the Forward Loss Adjustments, cost of goods sold increased (decreased) approximately $6.7 million in 2009, $1.3 million in 2010, $(0.3) million in 2011, $(2.2) million in 2012, $(0.9) million in 2013, and $(0.8) million in the nine months ended September 27, 2014. Further, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014, the Tax Adjustments were necessary as a result of certain calculation errors. The Tax Adjustments resulted in a net decrease to income tax expense of approximately $0.9 million in 2013 and zero in 2012. The Tax Adjustments in 2011 resulted in a reduction to the carrying value of goodwill totaling approximately $4.0 million due to a calculation error in the original purchase price allocation and subsequent performance of step 2 of our annual goodwill impairment analysis related to deferred income taxes and thus, (i) reduced deferred income taxes by approximately $2.7 million and (ii) generated a pre-tax goodwill impairment charge of approximately $1.4 million . Further, the Tax Adjustments in 2011 reduced deferred tax assets by approximately $1.6 million that were established as a result of shared-based compensation expenses recorded previously and should have been reduced as the tax deductions were utilized. Moreover, the restated amounts include previously identified and disclosed immaterial adjustments. In evaluating whether our previously issued consolidated financial statements were materially misstated, we evaluated the cumulative impact of these items on prior periods in accordance with the guidance in ASC 250-10, “Accounting Changes and Error Corrections,” relating to SEC Staff Accounting Bulletin No. 99, “Materiality” (“SAB 99”), and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (“SAB 108”), and we concluded these errors were in the aggregate material to the prior reporting periods, and therefore, restatement of previously filed financial statements was necessary to our previously issued 2013, 2012, 2011, and 2010 financial statements. This Quarterly Report on Form 10-Q for the quarter ended October 3, 2015 includes the impact of the restatement on the comparative unaudited quarterly financial information for the quarter ended September 27, 2014. Certain reclassifications have been made to prior period amounts to conform to the current year’s presentation. The account balances labeled “As Reported” in the following tables for the quarter ended September 27, 2014 represent the previously reported unaudited balances in our Quarterly Report on Form 10-Q for the quarter ended September 27, 2014. The effects of these prior period errors on our unaudited condensed consolidated financial statements are as follows (in thousands, except per share data): September 27, 2014 Unaudited Condensed Consolidated Balance Sheet: As Reported Adjustments As Restated Assets Current Assets Cash and cash equivalents $ 40,852 $ — $ 40,852 Accounts receivable (less allowance for doubtful accounts of $275 at September 27, 2014) 104,396 — 104,396 Inventories 145,468 — 145,468 Production cost of contracts 10,375 — 10,375 Deferred income taxes 13,664 1,521 15,185 Other current assets 20,444 1,486 21,930 Total Current Assets 335,199 3,007 338,206 Property and Equipment, Net 93,181 — 93,181 Goodwill 161,940 (4,371 ) 157,569 Intangibles, Net 157,694 — 157,694 Other Assets 7,657 — 7,657 Total Assets $ 755,671 $ (1,364 ) $ 754,307 Liabilities and Shareholders’ Equity Current Liabilities Current portion of long-term debt $ 26 $ — $ 26 Accounts payable 55,083 — 55,083 Accrued liabilities 42,916 3,871 46,787 Total Current Liabilities 98,025 3,871 101,896 Long-Term Debt, Less Current Portion 310,157 — 310,157 Deferred Income Taxes 73,078 (500 ) 72,578 Other Long-Term Liabilities 16,858 (300 ) 16,558 Total Liabilities 498,118 3,071 501,189 Commitments and Contingencies Shareholders’ Equity Common stock - $0.01 par value; 35,000,000 shares authorized; 10,945,806 shares issued at September 27, 2014 109 — 109 Additional paid-in capital 72,563 (1,633 ) 70,930 Retained earnings 188,551 (2,802 ) 185,749 Accumulated other comprehensive loss (3,670 ) — (3,670 ) Total Shareholders’ Equity 257,553 (4,435 ) 253,118 Total Liabilities and Shareholders’ Equity $ 755,671 $ (1,364 ) $ 754,307 Three Months Ended September 27, 2014 Nine Months Ended September 27, 2014 Unaudited Condensed Consolidated Statement of Income: As Reported Adjustments As Restated As Reported Adjustments As Restated Net Revenues $ 188,164 $ — $ 188,164 $ 554,433 $ — $ 554,433 Cost of Sales 154,770 282 155,052 448,526 (798 ) 447,728 Gross Profit 33,394 (282 ) 33,112 105,907 798 106,705 Selling, General and Administrative Expenses 23,050 — 23,050 65,005 — 65,005 Operating Income 10,344 (282 ) 10,062 40,902 798 41,700 Interest Expense (6,975 ) — (6,975 ) (21,094 ) — (21,094 ) Other Income 1,600 — 1,600 1,600 — 1,600 Income Before Taxes 4,969 (282 ) 4,687 21,408 798 22,206 Income Tax Expense 2,347 (593 ) 1,754 7,685 (190 ) 7,495 Net Income $ 2,622 $ 311 $ 2,933 $ 13,723 $ 988 $ 14,711 Earnings Per Share Basic earnings per share $ 0.24 $ 0.03 $ 0.27 $ 1.26 $ 0.09 $ 1.35 Diluted earnings per share $ 0.24 $ 0.03 $ 0.26 $ 1.23 $ 0.09 $ 1.31 Weighted-Average Number of Shares Outstanding Basic 10,921 — 10,921 10,902 — 10,902 Diluted 11,150 — 11,150 11,202 — 11,202 Three Months Ended September 27, 2014 Nine Months Ended September 27, 2014 Unaudited Condensed Consolidated Statement of Comprehensive Income: As Reported Adjustments As Restated As Reported Adjustments As Restated Net Income $ 2,622 $ 311 $ 2,933 $ 13,723 $ 988 $ 14,711 Pension Adjustments Amortization of actuarial loss and prior service costs, net of tax benefit of approximately $40 and $124 for the three months and nine months ended September 27, 2014 (66 ) — (66 ) (192 ) — (192 ) Other Comprehensive Loss (66 ) — (66 ) (192 ) — (192 ) Comprehensive Income $ 2,688 $ 311 $ 2,999 $ 13,915 $ 988 $ 14,903 Nine Months Ended September 27, 2014 Unaudited Condensed Consolidated Cash Flow Statement: As Reported Adjustments As Restated Cash Flows from Operating Activities Net Income $ 13,723 $ 988 $ 14,711 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and amortization 21,829 — 21,829 Stock-based compensation expense 2,520 — 2,520 Deferred income taxes 1,775 298 2,073 Excess tax benefits from stock-based compensation (139 ) — (139 ) Recovery of doubtful accounts (214 ) — (214 ) Other 649 (798 ) (149 ) Changes in Assets and Liabilities: Accounts receivable (12,273 ) — (12,273 ) Inventories (4,961 ) — (4,961 ) Production cost of contracts (1,408 ) — (1,408 ) Other assets 7,121 (488 ) 6,633 Accounts payable (2,447 ) — (2,447 ) Accrued and other liabilities (5,400 ) — (5,400 ) Net Cash Provided by Operating Activities 20,775 — 20,775 Cash Flows from Investing Activities Purchases of property and equipment (9,329 ) — (9,329 ) Proceeds from sales of assets 83 — 83 Insurance recoveries related to property and equipment 1,600 — 1,600 Net Cash Used in Investing Activities (7,646 ) — (7,646 ) Cash Flows from Financing Activities Repayments of senior unsecured notes and term loans (22,500 ) — (22,500 ) Repayment of other debt (19 ) — (19 ) Excess tax benefits from stock-based compensation 139 — 139 Net proceeds from issuance of common stock under stock plans 1,289 — 1,289 Net Cash Used in Financing Activities (21,091 ) — (21,091 ) Net Decrease in Cash and Cash Equivalents (7,962 ) — (7,962 ) Cash and Cash Equivalents at Beginning of Year 48,814 — 48,814 Cash and Cash Equivalents at End of Year $ 40,852 $ — $ 40,852 |
Restructuring Activities
Restructuring Activities | 9 Months Ended |
Oct. 03, 2015 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Activities | Restructuring Activities Summary of Restructuring Plans In September 2015, management approved and commenced implementation of several restructuring actions, including organizational re-alignments, consolidation and relocation of the New York facilities by December 2015, closure of the Houston facility by December 2015, and closure of the St. Louis facility by April 2016, all of which are part of our overall strategy to streamline operations. In the three months ended October 3, 2015, we have accrued approximately $0.5 million for severance and benefits and approximately $0.3 million for severance and benefits and charged to selling, general and administrative expenses in the DLT and DAS segments, respectively, and expect to record additional accruals totaling approximately $1.7 million to $2.0 million for severance and benefits and loss on early exit from leases in the fourth quarter of 2015. Our restructuring activities in the three and nine months ended October 3, 2015 were as follows (in thousands): Severance and Benefits Balance at July 4, 2015 $ — Gross charges 806 Cash payments — Balance at October 3, 2015 $ 806 |
Inventories
Inventories | 9 Months Ended |
Oct. 03, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted of the following: (In thousands) October 3, December 31, Raw materials and supplies $ 72,797 $ 77,033 Work in process 56,510 61,458 Finished goods 11,949 14,116 141,256 152,607 Less progress payments 3,939 9,765 Total $ 137,317 $ 142,842 We net advances from customers related to inventory purchases against inventories in the consolidated balance sheets. |
Goodwill
Goodwill | 9 Months Ended |
