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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File No. 1-8174
DUCOMMUN INCORPORATED
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(Exact name of registrant as specified in its charter)
Delaware 95-0693330
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State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
111 West Ocean Boulevard, Suite 900, Long Beach, California 90802-7901
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (562) 624-0800
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- ---------------------------- ------------------------
Common Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
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The aggregate market value of the voting stock held by nonaffiliates of the
registrant was approximately $92,000,000 as of January 31, 2001.
The number of shares of common stock outstanding on January 31, 2001 was
9,604,457.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference:
(a) Annual Report to Shareholders (the "2000 Annual Report") for the
year ended December 31, 2000, incorporated partially in Part I and Part II
hereof (see Exhibit 13), and
(b) Proxy Statement for the 2001 Annual Meeting of Shareholders (the
"2001 Proxy Statement"), incorporated partially in Part III hereof.
FORWARD-LOOKING STATEMENTS AND RISK FACTORS
Certain statements in the Form 10-K and documents incorporated by
reference contain forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Any such forward-looking statements involve
risks and uncertainties. The Company's future financial results could differ
materially from those anticipated due to the Company's dependence on conditions
in the airline industry, the level of new commercial aircraft orders, the
production rates for Boeing commercial aircraft, the C-17 and the Space Shuttle
programs, the level of defense spending, competitive pricing pressures,
technology and product development risks and uncertainties, product performance,
risks associated with acquisitions and dispositions of businesses by the
Company, increasing consolidation of customers and suppliers in the aerospace
industry, availability of raw materials and components from suppliers, the
outcome of the lawsuit by Com Dev Consulting Ltd. against the Company, and other
factors beyond the Company's control.
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PART I
ITEM 1. BUSINESS
During 2000, Ducommun Incorporated ("Ducommun"), through its
subsidiaries (collectively, the "Company"), manufactured components and
assemblies principally for domestic and foreign commercial and military aircraft
and space programs. Domestic commercial aircraft programs include the Boeing
717, 737NG, 747, 757, 767 and 777. Foreign commercial aircraft programs include
the Airbus Industrie A330, A340 and A340-600 aircraft, Bombardier Business and
Regional Jets, and Dash 8. Major military aircraft programs include the Boeing
C-17 and F-18, Lockheed Martin F-16, various Sikorsky, Bell, Boeing and Augusta
helicopter programs, and advanced development programs. The Company is a
subcontractor to Lockheed Martin on the Space Shuttle external tank and a
supplier of components for the Space Shuttle, as well as for the International
Space Station.
In November 1999, Ducommun, through a wholly-owned subsidiary, acquired
the assets and assumed certain liabilities of Parsons Precision Products, Inc.
("Parsons"). In April 1999, Ducommun acquired the capital stock of Sheet Metal
Specialties Company ("SMS"). In August 1998, Ducommun sold the capital stock of
3dbm, Inc. ("3dbm"). In June 1998, Ducommun Technologies, Inc., a subsidiary of
Ducommun, acquired the capital stock of American Electronics, Inc. ("AEI").
AEROSTRUCTURAL PRODUCTS
Aerochem, Inc.
Ducommun's subsidiary, Aerochem, Inc. ("Aerochem"), is a major supplier
of close tolerance chemical milling services for the aerospace and aircraft
industries. Chemical milling removes material in specific patterns to reduce
weight in areas where full material thickness is not required. This
sophisticated etching process enables Aerochem to produce lightweight,
high-strength designs that would be impractical to produce by conventional
means. Jet engine components, wing leading edges and fuselage skins are examples
of products that require chemical milling.
Aerochem offers production-scale chemical milling on aluminum, titanium,
steel, nickel-base and super alloys. Aerochem also specializes in very large and
complex parts up to 50 feet long. Management believes that Aerochem is the
largest independent supplier of chemical milling services in the United States.
Many of the parts chemically milled by Aerochem are formed and machined by
AHF-Ducommun Incorporated.
AHF-Ducommun Incorporated
AHF-Ducommun Incorporated ("AHF"), another Ducommun subsidiary, supplies
aircraft and aerospace prime contractors with engineering, manufacturing and
testing of complex components using stretch forming and thermal forming
processes and computer- controlled machining. Stretch forming is a process for
manufacturing large, complex structural shapes primarily from aluminum sheet
metal extrusions. AHF has some of the
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largest and most sophisticated stretch forming presses in the United States.
