BLOOMFIELD, Conn., March 1 /PRNewswire-FirstCall/ -- Kaman Corp.
(Nasdaq: KAMN) today reported financial results for its fourth quarter and
year ended December 31, 2006.
The company reported net earnings for the 2006 fourth quarter of $9.6
million, or $0.39 per share diluted, compared to $9.2 million, or $0.38 per
share diluted in the 2005 period. The 2006 fourth quarter results include
the negative effect of a $1.9 million pretax charge in the Aerospace
segment related to the company's SH-2G(A) helicopter program for Australia.
The 2005 fourth quarter results, on the other hand, include the positive
effect of $5.0 million in pretax income resulting from recoveries of
amounts that the company had written off in 2004 on programs with MD
Helicopters, Inc. (MDHI) and a $1.9 million reversal of vacation accruals
in the Industrial Distribution segment, offset by a $2.5 million pretax
charge related to the Australia helicopter program and $1.2 million in
non-deductible expenses for legal and financial advisory services related
to the successful recapitalization in 2005. The effective tax rate for the
2005 fourth quarter was 53.0 percent, due primarily to the non-deductible
recapitalization expenses and non- deductible stock appreciation rights
expense incurred earlier in 2005. The effective tax rate for the 2006
fourth quarter was at a more normal rate of 38.5 percent. Net sales for the
2006 fourth quarter were $308.9 million, compared to $288.5 million in the
2005 period.
For the 2006 full year, the company reported net earnings of $31.8
million, or $1.30 per share diluted, compared to net earnings of $13.0
million, or $0.57 per share diluted in 2005. Results for 2006 include $9.7
million in pretax charges in the Aerospace segment related to the Australia
helicopter program. Results for 2005 include $16.8 million in pretax
charges for the Australia helicopter program partially offset by a $6.8
million pretax benefit in the Aerospace segment arising from MDHI
recoveries. The 2005 results also include the impact of $8.3 million of
primarily nondeductible expenses for stock appreciation rights triggered by
a significant increase in the price of Kaman stock in 2005 and $3.3 million
of non-deductible recapitalization expenses. The non-deductible expenses
raised the effective 2005 tax rate to 54.8 percent, compared to an
effective 2006 tax rate of 39.2 percent. Net sales for the 2006 full year
were $1.2 billion, compared to $1.1 billion in 2005.
Paul R. Kuhn, chairman, president and CEO, said, "For Kaman, 2006 was a
strong year in several respects. Operationally, the company achieved record
sales and consolidated net earnings were up sharply. Our two largest
segments, Aerospace and Industrial Distribution, achieved record operating
income for the year. The Music segment achieved record sales for the year
due to a full year of performance from the acquisition of Musicorp but,
even so, sales were disappointing due to depressed consumer spending on
music products over the course of the year. Music segment operating income
declined for the year in part due to the effect of the soft market on the
overall business and, to a lesser extent, due to the incremental costs of
Musicorp, many of which have been or will be eliminated as Musicorp is
fully integrated into the segment. Strategically, each segment moved
forward in its markets securing new business relationships with top-level
customers and suppliers. Organizationally, we completed our first full year
since recapitalizing into a single class of voting stock, made good
appointments to augment segment leadership where necessary, and elected two
new members to the board of directors following a national search.
Financially, the company received affirmation of its Standard and Poor's
investment grade rating of BBB- (stable); and in January 2007, the company
expanded its revolving credit agreement for working capital support by $50
million to a total of $200 million. Much has changed at Kaman over the past
several years. As we continue the effort to bring our helicopter contract
with Australia and its long period of losses to an end, we are more focused
than ever on executing targeted internal and external growth strategies for
each of our businesses. We have excellent opportunities and the financial
flexibility to take advantage of those we wish to pursue."