Oct. 03, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill We perform our annual goodwill impairment test during the fourth quarter each year. As of fourth quarter 2014, the date of our most recent annual goodwill impairment test, the carrying amounts of goodwill for the DAS, DLT, and Miltec internal reporting units were approximately $57.2 million , $92.0 million , and $8.4 million , respectively. However, certain factors may result in the need to perform an impairment test prior to the fourth quarter, including significant under performance of our business relative to expected operating results, significant adverse economic and industry trends, significant decline in our market capitalization for an extended period of time relative to net book value, a decision to divest individual businesses within a reporting unit, or a decision to group individual businesses differently. At times, our market capitalization had declined below book value, which if it continues for an extended period of time, is a factor that could lead to a conclusion that a triggering event has occurred. As our market capitalization declines recently have been temporary in nature and our market capitalization has exceeded our book value, we do not consider these temporary declines in market capitalization to be a triggering event in the fiscal quarter ended October 3, 2015. However, it is considered at least reasonably possible that our determination that goodwill is not impaired could change in the near term if any the factors noted above occurs. The carrying amounts of goodwill, by operating segment, were as follows: (In thousands) Ducommun AeroStructures Ducommun LaBarge Technologies Consolidated Ducommun Gross goodwill $ 57,243 $ 182,048 $ 239,291 Accumulated goodwill impairment — (81,722 ) (81,722 ) Balance at December 31, 2014 $ 57,243 $ 100,326 $ 157,569 Balance at October 3, 2015 $ 57,243 $ 100,326 $ 157,569 |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Oct. 03, 2015 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | Accrued Liabilities The components of accrued liabilities were as follows: (In thousands) October 3, December 31, Accrued compensation $ 18,560 $ 25,352 Accrued income and sales tax 1,524 1,580 Customer deposits 698 1,139 Interest payable 249 9,439 Provision for forward loss reserves 13,540 4,734 Other 8,863 9,822 Total $ 43,434 $ 52,066 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Oct. 03, 2015 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt and the current period interest rates were as follows: (In thousands) October 3, December 31, New term loan $ 260,000 $ — Senior unsecured notes (fixed 9.75%) — 200,000 Senior secured term loan (floating 4.75%) — 90,000 Other debt (fixed 5.41%) 35 52 Total debt 260,035 290,052 Less current portion 2,215 26 Total long-term debt $ 257,820 $ 290,026 Weighted-average interest rate 2.82 % 8.20 % In June 2015, we completed a new credit facility to replace the Existing Credit Facilities. The new credit facility consists of a $275.0 million senior secured term loan, which matures on June 26, 2020 (“New Term Loan”), and a $200.0 million senior secured revolving credit facility (“New Revolving Credit Facility”), which matures on June 26, 2020 (collectively, the “New Credit Facilities”). The New Credit Facilities bear interest, at our option, at a rate equal to either (i) the Eurodollar Rate (defined as LIBOR) plus an applicable margin ranging from 1.50% to 2.75% per year or (ii) the Base Rate (defined as the highest of [a] Federal Funds Rate plus 0.50% , [b] Bank of America’s prime rate, and [c] the Eurodollar Rate plus 1.00% ) plus an applicable margin ranging from 0.50% to 1.75% per year, in each case based upon the consolidated total net adjusted leverage ratio. The undrawn portions of the commitments of the New Credit Facilities are subject to a commitment fee ranging from 0.175% to 0.300% , based upon the consolidated total net adjusted leverage ratio. Further, we are required to make mandatory prepayments of amounts outstanding under the New Term Loan. The mandatory prepayments will be made quarterly, equal to 5.0% per year of the original aggregate principal amount during the first two years and increase to 7.5% per year during the third year, and increase to 10.0% per year during the fourth year and fifth years, with the remaining balance payable on June 26, 2020. The loans under the New Revolving Credit Facility are due on June 26, 2020. As of October 3, 2015, we were in compliance with all covenants required under the New Credit Facilities. We have been making voluntary principal prepayments on a quarterly basis on our senior secured term loan and in conjunction with the closing of the New Credit Facilities in second quarter 2015, we drew down approximately $65.0 million on the New Revolving Credit Facility and used those proceeds along with current cash on hand to extinguish the existing senior secured term loan of approximately $80.0 million . We expensed the unamortized debt issuance costs related to the existing senior secured term loan of approximately $2.8 million as part of extinguishing the existing senior secured term loan in second quarter 2015. We also incurred approximately $4.8 million of debt issuance costs related to the New Credit Facilities and those costs are capitalized and being amortized over the five year life of the New Credit Facilities. In addition, on June 29, 2015, we initiated a call notice to retire all of the $200.0 million senior unsecured notes (“Existing Notes”) on July 27, 2015. We drew down on the New Term Loan in the amount of $275.0 million . Along with the call notice amount and paying the call premium of approximately $9.8 million , we also paid down the $65.0 million drawn on the New Revolving Credit Facility in the previous quarter. We expensed the call premium of approximately $9.8 million and debt issuance costs related to the Existing Notes of approximately $2.1 million upon extinguishing the Existing Notes in the current three months ended October 3, 2015. Further, we made voluntary principal prepayments of approximately $15.0 million under the New Term Loan during the three months ended October 3, 2015. As of October 3, 2015, we had approximately $198.5 million of unused borrowing capacity under the New Revolving Credit Facility, after deducting approximately $1.5 million for standby letters of credit. The Existing Notes were issued by us (“Parent Company”) and guaranteed by all of our subsidiaries, other than one subsidiary (“Subsidiary Guarantors”) that was considered minor. The New Credit Facilities are also guaranteed by the Subsidiary Guarantors. The Parent Company has no independent assets or operations and the Subsidiary Guarantors jointly and severally guarantee, on a senior unsecured basis, the Existing Notes and New Credit Facilities. Therefore, no condensed consolidating financial information for the Parent Company and its subsidiaries are presented. Subsequent to the quarter ended October 3, 2015, we entered into interest rate cap hedges designated as cash flow hedges with maturity dates of June 2020, and in aggregate, totaling approximately $135.0 million of our debt. We paid a total of approximately $1.0 million in connection with the interest rate cap hedges. |
Shareholders' Equity
Shareholders' Equity | 9 Months Ended |
Oct. 03, 2015 | |
Equity [Abstract] | |
Shareholders' Equity | Shareholders’ Equity We are authorized to issue five million shares of preferred stock. At October 3, 2015 and December 31, 2014 , no preferred shares were issued or outstanding. |
Employee Benefit Plans
Employee Benefit Plans | 9 Months Ended |
Oct. 03, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans The components of net periodic pension expense were as follows: (In thousands) (In thousands) Three Months Ended Nine Months Ended October 3, September 27, October 3, September 27, Service cost $ 196 $ 174 $ 589 $ 520 Interest cost 338 320 1,013 958 Expected return on plan assets (374 ) (351 ) (1,121 ) (1,052 ) Amortization of actuarial losses 222 106 665 316 Net periodic pension cost $ 382 $ 249 $ 1,146 $ 742 The components of the reclassifications of net actuarial losses from accumulated other comprehensive loss to net income for the three months ended October 3, 2015 were as follows: (In thousands) Three Months Ended Nine Months Ended October 3, October 3, Amortization of actuarial losses - total before tax (1) $ (222 ) $ (665 ) Tax benefit 83 248 Net of tax $ (139 ) $ (417 ) (1) The amortization expense is included in the computation of periodic pension cost and is a decrease to net income upon reclassification from accumulated other comprehensive loss. |
Indemnifications
Indemnifications | 9 Months Ended |
Oct. 03, 2015 | |
Disclosure of Guarantees and Indemnifications [Abstract] | |
Indemnifications | Indemnifications 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 |
Oct. 03, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We recorded an income tax benefit of approximately $(6.9) million (effective tax benefit rate of 42% ) for the three months ended October 3, 2015 compared to an income tax expense of approximately $1.8 million (effective tax rate of 37% ) for the three months ended September 27, 2014. The difference between the statutory tax rate of 35% and the effective tax benefit rate for the three months ended October 3, 2015 was primarily due to a benefit for the Qualified Domestic Production Activities Deduction and release of reserves as a result of the expiration of statute of limitations, partially offset by state taxes. The difference between the statutory tax rate of 35% and the effective tax benefit rate for the three months ended September 27, 2014 was primarily due to a benefit for the Qualified Domestic Production Activities Deduction and release of reserves as a result of the expiration of statute of limitations, partially offset by state taxes. We recorded an income tax benefit of approximately $(6.7) million (effective tax benefit rate of 41% ) for the nine months ended October 3, 2015 compared to an income tax expense of approximately $7.5 million (effective tax rate of 34% ) for the nine months ended September 27, 2014. The difference between the statutory tax rate of 35% and the effective tax benefit rate for the nine months ended October 3, 2015 was primarily due to a benefit for the Qualified Domestic Production Activities Deduction and release of reserves as a result of the expiration of statute of limitations, partially offset by state taxes. The difference between the statutory tax rate of 35% and the effective tax benefit rate for the nine months ended September 27, 2014 was primarily due to a benefit for the Qualified Domestic Production Activities Deduction and release of reserves as a result of the expiration of statute of limitations, partially offset by state taxes. Our unrecognized tax benefits were approximately $2.6 million and $2.8 million as of October 3, 2015 and December 31, 2014 , respectively. Approximately $1.5 million , if recognized, would affect the annual income tax rate. We do not reasonably expect significant increases or decreases to our unrecognized tax benefits in the next twelve months. |
