Kaman Reports Fourth Quarter and 1999 Results
BLOOMFIELD, Conn., Jan. 27 /PRNewswire/ -- (NASDAQ:KAMNA)
Kaman Corp. today reports that the company posted net earnings for the full year 1999 of $25.1 million, compared to $30.0 million the previous year. Net earnings per common share for 1999 were $1.05 on a diluted basis, compared to $1.23 the previous year. Excluding adjustments described below, net earnings per common share for 1999 increased to $1.31 on a diluted basis, compared to $1.23 in 1998.
Fourth quarter and 1999 net earnings were impacted by a pre-tax charge of $12.4 million, or 32 cents per share, taken in December with respect to its Industrial Distribution segment. 1999 earnings were also affected by a gain in the second quarter of approximately 6 cents per common share as a result of reversing a reserve established in 1994 associated with Raymond Engineering (now part of Kaman Aerospace).
Revenues for 1999 were $984.2 million, compared to $1 billion in 1998.
Net earnings for the fourth quarter 1999 following the charge were $1.6 million, or 7 cents per common share, compared to $7.8 million or 32 cents per share on a diluted basis in 1998. Revenues for the fourth quarter 1999 were $245.1 million, compared to $269.8 million in 1998.
SEGMENT PERFORMANCE
The corporation reports results in three segments: Aerospace, Industrial Distribution and Music Distribution.
Aerospace
Full year 1999 operating profit for Aerospace was $44.0 million, up slightly from $43.3 million the previous year. Aerospace operating profit for 1999 included a gain of $2.5 million from reversing the reserve described above. Net sales were $371.8 million in 1999 versus $382.7 million in 1998.
The segment's operating profit for the fourth quarter 1999 was $10.6 million, compared to $11.2 million in 1998. Fourth quarter net sales declined to $95.4 million, compared to $113.9 million the previous year, primarily as a result of lower revenues in the aircraft structures and component business.
"The segment's sales and operating profit during 1999 came principally from our SH-2G Super Seasprite helicopter programs for Australia and New Zealand and our aircraft structures and components business," according to Paul R. Kuhn, president and chief executive officer. "This performance, however, was offset by losses in the K-MAX(R) helicopter program, which continued to require investment for technical work and market development.
Aircraft production is underway for the five ship Super Seasprite order from New Zealand, with first delivery scheduled for late this year. In the fourth quarter of 1999, Kaman began flight testing the SH-2G(A) production prototype for the Royal Australian Navy. The integration and test program for the advanced cockpit, sensors and weapons systems will take most of this year. First deliveries to Australia are expected to begin in early 2001.
Kaman's aircraft structures and components business performed well during the year despite softness in this market. "While deliveries of commercial aircraft were at record highs in 1999, analysts are projecting overall deliveries to decline over the next few years. Traditionally, aircraft structures and components manufacturing tend to lead these cycles, and in light of this," said Kuhn, "we are working hard to grow our market positions."
"We are continuing our initiatives to improve efficiency and reduce costs in Aerospace by expanding 'lean thinking' practices and streamlining the organization. We already are seeing the results of these efforts and I believe there is continuing opportunity for improvement as we go forward," said Kuhn.
Industrial Distribution
Industrial Distribution operating profit for 1999 was $2.9 million, compared to $18.6 million in 1998. In December 1999, the company announced that it was undertaking initiatives to streamline this segment's operational structure and increase efficiency. As a result, Kaman Corp. took a pre-tax charge of $12.4 million, or 32 cents per share, against fourth quarter earnings. Approximately $4.1 million of the charge represented costs associated with the reorganization of operations and closure of branches and other facilities. Approximately $8.3 million represented a write-off of inventory that was determined to be obsolete or excess to the ongoing organization.
Industrial Distribution net sales for the full year 1999 were $493.8 million, compared to $503.5 million a year earlier.
The segment posted a net operating loss of $8.3 million in the fourth quarter of 1999 as a result of the charge, compared to operating profit of $4.0 million in 1998. Net sales for the quarter declined to $116.1 million, compared to $121.6 million in the fourth quarter 1998.
"Industrial Distribution continued to experience pressure on operating margins as a result of depressed markets for a number of key industries in North America, chiefly primary metals, mining, paper and chemicals," said Kuhn. "Low capacity utilization in these industries produced lower demand for industrial replacement products. Competition also increased during the year, as suppliers continued to consolidate and refocus their strategies. During the fourth quarter, however, Industrial Distribution did see some improvement in per day sales, which we consider encouraging.
"In December, we took steps to better position the company to compete and meet the changes in the market," said Kuhn. "We have reorganized the operation's sales, marketing and field management structure -- flattening it out so that we have senior people closer to the customer and can better react to local market changes. We have also consolidated certain branches and closed others, following a review of customer geography. As part of the reorganization process, we completed an extensive program to clean out obsolete and excess inventory so that we become more efficient and focused on the products and turn-around that our customers are seeking as they look to suppliers for ways to improve their businesses.
