-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T3NZd+OxwBBesip/p1HGbLw2+eYPGQrce/P+JjeIvSmZb/z2vPQqFsb3cwvZUkny KVR96K+8KaOfJOR0M7m9Aw== 0000054381-04-000046.txt : 20040421 0000054381-04-000046.hdr.sgml : 20040421 20040421143035 ACCESSION NUMBER: 0000054381-04-000046 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040420 ITEM INFORMATION: Acquisition or disposition of assets FILED AS OF DATE: 20040421 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KAMAN CORP CENTRAL INDEX KEY: 0000054381 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MACHINERY, EQUIPMENT & SUPPLIES [5080] IRS NUMBER: 060613548 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-66179 FILM NUMBER: 04745155 BUSINESS ADDRESS: STREET 1: 1332 BLUE HILLS AVE CITY: BLOOMFIELD STATE: CT ZIP: 06002 BUSINESS PHONE: 8602437100 MAIL ADDRESS: STREET 1: 1332 BLUE HILLS AVE CITY: BLOOMFIELD STATE: CT ZIP: 06002 FORMER COMPANY: FORMER CONFORMED NAME: KAMAN AIRCRAFT CORP DATE OF NAME CHANGE: 19680403 8-K 1 form8k0404.txt FORM 8K RE 1ST QTR PRESS RELEASE UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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): April 20, 2004 KAMAN CORPORATION (Exact name of issuer as specified in its charter) Connecticut 0-1093 06-0613548 (State or other jurisdictions (Commission (I.R.S. of Incorporation) File Number) Employer Identification No.) 1332 Blue Hills Avenue Bloomfield, CT 06002 (Address of principal executive offices) Registrant's telephone number, including area code: (860)243-7100 Not Applicable (Former name or former address, if changed since last report) Item 7. Financial Statements and Exhibits (c) Exhibits The following document is furnished as an Exhibit pursuant to Items 9 and 12 hereof: Exhibit 99.1 - Press Release of the Company regarding financial performance for the quarter ended March 31, 2004, dated April 20, 2004. Item 9. Regulation FD Disclosure See Item 12 below. Item 12. Results of Operations and Financial Condition On April 20, 2004, the Company issued a press release describing the Company's financial results for the quarter ended March 31, 2004. A copy of this press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference All of the information furnished in this report and the accompanying exhibits shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference in any Company filing under the Securities Act of 1933, as amended. 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, thereunto duly authorized. KAMAN CORPORATION /s/Robert M. Garneau Executive Vice President and Chief Financial Officer Dated: April 21, 2004 Page 3 EXHIBIT INDEX Exhibit Description 99.1 Press Release of the Company, dated April 20, 2004 Page 4 EX-99 3 exh99-1.txt PRESS RELEASE 4-20-04 Exhibit 99.1 KAMAN REPORTS FIRST QUARTER 2004 RESULTS BLOOMFIELD, Connecticut (April 20, 2004) - Kaman Corp. (NASDAQ:KAMNA) today reported financial results for the first quarter ended March 31, 2004. Net earnings for the first quarter were $1.3 million, or $0.06 per share diluted, compared to $14.0 million, or $0.60 per share diluted, the previous year. First quarter 2003 results include an after-tax gain of $10.1 million, or $0.45 per share, from the sale of the company's Electromagnetics Development Center (EDC). Net sales for the first quarter were $245.7 million, compared to $216.0 million in the 2003 quarter. Paul R. Kuhn, chairman, president and chief executive officer, said, "Following several years of difficult market conditions for the company's Industrial Distribution segment, there is now evidence that the tone of the market is improving: both the industrial production index and the plant capacity utilization statistic are signaling recovery. As a result of the market improvement, an acquisition in the fourth quarter of 2003, and the company's focus on cost controls, the Industrial Distribution segment generated substantially higher sales and operating profits, including higher same-store sales, than achieved during the same period last year. "At the same time, the Music segment benefited from continued resilience in consumer spending patterns, which contributed to higher sales and operating profits in the first quarter of 2004 than during the same period of 2003. "For the Aerospace segment, although our Kamatics specialty bearing subsidiary performed well, the Kaman Aerospace subsidiary continued to experience difficulties that resulted in a weak quarter for the company as a whole." A more detailed summary of segment information follows: Page 2 of 12 "Kaman Reports First Quarter 2004 Results" April 20, 2004 KAMAN CORPORATION AND SUBSIDIARIES Segment Information (In millions) For the Three Months Ended March 31, -------------- 2004 2003 - ----------------------------------------------------------------- Net sales: Aerospace $ 59.8 $ 61.7 Industrial Distribution 145.6 120.3 Music 40.3 34.0 - ----------------------------------------------------------------- $ 245.7 $ 216.0 ================================================================= Operating profit: Aerospace $ 3.6 $ 7.2 Industrial Distribution 5.0 2.8 Music 2.0 1.9 - ----------------------------------------------------------------- 10.6 11.9 Corporate and other expense, net (1) (7.5) (5.0) Interest expense, net (.8) (.8) Gain on sale of product line and other assets - 16.8 - ----------------------------------------------------------------- Earnings before income taxes $ 2.3 $ 22.9 ================================================================= (1) "Corporate and other expense, net" increased for the three months ended March 31, 2004 primarily due to an increase in pension and stock appreciation rights expense.