Contingencies
Contingencies | 9 Months Ended |
Oct. 03, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies On October 8, 2014, the United States District Court for the District of Kansas (the “District Court”) granted summary judgment in favor of The Boeing Company (“Boeing”) and Ducommun and dismissed the lawsuit entitled United States of America ex rel Taylor Smith, Jeannine Prewitt and James Ailes v. The Boeing Company and Ducommun Inc. . The lawsuit was 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. Relators have appealed the dismissal to the Tenth Circuit Court of Appeals. The lawsuit alleged that Ducommun sold unapproved parts to 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 sought 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 claimed 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 declined to intervene in 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 October 3, 2015 , which is reflected in other long-term liabilities on its 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, California 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 October 3, 2015 , which is reflected in other long-term liabilities on its 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 condensed consolidated financial position, results of operations or cash flows. |
Business Segment Information
Business Segment Information | 9 Months Ended |
Oct. 03, 2015 | |
Segment Reporting [Abstract] | |
Business Segment Information | 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 operating segment was as follows: (In thousands) Three Months Ended (In thousands) Nine Months Ended October 3, September 27, October 3, September 27, As Restated As Restated Net Revenues DAS $ 64,170 $ 81,357 $ 212,306 $ 241,627 DLT 97,500 106,807 297,129 312,806 Total Net Revenues $ 161,670 $ 188,164 $ 509,435 $ 554,433 Segment Operating Income DAS $ (6,028 ) $ 6,908 $ 2,980 $ 28,067 DLT 8,598 8,288 22,575 26,089 2,570 15,196 25,555 54,156 Corporate General and Administrative Expenses (1) (3,747 ) (5,134 ) (12,266 ) (12,456 ) Operating Income $ (1,177 ) $ 10,062 $ 13,289 $ 41,700 Depreciation and Amortization Expenses DAS $ 2,386 $ 2,272 $ 7,009 $ 8,242 DLT 4,207 4,391 12,928 13,442 Corporate Administration 42 41 127 145 Total Depreciation and Amortization Expenses $ 6,635 $ 6,704 $ 20,064 $ 21,829 Capital Expenditures DAS $ 2,329 $ 1,266 $ 8,080 $ 3,986 DLT 758 1,761 3,196 4,736 Corporate Administration 4 1 10 25 Total Capital Expenditures $ 3,091 $ 3,028 $ 11,286 $ 8,747 (1) Includes costs not allocated to either the DLT or DAS operating segments. Segment assets include assets directly identifiable with each segment. Corporate assets include assets not specifically identified with a business segment, including cash. Our segment assets are as follows: (In thousands) October 3, December 31, Total Assets DAS $ 240,035 $ 245,925 DLT 408,912 427,719 Corporate Administration 43,454 73,955 Total Assets $ 692,401 $ 747,599 Goodwill and Intangibles DAS $ 62,456 $ 63,497 DLT 242,693 249,176 Total Goodwill and Intangibles $ 305,149 $ 312,673 |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Oct. 03, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited condensed 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, 2014 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 IV, Item 15(a)(1), “Note 1. Summary of Significant Accounting Policies” in our Annual Report on Form 10-K for the year ended December 31, 2014. We followed the same accounting policies for interim reporting. The financial information included in this Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2014. 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 October 3, 2015 are not necessarily indicative of the results to be expected for the full year ending December 31, 2015. Our fiscal quarters typically end on the Saturday closest to the end of March, June and September for the first three fiscal quarters of each year, and ends on December 31 for our fourth fiscal quarter. As a result of using fiscal quarters for the first three quarters combined with leap years, our first and fourth fiscal quarters can range between 12 1/2 weeks to 13 1/2 weeks while the second and third fiscal quarters remain at a constant 13 weeks per fiscal quarter. Certain reclassifications have been made to prior period amounts to conform to the current year’s presentation. Supplemental Cash Flow Information Nine Months Ended October 3, 2015 September 27, 2014 As Restated Interest paid $ 24,066 $ 24,090 Taxes paid 1,150 3,410 Non-cash activities: Purchases of property and equipment not paid 957 418 |
Use of Estimates | Use of Estimates Certain amounts and disclosures included in the unaudited condensed consolidated financial statements required management to make estimates and judgments that affect the amounts of assets, liabilities (including forward loss reserves), 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. |
Restatement of Previously Issued Consolidated Financial Statements | Restatement of Previously Issued Consolidated Financial Statements As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014, we have restated our consolidated financial statements as of December 31, 2013, and for the years ended December 31, 2013 and 2012 and our unaudited quarterly financial information for the first three quarters in the year ended December 31, 2014 and for each of the quarters in the year ended December 31, 2013, to correct errors in prior periods primarily related to (i) a long-term contract following the discovery of misconduct by employees in the recording of direct labor costs to the contract from 2009 through the third quarter 2014 which resulted in the identification of a forward loss provision that should have been recorded in 2009 and the impact on subsequent periods of adjustments to the forward loss provision based on information available at the time; and (ii) the year end reconciliation of income taxes payable and deferred tax balances identified errors primarily in 2013, 2012, and 2011. In addition, the restated amounts include previously identified and disclosed immaterial adjustments. We have reflected our restated unaudited quarterly condensed consolidated financial information as of and for the three and nine months ended September 27, 2014 herein. See Note 2 for additional information. |
Description of Business | Description of Business We are a leading global provider of engineering and manufacturing services for high-performance products and high-cost-of failure applications used primarily in the aerospace, defense, industrial, natural resources, medical and other industries. Our subsidiaries are organized into two strategic businesses: Ducommun AeroStructures (“DAS”) and Ducommun LaBarge Technologies (“DLT”), each of which is a reportable operating segment. DAS designs, engineers and manufactures large, complex contoured aerospace structural components and assemblies and supplies composite and metal bonded structures and assemblies. DAS products are used on commercial aircraft, military fixed-wing aircraft and military and commercial rotary-wing aircraft. 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. All reportable operating segments follow the same accounting principles. |
(Loss) Earnings Per Share | (Loss) Earnings Per Share Basic (loss) earnings per share are computed by dividing (loss) 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 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. |
Cash and Cash Equivalents | Cash and Cash Equivalents Our cash accounts are not reduced for checks written until the checks are presented for payment and paid by our bank. 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. |
Provision for Estimated Losses on Contracts | Provision for Estimated Losses on Contracts We record provisions for the total anticipated losses on contracts considering total estimated costs to complete the contract compared to total anticipated revenues in the period in which such losses are identified. The provisions for estimated losses on contracts require us to make certain estimates and assumptions, including those with respect to the future revenue under a contract and the future cost to complete the contract. Our estimate of the future cost to complete a contract may include assumptions as to improvements in manufacturing efficiency, reductions in operating and material costs, and our ability to resolve claims and assertions with our customers. If any of these or other assumptions and estimates do not materialize in the future, we maybe required to record additional provisions for estimated losses on contracts. |
Inventory Valuation | Inventory Valuation Inventories are stated at the lower of cost or market, cost being determined on a first-in, first-out basis. Market value for raw materials is based on replacement costs, and is based on net realizable value for other inventory classifications. Inventoried costs include raw materials, outside processing, direct labor and allocated overhead, adjusted for any abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) incurred. Costs under long-term contracts are accumulated into, and removed from, inventory on the same basis as other contracts. We assess the inventory carrying value and reduce it, if necessary, to its net realizable value based on customer orders on hand, and internal demand forecasts using management’s best estimates given information currently available. We maintain an allowance for potentially excess and obsolete inventories and inventories that are carried at costs that are higher than their estimated net realizable values. |