Thermal forming is a metal working process conducted at high temperature for
manufacturing close tolerance titanium components. AHF designs and manufactures
the tooling required for the production of parts in both forming processes.
Certain components manufactured by AHF are machined with precision milling
equipment designed and constructed by AHF. AHF also employs computer-aided
design/manufacturing systems with three 5-axis gantry profile milling machines
and five 5-axis numerically-controlled routers to provide computer-controlled
machining and inspection of complex parts up to 100 feet long.
AHF has an integrated operation offering a broad range of capabilities.
From the design specifications of a customer, AHF is able to engineer,
manufacture, test and deliver the desired finished components. This process
depends on the skillful execution of several complex subtasks, including the
design and construction of special equipment. Management believes that the
ability of AHF to provide a full range of integrated capabilities represents a
competitive advantage.
Parsons Precision Products, Inc.
In November 1999, Ducommun, through a wholly-owned subsidiary, acquired
the assets and assumed certain liabilities of Parsons. Parsons is a leading
manufacturer of complex titanium hot-formed subassemblies and components for
commercial and military aerospace applications.
SEATING PRODUCTS
Brice Manufacturing Company, Inc.
Brice Manufacturing Company, Inc. ("Brice"), a subsidiary of Ducommun,
is an after-market supplier of aircraft seating products to many of the world's
largest commercial airlines. Products supplied by Brice include plastic and
metal seat parts, overhauled and refurbished seats, components for installation
of in-flight entertainment equipment, and other cabin interior components for
commercial aircraft.
In 1998, Brice introduced an original equipment manufacture ("OEM") 16G
coach-class aircraft seat. This new aircraft seat represents Brice's first major
OEM product.
ELECTROMECHANICAL PRODUCTS
Ducommun Technologies, Inc. (formerly Jay-El Products, Inc.)
Ducommun Technologies, Inc. ("DTI"), a subsidiary of Ducommun, develops,
designs and manufactures illuminated switches, switch assemblies and keyboard
panels used in many military aircraft, helicopter, commercial aircraft and
spacecraft programs, as well as ground support equipment and naval vessels. DTI
manufactures switches and panels where high reliability is a prerequisite.
Keyboard panels are lighted, feature push button switches, and are available
with sunlight readable displays. Some of the keyboard panels and illuminated
switches manufactured by DTI for military applications are night vision
goggle-compatible.
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DTI also develops, designs and manufactures microwave switches, filters
and other components used principally on commercial and military aircraft and
telecommunications satellites. DTI has developed several new products that apply
its existing microwave technology to nonaerospace markets, including the
wireless telecommunications industry.
In June 1998, DTI acquired the capital stock of AEI. AEI is a leading
manufacturer of high precision actuators, stepper motors, fractional horsepower
motors and resolvers principally for commercial and military space applications.
MechTronics of Arizona Corp.
MechTronics is a leading manufacturer of mechanical and
electromechanical enclosure products for the defense electronics and commercial
aviation markets. MechTronics has a fully integrated manufacturing capability,
including engineering, fabrication, machining, assembly, electronic integration
and related processes. MechTronics' products include sophisticated radar
enclosures, gyroscopes and indicators, aircraft avionics racks and shipboard
communications and control enclosures.
In April 1999, Ducommun acquired the capital stock of SMS. SMS is a
manufacturer of subassemblies for commercial and military aerospace
applications. SMS remained at its existing Chatsworth, California facility and
reports through MechTronics of Arizona Corp.
OTHER BUSINESS
3dbm, Inc.
In August 1998, Ducommun sold the capital stock of its wireless
communications subsidiary, 3dbm, Inc. ("3dbm"). The Company sold 3dbm because
the level of investment required to ensure the long-term viability of 3dbm in
the wireless system infrastructure business was more than the Company was
willing to commit.
DEFENSE AND SPACE PROGRAMS
A major portion of sales is derived from United States government
defense programs and space programs. Approximately 38 percent of 2000 sales were
related to defense programs and approximately 9 percent of 2000 sales were
related to space programs. These programs could be adversely affected by
reductions in defense spending and other government budgetary pressures which
would result in reductions, delays or stretch-outs of existing and future
programs. In addition, many of the Company's contracts covering defense and
space programs are subject to termination at the convenience of the customer (as
well as for default). In the event of termination for convenience, the customer
generally is required to pay the costs incurred by the Company and certain other
fees through the date of termination.
