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Investor Presentation
November 8, 2016
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Forward Looking Statements
FORWARD-LOOKING STATEMENTS
This presentation contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements also may be included in other publicly available documents issued by the Company and in oral statements made by our officers and
representatives from time to time. These forward-looking statements are intended to provide management's current expectations or plans for our future operating and
financial performance, based on assumptions currently believed to be valid. They can be identified by the use of words such as "anticipate," "intend," "plan," "goal," "seek,"
"believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "would," "could," "will" and other words of similar meaning in connection with a
discussion of future operating or financial performance. Examples of forward looking statements include, among others, statements relating to future sales, earnings, cash
flows, results of operations, uses of cash and other measures of financial performance.
Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and other factors that may cause the Company's actual results and
financial condition to differ materially from those expressed or implied in the forward-looking statements. Such risks, uncertainties and other factors include, among others:
(i) changes in domestic and foreign economic and competitive conditions in markets served by the Company, particularly the defense, commercial aviation and industrial
production markets; (ii) changes in government and customer priorities and requirements (including cost-cutting initiatives, government and customer shut-downs, the
potential deferral of awards, terminations or reductions of expenditures to respond to the priorities of Congress and the Administration, or budgetary cuts resulting from
Congressional actions or automatic sequestration); (iii) changes in geopolitical conditions in countries where the Company does or intends to do business; (iv) the
successful conclusion of competitions for government programs (including new, follow-on and successor programs) and thereafter successful contract negotiations with
government authorities (both foreign and domestic) for the terms and conditions of the programs; (v) the existence of standard government contract provisions permitting
renegotiation of terms and termination for the convenience of the government; (vi) the successful resolution of government inquiries or investigations relating to our
businesses and programs; (vii) risks and uncertainties associated with the successful implementation and ramp up of significant new programs, including the ability to
manufacture the products to the detailed specifications required and recover start-up costs and other investments in the programs; (viii) potential difficulties associated with
variable acceptance test results, given sensitive production materials and extreme test parameters; (ix) the receipt and successful execution of production orders under the
Company's existing U.S. government JPF contract, including the exercise of all contract options and receipt of orders from allied militaries, but excluding any next
generation programmable fuze programs, as all have been assumed in connection with goodwill impairment evaluations; (x) the continued support of the existing K-MAX®
helicopter fleet, including sale of existing K-MAX® spare parts inventory and the receipt of orders for new aircraft sufficient to recover our investment in the restart of the K-
MAX® production line; (xi) the accuracy of current cost estimates associated with environmental remediation activities; (xii) the profitable integration of acquired businesses
into the Company's operations; (xiii) the ability to implement our ERP systems in a cost-effective and efficient manner, limiting disruption to our business, and allowing us to
capture their planned benefits while maintaining an adequate internal control environment; (xiv) changes in supplier sales or vendor incentive policies; (xv) the effects of
price increases or decreases; (xvi) the effects of pension regulations, pension plan assumptions, pension plan asset performance, future contributions and the pension
freeze, including the ultimate determination of the U.S. Government's share of any pension curtailment adjustment calculated in accordance with CAS 413; (xvii) future
levels of indebtedness and capital expenditures; (xviii) the continued availability of raw materials and other commodities in adequate supplies and the effect of increased
costs for such items; (xix) the effects of currency exchange rates and foreign competition on future operations; (xx) changes in laws and regulations, taxes, interest rates,
inflation rates and general business conditions; (xxi) the effects, if any, of the United Kingdom's exit from the European Union; (xxii) future repurchases and/or issuances of
common stock; (xxiii) the incurrence of unanticipated restructuring costs or the failure to realize anticipated savings or benefits from past or future expense reduction
actions; and (xxiv) other risks and uncertainties set forth herein and in our 2015 Form 10-K.
Any forward-looking information provided in this presentation should be considered with these factors in mind. We assume no obligation to update any forward-looking
statements contained in this presentation.
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What is Kaman?
