Kaman Reports Increased Fourth Quarter, Year 2000 Earnings
BLOOMFIELD, Conn., Jan. 25 /PRNewswire/ -- Kaman Corp. (NASDAQ:KAMNA)
today reported financial results for its fourth quarter and year ended December 31, 2000.
Net earnings for the year increased to $36.9 million, or $1.57 per diluted share, from $25.1 million or $1.05 per diluted share, a year ago. Net earnings for fourth quarter 2000 were $9.6 million, or $0.42 cents per share diluted, compared to $1.6 million or $0.07 cents per share diluted the previous year. A discussion of these earnings figures is included in the segment performance sections below.
Revenues for 2000 were $1.0 billion, up slightly from 1999. Revenues for the fourth quarter increased to $253.5 million from $248.4 million in the 1999 quarter.
Paul R. Kuhn, president and chief executive officer, said, "Each of our business segments contributed to the strong earnings performance. Aerospace benefited from the aircraft structures and components business and the SH-2G helicopter programs. Both the Industrial and Music Distribution segments generated increased operating profits as a result of improved market conditions and improved operating efficiencies. Accounts receivable increased during the year, primarily at Aerospace, due to the Australia and New Zealand SH-2G programs entering their mature, pre-delivery phase. As a result, we were a net cash user during 2000; however, as deliveries are made, this situation should tend to reverse itself.
"We look forward to further improving the company's positions in the markets we serve," Kuhn said, "although we are mindful of a softening that occurred in certain segments of the economy during the fourth quarter."
SEGMENT PERFORMANCE Aerospace Segment
Year 2000 operating profits for the Aerospace segment were $44.2 million, essentially level with a year ago of $44.0 million (1999 operating profit was $41.5 million before reversal of a $2.5 million reserve, which had been associated with Raymond Engineering, now part of Kaman Aerospace). Net sales increased to $381.9 million in 2000 from $371.8 million reported in the previous year.
The Aerospace segment's operating profits for fourth quarter 2000 were $11.2 million, compared to $10.6 million a year ago. Fourth quarter net sales increased to $101.0 million from $95.4 million in 1999.
Helicopter Programs
SH-2G Super Seasprite business for the international naval helicopter market and K-MAX(R) helicopters, used in a variety of external lift applications, accounted for approximately 60 percent of the Aerospace segment's sales, most of it from the SH-2G.
The Royal New Zealand Navy, which has five SH-2Gs on order, will begin taking deliveries in the first quarter. The Royal Australian Navy has 11 of the aircraft on order. Initial deliveries of flight capable helicopters to Australia (albeit without the full Integrated Tactical Avionics System software) are scheduled to begin in the first quarter of this year. As deliveries occur, revenues from SH-2G helicopter programs will begin tapering off. The company is talking with a number of foreign governments that have indicated a need for a helicopter of the SH-2G's size and capabilities.
"The active pursuit of new SH-2G helicopter programs remains a key priority for Kaman, and we are having discussions with various governments around the world to familiarize them with the aircraft's advanced multi- mission capabilities," Kuhn said. "Foreign markets take time to develop, and acquisition decisions are subject to political and economic uncertainties. But the opportunities clearly exist and we feel the SH-2G is well suited to the shipboard helicopter requirements of a number of countries."
Litton Guidance and Control Systems, a division of Litton Industries, Inc., is a major subcontractor for the Australia and New Zealand SH-2G programs, being responsible for providing avionics system hardware and integration software. In addition, Litton is the designer and integrator of the Integrated Tactical Avionics System specific to the Australia program. Litton has stated that it is incurring additional costs to perform its fixed price contract with the company for the Australian program and submitted claims for its additional costs to the company during the year. The company's evaluation of the matter is different from Litton's and the company has, in turn, provided Litton with claims regarding the subcontractor's performance and funding issues. The parties have so far been unable to resolve their differences and have scheduled a mediation at the end of this month to address the unresolved matters.
In December, the company received a $21 million contract from the U. S. State Department for acquisition of five K-MAX helicopters, equipment and spare parts. The company recognized revenue from two of these aircraft in 2000 and the contract is expected to be completed during the second quarter of 2001. The aircraft will be utilized in Peru in support of anti-drug efforts. "This is the largest single order for K-MAX helicopters since it was introduced in 1994, and the first sale of the aircraft to the U. S. government," Kuhn said.