COMMERCIAL PROGRAMS
Approximately 53 percent of 2000 sales were related to commercial
aircraft programs, and nonaerospace commercial applications. The Company's
commercial sales depend
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substantially on aircraft manufacturer's production rates, which in turn depend
upon deliveries of new aircraft. Deliveries of new aircraft by aircraft
manufacturers are dependent on the financial capacity of the airlines and
leasing companies to purchase the aircraft. Sales of commercial aircraft could
be affected as a result of changes in new aircraft orders, or the cancellation
or deferral by airlines of purchases of ordered aircraft. The Company's sales
for commercial aircraft programs also could be affected by changes in its
customers' inventory levels and changes in its customers' aircraft production
build rates.
MAJOR CUSTOMERS
The Company had substantial sales to Boeing, Lockheed Martin and
Raytheon. During 2000, sales to Boeing were $61,109,000, or 37% of total sales;
sales to Lockheed Martin were $12,685,000, or 8% of total sales; and sales to
Raytheon were $14,242,000, or 9% of total sales. Sales to Boeing, Lockheed
Martin and Raytheon are diversified over a number of different commercial,
military and space programs.
COMPETITION
The Company competes with various companies, some of which are
substantially larger and have greater financial, technical and personnel
resources. The Company's ability to compete depends on the quality of goods and
services, competitive pricing and the ability to solve specific customer
problems.
BACKLOG
At December 31, 2000, backlog believed to be firm was approximately
$238,600,000, compared to $213,100,000 at December 31, 1999. Approximately
$103,100,000 of total backlog is expected to be delivered during 2001.
ENVIRONMENTAL MATTERS AND LEGAL
Aerochem uses various acid and alkaline solutions in the chemical
milling process, resulting in potential environmental hazards. Despite existing
waste recovery systems and continuing capital expenditures for waste reduction
and management, at least for the immediate future, Aerochem will remain
dependent on the availability and cost of remote hazardous waste disposal sites
or other alternative methods of disposal.
The Aerochem facility located in El Mirage, California has been directed
by California environmental agencies to investigate and take corrective action
for groundwater contamination. Based upon currently available information, the
Company has established a provision for the cost of such investigation and
corrective action. Aerochem expects to spend approximately $1 million for future
investigation and corrective action for groundwater contamination at its El
Mirage location. However, the Company's ultimate liability in connection with
the contamination will depend upon a number of factors, including changes in
existing laws and regulations, and the design and cost of the construction,
operation and maintenance of the corrective action.
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Ducommun's other subsidiaries are also subject to environmental laws and
regulations. However, the quantities of hazardous materials handled, hazardous
wastes generated and air emissions released by these subsidiaries are relatively
small.
The Company anticipates that capital expenditures will continue to be
required for the foreseeable future to upgrade and maintain its environmental
compliance efforts. The Company does not expect to spend a material amount on
capital expenditures for environmental compliance during 2001.
In the normal course of business, Ducommun and its subsidiaries are
defendants in certain other litigation, claims and inquiries, including matters
relating to environmental laws. In addition, the Company makes various
commitments and incurs contingent liabilities. While it is not feasible to
predict the outcome of these matters, the Company does not presently expect that
any sum it may be required to pay in connection with these matters would have a
material adverse effect on its consolidated financial position or results of
operations.
EMPLOYEES
At December 31, 2000, the Company employed 1,134 persons.
BUSINESS SEGMENT INFORMATION
The Company operates principally in only one business segment.
INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
In 2000, 1999 and 1998, foreign sales to manufacturers worldwide were
$26,267,000, $28,313,000 and $29,007,000, respectively.
The amounts of revenue, profitability and identifiable assets
attributable to foreign operations are not material when compared with the
revenue, profitability and identifiable assets attributed to United States
domestic operations during 2000, 1999 and 1998. The Company had no sales to a
foreign country greater than 5% of total sales in 2000, 1999 and 1998.
The Company is not subject to any foreign currency risks since all sales
are made in United States dollars.
ITEM 2. PROPERTIES
The Company occupies approximately 21 facilities with a total office and
manufacturing area of over 1,241,000 square feet, including both owned and
leased properties. At December 31, 2000, facilities which were in excess of
60,000 square feet each were occupied as follows:
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Square Expiration
Location Company Feet of Lease
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El Mirage, California Aerochem 74,300 Owned
Orange, California Aerochem 76,200 Owned
Carson, California AHF-Ducommun 65,000 2004
Carson, California AHF-Ducommun 69,000 Owned
Carson, California AHF-Ducommun 283,000 Owned
Carson, California Ducommun Technologies 118,000 2002
Phoenix, Arizona MechTronics 100,000 2006
Parsons, Kansas Parsons Precision Products 120,000 Owned
The Company's facilities are, for the most part, fully utilized,
although excess capacity exists from time to time based on product mix and
demand. Management believes that these properties are in good condition and
suitable for their present use.
