Diluted earnings per share from continuing operations up 29.6% for the
fourth quarter and 44.6% for the full year over year-ago periods. Sales up
8.8% for the fourth quarter and 9.5% for the full year over year-ago
periods.
BLOOMFIELD, Conn., Feb. 28 /PRNewswire-FirstCall/ -- Kaman Corp.
(Nasdaq: KAMN) today reported financial results for the fourth quarter and
year ended December 31, 2007.
On December 31, 2007, the company completed the sale of its
wholly-owned subsidiary, Kaman Music Corporation, to Fender Musical
Instruments Corporation for approximately $120 million in cash. Kaman Music
comprised the company's entire Music segment, and the segment is classified
as a discontinued operation for all periods in the report that follows.
Net earnings from continuing operations for the fourth quarter of 2007
were $9.0 million, or $0.35 per share diluted, an increase of 33.3% for net
earnings and 29.6% for earnings per share diluted, over the $6.7 million,
or $0.27 per share diluted, reported for the fourth quarter of 2006. The
fourth quarter results for 2007 and 2006 include $0.8 million and $1.9
million, respectively, in pretax charges for the company's SH-2G(A)
helicopter program for Australia. Including discontinued operations in both
periods and a gain on the sale of discontinued operations of $11.5 million,
or $0.46 per share diluted, in the 2007 period, net earnings for the fourth
quarter of 2007 were $24.0 million, or $0.95 per share diluted, a 149.4%
increase in net earnings and a 143.6% increase in net earnings per share
diluted over the $9.6 million, or $0.39 per share diluted, reported for the
fourth quarter of 2006. Net sales from continuing operations for the fourth
quarter of 2007 increased 8.8% to $272.3 million, compared to $250.2
million reported for the fourth quarter of 2006.
For the full year 2007, the company reported net earnings from
continuing operations of $36.5 million, or $1.46 per share diluted, an
increase of 48.1% in net earnings and 44.6% in earnings per share diluted
over the $24.6 million or $1.01 per share diluted, reported in the 2006
period. The 2007 and 2006 full year results include $6.4 million and $9.7
million, respectively, in pretax charges for the Australia program.
Including discontinued operations in both periods and the gain on the sale
of discontinued operations in 2007, net earnings for 2007 were $55.9
million, or $2.23 per share diluted, a 75.9% increase in net earnings and a
71.5% increase in net earnings per share diluted over the $31.8 million, or
$1.30 per share earnings diluted, for the 2006 full year. Net sales from
continuing operations for 2007 were $1,086.0 million, a 9.5% increase over
the $991.4 million reported for 2006.
Neal J. Keating, president and chief executive officer, said, "Kaman
Corporation continued its momentum of the past three years with solid
performance in the fourth quarter and full year 2007. Results were driven
primarily by favorable conditions in many of our served markets, a range of
strong military and commercial programs in our aerospace business and
growth in our Industrial Distribution business as a result of the continued
success of our national account initiative. During 2007, Kaman made
significant progress from both a strategic and operational perspective. We
are experiencing significantly improved performance and commensurate
customer responsiveness resulting from the 2005 aerospace business
realignment and continued emphasis on Lean processes throughout the
organization. In addition, the sale of our music business enables us to
focus on our core aerospace and industrial distribution businesses going
forward while further strengthening an already strong balance sheet and
providing the financial capacity to execute on our strategic growth
objectives.
Keating continued, "Kaman's strength lies not only in the
diversification of our businesses across aerospace and industrial
distribution but in the mix of markets, technologies and customers we serve
through these businesses. In aerospace, our line-up includes mature,
high-margin, proprietary products that enjoy a market-leading position such
as those of our Specialty Bearings segment. We also benefit from businesses
that are earlier in their growth cycle, such as our Fuzing and
Aerostructures segments, and we are investing the time and resources to
address the needs of these businesses and move them up the curve as well.
In Industrial Distribution, our national accounts program has been
effective both in driving growth and increasing our penetration in
industries such as food & beverages that tend to be less cyclical. This
should provide a more stable business base in the event of a weakening
economy. For both aerospace and industrial distribution, we will focus on
acquisition opportunities that add scale, purchasing power and margin
improvement to our considerable internal assets. Finally, I would like to
recognize the many contributions Paul Kuhn has made during his tenure as
Chief Executive Officer. Paul has provided tremendous leadership to our
company through a significant transformation and his accomplishments have
built a sturdy foundation and great potential for the future. On behalf of
all the employees of Kaman Corporation I would like to thank him for his
tireless efforts and wish him well on his retirement."
Segment reports follow:
Aerostructures segment operating income for the fourth quarter of 2007
was $3.4 million, compared to $3.7 million for the fourth quarter of 2006.
