-----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, Esreushm4r3doIwBwVcBmsvoAqCst9iJ0dDxy9KlQ2DMpsFJwonrgKZ+plKV1Ij7 dDAizQ328Gfw6FwQ1GfqSw== 0000054381-96-000007.txt : 19960813 0000054381-96-000007.hdr.sgml : 19960813 ACCESSION NUMBER: 0000054381-96-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960812 SROS: NASD 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-01093 FILM NUMBER: 96607872 BUSINESS ADDRESS: STREET 1: BLUE HILLS AVE CITY: BLOOMFIELD STATE: CT ZIP: 06002 BUSINESS PHONE: 2032437100 MAIL ADDRESS: STREET 1: PO BOX 1 CITY: BLOOMFIELD STATE: CT ZIP: 06002 FORMER COMPANY: FORMER CONFORMED NAME: KAMAN AIRCRAFT CORP DATE OF NAME CHANGE: 19680403 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE - --- SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996. -------------- OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM - --- ______________ TO ______________ Commission File No. 0-1093 KAMAN CORPORATION (Exact Name of Registrant) Connecticut 06-0613548 (State of Incorporation) (I.R.S. Employer Identification No.) Blue Hills Avenue Bloomfield, Connecticut 06002 (Address of Principal Executive Offices) Registrant's telephone number, including area code: (860)243-7100 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of July 31, 1996: Class A Common 17,968,009 Class B Common 667,814 Page 1 of 12 Pages KAMAN CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION Item 1. Financial Statements: Condensed Consolidated Balance Sheets (In thousands) June 30, December 31, Assets 1996 1995 ------ ---------------- ----------------- Current assets: Cash $ 4,278 $ 4,078 Accounts receivable (net of allowance for doubtful accounts of $2,572 in 1996, $2,289 in 1995) 198,174 177,878 Inventories: Raw materials $ 9,266 $ 8,761 Work-in-process 68,846 53,696 Finished goods 16,222 22,870 Merchandise for resale 112,189 206,523 107,407 192,734 -------- -------- Other current assets 28,619 30,174 -------- -------- Total current assets 437,594 404,864 Property, plant and equipment, at cost 190,841 189,317 Less accumulated depreciation and amortization 111,012 106,263 -------- -------- Net property, plant and equipment 79,829 83,054 Other assets 11,997 12,151 -------- -------- $529,420 $500,069 ======== ======== Liabilities and Shareholders' Equity ------------------------------------ Current liabilities: Notes payable $ 57,779 $ 63,498 Accounts payable 75,027 61,729 Accrued liabilities 40,719 38,151 Other current liabilities 36,131 42,895 -------- -------- Total current liabilities 209,656 206,273 Deferred credits 13,628 13,127 Long-term debt, excluding current portion 86,107 66,386 Shareholders' equity: Series 2 preferred stock $ 57,167 $ 57,167 Other shareholders' equity 162,862 220,029 157,116 214,283 -------- -------- -------- -------- $529,420 $500,069 ======== ========
- 2 - KAMAN CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION, Continued Item 1. Financial Statements, Continued: Condensed Consolidated Statements of Earnings (In thousands except per share amounts) For the Three Months For the Six Months Ended June 30, Ended June 30, -------------------- ------------------ 1996 1995 1996 1995 ---- ---- ---- ---- Revenues $246,525 $221,938 $486,558 $431,954 Costs and expenses: Cost of sales 185,716 165,230 363,180 317,396 Selling, general and administrative expense 48,532 46,696 99,545 93,221 Interest expense 2,377 2,250 4,806 4,084 Other expense 134 (45) 289 240 -------- -------- -------- -------- 236,759 214,131 467,820 414,941 -------- -------- -------- -------- Earnings before income taxes 9,766 7,807 18,738 17,013 Income taxes 4,354 3,144 8,124 6,800 -------- -------- -------- -------- Net earnings $ 5,412 $ 4,663 $ 10,614 $ 10,213 ======== ======== ======== ======== Preferred stock dividend requirement $ (929) $ (929) $ (1,858) $ (1,858) ======== ======== ======== ======== Earnings applicable to common stock $ 4,483 $ 3,734 $ 8,756 $ 8,355 ======== ======== ======== ======== Net earnings per common share: Primary $ .24 $ .20 $ .47 $ .45 Fully diluted $ .23 $ .20 $ .45 $ .44 ======== ======== ======== ======== Dividends declared per share: Series 2 preferred stock $ 3.25 $ 3.25 $ 6.50 $ 6.50 Common stock $ .11 $ .11 $ .22 $ .22 ======== ======== ======== ========