Although the Company maintains standard property casualty insurance
covering its properties, the Company does not carry any earthquake insurance
because of the cost of such insurance. Most of the Company's properties are
located in Southern California, an area subject to frequent and sometimes severe
earthquake activity.
ITEM 3. LEGAL PROCEEDINGS
In October 1999, Com Dev Consulting Ltd. ("Com Dev") filed a complaint
in the United States District Court against the Company and certain of its
officers relating to the sale of the capital stock of 3dbm, Inc. ("3dbm") by the
Company to Com Dev in August 1998. On February 3, 2000, the United States
District Court dismissed the complaint without prejudice. On April 7, 2000, Com
Dev filed another complaint in California Superior Court against the Company and
certain of its officers relating to the sale of the capital stock of 3dbm by the
Company to Com Dev. The complaint seeks recovery of damages in excess of
$10,000,000, restitution of the $17,250,000 purchase price paid for 3dbm, and
recovery of punitive damages, costs and attorneys' fees. A jury trial of the
lawsuit is currently scheduled to begin on April 23, 2001. The Company intends
to vigorously defend the matter. While it is not feasible to predict the outcome
of this matter, the Company presently believes that the final resolution of the
matter will not have a material adverse effect on its consolidated financial
position or results of operations. However, because of the nature and inherent
uncertainties of litigation, should the outcome of this matter be unfavorable,
the Company may be required to pay damages and other expenses, which could have
a material adverse effect on its consolidated financial position and results of
operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information under the caption "Quarterly Common Stock Price
Information" on page 12 of the 2000 Annual Report is incorporated herein by
reference. No dividends were paid during 1999 or 2000 (see Exhibit 13).
ITEM 6. SELECTED FINANCIAL DATA
The information under the caption "Selected Financial Data" appearing on
page 12 of the 2000 Annual Report is incorporated herein by reference (see
Exhibit 13).
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information under the caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations" appearing on pages 13 through
16 of the 2000 Annual Report is incorporated herein by reference (see Exhibit
13).
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data under the captions
"Consolidated Statements of Income," "Consolidated Balance Sheets,"
"Consolidated Statements of Cash Flows," "Consolidated Statements of Changes in
Shareholders' Equity," and "Notes to Consolidated Financial Statements,"
together with the report thereon of PricewaterhouseCoopers LLP dated February
20, 2001, appearing on pages 17 through 28 of the 2000 Annual Report are
incorporated herein by reference (see Exhibit 13).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors of the Registrant
The information under the caption "Election of Directors" in the 2001
Proxy Statement is incorporated herein by reference.
Executive Officers of the Registrant
The following table sets forth the names and ages of all executive
officers of the Company (including subsidiary presidents), all positions and
offices held with the Company and brief accounts of business experience during
the past five years. Executive officers do not serve for any specified terms,
but are typically elected annually by the Board of Directors of the Company or,
in the case of subsidiary presidents, by the Board of Directors of the
respective subsidiaries.
Positions and Offices Other Business
Held With Company Experience
Name (Age) (Year Elected) (Past Five Years)
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Joseph C. Berenato (54) President (1996), Chief Executive Executive Vice President (1995),
Officer (1997) and Chairman of the Board Chief Operating Officer (1995-1996),
(1999) and Chief Financial Officer
(1991-1996) of the Company
Robert A. Borlet (60) Vice President, Manufacturing Operations President of Ducommun Technologies,
(1999) Inc. (1988 -1999)
James S. Heiser (44) Vice President (1990), --
Chief Financial Officer (1996), General
Counsel (1988), Secretary (1987), and
Treasurer (1995)
Kenneth R. Pearson (65) Vice President-Human Resources (1988) --
Michael W. Williams (46) Vice President, Corporate Development Vice President of Operations at H.R.
