BLOOMFIELD, Conn., Oct. 28 /PRNewswire-FirstCall/ -- Kaman Corp.
(Nasdaq: KAMNA) today reported financial results for the third quarter and
nine months ended September 30, 2005.
The company reported a net loss for the 2005 third quarter of $3.6
million, or $0.16 loss per share diluted, compared to a net loss of $11.8
million, or $0.52 loss per share diluted in the 2004 period. Net sales for
the 2005 third quarter rose 12.9% to $278.1 million, compared to $246.3
million in the 2004 period.
Paul R. Kuhn, chairman, president and CEO, said, "Although we reported a
loss for the quarter, each segment of the company continued to compete
successfully in its markets and execute on its strategies. The loss is
primarily attributable to three previously reported factors: 1) an increase
in the price of Kaman shares that triggered $4.4 million, or $0.19 per share,
of nondeductible expenses for stock appreciation rights; 2) the
recapitalization proposal providing all shareholders a vote, approved by
shareholders on October 11, 2005, along with the Mason Capital litigation,
resulted in $1.1 million, or $0.05 per share, in additional nondeductible
expenses for legal and financial advisory fees; and 3) a long-delayed program
of the company's Helicopters Division for the government of Australia required
an additional pretax charge of $11.0 million, or $0.31 per share after tax, as
the project continues to move toward completion." Each of these factors is
discussed below.
On September 29, 2005, the company issued an advisory on third quarter
earnings in order to provide information concerning the charges related to the
stock appreciation rights and to the Australia program prior to the October 11
shareholder meetings. At that time, management anticipated a loss in the
range of $0.20 to $0.26 per share for the third quarter as compared to the
$0.16 per share loss reported. While the charge for the Australia program
came in at the higher end of the estimated range, the charge for stock
appreciation rights was lower, based on the actual closing price of the shares
at the end of the quarter. In addition, actual results for the Aerospace
segment, including all of the factors described in the segment discussion that
follows, were greater and certain corporate expenses were lower than had been
projected at the time of the advisory.
For the 2004 period, the third quarter loss was primarily attributable to
events in the Aerospace segment, including a non-cash sales and pre-tax
earnings charge of $20.1 million, or $0.58 per share, (includes an $18.2
million negative sales adjustment for recoverable costs-not billed and a $1.9
million addition to the company's bad debt reserve for billed receivables)
that eliminated the company's investment in contracts with MD Helicopters,
Inc. (MDHI). Also included in the 2004 third quarter results were $2.0
million, or $0.06 per share, in severance costs associated with realignment of
the segment's management team, and approximately $1.6 million, or $0.05 per
share, in accrued contract costs associated with the Australia helicopter
program.
As a result of a 13 percent increase in the price of the company's shares
of Class A Common stock during the third quarter of 2005, the company 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 approximately 59 percent for the year. Stock appreciation rights
expense is driven by changes in the market value of shares of the company's
Class A Common stock. These rights 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, and since a
majority of the rights have now been exercised and no new rights have been
awarded since early 2003, changes in the stock price will have a diminished
effect on earnings in future periods.
Northrop Grumman and Computer Sciences Corporation continued to make
progress toward the completion of the Integrated Tactical Avionics System
(ITAS) software integration for the SH-2G(A) helicopter program for Australia
and in August 2005, commenced software testing procedures in preparation for
final quality acceptance. Based upon the recent results of this testing,
management has determined that additional work is required prior to entering a
final qualification phase that will conclude the complex software acceptance
process. As a result of this additional work, along with continued work on
the software integration task, the company recorded an $11.0 million pretax
charge in the third quarter of 2005. 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
customer. The tenth aircraft, which is essentially complete, is currently
expected to be submitted for provisional acceptance in the fourth quarter of
2005. Delivery of the first fully operational aircraft complete with the ITAS
software is now targeted to occur in the first quarter of 2006.
