EX-99.4 5 a75263ex99-4.htm EXHIBIT 99.4 ex99-4

Exhibit 99.4

     Unaudited Pro Forma Financial Information for Ducommun Incorporated and Composite Structures, LLC for the Year Ended December 31, 2000 and the Three Months Ended March 31, 2001.


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Ducommun Incorporated
Pro Forma Financial Information
(Unaudited)

The following unaudited pro forma financial statements reflect the acquisition by Ducommun Incorporated (“Ducommun”) on June 6, 2001 of substantially all of the assets and assumption of certain liabilities of Composite Structures, LLC (“Composite”). The purchase price for Composite was approximately $53,584,000, subject to adjustments following the closing. The acquisition will be accounted for under the purchase method of accounting.

The unaudited pro forma condensed combined balance sheet at March 31, 2001 gives effect to the acquisition of Composite assuming the transaction was consummated as of March 31, 2001. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2000 and the three months ended March 31, 2001 give effect to the acquisition of Composite assuming the transaction was consummated as of the beginning of the periods presented. The unaudited pro forma condensed combined statements of operations combine the historical statements of operations of Ducommun and Composite for the three months ended March 31, 2001 and the year ended December 31, 2000.

The Composite acquisition will be accounted for using the purchase method of accounting. The purchase price is allocated to acquired assets and liabilities based on their estimated fair values at the date of the acquisition, and any excess is allocated to goodwill. The amount and allocation of the purchase price is subject to revision, which is not expected to be material, based on the final determination of the tangible net book value of Composite on the closing date and the fair value of certain acquired assets and liabilities. The Composite acquisition was included in the Ducommun Incorporated Form 10-Q for the period ended June 30, 2001.

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 periods presented; and should not be construed as representative of future operating results. The pro forma financial statements 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, 2000 and the Form 10-Q for the quarter ended June 30, 2001.


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DUCOMMUN INCORPORATED
Pro Forma Condensed Combined Balance Sheet
March 31, 2001
(Amounts in thousands)
(Unaudited)

                                     
                                Ducommun
                        Pro Forma   and Composite
        Ducommun   Composite   Adjustments   Combined
       
 
 
 
ASSETS
                               
Current Assets:
                               
 
Cash and cash equivalents
  $ 140     $ 251     $ (251 )(a)   $ 140  
 
Accounts receivable (less allowance for doubtful accounts)
    26,071       8,873       265 (e)     35,209  
 
Inventories, net
    32,111       7,633               39,744  
 
Deferred income taxes
    3,370                     3,370  
 
Prepaid income taxes
    134                     134  
 
Other current assets
    3,554       533               4,087  
 
   
     
     
     
 
   
Total Current Assets
    65,380       17,290       14       82,684    
Property and Equipment, Net
    50,186       5,339               55,525  
Deferred Income Taxes
    165                     165  
Excess of Cost Over Net Tangible Assets Acquired (Net of Accumulated Amortization)
    38,337             35,584 (b)     73,921  
Other Assets, Net
    1,272       1,536               2,808          
 
   
     
     
     
 
 
  $ 155,340     $ 24,165     $ 35,598     $ 215,103  
 
   
     
     
     
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
                               
Current Liabilities:
                               
 
Current portion of long-term debt
  $ 1,419     $     $ 1,784 (c)   $ 3,203  
 
Accounts payable
    12,349       4,034               16,383  
 
Accrued liabilities
    16,553       2,076               18,629  
 
   
     
     
     
 
   
Total Current Liabilities
    30,321       6,110       1,784       38,215  
Long-Term Debt
    18,705       2,674       49,125 (a)(c)     70,504  
Deferred Income Taxes
    2,409                     2,409  
Other Long-Term Liabilities
    1,316                     1,316  
 
   
     
     
     
 
   
Total Liabilities
    52,751       8,784       50,909       112,444  
Shareholders’ Equity
    102,589       15,381       (15,311 )(d)     102,659  
 
   
     
     
     
 
 
  $ 155,340     $ 24,165     $ 35,598     $ 215,103  
 
   
     
     
     
 


(a)   This adjustment is made to exclude assets and liabilities not acquired.
(b)   This adjustment is required to reflect the excess of acquisition cost over the fair value of net tangible assets acquired (Goodwill).
(c)   This adjustment is made to reflect bank borrowings, notes payable and other liabilities assumed to finance the transaction.
(d)   This adjustment is made to eliminate the shareholders’ equity accounts of Composite and include the net earnings associated with Pro Forma adjustments (See Exhibit 99.4)
(e)   This adjustment is made to reflect a purchase price adjustment following the closing.