Solving Our Customers’ Critical Problems with Technically
Differentiated Products & Services
Leading Provider of Highly Engineered Aerospace &
Industrial Solutions Serving a Broad Range of End Markets
4
30%
26%
44%
Defense
Fuzing
Commercial
50%
31%
19%
Bearings and Mechanical
Power Transmission
Automation, Control and
Energy
Fluid Power
39%
61%
Distribution
Kaman Corporation Overview
Distribution
Aerospace
$1.8B Revenues
Aerospace
Based on LTM results as of the quarter ended September 30, 2016
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Growth Opportunities
Secular trends helping to drive significant long-term growth
opportunities in both Aerospace and Distribution segments
AEROSPACE
• OEM/Tier 1 outsourcing and supplier
consolidation
• Higher bearing content on new platforms
• Increasing commercial build rates driving
bearing and aerostructure sales
• New programs provide offset to lower
defense spending
• Expanded geographic footprint
DISTRIBUTION
• Supplier consolidation favors larger national
service providers
• Increased need for value added services
• Large fragmented market provides
consolidation opportunities
• Factory automation trends driving fluid
power and high speed automation solutions
• National accounts
6
Capital Deployment Framework
Capital deployment is focused on growth investments &
return of capital to shareholders
Dividends &
Share Repurchases
Capital
Expenditures
Acquisitions
Total $885 Million
Period: 2010 to Q3 2016
61%23%
16%
• Strategic acquisitions to create
shareholder value
• High return capital expenditures
including facility expansions,
machinery and equipment, and IT
infrastructure
• Dividends paid without interruption
for 46 years
• $100 million share repurchase
authorization in place to offset
dilution from employee stock plans
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39%Aerospace
8
Aerospace Overview
v
AEROSYSTEMS
SPECIALTY BEARINGS &
ENGINEERED PRODUCTS
FUZING & PRECISION
PRODUCTS
• Engineering design and testing
• Tooling design & manufacture
• Advanced machining and composite
aerostructure manufacturing
• Complex assembly
• Helicopter MRO and support
• Self-lube airframe bearings
• Traditional airframe bearings
• Miniature ball bearings
• Flexible drive systems
• Aftermarket engineered
components
• Bomb and missile safe and
arm fuzing devices
• Precision measuring systems
• Memory products
• Global commercial and defense OEM’s
• Super Tier I’s to subcontract manufacturers
• Aircraft operators and MRO
• Specialized aerospace distributors
• Industrial and medical manufacturers of high precision equipment
• U.S. and allied militaries
• Weapon system OEMs
• Continued growth of bearing product line revenue from new program
positions, higher build rates and recent acquisitions
• Expanding engineered products portfolio into new end markets
• Assembly and structures capabilities provide opportunities for
additional subcontract programs
• Exclusivity and significant
backlog provide a stable
revenue base
Business
Dynamic
Customers
Products
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Global Aerospace Footprint
10
Significant Platforms
737
777
787
K-MAX®
A350
AH-1Z
UH-60SH-2JPF
A-10
11
Broad Portfolio of Specialty Bearings and Engineered Products
Traditional airframe bearings
Flexible drive systems
Self-lube bearings
High precision miniature bearings
Aftermarket components
12
High Precision Miniature Ball Bearings – Example Applications