Segment sales were $28.1 million in the fourth quarter of 2007, compared to
$23.3 million for the fourth quarter of 2006. Segment operating income for
the 2007 full year was $13.2 million, compared to $11.5 million for all of
2006. Segment sales were $102.4 million in 2007, compared to $78.7 million
for 2006. The growth in net sales for the fourth quarter and year 2007
compared to the same periods in 2006 was primarily due to higher production
levels and increased shipments to Sikorsky for the BLACK HAWK helicopter
program. The reduction in operating income for the fourth quarter of 2007
compared to the fourth quarter of 2006 was due to certain adverse
adjustments resulting from a rapid increase in manpower, production
inefficiencies and excess inventory at the Wichita facility experienced
during the ramp up of several new programs.
Fuzing segment operating income for the fourth quarter of 2007 was $1.3
million, compared to $0.9 million in the fourth quarter of 2006. Segment
sales were $22.9 million for the fourth quarter of 2007, compared to $15.1
million in the fourth quarter of 2006. Segment operating income for the
2007 full year was $10.5 million, compared to $7.8 million for 2006.
Segment sales were $87.5 million in 2007, compared to $71.1 million in
2006. The increase in sales for the fourth quarter of 2007 compared to the
fourth quarter of 2006 was due primarily to a higher sales volume in
40-millimeter fuzing and other segment products. The increase in sales for
the full year 2007 as compared to the full year 2006 was due primarily to
the higher volume of Joint Programmable Fuze (JPF) program shipments to
both U.S. and foreign militaries as well as greater shipments of
40-millimeter products. The increase in operating income for the fourth
quarter of 2007 compared to the fourth quarter of 2006 was driven by the
segment's traditional fuzing business and the increase in operating income
for the year was driven by a combination of increased JPF program and
40-millimeter sales. On December 31, 2007, the company sold the assets
related to the 40-millimeter product line, which had been identified as a
non-core asset.
Helicopters segment operating income for the fourth quarter of 2007 was
$1.6 million (including a $0.8 million pretax charge for the Australia
helicopter program), compared to $4.5 million (including a $1.9 million
pretax charge for the Australia program) for the fourth quarter of 2006.
Segment sales were $17.3 million for the fourth quarter of 2007 compared to
$27.8 million for the fourth quarter of 2006. Segment operating income for
the 2007 full year was $2.6 million (including $6.4 million in pretax
charges for the Australia program), compared to $0.2 million (including
$9.7 million in pretax charges for the Australia program) in 2006. Segment
sales were $72.0 million for the full year 2007, compared to $69.9 million
for the full year 2006. The decrease in sales and operating income for the
fourth quarter of 2007 was due to lower Australia program sales, a K-MAX
sale in the fourth quarter of 2006 that was not repeated in 2007, and lower
subcontract sales. The increase in sales for the year 2007 compared to the
year 2006 was due to a greater volume of work on the depot level
maintenance and upgrade program for the Egyptian SH-2G(E) aircraft, and the
Sikorsky BLACK HAWK helicopter program involving fuselage joining and
installation tasks along with various mechanical subassemblies. The
increase in operating income for the year 2007 compared to the year 2006
was due primarily to lower charges associated with the Australia program.
Specialty Bearings segment operating income for the fourth quarter of
2007 was $9.8 million, compared to $6.6 million in the fourth quarter of
2006. Segment sales were $29.8 million in the fourth quarter of 2007,
compared to $26.4 million in the fourth quarter of 2006. Segment operating
income for the 2007 full year was $41.4 million, compared to $28.6 million
for all of 2006. Segment sales were $124.0 million for 2007, compared to
$106.3 million for 2006. The segment delivered record sales and operating
income for the fourth quarter and full year 2007 periods compared to the
same periods of 2006, driven by higher product shipments to a wide range of
customers.
Collectively, the four Aerospace Segments generated operating income
for the fourth quarter of 2007 of $16.1 million, compared to $15.7 million
for the fourth quarter of 2006; and sales of $98.2 million and $92.6
million, respectively for the same periods. Full year operating income for
the four Aerospace Segments, collectively, was $67.8 million for 2007,
compared to $48.1 million in 2006, while sales were $385.9 million and
$326.0 million, respectively, for the same periods.
Industrial Distribution segment operating income for the fourth quarter
of 2007 was $7.0 million, compared to $6.5 million in the fourth quarter of
2006. Segment sales were $174.1 million in the fourth quarter of 2007,
compared to $157.6 million in the fourth quarter of 2006. Segment operating
income for the 2007 full year was $33.0 million, compared to $35.2 million
in 2006. Segment sales were $700.2 million in the 2007 full year, compared
to $665.4 million in 2006.