The company also sold four K-MAXs in 2000 to commercial customers operating in the U.S., Europe and Taiwan. The company is continuing to pursue new markets for this aircraft.
Aircraft Structures and Components
The aircraft structures and components business contributed approximately 30 percent of the segment's sales.
During the year, the company won several significant contracts:
-- MD Helicopters, Inc. selected Kaman to supply fuselages for its entire line of single-engine helicopters, including the MD600N, MD 520N, MD 530F and MD 500E helicopters in a multi-year contract potentially valued at $100 million.
-- MD Helicopters also selected Kaman to supply composite rotor systems for its popular MD Explorer(R) helicopter in a multi-year contract potentially valued at $75 million.
-- The Boeing Company awarded Kaman a three-year, follow-on contract worth a potential $98 million to supply fixed trailing edge kits for Boeing 777 and 767 aircraft, and other parts and subassemblies in support of those aircraft as well as 737, 747 and 757 airliners. The company supplies structural components for the Boeing C-17 military transport under a separate contract.
"2000 was a good year for this part of our business," Kuhn said. "I am encouraged by indications that the commercial aircraft market is strengthening, and I believe the aircraft structures business and the Kamatics components business are well-positioned to benefit from this." Advanced Technology Products
The company's advanced technology products, consisting of permanent magnet motors, electronic drives, missile fuzing devices, mass memory systems, precision measuring systems, microwave cabling and electro-optic devices, accounted for slightly above 10 percent of the segment's sales.
Sales of these products were steady for the quarter, as were operating profits. In December, the company received a $3 million contract from TESCO Corporation of Calgary, Canada, to provide additional advanced permanent magnet motors and electronic drives for oil and gas drilling equipment, marking the company's third major order from TESCO since 1996.
Industrial Distribution
Industrial Distribution operating profits increased sharply in 2000 to $22.9 million from $2.9 million in the previous year. 1999 operating profits include a pre-tax charge of $12.4 million, which was a result of a reorganization of operations, including closures of certain facilities and the write-off of excess inventory. Of this charge, $1.7 million was unused and added back into operating profits for 2000.
Industrial Distribution net sales for the full year grew to $520.8 million, compared to 1999 net sales of $505.3 million.
Fourth quarter operating profits increased to $6.1 million, compared to a loss in the 1999 quarter of $8.3 million, which included the charge. Net sales for the quarter were $117.8 million, compared to $118.9 million in the period last year.
"Industrial Distribution had a very solid performance in 2000. The segment benefited from healthy market conditions during most of the year as well as from internal initiatives undertaken early in the year to increase efficiency and service to customers," Kuhn said. "The benefits of our organizational streamlining positively impacted the bottom line and also produced benefits for our customers by helping them become more competitive in their own industries. We officially launched KamanDirect.com, which provides both existing and new customers easier access to our listing of over 1.2 million items so that they can find and purchase the products they need, and reduce transaction costs."
Kuhn continued, "While it was a very good year for Industrial Distribution overall, we did experience a weakening in the market during the fourth quarter, and that will bear watching."
Music Distribution
Music Distribution operating profits in 2000 rose to $7.4 million from $5.6 million the previous year. Net sales rose to $128.5 million from $118.4 million in 1999.
Fourth quarter operating profits were $2.9 million compared to $2.3 million a year ago. Net sales for the quarter were $34.5 million compared to $33.7 million a year ago.
"The solid performance in Music Distribution is a result of increased sales in domestic and international markets and our continued efforts to improve efficiency and reduce costs. Again, we are keeping a cautious eye on the economy," Kuhn said.
"We are working to improve market share of our existing brands while adding new products that meet the needs of our dealer base," Kuhn said. In 2000, the company was selected by Fred Gretsch Enterprises to assume global sales and marketing responsibility for Gretsch(R) brand professional quality drum products. That arrangement is expected to expand in 2001.
Kaman Corp., headquartered in Bloomfield, conducts business in the aerospace, industrial distribution and music distribution markets.