"The end result of these actions, we believe, is to make the segment a leaner and more responsive competitor in its market," said Kuhn.
Music Distribution
Music Distribution performance in 1999 was essentially level with the previous year. Operating profit for the full year was $5.6 million, compared to $5.3 million in 1998. Music's net sales for 1999 were $116.9 million, compared to $118.3 million a year earlier.
Fourth quarter 1999 operating profit for Music was $2.3 million, compared to $2.1 million a year ago. Net sales for the quarter were $33.2 million, compared to $33.9 million in 1998.
"Domestic sales to music retailers were good during the fourth quarter, and early reports indicate that the holiday selling season by retailers was favorable. Although a smaller portion of Music's sales, the international market for instruments and accessories remained weak during 1999, reflecting economic difficulties in various regions of the world," said Kuhn.
Kaman Corp., based here, is a $1 billion company with businesses in the aerospace, industrial distribution and music markets.
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Summaries of Operations
(In thousands except per share amounts)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
1999 1998 1999 1998
Revenues $245,136 $269,833 $984,233 $1,006,006
Costs and expenses:
Cost of sales 189,536* 199,212 735,982* 741,719
Selling, general and
administrative
expense 49,621 57,178 204,172 212,724
Restructuring costs 4,132 -- 4,132 --
Interest expense
(income), net (636) (21) (1,614) (353)
Other expense
(income), net 178 438 1,088 1,558
242,831 256,807 943,760 955,648
Earnings before
income taxes 2,305 13,026 40,473 50,358
Income taxes 733 5,211 15,400 20,350
Net earnings $1,572 $7,815 $25,073 $30,008
Net earnings
per common share:
Basic $.07 $.33 $1.07 $1.28
Diluted $.07 $.32 $1.05 $1.23
Average common shares
outstanding:
Basic 23,224 23,676 23,468 23,407
Diluted 24,511 25,165 24,810 25,235
Dividends declared
per share .11 .11 .44 .44
*Cost of sales for 1999 includes the write-off of inventory of $8,250 associated with the charge taken in the Industrial Distribution segment.
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
December 31, 1999 December 31, 1998
Assets
Current assets:
Cash and cash equivalents $76,249 $65,130
Accounts receivable, net 156,173 213,128
Inventories 199,731 207,897
Other current assets 27,958 30,349
Total current assets 460,111 516,504
Property, plant and equipment, net 64,332 65,773
Other assets 9,760 4,953
$534,203 $587,230
Liabilities and shareholders' equity
Current liabilities:
Notes payable $4,514 $4,801
Accounts payable 48,760 51,571
Accrued liabilities 31,421 28,725
Advances on contracts 50,243 101,376
Other current liabilities 29,499 36,573
Income taxes payable 3,937 5,929
Total current liabilities 168,374 228,975
Deferred credits 22,906 20,555
Long-term debt, excluding
current portion 26,546 28,206
Shareholders' equity 316,377 309,494
$534,203 $587,230
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
For the Twelve Months
Ended December 31,
1999 1998
Cash flows from operating activities:
Net earnings $25,073 $30,008
Depreciation and amortization 11,998 11,068
Restructuring costs 4,132 --
Accounts receivable 52,077 (21,974)
Advances on contracts (51,133) (3,347)
Income taxes payable (1,992) (30,799)
Changes in other
current assets
and liabilities (625) (4,391)
Other, net 2,890 3,005
Cash provided by (used in)
operating activities 42,420 (16,430)
Cash flows from investing activities:
Proceeds from sale of
businesses and other assets 538 5,642
Expenditures for property,
plant & equipment (10,964) (19,184)
Other, net 194 (478)
Cash provided by (used in)
investing activities (10,232) (14,020)
Cash flows from financing activities:
Reductions to notes payable (287) (2,406)
Reductions to long-term debt (1,660) (1,661)
Purchase of treasury stock (10,596) (2,212)
Dividends paid (10,230) (10,085)
Proceeds from sale of stock 1,704 1,970
Cash provided by (used in)
financing activities (21,069) (14,394)
Net increase (decrease)
in cash and cash equivalents 11,119 (44,844)
Cash and cash equivalents
at beginning of period 65,130 109,974
Cash and cash equivalents
at end of period $76,249 $65,130
Source: Kaman Corporation
Contact: David M. Long of Kaman Corporation, 860-243-6319,
dml-corp@kaman.com
Website: http://www.kaman.com/
Company News On-Call: http://www.prnewswire.com/comp/480450.html or fax,
800-758-5804, ext. 480450
