UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
report (Date of earliest event reported): March 16, 2005
Kaman
Corporation
(Exact
Name of Registrant as Specified in Its Charter)
Connecticut
(State or
Other Jurisdiction of
Incorporation)
|
0-1093 |
06-0613548 | |
|
(Commission
File Number) |
(IRS
Employer Identification No.) | |
|
1332
Blue Hills Avenue, Bloomfield, Connecticut |
06002 | |
|
(Address
of Principal Executive Offices) |
(Zip
Code) |
(860)
243-7100
(Registrant's
Telephone Number, Including Area Code)
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
|
o |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425) |
|
o |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12) |
|
o |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
|
o |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
Item
2.02. Results
of Operations and Financial Condition
On March
16, 2005, the Company issued a press release describing the Company's financial
results for the quarter and twelve months ended December 31, 2004. A copy of
this press release is furnished as Exhibit 99.1 hereto and is incorporated
herein by reference.
Item
9.01. Financial
Statements and Exhibits
(c) Exhibits
The
following document is furnished as an Exhibit pursuant to Item 2.02
hereof:
|
Exhibit
99.1 - Press Release of the Company regarding financial performance for
the quarter and twelve months ended December 31, 2004, dated March 16,
2005. |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
KAMAN
CORPORATION | ||
|
By: |
/s/
Robert M. Garneau | |
|
Robert
M. Garneau | ||
|
Executive
Vice President and | ||
|
Chief
Financial Officer | ||
Date:
March 16, 2005
KAMAN
CORPORATION AND SUBSIDIARIES
Index to
Exhibits
|
Exhibit
99.1 Press release dated March 16, 2005 |
Attached |
KAMAN
REPORTS FOURTH QUARTER, YEAR 2004 RESULTS
BLOOMFIELD,
Connecticut (March 16, 2005) - Kaman
Corp. (NASDAQ: KAMNA) today reported financial results for its fourth quarter
and year ended December 31, 2004.
The
company reported net earnings for the 2004 fourth quarter of $0.5 million, or
$0.02 per share diluted, compared to $1.0 million or $0.04 per share diluted the
previous year. The 2004 fourth quarter results include a loss before income
taxes of $2.5 million, offset by a fourth quarter tax benefit of $3.0 million
due to an adjustment in the estimated effective tax rate established at the end
of the third quarter to the actual effective tax rate based upon annual results.
Net sales for the 2004 fourth quarter were $256.2 million compared to $238.9
million in the 2003 fourth quarter.
For the
year ended December 31, 2004, the company reported a net loss of $11.8 million,
or $0.52 loss per share diluted, compared to net earnings of $19.4 million, or
$0.86 per share diluted, in 2003. The 2004 loss is primarily attributable to
events in the Aerospace segment, including $41.6 million of adjustments for the
year, $10.8 million of which were taken in the fourth quarter to address issues
with certain of the segment’s programs and contracts. All of these actions are
discussed in the Aerospace segment section of this release. Results for 2003
include an after-tax gain of $10.6 million, or $0.48 per share, from the sale in
the first quarter of the company’s Electromagnetics Development Center. Net
sales for the 2004 full year were $995.2 million, compared to $894.5 million in
2003.
Paul R.
Kuhn, chairman, president and chief executive officer, said, “The execution of
strategies put in place three years ago for each Kaman segment continued to
prove their relevance in 2004. Two segments, Industrial Distribution and Music,
and the Kamatics subsidiary within the Aerospace segment, performed very well,
each reporting record sales for the year, and demonstrating a considerable
market presence for our products and services. These good results, however, were
overshadowed by adjustments taken in the Aerospace segment that resulted in the
loss for the year. The company believes that meaningful progress was achieved in
2004 toward resolving business issues in the Aerospace segment. In order to
address differences among its various businesses and the changing markets they
serve, and to provide for a more focused management structure, various portions
of the segment were reconfigured into three new operating divisions. The company
expects that each will be better able to effectively control expenses for the
services and functions they require, and achieve optimal customer service. As
the process of reconfiguring the segment progressed during the year, the company
continued to identify and work through segment program and contract issues. Some
of these involve internal business issues; others involve external forces or
market circumstances. Several of these issues are now behind us or appear to be
approaching resolution. One issue the company has reported on in some detail
over the past several quarters is the time and expense involved with the
relocation of certain aircraft structures and components operations to
Jacksonville, Florida and the adverse effect the transition has had on segment
profitability. While we are still on a learning curve, significant progress was
made in improving performance metrics and reestablishing levels of customer
satisfaction. Additionally, the company received a significant new contract for
the Jacksonville facility involving the production of pilot cockpits for the
Sikorsky BLACK HAWK helicopter. The company has also previously reported on the
delays experienced in achieving qualification for the Joint Programmable Fuze
(JPF). In 2004, this goal was achieved, and the company received authorization
from the U.S. Air Force to begin low rate initial production of the fuze. At the
same time, Lot 1 of this production contract was released for production through
2005, and in December 2004, Lot 2 was released for production through 2006.
