Kaman Reports First Quarter 2001 Results

Apr 10, 2001, 01:00 ET from Kaman Corp.

    BLOOMFIELD, Conn., April 10 /PRNewswire/ -- Kaman Corp. (Nasdaq: KAMNA)
 today reported first quarter earnings per share increased to 38 cents on a
 diluted basis, from 36 cents per share diluted a year ago.  Net earnings were
 $8.7 million in the first quarter compared to $8.6 million for the same period
 a year ago.
     Revenues for the first quarter 2001 were $244.7 million compared to the
 $263.5 million reported the previous year.  Operating profit for the segments
 was $16.6 million for the quarter compared to $17.8 million the prior year.
 Lower operating profits were partially offset by a $0.7 million gain from the
 sale of a facility and reduced corporate expenses.
     Paul R. Kuhn, president and chief executive officer, said, "Our first
 quarter performance tracked in line with our expectations given the difficult
 operating environment of a slowing economy.  In anticipation of this
 environment, we implemented initiatives to contain costs which enabled us to
 maintain operating margins."
 
     SEGMENT PERFORMANCE
 
     Aerospace
     Operating profits for the Aerospace segment were $10.2 million compared to
 the prior year's $10.8 million.  Net sales were $92.2 million in the first
 quarter compared to $96.5 million in the period a year ago.
 
     Helicopter Programs
     SH-2G Super Seasprite business for the international naval helicopter
 market and the K-MAX medium-to-heavy lift helicopter, used in a variety of
 external lift applications, represented approximately 52 percent of Aerospace
 segment sales, and were down 15 percent from the previous year.  The majority
 of sales from helicopter programs came from the SH-2G.
     The company currently is working on contracts to supply SH-2G Super
 Seasprite helicopters to the governments of Australia and New Zealand.
 Deliveries to the Royal New Zealand Navy, which has ordered five SH-2G(NZ)
 aircraft, are scheduled to begin early in the second quarter of 2001.
     The program for the Royal Australian Navy (RAN) involves 11 SH-2G(A)
 helicopters. These aircraft will be equipped with an advanced Integrated
 Tactical Avionics System (ITAS) that will provide the most sophisticated,
 integrated cockpit and weapons system available in an intermediate-weight
 helicopter.
     Due to a contract dispute between Kaman and the ITAS supplier, Litton
 Guidance and Control Systems, there will be a delay in delivery of the full
 ITAS to the RAN.  As a result of mediation between Kaman and Litton, an
 agreement in principle was reached in February under which the two parties
 agreed to withdraw their claims upon fulfillment of mutually agreed
 commitments.  Litton's responsibilities to the program will end once its
 commitments to complete work on hardware and certain software are done, and it
 transfers a software integration laboratory, software and intellectual
 property rights to Kaman.  Kaman has identified subcontractors to complete the
 balance of the ITAS software development.  The company expects to have
 improved visibility on the overall impact on costs and profitability for the
 Australian program as agreements with the subcontractors are developed.  The
 company is working with the RAN to develop acceptance procedures and
 coordinate this year's deliveries of helicopters without the full ITAS.
     Mr. Kuhn stated, "The company expects that as deliveries to New Zealand
 and Australia occur, revenues from the SH-2G programs will begin to taper off
 during 2001.  However, the potential market for additional SH-2G helicopter
 programs is promising.  We are currently in negotiations with the United
 States and Polish governments on the refurbishment of four SH-2G helicopters
 along with future training and support.  The company also is in the late
 stages of competition for six search and rescue (SAR) helicopters for the
 government of Egypt.  The SH-2G size is ideally suited for operating from the
 type of ships in service with the Egyptian Navy.  In its last procurement for
 anti-submarine warfare helicopters, Egypt selected 10 SH-2Gs, which have been
 in service with the Egyptian Air Force since 1998."
     In the first quarter of 2001, the company realized revenue from three
 K-MAX helicopters that are part of a five-aircraft order received from the
 U. S. State Department in December 2000. The company realized revenue from the
 first two aircraft in 2000.  The aircraft are expected to be used in Peru for
 anti-drug efforts.
     Mr. Kuhn continued, "We continue to identify and pursue new opportunities
 for the K-MAX.  We are optimistic that the lifting capability and operating
 cost advantages of this unique helicopter will enable the program to
 contribute to the long term profitability of the Company."
 