Production Cost of Contracts | Production Cost of Contracts Production cost of contracts includes non-recurring production costs, such as design and engineering costs, and tooling and other special-purpose machinery necessary to build parts as specified in a contract. Production costs of contracts are recorded to cost of goods sold using the units of delivery method. We review long-lived assets within production costs of contracts for impairment on an annual basis (in the fourth quarter for us) or when events or changes in circumstances indicate that the carrying value of our long-lived assets may not be recoverable. An impairment charge is recognized when the carrying value of an asset exceeds the projected undiscounted future cash flows expected from its use and disposal. |
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. |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Accumulated other comprehensive loss, as reflected in the condensed consolidated balance sheets under the equity section, was comprised of cumulative pension and retirement liability adjustments, net of tax. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Issued Accounting Standards In August 2015, the FASB issued ASU 2015-15, “Imputation of Interest (Subtopic 835-30)” (“ASU 2015-15”), which provides guidance on the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. In ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” it requires entities to present debt issuance costs related to a recognized debt liability as a direct deduction from the carrying amount of that debt liability but does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Thus, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The new guidance is effective for annual and interim periods within those annual periods, beginning after December 15, 2015, which will be our interim period beginning January 1, 2016. Early adoption is permitted. We had approximately $4.6 million of debt issuance costs and approximately $260.0 million of total debt as of October 3, 2015, and thus, we do not believe that adoption of this new guidance will have a significant impact on our condensed consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330)” (“ASU 2015-11”), which requires inventory within the scope of ASU 2015-11 to be measured at the lower of cost and net realizable value. Subsequent measurement is unchanged for inventory measured using last-in, first-out (“LIFO”) or the retail inventory value. The new guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, which will be our interim period beginning January 1, 2017. Early adoption is permitted as of the beginning of an interim or annual reporting period. We are evaluating the impact of this standard but currently do not anticipate it will have a significant impact on our condensed consolidated financial statements. In June 2015, the FASB issued ASU 2015-10, “Technical Corrections and Improvements” (“ASU 2015-10”), which covers a wide range of Topics in the Codification. The amendments in ASU 2015-10 represent changes to make minor corrections or minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost on most entities. The amendments in this new guidance that require transition guidance are effective for annual and interim periods within those annual periods, beginning after December 15, 2015, which was our interim period beginning January 1, 2016. All other amendments are effective upon issuance of ASU 2015-10. Early adoption is permitted. We do not anticipate this standard will have a significant impact on our condensed consolidated financial statements. In April 2015, the FASB issued ASU 2015-05, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement” (“ASU 2015-05”), which provides guidance on fees paid by a customer in a cloud computing arrangement. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The new guidance is effective for annual and interim periods within those annual periods, beginning after December 15, 2015, which will be our interim period beginning January 1, 2016. Early adoption is permitted. We are evaluating the impact of this standard but currently do not anticipate it will have a significant impact on our condensed consolidated financial statements. In April 2015, the FASB issued ASU 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”), which changes the presentation of debt issuance costs in financial statements. Under ASU 2015-03, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of those costs is reported as interest expense. The new guidance is effective for annual and interim periods within those annual periods, beginning after December 15, 2015, which will be our interim period beginning January 1, 2016. Early adoption is permitted. We had approximately $4.6 million of debt issuance costs and approximately $260.0 million of total debt as of October 3, 2015, and thus, we do not believe that adoption of this new guidance will have a significant impact on our condensed consolidated financial statements. In January 2015, the FASB issued ASU 2015-01, “Income Statement - Extraordinary and Unusual Items (Subtopic 225-20)” (“ASU 2015-01”), which eliminates from U.S. GAAP the concept of extraordinary items. Current guidance requires separate classification, presentation, and disclosure of extraordinary events and transactions. In addition, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item. The new guidance is effective for annual and interim periods within those annual periods, beginning after December 15, 2015, which will be our interim period beginning January 1, 2016. Early adoption is permitted provided it is applied from the beginning of the annual period of adoption. We are evaluating the impact of this standard but currently do not anticipate it will have a significant impact on our condensed consolidated financial statements. In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“ASU 2014-15”), which defines management’s responsibility to evaluate whether there is substantial doubt about a company’s ability to continue as a going concern. ASU 2014-15 also provide principles and definitions that are intended to reduce diversity in the timing and content of disclosures in the financial statement footnotes. The new guidance is effective for annual periods ending after December 15, 2016, which will be our year ending December 31, 2016, and interim periods beginning after December 15, 2016, which will be our interim period beginning January 1, 2017. Early adoption is permitted. We are evaluating the impact of this standard but currently do not anticipate it will have a significant impact on our condensed consolidated financial statements. In June 2014, the FASB issued ASU 2014-12, “Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period” (“ASU 2014-12”), which requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. Thus, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. The new guidance is effective for us beginning January 1, 2016. Early adoption is permitted. We currently do not anticipate the adoption of this standard will have a material impact on our condensed consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), which outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. It requires entities to exercise judgment when considering the terms of the contract(s) which include (i) identifying the contract(s) with the customer, (ii) identifying the separate performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the separate performance obligations, and (v) recognizing revenue when each performance obligation is satisfied. Thus, it depicts the transfer of promised goods or services to customers in an amount that reflects the consideration an entity expects to receive in exchange for those goods or services. Companies have the option of applying the provisions of ASU 2014-09 either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this guidance recognized at the date of initial application. In August 2015, the FASB issued ASU 2015-14, “Revenue From Contracts With Customers (Topic 606)” (“ASU 2015-14”), which defer the effective date of ASU 2014-09 by one year to annual periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The new guidance is effective for us beginning January 1, 2018 and will provide us additional time to evaluate the method and impact that ASU 2014-09 will have on our condensed consolidated financial statements. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Oct. 03, 2015 | |
Accounting Policies [Abstract] | |
Schedule of Supplemental Cash Flow | Supplemental Cash Flow Information Nine Months Ended October 3, 2015 September 27, 2014 As Restated Interest paid $ 24,066 $ 24,090 Taxes paid 1,150 3,410 Non-cash activities: Purchases of property and equipment not paid 957 418 |
Weighted Average Number of Shares Outstanding Used to Compute Earnings Per Share | The net (loss) earnings, weighted-average number of common shares outstanding used to compute (loss) earnings per share were as follows: (In thousands, except per share data) Three Months Ended (In thousands, except per share data) Nine Months Ended October 3, September 27, October 3, September 27, As Restated As Restated Net (loss) earnings $ (9,515 ) $ 2,933 $ (9,706 ) $ 14,711 Weighted-average number of common shares outstanding Basic weighted-average common shares outstanding 11,083 10,921 11,035 10,902 Dilutive potential common shares — 229 — 300 Diluted weighted-average common shares outstanding 11,083 11,150 11,035 11,202 (Loss) earnings per share Basic $ (0.86 ) $ 0.27 $ (0.88 ) $ 1.35 Diluted $ (0.86 ) $ 0.26 $ (0.88 ) $ 1.31 |
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 (In thousands) Nine Months Ended October 3, September 27, October 3, September 27, Stock options and stock units 885 229 902 187 |
Restatement (Tables)
Restatement (Tables) | 9 Months Ended |
Oct. 03, 2015 | |
Accounting Changes and Error Corrections [Abstract] | |