Having achieved qualification, the fuze is now ready to market to international
customers, and the company expects program profitability to improve as
deliveries to the U.S. military ramp up and be further enhanced once orders are
received from allied militaries.”
A summary
of segment information follows.
Page 2 of
11
“Kaman
Reports Fourth Quarter, Year 2004 Results”
March
16, 2005
Summary
of Segment Information
(In
millions)
|
For
the Three Months
Ended
December 31, |
For
the Twelve Months
Ended
December 31, | ||||||||||||
|
2004 |
2003 |
2004(2) |
|
2003 |
|||||||||
Net
sales: |
|||||||||||||
Aerospace |
$ |
71.5 |
$ |
63.8 |
$ |
252.4 |
$ |
251.2 |
|||||
Industrial
Distribution |
141.6 |
133.2 |
581.8 |
497.9 |
|||||||||
|
Music |
43.1 |
41.9 |
161.0 |
145.4 |
|||||||||
|
256.2 |
238.9 |
995.2 |
894.5 |
||||||||||
Operating
income (loss): |
|||||||||||||
Aerospace |
1.2 |
(0.6 |
) |
(14.3 |
) |
14.8 |
|||||||
Industrial
Distribution |
3.0 |
3.7 |
19.3 |
12.7 |
|||||||||
Music |
4.3 |
3.5 |
11.1 |
9.5 |
|||||||||
Net
gain on sale of product |
|||||||||||||
lines
and other assets |
- |
- |
.2
|
18.2 |
|||||||||
|
Corporate
expense (1) |
(9.7 |
) |
(4.0 |
) |
(28.8 |
) |
(19.1 |
) | |||||
Operating
income (loss) |
(1.2 |
) |
2.6 |
(12.5 |
) |
36.1 |
|||||||
Interest
expense, net |
(1.0 |
) |
(.8 |
) |
(3.6 |
) |
(3.0 |
) | |||||
|
Other
expense, net |
(.3 |
) |
(.2 |
) |
(1.1 |
) |
(1.3 |
) | |||||
Earnings/(loss)
before |
|||||||||||||
|
income
taxes |
$ |
(2.5 |
) |
$ |
1.6 |
$ |
(17.2 |
) |
$ |
31.8 |
|||
(1) “Corporate
expense” increased for the three months ended December 31, 2004, compared to the
prior year period, primarily due to a $1.2 million increase in pension expense,
a $2.9 million accrual for the long-term incentive program, a $0.8 million
increase in supplemental retirement plan expense and a $0.5 million increase in
integrated audit services. The increase for the twelve months ended December 31,
2004, compared to the prior year period, is primarily due to a $4.7 million
increase in pension expense, a $2.9 million increase for the long-term incentive
program, a $2.7 million increase in supplemental retirement plan expense, a $0.7
million cumulative catch-up adjustment for rent expense, a $0.7 million increase
in integrated audit services, and $0.7 million of additional insurance expense
for senior executive life insurance offset by the $1.6 million refund related to
group insurance. The increase in corporate expense was also offset by a $1.2
million reduction in consulting expense.
(2) In
addition, the corporation has restated its statement of operations beginning
with the first quarter of 2004 to correct its accounting by recording a
cumulative catch-up pre-tax adjustment of approximately $0.7 million in rent
expense and related deferred rent liability pertaining to lease accounting as
well as a negative sales adjustment of $0.5 million for the University of
Arizona contract in the Aerospace segment. The corporation also recorded net
pre-tax adjustments of $1.0 million related to prior periods as a reduction to
selling, general and administrative expenses. Additional immaterial adjustments
of which the majority relates to the lease accounting and University of Arizona
contract were recorded during the second and third quarters of
2004.