     Aircraft Structures and Components
     Revenues in the aircraft structures and components business, which
 represented approximately 35 percent of the Aerospace segment's sales, grew
 10 percent from the comparable period last year.
     The company is a subcontractor on a number of commercial and defense
 aviation programs, including production of wing structures and other
 components for virtually all Boeing commercial aircraft as well as components
 for the Boeing C-17 transport and F-22 fighter.  Work also is progressing on
 two new multi-year contracts received last year from MD Helicopters, Inc. to
 supply fuselages for MDHI's entire line of single-engine helicopters, and
 composite rotor blades for its MD Explorer helicopter. These two contracts
 have a total potential value of $175 million.
     Kamatics reported a good quarter with increases in both sales and
 operating profits.  Kamatics manufactures self-lubricating bearings for use
 principally in aircraft flight controls, turbine engines and landing gear, as
 well as driveline couplings for helicopters.
 
     Advanced Technology Programs
     Revenues from the company's advanced technology products, which accounted
 for about 13 percent of the segment's sales, grew 8 percent from the same
 quarter last year.
     These products include missile safe, arm and fuzing devices for various
 missile programs, including the Maverick, AMRAAM and Penguin; precision
 measuring systems, mass memory systems, electromagnetic motors, microwave
 cabling and electro-optic systems.
 
     Industrial Distribution
     Operating profit for Kaman Industrial Technologies (KIT) was $5.1 million
 in the first quarter compared to $5.5 million a year ago.  Net sales were
 $123.1 million in the first quarter compared to $136.4 million the previous
 year.
     "Our financial results in the Industrial Distribution segment reflect the
 well-documented slowdown in the industrial markets, particularly automotive
 and steel," Kuhn said.  "The energy crisis on the West Coast also has been
 disruptive to our customer base from California to Washington.  Some
 manufacturers that we serve have closed plants or curtailed operations to cope
 with high energy costs and power shortages.  We have adjusted to this downturn
 by taking steps to reduce expenses and improve efficiency, including the
 consolidation of some branch facilities.  We believe these initiatives will
 position us to benefit significantly in an economic recovery."
 
     Music Distribution
     Kaman Music had operating profits of $1.3 million in the first quarter
 compared to $1.5 million in the previous year.  Sales for the quarter were
 $29.3 million compared to $30.4 million a year ago.
     "The Music Distribution segment has been affected by the economic slowdown
 and an overall softening in the music market.  Retailers are working to reduce
 inventories that were carried over from the prior year following the slow
 holiday sales period," Kuhn said.  "An exception has been the large retail
 stores where our sales have continued to be relatively strong."
 
     Outlook
     Looking ahead, Mr. Kuhn stated, "Based on the first quarter's results and
 the current level of visibility in each of our three operating segments, we
 believe that Kaman is positioned to post second quarter earnings level with
 the first quarter, with sequential improvement in the second half of the year.
 While the company was a net cash user during the first quarter, this situation
 should tend to reverse itself later this year. Furthermore, our strong balance
 sheet provides us the flexibility to identify and pursue opportunities to
 expand our business and enhance shareholder value. In that regard, we have
 retained a professional advisor to assist us in identifying opportunities in
 the Aerospace segment."
 
     Forward-Looking Statements
     This report contains forward-looking information relating to the
 corporation's business and prospects, including the SH-2G and K-MAX helicopter
 programs, aircraft structures and components, the industrial and music
 distribution businesses, operating cash flow, earnings expectations for future
 periods 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
 contract negotiations with government authorities, including foreign
 governments; 2) political developments in countries where the corporation
 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 corporation,
 including industry consolidation in the United States and global economic
 conditions; 5) timing of satisfactory completion of the Australian SH-2G(A)
 program; 6)  the timing, degree and scope of market acceptance for products
 such as a repetitive lift helicopter;  7)  U.S. industrial production levels;
 and  8) currency exchange rates, taxes, laws and regulations, inflation rates,
 general business conditions and other factors.  Any forward-looking
 information should be considered with these factors in mind.
 
