BLOOMFIELD, Conn., May 3 /PRNewswire-FirstCall/ -- Kaman Corp. (Nasdaq:
KAMN) today reported financial results for the first quarter ended March
30, 2007.
Net earnings for the first quarter of 2007 were $10.1 million, or $0.41
per share diluted, compared to $5.9 million, or $0.24 per share diluted, in
the first quarter of 2006. The first quarter results for both 2007 and 2006
include a $2.5 million pretax charge for the SH-2G(A) helicopter program
for Australia. The first quarter results for 2006 also include both
deductible and non-deductible expenses for stock appreciation rights,
partially offset by an adjustment to capitalize in-bound freight into
inventory in the Industrial Distribution segment. Net sales for the first
quarter of 2007 were $317.3 million, compared to $296.6 million in the
first quarter of 2006.
Paul R. Kuhn, chairman, president and chief executive officer, said,
"The progress we have been making continued in the quarter with sales for
the first quarter of 2007 up 7.0% and net earnings up 70.2% over the first
quarter of 2006. The principal thrust behind the strong performance for the
quarter was significantly improved performance in the Aerospace Segment,
driven by a strong market environment and the continued ramp-up of newer
programs."
Aerospace Segment sales for the first quarter of 2007 were $93.1
million, up 26.5% from the first quarter of 2006. Segment operating income,
including the $2.5 million pretax charge in both periods for the Australia
program, was $16.6 million for the first quarter of 2007, up 66.1% from $10
million in the first quarter of 2006 due to the newer programs and a
favorable product mix. The segment operates in four principal units:
Aerostructures, Fuzing, Helicopters, and Kamatics, including RWG. For the
first quarter of 2007 compared to the first quarter of 2006:
-- Aerostructures Division sales were $25.2 million, up 48.8% from $16.9
million in the previous year first quarter with both the Jacksonville
and Wichita facilities contributing to the increase. Three major
programs involving the Boeing C-17 military transport, the Sikorsky
BLACK HAWK helicopter, and the Boeing 777 commercial airliner continued
to perform well at Jacksonville. During the quarter, the Division
delivered 20 BLACK HAWK cockpits, compared to 12 cockpits in the year-
earlier period. Through 2006, orders for 110 cockpits were placed by
Sikorsky, all of which are expected to be completed by mid-2007 at the
current rate of production - and in February 2007, the division
received a follow-on order for an additional 176 cockpits. Production
of Boeing 777 subassemblies increased over the prior year quarter to a
rate of approximately seven shipsets per month, commensurate with the
increased build-rate for that aircraft. At Wichita, the Division
continued to ramp up a number of previously reported programs awarded
in 2006.
-- Fuzing Division sales were $18.5 million, down 2.8% from $19.0 million
in the previous year first quarter. The Division continued to work on
a variety of issues related to the JPF manufacturing process that have
resulted in periodic interruptions of program production. Management
believes significant progress has been made in diagnosing and
correcting technical issues, strengthening the reliability of the
supply chain, and improving material flow. These initiatives should
allow us to achieve desired increases in production rates.
-- Helicopters Division sales were $17.4 million, up 51.8% from $11.5
million in the previous year first quarter. The higher sales are a
result of a 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 and the
production of certain mechanical subassemblies. During the quarter,
the Division signed an agreement with Lockheed Martin Systems
Integration that will provide an opportunity for the parties to work
together to develop potential government programs involving the K-MAX
helicopter and the K-MAX-based BURRO Unmanned Resupply Helicopter
program. Work also continued toward completion of the 11 aircraft SH-
2G(A) program for Australia.
-- Kamatics Subsidiary sales, including RWG, were $32.0 million, up 22.2%
from $26.2 million in the previous year first quarter. The unit
achieved record sales and deliveries for the quarter, and ended the
quarter with a record backlog. The business is actively working toward
further penetration of both domestic and foreign markets. Sustained
focus on process improvement and development of operating efficiencies
allowed the company to manage its high level of order activity and
backlog as well as maintain delivery schedules during the quarter.
Industrial Distribution Segment sales for the first quarter of 2007
were $173.4 million, up 1.7% from the first quarter of 2006. Segment
operating income was $8.7 million in the first quarter of 2007, compared to
$10.8 million (which includes the previously mentioned one-time benefit of
$1.6 million) in the first quarter of 2006. The segment experienced a
modest sales increase in a less certain economic environment compared to
the prior year quarter. Despite the increase in sales, the segment
experienced a decrease in operating income because the sales increase was
not sufficient to cover increases in normal operating costs. During the
first quarter of 2007, the segment was advised that it had won two national
account competitions in addition to the two reported in the fourth quarter
of 2006. When fully implemented, two of these four new accounts would be
expected to be among the segment's largest.
Music Segment sales for the first quarter of 2007 were $50.8 million,
down 3.1% from the first quarter of 2006. Segment operating income was $1.6
million, up 24.9% from the first quarter of 2006 due to the Musicorp
consolidation and segment-wide cost control initiatives. The retail market
remained challenged as customers worked off the higher than expected
year-end inventories that remained following a less than robust holiday
selling season. As the quarter progressed, an unstable housing market,
rising interest rates, and a return to higher gas prices continued to
affect disposable income. Nevertheless, sales for several lines of
percussion products increased during the quarter. The climate for the Music
Segment is expected to remain uncertain for at least the next several
months.
The company held its annual meeting of shareholders on April 17, 2007.
At that meeting, shareholders re-elected two current directors, Eileen S.
Kraus and Richard J. Swift. Shareholders also ratified the company's
appointment of KPMG LLP as the company's independent registered public
accounting firm.