Schedule of Prior Period Adjustments | The effects of these prior period errors on our unaudited condensed consolidated financial statements are as follows (in thousands, except per share data): September 27, 2014 Unaudited Condensed Consolidated Balance Sheet: As Reported Adjustments As Restated Assets Current Assets Cash and cash equivalents $ 40,852 $ — $ 40,852 Accounts receivable (less allowance for doubtful accounts of $275 at September 27, 2014) 104,396 — 104,396 Inventories 145,468 — 145,468 Production cost of contracts 10,375 — 10,375 Deferred income taxes 13,664 1,521 15,185 Other current assets 20,444 1,486 21,930 Total Current Assets 335,199 3,007 338,206 Property and Equipment, Net 93,181 — 93,181 Goodwill 161,940 (4,371 ) 157,569 Intangibles, Net 157,694 — 157,694 Other Assets 7,657 — 7,657 Total Assets $ 755,671 $ (1,364 ) $ 754,307 Liabilities and Shareholders’ Equity Current Liabilities Current portion of long-term debt $ 26 $ — $ 26 Accounts payable 55,083 — 55,083 Accrued liabilities 42,916 3,871 46,787 Total Current Liabilities 98,025 3,871 101,896 Long-Term Debt, Less Current Portion 310,157 — 310,157 Deferred Income Taxes 73,078 (500 ) 72,578 Other Long-Term Liabilities 16,858 (300 ) 16,558 Total Liabilities 498,118 3,071 501,189 Commitments and Contingencies Shareholders’ Equity Common stock - $0.01 par value; 35,000,000 shares authorized; 10,945,806 shares issued at September 27, 2014 109 — 109 Additional paid-in capital 72,563 (1,633 ) 70,930 Retained earnings 188,551 (2,802 ) 185,749 Accumulated other comprehensive loss (3,670 ) — (3,670 ) Total Shareholders’ Equity 257,553 (4,435 ) 253,118 Total Liabilities and Shareholders’ Equity $ 755,671 $ (1,364 ) $ 754,307 Three Months Ended September 27, 2014 Nine Months Ended September 27, 2014 Unaudited Condensed Consolidated Statement of Income: As Reported Adjustments As Restated As Reported Adjustments As Restated Net Revenues $ 188,164 $ — $ 188,164 $ 554,433 $ — $ 554,433 Cost of Sales 154,770 282 155,052 448,526 (798 ) 447,728 Gross Profit 33,394 (282 ) 33,112 105,907 798 106,705 Selling, General and Administrative Expenses 23,050 — 23,050 65,005 — 65,005 Operating Income 10,344 (282 ) 10,062 40,902 798 41,700 Interest Expense (6,975 ) — (6,975 ) (21,094 ) — (21,094 ) Other Income 1,600 — 1,600 1,600 — 1,600 Income Before Taxes 4,969 (282 ) 4,687 21,408 798 22,206 Income Tax Expense 2,347 (593 ) 1,754 7,685 (190 ) 7,495 Net Income $ 2,622 $ 311 $ 2,933 $ 13,723 $ 988 $ 14,711 Earnings Per Share Basic earnings per share $ 0.24 $ 0.03 $ 0.27 $ 1.26 $ 0.09 $ 1.35 Diluted earnings per share $ 0.24 $ 0.03 $ 0.26 $ 1.23 $ 0.09 $ 1.31 Weighted-Average Number of Shares Outstanding Basic 10,921 — 10,921 10,902 — 10,902 Diluted 11,150 — 11,150 11,202 — 11,202 Three Months Ended September 27, 2014 Nine Months Ended September 27, 2014 Unaudited Condensed Consolidated Statement of Comprehensive Income: As Reported Adjustments As Restated As Reported Adjustments As Restated Net Income $ 2,622 $ 311 $ 2,933 $ 13,723 $ 988 $ 14,711 Pension Adjustments Amortization of actuarial loss and prior service costs, net of tax benefit of approximately $40 and $124 for the three months and nine months ended September 27, 2014 (66 ) — (66 ) (192 ) — (192 ) Other Comprehensive Loss (66 ) — (66 ) (192 ) — (192 ) Comprehensive Income $ 2,688 $ 311 $ 2,999 $ 13,915 $ 988 $ 14,903 Nine Months Ended September 27, 2014 Unaudited Condensed Consolidated Cash Flow Statement: As Reported Adjustments As Restated Cash Flows from Operating Activities Net Income $ 13,723 $ 988 $ 14,711 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and amortization 21,829 — 21,829 Stock-based compensation expense 2,520 — 2,520 Deferred income taxes 1,775 298 2,073 Excess tax benefits from stock-based compensation (139 ) — (139 ) Recovery of doubtful accounts (214 ) — (214 ) Other 649 (798 ) (149 ) Changes in Assets and Liabilities: Accounts receivable (12,273 ) — (12,273 ) Inventories (4,961 ) — (4,961 ) Production cost of contracts (1,408 ) — (1,408 ) Other assets 7,121 (488 ) 6,633 Accounts payable (2,447 ) — (2,447 ) Accrued and other liabilities (5,400 ) — (5,400 ) Net Cash Provided by Operating Activities 20,775 — 20,775 Cash Flows from Investing Activities Purchases of property and equipment (9,329 ) — (9,329 ) Proceeds from sales of assets 83 — 83 Insurance recoveries related to property and equipment 1,600 — 1,600 Net Cash Used in Investing Activities (7,646 ) — (7,646 ) Cash Flows from Financing Activities Repayments of senior unsecured notes and term loans (22,500 ) — (22,500 ) Repayment of other debt (19 ) — (19 ) Excess tax benefits from stock-based compensation 139 — 139 Net proceeds from issuance of common stock under stock plans 1,289 — 1,289 Net Cash Used in Financing Activities (21,091 ) — (21,091 ) Net Decrease in Cash and Cash Equivalents (7,962 ) — (7,962 ) Cash and Cash Equivalents at Beginning of Year 48,814 — 48,814 Cash and Cash Equivalents at End of Year $ 40,852 $ — $ 40,852 |
Restructuring Activities (Table
Restructuring Activities (Tables) | 9 Months Ended |
Oct. 03, 2015 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring Activities | Our restructuring activities in the three and nine months ended October 3, 2015 were as follows (in thousands): Severance and Benefits Balance at July 4, 2015 $ — Gross charges 806 Cash payments — Balance at October 3, 2015 $ 806 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Oct. 03, 2015 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | Inventories consisted of the following: (In thousands) October 3, December 31, Raw materials and supplies $ 72,797 $ 77,033 Work in process 56,510 61,458 Finished goods 11,949 14,116 141,256 152,607 Less progress payments 3,939 9,765 Total $ 137,317 $ 142,842 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Oct. 03, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The carrying amounts of goodwill, by operating segment, were as follows: (In thousands) Ducommun AeroStructures Ducommun LaBarge Technologies Consolidated Ducommun Gross goodwill $ 57,243 $ 182,048 $ 239,291 Accumulated goodwill impairment — (81,722 ) (81,722 ) Balance at December 31, 2014 $ 57,243 $ 100,326 $ 157,569 Balance at October 3, 2015 $ 57,243 $ 100,326 $ 157,569 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Oct. 03, 2015 | |
Payables and Accruals [Abstract] | |
Summary of Accrued Liabilities | The components of accrued liabilities were as follows: (In thousands) October 3, December 31, Accrued compensation $ 18,560 $ 25,352 Accrued income and sales tax 1,524 1,580 Customer deposits 698 1,139 Interest payable 249 9,439 Provision for forward loss reserves 13,540 4,734 Other 8,863 9,822 Total $ 43,434 $ 52,066 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Oct. 03, 2015 | |
Debt Disclosure [Abstract] | |
Long Term Debt Summary | Long-term debt and the current period interest rates were as follows: (In thousands) October 3, December 31, New term loan $ 260,000 $ — Senior unsecured notes (fixed 9.75%) — 200,000 Senior secured term loan (floating 4.75%) — 90,000 Other debt (fixed 5.41%) 35 52 Total debt 260,035 290,052 Less current portion 2,215 26 Total long-term debt $ 257,820 $ 290,026 Weighted-average interest rate 2.82 % 8.20 % |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 9 Months Ended |
Oct. 03, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Components of Net Periodic Pension Cost | The components of net periodic pension expense were as follows: (In thousands) (In thousands) Three Months Ended Nine Months Ended October 3, September 27, October 3, September 27, Service cost $ 196 $ 174 $ 589 $ 520 Interest cost 338 320 1,013 958 Expected return on plan assets (374 ) (351 ) (1,121 ) (1,052 ) Amortization of actuarial losses 222 106 665 316 Net periodic pension cost $ 382 $ 249 $ 1,146 $ 742 |
Reclassification out of Accumulated Other Comprehensive Income | The components of the reclassifications of net actuarial losses from accumulated other comprehensive loss to net income for the three months ended October 3, 2015 were as follows: (In thousands) Three Months Ended Nine Months Ended October 3, October 3, Amortization of actuarial losses - total before tax (1) $ (222 ) $ (665 ) Tax benefit 83 248 Net of tax $ (139 ) $ (417 ) (1) The amortization expense is included in the computation of periodic pension cost and is a decrease to net income upon reclassification from accumulated other comprehensive loss. |
Business Segment Information (T
Business Segment Information (Tables) | 9 Months Ended |
Oct. 03, 2015 | |
Segment Reporting [Abstract] | |
Financial Information by Reportable Segment | Financial information by reportable operating segment was as follows: (In thousands) Three Months Ended (In thousands) Nine Months Ended October 3, September 27, October 3, September 27, As Restated As Restated Net Revenues DAS $ 64,170 $ 81,357 $ 212,306 $ 241,627 DLT 97,500 106,807 297,129 312,806 Total Net Revenues $ 161,670 $ 188,164 $ 509,435 $ 554,433 Segment Operating Income DAS $ (6,028 ) $ 6,908 $ 2,980 $ 28,067 DLT 8,598 8,288 22,575 26,089 2,570 15,196 25,555 54,156 Corporate General and Administrative Expenses (1) (3,747 ) (5,134 ) (12,266 ) (12,456 ) Operating Income $ (1,177 ) $ 10,062 $ 13,289 $ 41,700 Depreciation and Amortization Expenses DAS $ 2,386 $ 2,272 $ 7,009 $ 8,242 DLT 4,207 4,391 12,928 13,442 Corporate Administration 42 41 127 145 Total Depreciation and Amortization Expenses $ 6,635 $ 6,704 $ 20,064 $ 21,829 Capital Expenditures DAS $ 2,329 $ 1,266 $ 8,080 $ 3,986 DLT 758 1,761 3,196 4,736 Corporate Administration 4 1 10 25 Total Capital Expenditures $ 3,091 $ 3,028 $ 11,286 $ 8,747 (1) Includes costs not allocated to either the DLT or DAS operating segments. |
Segment Assets | Corporate assets include assets not specifically identified with a business segment, including cash. Our segment assets are as follows: (In thousands) October 3, December 31, Total Assets DAS $ 240,035 $ 245,925 DLT 408,912 427,719 Corporate Administration 43,454 73,955 Total Assets $ 692,401 $ 747,599 Goodwill and Intangibles DAS $ 62,456 $ 63,497 DLT 242,693 249,176 Total Goodwill and Intangibles $ 305,149 $ 312,673 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies - Additional Information (Detail) $ in Thousands | 9 Months Ended | |
Oct. 03, 2015USD ($)Segment | Dec. 31, 2013USD ($) | |
Accounting Policies [Abstract] | ||
Number of reportable segments | Segment | 2 | |
Number of operating segments | Segment | 2 | |
Cash equivalent maturity period (in months) | 3 months | |
Debt issuance costs | $ 4,600 | |
