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): August 3, 2005 (August 3,
2005)
Kaman
Corporation
(Exact
Name of Registrant as Specified in Its Charter)
Connecticut
(State
or
Other Jurisdiction of
Incorporation)
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0-1093
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06-0613548
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(Commission
File Number)
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(IRS
Employer Identification No.)
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1332
Blue Hills Avenue, Bloomfield, Connecticut
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06002
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(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):
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x
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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|
o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Page
1
Item
2.02. Results
of Operations and Financial Condition
On
August
3, 2005, the Company issued a press release describing the Company's financial
results for the quarter and six month period ended July 1, 2005. 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:
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Exhibit
99.1 - Press
Release of the Company regarding financial performance for the quarter
and
six month period ended July 1, 2005, dated August 3,
2005.
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Page
2
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.
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KAMAN
CORPORATION
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||
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By:
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/s/
Robert M. Garneau
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Robert
M. Garneau
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Executive
Vice President and
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Chief
Financial Officer
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||
Date:
August 3, 2005
Page
3
Index
to
Exhibits
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Exhibit
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Description
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99.1
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Press
release dated August 3, 2005
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Attached
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Page
4
| Kaman
Corporation
Bloomfield,
CT 06002
(860)
243-7100
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NEWS
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|
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 |
KAMAN
REPORTS 2005 SECOND QUARTER, SIX MONTH RESULTS
BLOOMFIELD,
Connecticut (August 3, 2005) -
Kaman
Corp. (NASDAQ:KAMNA) today reported financial results for the second quarter
and
six months ended July 1, 2005.
Net
earnings for the second quarter of 2005 were $2.8 million, or $0.12 per share
diluted, compared to a net loss of $1.7 million, or $0.07 loss per share
diluted, in the 2004 period. The 2004 second quarter loss was attributable
to
the Aerospace segment. Net sales for the second quarter were $271.3 million,
compared to $247.5 million in the second quarter of 2004, an increase of 9.6
percent.
For
the
first six months of 2005 the company reported net earnings of $7.5 million,
or
$0.33 per share diluted, compared to a net loss of $0.5 million, or $0.02 loss
per share diluted, in the first six months of 2004. First six-month net sales
for 2005 rose 8.5 percent to $534.6 million, compared to $492.7 million in
the
2004 period. Results for the second quarter and six-month periods include the
effect of higher corporate expenses and substantially higher tax rates arising
from the non-deductibility of certain compensation expenses during the quarter
and expenses associated with the company’s proposed recapitalization
plan.
Paul
R.
Kuhn, chairman, president and CEO, said, “The Industrial Distribution and Music
segments along with the Kamatics subsidiary within the Aerospace segment
continued their good momentum of the first quarter, each delivering favorable
performance comparisons to earlier periods. Progress was also made in the
Aerostructures, Fuzing and Helicopters divisions of the Aerospace segment with
all contributing to operating profits for the three-and six-month periods ended
July 1, 2005. Kamatics, including the company’s German bearing manufacturer,
RWG, continued to produce a substantial majority of Aerospace segment profits
for the reporting periods. Reflecting the performance improvement of each
segment, the company increased its dividend rate by 13.6 percent to $0.50 per
share on an annual basis. The first dividend at the new rate was paid on July
11, 2005 to shareholders of record on June 27, 2005.”
On
June
7, 2005, the company announced that it had entered into an agreement with
certain members of the Kaman family that contemplated a proposed
recapitalization that would simplify the company’s capital structure and enhance
its corporate governance by eliminating the longstanding two-class structure
of
common stock. As reported, the Kaman family subsequently indicated its intention
to terminate the recapitalization agreement in order to accept an alternate
offer, as permitted under the terms of the recapitalization agreement. The
matter was submitted to arbitration and following the arbiter’s conclusion that
the alternate offer was permissible under the terms of the recapitalization
agreement, the company’s board of directors approved a substitute
recapitalization proposal on July 28, 2005. In accordance with the terms of
the
recapitalization agreement, the Kaman family has agreed to support the
substitute recapitalization proposal and abandon the alternate transaction.
The
substitute proposal provides for an exchange ratio of 3.58 voting common shares
for each share of Class B common stock and includes a part stock/part cash
alternative under which Class B shareholders would have the right to elect
instead to receive 1.84 voting common shares and $27.10 in cash for each of
their shares of Class B common stock.
