BLOOMFIELD, Conn., Aug. 3 /PRNewswire-FirstCall/ -- Kaman Corp.
(NASDAQ:KAMNA) today reported financial results for the second
quarter and six months ended July 1, 2005. Net earnings for the
second quarter of 2005 were $2.8 million, or $0.12 per share
diluted, compared to a net loss of $1.7 million, or $0.07 loss per
share diluted, in the 2004 period. The 2004 second quarter loss was
attributable to the Aerospace segment. Net sales for the second
quarter were $271.3 million, compared to $247.5 million in the
second quarter of 2004, an increase of 9.6 percent. For the first
six months of 2005 the company reported net earnings of $7.5
million, or $0.33 per share diluted, compared to a net loss of $0.5
million, or $0.02 loss per share diluted, in the first six months
of 2004. First six-month net sales for 2005 rose 8.5 percent to
$534.6 million, compared to $492.7 million in the 2004 period.
Results for the second quarter and six-month periods include the
effect of higher corporate expenses and substantially higher tax
rates arising from the non-deductibility of certain compensation
expenses during the quarter and expenses associated with the
company's proposed recapitalization plan. Paul R. Kuhn, chairman,
president and CEO, said, "The Industrial Distribution and Music
segments along with the Kamatics subsidiary within the Aerospace
segment continued their good momentum of the first quarter, each
delivering favorable performance comparisons to earlier periods.
Progress was also made in the Aerostructures, Fuzing and
Helicopters divisions of the Aerospace segment with all
contributing to operating profits for the three-and six-month
periods ended July 1, 2005. Kamatics, including the company's
German bearing manufacturer, RWG, continued to produce a
substantial majority of Aerospace segment profits for the reporting
periods. Reflecting the performance improvement of each segment,
the company increased its dividend rate by 13.6 percent to $0.50
per share on an annual basis. The first dividend at the new rate
was paid on July 11, 2005 to shareholders of record on June 27,
2005." On June 7, 2005, the company announced that it had entered
into an agreement with certain members of the Kaman family that
contemplated a proposed recapitalization that would simplify the
company's capital structure and enhance its corporate governance by
eliminating the longstanding two-class structure of common stock.
As reported, the Kaman family subsequently indicated its intention
to terminate the recapitalization agreement in order to accept an
alternate offer, as permitted under the terms of the
recapitalization agreement. The matter was submitted to arbitration
and following the arbiter's conclusion that the alternate offer was
permissible under the terms of the recapitalization agreement, the
company's board of directors approved a substitute recapitalization
proposal on July 28, 2005. In accordance with the terms of the
recapitalization agreement, the Kaman family has agreed to support
the substitute recapitalization proposal and abandon the alternate
transaction. The substitute proposal provides for an exchange ratio
of 3.58 voting common shares for each share of Class B common stock
and includes a part stock/part cash alternative under which Class B
shareholders would have the right to elect instead to receive 1.84
voting common shares and $27.10 in cash for each of their shares of
Class B common stock. The company expects to close on a new $150
million revolving credit facility expiring in August 2010 with Bank
of America Securities and Scotia Capital as Co-Lead Arrangers and a
group of four additional banks. The new facility is expected to
carry the same financial covenant package as the facility it
replaced, and is expected to be sufficient to meet the company's
anticipated working capital needs. Standard & Poor's has
assigned the new facility an investment grade rating of BBB-.