Summary of Segment Information
(In millions)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
2006 2005 2006 2005
Net sales:
Aerospace $92.6 $75.6 $326.0 $288.0
Industrial Distribution 157.6 152.0 665.4 621.9
Music 58.7 60.9 214.8 191.3
308.9 288.5 1,206.2 1,101.2
Operating income:
Aerospace 15.7 16.4 48.1 33.3
Industrial Distribution 6.5 7.3 35.2 29.4
Music 4.9 5.2 11.6 13.0
Net gain (loss) on sale of
assets - - (.1) -
Corporate expense (1) (9.6) (8.3) (35.4) (42.9)
Operating income: 17.5 20.6 59.4 32.8
Interest expense, net (1.6) (1.1) (6.2) (3.0)
Other expense, net (.2) - (.9) (.9)
Earnings before income taxes $15.7 $19.5 $52.3 $28.9
(1) "Corporate Expense" increased for the three months ended December 31,
2006 and decreased for the twelve months ended December 31, 2006,
compared to the same periods of 2005, as shown below:
For the Three Months Ended For the Twelve Months Ended
December 31, December 31, December 31, December 31,
2006 2005 2006 2005
Corporate
expense before
other items $(4.0) $(3.9) $(16.8) $(16.5)
Other items:
Stock appreciation
rights (.6) .1 (1.0) (8.3)
Consulting/Legal -
Recapitalization - (1.2) .5 (3.3)
Pension expense (.9) (1.4) (3.5) (5.7)
Supplemental employee
retirement plan (1.4) (.7) (5.4) (3.0)
Long term incentive
plan (1.6) (.6) (4.4) (3.2)
Incentive
compensation (.9) (.6) (3.7) (2.9)
Stock option expense (.2) - (1.1) -
Corporate expense -
total $(9.6) $(8.3) $(35.4) $(42.9)
REPORT BY SEGMENT
Aerospace Segment
The Aerospace segment had fourth quarter operating income of $15.7
million, compared to operating income of $16.4 million a year ago. The 2006
fourth quarter results include a $1.9 million pretax charge related to the
SH- 2G(A) helicopter program for Australia. The 2005 fourth quarter results
include a net benefit of $5.0 million in pretax income resulting primarily
from recoveries of certain past due amounts that the company had written
off in 2004 on programs with MDHI, partially offset by a $2.5 million
pretax charge related to the Australia program. Segment sales for the 2006
fourth quarter were $92.6 million, compared to $75.6 million in the 2005
period.
For the 2006 full year, the segment had operating income of $48.1
million, compared to operating income of $33.3 million in 2005. The 2006
results include the impact of $9.7 million in pretax charges for the
Australia helicopter program. Results for 2005 include $16.8 million in
pretax charges for the Australia program partially offset by a $6.8 million
pretax benefit arising primarily from MDHI recoveries. Segment sales for
2006 were $326.0 million, compared to $288.0 million in 2005.
Mr. Kuhn said, "Before 2005, our Aerospace company was one in which
many of our activities were designed to support our prime helicopter
operations. Our costs were too high for competition in the global
subcontract market. In addition, the industry had gone through a
consolidation that we had not participated in, and therefore, in terms of
new business opportunities, we were on the sidelines looking in. Since
then, we have made significant changes. We realigned the segment into four
operating units to insulate most of the business from the greater prime
contractor overheads that all of the activities had previously shouldered,
and since then have considerably reduced those overheads, as well. We
upgraded our facilities. We targeted the opportunities having the best
overall margin potential and avoided other business, sometimes at the cost
of giving up things we had been doing for years. We put in place lean
initiatives throughout and are constantly striving to improve our
efficiencies and our processes. Our results are showing the benefit of
these changes. Our margins in the Aerospace segment have improved, our
business base is growing, and we have developed our reputation as a lower
cost, high quality domestic partner to the prime aerospace manufacturers.
