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From our founding in 1945, when Charles Kaman first demonstrated a new rotor concept to make helicopters more stable and easier to fly, Kaman has been a company known for developing innovative solutions to significant challenges.
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Our performance in 2011 demonstrates that Charles Kaman's spirit of innovation infuses all aspects of our company, from engineering breakthroughs to new approaches to delivering outstanding customer service.
The Unmanned K–MAX® built by Team K–MAX, which consists of Lockheed Martin and the Helicopters Division of Kaman Aerospace Corporation, was named one of The 50 Best Inventions of 2011 by Time Magazine. The aircraft was lauded for providing "a safer way to supply troops deep inside hostile territory." The Unmanned K–MAX recently became the service's first-ever unmanned cargo aircraft system to deploy in an operational environment, having arrived in Afghanistan, and is now delivering cargo to U.S. Marine Corps troops at forward operating bases.
Bearing When the first AIRBUS A350 rolls off the production line in 2015, it will take to the air with significant content from Kaman Specialty Bearings and Engineering Products(KSB). One unique bearing type will combine the newly developed proprietary material, KAron® VS, with a ceramic coated titanium ball, technology pioneered by KSB subsidiary Kamatics almost 50 years ago. Kamatics has always innovated and continues to produce bearings for the industry's most friction-sensitive applications on the newest and most advanced aircraft.
Kaman Precision Products partnered with Microfabrica Inc. and the Charles Stark Draper Laboratory to develop MINIATURIZED MECHANICAL SAFE-AND-ARM DEVICES for munitions, using a proprietary microelectromechanical systems (MEMS) process. Miniaturizing the safe-and-arm functionality of a fuze opens up new applications, such as smaller caliber munitions and smart fuzes that allow more room for sensors, actuators and control circuitry, making weapons even safer for our men and women in uniform.
When an Industrial Distribution client experienced defects in the consistent application of glue while assembling corrugated boxes on its production line, our Minarik unit developed a monitoring system to detect glue application problems immediately, reducing scrap and downtime. This type of tailored, PACKAGED SOLUTION, an increasingly important focus for Industrial Distribution, demonstrates the innovative problem solving we provide to make our customers more successful.
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Innovations built in 2011 position Kaman to continue to develop new solutions to important challenges. Our Industrial Distribution business will continue to broaden its product offerings, creating new ways to serve a growing customer base. In Aerospace, each of our programs will continue to seek breakthroughs in technology to create a sustained and differentiated advantage.
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While technology and innovation underlie everything we do, a commitment to meeting – and exceeding – customer expectations has been key to our continuing success. Finding new approaches to create superb customer experiences is a core component of our long-range growth strategy.
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During 2011, Kaman continued to invest in customer service in both Aerospace and Industrial Distribution. We focused on understanding the always changing needs and expectations of our customers and meeting these needs with new solutions and new approaches to doing business.
Kaman's airframe bearings are a premium product offering industry-leading performance. This leadership is complemented by outstanding customer service, including the industry's shortest lead times and extremely high on-time delivery performance. During 2011, with work well underway on the 787 at its newly-opened Charleston, SC plant, Boeing needed a specialized airframe bearing, which had not yet been developed. Boeing "needed it yesterday" to prevent a halt in production. So Kaman's Specialty Bearings team got right to work. The team designed the part, procured the raw material, had three outside processes performed, completed the components and delivered them to Charleston twelve days after receiving the call for help, compared to a normal lead time of eighteen weeks for this type of bearing. As a result, production on the innovative 787 continued uninterrupted.
An Industrial Distribution customer's bottling plant was experiencing rinser chain failures, a mission critical production process. Such failures are costly, including unplanned maintenance, the expense of a replacement chain, and more significantly, downtime of the line. Kaman's engineers proposed a monitoring system to measure the chain's tension, stretch, speed and lubrication. The resulting extended chain life delivered increased mean time between failure (MTBF), reduced costs, improved productivity from fewer product jams and increased uptime.
Factory A long-standing and productive relationship between Spirit and Kaman Composites UK resulted in an important contract extension awarded during 2011. The contract is for a family of 30 sandwich structural wing panels constructed from Nomex honeycomb and carbon fiber prepreg cloth for the AIRBUS A330 aircraft. The previous five-year contract has been extended to 2016, with an optional extension of a further two years.
