<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): DECEMBER 30, 1994
DUCOMMUN INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 0-1222 95-0693330
- - ------------------------ ------------------------ ------------------------
(State of incorporation) (Commission File No.) (IRS Identification No.)
23301 South Wilmington Avenue, Carson, California 90745
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 513-7200
--------------
N/A
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(Former name or fomer address, if changed since last report)
<PAGE> 2
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
-------------------------------------------------------------------
(a) Financial statements of business acquired.
Attached as Exhibit 2 are the audited financial statements of
Dynatech Microwave Technology, Inc. (a wholly-owned subsidiary of
Dynatch USA, Inc.) for the nine months ended December 31, 1994.
(b) Pro forma financial information.
Attached as Exhibit 3 is unaudited pro forma financial information
for Ducommun Incorporated and Dynatech Microwave Technology, Inc.
(a wholly-owned subsidiary of Dynatech USA, Inc.).
(c) Exhibits.
1. Asset Purchase Agreement by and among Jay-El Products, Inc., as
Buyer, and Dynatch Microwave Technology, Inc., as Seller, and
Ducommun Incorporated and Dynatech Corporation, dated December
30, 1994. Incorporated by reference to Exhibit 1 to the Form 8-K
dated January 13, 1995.
2. Report of Independent Accountants and Financial Statements of
Dynatech Microwave Technology, Inc. (a wholly-owned subsidiary
of Dynatech USA, Inc.) for the nine months ended December 31, 1994.
3. Unaudited Pro Forma Financial Information for Ducommun
Incorporated and Dynatech Microwave Technology,
Inc. (a wholly-owned subsidiary of Dynatech USA, Inc.).
-2-
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DUCOMMUN INCORPORATED
Dated March 15, 1995 By: /s/ Joseph C. Berenato
-------------------------------
Joseph C. Berenato
Executive Vice President
Chief Operating Officer,
and Chief Financial Officer
-3-
<PAGE> 1
DYNATECH MICROWAVE TECHNOLOGY, INC.
(a wholly-owned subsidiary of Dynatech USA, Inc.)
FINANCIAL STATEMENTS
DECEMBER 31, 1994
Exhibit 2
<PAGE> 2
REPORT OF INDEPENDENT ACCOUNTANTS
January 19, 1994
To the Management of
Ducommun Incorporated
In our opinion, the accompanying balance sheet and the related statements of
income and retained earnings and of cash flows present fairly, in all material
respects, the financial position of Dynatech Microwave Technology, Inc. (a
wholly-owned subsidiary of Dynatech USA, Inc.) at December 31, 1994, and the
results of its operations and its cash flows for the nine months then ended in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statement, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for the
opinion expressed above.
As discussed in Note 1, Jay-El Products, Inc. (a wholly-owned subsidiary of
Ducommun Incorporated) acquired substantially all of the assets and assumed
certain liabilities of Dynatech Microwave Technology, Inc.
Price Waterhouse LLP
Los Angeles, California
<PAGE> 3
DYNATECH MICROWAVE TECHNOLOGY, INC.
(a wholly-owned subsidiary of Dynatech USA, Inc.)
BALANCE SHEET
<TABLE>
<CAPTION>
December 31,
1994
-----------
<S> <C>
ASSETS
- - ------
Current assets:
Cash $ 300,000
Accounts receivable (less allowance for
doubtful accounts of $5,000 1,048,000
Inventories 1,023,000
Prepaid expenses and other current assets 132,000
----------
Total current assets 2,503,000
Property and equipment, net 565,000
Other assets 67,000
----------
$3,135,000
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- - ------------------------------------
Current liabilities:
Accounts payable $ 241,000
Payable to Dynatech Corporation 1,727,000
Accrued costs of warranty claim 125,000
Commissions and expenses payable to outside parties 80,000
Accrued income taxes 211,000
Accrued expenses 184,000
----------
Total current liabilities 2,568,000
----------
Commitments and contingencies (Note 8)
Shareholders' equity:
Common stock, $.20 par value, 5,040 shares authorized
issued and outstanding 1,000
Additional paid-in capital 93,000
Retained earnings 473,000
----------
Total shareholders' equity 567,000
----------
$3,135,000
==========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 4
DYNATECH MICROWAVE TECHNOLOGY, INC.