(1998) Textron; (1995 - 1998)
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Positions and Offices Other Business
Held With Company Experience
Name (Age) (Year Elected) (Past Five Years)
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Samuel D. Williams (52) Vice President (1991) and Controller --
(1988)
Jeffrey P. Abbott (49) President, Aerochem, Inc. (1998) Vice President of Operations
(1992-1997); Executive Vice President
and General Manager (1997-1998) of
Aerochem
Paul L. Graham (56) President of Ducommun Technologies, Inc. President of 3dbm, Inc.
(1999) (1995-1998); President of Com Dev
Wireless Systems (1998-1999)
Robert B. Hahn (58) President of MechTronics of Arizona President of Aerochem, Inc.
Corp. (1997) (1987-1997)
Robert L. Hansen (47) President, AHF-Ducommun --
Incorporated (1989)
Richard A. Klisz (45) President of Brice Manufacturing Vice President, Sales and Marketing
Company, Inc. (2000) of Aerochem, Inc. (1994-2000)
ITEM 11. EXECUTIVE COMPENSATION
The information under the caption "Compensation of Executive Officers"
in the 2001 Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the 2001 Proxy Statement is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the caption "Election of Directors" contained in
the paragraph immediately following the table in the 2001 Proxy Statement is
incorporated herein by reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following consolidated financial statements of Ducommun Incorporated
and subsidiaries, included in the 2000 Annual Report, are incorporated
by reference in Item 8 of this report. Page numbers refer to the 2000
Annual Report:
Page
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Consolidated Statements of Income - Years ended December 31, 2000, 1999
and 1998 17
Consolidated Balance Sheets - December 31, 2000 and 1999 18
Consolidated Statements of Cash Flows - Years ended December 31,
2000, 1999 and 1998 19
Consolidated Statements of Changes in Shareholders' Equity - Years 20
Ended December 31, 2000, 1999 and 1998
Notes to Consolidated Financial Statements 21-27
Report of Independent Accountants 28
2. Financial Statement Schedule
The following schedule for the years ended December 31, 2000, 1999 and
1998 is filed herewith:
Schedule VIII - Valuation and Qualifying Accounts and Reserves
All other schedules have been omitted because they are not applicable,
not required, or the information has been otherwise supplied in the
financial statements or notes thereto.
(b) Reports on Form 8-K
None.
(c) Exhibits
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3.1 Restated Certificate of Incorporation filed with the Delaware
Secretary of State on May 29, 1990. Incorporated by reference to Exhibit
3.1 to Form 10-K for the year ended December 31, 1990.
3.2 Certificate of Amendment of Certificate of Incorporation filed with
the Delaware Secretary of State on May 27, 1998. Incorporated by
reference to Exhibit 3.2 to Form 10-K for the year ended December 31,
1998.
3.3 Bylaws as amended and restated on May 3, 2000.
4.1 Credit Agreement dated as of September 29, 2000 among Ducommun
Incorporated and the lenders referred to therein. Incorporated by
reference to Exhibit 4.1 to Form 10-Q for the quarter ended September
30, 2000.
4.2 Rights Agreement dated as of February 17, 1999 by and between
Ducommun Incorporated and Harris Trust Company of California as Rights
Agent. Incorporated by reference to Exhibit 4.2 to Form 8-K dated
February 17, 1999.
4.3 Conversion Agreement dated July 22, 1992 between Ducommun and the
holders of the 9% Convertible Subordinated Notes due 1998. Incorporated
by reference to Exhibit 1 to Form 8-K dated July 29, 1992.
* 10.1 1981 Stock Incentive Plan as amended and restated March 21, 1990.
Incorporated by reference to Exhibit 10.2 to Form 10-K for the year
ended December 31, 1989.
* 10.2 1990 Stock Option Plan. Incorporated by reference to Exhibit 10.4
to Form 10-K for the year ended December 31, 1990.
* 10.3 1994 Stock Incentive Plan, as amended May 7, 1998. Incorporated
by reference to Exhibit 10.3 to Form 10-K for the year ended December
31, 1997.
* 10.4 Form of Nonqualified Stock Option Agreement, for grants to
employees prior to January 1, 1999, under the 1994 Stock Incentive Plan,
the 1990 Stock Option Plan and the 1981 Stock Incentive Plan.
Incorporated by reference to Exhibit 10.5 to Form 10-K for the year
ended December 31, 1990.
* 10.5 Form of Nonqualified Stock Option Agreement, for grants to
employees after January 1, 1999, under the 1994 Stock Incentive Plan and
the 1990 Stock Option Plan. Incorporated by reference to Exhibit 10.5 to
Form 10-K for the year ended December 31, 1999.