                       KAMAN CORPORATION AND SUBSIDIARIES
                 Condensed Consolidated Summaries of Operations
                    (In thousands except per share amounts)
 
 
                                                        For the Three Months
                                                             Ended March 31,
 
                                                         2001           2000
     Revenues                                        $244,692       $263,525
     Costs and expenses:
      Cost of sales                                   182,692        198,752
      Selling, general and administrative expense      49,047         51,395
      Interest income, net                               (26)          (350)
      Other (income) / expense, net                     (487)            307
                                                      231,226        250,104
     Earnings before income taxes                      13,466         13,421
     Income taxes                                       4,725          4,865
     Net earnings                                      $8,741         $8,556
     Net earnings per share:
      Basic                                              $.39           $.37
      Diluted                                            $.38           $.36
     Average shares outstanding:
      Basic                                            22,309         23,126
      Diluted                                          23,678         24,356
     Dividends declared per share                        $.11           $.11
 
 
                       KAMAN CORPORATION AND SUBSIDIARIES
              Condensed Consolidated Balance Sheets(In thousands)
 
                                                    March 31,   December 31,
                                                         2001           2000
     Assets
     Current assets:
      Cash and cash equivalents                       $35,344        $48,157
      Accounts receivable, net                        216,197        212,374
      Inventories                                     190,141        196,148
      Other current assets                             25,932         25,321
      Total current assets                            467,614        482,000
     Property, plant and equipment, net                61,474         63,705
     Other assets                                       8,005          8,125
                                                     $537,093       $553,830
     Liabilities and shareholders' equity
     Current liabilities:
      Notes payable                                    $3,669         $3,720
      Accounts payable                                 48,055         58,057
      Accrued liabilities                              26,395         30,300
      Advances on contracts                            35,248         41,905
      Other current liabilities                        32,752         35,244
      Income taxes payable                              4,695          4,116
      Total current liabilities                       150,814        173,342
     Deferred credits                                  24,322         23,556
     Long-term debt, excluding current portion         23,226         24,886
     Shareholders' equity                             338,731        332,046
                                                     $537,093       $553,830
 
 
                       KAMAN CORPORATION AND SUBSIDIARIES
                 Condensed Consolidated Statement of Cash Flows
                                 (In Thousands)
                                                        For the Three Months
                                                             Ended March 31,
                                                         2001           2000
 
     Cash flows from operating activities:
 
      Net earnings                                     $8,741         $8,556
      Depreciation and amortization                     2,815          2,912
      Net gain on sale of assets                        (630)             --
      Accounts receivable                             (3,823)       (32,963)
      Inventory                                         6,007         11,148
      Accounts payable                               (10,002)          2,891
      Advances on contracts                           (6,657)        (2,591)
      Income taxes payable                                579          3,466
      Changes in other current assets and
       liabilities                                    (5,913)        (2,621)
      Other, net                                        (172)            638
 
     Cash provided by (used in) operating activities  (9,055)        (8,564)
 
     Cash flows from investing activities:
 
      Proceeds from sale of assets                      1,124             --
      Expenditures for property, plant & equipment    (1,040)        (1,471)
      Other, net                                         (55)           (88)
 
     Cash provided by (used in) investing activities       29        (1,559)
 
     Cash flows from financing activities:
 
      Reductions to notes payable                        (51)          (301)
      Reductions to long-term debt                    (1,660)        (1,660)
      Purchase of treasury stock                           --          (833)
      Dividends paid                                  (2,447)        (2,544)
      Proceeds from sale of stock                         371            392
 
     Cash provided by (used in) financing activities  (3,787)        (4,946)
 
     Net increase (decrease) in cash and
      cash equivalents                               (12,813)       (15,069)
 
     Cash and cash equivalents at beginning of period  48,157         76,249
 
     Cash and cash equivalents at end of period       $35,344        $61,180
 
 