- 3 - KAMAN CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION, Continued Item 1. Financial Statements, Continued: Condensed Consolidated Statements of Cash Flows (In thousands) For the Six Months Ended June 30, ------------------- 1996 1995 ------ ------ Cash flows from operating activities: Net earnings $10,614 $10,213 Depreciation and amortization 5,990 5,627 Gain on sale of assets (295) (1,773) Changes in current assets and liabilities (23,428) (34,667) Other, net 652 789 -------- -------- Cash provided by (used in) operating activities (6,467) (19,811) -------- -------- Cash flows from investing activities: Proceeds from sale of assets 1,758 3,810 Expenditures for property, plant & equipment (3,992) (5,367) Other, net (240) (122) -------- -------- Cash provided by (used in) investing activities (2,474) (1,679) -------- -------- Cash flows from financing activities: Additions(reductions) to notes payable (5,719) 1,250 Additions to long-term debt 20,000 25,000 Dividends paid (5,946) (5,885) Other, net 806 518 -------- -------- Cash provided by (used in) financing activities 9,141 20,883 -------- -------- Net increase(decrease) in cash 200 (607) Cash at beginning of period 4,078 3,711 -------- -------- Cash at end of period $ 4,278 $ 3,104 ======== ========
- 4 - KAMAN CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION, Continued Item 1. Financial Statements, Continued: Notes to Condensed Consolidated Financial Statements (In Thousands) Basis of Presentation - ---------------------- The December 31, 1995 condensed consolidated balance sheet amounts have been derived from the previously audited consolidated balance sheet of Kaman Corporation and subsidiaries. The balance of the condensed financial information reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented and are of a normal recurring nature unless otherwise disclosed in this report. The statements should be read in conjunction with the notes to the consolidated financial statements included in Kaman Corporation's 1995 Annual Report. Cash Flow Items - --------------- Cash payments for interest were $4,582 and $3,866 for the six months ended June 30, 1996 and 1995, respectively. Cash payments for income taxes for the six months ended June 30, 1996 and 1995 were $6,675 and $1,743, respectively. - 5 - KAMAN CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION, Continued Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - --------------------- Consolidated revenues for the three month and six month periods ended June 30, 1996 were up 11% and 13% respectively, compared to the same periods of 1995. These results reflect increased revenues in both the Distribution and Diversified Technologies segments. Distribution segment revenues increased approximately 8% for the quarter and six months ended June 30, 1996 compared to the same periods of 1995. Revenue increases in both the industrial distribution (which constitutes 75% of the segment's revenues) and music distribution businesses contributed to these results. For the quarter and six months ended June 30, 1996, Industrial Distribution sales have continued to increase at a stronger rate than that of industrial production generally. Results are due in part to the company's efforts to expand partnering relationships with suppliers, address the needs of customers who want to consolidate their vendor base, and provide value-added services in areas such as electrical and electronic systems, materials handling, and precision positioning systems. The company currently plans to open several new branch operations during the year in the south and midwest regions of the United States to service new customers and develop additional business. These are geographical regions where the company has not traditionally had a strong presence. In addition, the company is increasingly being given the opportunity to perform an "integrated supply" function for its larger customers, which includes management of the customer's parts inventories and associated personnel as well as selection of suppliers for the facility. Management believes that these initiatives, in combination with enhanced operating efficiencies attained during the past few years, have resulted in increased market share for this business. Music Distribution sales increased 20% and 14% for the three month and six month periods, compared to the same periods of 1995. These results reflect positive foreign and domestic economic conditions and demand for its products. Diversified Technologies segment revenues increased approximately 16% for the quarter and 22% for the six months ended June 30, 1996 compared to the same periods of 1995. The increases are primarily attributable to sales of the K-MAX (Registered Trademark) helicopter, SH-2G retrofit work in connection with the Republic of