Total debt | $ 260,035 | $ 290,052 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies - Supplemental Cash Flow Items (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 03, 2015 | Sep. 27, 2014 | |
Supplemental Disclosures of Cash Flow Information | ||
Interest paid | $ 24,066 | $ 24,090 |
Taxes paid | 1,150 | 3,410 |
Non-cash activities: | ||
Purchases of property and equipment not paid | $ 957 | $ 418 |
Summary of Significant Accoun33
Summary of Significant Accounting Policies - Weighted Average Number of Shares Outstanding Used to Compute Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2015 | Sep. 27, 2014 | Oct. 03, 2015 | Sep. 27, 2014 | |
Accounting Policies [Abstract] | ||||
Net (loss) earnings | $ (9,515) | $ 2,933 | $ (9,706) | $ 14,711 |
Weighted-average number of common shares outstanding | ||||
Basic weighted-average common shares outstanding | 11,083 | 10,921 | 11,035 | 10,902 |
Dilutive potential common shares | 0 | 229 | 0 | 300 |
Diluted weighted-average common shares outstanding | 11,083 | 11,150 | 11,035 | 11,202 |
(Loss) earnings per share | ||||
Basic (in dollars per share) | $ (0.86) | $ 0.27 | $ (0.88) | $ 1.35 |
Diluted (in dollars per share) | $ (0.86) | $ 0.26 | $ (0.88) | $ 1.31 |
Summary of Significant Accoun34
Summary of Significant Accounting Policies - Weighted Average Number of Shares Outstanding Excluded from Computation of Diluted Earnings (Detail) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2015 | Sep. 27, 2014 | Oct. 03, 2015 | Sep. 27, 2014 | |
Stock Options and Restricted Stock Units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potentially dilutive stock options and stock units to purchase common stock | 885 | 229 | 902 | 187 |
Restatement - Narrative (Detail
Restatement - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Oct. 03, 2015 | Sep. 27, 2014 | Oct. 03, 2015 | Sep. 27, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2014 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||||
Income tax expense (benefit) | $ (6,932,000) | $ 1,754,000 | $ (6,714,000) | $ 7,495,000 | ||||||
Goodwill | $ 157,569,000 | 157,569,000 | $ 157,569,000 | 157,569,000 | $ 157,569,000 | |||||
Adjustments | ||||||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||||||
Cost of goods sold | (800,000) | $ (900,000) | $ (2,200,000) | $ (300,000) | $ 1,300,000 | $ 6,700,000 | ||||
Income tax expense (benefit) | (593,000) | (190,000) | $ (900,000) | $ 0 | ||||||
Goodwill | $ (4,371,000) | $ (4,371,000) | (4,000,000) | |||||||
Deferred income taxes | (2,700,000) | |||||||||
Goodwill impairment | 1,400,000 | |||||||||
Deferred tax assets | $ (1,600,000) |
Restatement - Balance Sheet (De
Restatement - Balance Sheet (Details) - USD ($) $ in Thousands | Oct. 03, 2015 | Dec. 31, 2014 | Sep. 27, 2014 | Dec. 31, 2013 | Dec. 31, 2011 |
Current Assets | |||||
Cash and cash equivalents | $ 12,241 | $ 45,627 | $ 40,852 | $ 48,814 | |
Accounts receivable (less allowance for doubtful accounts of $275 at September 27, 2014) | 86,235 | 91,060 | 104,396 | ||
Inventories | 137,317 | 142,842 | 145,468 | ||
Production cost of contracts | 11,609 | 11,727 | 10,375 | ||
Deferred income taxes | 12,432 | 13,783 | 15,185 | ||
Other current assets | 22,700 | 23,702 | 21,930 | ||
Total Current Assets | 282,534 | 328,741 | 338,206 | ||
Property and equipment, net of accumulated depreciation of $137,556 and $128,457 at October 3, 2015 and December 31, 2014, respectively | 98,335 | 99,068 | 93,181 | ||
Goodwill | 157,569 | 157,569 | 157,569 | ||
Intangibles, net | 147,580 | 155,104 | 157,694 | ||
Other assets | 6,383 | 7,117 | 7,657 | ||
Total Assets | 692,401 | 747,599 | 754,307 | ||
Current Liabilities | |||||
Current portion of long-term debt | 2,215 | 26 | 26 | 26 | |
Accounts payable | 50,852 | 58,979 | 55,083 | ||
Accrued liabilities | 43,434 | 52,066 | 46,787 | ||
Total Current Liabilities | 96,501 | 111,071 | 101,896 | ||
Long-term debt, less current portion | 257,820 | 290,026 | 310,157 | 290,026 | |
Deferred income taxes | 69,696 | 69,448 | 72,578 | ||
Other long-term liabilities | 18,913 | 20,484 | 16,558 | ||
Total Liabilities | $ 442,930 | $ 491,029 | $ 501,189 | ||
Commitments and Contingencies | |||||
Shareholders’ Equity | |||||
Common stock - $0.01 par value; 35,000,000 shares authorized; 10,945,806 shares issued at September 27, 2014 | $ 111 | $ 110 | $ 109 | ||
Additional paid-in capital | 74,395 | 72,206 | 70,930 | ||
Retained earnings | 181,199 | 190,905 | 185,749 | ||
Accumulated other comprehensive loss | (6,234) | (6,651) | (3,670) | ||
Total Shareholders’ Equity | 249,471 | 256,570 | 253,118 | ||
Total Liabilities and Shareholders’ Equity | $ 692,401 | $ 747,599 | 754,307 | ||
As Reported | |||||
Current Assets | |||||
Cash and cash equivalents | 40,852 | 48,814 | |||
Accounts receivable (less allowance for doubtful accounts of $275 at September 27, 2014) | 104,396 | ||||
Inventories | 145,468 | ||||
Production cost of contracts | 10,375 | ||||
Deferred income taxes | 13,664 | ||||
Other current assets | 20,444 | ||||
Total Current Assets | 335,199 | ||||
Property and equipment, net of accumulated depreciation of $137,556 and $128,457 at October 3, 2015 and December 31, 2014, respectively | 93,181 | ||||
Goodwill | 161,940 | ||||
Intangibles, net | 157,694 | ||||
Other assets | 7,657 | ||||
Total Assets | 755,671 | ||||
Current Liabilities | |||||
Current portion of long-term debt | 26 | ||||
Accounts payable | 55,083 | ||||
Accrued liabilities | 42,916 | ||||
Total Current Liabilities | 98,025 | ||||
Long-term debt, less current portion | 310,157 | ||||
Deferred income taxes | 73,078 | ||||
Other long-term liabilities | 16,858 | ||||
Total Liabilities | $ 498,118 | ||||
Commitments and Contingencies | |||||
Shareholders’ Equity | |||||
Common stock - $0.01 par value; 35,000,000 shares authorized; 10,945,806 shares issued at September 27, 2014 | $ 109 | ||||
Additional paid-in capital | 72,563 | ||||
Retained earnings | 188,551 | ||||
Accumulated other comprehensive loss | (3,670) | ||||
Total Shareholders’ Equity | 257,553 | ||||
Total Liabilities and Shareholders’ Equity | 755,671 | ||||
Adjustments | |||||
Current Assets | |||||
Cash and cash equivalents | 0 | $ 0 | |||
Accounts receivable (less allowance for doubtful accounts of $275 at September 27, 2014) | 0 | ||||
Inventories | 0 | ||||
Production cost of contracts | 0 | ||||
Deferred income taxes | 1,521 | ||||
Other current assets | 1,486 | ||||
Total Current Assets | 3,007 | ||||
Property and equipment, net of accumulated depreciation of $137,556 and $128,457 at October 3, 2015 and December 31, 2014, respectively | 0 | ||||
Goodwill | (4,371) | $ (4,000) | |||
Intangibles, net | 0 | ||||
Other assets | 0 | ||||
Total Assets | (1,364) | ||||
Current Liabilities | |||||
Current portion of long-term debt | 0 | ||||
Accounts payable | 0 | ||||
Accrued liabilities | 3,871 | ||||
Total Current Liabilities | 3,871 | ||||
Long-term debt, less current portion | 0 | ||||
Deferred income taxes | (500) | ||||
Other long-term liabilities | (300) | ||||
Total Liabilities | $ 3,071 | ||||
Commitments and Contingencies | |||||
Shareholders’ Equity | |||||
Common stock - $0.01 par value; 35,000,000 shares authorized; 10,945,806 shares issued at September 27, 2014 | $ 0 | ||||
Additional paid-in capital | (1,633) | ||||
Retained earnings | (2,802) | ||||
Accumulated other comprehensive loss | 0 | ||||
Total Shareholders’ Equity | (4,435) | ||||
Total Liabilities and Shareholders’ Equity | $ (1,364) |
Restatement - Balance Sheet Non
Restatement - Balance Sheet Non-printing (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 03, 2015 | Dec. 31, 2014 | Sep. 27, 2014 |
Accounting Changes and Error Corrections [Abstract] | |||
Accounts receivable, allowance for doubtful accounts | $ 241 | $ 252 | $ 254 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 35,000,000 | 35,000,000 | 35,000,000 |
Common stock, shares issued | 11,083,369 | 10,952,268 | 10,892,133 |
Treasury stock, Shares | 0 |
Restatement - Consolidated Stat
Restatement - Consolidated Statement of Income (Details) - USD ($) $ / shares in Units, shares in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Oct. 03, 2015 | Sep. 27, 2014 | Oct. 03, 2015 | Sep. 27, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Net Revenues | $ 161,670,000 | $ 188,164,000 | $ 509,435,000 | $ 554,433,000 | ||
Cost of Sales | 141,642,000 | 155,052,000 | 431,439,000 | 447,728,000 | ||
Gross Profit | 20,028,000 | 33,112,000 | 77,996,000 | 106,705,000 | ||
Selling, General and Administrative Expenses | 21,205,000 | 23,050,000 | 64,707,000 | 65,005,000 | ||
Operating (Loss) Income | (1,177,000) | 10,062,000 | 13,289,000 | 41,700,000 | ||
Interest Expense | (3,392,000) | (6,975,000) | (16,499,000) | (21,094,000) | ||
Other Income | 0 | 1,600,000 | 1,510,000 | 1,600,000 | ||
(Loss) Income Before Taxes | (16,447,000) | 4,687,000 | (16,420,000) | 22,206,000 | ||
Income Tax Expense | (6,932,000) | 1,754,000 | (6,714,000) | 7,495,000 | ||
Net (Loss) Income | $ (9,515,000) | $ 2,933,000 | $ (9,706,000) | $ 14,711,000 | ||
(Loss) earnings per share | ||||||
Basic earnings per share (in dollars per share) | $ (0.86) | $ 0.27 | $ (0.88) | $ 1.35 | ||
Diluted earnings per share (in dollars per share) | $ (0.86) | $ 0.26 | $ (0.88) | $ 1.31 | ||
Weighted-Average Number of Common Shares Outstanding | ||||||
Basic weighted-average common shares outstanding | 11,083 | 10,921 | 11,035 | 10,902 | ||
Diluted weighted-average common shares outstanding | 11,083 | 11,150 | 11,035 | 11,202 | ||
As Reported | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Net Revenues | $ 188,164,000 | $ 554,433,000 | ||||
Cost of Sales | 154,770,000 | 448,526,000 | ||||
Gross Profit | 33,394,000 | 105,907,000 | ||||
Selling, General and Administrative Expenses | 23,050,000 | 65,005,000 | ||||
Operating (Loss) Income | 10,344,000 | 40,902,000 | ||||
Interest Expense | (6,975,000) | (21,094,000) | ||||
Other Income | 1,600,000 | 1,600,000 | ||||
(Loss) Income Before Taxes | 4,969,000 | 21,408,000 | ||||
Income Tax Expense | 2,347,000 | 7,685,000 | ||||
Net (Loss) Income | $ 2,622,000 | $ 13,723,000 | ||||
