<SEC-DOCUMENT>0001193125-24-174357.txt : 20240805
<SEC-HEADER>0001193125-24-174357.hdr.sgml : 20240805
<ACCEPTANCE-DATETIME>20240702163026
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001193125-24-174357
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20240702

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DUCOMMUN INC /DE/
		CENTRAL INDEX KEY:			0000030305
		STANDARD INDUSTRIAL CLASSIFICATION:	AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728]
		ORGANIZATION NAME:           	04 Manufacturing
		IRS NUMBER:				950693330
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		600 ANTON BOULEVARD
		STREET 2:		SUITE 1100
		CITY:			COSTA MESA
		STATE:			CA
		ZIP:			92626
		BUSINESS PHONE:		657-335-3665

	MAIL ADDRESS:	
		STREET 1:		600 ANTON BOULEVARD
		STREET 2:		SUITE 1100
		CITY:			COSTA MESA
		STATE:			CA
		ZIP:			92626
</SEC-HEADER>
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 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">July&nbsp;2, 2024 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>VIA
EDGAR </U></B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Mr.&nbsp;Ernest Greene and Ms.&nbsp;Anne McConnell </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Office of Manufacturing </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Division of Corporation Finance </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Securities and Exchange Commission </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Mail Stop 3561 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">100 F Street, N.E. </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Washington D.C. 20549 </P>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>Re:</B></TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><B>Ducommun Incorporated </B></P></TD></TR></TABLE>
<P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>Form <FONT STYLE="white-space:nowrap">10-K</FONT> for the Year Ended December&nbsp;31, 2023 </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>Form <FONT STYLE="white-space:nowrap">8-K</FONT> </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>Filed on February&nbsp;15, 2024 </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>Response dated May&nbsp;13, 2024 </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman"><B>File <FONT STYLE="white-space:nowrap">No.&nbsp;001-08174</FONT> </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Dear Mr.&nbsp;Greene and Ms.&nbsp;McConnell: </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">On
behalf of Ducommun Incorporated (the &#147;Company&#148; or &#147;Ducommun&#148;), I am hereby responding to the comments of the staff (the &#147;Staff&#148;) of the U.S. Securities and Exchange Commission contained in your letter dated
June&nbsp;20, 2024 relating to the above-referenced Annual Report on Form <FONT STYLE="white-space:nowrap">10-K,</FONT> Form <FONT STYLE="white-space:nowrap">8-K</FONT> and response dated May&nbsp;13, 2024 (the &#147;Original Response Letter&#148;).
Our responses are named and numbered to correspond with the names and numbers of the comments contained in your letter. For your convenience, we have included a copy of the text of your comment in bold above each of our responses. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Form <FONT STYLE="white-space:nowrap">10-K</FONT> for the Year Ended December&nbsp;31, 2023 </U></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</U> </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Critical Accounting Policies and Estimates </U></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Revenue
Recognition, page 35 </U></P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left"><B>1.</B></TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><B>Comment: </B></P></TD></TR></TABLE>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman"><B><I>We note your response to prior comment 2, including the additional disclosures you included in your interim financial statements pursuant
to ASC 250. However, based on the purpose of CAE disclosures and given the gross favorable and gross unfavorable changes in estimates you recognized during the periods presented, please tell us what consideration you gave to disclosing gross changes
in estimates under your CAE disclosures or, more fully explain to us, and revise future filings to disclose, why you believe disclosing cumulative <FONT STYLE="white-space:nowrap">catch-up</FONT> adjustments on a net basis, rather than on an
aggregate gross basis, would be more meaningful to readers, as noted in your response. </I></B></P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Ducommun Incorporated Responses </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"> Page
 2
 </P> <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman">Response: </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman">The Company respectfully acknowledges the Staff&#146;s comment. When assessing the purpose of CAE disclosures and whether to disclose the gross
favorable and gross unfavorable changes in estimates that the Company recognized in each period, the Company considered, as discussed in the Company&#146;s Original Response Letter, that changes in estimates involve a large and fluctuating number of
contracts, none of which is typically individually material. Given the significant number of contracts that the Company may have at any given point in time, the varied nature of products produced under such contracts, and the different assumptions,
facts and circumstances associated with each individual contract, the Company does not believe that presenting the aggregation of the effects of immaterial or unrelated changes in individual estimates (i.e., the gross favorable and gross unfavorable
changes where no common driver exists) would provide meaningful information to the users of the Company&#146;s financial statements. Thus, beginning with its first quarter 2024 Form <FONT STYLE="white-space:nowrap">10-Q</FONT> filed on May&nbsp;8,
2024, the Company disclosed the aggregate net cumulative <FONT STYLE="white-space:nowrap">catch-up</FONT> adjustments for each period being reported. In the event a cumulative <FONT STYLE="white-space:nowrap">catch-up</FONT> adjustment on any
particular contract is deemed material, the Company will provide additional disclosure as to the circumstances that caused the material cumulative <FONT STYLE="white-space:nowrap">catch-up</FONT> adjustment. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman">In response to the Staff&#146;s comment, in the Company&#146;s 2024 Annual Report on Form <FONT STYLE="white-space:nowrap">10-K,</FONT> the
Company will further enhance its CAE disclosures related to the cumulative <FONT STYLE="white-space:nowrap">catch-up</FONT> adjustments as follows (additional disclosures in italics): </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:13%; font-size:10pt; font-family:Times New Roman">&#147;As a significant change in one or more of these estimates could affect the progress completed (and related profitability) on our
contracts, we review and update our contract-related estimates on a regular basis. We recognize such adjustments under the cumulative <FONT STYLE="white-space:nowrap">catch-up</FONT> method. Under this method, the impact of the adjustment is
recognized in the period the adjustment is identified. <I>In any given reporting period, we have a large number of active contracts, which we have defined as a customer purchase order, and changes in estimates may occur on a significant number of
these contracts. Given the significant number of contracts that the Company may have at any given point in time, the varied nature of products produced under such contracts, and the different assumptions, facts and circumstances associated with each
individual contract, and the fact that such changes at the contract level are typically not material, the Company discloses cumulative <FONT STYLE="white-space:nowrap">catch-up</FONT> adjustments on a net basis.</I> </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Ducommun Incorporated Responses </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"> Page
 3
 </P> <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:13%; font-size:10pt; font-family:Times New Roman"><I>Net cumulative favorable and unfavorable <FONT STYLE="white-space:nowrap">catch-up</FONT>
adjustments to contracts had the following impact on our operating results: </I></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD></TD>
<TD></TD>