On October 11, 2005, the company's proposed recapitalization was approved
by holders of its Class A and Class B common stock, each voting separately as
a class, and holders of its Class B common stock also approved an amendment to
the company's certificate of incorporation that is intended to enhance the
ability of the board of directors to take actions in the longer-term interests
of the company and its shareholders. As previously announced, on September
19, 2005, Mason Capital, Ltd. brought a lawsuit in federal district court in
New Haven, Connecticut against the company and members of the Kaman family
seeking, among other relief, to enjoin the proposed recapitalization unless
and until the proposed recapitalization is approved by two "super-majority
votes," one vote of 80 percent of the holders of the company's Class B common
stock, and a second, separate vote of two-thirds of the disinterested holders
of the company's Class B common stock. A hearing on the issues was held on
October 7, 2005, with further submissions to the court provided thereafter.
The company has agreed to wait to close the recapitalization until the court
issues a decision in the matter and the other certificate of incorporation
amendment proposal will not be implemented unless the recapitalization is
effected.
For the nine-month period of 2005, the company reported net earnings of
$3.9 million, or $0.17 per share diluted, compared to a net loss of $12.3
million, or $0.54 loss per share diluted in the 2004 period. In addition to
the $20.1 million charge for the MDHI program and other items listed above,
the 2004 nine-month results include a second quarter $7.1 million non-cash
adjustment to the company's Boeing Harbour Pointe parts and subassemblies
contract. Nine-month net sales for 2005 were $812.7 million, compared to
$739.0 million a year ago, an increase of 10.0%.
On August 5, 2005, the company replaced its previous five-year, $150
million revolving credit facility with a new $150 million revolving credit
facility expiring August 4, 2010, with Bank of America and the Bank of Nova
Scotia as Co-Lead Arrangers and Administrators, JPMorgan Chase Bank as
Syndication Agent, Key Bank as Documentation Agent, and with Citibank and
Webster Bank as additional participants. The new facility includes an
"accordion" feature that provides the company the opportunity to request an
expansion of up to $50 million in the size of the facility. Standard & Poor's
assigned the new facility an investment grade rating of BBB-.
Summary of Segment Information
(In millions)
For the Three Months Ended For the Nine Months Ended
September 30, October 1, September 30, October 1,
2005(1) 2004(1)(2) 2005(1) 2004(1)(2)
Net sales:
Aerospace $70.6 $54.6 $212.4 $180.9
Industrial
Distribution 156.5 149.3 469.9 440.2
Music 51.0 42.4 130.4 117.9
278.1 246.3 812.7 739.0
Operating income (loss):
Aerospace (.3) (14.8) 16.8 (15.4)
Industrial
Distribution 5.2 5.5 22.1 16.3
Music 3.4 3.5 7.8 6.8
Net gain (loss)
on sale of assets (.2) - - .2
Corporate expense(3) (12.5) (6.9) (34.6) (19.2)
Operating income (loss) (4.4) (12.7) 12.1 (11.3)
Interest expense, net (.6) (.9) (1.9) (2.6)
Other expense, net (.1) (.1) (.9) (.8)
Earnings (loss)
before income taxes $(5.1) $(13.7) $9.3 $(14.7)
(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 third quarter for 2005 and 2004 ended on September 30,
2005 and October 1, 2004, respectively.
(2) As reported in the 2004 Form 10-K, the company has restated its
statement of operations for the third quarter of 2004. The loss per
share diluted for the three months ended October 1, 2004 remained the
same, while the adjustment reduced the loss per share diluted for the
nine months ended October 1, 2004 by $0.01 from a loss of $0.55
originally reported to $0.54.