"Both the commercial aircraft market and the military helicopter
market, two of our principal areas of focus, are strong and appear able to
remain so for some time. Our task now is to perform on those contracts we
already have, which will by themselves provide year-over-year growth for
our Kamatics bearing business and our Aerostructures business, and we must
be successful in taking advantage of other known opportunities we see
emerging. As this develops, we must still complete our helicopter contract
with Australia. We are close to completing all contractual requirements on
this long-delayed loss program, and yet we are currently talking with the
Australian government about scope changes and contract additions associated
with new certification requirements introduced by the customer. New work to
address the scope changes would be expected to take approximately
twenty-nine months to complete. Meanwhile, we await the decision of the
Australian Minister of Defence concerning continuation or cancellation of
the program. Our Fuzing division has been working through the technical
development and producability phases over the last several years to bring
its potentially largest program ever, the Joint Programmable Fuze (JPF), up
to a production level that can support the government's delivery
requirements. We think we are about there and anticipate sales and earnings
improvement in that division over time as a result."
Aerostructures Division:
The Aerostructures Division had net sales of $23.3 million in the
fourth quarter of 2006, compared to $14.0 million the previous year. Net
sales for the 2006 full year were $78.7 million, compared to $55.0 million
in the 2005 period.
The Aerostructures Division produces subcontract assemblies and detail
parts for commercial and military aircraft programs, including various
models of Boeing commercial airliners, the Boeing C-17 military transport,
the Sikorsky BLACK HAWK helicopter and several other programs. Operations
involving the use of metals are conducted principally at the company's
Jacksonville facility, while operations involving the use of composite
materials are conducted primarily at the company's PlasticFab facility in
Wichita.
At the Jacksonville facility, work continued on the production of
structural wing subassemblies for the C-17 at a rate of 15 shipsets per
year. This has been a good long-term program for Kaman that had been
scheduled to conclude in mid-2007 with the completion of the 180th
aircraft. Boeing has informed the company that the program will be
continued for a minimum of 22 additional shipsets, extending deliveries
through the end of 2008. The company also continued production of cockpits
for the Sikorsky BLACK HAWK helicopter, delivering 56 cockpits in 2006, and
Boeing 777 shipsets at a rate of approximately seven per month, reflecting
the positive sales trend for that aircraft.
At the division's Wichita facility, work continued on a multi-year
contract awarded by Spirit AeroSystems on April 1, 2006, for production of
the composite flight deck floor for the Boeing 787 Dreamliner. Work also
continued to bring previously announced orders on line from Sikorsky
Aircraft, involving MH-92 helicopters, and Shenyang Aircraft Corporation,
involving the Boeing 787 Dreamliner, while production continued on
commercial and military aircraft composite programs for Boeing, Bell
Helicopter, and others.
Fuzing Division:
The Fuzing Division net sales in the fourth quarter of 2006 were $15.1
million, compared to $16.6 million in the fourth quarter of 2005. In
September 2006, the company announced it was shifting management
responsibility for the company's Tucson-based Electro-Optics Development
Center (EODC) to the Fuzing Division, and consequently these net sales
figures include EODC net sales of $0.6 million and $1.5 million
respectively in the fourth quarters of 2006 and 2005. Net sales for the
2006 full year were $71.1 million, including $3.4 million from EODC,
compared to $64.1 million, including $5.7 million from EODC, in 2005.
Principal operations are conducted at the Middletown, Connecticut and
Orlando, Florida (Dayron) facilities.
The division manufactures safe, arm and fuzing devices with missile-
related programs generally performed at its facility in Middletown and
bomb- related programs generally performed at its Dayron facilities. In
addition, the company manufactures precision measuring and mass memory
systems for a range of military and commercial applications at its
Middletown facility.
The division has been working through a variety of issues related to
the JPF program manufacturing process, which may continue to result in
periodic interruptions of program production. The division continues to
work on strengthening the reliability of its supply chain, diagnosing and
correcting technical issues, and improving material flow on the JPF program
in order to meet production requirements. Management believes significant
progress has been made with respect to many of these issues. The current
total value of JPF contracts awarded by the U.S. government from inception
to date is $116.6 million, which includes the fourth quarter 2006 exercise
of Option 4. As the JPF product has continued to develop in the market, the
division is focused on further marketing the product to foreign militaries.
Management believes that foreign sales are an important element in the
ultimate success of the program.