(a wholly-owned subsidiary of Dynatech USA, Inc.)
STATEMENT OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
Nine months
Ended
December 31,
1994
------------
<S> <C>
Net sales $5,477,000
Cost of sales 3,781,000
----------
Gross margin 1,696,000
----------
Costs and expenses:
Selling and marketing 523,000
General and administrative 451,000
Management fees charged by Parent company 185,000
Research and development 97,000
----------
1,256,000
----------
Income from operations 440,000
Intercompany interest expense 248,000
----------
Income before income taxes 192,000
Provision for income taxes 88,000
----------
Net income 104,000
Retained earnings, beginning of period 369,000
----------
Retained earnings, end of period $ 473,000
==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
DYNATECH MICROWAVE TECHNOLOGY, INC.
(a wholly-owned subsidiary of Dynatech USA, Inc.)
STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH
<TABLE>
<CAPTION>
Nine months
Ended
December 31,
1994
------------
<S> <C>
Cash flows from operating activities:
Net income $ 104,000
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 200,000
Provision for excess and obsolete inventory 33,000
Changes in assets and liabilities:
Accounts receivable 504,000
Inventories 14,000
Prepaid expenses and other current assets (21,000)
Other assets 5,000
Accounts payable (450,000)
Payable to Dynatech Corporation 194,000
Commissions and expenses payable to outside parties (45,000)
Accrued income taxes 80,000
Accrued expenses (147,000)
---------
Net cash provided by operating activities 471,000
---------
Cash flows from investing activities:
Net cash used for acquisitions of property and equipment (171,000)
---------
Net increase in cash 300,000
Cash at begining of period -
---------
Cash at end of period $ 300,000
=========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
DYNATECH MICROWAVE TECHNOLOGY, INC.
(a wholly-owned subsidiary of Dynatech USA, Inc.)
NOTES TO FINANCIAL STATEMENTS
Note 1 - The Company:
Dynatech Microwave Technology, Inc. (the Company) was incorporated in Nevada in
1979. The Company is a wholly-owned subsidiary of Dynatech USA, Inc., which is
a wholly-owned subsidiary of Dynatech Corporation. The Company is engaged
primarily in the manufacture and distribution of switches and other microwave
components used in commercial and military aircraft and in other non-aerospace
commercial applications.
On December 30, 1994, certain assets of the Company were acquired by Jay-El
Products, Inc. (a wholly-owned subsidiary of Ducommun Incorporated) in exchange
for a cash payment to Dynatech, Inc. of $7.5 million and the assumption of
certain liabilities (the Acquisition). The following assets and liabilities of
the Company, which are included in the accompanying balance sheet, were not
acquired or assumed by Jay-El Products, Inc.:
<TABLE>
<CAPTION>
December 31,
1994
------------
<S> <C>
Assets
Cash $ 300,000
Prepaid expenses 132,000
Fixed Assets 20,000
----------
452,000
==========
Liabilities
Payable to Dynatech Corporation 1,727,000
Accrued income taxes 211,000
Accrued expenses 184,000
Accrued costs of warranty claim 125,000
----------
$2,247,000
==========
</TABLE>
The activity of the Company was not significant for the period from December
30, 1994 to December 31, 1994. The accompanying financial statements and notes
have been prepared as of December 31, 1994, using the Company's historical
basis of accounting, prior to giving effect to the Acquisition.
Note 2 - Summary of Accounting Policies:
Inventories
Inventories are stated at the lower of cost (determined by the first-in,
first-out method) or market.
<PAGE> 7
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization are
computed using the straight-line method and the estimated useful lives of the
assets of three to ten years. Leasehold improvements are depreciated over the
lesser of the remaining life of the lease or their estimated useful lives.
Revenue Recognition
Revenue from nonrecurring engineering services and research and development
contracts is recognized using the percentage of completion method based on
costs incurred-to-date to total estimated cost-at-completion. Unbilled revenue
under these contracts was not significant at December 31, 1994. Revenue from
product sales is recognized upon product shipment. During the nine months
ended December 31, 1994, one customer represented 20% of total revenue.