(3) "Corporate Expense" increased for the quarter and nine months ended
September 30, 2005, compared to the same periods of 2004, as shown
below:
For the Three Months Ended For the Nine Months Ended
September 30, October 1, September 30, October 1,
2005 2004 2005 2004
Corporate expense
before other items $(5.8) $(4.8) $(18.6) $(15.4)
Other items:
Stock appreciation
rights (4.4) .4 (8.4) -
Long term
incentive
plan (.4) - (2.5) -
Supplemental
retirement plan (.8) (2.5) (2.2) (3.6)
Consulting --
recapitalization (1.1) - (2.1) (.2)
Moosup plant
closure - - (.8) -
Corporate expense
-- total $(12.5) $(6.9) $(34.6) $(19.2)
REPORT BY SEGMENT
Aerospace Segment
The Aerospace segment had a third quarter operating loss of $0.3 million,
compared to an operating loss of $14.8 million a year ago. The third quarter
2005 operating loss is primarily attributed to an $11.0 million pretax charge
taken against the SH-2G(A) helicopter program for Australia due to higher than
anticipated costs associated with completion of the program. The loss in the
year-ago period is primarily attributable to a $20.1 million non-cash sales
and pre-tax earnings charge for its MDHI contracts. Sales for the third
quarter of 2005 were $70.6 million compared to $54.6 million, net of an $18.2
million negative sales adjustment for the MDHI program, for the third quarter
of 2004. Third quarter results for 2005 and 2004 include $0.6 million and
$0.9 million respectively in idle facility costs, primarily associated with
the Helicopters Division.
Third quarter 2005 operating profits include $1.4 million received from
MDHI, which was recently acquired and recapitalized. This amount is primarily
a payment on certain past due amounts that the company wrote off during the
third quarter of 2004, and includes a small amount of sales activity during
the quarter. The company and MDHI are currently working toward re-
establishing a business relationship.
For the 2005 nine-month period, the segment had an operating profit of
$16.8 million, compared to an operating loss of $15.4 million in the 2004
period as a result of the MDHI charge and a $7.1 million adjustment in the
second quarter of 2004 for the Boeing Harbour Pointe contract. Sales for the
2005 nine-month period were $212.4 million, compared to $180.9 million in the
2004 period. Nine-month results for 2005 and 2004 include $2.0 million and
$2.5 million respectively in idle facility costs.
Mr. Kuhn said, "The Aerospace segment continued to make progress in the
third quarter of 2005, with the Aerostructures Division performing on its
subcontract to build Sikorsky BLACK HAWK helicopter cockpits, the Fuzing
Division continuing the work of bringing the JPF product on line, the
Helicopters Division signing on new business and Kamatics continuing to grow
and deliver record results. Fortunately the Boeing strike was settled quickly
and there was no significant impact on the segment. We are still far from
optimal potential for this segment, having capacity to take on significantly
more new work, needing to bring the JPF program along to higher levels of
production, and needing to achieve final completion on the helicopter program
for Australia. The reorganization of the segment undertaken in 2004 has
provided meaningful enhancement to management visibility and accountability,
and has been an important enabler of the progress we are making in this
segment. I am becoming encouraged by the early results of these efforts."
Quarterly sales for 2005 and 2004 are given net of intercompany
eliminations for each of the segment's business units, excluding the Electro-
Optics Development Center, as follows.
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Year
Business Unit 2005 2004 2005 2004 2005 2004 2004 2004
Aerostructures $12.9 $10.7 $13.4 $11.0 $14.7 $10.4 $13.3 $45.4
Fuzing 12.8 9.0 15.0 16.2 15.5 10.9 20.7 56.8
Helicopters 15.2 18.0 23.3 18.4 16.8 10.6 20.0 67.0
Kamatics/RWG 23.0 19.8 22.8 18.6 22.8 19.7 19.0 77.1
Aerostructures Division:
The Aerostructures Division had net sales of $14.7 million in the third
quarter of 2005, compared to $10.4 million the previous year. Net sales for
the nine-month period were $41.0 million, compared to $32.1 million in the
2004 period.
The Aerostructures Division produces subcontract assemblies and detail
parts for commercial and military aircraft programs, including several models
of Boeing commercial airliners, the C-17 military transport, which remained
the division's largest program for the quarter, and the Sikorsky BLACK HAWK
helicopter. Operations are conducted from the Jacksonville, Florida and
Wichita, Kansas facilities.