Dental
Handpiece
Blowers
Cryo Pump
Surgical Power
Tools
Wind Speed
Instruments
Material Handling
Mechanical
Spindle
Navigation Systems
CAD/CAM
Analytical Devices
Climate Control
Gears
High-Speed
Placement
Blood Pump
Pressure
Regulation
Centrifuges
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Aftermarket Components – Major Platforms
Rolls-Royce 250
• Over 600 PMAs
• Estimated 11,000 engines in service
• Part offerings include:
– Compressor wheels
– Turbine nozzles
– Combustion liners
– Vane diffusers
PT6
• Over 170 PMAs
• Estimated 16,000 engines in service (most
popular in GA)
• Part offerings include:
– Turbine blades
– Shroud segments
– Gears and shafts
Honeywell APU
• Over 130 PMAs
• Estimated 15,000 APUs in service
• Part offerings include:
– Turbine blades
– Sector gear
– Shroud segment
– Inlet guide vanes
– Aft diffuser housing
Medium Helicopter
• Over 200 PMAs, including 29 Bell
approved parts
• Estimated 7,000 aircraft in service
• Part offerings include:
– Main rotor grips
– Tail rotor shafts
– Bearings, strap fittings
– Blade bolts
– Trunnions
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Fuzing Products
SLAM-ER
HARPOON
MAVERICK
AMRAAM
FMU-139
TOMAHAWK
JPF
STANDARD
MISSILE
SLAM-ER
SLAM-ERAMRAAM
TOMAHAWK
STANDARD
MISSILE
AGM-65M
AMRAAMOn a Majority of U.S. Weapon Systems
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• U.S. Air Force (USAF) multi-function hard/soft
target advanced bomb fuze system
• Highly flexible fuze system enabling in-flight
reprogramming of a weapon on the wing
• Operational reliability in the field is greater
than 99%
• Compatible with most U.S. and NATO aircraft
- 27 foreign customers
• Kaman is the sole provider of the JPF
• Increasing production capacity to meet
demand
Bomb Compatibility
- JDAM
- Paveway II and III
- GBU-10, 12, 16, 24, 27, 28, 31, 32,
38, 54
- BLU-109, 110, 111, 113, 117, 121,
122, 126
- MK82/BSU-49, MK83/BSU-85,
MK84/BSU-50
JPF Program
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• 2016 deliveries expected to increase to 33,000 to 35,000 fuzes from 24,700
in 2015
• USAF has stated that current inventory levels are below desired quantity
• Solid program multi-year backlog of over $195 million
• Order pipeline is robust – including pending orders for USAF and U.A.E.
requirements, which would provide visibility into 2020
JPF Demand is Strong
($ Millions)
$0
$50
$100
$150
$200
$250
12/31/2012 12/31/2013 12/31/2014 12/31/2015 9/30/2016
JPF Backlog
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• SH-2G
In service with Egypt, New Zealand, Poland, and Peru
Flying fleet projected to grow at least 40% from 2014 level
Significant opportunity exists to expand and upgrade the size and capability
of the Egyptian fleet
• K-MAX®
Expect deliveries of new aircraft to begin in the first half of 2017
We continue to pursue unmanned USMC and DOI programs with our
partner Lockheed Martin
• Aftermarket support including spares, repairs and MRO
Air Vehicles and MRO
Unmanned K-MAX® Commercial K-MAX®SH-2G Super Seasprite
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Distribution
61%
19
Distribution Overview
PRODUCT
PLATFORM
BEARINGS &
MECHANICAL POWER
TRANSMISSION (BPT)
FLUID POWER
AUTOMATION, CONTROL &
ENERGY (ACE)
LTM Q3 2016
% of Sales
50% 19% 31%
Estimated
Market Size(1)
$13 Billion $7 Billion $15 Billion
Acquisitions
since 2010
• Allied Bearings Supply
• Plains Bearing
• Florida Bearings Inc.
