BLOOMFIELD, Conn., Sept. 29 /PRNewswire-FirstCall/ -- Kaman Corp.
(Nasdaq: KAMNA) announced today that based on current information it expects
to report a loss in the range of $0.20 to $0.26 per share for the third
quarter ending September 30, 2005 primarily as a result of approximately $5.0
million, or $0.22 per share, in additional expenses related to market-driven
stock appreciation rights in the quarter that are predominately non tax-
deductible; and approximately $9.0 to $11.0 million, or $0.25 to $0.31 per
share of additional loss accruals associated with final completion of the
Australian SH-2G(A) helicopter program.
Operating results for each of the segments have continued to reflect the
relatively good conditions in the markets served by the company. The company
said, however, that as a result of a more than 30 percent increase in the
price of the company's shares since the end of the second quarter of 2005, it
has incurred additional expense related to stock appreciation rights. Due to
the non-deductibility of most of this expense, the tax rate for 2005 is
expected to be slightly over 65% for the year. Stock appreciation rights are
driven by changes in the market value of Kaman shares and were granted to
certain principal executives of the company from 1997 to 2003 as a long-term
incentive to enhance the value of shareholders' interests in the company.
Since a majority of these rights have now been exercised and no new stock
appreciation rights have been awarded since early 2003, the impact of future
changes in the stock price will have a diminished effect on earnings in future
periods: each dollar of increase in the price of Kaman shares from $23.00 will
be expected to result in approximately $250 thousand of expense while the
remaining rights are unexercised, and moderate decreases in the price of the
shares would result in a proportionate decrease in expense.
The company said that the charge taken against the SH-2G(A) helicopter
program for Australia is due to higher than anticipated costs associated with
final completion of the program. While significant progress has been made by
Northrop Grumman and CSC Australia on the development and testing of the
software for the aircrafts' Integrated Tactical Avionics System (ITAS), the
time and effort required to complete that complex process has been greater
than expected. The Australian Government has funded certain additions to the
testing protocol that will also extend the schedule. Production of the 11 SH-
2G(A)s for the Royal Australian Navy is essentially complete and nine of the
aircraft have been provisionally accepted by the Navy. Provisional acceptance
of the tenth aircraft is expected shortly, and delivery of the first fully
operational aircraft along with final acceptance by the customer is now
targeted to occur in the first quarter of 2006.
Kaman Corp. conducts business in the aerospace, industrial distribution
and music markets.
Forward-Looking Statements
This press 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, the benefits of the
recapitalization transaction, 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) economic
and competitive conditions in markets served by the company, particularly
defense, commercial aviation, industrial production and consumer market for
music products, as well as global economic conditions; 5) satisfactory
completion of the Australian SH-2G(A)program, including successful completion
and integration of the full ITAS software; 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) satisfactory resolution of the EODC/University of Arizona litigation; 8)
achievement of enhanced business base in the Aerospace segment in order to
better absorb overhead and general and administrative expenses, including
successful execution of the contract with Sikorsky for the BLACK HAWK
Helicopter program; 9) satisfactory results of negotiations with NAVAIR
concerning the company's leased facility in Bloomfield, Conn.; 10) profitable
integration of acquired businesses into the company 's operations; 11) changes
in supplier sales or vendor incentive policies; 12) the effect of price
increases or decreases; 13) pension plan assumptions and future contributions;
14) continued availability of raw materials in adequate supplies; 15)
satisfactory resolution of the supplier switch and incorrect part issues at
Dayron and the DCIS investigation; 16) cost growth in connection with
potential environmental remediation activities related to the Bloomfield and
Moosup facilities; 17) whether the proposed recapitalization is completed; 18)
risks associated with the course of litigation; 19) changes in laws and
regulations, taxes, interest rates, inflation rates, general business
conditions and other factors; 20) the effects of currency exchange rates and
foreign competition on future operations; and 21) 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 press release should be considered with these factors in mind. The
company assumes no obligation to update any forward-looking statements
contained in this press release.
On August 18, 2005, Kaman filed with the Securities and Exchange
Commission a Registration Statement on Form S-4, which has since been declared
effective by the Securities and Exchange Commission. The Registration
Statement on Form S-4 contains a proxy statement/prospectus, which describes
the proposed recapitalization. STOCKHOLDERS OF KAMAN ARE ADVISED TO READ THE
PROXY STATEMENT/PROSPECTUS, BECAUSE IT CONTAINS IMPORTANT INFORMATION. Such
proxy statement/prospectus and other relevant documents may be obtained, free
of charge, on the Securities and Exchange Commission's website
(http://www.sec.gov) or from Kaman by contacting Russell H. Jones, SVP, Chief
Investment Officer & Treasurer, by telephone at (860) 243-6307 or by email at
rhj-corp@kaman.com.
Kaman and certain persons may be deemed to be participants in the
solicitation of proxies relating to the proposed recapitalization. The
participants in such solicitation may include Kaman's executive officers and
directors. Further information regarding persons who may be deemed
participants is available in Kaman's proxy statement/prospectus.
SOURCE Kaman Corp.
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Related links:
http://www.kaman.com
Company News On-Call:
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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