The
company expects to close on a new $150 million revolving credit facility
expiring in August 2010 with Bank of America Securities and Scotia Capital
as
Co-Lead Arrangers and a group of four additional banks. The new facility is
expected to carry the same financial covenant package as the facility it
replaced, and is expected to be sufficient to meet the company’s anticipated
working capital needs. Standard & Poor’s has assigned the new facility an
investment grade rating of BBB-.
Page
2 of 11
“Kaman
Reports Second Quarter 2005 Results”
August
3, 2005
Summary
of Segment Information
(In
millions)
|
|
For
the Three Months Ended
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For
the Six Months Ended
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||||||||||||||
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|
July
1, 2005(1)
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|
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July
2, 2004(1)
(2)
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|
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July
1, 2005(1)
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|
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July
2, 2004(1)
(2)
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|||||
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Net
sales:
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||||||||||||||||
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Aerospace
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$
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76.0
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$
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67.1
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$
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141.7
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$
|
126.4
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||||||||
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Industrial
Distribution
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157.5
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145.3
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313.5
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290.9
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||||||||||||
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Music
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37.8
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35.1
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79.4
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75.4
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||||||||||||
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271.3
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247.5
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534.6
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492.7
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|||||||||||||
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Operating
income (loss):
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||||||||||||||||
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Aerospace
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9.5
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(3.6
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)
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17.2
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(.6
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)
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||||||||||
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Industrial
Distribution
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8.4
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5.8
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16.9
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10.8
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||||||||||||
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Music
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1.9
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1.4
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4.4
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3.4
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||||||||||||
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Net
gain on sale of assets
|
.1
|
.2
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.1
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.2
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||||||||||||
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Corporate
expense (3)
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(12.6
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)
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(5.7
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)
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(22.1
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)
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(12.4
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)
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||||||||
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Operating
income (loss)
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7.3
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(1.9
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)
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16.5
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1.4
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|||||||||||
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Interest
expense, net
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(.6
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)
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(.9
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)
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(1.4
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)
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(1.7
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)
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||||||||
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Other
expense, net
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(.5
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)
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(.2
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)
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(.7
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)
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(.6
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)
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||||||||
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Earnings
(loss) before income taxes
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$
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6.2
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$
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(3.0
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)
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$
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14.4
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$
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(.9
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)
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||||||
(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 second quarter
for 2005 and 2004 ended on July 1, 2005 and July 2, 2004,
respectively.
(2)
As
reported in the 2004 Form 10-K, the company has restated its 2004 statement
of
operations for the second quarter of 2004. The adjustment reduced the loss
per
share diluted by $0.01 from a loss of $(.08) originally reported to $(.07)
for
the three months ended July 2, 2004, while loss per share diluted for
the
six months ended July 2, 2004 remained the same.
(3)
“Corporate
Expense” increased for the quarter and six months ended July 1, 2005 compared to
the same periods of 2004. The following table presents detail, including a
significant increase in stock appreciation rights expense due to the increase
in
the price of Kaman shares during the quarter.
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For
the three months ended
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For
the six months ended
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|||||||||||||||
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July
1, 2005
|
|
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July
2, 2004
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|
|
|
|
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July
1, 2005
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|
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July
2, 2004
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||||
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Corporate
expense
before
other items
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$
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(7.2
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)
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$
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(6.3
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)
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$
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(14.2
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)
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$
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(12.0
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)
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||||
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Other
items:
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||||||||||||||||
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Stock
appreciation rights
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(3.9
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)
|
.6
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(3.9
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)
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(.4
|
)
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|||||||||
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Long
term incentive plan
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(.5
|
)
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-
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(2.2
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)
|
-
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||||||||||
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Consulting
- recapitalization
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(1.0
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)
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-
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(1.0
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)
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-
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||||||||||
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Moosup
plant closure
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-
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-
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(.8
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)
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-
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|||||||||||
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Corporate
expense - total
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$
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(12.6
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)
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$
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(5.7
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)
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$
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(22.1
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)
|
$
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(12.4
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)
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||||
-more-
Page
3 of 11
“Kaman
Reports Second Quarter 2005 Results”
August
3, 2005
REPORT
BY SEGMENT
Aerospace
Segment
The
Aerospace segment includes the three
principal operating divisions of the company’s Kaman Aerospace Corporation
subsidiary: Aerostructures, Fuzing, and Helicopters; and the Kamatics
Corporation subsidiary, each of which is discussed below.