• Ohio Gear and
Transmission
• INRUMEC
• Catching
• Northwest Hose & Fittings
• Western Fluid Components
• B. W. Rogers
• Calkins Fluid Power
• Zeller
• Minarik
• Target Electronic Supply
• B. W. Rogers
• G.C. Fabrication
Major Suppliers
(1) Source: PTDA Market Size Report; US Census Bureau; ARC Advisory
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Strong Nationwide Footprint
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Platform Evolution
74%
14%
12%
2009 Salesa = $613M
Through acquisitions and organic growth, Kaman has significantly grown its
Distribution business while greatly expanding its product offering
Bearings & Power Transmission up 21%
Automation, Control & Energy up 338%
Fluid Power up 194%
50%
31%
19%
9/30/2016 LTM Salesa = $1.1B
b
b
b
Sales from continuing operations
Growth in sales from the full year 2009 thru LTM 9/30/2016
a
b
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Scale
Distribution – Road to 7+% Operating Margin
TODAY
<5%
FUTURE
7+%
Improved Operational
Efficiencies
Product Mix
Strategic Pricing
CATALYSTS
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Acquisitions in all Product Platforms
$400,000,000
$500,000,000
$600,000,000
$700,000,000
$800,000,000
$900,000,000
$1,000,000,000
$1,100,000,000
$1,200,000,000
$1,300,000,000
2007 2008 2009 2010 2011 2012 2013 2014 2015
D
is
tr
ib
u
ti
o
n
G
ro
u
p
S
a
le
s
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Adding Leading Brands in Multiple Technologies
PLCs, HMIs
Sensors & Signaling
Machine Safety
Hydraulics
Pneumatics
Fluid Connectors
Motion Control
Servos & Steppers
Linear Motion
Bearings
Power Transmission
Industrial Supplies
V
a
lu
e
-
A
d
d
e
d
T
e
c
h
n
o
lo
g
ie
s
2009 2016
25
Extensive Solution and Service Capabilities
System Design & Build Fluid Power Systems
Hose & Coupling
Assemblies
Application Engineering Belt Fabrication Maintenance & Reliability
26
Summary
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Outstanding portfolio of
highly engineered
products and proprietary
technologies across
Aerospace
Distribution aligned with
best-in-class vendors and
delivers system solutions
Diverse end market and
customer exposure
provides consistent
performance to fund
growth
Strategically
Positioned
Kaman Investment Highlights
Improving
Financials
Reliable Business
Strategies
Focused on driving
profitable top-line
growth
Delivering EBITDA
growth through scale
and operational
execution
Generating strong
consistent cash flow to
fund long-term growth
Disciplined acquisition growth
to achieve scale and margin
expansion
Continuing focus on
innovation and internal
investment to maintain
differentiation and drive
productivity
Relentless effort to drive
operational excellence
across the company
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Long-Term Financial Targets
Kaman Corporation
• 3% – 6% organic sales
growth
• 3% – 10% including
acquisitions
Distribution
• 3% – 6% organic sales
growth
• 3% – 10% including
acquisitions
• 7+% operating margin
Aerospace
Corporate Expense
• ≤2.5% of sales by 2019
Free Cash Flow
• 80% – 100% of net
income
• 3% – 6% organic sales
growth
• 3% – 10% including
acquisitions
• High-teens operating
margin %
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Appendix
30
1
2
3
4
5
6
7
89
10 11
12
13
1415
16
Aircraft Programs/Capabilities
1. Doors
2. Nose landing gear
3. Engine/thrust reverser
4. Flight controls
5. Flaps