Page 3 of
11
“Kaman
Reports Fourth Quarter, Year 2004 Results”
March
16, 2005
REPORT
BY SEGMENT
Aerospace
Segment
The
Aerospace segment generated a fourth quarter operating profit of $1.2 million in
2004, compared to an operating loss of $0.6 million a year ago. The 2004 fourth
quarter results include $10.8 million in adjustments taken to address issues
involving the company’s advanced technology and helicopter programs and $0.9
million in idle facility and related costs. The 2003 results include the effect
of $1.4 million in relocation and recertification costs related to the Moosup,
Conn., plant closure and $1.0 million in idle facility and related costs.
Segment sales for the fourth quarter of 2004 were $71.5 million, compared to
$63.8 million in the 2003 period.
For the
2004 year the segment had an operating loss of $14.3 million as a result of
$41.6 million in adjustments involving various aspects of the company’s Aircraft
Structures, Advanced Technology Products, and Helicopter Programs work, as
discussed below, and $2.0 million in third quarter severance costs associated
with a management realignment in the Aerospace subsidiary; $3.3 million in idle
facility and related costs, and $0.4 million in relocation and recertification
costs related to closure of the company’s Moosup plant. This compares to an
operating profit of $14.8 million in 2003. Results for 2003 include the effect
of $3.6 million in relocation and recertification costs related to the Moosup,
Conn. plant closure and $1.4 million in idle facilities and related costs. Sales
for 2004 were $252.4 million, including the effect of an $18.2 million negative
sales adjustment to eliminate the company’s investment in contracts with MDHI,
compared to $251.2 million in 2003.
With the
2004 realignment, the segment now has new operating divisions: Kaman
Aerostructures, responsible for the Kaman Aerospace Jacksonville and PlasticFab
Wichita operations; Kaman Fuzing, responsible for the Kaman Aerospace Middletown
and Kaman Dayron Orlando operations; and Kaman Helicopters, responsible for the
Kaman Aerospace Bloomfield operations. They join Kamatics (including RWG, the
company’s German aircraft bearing manufacturer) to make up the four major
operating elements of the segment. For the fourth quarter and year 2004, results
for the Aerospace segment have been reported in the traditional format.
Beginning with results for the first quarter of 2005, the company will report
sales for each of the segment’s realigned divisions.
Aircraft
Structures and Components
Fourth
quarter aircraft structures and components sales were $36.7 million in 2004,
compared to $30.4 million in the period a year ago. This business contributed
approximately 51 percent of the Aerospace segment’s sales in the 2004 fourth
quarter, compared to approximately 48 percent a year ago.
Aircraft
structures and components sales for the full year were $116.6 million in 2004,
including the effect of the $18.2 million MDHI sales adjustment, compared to
sales of $121.2 million in the previous year. The business contributed
approximately 46 percent of segment sales in 2004, compared to 48 percent in
2003.
Aircraft
structures and components work involves commercial and military aircraft
programs, including proprietary aircraft bearings, the production of aircraft
subassemblies and other parts for commercial airliners as well as the C-17
military transport, and helicopter subcontract work.
Page 4 of
11
“Kaman
Reports Fourth Quarter, Year 2004 Results”
March
16, 2005
Since the
expanded Jacksonville aircraft subassemblies and parts facility began operations
in mid-2003, sales volume has not been sufficient to achieve profitability at
that location, resulting in overhead and general and administrative expenditures
being absorbed at higher rates by active programs, and generally lower
profitability or losses for these programs. Improving performance metrics and
reestablishing levels of customer satisfaction continue to be a focus at the
Jacksonville facility, and the company believes progress has been made in this
area. New orders are now coming on line and that should help with the overhead
absorption and profitability issue. During the third quarter of 2004, Sikorsky
Aircraft Corporation awarded Kaman a multi-year contract with an initial
two-year value of $27.7 million under which Kaman will manufacture the pilot
cockpit for four models of the Sikorsky BLACK HAWK helicopter. The work includes
installation of all wiring harnesses, hydraulic assemblies, control pedals and
sticks, seat tracks, pneumatic lines, and the composite structure that holds the
windscreen. The multi-year contract has follow-on options that, if fully
exercised, would include the fabrication of approximately 349 units, and bring
the total potential value to Kaman to approximately $100.0 million over five
years.