Segment
sales for the second quarter of 2005 were $76.0 million, compared to $67.1
million in the second quarter of 2004. The segment had an operating profit
of
$9.5 million in the second quarter of 2005, compared to an operating loss of
$3.6 million in the second quarter of 2004, such 2004 loss being primarily
attributable to a $7.1 million non-cash adjustment to the Boeing Harbour Pointe
contract, an insufficient business base at the segment’s Bloomfield, Connecticut
and Jacksonville, Florida aircraft manufacturing facilities, and $1.6 million
growth in workers’ compensation claims. Second quarter results for 2005 and 2004
include $0.7 million and $0.8 million respectively in idle facility costs,
primarily related to the Helicopters Division.
Segment
sales for the first half of 2005 were $141.7 million, compared to $126.4 million
in the 2004 period.
For
the
first half of 2005 the segment had an operating profit of $17.2 million,
compared to an operating loss of $0.6 million for the first half of 2004 as
a
result of the issues noted above. Six-month results for 2005 and 2004 include
$1.4 million and $1.6 million respectively in idle facility costs.
Mr.
Kuhn
said, “The work we have done to realign the Aerospace segment along with the
actions we have taken to improve operational efficiencies throughout the segment
are yielding encouraging results, with sales and profitability measures that
build upon the results seen in the first quarter of this year. With each of
our
principal operating units contributing to segment profits, and with the Kamatics
subsidiary providing continued leadership in its markets, the Aerospace segment
is beginning to improve as a contributor to our consolidated
results.”
Quarterly
sales for 2004 and 2005-to-date are given net of intercompany eliminations
for
each of the segment’s principal business units, excluding the Electro-Optics
Development Center, as follows.
|
|
1st
Quarter
|
2nd
Quarter
|
3rd
Quarter
|
4th
Quarter
|
Year
|
|||||||||||||||||
|
Business
Unit
|
2005
|
2004
|
2005
|
2004
|
2004
|
2004
|
2004
|
|||||||||||||||
|
Aerostructures
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$
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12.9
|
$
|
10.7
|
$
|
13.4
|
$
|
11.0
|
$
|
10.4
|
$
|
13.3
|
$
|
45.4
|
||||||||
|
Fuzing
|
12.8
|
9.0
|
15.0
|
16.2
|
10.9
|
20.7
|
56.8
|
|||||||||||||||
|
Helicopters
|
15.2
|
18.0
|
23.3
|
18.4
|
10.6
|
20.0
|
67.0
|
|||||||||||||||
|
Kamatics/RWG
|
23.0
|
19.8
|
22.8
|
18.6
|
19.7
|
19.0
|
77.1
|
|||||||||||||||
Aerostructures
Division:
The
Aerostructures Division had net sales of $13.4 million in the second quarter
of
2005, compared to $11.0 million in the second quarter of 2004. Sales for the
first half of 2005 were $26.3 million, compared to $21.7 million in first half
of 2004.
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.
Page
4 of 11
“Kaman
Reports Second Quarter 2005 Results”
August
3, 2005
Operations
at the Jacksonville facility continued to improve in the second quarter as
work
progressed on 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 $27.7 million. Follow-on options,
if
fully exercised, would have a total potential value to Kaman of approximately
$100.0 million and would include the fabrication of approximately 349 cockpits.
Delivery of cockpits to Sikorsky began in April 2005, and four cockpits were
delivered during the second quarter.
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 has concluded that it is probable that the division will incur costs to manufacture the replacement panels and as a result has recorded a charge for $0.4 million during the second quarter of 2005. On August 2, 2005, the company received information from one of the customers indicating that the panels would have to be replaced. Furthermore, the customer has advised the company that there will be additional costs to replace and install the panels on the aircraft. While the company believes that it will ultimately be responsible for some level of additional costs, it is currently unable to estimate the amount associated with such responsibility because additional information must be developed, including evaluation of contract provisions, the amount of re-work and the number of affected aircraft. Management is working with its customers to resolve this issue in a mutually satisfactory manner.
