<page>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
- --- SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED September 30, 2003.
------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
- --- SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM TO
--------------- --------------
Commission File No. 0-1093
KAMAN CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Connecticut 06-0613548
- -------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1332 Blue Hills Avenue
Bloomfield, Connecticut 06002
----------------------------------------
(Address of principal executive offices)
(860) 243-7100
--------------------------------------------------
Registrant's telephone number, including area code
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Exchange Act Rule 12b-2)
Yes x No
--- ---
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of October 31, 2003:
Class A Common 21,942,316
Class B Common 667,814
Page 1 of 29 Pages
<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets(In thousands)
<table>
Assets September 30, 2003 December 31, 2002
------ ------------------ -------------------
<s> <c> <c> <c> <c>
Current assets:
Cash and cash equivalents $ 8,005 $ 5,571
Accounts receivable 211,350 195,857
Inventories:
Contracts and other
work in process $ 59,043 61,917
Finished goods 22,003 7,742
Merchandise for resale 84,120 165,166 95,056 164,715
------- -------
Income taxes receivable 6,050 5,192
Deferred income taxes 27,999 28,450
Other current assets 12,737 14,460
------- -------
Total current assets 431,307 414,245
Property, plant & equip., at cost 154,810 161,918
Less accumulated depreciation
and amortization 101,469 100,283
------- -------
Net property, plant & equipment 53,341 61,635
Goodwill and other intangible assets 50,753 50,994
Other assets, net 7,158 8,666
------- -------
Total assets $542,559 $535,540
======= =======
</table>
- 2 -
<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets(In thousands) (continued)
<table>
Liabilities and Shareholders' Equity
------------------------------------
September 30, 2003 December 31, 2002
------------------ -------------------
<s> <c> <c> <c> <c>
Current liabilities:
Notes payable inc. current
portion of long-term debt $ 10,579 $ 10,307
Accounts payable 49,074 46,664
Accrued contract loss 22,846 26,674
Accrued restructuring costs 6,702 7,594
Other accrued liabilities 26,391 23,583
Advances on contracts 20,646 22,318
Other current liabilities 17,988 19,954
Income taxes payable 3,040 -
------- -------
Total current liabilities 157,266 157,094
Long-term debt, excl. current portion 53,774 60,132
Other long-term liabilities 27,331 26,367
Shareholders' equity 304,188 291,947
------- -------
Total liabilities and
shareholders' equity $542,559 $535,540
======= =======
</table>
See accompanying notes to condensed consolidated financial statements.
- 3 -
<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 1. Financial Statements, Continued:
Condensed Consolidated Statements of Operations
(In thousands except per share amounts)
<table>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
--------------------- --------------------
2003 2002 2003 2002
---- ---- ---- ----
<s> <c> <c> <c> <c>
Net sales $223,324 $218,266 $655,645 $650,500
Costs and expenses:
Cost of sales(1) 168,584 160,961 484,615 552,444
Selling, general and
administrative expense 53,415 48,191 156,799 149,681
Restructuring costs (2) - - - 8,290
Other operating
(income)/expense, net (493) (501) (1,107) (1,008)
Interest expense, net 739 713 2,258 1,580
(Gain)/loss on sale
of product lines
and other assets, net (1,317) 52 (18,143) (1,852)
Other(income)/expense, net 443 303 1,035 1,143
-------- -------- -------- --------
221,371 209,719 625,457 710,278
-------- -------- -------- --------
Earnings (loss)before
income taxes 1,953 8,547 30,188 (59,778)
Income taxes (benefit) 765 2 975 11,750 (20,325)
-------- -------- -------- --------
Net earnings (loss) $ 1,188 $ 5,572 $ 18,438 $(39,453)
======== ======== ======== ========
Net earnings (loss)per share:
Basic $ .05 $ .25 $ .82 $ (1.76)
Diluted (3) $ .05 $ .25 $ .81 $ (1.76)
======== ======== ======== ========
Dividends declared per share $ .11 $ .11 $ .33 $ .33
======== ======== ======== ========
<fn>
(1)Cost of sales for the nine months ended September 30, 2002 includes the
write-off of K-MAX assets of $50,000 and Moosup facility assets of $2,679
which are associated with the charge taken in the Aerospace segment.
(2)Restructuring costs for the nine months ended September 30, 2002 relate
to the closure of the Moosup facility in 2003 and are associated with the
charge taken in the Aerospace segment.
(3)The calculated diluted per share amounts for the three months ended
September 30, 2003 and the nine months ended September 30, 2002 are
anti-dilutive, therefore, amounts shown are equal to the basic per share
calculation.
</fn>
</table>
See accompanying notes to condensed consolidated financial statements.
- 4 -
<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 1. Financial Statements, Continued:
Condensed Consolidated Statements of Cash Flows(In thousands)
<table>
For the Nine Months
Ended September 30,
--------------------
2003 2002
------- -------
<s> <c> <c>
Cash flows from operating activities:
Net earnings (loss) $ 18,438 $(39,453)
Depreciation and amortization 7,657 8,520
Gain on sale of product lines
and other assets, net (18,143) (1,852)
Restructuring costs - 8,290
Non-cash write-down of assets - 52,679
Deferred income taxes 1,818 (22,250)
Other, net 1,618 2,430
Changes in current assets and liabilities,
excluding effects of acquisitions/divestitures:
Accounts receivable (17,820) (29,072)
Inventory (3,469) 713
Income taxes receivable (858) (1,409)
Accounts payable - trade 2,309 (8,380)
Accrued contract loss (3,828) 18,495
Accrued restructuring costs (892) (520)
Advances on contracts (893) (3,277)
Income taxes payable 3,040 -
Changes in other current assets and liabilities 6,056 (9,303)
------- -------
Cash provided by (used in) operating activities (4,967) (24,389)
------- -------
Cash flows from investing activities:
Proceeds from sale of product lines
and other assets 28,309 7,685
Expenditures for property, plant & equipment (6,682) (4,637)
Acquisition of business, less cash acquired (465) (35,302)
Other, net (1,016) (144)
------- -------
Cash provided by (used in) investing activities 20,146 (32,398)
------- -------
</table>
See accompanying notes to condensed consolidated financial statements.