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A focus on customer service delivered strong dividends during 2011, with significant new awards from long-standing customers in all of our businesses.
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Investments in technology are vital to supporting our long-term strategic objectives and a key driver of competitive differentiation. These investments support our own operations while helping to create more effective solutions for our customers.
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During 2011, Kaman invested in technology across the company. These investments ranged from new data warehousing and telecommunications applications to cutting-edge systems that created important new opportunities to extend our product offering and deepen relationships.
During 2011, Industrial Technologies implemented a Voice over Internet Protocol (VoIP) telephone system. This groundbreaking system routes customer calls to an available expert seamlessly across all 184 locations utilizing Kaman's extensive data network. The importance of this new system was demonstrated last fall, when Hurricane Irene and an unusually early winter storm threatened to disrupt business for many of our customers. Instead, the VoIP system provided uninterrupted service to all customers, despite power outages at nine branch locations, re-routing over 1,350 calls per day.
A new BACKUP DATA CENTER, implemented during 2011, has dramatically increased Kaman's information technology capabilities and added redundancy for improved risk mitigation. The new data center is constructed of steel-reinforced concrete and, along with the primary data center, is connected to all of Kaman's remote facilities through a fault-tolerant fiber optic communications ring. Both of Kaman's data centers have backup power generation and utilize the very latest in data networking, server virtualization and data storage technology.
All Industrial Distribution warehouses use a WAREHOUSE MANAGEMENT SYSTEM (WMS) to optimize the order fulfillment process. From order receipt to packing and shipping, parts are scanned at every step to assure peak accuracy. In 2011, Industrial Distribution's warehouses achieved an accuracy level of 99.9873%
STATE-OF-THE-ART LASER PROJECTION SYSTEMS are utilized at our Helicopters and Composite Structures divisions to eliminate the use and handling of costly and time consuming composite ply locating tooling. These deliver greater accuracy and reduced cycle time, both of which contribute to increased quality and lower costs.
Industrial Distribution was named to the InformationWeek 500 for innovative use of information technology.
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Technology investments added value in three important ways during 2011. They contributed to greater efficiency in our operations, they enabled new solutions for our customers, and they empowered higher levels of customer service.
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Strategic acquisitions complement organic growth in both Industrial Distribution and Aerospace, driving increases in revenue and profitability. In fact, the ability to integrate acquisitions is a demonstrated Kaman core competency.
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Over the past two years, Kaman completed eight acquisitions in Aerospace and Industrial Distribution, accelerating top line growth and building scale. These acquisitions have complemented existing product and service offerings and provided important access to new markets.
The 2011 acquisition of Catching Fluidpower significantly expands Kaman's capabilities in the important fluid power products market. Catching is one of Parker Hannifin Corporation's premier motion distributors, covering a wide variety of product technologies, including hydraulics, fluid connector and pneumatic automation products. In connection with the acquisition, Parker Hannifin named Kaman nationally as a value-added reseller of these products. Kaman is the only national distributor to be so recognized by Parker Hannifin.
For Industrial Distribution, acquisitions must meet specific criteria. They must expand our product offering, improve our value added services capability, and/or broaden our geographic footprint. In 2011, four acquisitions, Catching Fluidpower, Target Electronic Supply, Automation Technology and Plains Bearing, met these criteria.
In 2010, Kaman acquired Global Aerosystems, a provider of structural aerostructure engineering design analysis and FAA certification services to the aerospace industry. The successful integration of this acquisition is demonstrated by 40% year-over-year revenue growth. Equally as important, in 2011 the business received Boeing's Performance Excellence Award – Silver Level for demonstrating superior performance.
Since 2010, KAMAN AEROSPACE has made two important acquisitions: Global Aerosystems and Vermont Composites. Each of these acquisitions has added capabilities to Kaman's offerings and diversified the Company's platform exposure.
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Acquisitions completed in 2010 and 2011 added approximately $268 million in sales on a run rate basis. What's more, our 2010 acquisitions added more than twenty cents in earnings-per-share accretion in 2011.