In
January 2005, the U.S. Government selected an international team that includes
Lockheed Martin, Bell Helicopter, and AgustaWestland to provide the next “Marine
One” presidential helicopter. As a member of the winning team, Kaman anticipates
that it will have the opportunity to share in the work being sourced into the
U.S.
As
previously reported, in the 2004 third quarter the company recorded a sales and
non-cash pre-tax earnings charge of $20.1 million, consisting of an $18.2
million negative sales adjustment and a $1.9 million addition to the
corporation’s bad debt reserve, to eliminate its investment in its multi-year
contracts for production of fuselages for the MD Helicopters 500 and 600 series
helicopters and composite rotor blades for the MD Explorer helicopter, and
related receivables. The charge is not expected to result in any future cash
expenditures. Also, as previously reported, in the second quarter the company
recorded a $7.1 million non-cash adjustment to its Boeing Harbour Pointe
contract due to a lower than expected order flow and unprofitable mix of work.
The adjustment consists of an accrued contract loss of $4.3 million and a
valuation adjustment of $2.8 million associated with portions of the program
inventory.
The
Kamatics aircraft bearing subsidiary delivered strong performance in the fourth
quarter and full year 2004 as a result of improving market conditions and
increased order activity from Boeing, Airbus and other customers in both the
commercial and military sectors. While the market for specialized
high-performance products is becoming increasingly competitive, Kamatics
proprietary non-lubricated bearings are currently in use in almost all military
and commercial aircraft in production. As the aviation sector strengthened
during the year, the company increased production levels to manage an increasing
backlog.
Advanced
Technology Products
Sales of
the company’s advanced technology products in the 2004 fourth quarter were $19.2
million, compared to $15.0 million a year ago. The business accounted for
approximately 27 percent of Aerospace segment sales in the fourth quarter of
2004, compared to 23 percent a year ago.
Sales of
advanced technology products for the full year 2004 were $63.0 million, compared
to $54.0 million in 2003. The business accounted for approximately 25 percent of
segment sales in 2004, compared to 22 percent in the prior year.
The
company manufactures products for military and commercial markets, including
safe, arm and fuzing devices for a number of major missile and bomb programs;
and precision measuring systems, mass memory systems and electro-optic systems.
Page 5 of
11
“Kaman
Reports Fourth Quarter, Year 2004 Results”
March
16, 2005
As
previously reported, the company's Electro-Optics Development Center (EODC)
submitted a $6.3 million claim to the University of Arizona (University) in
April 2004 to recover additional costs which EODC believes are a result of
changes in the scope of a project being performed under a $12.8 million
fixed-price contract with the University. Having been unable to resolve the
matter, EODC filed suit in September 2004 to recover these costs from the
University and discontinued work on the project. The University has since filed
a counterclaim and the litigation process is ongoing. Although additional
efforts were made to resolve the matter out of court, it became clear during the
fourth quarter that EODC is not likely to complete the contract and therefore, a
$3.5 million sales and pre-tax earnings adjustment was recorded in the fourth
quarter to reflect the contract's curtailed status.
Concurrent
with the realignment of the Aerospace segment, management has been working to
identify and correct internal operational and efficiency shortcomings that have
affected profitability at the Dayron Orlando facility, acquired in 2002.
In the
fourth quarter, the company recorded a $3.5 million charge to provide for two
product warranty-related issues, one involving a supplier’s recall of a switch
embedded in certain of Dayron’s bomb fuzes, and the other involving bomb fuzes
manufactured according to procedures in place at the time Dayron was acquired
that have been found to contain an incorrect part. Management is currently
working with its customers and other parties to resolve these issues
appropriately.
The
company has a contract with the U.S. Air Force for production of the advanced
FMU-152A/B Joint Programmable Fuze. The JPF contract has a value of $13.6
million covering low rate initial production and production of Lot 1 that
extends through 2005 and includes options for eight additional years of
production, which, if fully exercised, would bring the total potential value of
the contract to $168.7 million. In the past few months, the Air Force has
released production for Lot 2 (including some additional production) for $11.4
million. These releases under the contract, plus development and engineering
activity along with special tool and test equipment, bring the total to
approximately $36.4 million to date. During the quarter the company continued
working on materials flow and manpower ramp-up to meet production requirements.