- 5 -
<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 1. Financial Statements, Continued:
Condensed Consolidated Statements of Cash Flows(In thousands)
<table>
For the Nine Months
Ended September 30,
--------------------
2003 2002
------- -------
<s> <c> <c>
Cash flows from financing activities:
Changes to notes payable 293 7,283
Additions/(reductions) to long-term debt (6,358) 31,680
Proceeds from exercise of employee stock plans 956 1,150
Purchases of treasury stock (205) (5)
Dividends paid (7,431) (7,379)
Other - 979
------- -------
Cash provided by (used in) financing activities (12,745) 33,708
------- -------
Net increase (decrease) in cash and cash equivalents 2,434 (23,079)
Cash and cash equivalents at beginning of period 5,571 30,834
------- -------
Cash and cash equivalents at end of period $ 8,005 $ 7,755
======= =======
</table>
See accompanying notes to condensed consolidated financial
statements.
Notes to Condensed Consolidated Financial Statements
(In thousands)
Basis of Presentation
- ----------------------
The December 31, 2002 condensed consolidated balance sheet
amounts have been derived from the previously audited
consolidated balance sheet of Kaman Corporation and subsidiaries.
In the opinion of management, the balance of the condensed
financial information reflects all adjustments which are
necessary for a fair presentation of the financial position,
results of operations and cash flows for the interim periods
presented and are of a normal recurring nature, unless otherwise
disclosed in this report.
The statements should be read in conjunction with the notes to
the consolidated financial statements included in Kaman
Corporation's 2002 Annual Report to Shareholders.
- 6 -
<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 1. Financial Statements, Continued:
Notes to Condensed Consolidated Financial Statements
(In thousands)
Net Gain on Sale of Product Lines
- ---------------------------------
On January 15, 2003, the corporation sold its electric motor and
drive business to DRS Technologies, Inc. The 2003 nine months
results include a pre-tax gain of $17,415 as a result of this
transaction. The 2003 third quarter results include pre-tax gains
of $1,114 due to post-closing adjustments associated with the sale
of businesses in prior periods. The 2002 nine month results
include a pre-tax $1,928 gain from the sale of the Company's
microwave products line.
Cash Flow Items
- ---------------
Cash payments for interest were $2,742 and $2,137 for the nine
months ended September 30, 2003 and 2002, respectively. Net cash
payments for income taxes for the comparable periods were $7,527
and $2,714, respectively.
Comprehensive Income/(Loss)
- ---------------------------
Comprehensive income (loss) was $18,250 and $(39,606) for the
nine months ended September 30, 2003 and 2002, respectively.
Comprehensive income was $302 and $5,350 for the three months
ended September 30, 2003 and 2002, respectively. The changes
to net earnings (loss) used to determine comprehensive income
(loss) are foreign currency translation adjustments.
- 7 -
<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 1. Financial Statements, Continued:
Notes to Condensed Consolidated Financial Statements
(In thousands)
Restructuring Costs
- -------------------
The following table displays the activity and balances of these
pre-tax charges as of September 30, 2003:
<table>
Deductions
----------
Balance at Balance at
December 31, Cash Non-Cash September 30,
2002 Payments Charges 2003
----------- -------- -------- -------------
<s> <c> <c> <c> <c>
Restructuring costs
- -------------------
Employee termination
benefits $ 2,594 $ 892 $ - $ 1,702
Facility closings 5,000 - - 5,000
------ ------ ------ ------
Total restructuring costs $ 7,594 $ 892 $ - $ 6,702
====== ====== ====== ======
Accounts Receivable
- -------------------
Accounts receivable consist of the following:
September 30, December 31,
2003 2002
------------ -----------
<s> <c> <c>
Trade receivables, net of allowance
for doubtful accounts of
$3,041 in 2003, $2,853 in 2002 $ 79,016 $ 72,471
U.S. Government contracts:
Billed 10,953 11,607
Recoverable costs and accrued profit
- not billed 13,404 21,225
Commercial and other government contracts:
Billed 26,928 21,628
Recoverable costs and accrued profit
- not billed 81,049 68,926
-------- --------
Total $211,350 $195,857
======== ========
- 8 -
<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 1. Financial Statements, Continued:
Notes to Condensed Consolidated Financial Statements
(In thousands)
Shareholders' Equity
- --------------------
Changes in shareholders' equity were as follows:
<s> <c>
Balance, January 1, 2003 $291,947
Net earnings 18,438
Foreign currency translation adjustment (188)
--------
Comprehensive income 18,250
Dividends declared (7,446)
Purchase of treasury stock (205)
Employee stock plans 1,642
--------
Balance, September 30, 2003 $304,188
========
</table>
- 9 -
<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 1. Financial Statements, Continued:
Notes to Condensed Consolidated Financial Statements
(In thousands)
Business Segments
- -----------------
Summarized financial information by business segment is as
follows:
<table>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
-------------------- -------------------
2003 2002 2003 2002
---- ---- ---- ----
<s> <c> <c> <c> <c>
Net sales:
Aerospace $ 62,785 $ 65,226 $187,421 $201,253
Industrial Distribution 122,571 120,259 364,699 358,734
Music Distribution 37,968 32,781 103,525 90,513
------- ------- ------- -------
$223,324 $218,266 $655,645 $650,500
======== ======== ======== ========
Operating profit (loss):
Aerospace $ 1,738 $ 7,180 $ 15,463 $(61,694)
Industrial Distribution 2,830 3,003 8,992 9,060
Music Distribution 2,772 2,289 6,010 4,351
------- ------- ------- -------
7,340 12,472 30,465 (48,283)
Interest, corporate and
other expense, net (6,704) (3,873) (18,420) (13,347)
Gain (loss) on sale of
product lines and
other assets, net 1,317 (52) 18,143 1,852
-------- -------- -------- --------
Earnings (loss)
before income taxes $ 1,953 $ 8,547 $ 30,188 $(59,778)
======= ======= ======= =======
September 30, December 31,
2003 2002
------------ -----------
<s> <c> <c>
Identifiable assets:
Aerospace $311,109 $308,275
Industrial Distribution 133,017 144,585
Music Distribution 73,477 68,448
Corporate 24,956 14,232
-------- --------
$542,559 $535,540
======== ========
</table>
- 10 -
<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 1. Financial Statements, Continued:
Notes to Condensed Consolidated Financial Statements
(In thousands except per share amounts)
Stock Option Accounting
- -----------------------
The following table reflects pro forma net earnings (loss) and
earnings (loss) per share had the corporation elected to record
employee stock option expense based on the fair value methodology:
<table>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
-------------------- -------------------
2003 2002 2003 2002
---- ---- ---- ----
<s> <c> <c> <c> <c>
Net earnings (loss):
As reported $ 1,188 $ 5,572 $ 18,438 $(39,453)
Less stock option expense (313) (344) (945) (1,044)
Tax effect 122 116 368 355
------ ------- ------- -------
Pro forma net
earnings (loss) $ 997 $ 5,344 $ 17,861 $(40,142)
====== ====== ====== ======
Earnings (loss) per share - basic:
As reported .05 .25 .82 (1.76)
Pro forma after option expense .04 .24 .79 (1.79)
Earnings (loss) per share - diluted:
As reported .05* .25 .81 (1.76)*
Pro forma after option expense .04* .24 .79 (1.79)*
</table>
These pro forma amounts may not be representative of future
disclosures since the estimated fair value of stock options is
amortized to expense over the vesting period, and additional
options may be granted in future years. The pro forma amounts
assume that the corporation had been following the fair value
approach since the beginning.