Fuzing Division:
The
Fuzing Division had net sales of $15.0 million in the second quarter of 2005,
compared to $16.2 million in the second quarter of 2004. Fuzing Division net
sales for the first half of 2005 were $27.8 million, compared to $25.2 million
in the first half of 2004. 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.
During
the second quarter of 2005, the division continued to work on two
warranty-related issues and believes it is making progress toward resolution
of
a government investigation at the Dayron operation that has been previously
reported.
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 development
and production of the advanced FMU-152A/B Joint Programmable Fuze (JPF). 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 $36.4 million. As deliveries to the
U.
S. military increase under the contract, management expects that efficiencies
will also increase and that program profitability will improve, 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 $23.3 million in the second quarter of
2005, compared to $18.4 million in the second quarter of 2004. Helicopters
Division net sales for the first half of 2005 were $38.5 million, compared
to
$36.4 million in the first half of 2004. Helicopters Division 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.
Page
5 of 11
“Kaman
Reports Second Quarter 2005 Results”
August
3, 2005
SH-2G
helicopters are operating with the governments of Egypt, New Zealand, and
Poland. The division is currently in the early stages of a standard depot level
maintenance program for the ten aircraft delivered to Egypt in 1994. Work on
the
first aircraft is in process, and the second aircraft arrived at the Bloomfield
facility late in the quarter. The contract covering the maintenance work for
the
first two aircraft plus an option for the next two is valued at $5.3 million.
The division is in conversations with the Egyptian government concerning various
requested upgrades to the aircraft.
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 division currently expects to deliver the first fully operational
aircraft late in 2005, after which all 11 aircraft will undergo a final
acceptance process by the Royal Australian Navy. Nine of the aircraft have
been
provisionally accepted by the Navy, including one in June 2005. Provisional
acceptance of the tenth aircraft is expected during the third quarter. The
final
aircraft remains in Bloomfield and is being used as the flight test vehicle.
As
of July 1, 2005, the company has a remaining accrued contract loss for this
program of $13.5 million, which includes an additional $3.1 million recorded
during the second quarter of 2005 primarily due to further testing to be
performed on the ITAS software.
The
division continues to support K-MAX helicopters that are operating with
customers in the field. The company has previously reported that it would
consider reopening the K-MAX production line for a substantial firm customer
order, and marketing efforts continue principally toward government customers
for use in a variety of missions, including firefighting, anti-drug activities,
and as an unmanned vehicle for the U.S. military.
During
the second 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, Connecticut
complex that the company currently leases from NAVAIR. As part of its
decision-making process, 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 includes the company
undertaking certain environmental remediation activities that may be legally
required in the event of a sale of the property. The company 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 second quarter of 2005, compared to $18.6
million in the comparable 2004 period. Kamatics net sales for the first half
of
2005 were $45.8 million, compared to $38.4 million in the 2004 period.
Operations are conducted at the facilities in Bloomfield, Connecticut and
Dachsbach, Germany.
Page
6 of 11
“Kaman
Reports Second Quarter 2005 Results”
August
3, 2005
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. General business
conditions in the primary aerospace markets remained positive. Order activity
from both Airbus and Boeing was strong in the quarter, as it was from other
customers in both the commercial and military sectors. As the aviation sector
strengthened, 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’s Electro-Optics Development Center in Tucson,
Arizona, which makes up the balance of Aerospace segment sales, submitted a
$6.3
million claim to the University of Arizona (University) in April 2004 to recover
additional costs which the company believes are a result of changes in the
scope
of a $12.8 million fixed-price contract with the University. Having been unable
to resolve the matter, Kaman filed suit in September 2004 to recover these
costs
from the University and discontinued work on the project. The University
subsequently filed a counterclaim and the litigation process is ongoing.
Industrial
Distribution Segment
Net
sales
for the 2005 quarter were $157.5 million, compared to $145.3 million in the
2004
period. The Industrial Distribution segment had operating profits of $8.4
million in the second quarter of 2005, compared to $5.8 million in the second
quarter of 2004. Net sales for the first half of 2005 were $313.5 million,
compared to $290.9 million in the first half of 2004. For the first half of
2005, the segment had operating profits of $16.9 million, compared to $10.8
million in the same period last year.
Mr.
