Kaman Corporation Bloomfield, CT 06002 (860) 243-7100	NEWS

KAMAN REPORTS 2010 SECOND QUARTER RESULTS

Second Quarter 2010 Highlights:

    · Improved Industrial Distribution performance helps drive earnings per diluted share of $0.23

    · Industrial Distribution total sales up 35.2%, organic sales up 17.5%

    ·   Operating margins:  Aerospace, 11.4%; Industrial Distribution, 3.7%

    ·   Q2 free cash flow* of $22.3 million

    ·   JPF production resumed

BLOOMFIELD, Connecticut (August 5, 2010) – Kaman Corp. (NASDAQ GS:KAMN) today reported financial results for the second quarter ended July 2, 2010.

Summary of Financial Results
In thousands except per share amounts – Unaudited	For the Three Months Ended
	July 2, 2010			July 3, 2009			$ Change
Net sales:
Industrial Distribution	$	210,924		$	155,954		$	54,970
Aerospace		106,163			137,269			(31,106	)
Net sales	$	317,087		$	293,223		$	23,864
Operating income:
Industrial Distribution	$	7,713		$	3,065		$	4,648
Aerospace		12,114			21,600			(9,486	)
Net gain (loss) on sale of assets		(56	)		(53	)		(3	)
Corporate expense		(8,581	)		(8,445	)		(136	)
Operating income	$	11,190		$	16,167		$	(4,977	)
Diluted earnings per share	$	0.23		$	0.37		$	(0.14	)

Neal J. Keating, Chairman, President and Chief Executive Officer, stated, "As previously announced, we experienced issues in our Aerospace segment during the second quarter that affected our financial performance.  The largest issue, with our Joint Programmable Fuze (JPF) program, was the failure of a supplied component during acceptance testing.  In cooperation with our supplier and customer, we have analyzed, tested and verified the root cause and have developed a plan for introduction of key product improvements.  Consequently, we resumed JPF production earlier this week.  As we expected, sales of our bearing product lines were lower than a year ago but operating margin remained strong.  Aerospace benefited from higher sales from our various BLACK HAWK programs and a variety of other programs. We were most encouraged by the performance of our Industrial Distribution segment during the quarter, where market conditions continued to improve.  We have completed three acquisitions in this segment in 2010 and each is exceeding our expectations for revenue and profitability.  With our growth in revenues and the profitable contribution from the acquisitions, we were able to expand our Industrial Distribution operating margin significantly.  Our free cash flow* in the quarter was excellent at $22.3 million as a result of a company-wide focus on cash generation.”

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Reports 2010 Second Quarter Results”

August 5, 2010

Segment reports follow:

Industrial Distribution segment sales increased 35.2% in the 2010 second quarter to $210.9 million from $156.0 million a year ago.  Acquisitions contributed $27.7 million in sales in the quarter.  On a sales per sales day* basis, organic sales were up 15.6% over last year’s second quarter (see table on page 3 for additional details regarding the Company’s sales per day performance).  Segment operating income for the second quarter of 2010 was $7.7 million, a 151.6% increase from operating income of $3.1 million in the second quarter of 2009.  The operating profit margin for the second quarter of 2010 was 3.7% compared to 2.7% in the first quarter of 2010 and 2.0% in the second quarter of 2009.

Industrial Distribution segment sales for the second quarter of 2010 reflect growth from acquisitions made in 2010 and healthier market conditions for the segment compared to the same period in 2009.  Improved market conditions were broad based across all geographies, customers and end markets.  Sales were higher on a sequential basis in the second quarter due to the contribution from acquisitions and improved market conditions.  The operating margin was higher on a sequential basis as a result of the higher sales volume, and the contributions from acquisitions.

Aerospace segment sales were $106.2 million, a decrease of 22.7% from sales of $137.3 million in the second quarter of 2009. Operating income for the second quarter of 2010 was $12.1 million, compared to operating income of $21.6 million in the 2009 second quarter.  The operating margin in this year’s second quarter was 11.4% as compared to 15.7% in the comparable period in the prior year.  The reduction in sales and profit was primarily attributable to the lower than anticipated deliveries under the JPF program, lower sales of bearing product lines, which carry higher margins than the company’s other product lines, lower sales under the Egyptian SH-2G(E) maintenance and upgrade program, and cost adjustments on other programs.  These reductions were partially offset by increased sales and profit from Sikorsky BLACK HAWK programs, including erosion coating work for rotor blades, and various other programs.

