EX-99.4 4 dex994.htm UNAUDITED PRO FORMA FINANCIAL INFORMATION FOR DUCOMMUN INCORPORATED Unaudited Pro Forma Financial Information for Ducommun Incorporated

Exhibit 99.4

Unaudited Pro Forma Financial Information for Ducommun Incorporated (“Ducommun”) for the Year Ended December 31, 2005 and Miltec Corporation (“Miltec”) for Year Ended September 30, 2005.

 

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Ducommun Incorporated

Pro Forma Financial Information

(Unaudited)

The following unaudited pro forma financial statements reflect the acquisition by Ducommun on January 6, 2006, for $50,000,000 (including assumed indebtedness) plus contingent payments not to exceed $3,000,000. The purchase price is subject to adjustment based on a closing balance sheet and certain tax refunds. The acquisition was accounted for under the purchase method of accounting.

The unaudited pro forma condensed combined balance sheet at December 31, 2005 gives effect to the acquisition of Miltec assuming the transaction was consummated as of December 31, 2005. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2005 for Ducommun and the year ended September 30, 2005 for Miltec gives effect to the acquisition of Miltec assuming the transaction was consummated as of the beginning of the period presented. The unaudited pro forma condensed combined statement of operations combined the historical statement of operations of Ducommun and Miltec for the year ended December 31, 2005 for Ducommun and September 30, 2005 for Miltec.

The Miltec acquisition will be accounted for using the purchase method of accounting. The purchase price will be allocated to acquired assets and liabilities based on their estimated fair values at the date of 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 Miltec on the closing date and the fair value of certain acquired assets and liabilities. The Miltec acquisition will be included in the Ducommun Incorporated Form 10-Q for the period ended April 1, 2006.

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, 2005.


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Ducommun Incorporated

Pro Forma Condensed Combined Balance Sheet

December 31, 2005

(Amounts in thousands)

(Unaudited)

 

     Ducommun    Miltec    Pro Forma
Adjustments
    Ducommun
and Miltec
Combined

ASSETS

          

Current Assets:

          

Cash and cash equivalents

   $ 19,221    $ 386    $ (19,607 )(d)   $ —  

Accounts receivable (less allowance for doubtful accounts)

     32,890      4,367      —         37,257

Unbilled receivables

     —        2,559      —         2,559

Inventories , net

     53,299      —        —         53,299

Deferred income taxes

     6,048      —        —         6,048

Prepaid income taxes

     56      —        —         56

Other current assets

     4,464      457      1,000  ( b )     5,921
                            

Total Current Assets

     115,978      7,769      (18,607 )     105,140

Property and Equipment, Net

     52,481      585      —         53,066

Excess of Cost Over Net Tangible Assets Acquired

     57,201      —        47,393  ( c )     104,594

Other Assets, Net

     2,309      14      —         2,323
                            
   $ 227,969    $ 8,368    $ 28,786     $ 265,123
                            

LIABILITIES AND SHAREHOLDERS’ EQUITY

          

Current Liabilities:

          

Current portion of long-term debt

   $ —      $ 2,189    $ (2,189 ) ( a )   $ —  

Accounts payable

     17,787      844      —         18,631

Accrued liabilities

     33,879      4,108      1,162  ( e )     39,149

Contingent liability - DCAA

     —        934      —         934
                            

Total Current Liabilities

     51,666      8,075      (1,027 )     58,714

Long-Term Debt

     —        —        30,106  ( d )     30,106

Deferred Income Taxes

     5,752      —        —         5,752

Other Long-Term Liabilities

     2,700      —        —         2,700
                            

Total Liabilities

     60,118      8,075      29,079       97,272

Shareholders’ Equity:

     167,851      293      (293 ) (f)     167,851
                            
   $ 227,969    $ 8,368    $ 28,786     $ 265,123
                            

 

(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 (Current portion of intangibles.)

 

(c) This adjustment is required to reflect the excess of acquisition cost over the fair value of net tangible assets acquired (Goodwill and long-term portion of intangibles).

 

(d) This adjustment is made to reflect bank borrowings, notes payable and other liabilities assumed to finance the transaction.

 

(e) This adjustment is made to reflect assumed liabilities, including transaction costs.

 

(f) This adjustment is made to eliminate the shareholders' equity accounts of Miltec.


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DUCOMMUN INCORPORATED

Pro Forma Condensed Combined Statement of Operations

Year Ended December 31, 2005

(Amounts in thousands)

(Unaudited)

 

     Ducommun     Miltec     Pro Forma
Adjustments
    Ducommun
and Miltec
Combined
 

Net Sales

   $ 249,696     $ 40,430     $ —       $ 290,126  
                                

Operating Costs and Expenses:

        

Cost of goods sold

     198,041       31,511       —         229,552  

Selling, general and administrative expenses

     31,057       6,895       —         37,952  

Intangibles amortization expense

     —         —         1,000  ( a )     1,000  
                                

Total Operating Costs and Expenses

     229,098       38,406       1,000       268,504  
                                

Operating Income

     20,598       2,024       (1,000 )     21,622  

Interest Income (Expense), Net

     522       (173 )     (1,557 ) ( b )     (1,208 )
                                

Income from Operations Before Taxes

     21,120       1,851       (2,557 )     20,414  

Income Tax Expense

     (5,127 )     —         172  ( c )     (4,955 )
                                

Net Income

   $ 15,993     $ 1,851     $ (2,385 )   $ 15,459  
                                

Earnings Per Share:

        

Basic

   $ 1.59     $ —       $ —       $ 1.54  

Diluted

     1.57       —         —         1.52  

Weighted Average Number of Common Shares Outstanding:

        

Basic

     10,065       —         —         10,065  

Diluted

     10,164       —         —         10,164  

 

(a) Record amortization of intangibles arising on the Miltec acquisition on a straight line basis over 13 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 5.00%.

 

(c) Represents the tax effects of the above adjustments of Ducommun's approximate tax rate of 24.3%.