Income Taxes
The Company has an income tax-sharing agreement with Dynatech Corporation
whereby the Company is included in the consolidated federal income tax return
of Dynatech Corporation. The Company's income tax liability has been recorded
in the accompanying financial statements on a separate-return basis. Income
tax liability for periods prior to and including the year ended March 31, 1993
has been recorded as an intercompany charge due to Dynatech Corporation.
This income tax accounting by the Company, recorded on a separate-return basis,
approximates Statement of Financial Accounting Standards No. 109, Accounting
for Income Taxes (FAS 109). FAS 109 requires an asset and liability approach
that recognizes deferred tax assets and liabilities for the expected future tax
consequences of events that have been recognized in the Company's financial
statements or tax returns. In estimating future tax consequences, FAS 109
generally considers all expected future events other than enactments or changes
in the tax law or rates.
Geographic Information and Concentrations of Credit Risk
The Company markets its products both domestically and internationally. All
sales are denominated in United States dollars. Export sales for the nine
months ended December 31, 1994 of $668,000 were primarily to Europe and Asia.
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of trade accounts receivable.
The Company offers credit terms
<PAGE> 8
on the sale of its products to its customers. The Company performs ongoing
credit evaluations of its customers' financial condition and, generally,
requires no collateral from its customers. The Company maintains an allowance
of uncollectible accounts receivable based upon the expected collectibility of
all accounts receivable.
Note 3 - Related Party Transactions:
Dynatech Corporation provides certain management services to the Company. The
costs of these services are allocated to the Company based on the Company's
sales and expenses. Dynatech Corporation also charges interest on the
intercompany balance. The following summarizes transaction activity with
Dynatech Corporation for the nine months ended December 31, 1994:
<TABLE>
<S> <C>
Payable at March 31, 1994 $ 1,533,000
Management service fees 185,000
Interest charge 248,000
Net cash paid (239,000)
-----------
Payable at December 31, 1994 $ 1,727,000
===========
</TABLE>
Note 4 - Balance Sheet Accounts:
<TABLE>
<CAPTION>
December 31,
1994
------------
<S> <C>
Inventories:
Raw materials $ 829,000
Work-in-progress 198,000
Finished goods 64,000
Reserved for excess and obsolete inventory (68,000)
-----------
$ 1,023,000
===========
Property and equipment:
Machinery and equipment $ 2,888,000
Leasehold improvements 539,000
Furniture and fixtures 215,000
-----------
3,642,000
Less: Accumulated depreciation
and amortization (3,077,000)
-----------
$ 565,000
===========
</TABLE>
Note 5 - Non-Recurring Engineering Services Contracts:
In March 1994, the Company entered into an agreement to develop and manufacture
certain switching devices (the Agreement). Under the Agreement the Company is
required to perform certain specified non-recurring engineering services to
develop a prototype of the device in return for a fee of $190,000. These
services were completed as of December 31, 1994 for a cost of $350,000. During
the nine months ended December 31, 1994, the Company recorded revenue and cost
of revenues under the Agreement of $344,000 and $439,000, respectively.
<PAGE> 9
Note 6 - Income Taxes:
The income tax provision consists of the following:
<TABLE>
<CAPTION>
Nine Months
Ended
December 31,
1994
------------
<S> <C>
Current
Federal $ 90,000
State 18,000
--------
108,000
--------
Deferred
Federal (20,000)
State -
--------
(20,000)
--------
Net tax provision $ 88,000
========
</TABLE>
The difference between the current income tax provision and the provision
determined by applying the U.S. statutory income tax rate to pretax income is
due primarily to state income taxes. Deferred tax assets are attributable
primarily to depreciation for financial reporting purposes in excess of tax.
Note 7 - Employee Benefits:
The Company maintains an Employee Profit Sharing and 401(k) Plan (the Plan)
which covers all employees of the Company who have completed certain period of
employment requirements. Under the Plan, employees may elect to contribute 1%
to 15% of their pretax compensation to the Plan, subject to certain limits. At
the end of each fiscal year the Board of Directors may vote to make a
profit-sharing contribution to the Plan. The contribution, together with any
forfeitures, is allocated to Plan participants partly as a basic contribution
and partly as a matching contribution. The matching contributions are to be
not more than 50% of the first $2,000 contributed by the Plan participant
during the fiscal year. The Company's contribution to the Plan was $43,000 for
the nine months ended December 31, 1994.