SOURCE Kaman Corp.
    BLOOMFIELD, Conn., April 10 /PRNewswire/ -- Kaman Corp. (Nasdaq: KAMNA)
 today reported first quarter earnings per share increased to 38 cents on a
 diluted basis, from 36 cents per share diluted a year ago.  Net earnings were
 $8.7 million in the first quarter compared to $8.6 million for the same period
 a year ago.
     Revenues for the first quarter 2001 were $244.7 million compared to the
 $263.5 million reported the previous year.  Operating profit for the segments
 was $16.6 million for the quarter compared to $17.8 million the prior year.
 Lower operating profits were partially offset by a $0.7 million gain from the
 sale of a facility and reduced corporate expenses.
     Paul R. Kuhn, president and chief executive officer, said, "Our first
 quarter performance tracked in line with our expectations given the difficult
 operating environment of a slowing economy.  In anticipation of this
 environment, we implemented initiatives to contain costs which enabled us to
 maintain operating margins."
 
     SEGMENT PERFORMANCE
 
     Aerospace
     Operating profits for the Aerospace segment were $10.2 million compared to
 the prior year's $10.8 million.  Net sales were $92.2 million in the first
 quarter compared to $96.5 million in the period a year ago.
 
     Helicopter Programs
     SH-2G Super Seasprite business for the international naval helicopter
 market and the K-MAX medium-to-heavy lift helicopter, used in a variety of
 external lift applications, represented approximately 52 percent of Aerospace
 segment sales, and were down 15 percent from the previous year.  The majority
 of sales from helicopter programs came from the SH-2G.
     The company currently is working on contracts to supply SH-2G Super
 Seasprite helicopters to the governments of Australia and New Zealand.
 Deliveries to the Royal New Zealand Navy, which has ordered five SH-2G(NZ)
 aircraft, are scheduled to begin early in the second quarter of 2001.
     The program for the Royal Australian Navy (RAN) involves 11 SH-2G(A)
 helicopters. These aircraft will be equipped with an advanced Integrated
 Tactical Avionics System (ITAS) that will provide the most sophisticated,
 integrated cockpit and weapons system available in an intermediate-weight
 helicopter.
     Due to a contract dispute between Kaman and the ITAS supplier, Litton
 Guidance and Control Systems, there will be a delay in delivery of the full
 ITAS to the RAN.  As a result of mediation between Kaman and Litton, an
 agreement in principle was reached in February under which the two parties
 agreed to withdraw their claims upon fulfillment of mutually agreed
 commitments.  Litton's responsibilities to the program will end once its
 commitments to complete work on hardware and certain software are done, and it
 transfers a software integration laboratory, software and intellectual
 property rights to Kaman.  Kaman has identified subcontractors to complete the
 balance of the ITAS software development.  The company expects to have
 improved visibility on the overall impact on costs and profitability for the
 Australian program as agreements with the subcontractors are developed.  The
 company is working with the RAN to develop acceptance procedures and
 coordinate this year's deliveries of helicopters without the full ITAS.
     Mr. Kuhn stated, "The company expects that as deliveries to New Zealand
 and Australia occur, revenues from the SH-2G programs will begin to taper off
 during 2001.  However, the potential market for additional SH-2G helicopter
 programs is promising.  We are currently in negotiations with the United
 States and Polish governments on the refurbishment of four SH-2G helicopters
 along with future training and support.  The company also is in the late
 stages of competition for six search and rescue (SAR) helicopters for the
 government of Egypt.  The SH-2G size is ideally suited for operating from the
 type of ships in service with the Egyptian Navy.  In its last procurement for
 anti-submarine warfare helicopters, Egypt selected 10 SH-2Gs, which have been
 in service with the Egyptian Air Force since 1998."
     In the first quarter of 2001, the company realized revenue from three
 K-MAX helicopters that are part of a five-aircraft order received from the
 U. S. State Department in December 2000. The company realized revenue from the
 first two aircraft in 2000.  The aircraft are expected to be used in Peru for
 anti-drug efforts.
     Mr. Kuhn continued, "We continue to identify and pursue new opportunities
 for the K-MAX.  We are optimistic that the lifting capability and operating
 cost advantages of this unique helicopter will enable the program to
 contribute to the long term profitability of the Company."
 