Helicopter
Programs
Sales
generated by the SH-2G Super Seasprite and K-MAX helicopter programs, including
spare parts and sales support, totaled $15.6 million in the 2004 fourth quarter,
compared to $18.4 million in the period last year. This represented
approximately 22 percent of segment sales for the quarter, compared to
approximately 29 percent a year ago.
Helicopter
program sales for the full year 2004 were $72.8 million, compared to $76.0
million in 2003. This represented approximately 29 percent of segment sales in
2004, compared to 30 percent the previous year.
Production
of the 11 SH-2G(A) aircraft for the Australia program is essentially complete.
As previously reported, the aircraft lack the full Integrated Tactical Avionics
System (ITAS) software and progress is continuing on this element of the
program. The Australian government provisionally accepted three additional
helicopters during the fourth quarter, bringing the number of aircraft now
provisionally accepted to eight. The company currently expects to deliver the
first fully operational aircraft by mid-year 2005, followed by the final
acceptance process for all eleven aircraft. Due to the complexity of the
integration process and testing results that indicate additional work to be
done, the company recorded an additional $5.5 million accrued contract loss
during the year to reflect the current estimate of costs to complete the
program, of which $3.8 million was recorded during the fourth quarter.
The
company continues to support K-MAX helicopters that are operating with customers
in the field. As of December 31, 2004, K-MAX inventories included approximately
$20.1 million in K-MAX spare parts and $9.8 million in aircraft owned by the
company.
Page 6 of
11
“Kaman
Reports Fourth Quarter, Year 2004 Results”
March
16, 2005
During
the fourth quarter, the company continued the process with the U.S. Naval Air
Systems Command (NAVAIR) and the General Services Administration to develop the
method that would be used to calculate the purchase price of that portion of the
Bloomfield, Conn. complex that the company currently leases from NAVAIR. This
could possibly include the company undertaking some level of the environmental
remediation that may be legally required in the event of a sale of the property.
The company also continued to work with government and environmental authorities
to prepare the closed Moosup, Conn. facility for eventual sale.
Industrial
Distribution Segment
Fourth
quarter operating profits for the Industrial Distribution segment were $3.0
million in 2004, compared to $3.7 million in the 2003 period. Sales were $141.6
million in the 2004 fourth quarter, compared to $133.2 million in the same
period last year. With the stronger market, the company achieved margin
improvement on the higher level of sales in the quarter. Operating profits for
the quarter, however, were somewhat lower because the company’s stronger than
expected results triggered increased accruals for a ramp-curved incentive
program that rewards a wide range of branch managers and sales personnel for
their achievements. Also, while vendor incentives in the form of rebates on
volume purchases were at the same approximate level for 2004 as for the previous
year, they were lower in the fourth quarter. With the increase in business,
rebates represented a smaller percentage of operating profits for the year than
for the previous year.
Segment
operating profits for the full year 2004 were $19.3 million, compared to $12.7
million the previous year. Sales in 2004 were a record $581.8 million, including
$28.3 million from a fourth quarter 2003 acquisition, compared to $497.9
million, including $6.5 million from that acquisition, in 2003.
Mr. Kuhn
said, “The Industrial Distribution segment had an excellent year in 2004,
reflecting the combined effects of an improved industrial economic environment,
a full-year of benefit from a fourth quarter 2003 acquisition, and market share
gains. During the year, Kaman ramped up its new national account business with
Tyco International (US) Inc., Phelps Dodge, James Hardie and Quad Graphics.
During the fourth quarter of 2004, Procter & Gamble, already a major
customer of the company, selected Kaman as its bearing and power transmission
supplier in Canada. The company opened a new branch in Toronto to serve that
account while providing a platform for expansion in the area. Kaman added
further to its geographic footprint with the August 2004 acquisition of Brivsa
de Mexico, a small Monterrey, Mexico distributor that enhances the company’s
ability to attract and serve national account customers with operations in this
important Mexican industrial center. In addition, Kaman was named a national
distributor for IMI Norgren, Inc., providing the company an additional major
line to sell through its entire U.S. branch network.”