In connection with the division's previously reported warranty rework
for the FMU-143 program, the division has not been permitted to finish the
work due to issues raised by the U.S. Army Sustainment Command (USASC), the
procurement agency that administers the FMU-143 contract, primarily related
to administrative matters and verification of the accuracy of test
equipment (which accuracy has been verified). On December 27, 2006, the
USASC notified the company that it was changing its remedy under the
warranty clause from rework of the non-conforming fuzes to an "equitable
adjustment" of the contract price in the amount of $6.9 million. The
company believes that the USASC is unjustified in attempting to make this
change and has responded to that effect to the USASC. The parties are
following the procedure established by the contract and if the USASC
determines that it will not accept rework of the fuzes, the company intends
to appeal the decision.
Generally, revenue on fuzing programs is recorded on delivery of the
product to the customer. Many Fuzing Division programs require fuzes to be
shipped in lots that take longer than three months to produce, and sales
for the various programs will vary based on the number of lots that are
delivered during a quarter. Therefore quarter-to-quarter comparisons will
not always be meaningful.
Helicopters Division:
The Helicopters Division had net sales of $27.8 million in the fourth
quarter of 2006, compared to $21.4 million in the 2005 period. Net sales
for the 2006 full year were $69.9 million, compared to $76.7 million in
2005. Full year results include the sale of the last available K-MAX
helicopter in 2006, and four such aircraft in 2005. Operations are
conducted primarily from the Bloomfield, Connecticut facilities. While the
Helicopters Division continues to market its SH-2G and K-MAX aircraft, its
focus has changed to bringing engineering and manufacturing support to the
other prime manufacturers in the industry.
During 2006, the division made significant progress toward completion
of the requirements of the 1997 production contract with the Commonwealth
of Australia by performing Formal Qualification Testing (FQT) of the
Integrated Tactical Avionics System (ITAS). During this time, the division
also worked with the Commonwealth to resolve previously reported flight
safety questions that resulted in grounding of the aircraft early in 2006,
and management believes that the cause of the safety concern has been
rectified. The Commonwealth also continued to develop additional work scope
related to its aircraft certification requirements, which would involve
development and testing of new software and hardware requirements for the
automatic flight control system. The division has provided a proposal to
perform the additional work, which could take up to approximately
twenty-nine months.
Meanwhile, the company awaits the result of a previously reported
review by the Commonwealth's Minister of Defence regarding the possibility
of pursuing an alternative to the Kaman program. The company believes that
its program is the most efficient and cost effective method to achieve the
Royal Australian Navy's operational needs. As of this writing, no decision
has been announced by the Minister.
While these activities are ongoing, in January 2007, the Commonwealth
also initiated the process that is provided for under the contract to
resolve disputes (which would begin with discussions between the parties
and could ultimately result in arbitration). The parties subsequently
agreed to stop that process and mutually waive, for the present, the
expiration of any statute of limitations periods that might be involved in
the dispute. The Commonwealth's principal assertions are that the
helicopters have not been delivered in a timely manner and the design of
the helicopter, particularly the automatic flight control system, is
inadequate from a safety perspective. Management believes that its
obligations to the Commonwealth under the program are being performed and
the design of the SH-2G(A) is safe and proper as demonstrated by the
significant operational history of this aircraft type with several
countries, including the United States. Management intends to continue its
efforts to work with the Commonwealth to develop a satisfactory path
forward to complete the SH-2G(A) program, which may include the additional
work discussed above.
The Helicopters Division began to perform subcontract work for Sikorsky
Aircraft Corporation in 2006, specifically related to fuselage joining and
installation tasks related to the BLACK HAWK helicopter as well as
providing certain mechanical subassemblies for Sikorsky. This exposure to a
new customer is creating the potential for additional business
opportunities for the division.
The division is also continuing work under a program to provide depot
level maintenance for SH-2G(E) helicopters delivered to the government of
Egypt during the 1990s. Through December 2006, the total estimated value of
the program was $7.3 million and the division had completed work on three
of the nine aircraft. Work on the fourth aircraft commenced in August and
it is anticipated that it will be completed in May 2007. In January 2007,
the division received authorization for $1.8 million for depot level
maintenance on the fifth aircraft.
