Ducommun Inc. to Sell Airdrome Unit to Investors

Ducommun Inc., the Cypress-based electronics distributor and aerospace parts maker, said Monday that it will sell its Airdrome Parts Co. division to a group of investors headed by Airdrome’s management.

The transaction was valued by Ducommun at $12 million in cash. H.R. Byrne, Ducommun’s vice president of finance, said the sale will result in a net gain of about $1.5 million, but he declined to give details or to say whether the investor group will assume any debt.

The management group’s purchase is expected to close by the end of January if financing can be obtained, Ducommun said.

Airdrome Parts, located in Long Beach, was acquired by Ducommun in 1981 and has annual sales of about $11 million. The division makes and distributes tube fittings for use in commercial aircraft. Its sale will leave Ducommun with four aerospace divisions with combined sales of about $75 million, Byrne said.

Ducommun, which reported $417 million in sales in 1985--the latest year for which annual figures are available--does most of its business as a distributor of electronic components and computer products. Byrne said the Airdrome division was sold because Ducommun officials have “been focusing our operations on core businesses.” Airdrome, which is capital intensive, “did not fit into our long-range scheme,” he said.

Airdrome’s president, Harold D. Stout, said that one reason for the sale might be Ducommun’s need for cash. Stout said he expects to continue as Airdrome’s president, although he is not the principal of the investors’ group.

In October, the ongoing recession in the semiconductor industry led to Ducommun’s reporting a third-quarter net loss of $849,000, compared to a loss from continuing operations of $1.2 million for the same period a year earlier. Third-quarter sales totaled $111.1 million, up from sales of $99.7 million for the same period a year ago.

Reported Net Loss

For the nine months, the company reported a net loss of $525,000, contrasted with net income from continuing operations of $399,000 for the first nine months of the prior year.

Ducommun said the sale of Airdrome, which Byron said has been “reasonably profitable,” is unrelated to Ducommun’s declining income.

But Clarke L. Walser, a research analyst with the Chicago Corp., said “inferentially, the fact that (Ducommun) hasn’t been profitable for the last two quarters has led to a more intensive” look by the company at its need for capital.

Walser added that Ducommun appears to be one of “a lot of companies that diversified in the 1970s, then decided they were better off concentrating on businesses that they know.”

Wall Street reacted to news of the sale with modest trading Monday. Ducommun stock closed on the American Stock Exchange at $18.875, down 12.5-cents per share.

Monday’s action marks the second time recently that Ducommun has announced plans to sell a division. In December, EIL Instruments Inc. of Sparks, Md., said it had signed a letter of intent to acquire the assets of Meter Master Inc. of Los Angeles for about $8 million. Meter Master is an electronics division of Ducommun.

Ducommun reportedly is considering a second bid for Meter Master by an unknown bidder and is expected to make some decision by mid-February, analysts said.