Kaman is
the third largest North American industrial distributor serving the bearings,
electrical/mechanical power transmission, fluid power, motion control and
materials handling markets. Kaman 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, from its geographically broad-based footprint of
nearly 200 locations in the U.S., Canada and Mexico. The company now covers 70
of the top 100 industrial markets in the U.S. This segment continues to track
the U.S. Industrial Production Index and is affected to a large extent by the
overall climate for its customer industries, including overall plant capacity
utilization levels and the effect of pricing spikes and/or interruptions for
basic commodities such as steel and oil. A weaker U.S. dollar is currently
stimulating customers’ export sales, and the demand from China for raw materials
continues to benefit the company’s locations that participate in the mining,
steel and cement production markets.
Page 7 of
11
“Kaman
Reports Fourth Quarter, Year 2004 Results”
March
16, 2005
Music
Segment
Music
segment operating profits for the 2004 fourth quarter were $4.3 million,
compared to $3.5 million in the period a year ago. Sales for the 2004 quarter
were $43.1 million, compared to $41.9 million last year.
Operating
profits for the year 2004 were $11.1 million, compared to $9.5 million a year
ago. Sales for the year 2004 were $161.0 million, compared to $145.4 million the
previous year.
Mr. Kuhn
said, “Music delivered a strong performance for the quarter and year, reflecting
a reasonably good Christmas season for the retail sector and, as a consequence,
good demand for the company’s lines of branded musical instruments and
accessories. Sales for both the guitar and percussion lines were up. Among the
year’s highlights was the introduction of the Ovation LX series premium guitar,
which is receiving high acceptance ratings from players and positive reviews in
the national music trade press. In addition, continued growth in sales to both
large and small retailers with such products as Gretsch drums and Sabian cymbals
has made 2004 a record sales year.”
Kaman is
the largest independent distributor of musical instruments and accessories in
the United States, offering more than 15,000 products for amateurs and
professionals. While the vast majority of Kaman’s music sales are to North
American customers, the company has been building its presence in European,
Asian and Australian markets as well. The business is affected by consumer
sentiment as retailers gauge how aggressively to stock for the holiday selling
season, and by actual consumer spending levels. It is also affected by changes
in consumers’ musical tastes and interests. Consequently, a principal strategy
of the company over the past several years has been to add popular premier
branded products that can be brought to market exclusively by Kaman. An
important industry trend of the past several years has been consolidation in the
retail market with the growth in the very large retail chains. The concentration
of sales to these large customers is increasing. Kaman believes it has built
upon its competitive advantages by creating and maintaining industry-leading
distribution systems and the computerized business-to-business capabilities that
large national retailers increasingly require, while continuing to support its
traditional base of small retailers.
Concluding
Remark
Mr. Kuhn
noted that, “While 2004 was a year of difficult circumstances for certain of the
company’s aerospace businesses, it was also a year of meaningful progress, as
major portions of the corporation performed exceptionally well. While we have
more work to do before the aerospace transition is complete, we look to 2005
with optimism.”
Kaman
Corp., headquartered in Bloomfield, Conn., conducts business in the aerospace,
industrial distribution and music markets.
Page 8 of
11
“Kaman
Reports Fourth Quarter, Year 2004 Results”
March
16, 2005
Forward-Looking
Statements
This
release may contain forward-looking information relating to the corporation's
business and prospects, including aerostructures and helicopter subcontract
programs and components, advanced technology products, the SH-2G and K-MAX
helicopter programs, the 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 corporation 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 corporation, 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 as such
exercise has been assumed in connection with goodwill impairment evaluations)
and receipt of orders from allied militaries; 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; 9) satisfactory results of negotiations with NAVAIR
concerning the corporation's leased facility in Bloomfield, Conn.; 10)
profitable integration of acquired businesses into the corporation'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
attributable to Dayron suppliers and others; 16) cost growth in connection with
potential environmental remediation activities related to the Bloomfield and
Moosup facilities; 17) successful replacement of the Corporation’s revolving
credit facility upon its expiration in November 2005; and 18) currency exchange
rates, taxes, changes in laws and regulations, interest rates, inflation rates,
general business conditions and other factors. Any forward-looking information
provided in this release dated March 16, 2005 should be considered with these
factors in mind. The Corporation assumes no obligation to update any
forward-looking statements contained in this release.
