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 DATASOURCE: Kaman Corp. CONTACT: Russell H. Jones, SVP,
Chief Investment Officer & Treasurer, of Kaman Corp.,
+1-860-243-6307, or Web site: http://www.kaman.com/ Company News
On-Call: http://www.prnewswire.com/comp/480450.html
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