     Aircraft Structures and Components
     Revenues in the aircraft structures and components business, which
 represented approximately 35 percent of the Aerospace segment's sales, grew
 10 percent from the comparable period last year.
     The company is a subcontractor on a number of commercial and defense
 aviation programs, including production of wing structures and other
 components for virtually all Boeing commercial aircraft as well as components
 for the Boeing C-17 transport and F-22 fighter.  Work also is progressing on
 two new multi-year contracts received last year from MD Helicopters, Inc. to
 supply fuselages for MDHI's entire line of single-engine helicopters, and
 composite rotor blades for its MD Explorer helicopter. These two contracts
 have a total potential value of $175 million.
     Kamatics reported a good quarter with increases in both sales and
 operating profits.  Kamatics manufactures self-lubricating bearings for use
 principally in aircraft flight controls, turbine engines and landing gear, as
 well as driveline couplings for helicopters.
 
     Advanced Technology Programs
     Revenues from the company's advanced technology products, which accounted
 for about 13 percent of the segment's sales, grew 8 percent from the same
 quarter last year.
     These products include missile safe, arm and fuzing devices for various
 missile programs, including the Maverick, AMRAAM and Penguin; precision
 measuring systems, mass memory systems, electromagnetic motors, microwave
 cabling and electro-optic systems.
 
     Industrial Distribution
     Operating profit for Kaman Industrial Technologies (KIT) was $5.1 million
 in the first quarter compared to $5.5 million a year ago.  Net sales were
 $123.1 million in the first quarter compared to $136.4 million the previous
 year.
     "Our financial results in the Industrial Distribution segment reflect the
 well-documented slowdown in the industrial markets, particularly automotive
 and steel," Kuhn said.  "The energy crisis on the West Coast also has been
 disruptive to our customer base from California to Washington.  Some
 manufacturers that we serve have closed plants or curtailed operations to cope
 with high energy costs and power shortages.  We have adjusted to this downturn
 by taking steps to reduce expenses and improve efficiency, including the
 consolidation of some branch facilities.  We believe these initiatives will
 position us to benefit significantly in an economic recovery."
 
     Music Distribution
     Kaman Music had operating profits of $1.3 million in the first quarter
 compared to $1.5 million in the previous year.  Sales for the quarter were
 $29.3 million compared to $30.4 million a year ago.
     "The Music Distribution segment has been affected by the economic slowdown
 and an overall softening in the music market.  Retailers are working to reduce
 inventories that were carried over from the prior year following the slow
 holiday sales period," Kuhn said.  "An exception has been the large retail
 stores where our sales have continued to be relatively strong."
 
     Outlook
     Looking ahead, Mr. Kuhn stated, "Based on the first quarter's results and
 the current level of visibility in each of our three operating segments, we
 believe that Kaman is positioned to post second quarter earnings level with
 the first quarter, with sequential improvement in the second half of the year.
 While the company was a net cash user during the first quarter, this situation
 should tend to reverse itself later this year. Furthermore, our strong balance
 sheet provides us the flexibility to identify and pursue opportunities to
 expand our business and enhance shareholder value. In that regard, we have
 retained a professional advisor to assist us in identifying opportunities in
 the Aerospace segment."
 
     Forward-Looking Statements
     This report contains forward-looking information relating to the
 corporation's business and prospects, including the SH-2G and K-MAX helicopter
 programs, aircraft structures and components, the industrial and music
 distribution businesses, operating cash flow, earnings expectations for future
 periods 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
 contract negotiations with government authorities, including foreign
 governments; 2) political developments in countries where the corporation
 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 corporation,
 including industry consolidation in the United States and global economic
 conditions; 5) timing of satisfactory completion of the Australian SH-2G(A)
 program; 6)  the timing, degree and scope of market acceptance for products
 such as a repetitive lift helicopter;  7)  U.S. industrial production levels;
 and  8) currency exchange rates, taxes, laws and regulations, inflation rates,
 general business conditions and other factors.  Any forward-looking
 information should be considered with these factors in mind.
 