<PAGE> 10
Note 8 - Commitments and Contingencies:
The Company leases its principal facility in Calabasas, California under a
noncancelable operating lease which provides for escalating lease payments and
for pro rata costs of common area maintenance. Future minimum lease payments
under all noncancelable operating leases for fiscal years ending December 31
are as follows:
<TABLE>
<CAPTION>
Operating
Leases
---------
<S> <C>
1995 $401,000
1996 401,000
1997 135,000
--------
Total minimum lease payments $937,000
========
</TABLE>
Total rent expense on all operating leases was $300,000 for the nine months
ended December 31, 1994.
The Company is involved in legal proceedings arising in the ordinary course of
business. Management believes that such proceedings will be resolved without
material effect on the Company's financial position or results of operations.
<PAGE> 1
Exhibit 3
Page 1 of 2
DUCOMMUN INCORPORATED
PRO FORMA FINANCIAL INFORMATION
(Unaudited)
The following unaudited pro forma financial statements reflect the
acquisition by Jay-El Products, Inc., a wholly-owned subsidiary of Ducommun
Incorporated (Ducommun) on December 30, 1994, of substantially all of the
assets and the assumption of certain liabilities of Dynatech Microwave
Technology, Inc. (DMT), an indirect wholly-owned subsidiary of Dynatech
Corporation. The purchase price for DMT was $7.5 million in cash, subject to
adjustments following the closing. The acquisition was accounted for under the
purchase method of accounting.
The unaudited pro forma condensed combined statement of operations for
the twelve months ended December 31, 1994 give effect to the acquisition of
DMT assuming the transaction was consummated as of the beginning of the period
presented. The unaudited pro forma condensed combined statements of operations
combine the historical statements of operations of Ducommun and DMT for the
year ended December 31, 1994.
The unaudited pro forma condensed combined statements of operations are not
necessarily indicative of the operating results that would have been achieved
had the acquisition been consummated at the beginning of the period presented;
and should not be construed as representative of future operating results. The
pro forma financial statement should also be read in conjunction with
Ducommun's consolidated financial statements and notes set forth in the Report
on Form 10-K for the year ended December 31, 1994.
<PAGE> 2
DUCOMMUM INCORPORATED Exhibit 3
Page 2 of 2
Pro Forma Condensed Combined Statement of Operations
Twelve Months Ended December 31, 1994
(Amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
DUCOMMUN
Pro Forma and DMT
Ducommun DMT Adjustments Combined
--------- ------ ----------- ---------
<S> <C> <C> <C> <C>
Net Sales $72,715 $7,867 $ - $80,582
------- ------ ----- -------
Operating Costs and Expenses:
Cost of goods sold 49,716 5,264 - 54,980
Selling, general and administrative expenses 15,755 1,761 182 (a) 17,698
------- ------ ----- -------
Total Operating Costs and Expenses 65,471 7,025 182 72,678
------- ------ ----- -------
Operating Income 7,244 842 (182) 7,904
Interest (2,800) - (585)(b) (3,385)
------- ------ ----- -------
Income from Continuing Operations Before Taxes 4,444 842 (767) 4,519
Income Tax Expense (1,364) (258) 235 (c) (1,387)
------- ------ ----- -------
Net Income $ 3,080 $ 584 $(532) $ 3,132
======= ====== ===== =======
Per Share:
Fully Diluted Earnings Per Share $ 0.62 $ 0.62
======= =======
Weighted Average Number of Common and Common Equivalent
Shares Outstanding for Computation of Fully Diluted
Earnings Per Share 7,452 7,452
======= =======
</TABLE>
(a) Record amortization of goodwill arising on the
DMT acquisition on a straight line basis
over 15 years and a reduction in expenses related
to administrative expenses charged by DMT's Parent.
(b) This adjustment is made to reflect incremental
interest on bank borrowings and notes payable
used to finance the transaction.
(c) Represents the tax effects of the above
adjustments at Ducommun's approximate tax rate.