Outlook

Due to disruptions in JPF production, the company is adjusting its full year sales outlook to reflect lower anticipated sales of JPF fuzes in 2010 offset by higher anticipated BLACK HAWK cockpit deliveries.

The company’s revised expectations for 2010 include:

·   Aerospace segment sales of $480 million to $490 million

·   Aerospace operating margins of 14.0% to 14.5%

·   Industrial Distribution organic sales growth of 10% to 13% yielding sales in a range of $800 million to $815 million when combined with previously announced acquisitions

·   Industrial Distribution segment operating margins of 3.0% to 3.3%

·   Interest expense of approximately $9.6 million (net interest expense will be approximately $3.0 million as a result of a one-time look-back interest benefit)

·   Quarterly corporate expenses on average of $9.0 million to $10.0 million

Aerospace expectations include $60 million of sales in the second half of the year from the JPF program, but do not include potential opportunities related to either the sale of SH-2G(I) inventory or deployment of the unmanned K-MAX aircraft.

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“Kaman Reports 2010 Second Quarter Results”

August 5, 2010

CFO William C. Denninger commented, “Looking ahead to the second half of the year, recent economic data suggests that a recovery in the economy is likely to be gradual. However, at the same time, we are optimistic about the potential for improvement in our end markets for both Industrial Distribution and Aerospace. The strong second quarter performance of our Industrial Distribution segment provides us with confidence in our ability to meet our full year outlook for this business. In Aerospace, we are working diligently to implement the JPF product improvements developed from our root cause analysis and have resumed production.  While sales of our bearing product lines were soft in the second quarter, as we anticipated, order intake is improving, which helps support our outlook for higher sales in the second half of the year. Overall, we believe we are well positioned to benefit from gradually improving market conditions, which should in turn result in improved second half performance.”

Please see the MD&A section of the company’s SEC Form 10-Q filed concurrent with the issuance of this release for greater detail on the quarter’s results and various company programs.

A conference call has been scheduled for tomorrow, August 6, 2010 at 8:30 AM EDT.  Listeners may access the call live over the Internet through a link on the home page of the company’s website at http://www.kaman.com.  In its discussion, management may include certain non-GAAP measures related to company performance.  If so, a reconciliation of that information to GAAP, if not provided in this release, will be provided in the exhibits to the conference call and will be available through the Internet link provided above.

Non-GAAP Measure Disclosure

Management believes that the non-GAAP (Generally Accepted Accounting Principles) measures indicated by an asterisk (*) used in this release or in other disclosures provide investors with important perspectives into the company’s ongoing business performance.  The company does not intend for the information to be considered in isolation or as a substitute for the related GAAP measures.  Other companies may define the measures differently.  We define the non-GAAP measures used in this report and other disclosures, as follows:

Organic Sales per Sales Day – Organic sales per sales day is defined as GAAP “Net sales from the Industrial Distribution segment” less sales derived from acquisitions, divided by the number of sales days in a given period.  Sales days are essentially business days that the company’s branch locations are open for business and exclude weekends and holidays.  Sales days are provided as part of this release.  Management believes sales per sales day provides investors with an important perspective on how net sales may be impacted by the number of days the segment is open for business.  

Management uses sales per sales day as a measurement to compare periods in which the number of sales days differ.  The following table illustrates the calculation of sales per sales day using “Net sales: Industrial Distribution” from the “Segment Information” footnote in the “Notes to Condensed Consolidated Financial Statements” from the company’s Form 10-Q filed with the Securities and Exchange Commission on August 5, 2010 (in thousands, except days):

	For the three months ended
	July 2, 2010			April 2, 2010			December 31, 2009			October 2, 2009			July 3, 2009
Net sales	$	210,924		$	179,259		$	149,754		$	162,921		$	155,954
Acquisition related sales		27,729			-			-			-			-
Organic sales	$	183,195		$	179,259		$	149,754		$	162,921		$	155,954
Sales days		64			65			60			64			63
Organic sales per sales day	$	2,862		$	2,758		$	2,496		$	2,546		$	2,475
% change - sequential		3.8	%		10.5	%		-2.0	%		2.8	%		-7.6	%