(Loss) earnings per share | ||||||
Basic earnings per share (in dollars per share) | $ 0.24 | $ 1.26 | ||||
Diluted earnings per share (in dollars per share) | $ 0.24 | $ 1.23 | ||||
Weighted-Average Number of Common Shares Outstanding | ||||||
Basic weighted-average common shares outstanding | 10,921 | 10,902 | ||||
Diluted weighted-average common shares outstanding | 11,150 | 11,202 | ||||
Adjustments | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Net Revenues | $ 0 | $ 0 | ||||
Cost of Sales | 282,000 | (798,000) | ||||
Gross Profit | (282,000) | 798,000 | ||||
Selling, General and Administrative Expenses | 0 | 0 | ||||
Operating (Loss) Income | (282,000) | 798,000 | ||||
Interest Expense | 0 | 0 | ||||
Other Income | 0 | 0 | ||||
(Loss) Income Before Taxes | (282,000) | 798,000 | ||||
Income Tax Expense | (593,000) | (190,000) | $ (900,000) | $ 0 | ||
Net (Loss) Income | $ 311,000 | $ 988,000 | ||||
(Loss) earnings per share | ||||||
Basic earnings per share (in dollars per share) | $ 0.03 | $ 0.09 | ||||
Diluted earnings per share (in dollars per share) | $ 0.03 | $ 0.09 | ||||
Weighted-Average Number of Common Shares Outstanding | ||||||
Basic weighted-average common shares outstanding | 0 | 0 | ||||
Diluted weighted-average common shares outstanding | 0 | 0 |
Restatement - Statement of Comp
Restatement - Statement of Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2015 | Sep. 27, 2014 | Oct. 03, 2015 | Sep. 27, 2014 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Net (Loss) Income | $ (9,515) | $ 2,933 | $ (9,706) | $ 14,711 |
Other Comprehensive Loss | ||||
Amortization of actuarial loss and prior service costs, net of tax benefit of approximately $40 and $124 for the three months and nine months ended September 27, 2014 | (139) | (66) | (417) | (192) |
Other Comprehensive Loss | (139) | (66) | (417) | (192) |
Comprehensive (Loss) Income | $ (9,376) | 2,999 | $ (9,289) | 14,903 |
As Reported | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Net (Loss) Income | 2,622 | 13,723 | ||
Other Comprehensive Loss | ||||
Amortization of actuarial loss and prior service costs, net of tax benefit of approximately $40 and $124 for the three months and nine months ended September 27, 2014 | (66) | (192) | ||
Other Comprehensive Loss | (66) | (192) | ||
Comprehensive (Loss) Income | 2,688 | 13,915 | ||
Adjustments | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Net (Loss) Income | 311 | 988 | ||
Other Comprehensive Loss | ||||
Amortization of actuarial loss and prior service costs, net of tax benefit of approximately $40 and $124 for the three months and nine months ended September 27, 2014 | 0 | 0 | ||
Other Comprehensive Loss | 0 | 0 | ||
Comprehensive (Loss) Income | $ 311 | $ 988 |
Restatement - Statement of Co40
Restatement - Statement of Comprehensive Income Non-printing (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2015 | Sep. 27, 2014 | Oct. 03, 2015 | Sep. 27, 2014 | |
Accounting Changes and Error Corrections [Abstract] | ||||
Amortization of actuarial loss, tax benefits | $ 83 | $ 40 | $ 248 | $ 124 |
Restatement - Statement of Cash
Restatement - Statement of Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2015 | Sep. 27, 2014 | Oct. 03, 2015 | Sep. 27, 2014 | |
Cash Flows from Operating Activities | ||||
Net (Loss) Income | $ (9,515) | $ 2,933 | $ (9,706) | $ 14,711 |
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | ||||
Depreciation and amortization | 6,635 | 6,704 | 20,064 | 21,829 |
Stock-based compensation expense | 2,792 | 2,520 | ||
Deferred income taxes | 1,599 | 2,073 | ||
Excess tax benefits from stock-based compensation | (516) | (139) | ||
Recovery of doubtful accounts | (11) | (214) | ||
Other | 7,180 | (149) | ||
Changes in Assets and Liabilities: | ||||
Accounts receivable | 4,836 | (12,273) | ||
Inventories | 5,525 | (4,961) | ||
Production cost of contracts | (560) | (1,408) | ||
Other assets | 1,614 | 6,633 | ||
Accounts payable | (7,626) | (2,447) | ||
Accrued and other liabilities | (18,076) | (5,400) | ||
Net Cash Provided by Operating Activities | 12,085 | 20,775 | ||
Cash Flows from Investing Activities | ||||
Purchases of property and equipment | (11,803) | (9,329) | ||
Proceeds from sale of assets | 289 | 83 | ||
Insurance recoveries related to property and equipment | 1,510 | 1,600 | ||
Net Cash Used in Investing Activities | (10,004) | (7,646) | ||
Cash Flows from Financing Activities | ||||
Repayments of senior unsecured notes and term loans | (305,000) | (22,500) | ||
Repayments of other debt | (17) | (19) | ||
Excess tax benefits from stock-based compensation | 516 | 139 | ||
Net proceeds from issuance of common stock under stock plans | (1,118) | 1,289 | ||
Net Cash Used in Financing Activities | (35,467) | (21,091) | ||
Net (Decrease) Increase in Cash and Cash Equivalents | (33,386) | (7,962) | ||
Cash and Cash Equivalents at Beginning of Period | 45,627 | 48,814 | ||
Cash and Cash Equivalents at End of Period | $ 12,241 | 40,852 | $ 12,241 | 40,852 |
As Reported | ||||
Cash Flows from Operating Activities | ||||
Net (Loss) Income | 2,622 | 13,723 | ||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | ||||
Depreciation and amortization | 21,829 | |||
Stock-based compensation expense | 2,520 | |||
Deferred income taxes | 1,775 | |||
Excess tax benefits from stock-based compensation | (139) | |||
Recovery of doubtful accounts | (214) | |||
Other | 649 | |||
Changes in Assets and Liabilities: | ||||
Accounts receivable | (12,273) | |||
Inventories | (4,961) | |||
Production cost of contracts | (1,408) | |||
Other assets | 7,121 | |||
Accounts payable | (2,447) | |||
Accrued and other liabilities | (5,400) | |||
Net Cash Provided by Operating Activities | 20,775 | |||
Cash Flows from Investing Activities | ||||
Purchases of property and equipment | (9,329) | |||
Proceeds from sale of assets | 83 | |||
Insurance recoveries related to property and equipment | 1,600 | |||
Net Cash Used in Investing Activities | (7,646) | |||
Cash Flows from Financing Activities | ||||
Repayments of senior unsecured notes and term loans | (22,500) | |||
Repayments of other debt | (19) | |||
Excess tax benefits from stock-based compensation | 139 | |||
Net proceeds from issuance of common stock under stock plans | 1,289 | |||
Net Cash Used in Financing Activities | (21,091) | |||
Net (Decrease) Increase in Cash and Cash Equivalents | (7,962) | |||
Cash and Cash Equivalents at Beginning of Period | 48,814 | |||
Cash and Cash Equivalents at End of Period | 40,852 | 40,852 | ||
Adjustments | ||||
Cash Flows from Operating Activities | ||||
Net (Loss) Income | 311 | 988 | ||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities | ||||
Depreciation and amortization | 0 | |||
Stock-based compensation expense | 0 | |||
Deferred income taxes | 298 | |||
Excess tax benefits from stock-based compensation | 0 | |||
Recovery of doubtful accounts | 0 | |||
Other | (798) | |||
Changes in Assets and Liabilities: | ||||
Accounts receivable | 0 | |||
Inventories | 0 | |||
Production cost of contracts | 0 | |||
Other assets | (488) | |||
Accounts payable | 0 | |||
Accrued and other liabilities | 0 | |||
Net Cash Provided by Operating Activities | 0 | |||
Cash Flows from Investing Activities | ||||
Purchases of property and equipment | 0 | |||
Proceeds from sale of assets | 0 | |||
Insurance recoveries related to property and equipment | 0 | |||
Net Cash Used in Investing Activities | 0 | |||
Cash Flows from Financing Activities | ||||
Repayments of senior unsecured notes and term loans | 0 | |||
Repayments of other debt | 0 | |||
Excess tax benefits from stock-based compensation | 0 | |||
Net proceeds from issuance of common stock under stock plans | 0 | |||
Net Cash Used in Financing Activities | 0 | |||
Net (Decrease) Increase in Cash and Cash Equivalents | 0 | |||
Cash and Cash Equivalents at Beginning of Period | 0 | |||
Cash and Cash Equivalents at End of Period | $ 0 | $ 0 |
Restructuring Activities (Detai
Restructuring Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 03, 2015 | Oct. 03, 2015 | |
Severance and benefits | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges accrued during period | $ 0 | $ 806 |
Restructuring Reserve [Roll Forward] | ||
Beginning balance | 0 | |
Gross charges | 806 | |
Cash payments | 0 | |
Ending balance | 806 | |
Severance benefits and loss on early exit from leases | Minimum | ||
Restructuring Cost and Reserve [Line Items] | ||
Remaining additional expenses expected to be accrued | 1,700 | |
Severance benefits and loss on early exit from leases | Maximum | ||
Restructuring Cost and Reserve [Line Items] | ||
Remaining additional expenses expected to be accrued | 2,000 | |
DLT | Severance and benefits | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges accrued during period | 500 | 500 |
Restructuring Reserve [Roll Forward] | ||
Ending balance | 500 | |
DAS | Severance and benefits | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges accrued during period | 300 | $ 300 |
Restructuring Reserve [Roll Forward] | ||
Ending balance | $ 300 |
Inventories (Detail)
Inventories (Detail) - USD ($) $ in Thousands | Oct. 03, 2015 | Dec. 31, 2014 | Sep. 27, 2014 |
Inventory Disclosure [Abstract] | |||
Raw materials and supplies | $ 72,797 | $ 77,033 | |
Work in process | 56,510 | 61,458 | |
Finished goods | 11,949 | 14,116 | |
Inventory, Gross, Total | 141,256 | 152,607 | |
Less progress payments | 3,939 | 9,765 | |
Total | $ 137,317 | $ 142,842 | $ 145,468 |
Goodwill - Additional Informati
Goodwill - Additional Information (Details) - USD ($) $ in Thousands | Oct. 03, 2015 | Dec. 31, 2014 | Sep. 27, 2014 |
Goodwill [Line Items] | |||
Goodwill | $ 157,569 | $ 157,569 | $ 157,569 |
DAS | |||
Goodwill [Line Items] | |||
Goodwill | $ 57,243 | 57,243 | |
DLT | |||
Goodwill [Line Items] | |||
Goodwill | 92,000 | ||
Miltec | |||
Goodwill [Line Items] | |||
Goodwill | $ 8,400 |
Goodwill (Detail)
Goodwill (Detail) - USD ($) $ in Thousands | Oct. 03, 2015 | Dec. 31, 2014 | Sep. 27, 2014 |
Goodwill [Line Items] | |||
Gross goodwill | $ 239,291 | $ 239,291 | |
Accumulated goodwill impairment | (81,722) | (81,722) | |