The segment generated record sales for the fourth consecutive year,
exceeding $700 million for the first time, with growth in the company's
national account business and continued strength in the energy and power
generation, mining, oil exploration, and food processing industries
offsetting weakness in housing-related industries. The decrease in
operating income for the full year 2007 compared to the full year 2006 is
attributed primarily to additional start up costs for new branch openings
and other implementation costs the company has incurred to establish
several new national account contracts along with higher operating expense
and personnel costs driven by the increased headcount necessary to support
the company's growing business base.
Discontinued Operations: Music segment operating results are reported
as discontinued operations for all periods presented. Operating income was
$5.5 million for the fourth quarter of 2007, compared to $4.9 million in
the fourth quarter of 2006, while sales were $58.7 million in both periods.
For the 2007 full year, operating income was $12.5 million, compared to
$11.6 million for 2006, while sales were $214.1 million compared to $214.7
million for 2006.
Please see the MD&A section of the company's SEC Form 10-K filed
concurrent with the issuance of this release for greater detail on the full
year financial results and various company programs.
A conference call to discuss this report has been scheduled for
tomorrow, February 29, 2008 at 11:00 AM ET. Listeners may access the call
live over the Internet through a link on the home page of the company's
website at http://www.kaman.com. In its discussion, management will include
certain non-GAAP measures related to company performance. A reconciliation
of this information to GAAP will be provided in the exhibits to the
conference call and will be available through the Internet link provided
above.
Forward-Looking Statements
This release may contain forward-looking information relating to the
company's business and prospects, including the Aerospace and Industrial
Distribution businesses, operating cash flow, and other matters that
involve a number of uncertainties that may cause actual results to differ
materially from expectations. Those uncertainties include, but are not
limited to: 1) the successful conclusion of competitions for government
programs and thereafter contract negotiations with government authorities,
both foreign and domestic; 2) political conditions in countries where the
company does or intends to do business; 3) standard government contract
provisions permitting renegotiation of terms and termination for the
convenience of the government; 4) domestic and foreign economic and
competitive conditions in markets served by the company, particularly the
defense, commercial aviation and industrial production markets; 5) risks
associated with successful implementation and ramp up of significant new
programs; 6) satisfactory completion of the Australian SH-2G(A) program,
including negotiation of payment and performance terms for the balance of
the program as well as any additional work scope requested by the
Commonwealth; 7) receipt and successful execution of production orders for
the JPF U.S. government contract, including the exercise of all contract
options and receipt of orders from allied militaries, as both have been
assumed in connection with goodwill impairment evaluations; 8) the
University of Arizona's continued failure to succeed in its appeals efforts
to overturn the jury verdict that rejected the University's breach of
contract claim against the company; 9) satisfactory resolution of the
company's contract dispute with the U.S. Army procurement agency relating
to the FMU-143 program; 10) continued support of the existing K-MAX
helicopter fleet, including sale of existing K-MAX spare parts inventory;
11) cost growth in connection with environmental remediation activities at
the Moosup and New Hartford, CT facilities and such potential activities at
the Bloomfield, CT facility; 12) profitable integration of acquired
businesses into the company's operations; 13) changes in supplier sales or
vendor incentive policies; 14) the effect of price increases or decreases;
15) pension plan assumptions and future contributions; 16) future levels of
indebtedness and capital expenditures; 17) continued availability of raw
materials in adequate supplies; 18) the effects of currency exchange rates
and foreign competition on future operations; 19) changes in laws and
regulations, taxes, interest rates, inflation rates, general business
conditions and other factors; and 20) other risks and uncertainties set
forth in the company's annual, quarterly and current reports, and proxy
statements. Any forward-looking information provided in this report should
be considered with these factors in mind. The company assumes no obligation
to update any forward-looking statements contained in this release.