Kuhn
said, “The Industrial Distribution segment continued its strong performance with
an 8.4 percent gain in sales during the quarter contributing $1.9 million of
the
growth in operating profit. Demand remains high in the construction materials,
mining, energy production and the paper and chemical industries. Regionally,
the
western states continue to produce the strongest results. With U.S. capacity
utilization rebounding to nearly 80 percent, which is within range of its
long-term average level, our overall assessment is that the outlook for the
U.S.
manufacturing economy remains positive. At this point in the cycle, however,
the
recovery may now be in a decelerating mode. The segment continues to compete
well. During the quarter, the company continued to develop its national accounts
business as it renewed its multi-year contract with Procter & Gamble, the
segment’s largest customer, and won a new national account with Del
Monte.”
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. The segment continues to track the U.S. Industrial
Production and Capacity Utilization Indexes. Segment operations are
headquartered in Windsor, Connecticut and conducted from approximately 200
locations in the U.S., Canada and Mexico.
Music
Segment
Net
sales
were $37.8 million in the second quarter of 2005, compared to $35.1 million
for
the second quarter of 2004. The Music segment’s operating profit was $1.9
million in the second quarter of 2005, compared to $1.4 million for the second
quarter of 2004. Net sales for the first half of 2005 were $79.4 million,
compared to $75.4 million for the first half of 2004. For the first half of
2005
the segment had operating profits of $4.4 million, compared to $3.4 million
in
the first half of 2004.
Page
7 of 11
“Kaman
Reports Second Quarter 2005 Results”
August
3, 2005
Commenting
on the performance, Mr. Kuhn said, “National retail chains, in particular,
continued their strong performance of the first quarter of 2005 contributing
to
the results for this segment. Kaman’s premium branded products, many of which
are brought to the market on an exclusive basis, and the segment’s
market-leading business-to-business systems for its customer base of over 7,000
retailers nationwide, also contributed to the performance.”
Kaman
is
the largest independent distributor of musical instruments and accessories
in
the United States, offering more than 17,500 products for amateurs and
professionals. Operations are headquartered in Bloomfield, Connecticut and
conducted 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,
export shipments are increasing as the company continues to build its presence
in key international markets.
Concluding
Remark
Mr.
Kuhn
concluded, “The company continued to achieve progress, with each of the segments
and the company as a whole posting increases in sales and earnings over the
prior year periods. Additionally, good progress was made in the operations
of
the lesser performing divisions of the Aerospace segment. As a result, the
dividend was increased. Within the next several months, the Class A
shareholders, currently representing 97.1 percent of total shares outstanding
but having no vote, will have the opportunity to approve a recapitalization
proposal that would eliminate the existing dual class structure and provide
all
shareholders with voting power proportionate to their economic interest in
the
company.”
Forward-Looking
Statements
This
release may contain forward-looking information relating to the corporation'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 corporation does or intends to do business; 3) standard government
contract provisions permitting renegotiation of terms and termination for the
convenience of the government;
Page
8 of
11
“Kaman
Reports Second Quarter 2005 Results”
August
3, 2005
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 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 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
at
Dayron and the DCIS investigation; 16) cost growth in connection with potential
environmental remediation activities related to the Bloomfield and Moosup
facilities; 17) successful replacement of the Corporation’s current revolving
credit facility; 18) whether the proposed recapitalization is completed; 19)
risks associated with the course of litigation; 20) changes in laws and
regulations, taxes, interest rates, inflation rates, general business conditions
and other factors; 21) the effects of currency exchange rates and foreign
competition on future operations; and 22) other risks and uncertainties set
forth in Kaman's annual, quarterly and current reports, and proxy statements.
Any forward-looking information provided in this release should be considered
with these factors in mind. The corporation assumes no obligation to update
any
forward-looking statements contained in this release.
The
Corporation intends to file with the Securities and Exchange Commission a
Registration Statement on Form S-4, which will contain a proxy
statement/prospectus in connection with the proposed recapitalization. The
proxy
statement/prospectus will be mailed to the stockholders of Kaman when it is
finalized. STOCKHOLDERS OF KAMAN ARE ADVISED TO READ THE PROXY
STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. Such proxy statement/prospectus (when available) and
other relevant documents may also be obtained, free of charge, on the Securities
and Exchange Commission's website (http://www.sec.gov) or by request from the
contact listed below.