6. Main landing gear
7. Rudder
8. Horizontal stabilizer
Bearing Products Other Products
9. Door assemblies
10. Top covers
11. Fixed leading edge
12. Fixed trailing edge
13. Winglets
14. Wing structures, flaps, slats
15. Composite structures (e.g. access
doors, radomes, consoles)
16. Nacelle components
15
15
31
1
4
1
2
3
5
4
4 4
4
Aircraft Programs/Capabilities
1. Flexible drive systems
2. Flight control bearings
3. Landing gear bearings
Bearing Products Other Products
4. Manufacture and subassembly of
major structures (e.g. cockpit)
5. Blade manufacture, repair and
overhaul
6. Manufacture of composite
structures (e.g. radomes)
6
32
Airframe Bearings and Components
• Flap Systems
• Doors
• Landing gear
• Flight controls
• Thrust reversers
Fixed Wing
Industrial
Rotary Wing
Marine and Hydro
• Flexible drive systems
• Flight control bearings
• Landing gear
bearings
• Dive systems
• Doors and hatches
• Rudder
• Periscope
• Wicket gates
• Navigational locks
• Oil sands bearings
and track rollers
• Motorsport bearings
and bushings
33
Financial Information and Non-
GAAP Reconciliations
34
Sales and Operating Income
Kaman Corporation and Subsidiaries
Adjusted Net Sales and Adjusted Operating Income
Quarterly data for the years ended December 31
2015 2016
Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 YTD
SALES FROM CONTINUING OPERATIONS
Distribution net sales 311,471$ 304,050$ 296,312$ 265,706$ 1,177,539$ 288,664$ 286,052$ 274,388$ 849,104$
Aerospace net sales 131,311 142,274 137,430 186,571 597,586 162,534 184,590 179,086 526,210
Settlement of Bell matter - - - - - - (4,300) - - (4,300)
Aerospace adjusted net sales 131,311 142,274 137,430 186,571 597,586 162,534 180,290 179,086 521,910
Total 442,782$ 446,324$ 433,742$ 452,277$ 1,775,125$ 451,198$ 466,342$ 453,474$ 1,371,014$
OPERATING INCOME FROM CONTINUING OPERATIONS
Distribution
GAAP Operating Income 12,964$ 15,403$ 14,422$ 6,652$ 49,441$ 10,469$ 13,807$ 11,872$ 36,148$
Restructuring and Severance Costs 259 589 - 1,496 2,344 347 - 344 691
Adjusted operating income from continuing
operations 13,223$ 15,992$ 14,422$ 8,148$ 51,785$ 10,816$ 13,807$ 12,216$ 36,839$
% of net sales 4.2% 5.3% 4.9% 3.1% 4.4% 3.7% 4.8% 4.5% 4.3%
Aerospace
GAAP Operating Income as reported 21,821$ 29,153$ 27,801$ 31,553$ 110,328$ 21,297$ 30,461$ 29,616$ 81,374$
Acqusitions inventory step-up - - - 508 508 - 1,065 - 1,065
Acquisistion and integration costs - - - 198 198 2,002 1,237 546 3,785
Resolution of Aerospace contract claim - - - 4,000 4,000 - - - -
Adjusted operating income 21,821$ 29,153$ 27,801$ 36,259$ 115,034$ 23,299$ 32,763$ 30,162$ 86,224$
% of net sales 16.6% 20.5% 20.2% 19.4% 19.2% 14.3% 17.7% 16.8% 16.4%
% of adjusted net sales 16.6% 20.5% 20.2% 19.4% 19.2% 14.3% 18.2% 16.8% 16.5%
Corporate
GAAP corporate expense (12,428)$ (14,557)$ (12,450)$ (16,143)$ (55,578)$ (13,444)$ (14,407)$ (10,402)$ (38,253)$
Acquisistion Costs for GRW and EXTEX - - 437 3,545 3,982 - - - -
Adjusted corporate expense (12,428)$ (14,557)$ (12,013)$ (12,598)$ (51,596)$ (13,444)$ (14,407)$ (10,402)$ (38,253)$
Net gain(loss) on sale of assets (27)$ 432$ 10$ (87)$ 328$ 28$ (14)$ (24)$ (10)$
Adjusted total net operating profit 22,589$ 31,020$ 30,220$ 31,722$ 115,551$ 20,699$ 32,149$ 31,952$ 84,800$
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Net Earnings
Kaman Corporation and Subsidiaries
Adjusted Net Earnings and Adjusted Diluted Earnings per Share