Operations at the Jacksonville facility continued to improve in the third
quarter with progress on manufacturing throughput and efficiencies and good
early results from the division's contract to manufacture cockpits for four
models of the Sikorsky BLACK HAWK helicopter. As previously reported, the
initial contract, awarded in the third quarter of 2004, covers 80 cockpits for
production through 2006, and has a value of $26.4 million. Follow-on options,
if fully exercised, would bring the total potential value to Kaman to
approximately $100.0 million and would include the fabrication of
approximately 349 cockpits. Delivery of cockpits to Sikorsky began in April
2005. Ten cockpits have been delivered as of September 30, 2005, which is in
keeping with the customer's present scheduling requirements.
On June 29, 2005, the company notified its two affected customers of a
non-conforming part that may have an impact on certain aircraft panels
manufactured by the Aerostructures facility in Wichita, Kansas, beginning in
September 2002. The company's management concluded that it was probable that
the division will incur costs to manufacture replacement panels and as a
result recorded a charge of $0.4 million during the second quarter of 2005.
During the third quarter, the company received notification from the two
customers indicating that the discrepant panels would have to be replaced. As
a result of this notification, the company has recorded an additional $0.6
million charge in anticipation of incurring its estimated share of certain
costs to replace and install the panels on certain aircraft. Management is
working with its customers to resolve this issue in a mutually satisfactory
manner.
Fuzing Division:
The Fuzing Division had net sales in the third quarter of $15.5 million,
compared to $10.9 million a year ago. Net sales for the 2005 nine-month
period were $43.3 million, compared to $36.1 million a year ago. Principal
operations are conducted at the Middletown, Connecticut and Orlando, Florida
(Dayron) facilities.
The division manufactures safe, arm and fuzing devices for major missile
and bomb programs as well as precision measuring and mass memory systems for
commercial and military applications. Principal customers include the U.S.
militaries, General Dynamics, Raytheon, Lockheed Martin and Boeing.
The division continued to work on two warranty-related issues at the
Dayron operation that had been previously reported. During the third quarter
of 2005, the division received notification from the customer that it was
released from liability associated with certain lots of fuzes. As a result,
the company reversed approximately $1.1 million of warranty reserves related
to this matter.
Also during the quarter, ramp-up continued at the Dayron facility toward
full production on the division's contract with the U.S. Air Force for the
advanced FMU-152A/B Joint Programmable Fuze). As previously reported, the
contract has a potential value of $168.7 million if all options for future
years' production are exercised. Releases received to date under this
contract total approximately $38.1 million. As deliveries to the U. S.
military increase under the contract, management expects that efficiencies
will also increase and that the overall program will be profitable, with
further enhancement as orders are received from allied militaries. The
division received its first small initial order from a foreign military early
in July 2005.
Helicopters Division:
The Helicopters Division had net sales of $16.8 million in the third
quarter of 2005, compared to $10.6 million in the 2004 period. Net sales for
the first nine months of 2005 were $55.3 million, compared to $47.0 million in
the 2004 nine-month period. Operations are conducted primarily from the
Bloomfield, Connecticut facilities.
The division supports and markets Kaman SH-2G maritime helicopters
operating with foreign militaries, and K-MAX "aerial truck" helicopters
operating with government and commercial customers in several countries. The
division also has other small manufacturing programs such as fuel booms for
the MH-47 and markets its helicopter engineering expertise on a subcontract
basis.
SH-2G helicopters are operating with the governments of Egypt, New
Zealand, and Poland. The division is currently performing a standard depot
level maintenance program for aircraft delivered to Egypt in 1998. Work on
the first of nine aircraft has been completed, and work on the second aircraft
is underway at the Bloomfield facility. The company has a $5.3 million
contract covering maintenance work on the first two aircraft plus an option
for the next two. The company is in discussions with the Egyptian government
concerning a maintenance program covering the remaining helicopters and
various requested upgrades to the aircraft.