* The calculated diluted per share amounts for the three months
ended September 30, 2003 and the nine months ended September 30,
2002 are anti-dilutive, therefore, amounts shown are equal to the
basic per share calculation.
- 11 -
<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 1. Financial Statements, Continued:
Reclassification
- ----------------
Certain amounts from earlier quarters have been reclassified for
comparability. There was no impact on net earnings in any period.
Subsequent Event
- ----------------
Early in the fourth quarter of 2003, the corporation completed
its acquisition of the net assets and business of Industrial
Supplies, Inc. (ISI), a privately held distributor of bearing,
conveyor, electrical, fluid power and power transmission
components. ISI is headquartered in Birmingham, Alabama and has
annual sales of approximately $28 million.
Item 2. Management's Discussion and Analysis of
Financial
Condition and Results of Operations
Results of Operations
- ---------------------
Consolidated net sales for the quarter ended September 30, 2003
were $223.3 million compared to $218.3 million for the same
period of 2002. Consolidated net sales for the nine months ended
September 30, 2003 were $655.6 million compared to $650.5 million
in the previous year. Net sales in the nine month period of 2002
were reduced by $6.5 million as a result of the Australia SH-2G
helicopter program adjustment recorded in the second quarter of
that year.
Aerospace segment net sales were $62.8 million for the third
quarter of 2003 compared to $65.2 million in the comparable
2002 quarter (which included $2.2 million from the
Electromagnetics Development Center operation that was sold
in January of 2003). Net sales for the first nine months of 2003
were $187.4 million compared to $201.3 million in the previous
year (including $11.9 million from two divested businesses). The
second quarter 2002 adjustment mentioned above reduced net sales
by $6.5 million for the nine-month period of 2002. During the
quarter and first nine-months of 2003, the Kaman Aerospace
subsidiary was affected by several factors, including the absence
of new helicopter orders, the fact that the MD Helicopters, Inc.
(MDHI) subcontract program is in stop-work mode, the transition
of manufacturing from the Moosup, Connecticut facility to the
Jacksonville, Florida facility, and the current weak market for
commercial airliners, which has caused order stretch-outs and a
- 12 -
<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
lower volume of deliveries than anticipated for certain Boeing
programs. These conditions have resulted in lower sales, which in
turn have resulted in overhead and general and administrative
expenditures being absorbed at higher rates by active aerospace
programs. This has led to generally lower profitability or losses
for these programs.
In this environment, management continues to evaluate its overall
cost structure. To date, management has elected to continue
expenditures for longer-term competitiveness in the commercial
aircraft market and to maintain its prime helicopter program
capabilities.
The Aerospace segment's programs include prime helicopter
manufacturing along with spare parts and support; aerostructure
and helicopter subcontract work as well as manufacture of
components such as self-lubricating bearings and drive-line
couplings for aircraft applications; and advanced technology
products.
The corporation's prime helicopter programs include the SH-2G
multi-mission maritime helicopter and the K-MAX medium-to-heavy
external lift helicopter. This business generated sales of
$21.3 million in the third quarter (about 34% of Aerospace segment
sales), reflecting a decrease in SH-2G sales that was more than
offset by the sale of two K-MAX aircraft previously under lease
with customers. Sales for the same period of 2002 were $20.3
million (approximately 31% of the segment's sales). SH-2G
helicopter programs constituted a majority of the segment's
helicopter program sales for the quarter with only the Australia
program currently still in process. The programs for New Zealand
and Poland have essentially been completed.
Work continues on the SH-2G (A) program for Australia which
involves eleven helicopters with support, including a support
services facility, for the Royal Australian Navy (RAN). The total
contract has an anticipated value of about $716 million (US). The
helicopter production portion of the program is valued at
approximately $595 million, of which about 95% has been recorded
as sales through September 30, 2003. As previously reported,
this contract is now in a loss position due to an increase in
anticipated costs to complete the program, which was reflected in
a $25.0 million pre-tax charge taken in the second quarter of 2002
and a $31.2 million pre-tax charge taken in the second quarter
of 2001.
- 13 -
<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Production of all the SH-2G(A) aircraft is essentially complete.