###
Contact:
Russell
H. Jones
SVP,
Chief Investment Officer & Treasurer
(860)
243-6307
rhj-corp@kaman.com
Page 9 of
11
“Kaman
Reports Fourth Quarter, Year 2004 Results”
March
16, 2005
KAMAN
CORPORATION AND SUBSIDIARIES
Condensed
Consolidated Statements of Operations
(In
thousands except per share amounts)
|
For
the Three Months |
For
the Twelve Months | ||||||||||||
|
|
Ended
December 31, |
Ended
December 31, | |||||||||||
|
2004 |
2003 |
2004 |
2003 |
||||||||||
Net
Sales |
$ |
256,226 |
$ |
238,854 |
$ |
995,192 |
$ |
894,499 |
|||||
Costs
and expenses: |
|||||||||||||
Cost
of sales |
198,837
|
186,017
|
770,285
|
671,591
|
|||||||||
Selling,
general and |
|||||||||||||
administrative
expense |
59,186
|
50,576
|
239,368
|
206,416
|
|||||||||
Net
(gain)/loss on sale of |
|||||||||||||
product
lines and other assets |
16
|
(20 |
) |
(199 |
) |
(18,163 |
) | ||||||
Other
operating income |
(510 |
) |
(341 |
) |
(1,731 |
) |
(1,448 |
) | |||||
Interest
expense, net |
945
|
750
|
3,580 |
3,008
|
|||||||||
|
Other
expense, net |
256 |
230 |
1,053 |
1,265 |
|||||||||
|
258,730 |
237,212
|
1,012,356 |
862,669
|
||||||||||
Earnings
(loss) before income taxes |
(2,504 |
) |
1,642
|
(17,164 |
) |
31,830
|
|||||||
|
Income
tax benefit/(expense) |
2,997 |
(675 |
) |
5,342 |
(12,425 |
) | |||||||
|
Net
earnings (loss) |
$ |
493 |
$ |
967 |
$ |
(11,822 |
) |
$ |
19,405 |
||||
Net
earnings (loss) per share: |
|||||||||||||
Basic |
$ |
.02 |
$ |
.04 |
$ |
(.52 |
) |
$ |
.86 |
||||
|
Diluted
(1) |
$ |
.02 |
$ |
.04 |
$ |
(.52 |
) |
$ |
.86 |
||||
Average
shares outstanding: |
|||||||||||||
Basic |
22,748 |
22,616
|
22,700 |
22,561
|
|||||||||
|
Diluted
(2) |
23,651 |
23,621
|
22,700 |
23,542
|
|||||||||
|
Dividends
declared per share |
$ |
.11 |
$ |
.11 |
$ |
.44 |
$ |
.44 |
|||||
(1) The
calculated diluted per share amounts for the three months ended December 31,
2004 and 2003 and the twelve months ended December 31, 2004 are anti-dilutive,
therefore, amounts shown are equal to the basic per share
calculation.
(2)
Additional potentially diluted average shares outstanding of 942 for the twelve
months ended December 31, 2004 have been excluded from the average diluted
shares outstanding due to the loss from operations in that year.