A conference call has been scheduled for tomorrow, May 4, 2007 at 11:00
AM EDT. 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. Please see the MD&A section of
the company's SEC Form 10-Q filed concurrent with the issuance of this
release for greater detail on the quarters' results and various company
programs.
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 the 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 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 millions)
For the Three Months Ended
March 30, 2007(1) March 31, 2006 (1)
Net sales:
Aerospace $93.1 $73.6
Industrial Distribution 173.4 170.6
Music 50.8 52.4
317.3 296.6
Operating income:
Aerospace 16.6 10.0
Industrial Distribution 8.7 10.8
Music 1.6 1.3
Corporate expense (2) (9.4) (10.4)
Operating income 17.5 11.7
Interest expense, net (1.5) (1.3)
Other expense, net - (0.3)
Earnings before income taxes $16.0 $10.1
(1) The company has a calendar year-end; however, its first three fiscal
quarters follow a 13-week convention, with each quarter ending on a
Friday. The first quarters of 2007 and 2006 ended on March 30, 2007
and March 31, 2006 respectively.
(2) "Corporate expense" decreased for the quarter ended March 30, 2007
compared to the first quarter of 2006, as shown below:
For the Three Months Ended
March 30, 2007 March 31, 2006
Corporate expense before breakout items $(6.3) $(7.2)
Breakout items:
Stock appreciation rights (0.2) (1.3)
Pension expense (0.1) (0.7)
Supplemental employees' retirement plan (1.5) (1.3)
Group insurance (1.3) 0.1
Corporate expense - total $(9.4) $(10.4)
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands except per share amounts)
For the Three Months Ended
March 30, 2007 March 31, 2006
Net sales $317,318 $296,637
Costs and expenses:
Cost of sales 228,189 215,292
Selling, general and
administrative expense 72,099 70,074
Net (gain) loss on sale of assets 42 (13)
Other operating income (532) (371)
Interest expense, net 1,518 1,258
Other expense (income), net (42) 260
301,274 286,500
Earnings before income taxes 16,044 10,137
Income tax expense (5,969) (4,217)
Net earnings $10,075 $5,920
Net earnings per share:
Basic $0.42 $0.25
Diluted $0.41 $0.24
Average shares outstanding:
Basic 24,140 23,937
Diluted 25,105 24,887
Dividends declared per share $0.125 $0.125
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
March 30, 2007 December 31, 2006
Assets
Current assets:
Cash and cash equivalents $9,930 $12,720
Accounts receivable, net 203,104 189,328
Inventories 231,823 231,350
Deferred income taxes 28,571 25,425
Other current assets 18,536 19,097
Total current assets 491,964 477,920
Property, plant and equipment, net 54,366 54,165
Goodwill 57,478 56,833
Other intangible assets, net 19,180 19,264
Deferred income taxes 15,791 14,000
Other, net 8,386 8,231
$647,165 $630,413
Liabilities and shareholders' equity
Current liabilities:
Notes payable $609 $-
Current portion of long-term debt 1,551 1,551
Accounts payable - trade 93,353 95,059
Accrued salaries and wages 17,094 26,129
Accrued pension costs 8,928 2,965
Accrued contract losses 10,486 11,542
Advances on contracts 9,575 10,215
Other accruals and payables 40,108 42,661
Income taxes payable 6,359 8,215
Total current liabilities 188,063 198,337
Long-term debt, excluding current portion 88,732 72,872
Other long-term liabilities 63,521 62,643
Shareholders' equity 306,849 296,561
$647,165 $630,413
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
For the Three Months Ended
March 30, 2007 March 31, 2006
Cash flows from operating activities:
Net earnings $10,075 $5,920
Depreciation and amortization 2,898 2,533
Change in allowance for doubtful accounts (773) (104)
Net (gain) loss on sale of assets 42 (13)
Stock compensation expense 539 1,639
Deferred income taxes (4,409) 814
Changes in assets and liabilities,
excluding effects of
acquisitions/divestitures:
Accounts receivable (13,043) (13,531)
Inventory (31) (5,048)
Other current assets 820 (1,160)
Accounts payable 4,186 (11,605)
Accrued contract losses (1,165) (3,225)
Advances on contracts (641) (3,542)
Accrued expenses and payables (11,843) (11,785)
Income taxes payable (1,186) (696)
Pension liabilities 1,266 3,126
Other long-term liabilities 5,642 1,403
Cash provided by (used in)
operating activities (7,623) (35,274)
Cash flows from investing activities:
Proceeds from sale of assets 41 24
Expenditures for property, plant &
equipment (2,948) (1,715)
Acquisition of businesses
including earn out adjustment (1,296) (53)
Other, net (580) (178)
Cash provided by (used in)
investing activities (4,783) (1,922)
Cash flows from financing activities:
Net borrowings (repayments) under
revolving credit agreements 18,019 40,305
Debt repayment (1,543) (1,665)
Net changes in book overdraft (5,857) 1,131
Proceeds from exercise of employee
stock plans 1,758 983
Dividends paid (3,018) (2,988)
Debt issuance costs (150) -
Windfall tax benefit 307 55
Other - (11)
Cash provided by (used in)
financing activities 9,516 37,810
Net increase (decrease) in cash and
cash equivalents (2,890) 614
Effect of exchange rate changes on cash
and cash equivalents 100 97
Cash and cash equivalents at beginning
of period 12,720 12,998
Cash and cash equivalents at end of period $9,930 $13,709
SOURCE Kaman Corp.
 back to top
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,
Russell.Jones@kaman.com
|