As previously reported, all of the aircraft lack the full
Integrated Tactical Avionics System (ITAS) software because of a
contract dispute with the original software supplier. Replacement
subcontractors are in the process of completing that element of
the program and the corporation has responsibility for aircraft
system integration (previously a subcontracted task). In the
third quarter of 2003, the Australian government began the process
of provisional acceptance for the aircraft. The RAN intends to
use the aircraft for training purposes until the full ITAS is
installed and the aircraft have been finally accepted. The
corporation currently expects that the software will be fully
completed, installed and operational on all of the Australia
aircraft by the end of 2004. While management believes that its
reserves are sufficient to cover estimated costs to complete the
program, the task of software integration is yet to come and that
task could present issues that are difficult to anticipate.
Except for post-production support, the program for New Zealand,
involving five aircraft with support to serve the Royal New
Zealand Navy, has been successfully completed. The contract has
a value of about $190 million (US), of which about 99% has been
recorded as sales through September 30, 2003.
In a smaller program, the corporation has completed work on the
reactivation of four existing SH-2G aircraft previously in
service with the U.S. Navy Reserves for the government of Poland.
The corporation has also completed training for pilots, sensor
operators and maintenance personnel. It is expected that the
aircraft will operate aboard two Polish Navy FFG-7 class frigates
that Poland also acquired from the U.S. Navy.
The corporation continues to pursue other opportunities for the
SH-2G helicopter in the international defense market. This market
is highly competitive and heavily influenced by economic and
political conditions. However, management continues to believe
that the aircraft is in a good competitive position to meet the
specialized needs of navies around the world that operate smaller
ships for which the SH-2G is ideally sized.
The corporation also maintains a consignment of the U.S. Navy's
inventory of SH-2 spare parts under a multi-year agreement that
provides the corporation the ability to utilize certain inventory
for support of its SH-2G programs.
With respect to its K-MAX helicopter, the corporation continues
to pursue both a sale and short-term lease program for existing
K-MAX aircraft inventory, which was written down to an estimated
fair market last year As previously reported, this approach
follows a 2002 market evaluation of the K-MAX helicopter program
which had experienced several years of significant market
- 14 -
<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
difficulties. The corporation will produce additional aircraft
only upon firm order by a customer. During the third quarter of
2003, two K-MAXs were leased and two others were converted from
leases to sales. These sales produced pre-tax profit of $2.1
million.
The Aerospace segment also performs aerostructure and helicopter
subcontract work for a variety of aerospace manufacturers and
produces proprietary self-lubricating bearings. This business
generated sales of $25.7 million in the third quarter of 2003
(about 41% of Aerospace segment sales) compared to $31.2 million
for same period a year ago (about 48% of this segment's sales).
Aerostructures subcontract work involves commercial and military
aircraft programs. Current programs include production of
assemblies such as wing structures and other parts for virtually
all Boeing commercial aircraft and the C-17 military transport.
This element of the Aerospace segment continues to be an area of
strategic emphasis for the corporation. The low current and
projected build rates for commercial airliners affect this
business directly and the market has become increasingly
competitive and difficult on an industry-wide basis. The move
from Moosup to Jacksonville was specifically undertaken to
provide a lower cost base from which to compete. The physical
completion of that move has been accompanied by phase-out costs
in Moosup as well as learning curve and other ramp-up costs in
Jacksonville, which have resulted in lower profitability or
losses in certain aerostructures programs. While management
believes that these costs hit their peak in the third quarter of
2003, the opportunity to operate at lower cost in Jacksonville
remains evident and is an expectation for the future. The
Jacksonville facility is now ready to accept additional business,
which may take time to develop in the present environment.
Helicopter subcontract work involves commercial and military
programs. Current work includes multi-year contracts for
production of fuselages and rotor systems for various MD
Helicopters, Inc. aircraft. Total orders received from MDHI
have run at significantly lower rates than originally
anticipated due to lower than expected demand. The corporation's
investment in these contracts consists of $4.5 million in billed
receivables as of October 1, and $16.9 million in recoverable
costs - not billed (which includes start-up costs and other program
expenditures). The corporation has received several partial
payments in 2003, including a payment received on October 1, 2003.
The recoverability of unbilled costs will depend to a significant
extent upon MDHI's future requirements. The corporation has
stopped production on these programs while working with MDHI to
resolve overall payment issues and establish conditions under
which production can be resumed.
- 15 -
<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
The segment's Kamatics operation manufactures proprietary
self-lubricating bearings used in aircraft flight controls,
turbine engines and landing gear and produces driveline
couplings for helicopters. This business had increased sales in
the reporting period with military sales helping to offset
continued softness in commercial and regional aircraft
manufacturing. Kamatics' products are in wide use in commercial
airliners operated by major and regional airlines, and Boeing is
Kamatics' largest customer. The acquisition a year ago of RWG
Frankenjura-Industrie Flugwerklager GmbH (RWG), a small German
specialty bearing manufacturer, is expected to strengthen Kaman's
presence in European markets. Airbus Industrie is RWG's largest
customer.
The Aerospace segment also produces advanced technology products.
Sales for the third quarter of 2003 were $15.8 million
(approximately 25% of Aerospace segment sales) compared to $13.7
million in the prior year period (about 21% of this segment's
sales). These products involve systems, devices and assemblies
for a variety of military and commercial applications, including
safe, arm and fuzing devices for several missile and bomb
programs; precision non-contact measuring systems for industrial
and scientific use; electro-optic systems for mine detection and
other applications; and high reliability memory systems for
airborne, shipboard, and ground-based programs.
The corporation's Kaman Dayron operation, which was acquired in
July 2002, is a weapons fuze manufacturer for a variety of
munitions programs and has the contract to develop a fuze for the
U.S. Air Force and Navy Joint Programmable Fuze (JPF) program.
Securing the JPF program was the principal motivation for making
the Dayron acquisition, as the program is expected to generate
substantial business for the corporation once final qualification
has been achieved and production orders have been received. As a
result of qualification test results received during the first
quarter of 2003, the corporation is implementing certain changes
to the fuze design and production process and is conducting
internal testing. This additional qualification work has delayed
production unit sales and has increased program costs.