Egypt's acquisition of ten (10) SH-2G helicopters from the U.S. Navy, and to some extent, increases in scientific services. - 6 - KAMAN CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION, Continued Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Within the Diversified Technologies segment, management continues initiatives to adapt the corporation's businesses to conditions in defense and commercial aircraft markets. With respect to its SH-2 helicopter, management is pursuing the potential for use of this aircraft by foreign military services. In 1995, the corporation began work pursuant to a letter agreement between the Republic of Egypt and the U.S. Navy for the acquisition of ten (10) SH-2G helicopters. This work, which could have a value of up to $160 million over a three-year period, involves the retrofit of SH-2F helicopters already manufactured for the U.S. Navy into the SH-2G configuration. The contract between the corporation and the U.S. Navy for this work is not yet finalized, however, the corporation has received a contract to provide long lead materials and services in support of the sale in the amount of $56 million. Deliveries are scheduled to begin in the fourth quarter of 1997. The corporation is also seeking other opportunities for foreign sales and has established an office in Australia to coordinate work on competitions in New Zealand, Australia, and Malaysia. Regarding New Zealand's procurement of four (4) to six (6) aircraft, the corporation was the only U.S. company among the two competitors that were invited to enter the Best and Final Offer process, and the corporation's offer has been submitted. The corporation was notified in July by the New Zealand government that there will be a postponement of its award announcement until the November 1996 time frame, after general elections are held in that country. In the U.S., while the corporation is not manufacturing further aircraft for the U.S. Navy, sixteen aircraft are currently in the Naval Reserves and the corporation expects to provide logistics and spare parts support for these aircraft. As to its advanced technology defense programs, management continues to believe that it is well positioned to compete in the current defense environment where emphasis is being placed upon advanced technology "smart weapons" programs. The corporation has significant experience and expertise with advanced technology programs, having performed a multitude of government contracts over the years. These contracts have involved products and systems, as well as services such as computer software development, intelligence analysis, and research and development. The corporation continues to be successful in maintaining revenues from this type of business, however, competition for these contracts has increased. The corporation also performs aerospace subcontracting work for several airframe manufacturing programs. This business had been adversely affected by weakness in the domestic aircraft industry for some time, however there has recently been some evidence of renewed health in the industry, with the roll out of the new Boeing 777 and the government's announcement regarding longer term production of the McDonnell Douglas C-17 being good examples. - 7 - KAMAN CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION, Continued Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) The K-MAX program is now in its second year of commercial operation. K-MAX is a medium to heavy lift "aerial truck" with operating characteristics that distinguish it from other helicopters for use in logging, fire fighting, reforestation, utility power line work, and other applications. The aircraft is now certified in the United States, Canada, Japan, and Switzerland. The special lease program for the first five (5) helicopters has been substantially completed. The corporation continues to lease a few of the aircraft, generally with initial customers. Otherwise, the aircraft is being sold in the United States and abroad. Production of six (6) aircraft is scheduled for 1996. Management continues to take a conservative approach to market introduction of this aircraft and expects that sales and profitability will take some time to achieve. Management also believes that a conservative approach is prudent since the market has been affected by a number of military surplus aircraft that have been (and may be in the future)released to the public at lower cost than new aircraft. In April 1996 the Military Sealift Command ("MSC"), U.S. Navy, awarded