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“Kaman Reports 2010 Second Quarter Results”

August 5, 2010

Free Cash Flow – Free cash flow is defined as GAAP “Net cash provided by (used in) operating activities” less “Expenditures for property, plant & equipment.”  Management believes free cash flow provides investors with an important perspective on the cash available for dividends to shareholders, debt repayment, and acquisitions after making capital investments required to support ongoing business operations and long-term value creation.  Free cash flow does not represent the residual cash flow available for discretionary expenditures as it excludes certain mandatory expenditures such as repayment of maturing debt.

Management uses free cash flow internally to assess both business performance and overall liquidity.  The following table illustrates the calculation of free cash flow using  “Net cash provided by (used in) operating activities” and “Expenditures for property, plant & equipment”, GAAP measures from the cash flow statement on page 8 (in thousands):

	For the Six Months Ended			For the Three Months Ended			For the Three Months Ended
	July 2, 2010			April 2, 2010			July 2, 2010
Net cash provided by (used in) operating activities	$	13, 509		$	(13,342	)	$	26,851
Expenditures for property, plant & equipment		(8,124	)		(3,579	)		(4,545	)
Free Cash Flow	$	5,385		$	(16,921	)	$	22,306

Debt to Capitalization Ratio – Debt to capitalization ratio is calculated by dividing debt by capitalization.  Debt is defined as GAAP “Notes payable” plus “Current portion of long-term debt” plus “Long-term debt, excluding current portion.”  Capitalization is defined as Debt plus GAAP “Total shareholders’ equity.”  Management believes that debt to capitalization is a measurement of financial leverage and provides investors with an insight into the financial structure of the company and its financial strength.  The following table illustrates the calculation of debt to capitalization using GAAP measures from the balance sheets on page 7 (in thousands):

	July 2, 2010			December 31, 2009
Notes payable	$	2,599		$	1,835
Current portion of long-term debt		5,000			5,000
Long-term debt, excluding current portion		95,700			56,800
Debt		103,299			63,635
Total shareholders’ equity		334,505			312,900
Capitalization	$	437,804		$	376,535
Debt to capitalization		23.6	%		16.9	%

Kaman Corporation, founded in 1945 by aviation pioneer Charles H. Kaman, and headquartered in Bloomfield, Connecticut conducts business in the aerospace and industrial distribution markets.  The company produces and/or markets widely used proprietary aircraft bearings and components; complex metallic and composite aerostructures for commercial, military and general aviation fixed and rotary wing aircraft; safe and arm solutions for missile and bomb systems for the U.S. and allied militaries; subcontract helicopter work; and support for the company’s SH-2G Super Seasprite maritime helicopters and K-MAX medium-to-heavy lift helicopters.  The company is a leading distributor of industrial parts, and operates more than 200 customer service centers and five distribution centers across North America.  Kaman offers more than 3.5 million items including bearings, mechanical power transmission, electrical, material handling, motion control, fluid power, automation and MRO supplies to customers in virtually every industry.  Additionally, Kaman provides engineering, design and support for automation, electrical, linear, hydraulic and pneumatic systems as well as belting and rubber fabrication, customized mechanical services, hose assemblies, repair, fluid analysis and motor management.

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“Kaman Reports 2010 Second Quarter Results”