Management understands that successful completion of final
qualification testing is critical and now expects to resume that
testing by the end of 2003 and begin production in 2004.
The corporation has divested two non-core portions of the
Aerospace segment. Specifically, in the second quarter of 2002,
the corporation sold its microwave products line. That product
line was formerly associated with the Kaman Sciences Corp.
subsidiary which was sold in 1997. Microwave product sales were
about $2.1 million in the first nine months of 2002. In January
2003, the corporation sold its Electromagnetics Development
- 16 -
<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Center (EDC), an electric motor and drive business that had
sales of approximately $9.8 million during the first nine months
of 2002.
Industrial Distribution segment net sales for the third quarter
of 2003 were $122.6 million compared to $120.3 million a year
ago. Net sales for the nine-month period of 2003 were $364.7
million compared to $358.7 million a year ago. This segment is
the third largest U.S. industrial distributor servicing the
bearings, electrical/mechanical power transmission, fluid power,
motion control and materials handling market in the United States.
This segment offers more than 1.5 million items, as well as value
added services, through a network of nearly 200 branches and
regional distribution centers in the U.S., Canada, and Mexico.
The company currently covers 68 out of the top 100 industrial
markets in the U.S., with a customer base of over 50,000
businesses in nearly every sector of heavy and light industry.
As a result, this segment is directly affected by national
macroeconomic variables such as the percentage of plant capacity
utilization within the U.S. industrial base, and the business
tends to track the U.S. Industrial Production Index with a short
lag. Conditions for manufacturers have remained soft since the
second half of 2000, with capacity utilization remaining
considerably below the 80 percent threshold considered at recession
level by the U.S. government. As manufacturing continues to move
off shore and customers permanently close facilities, recovery in
industrial production becomes even more difficult. Management
believes that signs of meaningful national economic recovery have
been inconsistent and inconclusive with the tone of the market at
the beginning of the fourth quarter remaining weak.
Management believes that it has the appropriate platforms,
including the technology, systems management and customer and
supplier relationships to compete effectively in the evolving
industrial distribution industry. The company's size and scale
of operations allow it to attract highly skilled personnel and
realize internal operating efficiencies, and also to take
advantage of vendor incentives in the form of rebates, which tend
to favor the larger distributors. Management believes that the
company's resources and product knowledge enable it to offer a
comprehensive product line and invest in sophisticated inventory
management and control systems while its position in the industry
enhances its ability to rebound during economic recoveries and
grow through acquisitions.
Success in this market requires a combination of competitive
pricing and value-added services that save the customer money
while helping it become more efficient and productive. Over the
past several years, large companies have increasingly
centralized their purchasing through suppliers that can service
all of their plant locations across a wide geographic area. As
- 17 -
<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
this trend continues, the corporation has expanded its presence in
geographic markets considered key to winning these customers
through acquisitions in the upper midwest and Mexico, and the
selective opening of new branches. Furthering this strategy,
early in the fourth quarter of 2003, the company acquired the
net assets and business of Industrial Supplies, Inc., (ISI) of
Birmingham, AL, a distributor of a wide variety of bearing,
conveyor, electrical, fluid power and power transmission
components used by manufacturing, mining, steel, lumber, pulp
and paper, food and other industries. ISI maintained a total of
four Alabama facilities and one Florida facility. This
acquisition expands the company's presence in the increasingly
important southeast industrial market. Management's goal is to
grow the Industrial Distribution segment by expanding into
additional areas that enhance its ability to compete for large
regional and national customer accounts.
As previously reported, this segment has experienced an increase
in the number of "John Doe" type legal proceedings filed against
it, generally relating to parts allegedly supplied to the U.S.
Navy's shipyard in San Diego, California by a predecessor company
over 25 years ago, that may have contained asbestos. While
management believes that the segment has good defenses to these
claims, which it intends to assert, certain claims have been
settled for immaterial amounts, with contribution from insurance
carriers. Approximately sixty-one claims are currently
outstanding, involving the company among many other defendants.
Management does not currently expect that this situation will
have a material adverse effect on the corporation.
Music Distribution segment net sales for the third quarter of
2003 were $37.9 million, including $4.3 million from Latin
Percussion, Inc. (LP) which was acquired in October 2002,
compared to $32.8 million for the same period last year. For the
first nine months of 2003, net sales were $103.5 million,
including $13.2 million contributed by LP, compared to $90.5
million in the same period of 2002. This segment had good results
for the third quarter of 2003, although the base business did not
grow since consumers have generally taken a cautious approach to
the economy. The strength of the Christmas season is expected to
be an important factor in segment results for the year.
This segment is America's largest independent distributor of
music instruments and accessories, offering more than 15,000
products from five facilities in the U.S. and Canada to retailers
of all sizes for musicians of all capabilities. This segment's
business is directly affected by consumer confidence levels and
results in the base business to date in 2003 reflect a somewhat
weak consumer environment, although this has been more than
offset by LP's performance. LP is considered the world leader in
hand percussion instruments. The segment's array of other
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<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
instruments includes premier and proprietary products, such as
the company's Ovation (registered trademark) and Hamer (registered
trademark) guitars, and Takamine (registered trademark) guitars
under its exclusive North American distribution agreement. The
segment has significantly extended its line of percussion products
and accessories over the past two years, augmenting its CB,
Toca (registered trademark) and Gibraltar (registered trademark)
lines with the addition of an exclusive distribution agreement
with Gretsch (registered trademark) drums in 2001, the
acquisition of LP in 2002, and in the third quarter of 2003 the
acquisition of Genz Benz Enclosures, Inc., a small manufacturer
of amplification and sound reinforcement equipment. Genz Benz
had been working closely with the company for several years
through an exclusive distribution agreement, so the acquisition
brings this segment control of the product sources rather than
immediate incremental sales.