Summary of Segment Information (In millions) For the Three Months
Ended For the Six Months Ended July 1, July 2, July 1, July 2,
2005(1) 2004 (1)(2) 2005(1) 2004 (1)(2) Net sales: Aerospace $76.0
$67.1 $141.7 $126.4 Industrial Distribution 157.5 145.3 313.5 290.9
Music 37.8 35.1 79.4 75.4 271.3 247.5 534.6 492.7 Operating income
(loss): Aerospace 9.5 (3.6) 17.2 (.6) Industrial Distribution 8.4
5.8 16.9 10.8 Music 1.9 1.4 4.4 3.4 Net gain on sale of assets .1
.2 .1 .2 Corporate expense (3) (12.6) (5.7) (22.1) (12.4) Operating
income (loss) 7.3 (1.9) 16.5 1.4 Interest expense, net (.6) (.9)
(1.4) (1.7) Other expense, net (.5) (.2) (.7) (.6) Earnings (loss)
before income taxes $6.2 $(3.0) $ 14.4 $(.9) (1) The company has a
calendar year-end; however, its first three fiscal quarters follow
a 13-week convention, with each quarter ending on a Friday. The
second quarter for 2005 and 2004 ended on July 1, 2005 and July 2,
2004, respectively. (2) As reported in the 2004 Form 10-K, the
company has restated its 2004 statement of operations for the
second quarter of 2004. The adjustment reduced the loss per share
diluted by $0.01 from a loss of $(.08) originally reported to
$(.07) for the three months ended July 2, 2004, while loss per
share diluted for the six months ended July 2, 2004 remained the
same. (3) "Corporate Expense" increased for the quarter and six
months ended July 1, 2005 compared to the same periods of 2004. The
following table presents detail, including a significant increase
in stock appreciation rights expense due to the increase in the
price of Kaman shares during the quarter. For the three months
ended For the six months ended July 1, 2005 July 2, 2004 July 1,
2005 July 2, 2004 Corporate expense before other items $(7.2)
$(6.3) $(14.2) $(12.0) Other items: Stock appreciation rights (3.9)
.6 (3.9) (.4) Long term incentive plan (.5) - (2.2) - Consulting -
recapitalization (1.0) - (1.0) - Moosup plant closure - - (.8) -
Corporate expense - total $(12.6) $(5.7) $(22.1) $(12.4) REPORT BY
SEGMENT Aerospace Segment The Aerospace segment includes the three
principal operating divisions of the company's Kaman Aerospace
Corporation subsidiary: Aerostructures, Fuzing, and Helicopters;
and the Kamatics Corporation subsidiary, each of which is discussed
below. Segment sales for the second quarter of 2005 were $76.0
million, compared to $67.1 million in the second quarter of 2004.
The segment had an operating profit of $9.5 million in the second
quarter of 2005, compared to an operating loss of $3.6 million in
the second quarter of 2004, such 2004 loss being primarily
attributable to a $7.1 million non-cash adjustment to the Boeing
Harbour Pointe contract, an insufficient business base at the
segment's Bloomfield, Connecticut and Jacksonville, Florida
aircraft manufacturing facilities, and $1.6 million growth in
workers' compensation claims. Second quarter results for 2005 and
2004 include $0.7 million and $0.8 million respectively in idle
facility costs, primarily related to the Helicopters Division.
Segment sales for the first half of 2005 were $141.7 million,
compared to $126.4 million in the 2004 period. For the first half
of 2005 the segment had an operating profit of $17.2 million,
compared to an operating loss of $0.6 million for the first half of
2004 as a result of the issues noted above. Six-month results for
2005 and 2004 include $1.4 million and $1.6 million respectively in
idle facility costs. Mr. Kuhn said, "The work we have done to
realign the Aerospace segment along with the actions we have taken
to improve operational efficiencies throughout the segment are
yielding encouraging results, with sales and profitability measures
that build upon the results seen in the first quarter of this year.
With each of our principal operating units contributing to segment
profits, and with the Kamatics subsidiary providing continued
leadership in its markets, the Aerospace segment is beginning to
improve as a contributor to our consolidated results." Quarterly
sales for 2004 and 2005-to-date are given net of intercompany
eliminations for each of the segment's principal business units,
excluding the Electro-Optics Development Center, as follows. 1st
Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Business Unit 2005
2004 2005 2004 2004 2004 2004 Aerostructures $12.9 $10.7 $13.4
$11.0 $10.4 $13.3 $45.4 Fuzing 12.8 9.0 15.0 16.2 10.9 20.7 56.8
Helicopters 15.2 18.0 23.3 18.4 10.6 20.0 67.0 Kamatics/RWG 23.0
19.8 22.8 18.6 19.7 19.0 77.1 Aerostructures Division: The
Aerostructures Division had net sales of $13.4 million in the
second quarter of 2005, compared to $11.0 million in the second
quarter of 2004. Sales for the first half of 2005 were $26.3
million, compared to $21.7 million in first half of 2004. The
Aerostructures Division produces subcontract assemblies and detail
parts for commercial and military aircraft programs including
several models of Boeing commercial airliners, the C-17 military
transport, which remained the division's largest program for the
quarter, and the Sikorsky BLACK HAWK helicopter. Operations are
conducted from the Jacksonville, Florida and Wichita, Kansas
facilities. Operations at the Jacksonville facility continued to
improve in the second quarter as work progressed on the division's
contract to manufacture cockpits for four models of the Sikorsky
BLACK HAWK helicopter. As previously reported, the initial
contract, awarded in the third quarter of 2004, covers 80 cockpits
for production through 2006, and has a value of $27.7 million.