August 5, 2010

Forward-Looking Statements

This release contains forward-looking information relating to the company's business and prospects, including the Aerospace and Industrial Distribution 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 company does or intends to do business; 3) standard government contract provisions permitting renegotiation of terms and termination for the convenience of the government; 4) domestic and foreign economic and competitive conditions in markets served by the company, particularly the defense, commercial aviation and industrial production markets; 5) risks associated with successful implementation and ramp up of significant new programs; 6) potential difficulties associated with variable acceptance test results, given sensitive production materials and extreme test parameters; 7) management's success in increasing the volume of profitable work at the Aerospace Wichita facility;  8) successful negotiation of the Sikorsky Canadian MH-92  program price; 9) successful resale of the SH-2G(I) aircraft, equipment and spare parts; 10) 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 all have been assumed in connection with goodwill impairment evaluations; 11) satisfactory resolution of the company’s litigation relating to the FMU-143 program; 12) continued support of the existing K-MAX helicopter fleet, including sale of existing K-MAX spare parts inventory; 13) cost estimates associated with environmental remediation activities at the Bloomfield, Moosup and New Hartford, CT facilities and our U.K. facilities; 14) profitable integration of acquired businesses into the company's operations; 15) changes in supplier sales or vendor incentive policies; 16) the effects of price increases or decreases; 17) the effects of pension regulations, pension plan assumptions and future contributions; 18) future levels of indebtedness and capital expenditures; 19) continued availability of raw materials and other commodities in adequate supplies and the effect of increased costs for such items; 20) the effects of currency exchange rates and foreign competition on future operations; 21) changes in laws and regulations, taxes, interest rates, inflation rates and general business conditions; 22) future repurchases and/or issuances of common stock; and 23) other risks and uncertainties set forth in the company's annual, quarterly and current reports, and proxy statements. Any forward-looking information provided in this release should be considered with these factors in mind. The company assumes no obligation to update any forward-looking statements contained in this release.

###

Contact: Eric Remington

V.P., Investor Relations

(860) 243-6334

Eric.Remington@kaman.com

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“Kaman Reports 2010 Second Quarter Results”

August 5, 2010

A summary of segment information follows (in thousands, unaudited):

Summary of Segment Information

	For the three months ended						For the six months ended
	July 2, 2010			July 3, 2009			July 2, 2010			July 3, 2009
Net sales:
Industrial Distribution	$	210,924		$	155,954		$	390,183		$	332,860
Aerospace		106,163			137,269			203,676			254,398
Net sales	$	317,087		$	293,223		$	593,859		$	587,258
Operating income:
Industrial Distribution	$	7,713		$	3,065		$	12,525		$	5,844
Aerospace		12,114			21,600			21,747			36,897
Net gain (loss) on sale of assets		(56	)		(53	)		520			40
Corporate expense		(8,581	)		(8,445	)		(19,109	)		(17,211	)
Operating income	$	11,190		$	16,167		$	15,683		$	25,570

KAMAN CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands except per share amounts)(Unaudited)

	For the Three Months Ended					For the Six Months Ended
	July 2, 2010			July 3, 2009		July 2, 2010			July 3, 2009
Net sales	$	317,087		$	293,223	$	593,859		$	587,258
Cost of sales		233,827			214,752		437,844			431,092
		83,260			78,471		156,015			156,166
Selling, general and administrative		72,014			62,251		140,852			130,636
Net (gain)/loss on sale of assets		56			53		(520	)		(40	)
Operating income		11,190			16,167		15,683			25,570
Interest expense, net		2,337			1,195		4,391			2,639
Other (income) expense, net		(451	)		752		(667	)		614
Earnings before income taxes		9,304			14,220		11,959			22,317
Income tax expense		3,227			4,826		4,156			7,547
Net earnings	$	6,077		$	9,394	$	7,803		$	14,770
Net earnings per share:
Basic net earnings per share	$	0.23		$	0.37	$	0.30		$	0.58
Diluted net earnings per share	$	0.23		$	0.37	$	0.30		$	0.58
Average shares outstanding:
Basic		25,926			25,638		25,877			25,586
Diluted		26,093			25,721		26,055			25,659
Dividends declared per share	$	0.14		$	0.14	$	0.28		$	0.28

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“Kaman Reports 2010 Second Quarter Results”

August 5, 2010

KAMAN CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands (Unaudited)