-more- Page 3 of 12 "Kaman Reports First Quarter 2004 Results" April 20, 2004 REPORT BY SEGMENT - ----------------- Aerospace Segment - ----------------- The Aerospace segment had a first quarter operating profit of $3.6 million, compared to $7.2 million a year ago. The first quarter of 2004 includes $0.2 million in ongoing relocation and re-certification costs related to the transfer of operations in 2003 from the company's Moosup, Conn. facilities to expanded facilities in Jacksonville, Fla., compared to $0.7 million in the first quarter of 2003. The first quarter of 2004 also includes $0.8 million in underutilized facility costs primarily associated with the absence of new helicopter orders at the Bloomfield, Conn. facility. Segment sales for the first quarter were $59.8 million, compared to $61.7 million a year ago. Results for the quarter continued to be adversely affected by several factors at the Kaman Aerospace subsidiary. These factors are discussed in the report on each component of the segment: Aircraft Structures and Components, Advanced Technology Products, and Helicopter Programs. Aircraft Structures and Components First quarter aircraft structures and components sales were $33.5 million, compared to $32.2 million in the period a year ago. This business contributed approximately 56 percent of the Aerospace segment's sales in the first quarter, compared to approximately 52 percent a year ago. Aircraft Structures and Components involves commercial and military aircraft programs, including production of aircraft subassemblies and other parts for Boeing commercial airliners and the C-17 military transport, as well as helicopter subcontract work. This has become a core business area for the company and a focal point for future growth. Operating results for this business were affected by several factors during the quarter. The current weak market for commercial airliners has resulted in order stretch-outs, pricing pressures, and a lower volume of deliveries than anticipated for Boeing commercial aircraft programs. The market for detail parts manufacturing and assembly work remains very competitive industry wide and in this environment new business awards have been difficult to achieve. These conditions will make it more difficult for the Jacksonville plant to develop an optimal Page 4 of 12 "Kaman Reports First Quarter 2004 Results" April 20, 2004 business base, at least until the commercial aviation market improves. In this environment, military work, including the C-17, which is one of the business' largest programs, has been an important contributor. Meanwhile, the Jacksonville facility is operational and ready to accept new business, although the plant's capabilities are taking time to develop. Production man-hour performance is improving; however on certain programs, it continues to be well below the levels that had existed at the Moosup facility, in large part due to the continuing process of training a new labor force. The company is working to improve this measure of performance and as it pursues that goal, it is also working to reestablish the level of product quality and customer quality rankings that had been maintained at the Moosup facility, and believes that progress is being made. As the Jacksonville plant continues to develop its capabilities, operating costs have also increased due to manpower and third-party processing costs that have been required to expedite deliveries, and the standard FAA and customer requirements to requalify manufacturing and quality processes made necessary by the move. Management believes that these conditions are temporary and continues to expect that the move from Moosup to Jacksonville will ultimately provide a lower cost base from which to compete. Taken together, these factors have resulted in lower sales, which in turn has resulted in overhead and general and administrative expenditures being absorbed at higher rates by active Aerospace company programs, and generally lower profitability or losses for these programs. The company continues to evaluate ways to grow in a competitive global business environment that requires progressively lower costs. In addition to the actions taken to shift production to other U.S. locations expected to provide lower cost structures, such as Jacksonville, the company is also continuing to adjust its manpower, and is taking other actions, as appropriate, to help bring its cost structure in line with the reduced business base. Helicopter subcontract work involves commercial and military helicopter programs. Commercial programs include multi-year contracts for production of fuselages for the MD Helicopters, Inc. (MDHI) 500 and 600 series helicopters and composite rotor blades for the MD Explorer helicopter. Total orders from MDHI have run at significantly lower rates than originally anticipated due to lower than expected demand. The company's investment in these contracts consists principally of $4.3 million in billed receivables and $16.2 million in recoverable costs-not billed, including start-up costs and other program expenditures, as of Page 5 of 12 "Kaman Reports First Quarter 2004 Results" April 20, 2004 March 31, 2004. In 2003, the company received payments totaling $4.4 million, primarily for items shipped during 2003. The company received nominal payments in the first quarter of 2004. The recoverability of unbilled costs will depend to a significant extent