Follow-on options, if fully exercised, would have a total potential
value to Kaman of approximately $100.0 million and would include
the fabrication of approximately 349 cockpits. Delivery of cockpits
to Sikorsky began in April 2005, and four cockpits were delivered
during the second quarter. On June 29, 2005, the company notified
its two affected customers of a non-conforming part that may have
an impact on certain aircraft panels manufactured by the
Aerostructures facility in Wichita, Kansas, beginning in September
2002. The company's management has concluded that it is probable
that the division will incur costs to manufacture the replacement
panels and as a result has recorded a charge for $0.4 million
during the second quarter of 2005. On August 2, 2005, the company
received information from one of the customers indicating that the
panels would have to be replaced. Furthermore, the customer has
advised the company that there will be additional costs to replace
and install the panels on the aircraft. While the company believes
that it will ultimately be responsible for some level of additional
costs, it is currently unable to estimate the amount associated
with such responsibility because additional information must be
developed, including evaluation of contract provisions, the amount
of re-work and the number of affected aircraft. Management is
working with its customers to resolve this issue in a mutually
satisfactory manner. Fuzing Division: The Fuzing Division had net
sales of $15.0 million in the second quarter of 2005, compared to
$16.2 million in the second quarter of 2004. Fuzing Division net
sales for the first half of 2005 were $27.8 million, compared to
$25.2 million in the first half of 2004. Principal operations are
conducted at the Middletown, Connecticut and Orlando, Florida
(Dayron) facilities. The division manufactures safe, arm and fuzing
devices for major missile and bomb programs as well as precision
measuring and mass memory systems for commercial and military
applications. Principal customers include the U.S. militaries,
General Dynamics, Raytheon, Lockheed Martin and Boeing. During the
second quarter of 2005, the division continued to work on two
warranty-related issues and believes it is making progress toward
resolution of a government investigation at the Dayron operation
that has been previously reported. Also during the quarter, ramp-up
continued at the Dayron facility toward full production on the
division's contract with the U.S. Air Force for development and
production of the advanced FMU-152A/B Joint Programmable Fuze
(JPF). As previously reported, the contract has a potential value
of $168.7 million if all options for future years' production are
exercised. Releases received to date under this contract total
approximately $36.4 million. As deliveries to the U. S. military
increase under the contract, management expects that efficiencies
will also increase and that program profitability will improve,
with further enhancement as orders are received from allied
militaries. The division received its first small initial order
from a foreign military early in July 2005. Helicopters Division:
The Helicopters Division had net sales of $23.3 million in the
second quarter of 2005, compared to $18.4 million in the second
quarter of 2004. Helicopters Division net sales for the first half
of 2005 were $38.5 million, compared to $36.4 million in the first
half of 2004. Helicopters Division operations are conducted
primarily from the Bloomfield, Connecticut facilities. The division
supports and markets Kaman SH-2G maritime helicopters operating
with foreign militaries, and K-MAX "aerial truck" helicopters
operating with government and commercial customers in several
countries. The division also has other small manufacturing programs
such as fuel booms for the MH-47, and markets its helicopter
engineering expertise on a subcontract basis. SH-2G helicopters are
operating with the governments of Egypt, New Zealand, and Poland.
The division is currently in the early stages of a standard depot
level maintenance program for the ten aircraft delivered to Egypt
in 1994. Work on the first aircraft is in process, and the second
aircraft arrived at the Bloomfield facility late in the quarter.
The contract covering the maintenance work for the first two
aircraft plus an option for the next two is valued at $5.3 million.
The division is in conversations with the Egyptian government
concerning various requested upgrades to the aircraft. Production
of the 11 SH-2G(A) aircraft for the Australia program is
essentially complete. As previously reported, the aircraft lack the
full Integrated Tactical Avionics System (ITAS) software and
progress is continuing on this element of the program. The division
currently expects to deliver the first fully operational aircraft
late in 2005, after which all 11 aircraft will undergo a final
acceptance process by the Royal Australian Navy. Nine of the
aircraft have been provisionally accepted by the Navy, including
one in June 2005. Provisional acceptance of the tenth aircraft is
expected during the third quarter. The final aircraft remains in
Bloomfield and is being used as the flight test vehicle. As of July
1, 2005, the company has a remaining accrued contract loss for this
program of $13.5 million, which includes an additional $3.1 million
recorded during the second quarter of 2005 primarily due to further
testing to be performed on the ITAS software. The division
continues to support K-MAX helicopters that are operating with
customers in the field. The company has previously reported that it
would consider reopening the K-MAX production line for a
substantial firm customer order, and marketing efforts continue
principally toward government customers for use in a variety of
missions, including firefighting, anti-drug activities, and as an
unmanned vehicle for the U.S. military. During the second quarter,
the company continued to work with the U.S. Naval Air Systems
Command (NAVAIR) and the General Services Administration toward
establishing a purchase price for that portion of the Bloomfield,
Connecticut complex that the company currently leases from NAVAIR.