* 10.6 Form of Incentive Stock Option Agreement under the 1994 Stock
Incentive Plan. Incorporated by reference to Exhibit 10.5 to Form 10-K
for the year ended December 31, 1996.
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* 10.7 Form of Nonqualified Stock Option Agreement for nonemployee
directors under the 1994 Stock Incentive Plan. Incorporated by reference
to Exhibit 10.7 to Form 10-K for the year ended December 31, 1999.
* 10.8 Form of Key Executive Severance Agreement entered with ten
current executive officers of Ducommun or its subsidiaries. Incorporated
by reference to Exhibit 10.7 to Form 10-K for the year ended December
31, 1999. All of the Key Executive Severance Agreements are identical
except for the name of the executive officer and the date of the
Agreement:
Executive Officer Date of Agreement
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Jeffrey P. Abbott April 10, 2000
Joseph C. Berenato November 4, 1991
Robert A. Borlet July 27, 1988
Paul L. Graham April 10, 2000
Robert B. Hahn July 27, 1988
Robert L. Hansen May 5, 1993
James S. Heiser July 27, 1988
Kenneth R. Pearson July 27, 1988
Michael W. Williams October 25, 1999
Samuel D. Williams June 21, 1989
* 10.9 Form of Indemnity Agreement entered with all directors and
officers of Ducommun. Incorporated by reference to Exhibit 10.8 to Form
10-K for the year ended December 31, 1990. All of the Indemnity
Agreements are identical except for the name of the director or officer
and the date of the Agreement:
Director/Officer Date of Agreement
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Norman A. Barkeley July 29, 1987
Joseph C. Berenato November 4, 1991
Eugene P. Conese, Jr. January 26, 2000
Ralph D. Crosby, Jr. January 26, 2000
James S. Heiser May 6, 1987
Kenneth R. Pearson July 27, 1988
Michael W. Williams February 26, 1999
Samuel D. Williams November 11, 1988
H. Frederick Christie October 23, 1985
Robert C. Ducommun December 31, 1985
Kevin S. Moore October 15, 1994
Thomas P. Mullaney April 8, 1987
* 10.10 Description of 2001 Executive Officer Bonus Arrangement.
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* 10.11 Directors' Deferred Compensation and Retirement Plan, as amended
October 29, 1993. Incorporated by reference to Exhibit 10.9 to Form 10-K
for the year ended December 31, 1993.
* 10.12 Ducommun Incorporated Executive Retirement Plan dated May 5,
1993. Incorporated by reference to Exhibit 10.2 to Form 10-Q for the
quarter ended July 3, 1993.
* 10.13 Ducommun Incorporated Executive Compensation Deferral Plan dated
May 5, 1993. Incorporated by reference to Exhibit 10.3 to Form 10-Q for
the quarter ended July 3, 1993.
* 10.14 Ducommun Incorporated Executive Compensation Deferral Plan No. 2
dated October 15, 1994. Incorporated by reference to Exhibit 10.12 to
Form 10-K for the year ended December 31, 1994.
10.15 Asset Purchase and Sale Agreement dated as of November 8, 1999
among Ducommun Incorporated, Ducommun Acquisition Corporation, Jordan
Industries, Inc., and Parsons Precision Products, Inc. Incorporated by
reference to Exhibit 2.1 to Form 8-K dated November 23, 1999.
11 Reconciliation of the Numerators and Denominators of the Basic and
Diluted Earnings Per Share Computations
13 2000 Annual Report to Shareholders (not deemed to be filed except as
previously incorporated by reference).
21 Subsidiaries of registrant
23 Consent of PricewaterhouseCoopers LLP
- -------------------
* Indicates an executive compensation plan or arrangement.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
DUCOMMUN INCORPORATED
Date: February 23, 2001 By: /s/ Joseph C. Berenato
--------------------------------
Joseph C. Berenato
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been duly signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: February 23, 2001 By: /s/ Joseph C. Berenato
--------------------------------
Joseph C. Berenato
Chairman of the Board, President
and Chief Executive Officer
(Principal Executive Officer)
Date: February 23, 2001 By: /s/ James S. Heiser
--------------------------------
James S. Heiser
Vice President,
Chief Financial Officer,
General Counsel,
Secretary and Treasurer
(Principal Financial Officer)
Date: February 23, 2001 By: /s/ Samuel D. Williams
--------------------------------
Samuel D. Williams
Vice President,
Controller and Assistant
Treasurer
(Principal Accounting Officer)
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DIRECTORS
By: /s/ Norman A. Barkeley
------------------------------------ Date: February 23, 2001
Norman A. Barkeley
By: /s/ Joseph C. Berenato Date: February 23, 2001
------------------------------------
Joseph C. Berenato
By: /s/ Eugene P. Conese, Jr. Date: February 23, 2001
------------------------------------
Eugene P. Conese, Jr.