In December 2006, the division sold its last available K-MAX helicopter
to Central Copters of Belgrade, Montana, for use in oil and gas
exploration.
Kamatics Subsidiary:
Kamatics (including RWG, the company's German bearing subsidiary)
generated net sales of $26.4 million in the fourth quarter of 2006,
compared to $23.6 million in the 2005 period. Kamatics net sales for the
2006 full year were a record $106.3 million, compared to $92.2 million in
2005. Operations are conducted at company facilities in Bloomfield,
Connecticut and Dachsbach, Germany.
Kamatics' proprietary self-lubricating bearings are currently in use in
almost all military and commercial aircraft produced in North and South
America and Europe, and are market-leading products for applications
requiring highly sophisticated engineering and specialization in the
airframe bearing market. Together with RWG's product range, solutions for
almost all types of applications can be offered.
Business conditions and product mix continued to be favorable for
Kamatics and RWG during the quarter. Sales were strong in all principal
market sectors served. While the strong market for commercial and military
aerospace business has created a positive climate for growth throughout the
industry, a meaningful contributor to Kamatics' growth has been the
company's emergence as an industry leader in overall delivery performance:
our "lean" transformation over the last several years has earned the
company a reputation for shorter lead-times and high on-time delivery
performance.
To accommodate anticipated growth, the company added 25,000 square feet
of plant space at the Bloomfield site during the fourth quarter,
representing an approximate 20 percent increase in production space, and
has an additional 10,000 square feet under construction for occupancy in
the second quarter of 2007.
Other Aerospace Matters:
The company has previously reported that it has made an offer to NAVAIR
and the General Services Administration to purchase the portion of the
Bloomfield facility that the company currently leases from NAVAIR. The
offer is valid through July 31, 2007 and is subject to negotiation of
mutually acceptable terms that include, in consideration for the transfer
of title, the company's assumption of responsibility for environmental
remediation at the facility as necessary to meet the requirements of state
law that will apply upon the transfer. In preparation for this, the company
is in discussions with the Connecticut Department of Environmental
Protection in order to define the scope of such remediation.
Industrial Distribution Segment
The Industrial Distribution segment had operating income for the fourth
quarter of 2006 of $6.5 million, compared to $7.3 million in the 2005
period. Results for the 2005 quarter include the benefit of a $1.9 million
reversal of vacation accruals. Net sales in the 2006 fourth quarter were
$157.6 million, compared to $152.0 million the previous year. For the full
year of 2006, the segment had record operating income of $35.2 million,
compared to $29.4 million in 2005. Net sales for 2006 were a record $665.4
million, compared to $621.9 million in the prior year.
Kaman is the third largest North American industrial distributor
serving the bearings, electrical/mechanical power transmission, fluid
power, motion control and materials handling markets. The segment offers
almost two million items, as well as value-added services, to a base of
more than 50,000 customers spanning nearly every sector of industry. The
segment is headquartered in Windsor, Connecticut, and operations are
conducted from approximately 200 locations in the U. S., Canada and Mexico.
In 2006, the segment won major new business with two prestigious,
nationally known companies. One of these new accounts is expected to become
one of the segment's largest. The segment also won renewal of all of its
major agreements that were expiring.
Mr. Kuhn said, "2006 was a year of record sales and operating profits
for the Industrial Distribution segment. The increase in sales for the year
was driven by strong organic growth in the business, as we won new national
accounts and expanded relationships with existing customers. The Industrial
Distribution segment is a scalable business that can leverage its
infrastructure to raise operating margins as sales increase. It is also a
business in which the three top players, including Kaman, are all adding
market share due to both consolidation in the ranks of distributors and the
inclination of the larger manufacturers to concentrate their purchases
through national account arrangements such as those we have been winning in
recent years. Winning new accounts leads to expansion of the segment's
geographic footprint. In 2006, new branches were opened in Austin, Texas;
Greenville, South Carolina; LaGrange, Georgia; and Topeka, Kansas, and
several are planned for 2007. In addition, the segment is working to expand
its product offerings, particularly in the field of fluid power. We are
confident that all of these things taken together, combined with our
continued pursuit of acquisition opportunities, will sustain the strong
performance of 2006 over the longer term."
