Business Context and Reporting Period
Company: Ducommun Incorporated
Filing Type: Form 10-K (Annual Report)
Period Ended: December 31, 1995
Industry: Aerospace and Defense Manufacturing
Ducommun manufactures components and assemblies for commercial and military aircraft, space programs, and wireless communications. Key subsidiaries include Aerochem (chemical milling), AHF-Ducommun (stretch and thermal forming), Jay-El Products (switches and microwave components), Brice Manufacturing (aircraft seating), and 3dbm (wireless hardware). The company operates in a single business segment with 808 employees as of year-end.
Key Financial Metrics
Note: Specific revenue, profit, cash flow, and margin figures are incorporated by reference to the 1995 Annual Report (Exhibit 13.0) and are not explicitly stated in the provided text.
- Backlog: $92.6 million as of December 31, 1995 (up from $84.8 million in 1994).
- Foreign Sales: $23.497 million in 1995 (Canada accounted for $4.518 million).
- Market Value: Approximately $35 million (non-affiliate voting stock as of January 31, 1996).
- Outstanding Shares: 5,121,115 shares of common stock (as of January 31, 1996).
- Dividends: None paid in 1994 or 1995.
- Debt Instruments: 7-3/4% Convertible Subordinated Debentures Due 2011 registered on the American Stock Exchange.
Material Changes and Operational Highlights
- Acquisitions: Completed acquisition of Brice Manufacturing Company (Dec 1994), Dynatech Microwave Technology assets (Dec 1994), and 3dbm, Inc. (Jan 1995).
- Sales Mix: Commercial aircraft programs accounted for approximately 55% of 1995 sales. Defense programs accounted for 36%, and space programs for 9%.
- Major Customers: Significant reliance on major defense contractors. Sales to Northrop Grumman (10.5%), McDonnell Douglas (10.4%), and Lockheed Martin (8.9%) represented a substantial portion of total revenue.
- Backlog Growth: Firm backlog increased by approximately $7.8 million year-over-year, with $40 million expected to be delivered in 1996.
Outlook, Risks, and Contingencies
Management Outlook: The company anticipates continued capital expenditures for environmental compliance but does not expect material spending in 1996. Facilities are fully utilized, though excess capacity exists based on product mix.
Key Risks:
- Government Dependence: 45% of sales (defense and space) are subject to budgetary pressures, program delays, or termination for convenience.
- Commercial Cyclicality: Commercial sales depend on aircraft manufacturers' production rates and airline financial capacity.
- Environmental Liabilities: Aerochem faces groundwater contamination issues in El Mirage, CA, and potential cleanup costs at the Casmalia Resources Hazardous Waste Facility. Provisions have been established for these costs.
- Geographic Risk: All facilities are in Southern California, an area prone to earthquakes. The company does not carry earthquake insurance due to cost.
Investor Verification Checklist
- Verify specific revenue, net income, and cash flow figures in the 1995 Annual Report (Exhibit 13.0), as they are not detailed in this filing text.
- Review the "Selected Financial Data" and "Management's Discussion and Analysis" sections in the Annual Report for margin trends and liquidity details.
- Assess the impact of the 1995 acquisitions (Brice, DMT, 3dbm) on consolidated profitability and integration costs.
- Monitor the status of the Space Shuttle program, as sales to Lockheed Martin (8.9% of total) are primarily tied to this program.
- Confirm the adequacy of environmental provisions regarding the El Mirage groundwater and Casmalia Site cleanup costs.