Quarterly data for the years ended December 31
2015 2016
Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 YTD
Adjustments to Net Earnings, pre tax
Aerospace acquisition costs and inventory step-up - - 437 4,251$ 4,688$ 2,002$ 2,302$ 546$ 4,850$
Aerospace resolution of contract claim - - - 4,000 4,000 - - - -
Restructuring and severance costs 259$ 589$ - 1,496 2,344 347 - 344 691
Foreign currency transaction expenses associated with
purchase of GRW - - - 2,992 2,992 - - - -
Recognition of tax benefit/(loss) from tax law changes - (4,402) - 2,113 (2,289) - - - -
Adjustments, pre tax 259$ (3,813)$ 437$ 14,852$ 11,735$ 2,349$ 2,302$ 890$ 5,541$
Adjustments to Net Earnings, tax
Aerospace acquisition costs and inventory step-up - - 153 1,488$ 1,641$ 701$ 806$ 191$ 1,697$
Aerospace resolution of contract claim - - - 1,400 1,400 - - - -
Restructuring and severance costs 91$ 164$ - 524 779 121 - 120 242
Foreign currency transaction expenses associated with
purchase of GRW - - - 1,047 1,047 - - - -
Recognition of tax benefit/(loss) from tax law changes - - - - - - - - -
Adjustments, pre tax 91$ 164$ 153$ 4,459$ 4,867$ 822$ 806$ 311$ 1,939$
Adjustments to Net Earnings, net of tax
GAAP Net earnings, as reported 12,749$ 21,691$ 17,224$ 8,774$ 60,438$ 9,777$ 16,495$ 17,455$ 43,727$
Aerospace acquisition costs and inventory step-up - - 284 2,763 3,047 1,301 1,496 355 3,152
Aerospace resolution of contract claim - - - 2,600 2,600 - - 224 224
Restructuring and severance costs 168 425 - 972 1,565 226 - - 226
Foreign currency transaction expenses associated with
purchase of GRW - - - 1,945 1,945 - - - -
Recognition of tax benefit/(loss) from tax law changes - (4,402) - 2,113 (2,289) - - - -
Adjusted Net Earnings 12,917$ 17,714$ 17,508$ 19,167$ 67,306$ 11,304$ 17,991$ 18,034$ 47,329$
Calculation of Adjusted Diluted Earnings per Share
GAAP diluted earnings per share 0.46$ 0.77$ 0.62$ 0.32$ 2.17$ 0.35$ 0.59$ 0.62$ 1.56$
Aerospace acquisition costs and inventory step-up - - 0.01 0.10 0.11 0.05 0.05 0.01 0.11
Aerospace resolution of contract claim - - - 0.09 0.09 - - - -
Restructuring and severance costs 0.01 0.02 - 0.03 0.06 0.01 - 0.01 0.02
Foreign currency transaction expenses associated with
purchase of GRW - - - 0.07 0.07 - - - -
Recognition of tax benefit/(loss) from tax law changes - (0.16) - 0.08 (0.08) - - - -
Adjusted Diluted Earnings per Share 0.47$ 0.63$ 0.63$ 0.69$ 2.42$ 0.41$ 0.64$ 0.64$ 1.69$
Diluted weighted average shares outstanding 27,878 28,098 27,770 27,725 27,868 27,806 27,944 28,080 27,943
36
Cash Flow, Balance Sheet, and Capital Factors
Kaman Corporation and Subsidiaries
Cash Flow, Balance Sheet and Capital Factors
YEAR ENDED YEAR ENDED YEAR ENDED NINE MONTHS
December 31, December 31, December 31, YTD as of
2013 2014 2015 Sept. 30, 2016
FREE CASH FLOW FROM CONTINUING OPERATIONS
Net earnings 59,066$ 65,780$ 60,438$ 43,727$
Depreciation and amortization 31,555 36,209 37,729 33,732
Changes in working capital and other (25,781) 7,100 11,417 (7,443)
Capital expenditures (40,852) (28,283) (29,932) (23,926)
Free cash flow from continuing operations 23,988$ 80,806$ 79,652$ 46,090$
DEBT TO CAPITALIZATION
Total debt 275,214$ 281,232$ 439,227$ 420,472$
Temporary equity, convertible notes -$ -$ -$ 2,344$
Total shareholders' equity 511,292 517,665 543,077 564,613
Capitalization 786,506$ 798,897$ 982,304$ 987,429$
Debt to capitalization 35.0% 35.2% 44.7% 42.6%