Goodwill | 157,569 | 157,569 | $ 157,569 |
Ducommun AeroStructures | |||
Goodwill [Line Items] | |||
Gross goodwill | 57,243 | 57,243 | |
Accumulated goodwill impairment | 0 | 0 | |
Goodwill | 57,243 | 57,243 | |
Ducommun LaBarge Technologies | |||
Goodwill [Line Items] | |||
Gross goodwill | 182,048 | 182,048 | |
Accumulated goodwill impairment | (81,722) | (81,722) | |
Goodwill | $ 100,326 | $ 100,326 |
Accrued Liabilities (Detail)
Accrued Liabilities (Detail) - USD ($) $ in Thousands | Oct. 03, 2015 | Dec. 31, 2014 | Sep. 27, 2014 |
Payables and Accruals [Abstract] | |||
Accrued compensation | $ 18,560 | $ 25,352 | |
Accrued income and sales tax | 1,524 | 1,580 | |
Customer deposits | 698 | 1,139 | |
Interest payable | 249 | 9,439 | |
Provision for forward loss reserves | 13,540 | 4,734 | |
Other | 8,863 | 9,822 | |
Total | $ 43,434 | $ 52,066 | $ 46,787 |
Long Term Debt - Summary (Detai
Long Term Debt - Summary (Detail) - USD ($) $ in Thousands | Oct. 03, 2015 | Dec. 31, 2014 | Sep. 27, 2014 | Dec. 31, 2013 |
Debt Instrument [Line Items] | ||||
Total debt | $ 260,035 | $ 290,052 | ||
Less current portion | 2,215 | $ 26 | $ 26 | 26 |
Total long-term debt | $ 257,820 | $ 290,026 | $ 310,157 | $ 290,026 |
Weighted-average interest rate (percent) | 2.82% | 8.20% | ||
Senior Secured Term Loan | ||||
Debt Instrument [Line Items] | ||||
Long-Term Debt | $ 260,000 | $ 0 | ||
Senior Unsecured Notes | ||||
Debt Instrument [Line Items] | ||||
Long-Term Debt | $ 0 | 200,000 | ||
Fixed rate, note (percent) | 9.75% | |||
Senior Secured Term Loan | ||||
Debt Instrument [Line Items] | ||||
Long-Term Debt | $ 0 | 90,000 | ||
Floating rate, note (percent) | 4.75% | |||
Other Debt | ||||
Debt Instrument [Line Items] | ||||
Long-Term Debt | $ 35 | $ 52 | ||
Fixed rate, note (percent) | 5.41% |
Long-Term Debt - Additional inf
Long-Term Debt - Additional information (Detail) - USD ($) | Oct. 04, 2015 | Jun. 30, 2015 | Oct. 03, 2015 | Jul. 04, 2015 | Jun. 29, 2015 | Dec. 31, 2013 |
New Credit Facilities | First two years | ||||||
Debt Instrument [Line Items] | ||||||
Prepayment amount of principal outstanding (percentage) | 5.00% | |||||
New Credit Facilities | Third year | ||||||
Debt Instrument [Line Items] | ||||||
Prepayment amount of principal outstanding (percentage) | 7.50% | |||||
New Credit Facilities | Fourth and fifth years | ||||||
Debt Instrument [Line Items] | ||||||
Prepayment amount of principal outstanding (percentage) | 10.00% | |||||
New Credit Facilities | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Commitment fee (percentage) | 0.175% | |||||
New Credit Facilities | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Commitment fee (percentage) | 0.30% | |||||
New Credit Facilities | LIBOR | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Spread on variable rate (percentage) | 1.50% | |||||
New Credit Facilities | LIBOR | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Spread on variable rate (percentage) | 2.75% | |||||
New Credit Facilities | Federal Funds Rate | ||||||
Debt Instrument [Line Items] | ||||||
Spread on base rate (percentage) | 0.50% | |||||
New Credit Facilities | Eurodollar Rate | ||||||
Debt Instrument [Line Items] | ||||||
Spread on base rate (percentage) | 1.00% | |||||
New Credit Facilities | Base Rate | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Spread on variable rate (percentage) | 0.50% | |||||
New Credit Facilities | Base Rate | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Spread on variable rate (percentage) | 1.75% | |||||
Senior Secured Term Loan | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | $ 260,000,000 | $ 0 | ||||
Senior Secured Term Loan | New Credit Facilities | ||||||
Debt Instrument [Line Items] | ||||||
Debt amount | $ 275,000,000 | |||||
Term (in years) | 5 years | |||||
Borrowings from senior secured debt | 275,000,000 | |||||
Repayments of debt | 15,000,000 | |||||
Senior Secured Term Loan | Existing Credit Facilities | ||||||
Debt Instrument [Line Items] | ||||||
Cash paid on extinguishment of debt | $ 80,000,000 | |||||
Unamortized debt issuance costs expensed | 2,800,000 | |||||
New Revolving Credit Facility | New Credit Facilities | ||||||
Debt Instrument [Line Items] | ||||||
Debt amount | $ 200,000,000 | |||||
Proceeds from revolving credit facility | 65,000,000 | |||||
Debt issuance costs expensed | $ 4,800,000 | |||||
Repayments of debt | 65,000,000 | |||||
Remaining borrowing capacity | 198,500,000 | |||||
Outstanding standby letters of credit | 1,500,000 | |||||
Existing Notes | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | 0 | $ 200,000,000 | ||||
Existing Notes | Existing Credit Facilities | ||||||
Debt Instrument [Line Items] | ||||||
Unamortized debt issuance costs expensed | 2,100,000 | |||||
Long-term debt | $ 200,000,000 | |||||
Call premium incurred | $ 9,800,000 | |||||
Interest rate cap | Subsequent Event | ||||||
Debt Instrument [Line Items] | ||||||
Interest rate hedge | $ 135,000,000 | |||||
Payments made for interest rate hedge | $ 1,000,000 |
Shareholders' Equity (Detail)
Shareholders' Equity (Detail) - shares | Oct. 03, 2015 | Dec. 31, 2014 |
Equity [Abstract] | ||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Employee Benefit Plans - Compon
Employee Benefit Plans - Components of Net Periodic Pension Cost for Defined Benefit Pension Plan and Retirement Plan (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 03, 2015 | Sep. 27, 2014 | Oct. 03, 2015 | Sep. 27, 2014 | |
Compensation and Retirement Disclosure [Abstract] | ||||
Service cost | $ 196 | $ 174 | $ 589 | $ 520 |
Interest cost | 338 | 320 | 1,013 | 958 |
Expected return on plan assets | (374) | (351) | (1,121) | (1,052) |
Amortization of actuarial losses | 222 | 106 | 665 | 316 |
Net periodic pension cost | $ 382 | $ 249 | $ 1,146 | $ 742 |
Employee Benefit Plans - Reclas
Employee Benefit Plans - Reclassifications from Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Oct. 03, 2015 | Oct. 03, 2015 | ||
Compensation and Retirement Disclosure [Abstract] | |||
Amortization of actuarial loss - total before tax | [1] | $ (222) | $ (665) |
Tax benefit | 83 | 248 | |
Net of tax | $ (139) | $ (417) | |
[1] | The amortization expense is included in the computation of periodic pension cost and is a decrease to net income upon reclassification from accumulated other comprehensive loss. |
Income Taxes (Detail)
Income Taxes (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Oct. 03, 2015 | Sep. 27, 2014 | Oct. 03, 2015 | Sep. 27, 2014 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||||
Income tax expense (benefit) | $ (6,932) | $ 1,754 | $ (6,714) | $ 7,495 | |
Effective income tax rate (percentage) | 42.00% | 37.00% | 41.00% | 34.00% | |
Federal income tax rate (percentage) | 35.00% | 35.00% | 35.00% | 35.00% | |
Unrecognized tax benefits | $ 2,600 | $ 2,600 | $ 2,800 | ||
Expected reduction in unrecognized tax benefits | $ 1,500 | $ 1,500 |
Contingencies (Detail)
Contingencies (Detail) | 9 Months Ended |
Oct. 03, 2015USD ($)AirCraft | |
Loss Contingencies [Line Items] | |
Number of Boeing aircraft subject to lawsuit | AirCraft | 21 |
Ducommun AeroStructures | El Mirage and Monrovia, California | |
Loss Contingencies [Line Items] | |
Reserve for estimated liability | $ 1,500,000 |
Ducommun AeroStructures | West Covina, California | |
Loss Contingencies [Line Items] | |
Reserve for estimated liability | 400,000 |
Possible Loss, minimum | 400,000 |
Possible Loss, maximum | 3,100,000 |
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 |
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 -
Business Segment Information - Additional Information (Detail) | 9 Months Ended |
Oct. 03, 2015Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Business Segment Information 55
Business Segment Information - Financial Information by Reportable Segment (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Oct. 03, 2015 | Sep. 27, 2014 | Oct. 03, 2015 | Sep. 27, 2014 | ||
Segment Reporting Information [Line Items] | |||||
Net Revenues | $ 161,670 | $ 188,164 | $ 509,435 | $ 554,433 | |
Segment Operating Income | 2,570 | 15,196 | 25,555 | 54,156 | |
Operating (Loss) Income | (1,177) | 10,062 | 13,289 | 41,700 | |
Depreciation and Amortization Expenses | 6,635 | 6,704 | 20,064 | 21,829 | |
Capital Expenditures | 3,091 | 3,028 | 11,286 | 8,747 | |
Operating Segments | DAS | |||||
Segment Reporting Information [Line Items] | |||||
Net Revenues | 64,170 | 81,357 | 212,306 | 241,627 | |
Segment Operating Income | (6,028) | 6,908 | 2,980 | 28,067 | |
Depreciation and Amortization Expenses | 2,386 | 2,272 | 7,009 | 8,242 | |
Capital Expenditures | 2,329 | 1,266 | 8,080 | 3,986 | |
Operating Segments | DLT | |||||
Segment Reporting Information [Line Items] | |||||
Net Revenues | 97,500 | 106,807 | 297,129 | 312,806 | |
Segment Operating Income | 8,598 | 8,288 | 22,575 | 26,089 | |
Depreciation and Amortization Expenses | 4,207 | 4,391 | 12,928 | 13,442 | |
Capital Expenditures | 758 | 1,761 | 3,196 | 4,736 | |
Operating Segments | Corporate Administration | |||||
Segment Reporting Information [Line Items] | |||||
Corporate General and Administrative Expenses | [1] | (3,747) | (5,134) | (12,266) | (12,456) |
Depreciation and Amortization Expenses | 42 | 41 | 127 | 145 | |
Capital Expenditures | $ 4 | $ 1 | $ 10 | $ 25 | |
[1] | Includes costs not allocated to either the DLT or DAS operating segments. |
Business Segment Information 56
Business Segment Information - Segment Assets (Detail) - USD ($) $ in Thousands | Oct. 03, 2015 | Dec. 31, 2014 | Sep. 27, 2014 |
Segment Reporting Information [Line Items] | |||
Total Assets | $ 692,401 | $ 747,599 | $ 754,307 |
Total Goodwill and Intangibles | 305,149 | 312,673 | |
DAS | |||
Segment Reporting Information [Line Items] | |||
Total Assets | 240,035 | 245,925 | |
Total Goodwill and Intangibles | 62,456 | 63,497 | |
DLT | |||
Segment Reporting Information [Line Items] | |||
Total Assets | 408,912 | 427,719 | |
Total Goodwill and Intangibles | 242,693 | 249,176 | |
Corporate Administration | |||
Segment Reporting Information [Line Items] | |||
Total Assets | $ 43,454 | $ 73,955 |