upon MDHI's future requirements through 2013, the year to which both contracts extend. The company stopped production on these contracts in the second quarter of 2003, but continues to work closely with the customer to resolve overall payment issues and establish conditions under which production could be resumed, including the timing thereof. Based upon MDHI's projected future requirements and inventory on hand at both MDHI and the company, this would not be expected to occur until late in the second half of 2004 at the earliest. Although the outcome is not certain, the company understands that MDHI management is pursuing strategies to improve its current financial and operational circumstances. Sales and operating profits for the company's Kamatics specialty bearing business were higher in the quarter than the year-ago period and were the source of a significant portion of total segment operating profits, with military and commercial aftermarket sales helping to offset continued softness in commercial and regional aircraft manufacturing. Kamatics products are in wide use in commercial airliners operated by the major and regional airlines, and increasingly in military programs. Advanced Technology Products Sales of the company's advanced technology products in the first quarter were $11.3 million, compared to $11.8 million a year ago. The business accounted for approximately 19 percent of Aerospace segment sales, the same as a year ago. 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. The Kaman Dayron operation, acquired in 2002, manufactures fuzes for a variety of munitions programs, and has the contract to develop a fuze for the U. S. Air Force and Navy Joint Programmable Fuze (JPF) program. Securing the JPF program was the principal motivation for making the Dayron acquisition. Qualification testing conducted by Kaman as the prime contractor was completed in the fourth quarter of 2003 and qualification testing by the Air Force was completed in April 2004. Management believes that the test phase has been successfully completed and is now waiting for the Page 6 of 12 "Kaman Reports First Quarter 2004 Results" April 20, 2004 Air Force to perform a final analysis of the tests, after which authorization for production is expected. Since 2001, the company's Electro-Optics Development Center (EODC) in Tucson, Ariz., has been teamed with the University of Arizona's Steward Observatory to build a 6.5-meter aperture collimator that will be used for testing large optical systems in a vacuum environment. The EODC has been working under a $12.8 million fixed-price contract to design and fabricate the structural, electrical, mechanical and software control systems for the collimator. The EODC has experienced significant cost growth in its portion of the program as a result of changes in the scope of the project, and believes that it has a valid basis to recover these amounts. As a result, in April 2004, the company submitted a claim in the amount of $6.3 million to the university to recover these additional costs. Helicopter Programs Sales generated by the SH-2G Super Seasprite and K-MAX helicopter programs, including spare parts and sales support, totaled $15.0 million in the first quarter, compared to $17.7 million in the period last year. This represented approximately 25 percent of segment sales for the quarter, compared to approximately 29 percent a year ago. Production of the eleven 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. In September 2003 the Royal Australian Navy (RAN) began the process of provisionally accepting these aircraft after receiving a decision to proceed from the Australian government. Since that date, the RAN has provisionally accepted four of the 11 aircraft. The company expects to be able to deliver the full capability of the ITAS weapons system software in late 2004 with a final acceptance anticipated in 2005. While the company believes its reserves are sufficient to cover estimated costs to complete the program, final development of the software and its integration are underway, and these are complex tasks. The company is marketing its existing K-MAX aircraft inventory, which was written down to an estimated fair market value in 2002, using sales and short-term leasing programs. There were no sales or new leases of K-MAX helicopters in the first quarter of 2004. Kuhn said, "To establish clear lines of responsibility and improve decision-making, Aerospace recently initiated a Page 7 of 12 "Kaman Reports First Quarter 2004 Results" April 20, 2004 reorganization to address differences between its various businesses and their specific requirements. Three divisions are being created to replace portions of the existing structure: Kaman Aerostructures, having production facilities in Jacksonville, Fla. and Wichita, Kans., will be responsible for fixed-wing aircraft subcontract programs; Kaman Fuzing, having production facilities in Middletown, Conn. and Orlando, Fla., will be responsible for fuze operations; and Kaman Helicopters, having production facilities in Bloomfield, Conn., will be responsible for prime and subcontract helicopter programs, including the SH-2G, K-MAX and MDHI programs. By placing purchasing, operations, finance, contracts and human resources personnel within each division we expect each will be better able to effectively manage expenses for the services and/or functions they require, and achieve optimal customer service. The company expects to complete the reorganization by the end of 2004." Industrial Distribution - ----------------------- First quarter operating profits for the Industrial Distribution segment were $5.0 million, compared to $2.8 million in the 2003 period. Sales were $145.6 million in the first quarter, including $7.2 million from Industrial Supplies, Inc. (ISI), which was acquired in the fourth quarter of 2003, compared to $120.3 million a year ago. Kuhn said, "The Industrial Distribution segment made good gains in the first quarter. It appears that the economy is continuing to strengthen as demand for manufactured goods increases to levels not seen in recent years, and that is good news for our distribution business. The `lean-thinking' practices and adherence to strict cost controls that we have been implementing have helped to see us through the hard times and continue to benefit the company competitively. Vendor incentives in the form of rebates continue to be an important contributor to the segment's operating profits." Kaman is the third largest U.S. industrial distributor servicing the bearings, electrical/mechanical power transmission, fluid power, motion control and materials handling markets in the United States. 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 U.S. industry. Success in the market requires a combination of competitive pricing and value-added services that save the customer money while helping them become more efficient and productive. Over Page 8 of 12 "Kaman Reports First Quarter 2004 Results" April 20, 2004 the past several years, large companies have increasingly centralized their purchasing, focusing on suppliers that can service all of their plant locations across a wide geographic area. To meet these requirements, Kaman has expanded its geographic presence through the selective opening of new branches, and acquisitions in key markets of the upper Midwest, the South, and Mexico. The company's footprint of nearly 200 branches and regional distribution centers now covers 70 of the top 100 industrial markets in the U.S. Music - ----- The Music segment's first quarter operating profit was $2.0 million, compared to $1.9 million in the period a year ago. Sales for the quarter were $40.3 million, compared to $34.0 million a year ago. Notwithstanding the increase in sales, the gross profit rate was lower in the quarter due to the addition of several lower margin products to the catalog, a shift in sales mix toward lower margin products, increased guitar manufacturing costs in the U.S., and increased sales of products to some larger customers that carry a lower gross profit rate. Kuhn said, "The steadily improving national economy and resilient consumer confidence have had a positive impact on the music industry and on our business. Sales to both independent retailers and the large chain store accounts exceeded expectations for the quarter, with sales to the latter being particularly strong." The segment is America's largest independent distributor of musical instruments and accessories, and is involved in some combination of designing, manufacturing, marketing and distributing more than 15,000 products from five facilities in the U.S. and Canada to retailers of all sizes for musicians of all skill levels. Concluding Remark Kuhn concluded, "Going forward, our confidence in the strengthening economy remains intact for our Industrial Distribution and Music segments. However, we will be watching for the effect of rising steel prices, energy costs and other influences on these businesses. For Aerospace, we remain focused on cost control, efficiency improvement, and the marketing of our manufacturing and engineering capabilities and are confident that we will be well-positioned to take advantage of the eventual Page 9 of 12 "Kaman Reports First Quarter 2004 Results" April 20, 2004 turnaround in the commercial aerospace market when it comes, just like we are successfully doing with our Industrial Distribution business." Forward-Looking Statements - -------------------------- This release contains forward-looking information relating to the company's business and prospects, including aerostructures and helicopter subcontract programs and components, advanced technology products, SH-2G and K-MAX helicopter programs, the industrial and music businesses, 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 and thereafter contract negotiations with government authorities, including foreign governments; 2) political developments in countries where the company 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 industrial production and commercial aviation, and global economic conditions; 5) satisfactory completion of the Australian SH-2G(A) program, including successful completion and integration of the full ITAS software; 6) recovery of the company's investment in the MD Helicopters, Inc. contracts; 7) actual costs for recertifying products and processes in connection with start-up of the expanded Jacksonville facility; 8) JPF program final qualification test results and receipt of production orders; 9) satisfactory resolution of the EODC Collimator claim and completion of contract performance, 10) achievement of enhanced business base in the Aerospace segment in order to better absorb overhead and general and administrative expenses; 11) successful sale or lease of existing K-MAX inventory; 12) the condition of consumer markets for musical instruments; 13) profitable integration of acquired businesses into the company's operations; 14) changes in supplier sales or vendor incentive policies; 15) the effect of price increases or decreases; and 