                       KAMAN CORPORATION AND SUBSIDIARIES
                 Condensed Consolidated Summaries of Operations
                    (In thousands except per share amounts)
 
 
                                                        For the Three Months
                                                             Ended March 31,
 
                                                         2001           2000
     Revenues                                        $244,692       $263,525
     Costs and expenses:
      Cost of sales                                   182,692        198,752
      Selling, general and administrative expense      49,047         51,395
      Interest income, net                               (26)          (350)
      Other (income) / expense, net                     (487)            307
                                                      231,226        250,104
     Earnings before income taxes                      13,466         13,421
     Income taxes                                       4,725          4,865
     Net earnings                                      $8,741         $8,556
     Net earnings per share:
      Basic                                              $.39           $.37
      Diluted                                            $.38           $.36
     Average shares outstanding:
      Basic                                            22,309         23,126
      Diluted                                          23,678         24,356
     Dividends declared per share                        $.11           $.11
 
 
                       KAMAN CORPORATION AND SUBSIDIARIES
              Condensed Consolidated Balance Sheets(In thousands)
 
                                                    March 31,   December 31,
                                                         2001           2000
     Assets
     Current assets:
      Cash and cash equivalents                       $35,344        $48,157
      Accounts receivable, net                        216,197        212,374
      Inventories                                     190,141        196,148
      Other current assets                             25,932         25,321
      Total current assets                            467,614        482,000
     Property, plant and equipment, net                61,474         63,705
     Other assets                                       8,005          8,125
                                                     $537,093       $553,830
     Liabilities and shareholders' equity
     Current liabilities:
      Notes payable                                    $3,669         $3,720
      Accounts payable                                 48,055         58,057
      Accrued liabilities                              26,395         30,300
      Advances on contracts                            35,248         41,905
      Other current liabilities                        32,752         35,244
      Income taxes payable                              4,695          4,116
      Total current liabilities                       150,814        173,342
     Deferred credits                                  24,322         23,556
     Long-term debt, excluding current portion         23,226         24,886
     Shareholders' equity                             338,731        332,046
                                                     $537,093       $553,830
 
 
                       KAMAN CORPORATION AND SUBSIDIARIES
                 Condensed Consolidated Statement of Cash Flows
                                 (In Thousands)
                                                        For the Three Months
                                                             Ended March 31,
                                                         2001           2000
 
     Cash flows from operating activities:
 
      Net earnings                                     $8,741         $8,556
      Depreciation and amortization                     2,815          2,912
      Net gain on sale of assets                        (630)             --
      Accounts receivable                             (3,823)       (32,963)
      Inventory                                         6,007         11,148
      Accounts payable                               (10,002)          2,891
      Advances on contracts                           (6,657)        (2,591)
      Income taxes payable                                579          3,466
      Changes in other current assets and
       liabilities                                    (5,913)        (2,621)
      Other, net                                        (172)            638
 
     Cash provided by (used in) operating activities  (9,055)        (8,564)
 
     Cash flows from investing activities:
 
      Proceeds from sale of assets                      1,124             --
      Expenditures for property, plant & equipment    (1,040)        (1,471)
      Other, net                                         (55)           (88)
 
     Cash provided by (used in) investing activities       29        (1,559)
 
     Cash flows from financing activities:
 
      Reductions to notes payable                        (51)          (301)
      Reductions to long-term debt                    (1,660)        (1,660)
      Purchase of treasury stock                           --          (833)
      Dividends paid                                  (2,447)        (2,544)
      Proceeds from sale of stock                         371            392
 
     Cash provided by (used in) financing activities  (3,787)        (4,946)
 
     Net increase (decrease) in cash and
      cash equivalents                               (12,813)       (15,069)
 
     Cash and cash equivalents at beginning of period  48,157         76,249
 
     Cash and cash equivalents at end of period       $35,344        $61,180
 
 SOURCE  Kaman Corp.

RELATED LINKS

http://www.kaman.com