the corporation a contract to provide an extended demonstration of the K-MAX helicopter's vertical replenishment ("VERTREP") capability. That demonstration began in May, with two (2) K-MAX helicopters scheduled to support MSC airborne cargo movement for a period of seven (7) months. The value of the contract is estimated at $5.7 million. The demonstration is being conducted under a charter/lease arrangement whereby the corporation provides the aircraft, crew, and all maintenance and logistics support. This is the second MSC award that the corporation has received for this type of work; the first award was for a two-month VERTREP demonstration in the third quarter of 1995. Management believes that the federal government's continuing evaluation of the charter/lease concept for K-MAX in a non-combat role represents another significant step forward in the process of defense acquisition reform. Total operating income for the segments increased approximately 19% and 13% for the three month and six month periods ended June 30, 1996 compared to the same periods of 1995. Operating profits for the Diversified Technologies segment increased some 13% and 11% for the quarter and six month periods, from the same periods last year. Results for the first quarter of 1995 included a gain on the sale of land in this segment. If the gain is disregarded, operating profits for the first six months of 1996 increased 23%, due primarily to two aerospace subcontract programs that are in the final stages of completion and work on the SH-2G sale for Egypt. Operating profits for the Distribution segment were up about 27% and 16% respectively for the three month and six month periods ended June 30, 1996, compared to the same periods last year, due to relatively healthy domestic and foreign markets. Work continues in the Music business to address manufacturing costs for its European activities. - 8 - KAMAN CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION, Continued Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) Interest expense for the first half of 1996 increased almost 18% compared to the same period of 1995, due to increases in average borrowings and higher interest rates. The consolidated effective income tax rate for the first six months of 1996 was 43.4%. For the same period of 1995, the rate was 40.0%. Net earnings for the quarter ended June 30, 1996 were $5.4 million, compared to $4.7 million for the same period of 1995. After giving effect to preferred stock dividend requirements, earnings available to common shareholders were $4.5 million for the second quarter of 1996 compared to $3.7 million for the same period of 1995. Net earnings for the six months ended June 30, 1996 were $10.6 million, compared to $10.2 million for the same period of 1995. After giving effect to preferred stock dividend requirements, earnings available to common shareholders were $8.8 million for the six-month period of 1996 compared to $8.4 million for the same period of 1995. Results for 1995 included a gain of approximately $1.8 million on the sale of real estate within the Diversified Technologies segment. Adjusted to exclude this one-time gain, net earnings for the first six months of 1996 were up approximately 16% over 1995. Liquidity and Capital Resources - ------------------------------- The corporation's cash flow from operations has generally been sufficient to finance a significant portion of its working capital and other capital requirements. In recent periods, the corporation has financed somewhat more of its requirements from bank borrowings. For general borrowing purposes, the corporation maintains a revolving credit agreement involving twelve domestic and foreign banks. This facility was established in January 1996 and provides a maximum unsecured line of credit of $250 million. It replaces two previous revolving credit arrangements and involves many of the same lenders that participated in those arrangements. The agreement has a term of five years and contains various covenants, including debt to capitalization, consolidated net worth requirements, and limitations on other loan indebtedness that the corporation may incur. As of June 30, 1996, the corporation's aggregate borrowings were $107.1 million, most of which was borrowed under the revolving credit facility. Average borrowings were $119.0 million for the first six months of 1996, compared to $86.0 million for the same period last year. - 9 - KAMAN CORPORATION AND SUBSIDIARIES PART I - FINANCIAL