	July 2, 2010			December 31, 2009
Assets
Current assets:
Cash and cash equivalents	$	7,136		$	18,007
Accounts receivable, net		167,215			135,423
Inventories		306,765			285,263
Deferred income taxes		28,190			23,040
Income taxes receivable		3,540			-
Other current assets		23,427			20,870
Total current assets		536,273			482,603
Property, plant and equipment, net		83,481			81,322
Goodwill		109,339			88,190
Other intangibles assets, net		43,580			28,684
Deferred income taxes		45,467			69,811
Other assets		18,179			22,457
Total assets	$	836,319		$	773,067
Liabilities and Shareholders’ Equity
Current liabilities:
Notes payable	$	2,599		$	1,835
Current portion of long-term debt		5,000			5,000
Accounts payable – trade		95,310			79,309
Accrued salaries and wages		22,904			19,049
Accrued pension costs		6,903			1,105
Accrued contract losses		3,027			1,310
Advances on contracts		10,039			1,800
Current portion of amount due to Commonwealth of Australia		20,471			-
Other accruals and payables		51,322			39,204
Income taxes payable		-			5,458
Total current liabilities		217,575			154,070
Long-term debt, excluding current portion		95,700			56,800
Deferred income taxes		7,657			8,352
Underfunded pension		122,763			157,266
Due to Commonwealth of Australia, excluding current portion		10,806			34,067
Other long-term liabilities		47,313			49,612
Commitments and contingencies
Shareholders’' equity:
Capital stock, $1 par value per share:
Preferred stock, 200,000 shares authorized; none outstanding		-			-
Common stock, 50,000,000 shares authorized, voting, 26,004,293 and 25,817,477  shares issued, respectively		26,004			25,817
Additional paid-in capital		93,717			89,624
Retained earnings		302,605			302,058
Accumulated other comprehensive income (loss)		(86,955	)		(104,042	)
Less 63,130 and 51,000 shares of common stock, respectively,
held in treasury, at cost		(866	)		(557	)
Total shareholders’ equity		334,505			312,900
Total liabilities and shareholders’ equity	$	836,319		$	773,067

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“Kaman Reports 2010 Second Quarter Results”

August 5, 2010

KAMAN CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)(Unaudited)

	For the Six Months Ended
	July 2, 2010			July 3, 2009
Cash flows from operating activities:
Net earnings	$	7,803		$	14,770
Adjustments to reconcile net earnings to
net cash provided by (used in) operating activities
Depreciation and amortization		9,457			7,692
Change in allowance for doubtful accounts		(93	)		172
Net (gain) loss on sale of assets		(520	)		(40	)
(Gain) loss on Australian payable, net of loss on derivative instruments		(487	)		862
Stock compensation expense		2,654			1,727
Excess tax expense (benefit) from share-based compensation arrangements		(179	)		71
Deferred income taxes		(2,364	)		1,357
Changes in assets and liabilities, excluding effects of acquisitions/divestures:
Accounts receivable		(14,867	)		(2,780	)
Inventories		(10,470	)		18,989
Income tax receivable		(2,417	)		3,450
Other current assets		2,226			1,603
Accounts payable		7,918			(12,169	)
Accrued contract losses		1,719			(251	)
Advances on contracts		8,238			(684	)
Accrued expenses and payables		4,277			(3,928	)
Income taxes payable		(4,912	)		1,571
Pension liabilities		6,675			(8,869	)
Other long-term liabilities		(1,149	)		(654	)
Net cash provided by (used in) operating activities		13,509			22,889
Cash flows from investing activities:
Proceeds from sale of assets		1,075			31
Expenditures for property, plant & equipment		(8,124	)		(5,508	)
Acquisition of businesses including earn out adjustment, net of cash received		(50,637	)		(550	)
Other, net		963			(1,237	)
Cash provided by (used in) investing activities		(56,723	)		(7,264	)
Cash flows from financing activities:
Net borrowings (repayments) under revolving credit agreements		41,266			(1,117	)
Debt repayment		(2,500	)		(2,500	)
Net change in book overdraft		1,288			(1,989	)
Proceeds from exercise of employee stock plans		1,599			899
Dividends paid		(7,444	)		(7,350	)
Debt issuance costs		(43	)		-
Windfall tax (expense) benefit		179			(71	)
Other		(211	)		(36	)
Cash provided by (used in) financing activities		34,134			(12,164	)
Net increase (decrease) in cash and cash equivalents		(9,080	)		3,461
Effect of exchange rate changes on cash and cash equivalents		(1,791	)		797
Cash and cash equivalents at beginning of period		18,007			8,161
Cash and cash equivalents at end of period	$	7,136		$	12,419