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, 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) political developments in countries where the corporation intends to do business; 2) standard government contract provisions permitting renegotiation of terms and termination for the convenience of the government; 3) economic and competitive conditions in markets served by the corporation, including industry consolidation in the United States and global economic conditions; 4) timing of satisfactory completion of the Australian SH-2G(A) program; 5) the timing, degree and scope of market acceptance for products such as a repetitive lift helicopter; 6) U.S. industrial production levels; and 7) 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.
(NOTE: Effective Dec. 31, 2000, the company adopted Emerging Issues Task Force Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs." Therefore, freight charged to customers in the Industrial Distribution and Music Distribution segments is now included in sales ($14.0 million in 2000) rather than as an offset to freight expense. All prior year amounts in these segments ($12.9 million in 1999) have been restated to conform to the current presentation.)
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Summaries of Operations
(In thousands except per share amounts)
For the Three Months Ended For the Twelve Months Ended
December 31, December 31,
2000 1999 2000 1999
Revenues $253,516 $248,365 $1,032,326 $997,177
Costs and expenses:
Cost of sales 187,844 193,495* 774,264 751,291*
Selling, general and
administrative expense 52,414 48,891 202,319 201,807
Restructuring costs (1,680) 4,132 (1,680) 4,132
Interest income, net (280) (636) (1,660) (1,614)
Other expense, net 260 178 1,363 1,088
238,558 246,060 974,606 956,704
Earnings before
income taxes 14,958 2,305 57,720 40,473
Income taxes 5,400 733 20,800 15,400
Net earnings $9,558 $1,572 $36,920 $25,073
Net earnings per share:
Basic $.43 $.07 $1.61 $1.07
Diluted $.42 $.07 $1.57 $1.05
Average shares outstanding:
Basic 22,236 23,224 22,936 23,468
Diluted 23,528 24,511 24,168 24,810
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, 2000 December 31, 1999
Assets
Current assets:
Cash and cash equivalents $48,157 $76,249
Accounts receivable, net 212,374 156,173
Inventories 196,148 199,731
Other current assets 25,321 27,958
Total current assets 482,000 460,111
Property, plant and equipment, net 63,705 64,332
Other assets 8,125 9,760
$553,830 $534,203
Liabilities and shareholders' equity
Current liabilities:
Notes payable $3,720 $4,514
Accounts payable 58,057 48,760
Accrued liabilities 30,300 31,421
Advances on contracts 41,905 50,243
Other current liabilities 35,244 29,499
Income taxes payable 4,116 3,937
Total current liabilities 173,342 168,374
Deferred credits 23,556 22,906
Long-term debt,
excluding current portion 24,886 26,546
Shareholders' equity 332,046 316,377
$553,830 $534,203
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
For the Twelve Months
Ended December 31,
2000 1999
Cash flows from operating activities:
Net earnings $36,920 $25,073
Depreciation and amortization 11,630 11,998
Restructuring costs (1,680) 4,132
Accounts receivable (56,201) 52,077
Inventory 3,583 8,166
Accounts payable 9,297 (2,811)
Advances on contracts (8,338) (51,133)
Income taxes payable 179 (1,992)
Changes in other current assets and liabilities 6,487 (5,858)
Other, net 6,476 2,890
Cash provided by (used in) operating activities 8,353 42,542
Cash flows from investing activities:
Proceeds from sale of businesses and other assets 56 538
Expenditures for property, plant & equipment (11,044) (10,964)
Other, net (963) 194
Cash provided by (used in) investing activities (11,951) (10,232)
Cash flows from financing activities:
Reductions to notes payable (794) (287)
Reductions to long-term debt (1,660) (1,660)
Purchase of treasury stock (13,660) (10,596)
Dividends paid (10,193) (10,352)
Proceeds from sale of stock 1,813 1,704
Cash provided by (used in) financing activities (24,494) (21,191)
Net increase (decrease) in cash
and cash equivalents (28,092) 11,119
Cash and cash equivalents at beginning of period 76,249 65,130
Cash and cash equivalents at end of period $48,157 $76,249
Source: Kaman Corp.
Contact: David M. Long of Kaman Corp., 860-243-6319
Website: http://www.kaman.com/
Company News On-Call: http://www.prnewswire.com/comp/480450.html or fax,
800-758-5804, ext. 480450