Music Segment
The Music segment had fourth quarter operating income of $4.9 million,
compared to $5.2 million the previous year. Segment net sales for the 2006
fourth quarter were $58.7 million, including $15.2 million from the August
2005 acquisition of Musicorp, compared to $60.9 million, including $17.9
million from Musicorp in the fourth quarter of 2005.
For the 2006 full year, the segment had operating income of $11.6
million, compared to $13.0 million in the 2005 period. Net sales for the
2006 full year were $214.8 million, including $52.6 million from Musicorp,
compared to $191.3 million, including $28.7 million from Musicorp in 2005.
Kaman is the largest independent distributor of musical instruments and
accessories, offering more than 20,000 products for amateurs and
professionals. Headquartered in Bloomfield, Connecticut, distribution
operations are conducted from strategically placed warehouse facilities and
offices that cover the North American market.
Mr. Kuhn said, "High energy prices and a weakening housing market took
their toll on the Music industry in 2006, with two national retailers
filing for bankruptcy during the year. Despite that challenging
environment, we experienced a year of meaningful achievement as Kaman
continued to build the value of its Music business. During the year, we
completed the consolidation of the 2005 acquisition of Musicorp and
continued to reduce Musicorp operating expenses. In 2006, we converted our
distribution agreement with Sabian Cymbals into an exclusive distribution
contract, expanding an important product offering to proprietary brand
status and, on January 1, 2007, Elixir Strings selected Kaman as its
exclusive U.S. distributor. The added value that Kaman brings as the
largest independent distributor of musical instruments and accessories has
allowed us to secure these arrangements. The company has also used its
sophisticated, large-scale business systems to create a proprietary
software system link to our inventories for our customer base of several
thousand retailers ranging from the industry's largest national chains,
which require such systems, to the smallest neighborhood music stores,
which gain the benefit of greater efficiency. All of this should benefit
the company when the outlook for musical instrument sales improves."
Concluding Remark
Mr. Kuhn concluded, "We have come a long way in transforming Kaman
Corporation, and the future looks bright for continued growth. With our
recapitalization in late 2005 that took us from a dual class, nonvoting
structure to a single class of voting stock, and with the improving
financial performance that we are achieving, investor community interest in
the company has increased. We are working hard to sustain the momentum of
our recent successes, and I believe Kaman is well positioned to continue
building shareholder value in the years ahead."
A conference call has been scheduled for tomorrow, March 2, 2007 at
11:00 a.m. (EST). 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 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, Industrial
Distribution and Music 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
defense, commercial aviation, industrial production and consumer market for
music products; 5) satisfactory completion of the Australian
SH-2G(A)program, including resolution of the current contract dispute with
the Commonwealth; 6) 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; 7) in the
EODC/University of Arizona litigation, successful defeat of the
University's appeal of the jury verdict in the company's favor; 8)
satisfactory resolution of i) the company's dispute with the U.S. Army
procurement agency relating to warranty work for the FMU- 143 program and
ii) the 2005 DCIS investigation of that program; 9) satisfactory results of
negotiations with NAVAIR concerning purchase of the company's leased
facility in Bloomfield, Conn.; 10) continued support of the existing K-MAX
helicopter fleet, including sale of existing K-MAX spare parts inventory
and in 2007, availability of a redesigned clutch assembly system; 11) cost
growth in connection with environmental remediation activities at the
Moosup facility and such potential activities at the Bloomfield 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 release should be considered
with these factors in mind. The company assumes no obligation to update any
forward-looking statements contained in this release.