By: /s/ Ralph D. Crosby, Jr. Date: February 23, 2001
------------------------------------
Ralph D. Crosby, Jr.
By: /s/ H. Frederick Christie Date: February 23, 2001
------------------------------------
H. Frederick Christie
By: /s/ Robert C. Ducommun Date: February 23, 2001
------------------------------------
Robert C. Ducommun
By: /s/ Kevin S. Moore Date: February 23, 2001
------------------------------------
Kevin S. Moore
By: /s/ Thomas P. Mullaney Date: February 23, 2001
------------------------------------
Thomas P. Mullaney
17
18
Report of Independent Accountants on
Financial Statement Schedule
To the Board of Directors
of Ducommun Incorporated:
Our audits of the consolidated financial statements referred to in our report
dated February 20, 2001 appearing in the 2000 Annual Report to Shareholders of
Ducommun Incorporated (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the financial statement schedule listed in Item 14(a)(2) of this Form
10-K. In our opinion, this financial statement schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.
PricewaterhouseCoopers LLP
Los Angeles, California
February 20, 2001
18
19
DUCOMMUN INCORPORATED
AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
SCHEDULE VIII
Column A Column B Column C Column D Column E
- -------------------- ---------- ------------------------------- ------------- ----------
Additions
-------------------------------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End of
Description of Period Expenses Accounts Deductions Period
- -------------------- ---------- ---------- ------------- ------------- ----------
FOR THE YEAR ENDED DECEMBER 31, 2000
Allowance for
Doubtful Accounts $ 153,000 $1,061,000 $ 34,000(a) $ 67,000(b) $1,160,000
$ 18,000(c) $ 39,000(c)
FOR THE YEAR ENDED DECEMBER 31, 1999
Allowance for
Doubtful Accounts $ 125,000 $ 25,000 $ 39,000(c) $ 36,000(b) $ 153,000
FOR THE YEAR ENDED DECEMBER 31, 1998
Allowance for
Doubtful Accounts $ 359,000 $ 7,000 $ -- $ 194,000(a) $ 125,000
$ 47,000(b)
(a) Collections on previously written off accounts.
(b) Write-offs on uncollectible accounts.
(c) Changes in allowance for doubtful accounts related to acquisitions in
1999.
19
20
EXHIBIT INDEX
Number
------
3.1 Restated Certificate of Incorporation filed with the Delaware
Secretary of State on May 29, 1990. Incorporated by reference to Exhibit
3.1 to Form 10-K for the year ended December 31, 1990.
3.2 Certificate of Amendment of Certificate of Incorporation filed with
the Delaware Secretary of State on May 27, 1998. Incorporated by
reference to Exhibit 3.2 to Form 10-K for the year ended December 31,
1998.
3.3 Bylaws as amended and restated on May 3, 2000.
4.1 Credit Agreement dated as of September 29, 2000 among Ducommun
Incorporated and the lenders referred to therein. Incorporated by
reference to Exhibit 4.1 to Form 10-Q for the quarter ended September
30, 2000.
4.2 Rights Agreement dated as of February 17, 1999 by and between
Ducommun Incorporated and Harris Trust Company of California as Rights
Agent. Incorporated by reference to Exhibit 4.2 to Form 8-K dated
February 17, 1999.
4.3 Conversion Agreement dated July 22, 1992 between Ducommun and the
holders of the 9% Convertible Subordinated Notes due 1998. Incorporated
by reference to Exhibit 1 to Form 8-K dated July 29, 1992.
* 10.1 1981 Stock Incentive Plan as amended and restated March 21, 1990.
Incorporated by reference to Exhibit 10.2 to Form 10-K for the year
ended December 31, 1989.
* 10.2 1990 Stock Option Plan. Incorporated by reference to Exhibit 10.4
to Form 10-K for the year ended December 31, 1990.
* 10.3 1994 Stock Incentive Plan, as amended May 7, 1998. Incorporated
by reference to Exhibit 10.3 to Form 10-K for the year ended December
31, 1997.