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<TD></TD>
<TD></TD>
<TD></TD>

<TD VALIGN="bottom" WIDTH="3%"></TD>
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="13" ALIGN="center"><B></B><I>(Dollars in thousands)</I><B></B></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="13" ALIGN="center"><B></B><I>December 31,</I><B></B></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:8pt">
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><I>2024</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><I>2023</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center" STYLE="border-bottom:1.00pt solid #000000"><I>2022</I></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;</TD></TR>


<TR BGCOLOR="#cceeff" STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><I>Total net revenues</I></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom"><I>$</I><I></I></TD>
<TD NOWRAP VALIGN="bottom" ALIGN="right"><I></I><I>XXX</I></TD>
<TD NOWRAP VALIGN="bottom"><I></I><I></I>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom"><I>$</I></TD>
<TD NOWRAP VALIGN="bottom" ALIGN="right"><I>XXX</I></TD>
<TD NOWRAP VALIGN="bottom"><I></I>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom"><I>$</I><I></I></TD>
<TD NOWRAP VALIGN="bottom" ALIGN="right"><I></I><I>XXX</I></TD>
<TD NOWRAP VALIGN="bottom"><I></I><I></I>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; margin-left:1.00em; text-indent:-1.00em; font-size:10pt; font-family:Times New Roman"><I>Operating income</I></P></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom"><I>$</I><I></I></TD>
<TD NOWRAP VALIGN="bottom" ALIGN="right"><I></I><I>XXX</I></TD>
<TD NOWRAP VALIGN="bottom"><I></I><I></I>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom"><I>$</I></TD>
<TD NOWRAP VALIGN="bottom" ALIGN="right"><I>XXX</I></TD>
<TD NOWRAP VALIGN="bottom"><I></I>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD NOWRAP VALIGN="bottom"><I>$</I><I></I></TD>
<TD NOWRAP VALIGN="bottom" ALIGN="right"><I></I><I>XXX</I></TD>
<TD NOWRAP VALIGN="bottom"><I></I><I></I>&nbsp;</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="bottom" NOWRAP ALIGN="center">&#148;</TD></TR>
</TABLE> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Consolidated Financial Statements </U></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Note 15. Commitments and Contingencies, page 78 </U></P> <P STYLE="font-size:18pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="top" ALIGN="left"><B>2.</B></TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><B>Comment: </B></P></TD></TR></TABLE>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman"><B><I>We note your response to prior comment 3. You indicate that insurance recoveries for losses on equipment are reflected in cash flows from
investing activities up to the net book value of the assets and all other recoveries are reflected in cash flows from operating activities, as either part of net income or part of change in operating assets. Please be advised, it appears to us that
proceeds received from insurance recoveries related to equipment are analogous to proceeds received from the sale or disposal of equipment and, therefore, should be afforded similar treatment, as investing cash flows. To the extent material, please
reflect insurance recoveries for losses on equipment in cash flows from investing activities in future filings or explain to us how you determined limiting amounts reflected in cash flows from investing activities to the net book value of the assets
is appropriate and complies with ASC 230. </I></B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman">Response: </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman">The Company respectfully acknowledges the Staff&#146;s comment. The Company&#146;s policy is to allocate insurance recoveries among covered
incidents, based on the provisions of the insurance policy. While immaterial, upon further evaluation and consideration of the Staff&#146;s comment, the Company acknowledges that a portion of the $1.0&nbsp;million and $1.7&nbsp;million of insurance
recoveries received in 2022 and 2023, respectively, related to the 2020 fire at the Company&#146;s Guaymas, Mexico performance center, which were attributed by the insurance company to property damage (which included fixed assets, inventory, and
tooling) should have been presented as cash inflows from investing activities. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:9%; font-size:10pt; font-family:Times New Roman">Going forward, should the Company experience insurance
recoveries for losses on fixed assets, the Company will follow the guidance in ASC 230 and present insurance recoveries as cash flows from investing activities. </P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Ducommun Incorporated Responses </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"> Page
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 </P> <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Please do not hesitate to call me if you have any further comments or questions regarding
this response at (310) <FONT STYLE="white-space:nowrap">513-7282.</FONT> </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><DIV ALIGN="right">
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<TD VALIGN="top" COLSPAN="3">Very truly yours,</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16" COLSPAN="3"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top" COLSPAN="3">Ducommun Incorporated</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">By:</TD>
<TD VALIGN="bottom" STYLE=" BORDER-BOTTOM:1px solid #000000">&nbsp;</TD>
<TD VALIGN="top" STYLE="BORDER-BOTTOM:1px solid #000000">/s/ Suman B. Mookerji</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Suman B. Mookerji</TD></TR>
<TR STYLE="page-break-inside:avoid ; font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">Sr. Vice President, Chief Financial Officer</TD></TR>
</TABLE></DIV> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">cc:</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Rajiv A. Tata, Esq. </P></TD></TR></TABLE>
<P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Karen Hsu Kelley, Esq. </P>
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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