16) currency exchange rates, taxes, changes in laws and regulations, inflation rates, general business conditions and other factors. Any forward-looking information should be considered with these factors in mind. ### Contact: Russell H. Jones SVP, Chief Investment Officer & Treasurer (860) 243-6307 rhj-corp@kaman.com Page 10 of 12 "Kaman Reports First Quarter 2004 Results" April 20, 2004 KAMAN CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Operations (In thousands except per share amounts) For the Three Months Ended March 31, --------------- 2004 2003 - ----------------------------------------------------------------- Net sales $ 245,678 $ 216,010 Costs and expenses: Cost of sales 183,023 159,956 Selling, general and administrative expense 59,427 49,137 Other operating (income) / expense, net (318) (273) Interest expense, net 795 768 Gain on sale of product line and other assets - (16,849) Other expense, net 484 405 - ----------------------------------------------------------------- 243,411 193,144 - ----------------------------------------------------------------- Earnings before income taxes 2,267 22,866 Income taxes 975 8,900 - ----------------------------------------------------------------- Net earnings $ 1,292 $ 13,966 ================================================================= Net earnings per share: Basic $ .06 $ .62 Diluted $ .06 $ .60 ================================================================= Average shares outstanding: Basic 22,648 22,495 Diluted 23,660 23,480 ================================================================= Dividends declared per share $ .11 $ .11 ================================================================= -more- Page 11 of 12 "Kaman Reports First Quarter 2004 Results" April 20, 2004 KAMAN CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands) March 31, December 31, 2004 2003 - ----------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 9,825 $ 7,130 Accounts receivable, net 209,442 193,243 Inventories 189,202 178,952 Income taxes receivable - 1,043 Deferred income taxes 26,026 26,026 Other current assets 11,627 12,457 - ----------------------------------------------------------------- Total current assets 446,122 418,851 - ----------------------------------------------------------------- Property, plant and equipment, net 50,561 51,049 Goodwill and other intangible assets, net 53,476 53,347 Other assets 4,843 5,064 - ----------------------------------------------------------------- $ 555,002 $ 528,311 ================================================================= Liabilities and shareholders' equity Current liabilities: Notes payable $ 10,857 $ 7,673 Accounts payable 58,810 59,600 Accrued contract loss 23,805 23,611 Accrued restructuring costs 5,445 6,109 Other accrued liabilities 24,141 26,123 Advances on contracts 19,966 19,693 Other current liabilities 16,810 17,746 Income taxes payable 759 - - ----------------------------------------------------------------- Total current liabilities 160,593 160,555 - ----------------------------------------------------------------- Long-term debt, excluding current portion 62,620 36,624 Other long-term liabilities 28,491 27,949 Shareholders' equity 303,298 303,183 - ----------------------------------------------------------------- $ 555,002 $ 528,311 =================================================================
-more- Page 12 of 12 "Kaman Reports First Quarter 2004 Results" April 20, 2004 KAMAN CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) For the Three Months Ended March 31, - ----------------------------------------------------------------------------- 2004 2003 ---- ---- Cash flows from operating activities: Net earnings $ 1,292 $ 13,966 Depreciation and amortization 2,238 2,626 Net gain on sale of product line and other assets - (16,849) Other, net 1,025 191 Changes in current assets and liabilities, excluding effects of divestiture: Accounts receivable (16,125) (24,209) Inventory (10,163) (7,108) Income taxes receivable 1,043 5,192 Accounts payable (807) 6,393 Advances on contracts 273 (747) Income taxes payable 763 5,260 Changes in other current assets and liabilities (2,598) (1,510) - ----------------------------------------------------------------------------- Cash provided by (used in) operating activities (23,059) (16,795) - ----------------------------------------------------------------------------- Cash flows from investing activities: Proceeds from sale of product line and other assets - 28,021 Expenditures for property, plant & equipment (1,586) (1,789) Other, net 370 (461) - ----------------------------------------------------------------------------- Cash provided by (used in) investing activities (1,216) 25,771 - ----------------------------------------------------------------------------- Cash flows from financing activities: Changes to notes payable 3,158 1,926 Additions/(reductions) to long-term debt 25,996 (5,897) Proceeds from exercise of employee stock plans 309 324 Purchases of treasury stock (4) (205) Dividends paid (2,489) (2,471) - ----------------------------------------------------------------------------- Cash provided by (used in) financing activities 26,970 (6,323) - ----------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 2,695 2,653 Cash and cash equivalents at beginning of period 7,130 5,571 - ----------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 9,825 $ 8,224 ============================================================================= ###
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