Kaman
and certain persons may be deemed to be participants in the solicitation of
proxies relating to the proposed recapitalization. The participants in such
solicitation may include Kaman's executive officers and directors. Further
information regarding persons who may be deemed participants will be available
in Kaman's proxy statement/prospectus to be filed with the Securities
and Exchange Commission in connection with the proposed
recapitalization.
###
Contact:
Russell H. Jones
SVP,
Chief Investment Officer & Treasurer
(860)
243-6307
rhj-corp@kaman.com
Page
9 of 11
“Kaman
Reports Second Quarter 2005 Results”
August
3, 2005
KAMAN
CORPORATION AND SUBSIDIARIES
Condensed
Consolidated Statements of Operations
(In
thousands except per share amounts)
|
For
the Three Months
Ended
|
For
the Six Months
Ended
|
||||||||||||||||||
|
July
1, 2005
|
July
2, 2004
|
July
1, 2005
|
July
2, 2004
|
||||||||||||||||
|
Net
sales
|
$
|
271,263
|
$
|
247,509
|
$
|
534,569
|
$
|
492,660
|
|||||||||||
|
Costs
and expenses:
|
|||||||||||||||||||
|
Cost
of sales
|
200,573
|
192,092
|
392,984
|
375,504
|
|||||||||||||||
|
Selling,
general and
|
|||||||||||||||||||
|
administrative
expense
|
64,023
|
57,952
|
126,201
|
116,672
|
|||||||||||||||
|
Net
gain on sale of assets
|
(93
|
)
|
(235
|
)
|
(93
|
)
|
(235
|
)
|
|||||||||||
|
Other
operating income
|
(525
|
)
|
(435
|
)
|
(983
|
)
|
(753
|
)
|
|||||||||||
|
Interest
expense, net
|
638
|
949
|
1,350
|
1,744
|
|||||||||||||||
|
Other
expense, net
|
470
|
177
|
708
|
661
|
|||||||||||||||
|
265,086
|
250,500
|
520,167
|
493,593
|
||||||||||||||||
|
Earnings
(loss) before income taxes
|
6,177
|
(2,991
|
)
|
14,402
|
(933
|
)
|
|||||||||||||
|
Income
tax benefit (expense)
|
(3,420
|
)
|
1,289
|
(6,940
|
)
|
404
|
|||||||||||||
|
Net
earnings (loss)
|
$
|
2,757
|
$
|
(1,702
|
)
|
$
|
7,462
|
$
|
(529
|
)
|
|||||||||
|
Net
earnings (loss) per share:
|
|||||||||||||||||||
|
Basic
|
$
|
.12
|
$
|
(.07
|
)
|
$
|
.33
|
$
|
(.02
|
)
|
|||||||||
|
Diluted
(1)
|
$
|
.12
|
$
|
(.07
|
)
|
$
|
.33
|
$
|
(.02
|
)
|
|||||||||
|
Weighted
average shares outstanding:
|
|||||||||||||||||||
|
Basic
|
22,815
|
22,686
|
22,797
|
22,667
|
|||||||||||||||
|
Diluted
|
23,693
|
22,686
|
23,671
|
22,667
|
|||||||||||||||
|
Dividends
declared per share
|
$
|
.125
|
$
|
.11
|
$
|
.235
|
$
|
.22
|
|||||||||||
(1) The
calculated diluted per share amounts for the three months ended and six months
ended July 2, 2004 are anti-dilutive, therefore, amounts shown are equal to
the
basic per share calculation.