Page 10
of 11
“Kaman
Reports Fourth Quarter, Year 2004 Results”
March
16, 2005
KAMAN
CORPORATION AND SUBSIDIARIES
Condensed
Consolidated Balance Sheets
(In
thousands)
|
|
December
31, 2004 |
December
31, 2003 |
|||||
Assets |
|||||||
Current
assets: |
|||||||
Cash
and cash equivalents |
$ |
12,369 |
$ |
7,130 |
|||
Accounts
receivable, net |
190,141 |
193,243 |
|||||
Inventories |
196,718 |
178,952 |
|||||
Income
taxes receivable |
- |
1,043 |
|||||
Deferred
income taxes |
35,837 |
26,026 |
|||||
|
Other
current assets |
15,270 |
12,457 |
|||||
|
Total
current assets |
450,335 |
418,851 |
|||||
Property,
plant and equipment, net |
48,958 |
51,049 |
|||||
Goodwill
and other intangible assets, net |
55,538 |
53,347 |
|||||
|
Other
assets |
7,500 |
5,064 |
|||||
$ |
562,331 |
$ |
528,311 |
||||
Liabilities
and shareholders’ equity |
|||||||
Current
liabilities: |
|||||||
Notes
payable |
$ |
7,255 |
$ |
6,013 |
|||
Current
portion of long-term debt |
17,628 |
1,660 |
|||||
Accounts
payable |
74,809 |
59,600 |
|||||
Accrued
contract losses |
37,852 |
23,611 |
|||||
Accrued
restructuring costs |
3,762 |
6,109 |
|||||
Other
accrued liabilities |
38,961 |
26,123 |
|||||
Advances
on contracts |
16,721 |
19,693 |
|||||
Other
current liabilities |
26,305 |
17,746 |
|||||
|
Income
taxes payable |
2,812 |
- |
|||||
|
Total
current liabilities |
226,105 |
160,555 |
|||||
Long-term
debt, excluding current portion |
18,522 |
36,624 |
|||||
Other
long-term liabilities |
33,534 |
27,949 |
|||||
|
Shareholders’
equity |
284,170 |
303,183 |
|||||
$ |
562,331 |
$ |
528,311 |
Page 11
of 11
“Kaman
Reports Fourth Quarter, Year 2004 Results”
March
16, 2005
KAMAN
CORPORATION AND SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flows
(In
thousands)
|
For
the Twelve Months | |||||||
|
|
Ended
December 31, | ||||||
|
2004 |
2003 |
||||||
Cash
flows from operating activities: |
|||||||
Net
earnings (loss) |
$ |
(11,822 |
) |
$ |
19,405 |
||
Depreciation
and amortization |
8,969
|
10,019
|
|||||
Provision
for losses on accounts receivable |
2,180 |
487 |
|||||
Net
gain on sale of product lines and other assets |
(199 |
) |
(18,163 |
) | |||
Non-cash
write-down of assets |
962 |
- |
|||||
Non-cash
sales adjustment for costs |
|||||||
-
not billed |
21,332 |
- |
|||||
Deferred
income taxes |
(11,421 |
) |
5,994
|
||||
Other,
net |
7,418 |
2,376
|
|||||
Changes
in current assets and liabilities, |
|||||||
excluding
effects of acquisitions/divestitures: |
|||||||
Accounts
receivable |
(20,179 |
) |
2,744
|
||||
Inventory |
(18,175 |
) |
(9,806 |
) | |||
Income
taxes receivable |
1,043 |
4,149 |
|||||
Accounts
payable |
15,149 |
10,106
|
|||||
Accrued
contract losses |
14,241 |
(3,063 |
) | ||||
Accrued
restructuring costs |
(2,347 |
) |
(1,485 |
) | |||
Advances
on contracts |
(2,972 |
) |
(1,846 |
) | |||
Changes
in other current assets and liabilities |
18,484 |
5,726
|
|||||
|
Income
taxes payable |
2,807 |
-
|
|||||
|
Cash
provided by (used in) operating activities |
25,470 |
26,643 |
|||||
Cash
flows from investing activities: |
|||||||
Proceeds
from sale of product lines and other assets |
376 |
28,339
|
|||||
Expenditures
for property, plant & equipment |
(7,539 |
) |
(9,069 |
) | |||
Acquisition
of businesses, less cash acquired |
(2,435 |
) |
(7,748 |
) | |||
|
Other,
net |
(621 |
) |
(1,599 |
) | |||
|
Cash
provided by (used in) investing activities |
(10,219 |
) |
9,923
|
||||
Cash
flows from financing activities: |
|||||||
Changes
to notes payable |
1,197 |
(2,664 |
) | ||||
Additions
/ (reductions) to long-term debt |
(2,134 |
) |
(23,508 |
) | |||
Proceeds
from exercise of employee stock plans |
1,218 |
1,287 |
|||||
Purchase
of treasury stock |
(9 |
) |
(205 |
) | |||
Dividends
paid |
(9,979 |
) |
(9,917 |
) | |||
|
Other |
(305 |
) |
- |
||||
|
Cash
provided by (used in) financing activities |
(10,012 |
) |
(35,007 |
) | |||
Net
increase (decrease) in cash and cash equivalents |
5,239 |
1,559 |
|||||
|
Cash
and cash equivalents at beginning of period |
7,130 |
5,571 |
|||||
|
Cash
and cash equivalents at end of period |
$ |
12,369 |
$ |
7,130 |
|||
###