* 10.4 Form of Nonqualified Stock Option Agreement, for grants to
employees prior to January 1, 1999, under the 1994 Stock Incentive Plan,
the 1990 Stock Option Plan and the 1981 Stock Incentive Plan.
Incorporated by reference to Exhibit 10.5 to Form 10-K for the year
ended December 31, 1990.
* 10.5 Form of Nonqualified Stock Option Agreement, for grants to
employees after January 1, 1999, under the 1994 Stock Incentive Plan and
the 1990 Stock Option Plan. Incorporated by reference to Exhibit 10.5 to
Form 10-K for the year ended December 31, 1999.
* 10.6 Form of Incentive Stock Option Agreement under the 1994 Stock
Incentive Plan. Incorporated by reference to Exhibit 10.5 to Form 10-K
for the year ended December 31, 1996.
21
* 10.7 Form of Nonqualified Stock Option Agreement for nonemployee
directors under the 1994 Stock Incentive Plan. Incorporated by reference
to Exhibit 10.7 to Form 10-K for the year ended December 31, 1999.
* 10.8 Form of Key Executive Severance Agreement entered with ten
current executive officers of Ducommun or its subsidiaries. Incorporated
by reference to Exhibit 10.7 to Form 10-K for the year ended December
31, 1999. All of the Key Executive Severance Agreements are identical
except for the name of the executive officer and the date of the
Agreement:
Executive Officer Date of Agreement
----------------- -----------------
Jeffrey P. Abbott April 10, 2000
Joseph C. Berenato November 4, 1991
Robert A. Borlet July 27, 1988
Paul L. Graham April 10, 2000
Robert B. Hahn July 27, 1988
Robert L. Hansen May 5, 1993
James S. Heiser July 27, 1988
Kenneth R. Pearson July 27, 1988
Michael W. Williams October 25, 1999
Samuel D. Williams June 21, 1989
* 10.9 Form of Indemnity Agreement entered with all directors and
officers of Ducommun. Incorporated by reference to Exhibit 10.8 to Form
10-K for the year ended December 31, 1990. All of the Indemnity
Agreements are identical except for the name of the director or officer
and the date of the Agreement:
Director/Officer Date of Agreement
---------------- -----------------
Norman A. Barkeley July 29, 1987
Joseph C. Berenato November 4, 1991
Eugene P. Conese, Jr. January 26, 2000
Ralph D. Crosby, Jr. January 26, 2000
James S. Heiser May 6, 1987
Kenneth R. Pearson July 27, 1988
Michael W. Williams February 26, 1999
Samuel D. Williams November 11, 1988
H. Frederick Christie October 23, 1985
Robert C. Ducommun December 31, 1985
Kevin S. Moore October 15, 1994
Thomas P. Mullaney April 8, 1987
* 10.10 Description of 2001 Executive Officer Bonus Arrangement.
22
* 10.11 Directors' Deferred Compensation and Retirement Plan, as amended
October 29, 1993. Incorporated by reference to Exhibit 10.9 to Form 10-K
for the year ended December 31, 1993.
* 10.12 Ducommun Incorporated Executive Retirement Plan dated May 5,
1993. Incorporated by reference to Exhibit 10.2 to Form 10-Q for the
quarter ended July 3, 1993.
* 10.13 Ducommun Incorporated Executive Compensation Deferral Plan dated
May 5, 1993. Incorporated by reference to Exhibit 10.3 to Form 10-Q for
the quarter ended July 3, 1993.
* 10.14 Ducommun Incorporated Executive Compensation Deferral Plan No. 2
dated October 15, 1994. Incorporated by reference to Exhibit 10.12 to
Form 10-K for the year ended December 31, 1994.
10.15 Asset Purchase and Sale Agreement dated as of November 8, 1999
among Ducommun Incorporated, Ducommun Acquisition Corporation, Jordan
Industries, Inc., and Parsons Precision Products, Inc. Incorporated by
reference to Exhibit 2.1 to Form 8-K dated November 23, 1999.
11 Reconciliation of the Numerators and Denominators of the Basic and
Diluted Earnings Per Share Computations
13 2000 Annual Report to Shareholders (not deemed to be filed except as
previously incorporated by reference).
21 Subsidiaries of registrant
23 Consent of PricewaterhouseCoopers LLP
- -------------------
* Indicates an executive compensation plan or arrangement.