As part of its decision-making process, the company has submitted
an offer to NAVAIR and the General Services Administration
detailing a proposed method that would be used to calculate the
purchase price for the facility, which includes the company
undertaking certain environmental remediation activities that may
be legally required in the event of a sale of the property. The
company continues to work with government and environmental
authorities to prepare the closed Moosup, Connecticut facility for
eventual sale. Kamatics Subsidiary: Kamatics (including RWG, the
company's German aircraft bearing manufacturing arm) generated net
sales of $22.8 million in the second quarter of 2005, compared to
$18.6 million in the comparable 2004 period. Kamatics net sales for
the first half of 2005 were $45.8 million, compared to $38.4
million in the 2004 period. Operations are conducted at the
facilities in Bloomfield, Connecticut and Dachsbach, Germany.
Kamatics' proprietary self-lubricating bearings are currently in
use in almost all military and commercial aircraft produced in
North and South America and Europe, and are market-leading products
for applications requiring the highest level of engineering and
specialization in the airframe bearing market. General business
conditions in the primary aerospace markets remained positive.
Order activity from both Airbus and Boeing was strong in the
quarter, as it was from other customers in both the commercial and
military sectors. As the aviation sector strengthened, the
subsidiary was able to increase production levels while maintaining
delivery schedules, leading to additional sales opportunities and
further penetration of the market. Other Aerospace Matters: As
previously reported, the company's Electro-Optics Development
Center in Tucson, Arizona, which makes up the balance of Aerospace
segment sales, submitted a $6.3 million claim to the University of
Arizona (University) in April 2004 to recover additional costs
which the company believes are a result of changes in the scope of
a $12.8 million fixed-price contract with the University. Having
been unable to resolve the matter, Kaman filed suit in September
2004 to recover these costs from the University and discontinued
work on the project. The University subsequently filed a
counterclaim and the litigation process is ongoing. Industrial
Distribution Segment Net sales for the 2005 quarter were $157.5
million, compared to $145.3 million in the 2004 period. The
Industrial Distribution segment had operating profits of $8.4
million in the second quarter of 2005, compared to $5.8 million in
the second quarter of 2004. Net sales for the first half of 2005
were $313.5 million, compared to $290.9 million in the first half
of 2004. For the first half of 2005, the segment had operating
profits of $16.9 million, compared to $10.8 million in the same
period last year. Mr. Kuhn said, "The Industrial Distribution
segment continued its strong performance with an 8.4 percent gain
in sales during the quarter contributing $1.9 million of the growth
in operating profit. Demand remains high in the construction
materials, mining, energy production and the paper and chemical
industries. Regionally, the western states continue to produce the
strongest results. With U.S. capacity utilization rebounding to
nearly 80 percent, which is within range of its long-term average
level, our overall assessment is that the outlook for the U.S.
manufacturing economy remains positive. At this point in the cycle,
however, the recovery may now be in a decelerating mode. The
segment continues to compete well. During the quarter, the company
continued to develop its national accounts business as it renewed
its multi- year contract with Procter & Gamble, the segment's
largest customer, and won a new national account with Del Monte."
Kaman is the third largest North American industrial distributor
serving the bearings, electrical/mechanical power transmission,
fluid power, motion control and materials handling markets. Kaman
offers more than 1.5 million items, as well as value-added services
to a base of more than 50,000 customers spanning nearly every
sector of industry. The segment continues to track the U.S.
Industrial Production and Capacity Utilization Indexes. Segment
operations are headquartered in Windsor, Connecticut and conducted
from approximately 200 locations in the U.S., Canada and Mexico.