The corporation's segments, in total, had net operating profits
of $7.3 million for the third quarter of 2003 compared to $12.5
million for the comparable period of 2002. For the nine months
ended September 30, 2003, the corporation's segments, in total,
had net operating profits of $30.5 million compared to a net loss
of $48.3 million for the 2002 period. The 2002 nine-month period
includes pre-tax charges of $86.0 million taken in the second
quarter of that year to cover the write-down of K-MAX helicopter
assets, principally inventories; for cost growth associated with
the Australian SH-2G(A) helicopter program; and to phase out
operations at the corporation's Moosup plant.
For the third quarter of 2003, the Aerospace segment had
operating profits of $1.7 million (including the effect of $946
thousand in ongoing relocation and re-certification costs related
to the Moosup plant closure)compared to $7.2 million last year.
In the first nine months of 2003, this segment had operating
profits of $15.5 million (including the effect of $2.1 million in
ongoing relocation and re-certification costs related to the Moosup
plant closure) compared to an operating loss of $61.7 million a
year earlier as a result of the pre-tax charges. Aerospace segment
results for the quarter and nine-month period ended September 30,
2003 were affected by the same factors described in the previous
discussion of net sales for those periods. Closure of the
corporation's Moosup plant is scheduled to occur by the end of
2003. In connection with that plant closure, the corporation
recorded a charge of about $3.3 million in the second quarter of
2002 relating to severance costs at the Moosup and Bloomfield,
Connecticut locations which is expected to involve the separation
from service of approximately 400 employees (of which $1.6
million had been paid for 365 such separations as of September 30,
2003).
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<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Operating profits in the Industrial Distribution segment were
$2.8 million in the third quarter of 2003 compared to $3.0
million in the prior year period. This segment's operating
profits for the first nine months of 2003 were $9.0 million
compared to $9.1 million in the same period last year. These
results reflect the softness in industrial production that has
existed since the second half of 2000 and increasingly intense
price competition which has resulted from manufacturing plant
closures and the movement of many other manufacturers off-shore.
Vendor incentives in the form of rebates (i.e., vendors provide
inventory purchase rebates to distributors at specified
volume-purchasing levels) continue to be an important contributor
to this segment's operating profits.
The Music Distribution segment's operating profits for the third
quarter of 2003 were $2.8 million compared to $2.3 million the
previous year while operating profits for the nine-month period
were $6.0 million compared to $4.4 million for the 2002 period.
The 2003 results are primarily due to the addition of LP.
Management is closely monitoring the upcoming Christmas season as
the strength of consumer spending at that time will be an
important factor in segment results for the year.
Net earnings for the third quarter of 2003 were $1.2 million, or
$0.05 per share diluted, including an after-tax gain of about
$700 thousand, or approximately $0.03 per share diluted, as the
result of post-closing adjustments associated with the sale of
businesses in prior periods, compared to $5.6 million, or $0.25
per share diluted in the same quarter of 2002. For the nine
months ended September 30, 2003, net earnings were $18.4 million,
or $0.81 per share diluted, including a $10.6 million after-tax
gain, or $0.48 per share ($17.4 million on a pre-tax basis) on the
sale of EDC, compared to a net loss of $39.5 million, or $1.76 net
loss per share diluted in the comparable period of 2002. The 2002
nine-month period results also include a pre-tax gain of
$1.9 million from the sale of the corporation's microwave products
line during that period.
For the nine months ended September 30, 2003, net interest
expense increased by 42.9% to $2.3 million compared to the same
period of 2002.
The consolidated effective income tax rate for the nine-month
period ended September 30, 2003 was 38.9% compared to a tax
recovery rate of 34.0% for the same period last year.
CRITICAL ACCOUNTING POLICIES
- ----------------------------
The preparation of consolidated financial statements in conformity
with accounting principles generally accepted in the United States
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<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. Significant accounting
policies are disclosed in the Notes to Consolidated Financial
Statements in the corporation's Annual Report on Form 10-K for the
year ended December 31, 2002. The most significant current areas
involving management judgments and estimates are described below.
Actual results could differ from those estimates.
LONG-TERM CONTRACTS - REVENUE RECOGNITION
- -----------------------------------------
Sales and estimated profits under long-term contracts are
principally recognized on the percentage-of-completion method of
accounting, generally using either a ratio that costs incurred
bear to estimated total costs, after giving effect to estimates of
costs to complete based upon most recent information for each
contract, or units-of-delivery as the measurement basis for effort
accomplished. Reviews of contracts are made regularly throughout
their lives and revisions in profit estimates are recorded in the
accounting period in which the revisions are made. Any
anticipated contract losses are charged to operations when first
indicated.
ACCOUNTS RECEIVABLE
- -------------------
Trade accounts receivable consist of amounts billed and currently
due from customers. The allowance for doubtful accounts reflects
management's best estimate of probable losses inherent in the
trade accounts receivable balance. Management determines the
allowance for doubtful accounts based on known troubled accounts,
historical experience, and other currently available evidence.
Billed amounts for U.S. Government, commercial, and other
government contracts consist of amounts billed and currently due
from customers. Recoverable costs and accrued profit - not billed
for U.S. Government, commercial, and other government contracts
primarily relate to costs incurred on contracts which are expected
to become billable upon future deliveries, achievement of specific
contract milestones or completion of engineering and service type
contracts.
INVENTORIES
- -----------
Inventory of merchandise for resale is stated at cost (using the
average costing method) or market, whichever is lower. Contracts
and work in process, and finished goods are valued at production
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<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
cost represented by material, labor and overhead, including
general and administrative expenses where applicable. Contracts
and work in process, and finished goods are not recorded in excess
of net realizable values.
GOODWILL AND OTHER INTANGIBLE ASSETS ACCOUNTING
- -----------------------------------------------
Goodwill and certain other intangible assets are evaluated at
least annually for impairment. The corporation utilizes discounted
cash flow models to determine fair value used in the goodwill and
other intangible asset impairment evaluations. Management's
estimates of fair value are based upon factors such as projected
sales and cash flows and other elements requiring significant
judgments. The corporation utilizes the best available
information to prepare its estimates and perform impairment
evaluations; however, actual results could differ significantly,
resulting in the future impairment of recorded goodwill and other
intangible asset balances.