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DUCOMMUN INCORPORATED
Pro Forma Condensed Combined Statement of Operations
Three Months Ended March 31, 2001
(Amounts in thousands)
(Unaudited)

                                       
                                  Ducommun
                          Pro Forma   and Composite
          Ducommun   Composite   Adjustments   Combined
         
 
 
 
Net Sales
  $ 48,461     $ 15,400     $       $ 63,861  
Operating Costs and Expenses:
                               
 
Cost of goods sold
    36,007       12,043               48,050  
 
Selling, general and administrative expenses
    6,476       1,720               8,196  
 
Goodwill amortization expense
    719             603 (a)     1,322  
 
   
     
     
     
 
     
Total Operating Costs and Expenses
    43,202       13,763       603       57,568  
 
   
     
     
     
 
Operating Income
    5,259       1,637       (603 )     6,293  
Interest Expense, Net
    (380 )     (12 )     (909 )(b)     (1,301 )
 
   
     
     
     
 
Income from Continuing Operations Before Taxes
    4,879       1,625       (1,512 )     4,992  
Income Tax Expense
    (1,854 )           (43 )(c)     (1,897 )
 
   
     
     
     
 
 
Net Income
  $ 3,025     $ 1,625     $ (1,555 )   $ 3,095  
 
   
     
     
     
 
Earnings Per Share:
                               
   
Basic
  $ .31                     $ .32  
   
Diluted
    .31                       .32  
Weighted Average Number of Common Shares Outstanding:
                               
   
Basic
    9,614                       9,614  
   
Diluted
    9,718                       9,718  


(a)   This adjustment is made to amortize goodwill arising on the Composite acquisition on a straight line basis over 15 years.
(b)   This adjustment is made to reflect incremental interest on bank borrowings and notes payable used to finance the transaction at an approximate interest rate of 6.90%.
(c)   This adjustment is made to represent the tax effects of Composite and the Pro Forma adjustments above at Ducommun’s approximate tax rate of 38%.


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DUCOMMUN INCORPORATED
Pro Forma Condensed Combined Statement of Operations
Year Ended December 31, 2000
(Amounts in thousands)
(Unaudited)

                                       
                                  Ducommun
                          Pro Forma   and Composite
          Ducommun   Composite   Adjustments   Combined
         
 
 
 
Net Sales
  $ 165,711     $ 59,300     $       $ 225,011  
Operating Costs and Expenses:
                               
 
Cost of goods sold
    117,750       41,771               159,521  
 
Selling, General and administrative expenses
    22,804       8,429               31,233  
 
Goodwill amortization expense
    2,852             2,412 (a)     5,264  
 
   
     
     
     
 
     
Total Operating Costs and Expenses
    143,406       50,200       2,412       196,018  
 
   
     
     
     
 
Operating Income
    22,305       9,100       (2,412 )     28,993  
Interest Expense, Net
    (1,788 )     (273 )     (3,636 )(b)     (5,697 )
 
   
     
     
     
 
Income from Continuing Operations Before Taxes
    20,517       8,827       (6,048 )     23,296  
Income Tax Expense
    (7,797 )           (660 )(c)     (8,457 )
 
   
     
     
     
 
 
Net Income
  $ 12,720     $ 8,827     $ (6,708 )   $ 14,839  
 
   
     
     
     
 
Earnings Per Share:
                               
   
Basic
  $ 1.32                     $ 1.54  
   
Diluted
    1.30                       1.52  
Weighted Average Number of Common Shares Outstanding:
                               
   
Basic
    9,650                       9,650  
   
Diluted
    9,761                       9,761  


(a)   This adjustment is made to amortize goodwill arising on the Composite acquisition on a straight line basis over 15 years.
(b)   This adjustment is made to reflect incremental interest on bank borrowings and notes payable used to finance the transaction at an approximate interest rate of 6.90%.
(c)   This adjustment is made to represent the tax effects of Composite and the Pro Forma adjustments above at Ducommun’s approximate tax rate of 38%.