A summary of segment information follows:
Summary of Segment Information
(In thousands)
For the Three Months Ended For the Twelve Months Ended
December 31, December 31,
2007 2006 2007 2006
Net sales:
Aerostructures $28,148 $23,320 $102,362 $78,742
Fuzing 22,889 15,082 87,455 71,068
Helicopters 17,328 27,774 72,031 69,914
Specialty Bearings 29,830 26,449 124,009 106,278
Subtotal
Aerospace
Segments 98,195 92,625 385,857 326,002
Industrial
Distribution 174,068 157,621 700,174 665,420
Net sales from
continuing
operations 272,263 250,246 1,086,031 991,422
Operating income:
Aerostructures $3,357 $3,717 $13,219 $11,538
Fuzing 1,314 873 10,546 7,750
Helicopters 1,617 4,521 2,631 222
Specialty Bearings 9,765 6,556 41,387 28,630
Subtotal
Aerospace
Segments 16,053 15,667 67,783 48,140
Industrial
Distribution 6,995 6,497 33,038 35,160
Net gain (loss) on
sale of assets 2,564 (12) 2,579 (52)
Corporate
expense (1) (9,675) (9,509) (38,672) (35,426)
Operating income
from continuing
operations 15,937 12,643 64,728 47,822
(1) "Corporate expense" increased for the quarter and twelve months ended
December 31, 2007 compared to the same periods of 2006, as shown
below:
For the Three Months Ended For the Twelve Months Ended
December 31, December 31,
(In thousands) 2007 2006 2007 2006
Corporate expenses
before breakout
items $(7,315) $(6,583) $(26,811) $(25,181)
Breakout items:
Stock appreciation
rights (137) (551) (1,374) (1,036)
Stock option
expense (231) (242) (1,528) (1,102)
Pension expense (96) (876) (385) (3,484)
Supplemental
employees'
retirement plan (1,503) (1,350) (6,014) (5,399)
Group insurance (393) 93 (2,560) 325
Legal -
recapitalization - - - 451
Corporate expense -
total $(9,675) $(9,509) $(38,672) $(35,426)
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands except per share amounts)
For the Three Months Ended For the Twelve Months Ended
December 31, December 31,
2007 2006 2007 2006
Net sales $272,263 $250,246 $1,086,031 $991,422
Cost of sales 197,520 181,503 785,086 719,999
Selling, general
and administrative
expense 61,370 56,088 238,796 223,549
Net (gain)/loss on
sale of assets (2,564) 12 (2,579) 52
256,326 237,603 1,021,303 943,600
Operating income
from continuing
operations 15,937 12,643 64,728 47,822
Interest expense,
net 1,464 1,662 6,336 6,244
Other expense, net 574 194 865 918
Earnings from
continuing
operations before
income taxes 13,899 10,787 57,527 40,660
Income tax expense (4,925) (4,054) (21,036) (16,017)
Net earnings from
continuing
operations 8,974 6,733 36,491 24,643
Earnings from
discontinued
operations, net of
taxes 3,536 2,909 7,890 7,143
Gain on disposal of
discontinued
operations, net of
taxes 11,538 - 11,538 -
Total earnings from
discontinued
operations 15,074 2,909 19,428 7,143
Net earnings $24,048 $9,642 $55,919 $31,786
Net earnings per
share:
Basic net
earnings per
share from
continuing
operations 0.37 0.28 1.50 1.02
Basic net
earnings per
share from
discontinued
operations 0.14 0.12 0.32 0.30
Basic net
earnings per
share from
disposal of
disco oper 0.47 - 0.47 -
Basic net
earnings per
share $0.98 $0.40 $2.29 $1.32
Diluted net
earnings per
share from
continuing
operations 0.35 0.27 1.46 1.01
Diluted net
earnings per
share from
discontinued
operations 0.14 0.12 0.31 0.29
Diluted net
earnings per
share from
disposal of
disco oper 0.46 - 0.46 -
Diluted net
earnings per
share $0.95 $0.39 $2.23 $1.30
Average shares
outstanding:
Basic 24,638 24,110 24,375 24,036
Diluted 25,393 24,917 25,261 24,869
Dividends declared
per share $0.140 $0.125 $0.530 $0.500
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
December 31, 2007 December 31, 2006
Assets:
Current assets:
Cash and cash equivalents $73,898 $12,720
Accounts receivable, net 158,435 163,163
Inventories 210,341 188,869
Deferred income taxes 28,724 24,687
Other current assets 20,231 16,385
Assets held for sale - 107,407
Total current assets 491,629 513,231
Property, plant and equipment, net 53,645 49,954
Goodwill and other intangible
assets, net 46,188 42,495
Deferred income taxes 3,594 16,797
Overfunded pension 30,486 -
Other assets, net 9,321 7,936
$634,863 $630,413
Liabilities and shareholders'
equity:
Current liabilities:
Notes payable $1 ,680 $-
Current portion of long-term debt - 1,551
Accounts payable - trade 74,236 77,263
Accrued salaries and wages 25,328 23,955
Accrued pension costs 14,202 2,862
Accrued contract losses 9,513 11,542
Advances on contracts 9,508 10,215
Other accruals and payables 36,162 39,649
Income taxes payable 12,002 8,787
Liabilities held for sale - 23,302
Total current liabilities 182,631 199,126
Long-term debt, excl. current
portion 11,194 72,872
Other long-term liabilities 46,512 61,854
Shareholders' equity 394,526 296,561
$634,863 $630,413
SOURCE Kaman Corp.
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Related links:
http://www.kaman.com
http://www.prnewswire.com/comp/480450.html /
CONTACT:
Russell H. Jones, SVP, Chief Investment
Officer & Treasurer of Kaman Corp., +1-860-243-6307, or
Russell.Jones@kaman.com
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