VENDOR INCENTIVES
- -----------------
The corporation enters into agreements with certain vendors
providing for inventory purchase rebates that are generally earned
upon achieving specified volume-purchasing levels. The corporation
recognizes these rebates as a reduction in cost of goods sold as
rebates are earned. While management believes that the
corporation will continue to receive rebates from vendors, there
can be no assurance that vendors will continue to provide
comparable amounts in the future.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
For the nine-month period of 2003, operating activities used a net
$5.0 million of cash, principally due to increased accounts
receivable and inventories in the Aerospace segment. In the
Aerospace segment, accounts receivable increased primarily due to
the Australia SH-2G program and inventories increased primarily
due to K-MAX helicopter program and aerostructures subcontracting
activities. This was offset in part by a decrease in inventories
in the Industrial Distribution segment.
During the first nine months of 2003, the largest element of cash
provided from investing activities consisted of the proceeds from
the sale of the EDC operation. Cash used in financing activities
for the nine-month period of 2003 consisted of reductions in
long-term debt and payments of dividends to shareholders.
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<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
At September 30, 2003, the corporation had $21.6 million of its 6%
convertible subordinated debentures outstanding. The debentures
are convertible into shares of Class A common stock at any time on
or before March 15, 2012 at a conversion price of $23.36 per
share, generally at the option of the holder. Pursuant to a
sinking fund requirement that began March 15, 1997, the
corporation redeems approximately $1.7 million of the outstanding
principal of the debentures each year.
In November 2000, the corporation's board of directors approved a
replenishment of the corporation's stock repurchase program,
providing for repurchase of an aggregate of 1.4 million Class A
common shares for use in administration of the corporation's
stock plans and for general corporate purposes. As of September 30,
2003, a total of about 269,000 shares had been repurchased under
this replenishment program.
Total average bank borrowings were $43.7 million for the nine-month
period of 2003 compared to $12.9 million in the same period of
2002.
The corporation maintains a revolving credit agreement involving
a group of financial institutions. The agreement currently provides
a maximum unsecured line of credit of $225 million which consists
of a $150 million commitment for five years (expiring in November
2005)and a $75 million commitment under a "364 day" arrangement
which is scheduled for renewal in November 2003. In order to take
advantage of the current interest rate environment, management is
considering the potential for a fixed rate financing to replace
the "364 day" facility and as a result, will not renew the
"364 day" facility.
The most restrictive of the covenants contained in the current
revolving credit agreement requires the corporation to have
EBITDA, as defined, at least equal to 300% of net interest expense,
on the basis of a rolling four quarters and a ratio of consolidated
total indebtedness to total capitalization of not more than 55%.
In the third quarter of 2003, the revolving credit agreement was
amended to permit potential lenders under a fixed rate financing
of up to $75 million to obtain the same covenant and guarantee
protections that the revolving credit agreement lenders possess.
In connection with the acquisition of RWG, in July 2002 the
corporation established a 9.5 million Euro term loan and revolving
credit facility with Wachovia Bank, National Association, one of
its revolving credit agreement lenders having offices in London.
In general, the agreement contains the same financial covenants as
the revolving credit agreement described previously and the term of
this facility will expire at the same time as the revolving credit
agreement. During the third quarter of 2003, this agreement was
amended to conform with the previously described amendment to the
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<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
revolving credit agreement. In the third quarter of 2003, the
corporation entered into an arrangement with Wachovia Bank,
National Association which permits the corporation to lock in a
fixed rate of interest for the RWG financing.
Letters of credit are generally considered borrowings for purposes
of the revolving credit agreement. A total of $29.8 million in
letters of credit were outstanding at September 30, 2003. During
the second quarter of 2003, the letter of credit for the
helicopter production portion of the Australia SH-2G program was
reduced to a balance of $20 million, which will remain in place
until final acceptance of the aircraft by the RAN.
Management believes that the corporation's annual cash flow from
operations and available unused bank lines of credit under its
revolving credit agreement will be sufficient to finance its
working capital and other recurring capital requirements for the
foreseeable future.
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, aerostructures and helicopter
subcontract programs and components, advanced technology products,
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) the successful conclusion of competitions and thereafter
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,
particularly industrial production and commercial aviation, and
global economic conditions; 5) satisfactory completion of the
Australian SH-2G(A)program, including successful completion and
integration of the full ITAS software; 6) recovery of the
corporation's investment in the MD Helicopters, Inc. contracts;
7) actual costs for moving equipment and recertifying products
and processes in connection with phase out of the Moosup,
Connecticut facility; 8) JPF program final qualification test
results and receipt of production orders; 9)achievement of
enhanced business base in the Aerospace segment in order to
better absorb overhead and general and administrative expenses;
10) successful sale or lease of existing K-MAX inventory; 11)
- 24 -
<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
the condition of consumer markets for musical instruments,
including the strength of the Christmas season; 12) profitable
integration of acquired businesses into the corporation's
operations; 13) changes in supplier sales or vendor incentive
policies; 14) the effect of price increases or decreases; and
15) currency exchange rates, taxes, changes in laws and
regulations, inflation rates, general business conditions and
other factors. Any forward-looking information should be
considered with these factors in mind.
Item 3. Quantitative and Qualitative Disclosures About
Market Risk
There has been no significant change in the corporation's
exposure to market risk during the nine-month period ended
September 30, 2003. Please see the corporation's annual report on
Form 10-K for the year ended December 31, 2002 for discussion of
the corporation's exposure to market risk.
Item 4. Controls and Procedures
(a) Disclosure Controls and Procedures. The corporation's
management, with the participation of the corporation's Chief
Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of the corporation's disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) as of the end of the period covered by this
report. Based on such evaluation, the corporation's Chief
Executive Officer and Chief Financial Officer have concluded that,
as of the end of such period, the corporation's disclosure
controls and procedures were effective.