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands except per share amounts)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
2006 2005 2006 2005
Net Sales $308,940 $288,516 $1,206,154 $1,101,196
Costs and expenses:
Cost of sales 222,630 205,502 873,868 814,385
Selling, general and
administrative expense 69,485 63,004 275,110 256,241
Net (gain) loss on sale
of assets 16 (24) 52 27
Other operating income (701) (643) (2,253) (2,214)
Interest expense, net 1,643 1,134 6,179 3,046
Other expense, net 192 17 919 860
293,265 268,990 1,153,875 1,072,345
Earnings before income taxes 15,675 19,526 52,279 28,851
Income tax expense (6,033) (10,348) (20,493) (15,823)
Net earnings $9,642 $9,178 $31,786 $13,028
Net earnings per share:
Basic $.40 $.39 $1.32 $.57
Diluted $.39 $.38 $1.30 $.57
Average shares outstanding:(1)
Basic 24,110 23,641 24,036 23,038
Diluted 24,917 24,575 24,869 23,969
Dividends declared per share $.125 $.125 $.50 $.485
(1) Average shares outstanding for the three and twelve months ended
December 31, 2006 increased from prior year principally due to the
completion of the recapitalization on November 3, 2005.
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
December 31, 2006 December 31, 2005
Assets
Current assets:
Cash and cash equivalents $12,720 $12,998
Accounts receivable, net 189,328 176,285
Inventories 231,350 220,714
Deferred income taxes 25,425 31,652
Other current assets 19,097 17,159
Total current assets 477,920 458,808
Property, plant and equipment, net 54,165 51,592
Goodwill 56,833 54,693
Other intangible assets, net 19,264 19,836
Deferred income taxes 14,000 7,908
Other, net 8,231 5,660
$630,413 $598,497
Liabilities and shareholders' equity
Current liabilities:
Notes payable $ - $915
Current portion of long-term debt 1,551 1,660
Accounts payable - trade 95,059 94,716
Accrued pension costs 2,965 13,150
Accrued contract losses 11,542 19,950
Other accrued liabilities 40,231 41,077
Advances on contracts 10,215 14,513
Other current liabilities 28,559 30,872
Income taxes payable 8,215 6,423
Total current liabilities 198,337 223,276
Long-term debt, excluding current portion 72,872 62,235
Other long-term liabilities 62,643 43,232
Shareholders' equity 296,561 269,754
$630,413 $598,497
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
For the Twelve Months
Ended December 31,
2006 2005
Cash flows from operating activities:
Net earnings $31,786 $13,028
Depreciation and amortization 10,472 9,555
Provision (recovery) for losses on accounts
receivable (47) (2,120)
Net (gain) loss on sale of assets 52 27
Deferred income taxes (243) 3,183
Other, net 22,717 4,086
Changes in current assets and liabilities,
excluding effects of acquisitions:
Accounts receivable (12,624) 20,487
Inventory (10,280) (9,825)
Accounts payable (7,041) 10,986
Accrued contract losses (8,429) (17,550)
Advances on contracts (4,298) (2,208)
Changes in other current assets and
liabilities (16,546) 9,467
Income taxes payable 1,300 3,660
Cash provided by (used in) operating
activities 6,819 42,776
Cash flows from investing activities:
Proceeds from sale of assets 545 346
Expenditures for property, plant & equipment (13,219) (9,866)
Acquisition of businesses, less cash acquired (1,341) (31,875)
Other, net (1,675) 788
Cash provided by (used in)
investing activities (15,690) (40,607)
Cash flows from financing activities:
Changes to notes payable (915) (6,341)
Changes in book overdraft 7,264 1,912
Changes in debt 10,528 27,745
Recapitalization - (13,892)
Proceeds from exercise of employee stock
plans 3,238 585
Dividends paid (12,002) (10,747)
Debt issuance costs - (824)
Other 283 -
Cash provided by (used in) financing
activities 8,396 (1,562)
Net increase (decrease) in cash and cash
equivalents (475) 607
Effect of exchange rate changes on cash and
cash equivalents 197 22
Cash and cash equivalents at beginning of
period 12,998 12,369
Cash and cash equivalents at end of period $12,720 $12,998
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, 1-860-243-6307, rhj-corp@kaman.com
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