As of September 30, 2005, the company has a remaining accrued contract
loss for the Australian SH-2G(A) program of $20.2 million, which includes
$11.0 million recorded in the third quarter of 2005 primarily due to further
testing to be performed on the ITAS software. Pending completion of the
testing and final acceptance by the customer, delivery of the first fully
operational aircraft is now targeted for the first quarter of 2006.
On September 29, 2005 the division received a $6.4 million contract from
Sikorsky Aircraft Corp. to assemble mechanical fuselage subassemblies for
various models of Sikorsky helicopters, including the UH-60 BLACK HAWK and S-
76 models. The program contains nearly 400 different components, with
subassembly deliveries scheduled to start in October 2005 and continuing
through December 2006. All work will be performed at the Bloomfield facility.
In July 2005, the company was awarded a $1.1 million contract for the
forward air stair door on the new U.S. Presidential helicopter. In early
October, the company also received the go-ahead to begin engineering studies
for design and development of another door on the aircraft.
During the third quarter, the company continued to work with the U.S.
Naval Air Systems Command (NAVAIR) and the General Services Administration
toward establishing a purchase price for that portion of the Bloomfield
complex that the company currently leases from NAVAIR. The company has
submitted an offer to NAVAIR and the General Services Administration detailing
a proposed method that would be used to calculate the purchase price for the
facility, which would include the company undertaking certain environmental
remediation activities that may be legally required in the event of a sale of
the property. Recently, as part of the remediation activities undertaken by
NAVAIR, the U.S. Navy funded a soils excavation and removal project that is
nearing completion. The company also continues to work with government and
environmental authorities to prepare the closed Moosup, Connecticut facility
for eventual sale.
Kamatics Subsidiary:
Kamatics (including RWG, the company's German aircraft bearing
manufacturing arm) generated net sales of $22.8 million in the third quarter
of 2005, compared to $19.7 million in the comparable 2004 period. Kamatics
net sales for the first nine months of 2005 were $68.6 million, compared to
$58.1 million in the 2004 period. 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
the highest level of engineering and specialization in the airframe bearing
market. Order activity from both Airbus and Boeing continued to be strong in
the third quarter, as it was from other customers in both the commercial and
military sectors. As order levels increased, the subsidiary was able to
increase production levels while maintaining delivery schedules, leading to
additional sales opportunities and further penetration of the market.
Other Aerospace Matters:
As previously reported, the company filed suit against the University of
Arizona in September 2004 to recover the $6.3 million in costs that were
incurred as a result of what management believes was a change in the scope of
work under a $12.8 million fixed-price contract between the University and the
Electro-Optics Development Center operation of the Kaman Aerospace company.
The University subsequently filed a counter-claim and the discovery element of
the litigation has been in process. In late October 2005, the University
filed a motion for partial summary judgment in the case, seeking to eliminate
the "breach of contract" element of the company's claim. The company is now
in the process of preparing its response to the court.
Industrial Distribution Segment
Net sales for the Industrial Distribution segment in the 2005 third
quarter were $156.5 million, compared to $149.3 million in the 2004 period.
The segment had operating profits of $5.2 million in the third quarter of
2005, compared to $5.5 million in the 2004 period. Supplier incentives in the
form of volume purchase rebates were $0.9 million less in the third quarter of
2005 than in the third quarter of 2004 as a result of planned reductions in
the purchasing of certain types of inventory. Additionally an increase in
freight charges partially offset gains generated by the increased sales. Net
sales for the first nine months of 2005 were $469.9 million, compared to
$440.2 in the 2004 period. Operating profits for the nine-month period were
$22.1 million, compared to $16.3 million in the same period of 2004.