INFORMATION, Continued Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Continued) The corporation has a stock repurchase program under which it may repurchase slightly more than 700,000 Class A shares. As of June 30, 1996, a total of 188,000 Class A shares had been repurchased under the program. The primary purpose of the stock repurchase program is to meet the needs of the Employees Stock Purchase Plan and Stock Incentive Plan. Management believes that the corporation's cash flow from operations and available unused bank lines of credit under its revolving credit agreement will be sufficient to finance its working capital and other capital requirements for the foreseeable future. These requirements may include working capital requirements for potential foreign sales of the SH-2 helicopter. Forward Looking Statements - -------------------------- This report includes forward-looking statements that describe the corporation's business prospects. Readers should keep in mind factors that could have an adverse impact on those prospects. These include political, economic, or other conditions, such as recessionary or expansive trends, inflation rates, currency exchange rates, taxes and regulations and laws affecting the business; and standard government contract provisions permitting termination for the convenience of the government; as well as product competition, pricing, the degree of acceptance of new products to the marketplace, and the difficulty of forecasting sales at various times in various markets. - 10 - KAMAN CORPORATION AND SUBSIDIARIES PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits to Form 10-Q: (11) Earnings per common share computation (27) Financial Data Schedule (b) Reports on Form 8-K: There have been no reports on Form 8-K filed during the quarter ended June 30, 1996. 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 Registrant Date: August 12, 1996 By Charles H. Kaman President and Chief Executive Officer (Duly Authorized Officer) Date: August 12, 1996 By Robert M. Garneau Executive Vice President and Chief Financial Officer - 11 - KAMAN CORPORATION AND SUBSIDIARIES Index to Exhibits Exhibit 11 Earnings Per Share Common Computation Attached Exhibit 27 Financial Data Schedule Attached - 12 - EX-11 2 KAMAN CORPORATION AND SUBSIDIARIES EXHIBIT 11 - EARNINGS PER COMMON SHARE COMPUTATION (In thousands except per share amounts) For the Three Months For the Six Months Ended June 30, Ended June 30, -------------------- ------------------ 1996 1995 1996 1995 ---- ---- ---- ---- Primary: Net earnings applicable to common stock $ 4,483 $ 3,734 $ 8,756 $ 8,355 ======== ======== ======== ======== Weighted average number of common shares outstanding 18,584 18,306 18,541 18,266 Weighted average shares issuable on exercise of dilutive stock options 141 210 127 192 -------- -------- -------- -------- Total 18,725 18,516 18,668 18,458 ======== ======== ======== ======== Net earnings per common share - primary $ .24 $ .20 $ .47 $ .45 ======== ======== ======== ======== Fully diluted: Net earnings applicable to common stock $ 4,483 $ 3,734 $ 8,756 $ 8,355 Elimination of interest expense on 6% subordinated convertible debentures(net after taxes) 282 297 570 597 Elimination of preferred stock dividend requirement 929 929 1,858 1,858 -------- -------- -------- -------- Net earnings (as adjusted) $ 5,694 $ 4,960 $ 11,184 $ 10,810 ======== ======== ======== ======== Weighted avg. no. of shares out- standing including shares issuable on exercise of stock options 18,725 18,516 18,668 18,458 Shares issuable on conversion of 6% subordinated convertible debentures 1,421 1,421 1,421 1,421 Shares issuable on conversion of Series 2 preferred stock 4,551 4,551 4,551 4,551 Additional shares using ending market price instead of average market on treasury method use of stock option proceeds - 28 8 14 -------- -------- -------- -------- Total 24,697 24,516 24,648 24,444 ======== ======== ======== ======== Net earnings per common share - fully diluted $ .23 $ .20 $ .45 $ .44 ======== ======== ======== ========
EX-27 3
5 The schedule contains summary financial information extracted from the corporation's quarterly report to shareholders and is qualified in its entirety by reference to such financial statements. 1000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 4,278 0 200,746 (2,572) 206,523 437,594 190,841 (111,012) 529,420 209,656 86,107 0 57,167 18,627 144,235 529,420 485,656 486,558 363,180 462,725 289 0 4,806 18,738 8,124 10,614 0 0 0 10,614 .47 .45
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