We note, however, that even the most well designed and executed
control systems are subject to inherent limitations and as a
result, the control system can provide reasonable but not absolute
assurance that its objectives will be met under all potential
future conditions. The corporation's Chief Executive Officer and
Chief Financial Officer have concluded that the corporation's
disclosure controls and procedures are effective at a reasonable
assurance level.
(b) Internal Control Over Financial Reporting. There have not
been any changes in the corporation's internal control over
financial reporting (as such term is defined in Rules 13a-15(f)
and 15d-15 (f) under the Exchange Act) during the fiscal quarter
to which this report relates that have materially affected, or are
reasonably likely to materially affect, the corporation's internal
control over financial reporting.
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<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The corporation has previously reported on the matter of Arthur
Rocque, Jr. (Commissioner of the Department of Environmental
Protection of the State of Connecticut) v. Kaman Aerospace
Corporation, Kamatics Corporation and the Ovation Division of
Kaman Music Corporation in its reports on Form 10-K for the a)
fiscal year ended December 31, 2000, Document No. 0000054381-01-
500005 filed with the Securities and Exchange Commission on
March 15, 2001, and b) fiscal year ended December 31, 2002,
Document No. 0000054381-03-000079, filed with the Securities and
Exchange Commission on March 26, 2003. This matter involved
allegations of certain regulatory violations at facilities
located in Connecticut related to routine inspections which took
place between 1988 and 1998. Management believes that in all cases
where corrective action was required at the time of such
inspections, such action was promptly taken at that time. The
parties have now reached a settlement in the matter and a
Stipulation for Judgment was entered by the Superior Court on
October 8, 2003. The settlement includes a civil penalty of
$420,000, payable in installments through January 2005, a
permanent injunction applicable to the affected facilities for
a period of ten years, and annual environmental compliance audits
for a period of three years. Management believes that resolution
of this matter is not material to the business or financial
condition of the corporation.
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<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION, Continued
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits to Form 10-Q:
4.1 Amendment No. 2 to Revolving Credit Agreement
between the corporation and The Bank of Nova
Scotia and Fleet National Bank as Co-
Administrative Agents and Bank One, N.A. as the
Documentation Agent and The Bank of Nova Scotia
and Fleet Securities, Inc. as the Co-Lead
Arrangers and Various Financial Institutions
dated as of September 12, 2003.
4.2 Amendment to Credit Agreement between the
corporation, RWG Frankenjura-Industrie
Flugwerklager GmbH, and Wachovia Bank, N.A.,
dated September 12, 2003.
4.3 International Swap Dealers Association, Inc.
Master Agreement dated as of October 25, 2002
between Wachovia Bank, National Association and
the corporation.
11 Earnings (Loss) Per Share Computation
31.1 Certification of Chief Executive Officer
Pursuant to Rule 13a-14 under the
Securities and Exchange Act of 1934
31.2 Certification of Chief Financial Officer
Pursuant to Rule 13a-14 under the
Securities and Exchange Act of 1934
32.1 Certification of Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
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<page>
KAMAN CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION, Continued
Item 6. Exhibits and Reports on Form 8-K (Continued)
(b) Reports on Form 8-K:
(1) A report on Form 8-K was filed on July 22, 2003,
reporting that the Company's financial results
for the second quarter and six months ended
June 30, 2003.
(2) A report on Form 8-K was filed on September 9,
2003 announcing that the Company has signed an
agreement to acquire Industrial Supplies, Inc.,
an Alabama corporation located in Birmingham,
Alabama.
(3) A report on Form 8-K was filed on October 31,2003
reporting the company's financial results for the
third quarter and nine months ended September 30,
2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
KAMAN CORPORATION
Registrant
Date: November 5, 2003 By: /s/ Paul R. Kuhn
-----------------------------
Paul R. Kuhn
Chairman, President and
Chief Executive Officer
(Duly Authorized Officer)
Date: November 5, 2003 By: /s/ Robert M. Garneau
-----------------------------
Robert M. Garneau
Executive Vice President and
Chief Financial Officer
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<page>
KAMAN CORPORATION AND SUBSIDIARIES
Index to Exhibits
Exhibit 4.1 Amendment No. 2 to Revolving Credit Agreement
between the corporation and The Bank of Nova
Scotia and Fleet National Bank as Co-
Administrative Agents and Bank One, N.A. as the
Documentation Agent and The Bank of Nova Scotia
and Fleet Securities, Inc. as the Co-Lead
Arrangers and Various Financial Institutions dated
as of September 12, 2003. The Revolving Credit
Agreement dated as of November 13, 2000 was filed
as Exhibit 4 to Form 10-Q filed with the
Securities and Exchange Commission on November 14,
2000, Document No. 0000054381-00-500006, as
amended by Document No. 0000054381-02-000022 filed
as Exhibit 10 to Form 10-Q filed with the
Securities and Exchange Commission on August 14,
2002.
Exhibit 4.2 Amendment to Credit Agreement between the
corporation, RWG Frankenjura-Industrie
Flugwerklager GmbH, and Wachovia Bank, N.A., dated
September 12, 2003. The Credit Agreement dated
July 29, 2002 was filed as Exhibit 4c to Form 10-K
filed with the Securities and Exchange Commission
on March 26, 2003, Document No. 0000054381-03-
000079. Schedules and Exhibits to the Credit
Agreement, which are listed in its Table of
Contents, are omitted but will be provided to the
Commission upon request.
Exhibit 4.3 International Swap Dealers Association, Inc. Master
Agreement dated as of October 25, 2002 between
Wachovia Bank, National Association and the
corporation.
Exhibit 11 Earnings (Loss) Per Share Computation Attached
Exhibit 31.1 Certification of Chief Executive Officer
Pursuant to Rule 13a-14 under the
Securities and Exchange Act of 1934 Attached
Exhibit 31.2 Certification of Chief Financial Officer
Pursuant to Rule 13a-14 under the
Securities and Exchange Act of 1934 Attached
Exhibit 32.1 Certification of Chief Executive Officer
Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 Attached
Exhibit 32.2 Certification of Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 Attached
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