Page
10 of 11
“Kaman
Reports Second Quarter 2005 Results”
August
3, 2005
KAMAN
CORPORATION AND SUBSIDIARIES
Condensed
Consolidated Balance Sheets
(In
thousands)
|
|
July
1, 2005
|
December
31, 2004
|
|||||
|
Assets
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
10,048
|
$
|
12,369
|
|||
|
Accounts
receivable, net
|
190,654
|
190,141
|
|||||
|
Inventories
|
201,583
|
196,718
|
|||||
|
Deferred
income taxes
|
32,953
|
35,837
|
|||||
|
Other
current assets
|
14,989
|
15,270
|
|||||
|
Total
current assets
|
450,227
|
450,335
|
|||||
|
Property,
plant and equipment, net
|
48,955
|
48,958
|
|||||
|
Goodwill
and other intangible assets, net
|
55,726
|
55,538
|
|||||
|
Other
assets
|
8,721
|
7,500
|
|||||
|
$
|
563,629
|
$
|
562,331
|
||||
|
Liabilities
and shareholders’ equity
|
|||||||
|
Current
liabilities:
|
|||||||
|
Notes
payable
|
$
|
4,266
|
$
|
7,255
|
|||
|
Current
portion of long-term debt
|
23,267
|
17,628
|
|||||
|
Accounts
payable - trade
|
76,834
|
74,809
|
|||||
|
Accrued
contract losses
|
22,140
|
37,852
|
|||||
|
Accrued
restructuring costs
|
3,649
|
3,762
|
|||||
|
Other
accrued liabilities
|
49,676
|
38,961
|
|||||
|
Advances
on contracts
|
16,605
|
16,721
|
|||||
|
Other
current liabilities
|
25,318
|
26,305
|
|||||
|
Income
taxes payable
|
2,704
|
2,812
|
|||||
|
Total
current liabilities
|
224,459
|
226,105
|
|||||
|
Long-term
debt, excluding current portion
|
16,873
|
18,522
|
|||||
|
Other
long-term liabilities
|
35,007
|
33,534
|
|||||
|
Shareholders’
equity
|
287,290
|
284,170
|
|||||
|
$
|
563,629
|
$
|
562,331
|
Page
11 of 11
“Kaman
Reports Second Quarter 2005 Results”
August
3, 2005
KAMAN
CORPORATION AND SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flows
(In
thousands)
|
For
the Six Months Ended
|
|||
|
July
1, 2005
|
July
2, 2004
|
||
|
Cash
flows from operating activities:
|
|||
|
Net
earnings
|
$
7,462
|
$
(529)
|
|
|
Depreciation
and amortization
|
4,577
|
4,634
|
|
|
Provision
for losses on accounts receivable
|
(27)
|
289
|
|
|
Net
gain on sale of product line and other assets
|
(93)
|
(235)
|
|
|
Deferred
income taxes
|
3,308
|
-
|
|
|
Other,
net
|
1,982
|
1,815
|
|
|
Changes
in current assets and liabilities,
|
|||
|
excluding
effects of acquisitions:
|
|||
|
Accounts
receivable
|
(669)
|
(23,200)
|
|
|
Inventory
|
(5,653)
|
(6,250)
|
|
|
Income
taxes receivable
|
-
|
(1,552)
|
|
|
Accounts
payable
|
2,102
|
(1,972)
|
|
|
Accrued
contract losses
|
(15,693)
|
4,930
|
|
|
Accrued
restructuring costs
|
(113)
|
(1,519)
|
|
|
Advances
on contracts
|
(116)
|
(168)
|
|
|
Income
taxes payable
|
(79)
|
6
|
|
|
Changes
in other current assets and liabilities
|
9,735
|
6,947
|
|
|
Cash
provided by (used in) operating activities
|
6,723
|
(16,804)
|
|
|
Cash
flows from investing activities:
|
|||
|
Proceeds
from sale of product line and other assets
|
263
|
348
|
|
|
Expenditures
for property, plant & equipment
|
(4,129)
|
(3,834)
|
|
|
Acquisition
of businesses, less cash acquired
|
(1,448)
|
(399)
|
|
|
Other,
net
|
(343)
|
(1,129)
|
|
|
Cash
provided by (used in) investing activities
|
(5,657)
|
(5,014)
|
|
|
Cash
flows from financing activities:
|
|||
|
Changes
in notes payable
|
(2,989)
|
(451)
|
|
|
Changes
in debt
|
3,988
|
30,141
|
|
|
Proceeds
from exercise of employee stock plans
|
625
|
629
|
|
|
Purchase
of treasury stock
|
-
|
(4)
|
|
|
Dividends
paid
|
(5,011)
|
(4,982)
|
|
|
Cash
provided by (used in) financing activities
|
(3,387)
|
25,333
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
(2,321)
|
3,515
|
|
|
Cash
and cash equivalents at beginning of period
|
12,369
|
7,130
|
|
|
Cash
and cash equivalents at end of period
|
$
10,048
|
$
10,645
|
|
###