Mr. Kuhn said, "Driven by increased sales levels and an ongoing program to
improve margins, the Industrial Distribution segment delivered solid
improvement for the first nine months of 2005, a period in which higher energy
costs together with the massive destruction caused by Hurricanes Katrina and
Rita in the third quarter could have had a damping effect on purchasers'
confidence. While the inflationary effect of energy cost spikes is yet to be
fully determined, storm-related disruption to the energy sector was less than
initially feared and the underlying strength of the economy is showing
considerable resilience. This should support a reasonable business
environment over the next several quarters. The segment continues to track
the U.S. Industrial Production Index nationally, but is also affected by
sector and regional differences in the economy. Branches serving the paper,
chemicals and mining industries, for instance, benefited from the strength of
those industries while branches serving primarily the machinery manufacturing,
primary metal manufacturing and transportation equipment industries were
affected by the relatively weaker performance of those industries. Due to the
particular mix of industries by region, Western branches serving raw materials
industries generally performed better than those in the East, where a
continuing exodus of manufacturing from the region has affected OEM sales.
The Central region remained stable. Overall, the segment continued to compete
well."
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 more than 1.5
million items, as well as value-added services to a base of more than 50,000
customers spanning nearly every sector of industry. Segment operations are
headquartered in Windsor, Connecticut and conducted from approximately 200
locations in the U.S., Canada and Mexico.
Music Segment
Net sales in the 2005 third quarter were $51.0 million, including $10.7
million from the acquisition of MBT Holding Corp. (MBT), compared to $42.4
million for the third quarter of 2004. The Music segment's operating profit
was $3.4 million compared to $3.5 million in the same quarter of 2004. Net
sales for the first nine months of 2005 were $130.4 million, including $10.7
million from the acquisition compared to $117.9 million for the 2004 nine-
month period. Operating profits for the first nine months of 2005 were $7.8
million, compared to $6.8 million in the 2004 nine-month period.
Mr. Kuhn said, "Concerns over high fuel prices, worsened by the
hurricanes, and rising interest rates associated with heavy levels of consumer
debt, became factors for the segment as the 18 to 30 year old consumers that
represent the principal musical instrument buying demographic reined in
spending in the latter half of the quarter. While sales to the large national
chain stores and certain specialty shops saw growth in the quarter, sales to
many of the smaller independent retailers weakened."
The company continues to capitalize on its growth opportunities through
enhancements to the product mix and through acquisitions. On August 5, 2005,
Kaman announced it had paid approximately $30 million to acquire certain of
the assets and assume certain of the liabilities of MBT and its subsidiaries,
more commonly known as Musicorp, a wholesale distributor of musical
instruments and accessories headquartered in Charleston, South Carolina. MBT
was the second largest independent U.S. distributor of musical instruments and
accessories, after Kaman.
Kaman is the largest independent distributor of musical instruments and
accessories in the United States, offering more than 20,000 products for
amateurs and professionals. Operations are headquartered in Bloomfield,
Connecticut and conducted primarily from a manufacturing plant in New
Hartford, Connecticut and strategically placed warehouse facilities that cover
the North American markets. While the vast majority of Kaman's music sales
are to North American customers, the company continues to build its presence
in key international markets.
Concluding Statement
Mr. Kuhn concluded, "The third quarter continued the operational progress
we have seen throughout 2005, as stable conditions across most of the markets
we participate in, along with the benefits of the actions we have taken to
better position the company for growth, combined to generate solid revenue
growth. At this point, conditions in many of our markets remain positive, and
we feel we are in an excellent position to take advantage of the opportunities
presented to us."
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, including the Mason Capital
Ltd. lawsuit; 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.