Music Segment Net sales were $37.8 million in the second quarter of
2005, compared to $35.1 million for the second quarter of 2004. The
Music segment's operating profit was $1.9 million in the second
quarter of 2005, compared to $1.4 million for the second quarter of
2004. Net sales for the first half of 2005 were $79.4 million,
compared to $75.4 million for the first half of 2004. For the first
half of 2005 the segment had operating profits of $4.4 million,
compared to $3.4 million in the first half of 2004. Commenting on
the performance, Mr. Kuhn said, "National retail chains, in
particular, continued their strong performance of the first quarter
of 2005 contributing to the results for this segment. Kaman's
premium branded products, many of which are brought to the market
on an exclusive basis, and the segment's market-leading
business-to-business systems for its customer base of over 7,000
retailers nationwide, also contributed to the performance." Kaman
is the largest independent distributor of musical instruments and
accessories in the United States, offering more than 17,500
products for amateurs and professionals. Operations are
headquartered in Bloomfield, Connecticut and conducted from a
manufacturing plant in New Hartford, Connecticut and strategically
placed warehouse facilities that cover the North American markets.
While the vast majority of Kaman's music sales are to North
American customers, export shipments are increasing as the company
continues to build its presence in key international markets.
Concluding Remark Mr. Kuhn concluded, "The company continued to
achieve progress, with each of the segments and the company as a
whole posting increases in sales and earnings over the prior year
periods. Additionally, good progress was made in the operations of
the lesser performing divisions of the Aerospace segment. As a
result, the dividend was increased. Within the next several months,
the Class A shareholders, currently representing 97.1 percent of
total shares outstanding but having no vote, will have the
opportunity to approve a recapitalization proposal that would
eliminate the existing dual class structure and provide all
shareholders with voting power proportionate to their economic
interest in the company." Forward-Looking Statements This release
may contain forward-looking information relating to the
corporation's business and prospects, including the aerospace,
industrial distribution and music businesses, operating cash flow,
the benefits of the recapitalization transaction, 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
corporation does or 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,
particularly defense, commercial aviation, industrial production
and consumer market for music products, as well as global economic
conditions; 5) satisfactory completion of the Australian
SH-2G(A)program, including successful completion and integration of
the full ITAS software; 6) 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 both have been assumed in connection with
goodwill impairment evaluations; 7) satisfactory resolution of the
EODC/University of Arizona litigation; 8) achievement of enhanced
business base in the Aerospace segment in order to better absorb
overhead and general and administrative expenses, including
successful execution of the contract with Sikorsky for the BLACK
HAWK Helicopter program; 9) satisfactory results of negotiations
with NAVAIR concerning the corporation's leased facility in
Bloomfield, Conn.; 10) profitable integration of acquired
businesses into the corporation's operations; 11) changes in
supplier sales or vendor incentive policies; 12) the effect of
price increases or decreases; 13) pension plan assumptions and
future contributions; 14) continued availability of raw materials
in adequate supplies; 15) satisfactory resolution of the supplier
switch and incorrect part issues at Dayron and the DCIS
investigation; 16) cost growth in connection with potential
environmental remediation activities related to the Bloomfield and
Moosup facilities; 17) successful replacement of the Corporation's
current revolving credit facility; 18) whether the proposed
recapitalization is completed; 19) risks associated with the course
of litigation; 20) changes in laws and regulations, taxes, interest
rates, inflation rates, general business conditions and other
factors; 21) the effects of currency exchange rates and foreign
competition on future operations; and 22) other risks and
uncertainties set forth in Kaman'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 corporation assumes no obligation to update any
forward-looking statements contained in this release. The
Corporation intends to file with the Securities and Exchange
Commission a Registration Statement on Form S-4, which will contain
a proxy statement/prospectus in connection with the proposed
recapitalization. The proxy statement/prospectus will be mailed to
the stockholders of Kaman when it is finalized. STOCKHOLDERS OF
KAMAN ARE ADVISED TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT
BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION.
Such proxy statement/prospectus (when available) and other relevant
documents may also be obtained, free of charge, on the Securities
and Exchange Commission's website (http://www.sec.gov/) or by
request from the contact listed below. Kaman and certain persons
may be deemed to be participants in the solicitation of proxies
relating to the proposed recapitalization. The participants in such
solicitation may include Kaman's executive officers and directors.
Further information regarding persons who may be deemed
participants will be available in Kaman's proxy
statement/prospectus to be filed with the Securities and Exchange
Commission in connection with the proposed recapitalization. KAMAN
CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of
Operations (In thousands except per share amounts) For the Three
Months Ended For the Six Months Ended July 1, 2005 July 2, 2004
July 1, 2005 July 2, 2004 Net sales $271,263 $247,509 $534,569
$492,660 Costs and expenses: Cost of sales 200,573 192,092 392,984
375,504 Selling, general and administrative expense 64,023 57,952
126,201 116,672 Net gain on sale of assets (93) (235) (93) (235)
Other operating income (525) (435) (983) (753) Interest expense,
net 638 949 1,350 1,744 Other expense, net 470 177 708 661 265,086
250,500 520,167 493,593 Earnings (loss) before income taxes 6,177
(2,991) 14,402 (933) Income tax benefit (expense) (3,420) 1,289
(6,940) 404 Net earnings (loss) $2,757 $(1,702) $7,462 $(529) Net
earnings (loss) per share: Basic $.12 $(.07) $.33 $(.02) Diluted
(1) $.12 $(.07) $.33 $(.02) Weighted average shares outstanding:
Basic 22,815 22,686 22,797 22,667 Diluted 23,693 22,686 23,671
22,667 Dividends declared per share $.125 $.11 $.235 $.22 (1) The
calculated diluted per share amounts for the three months ended and
six months ended July 2, 2004 are anti-dilutive, therefore, amounts
shown are equal to the basic per share calculation. KAMAN
CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets
(In thousands) July 1, 2005 December 31, 2004 Assets Current
assets: Cash and cash equivalents $10,048 $12,369 Accounts
receivable, net 190,654 190,141 Inventories 201,583 196,718
Deferred income taxes 32,953 35,837 Other current assets 14,989
15,270 Total current assets 450,227 450,335 Property, plant and
equipment, net 48,955 48,958 Goodwill and other intangible assets,
net 55,726 55,538 Other assets 8,721 7,500 $563,629 $562,331
Liabilities and shareholders' equity Current liabilities: Notes
payable $4,266 $7,255 Current portion of long-term debt 23,267
17,628 Accounts payable - trade 76,834 74,809 Accrued contract
losses 22,140 37,852 Accrued restructuring costs 3,649 3,762 Other
accrued liabilities 49,676 38,961 Advances on contracts 16,605
16,721 Other current liabilities 25,318 26,305 Income taxes payable
2,704 2,812 Total current liabilities 224,459 226,105 Long-term
debt, excluding current portion 16,873 18,522 Other long-term
liabilities 35,007 33,534 Shareholders' equity 287,290 284,170
$563,629 $562,331 KAMAN CORPORATION AND SUBSIDIARIES Condensed
Consolidated Statements of Cash Flows (In thousands) For the Six
Months Ended July 1, 2005 July 2, 2004 Cash flows from operating
activities: Net earnings $7,462 $(529) Depreciation and
amortization 4,577 4,634 Provision for losses on accounts
receivable (27) 289 Net gain on sale of product line and other
assets (93) (235) Deferred income taxes 3,308 - Other, net 1,982
1,815 Changes in current assets and liabilities, excluding effects
of acquisitions: Accounts receivable (669) (23,200) Inventory
(5,653) (6,250) Income taxes receivable - (1,552) Accounts payable
2,102 (1,972) Accrued contract losses (15,693) 4,930 Accrued
restructuring costs (113) (1,519) Advances on contracts (116) (168)
Income taxes payable (79) 6 Changes in other current assets and
liabilities 9,735 6,947 Cash provided by (used in) operating
activities 6,723 (16,804) Cash flows from investing activities:
Proceeds from sale of product line and other assets 263 348
Expenditures for property, plant & equipment (4,129) (3,834)
Acquisition of businesses, less cash acquired (1,448) (399) Other,
net (343) (1,129) Cash provided by (used in) investing activities
(5,657) (5,014) Cash flows from financing activities: Changes in
notes payable (2,989) (451) Changes in debt 3,988 30,141 Proceeds
from exercise of employee stock plans 625 629 Purchase of treasury
stock - (4) Dividends paid (5,011) (4,982) Cash provided by (used
in) financing activities (3,387) 25,333 Net increase (decrease) in
cash and cash equivalents (2,321) 3,515 Cash and cash equivalents
at beginning of period 12,369 7,130 Cash and cash equivalents at
end of period $10,048 $10,645 DATASOURCE: Kaman Corporation
CONTACT: Russell H. Jones, SVP, Chief Investment Officer &
Treasurer of Kaman Corporation, +1-860-243-6307, Web site:
http://www.kaman.com/ Company News On-Call:
http://www.prnewswire.com/comp/480450.html
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