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands except per share amounts)
For the Three Months Ended For the Nine Months Ended
September 30, October 1, September 30, October 1,
2005 2004 2005 2004
Net sales $278,111 $246,306 $812,680 $738,966
Costs and expenses:
Cost of sales 215,899 195,944 608,883 571,448
Selling, general
and administrative
expense 67,036 63,510 193,237 180,182
Net (gain) loss on
sale of assets 144 20 51 (215)
Other operating
income (588) (468) (1,571) (1,221)
Interest expense, net 562 891 1,912 2,635
Other expense, net 135 136 843 797
283,188 260,033 803,355 753,626
Earnings (loss)
before income taxes (5,077) (13,727) 9,325 (14,660)
Income tax benefit
(expense) 1,465 1,941 (5,475) 2,345
Net earnings (loss) $(3,612) $(11,786) $3,850 $(12,315)
Net earnings (loss)
per share:
Basic $(.16) $(.52) $.17 $(.54)
Diluted(1) $(.16) $(.52) $.17 $(.54)
Weighted average
shares outstanding:
Basic 22,920 22,717 22,838 22,684
Diluted 22,920 22,717 23,767 22,684
Dividends declared
per share $.125 $.11 $.36 $.33
(1) The calculated diluted per share amounts for the three months ended
September 30, 2005 and October 1, 2004 and the nine months ended
September 30, 2005 and October 1, 2004 are anti-dilutive, therefore,
amounts shown are equal to the basic per share calculation.
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
September 30, December 31,
2005 2004
Assets
Current assets:
Cash and cash equivalents $10,830 $12,369
Accounts receivable, net 202,565 190,141
Inventories 209,481 196,718
Deferred income taxes 35,545 35,837
Other current assets 17,582 15,270
Total current assets 476,003 450,335
Property, plant and equipment, net 50,604 48,958
Goodwill and other intangible assets, net 75,168 55,538
Other assets 9,189 7,500
$610,964 $562,331
Liabilities and shareholders' equity
Current liabilities:
Notes payable $11,516 $7,255
Current portion of long-term debt 1,660 17,628
Accounts payable -- trade 79,193 74,809
Accrued contract losses 26,308 37,852
Accrued restructuring costs 3,503 3,762
Other accrued liabilities 53,008 38,961
Advances on contracts 13,849 16,721
Other current liabilities 28,701 26,305
Income taxes payable 154 2,812
Total current liabilities 217,892 226,105
Long-term debt, excluding current portion 75,390 18,522
Other long-term liabilities 35,847 33,534
Shareholders' equity 281,835 284,170
$610,964 $562,331
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
For the Nine Months Ended
September 30, October 1,
2005 2004
Cash flows from operating activities:
Net earnings (loss) $3,850 (12,315)
Depreciation and amortization 6,875 6,815
Provision (recovery) for losses on
accounts receivable (799) 2,273
Net (gain) loss on sale of assets 51 (215)
Non-cash sales adjustment for
recoverable costs -- not billed - 18,211
Deferred income taxes 1,427 (593)
Other, net 2,925 4,803
Changes in current assets and
liabilities, excluding effects of acquisitions:
Accounts receivable (6,987) (33,939)
Inventory 1,533 (3,183)
Income taxes receivable - (3,547)
Accounts payable (2,671) (2,814)
Accrued contract losses (11,205) 7,095
Accrued restructuring costs (259) (1,646)
Advances on contracts (2,872) (1,217)
Income taxes payable (2,626) 5
Changes in other current assets and
liabilities 8,984 3,521
Cash provided by (used in) operating
activities (1,774) (16,746)
Cash flows from investing activities:
Proceeds from sale of assets 300 348
Expenditures for property, plant & equipment (6,339) (5,015)
Acquisition of businesses, less cash acquired (31,581) (399)
Other, net (238) (472)
Cash provided by (used in) investing
activities (37,858) (5,538)
Cash flows from financing activities:
Changes in notes payable 4,260 2,660
Additions / (reductions) to long-term debt 40,899 28,600
Proceeds from exercise of employee stock plans 751 911
Purchase of treasury stock - (9)
Dividends paid (7,865) (7,479)
Other 48 21
Cash provided by (used in) financing
activities 38,093 24,704
Net increase (decrease) in cash and cash
equivalents (1,539) 2,420
Cash and cash equivalents at beginning of period 12,369 7,130
Cash and cash equivalents at end of period $10,830 $9,550
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, of Kaman Corp., +1-860-243-6307, or
rhj-corp@kaman.com
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