<page>
Exhibit 99.1
KAMAN REPORTS FIRST QUARTER 2004 RESULTS
BLOOMFIELD, Connecticut (April 20, 2004) - Kaman Corp.
(NASDAQ:KAMNA) today reported financial results for the first
quarter ended March 31, 2004.
Net earnings for the first quarter were $1.3 million, or $0.06
per share diluted, compared to $14.0 million, or $0.60 per share
diluted, the previous year. First quarter 2003 results include an
after-tax gain of $10.1 million, or $0.45 per share, from the
sale of the company's Electromagnetics Development Center (EDC).
Net sales for the first quarter were $245.7 million, compared to
$216.0 million in the 2003 quarter.
Paul R. Kuhn, chairman, president and chief executive officer,
said, "Following several years of difficult market conditions for
the company's Industrial Distribution segment, there is now
evidence that the tone of the market is improving: both the
industrial production index and the plant capacity utilization
statistic are signaling recovery. As a result of the market
improvement, an acquisition in the fourth quarter of 2003, and
the company's focus on cost controls, the Industrial Distribution
segment generated substantially higher sales and operating
profits, including higher same-store sales, than achieved during
the same period last year.
"At the same time, the Music segment benefited from continued
resilience in consumer spending patterns, which contributed to
higher sales and operating profits in the first quarter of 2004
than during the same period of 2003.
"For the Aerospace segment, although our Kamatics specialty
bearing subsidiary performed well, the Kaman Aerospace subsidiary
continued to experience difficulties that resulted in a weak
quarter for the company as a whole."
A more detailed summary of segment information follows:
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"Kaman Reports First Quarter 2004 Results"
April 20, 2004
KAMAN CORPORATION AND SUBSIDIARIES
Segment Information
(In millions)
<table>
For the Three Months
Ended March 31,
--------------
<s> <c> <c>
2004 2003
- -----------------------------------------------------------------
Net sales:
Aerospace $ 59.8 $ 61.7
Industrial Distribution 145.6 120.3
Music 40.3 34.0
- -----------------------------------------------------------------
$ 245.7 $ 216.0
=================================================================
Operating profit:
Aerospace $ 3.6 $ 7.2
Industrial Distribution 5.0 2.8
Music 2.0 1.9
- -----------------------------------------------------------------
10.6 11.9
Corporate and other expense, net (1) (7.5) (5.0)
Interest expense, net (.8) (.8)
Gain on sale of product line and other assets - 16.8
- -----------------------------------------------------------------
Earnings before income taxes $ 2.3 $ 22.9
=================================================================
<fn>
(1) "Corporate and other expense, net" increased for the three
months ended March 31, 2004 primarily due to an increase in
pension and stock appreciation rights expense.
</fn>
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"Kaman Reports First Quarter 2004 Results"
April 20, 2004
REPORT BY SEGMENT
- -----------------
Aerospace Segment
- -----------------
The Aerospace segment had a first quarter operating profit of
$3.6 million, compared to $7.2 million a year ago. The first
quarter of 2004 includes $0.2 million in ongoing relocation and
re-certification costs related to the transfer of operations in
2003 from the company's Moosup, Conn. facilities to expanded
facilities in Jacksonville, Fla., compared to $0.7 million in the
first quarter of 2003. The first quarter of 2004 also includes
$0.8 million in underutilized facility costs primarily associated
with the absence of new helicopter orders at the Bloomfield,
Conn. facility. Segment sales for the first quarter were $59.8
million, compared to $61.7 million a year ago.
Results for the quarter continued to be adversely affected by
several factors at the Kaman Aerospace subsidiary. These factors
are discussed in the report on each component of the segment:
Aircraft Structures and Components, Advanced Technology Products,
and Helicopter Programs.
Aircraft Structures and Components
First quarter aircraft structures and components sales were $33.5
million, compared to $32.2 million in the period a year ago.
This business contributed approximately 56 percent of the
Aerospace segment's sales in the first quarter, compared to
approximately 52 percent a year ago.
Aircraft Structures and Components involves commercial and
military aircraft programs, including production of aircraft
subassemblies and other parts for Boeing commercial airliners and
the C-17 military transport, as well as helicopter subcontract
work. This has become a core business area for the company and a
focal point for future growth.
Operating results for this business were affected by several
factors during the quarter. The current weak market for
commercial airliners has resulted in order stretch-outs, pricing
pressures, and a lower volume of deliveries than anticipated for
Boeing commercial aircraft programs. The market for detail parts
manufacturing and assembly work remains very competitive industry
wide and in this environment new business awards have been
difficult to achieve. These conditions will make it more
difficult for the Jacksonville plant to develop an optimal
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"Kaman Reports First Quarter 2004 Results"
April 20, 2004
business base, at least until the commercial aviation market
improves. In this environment, military work, including the
C-17, which is one of the business' largest programs, has been an
important contributor.
Meanwhile, the Jacksonville facility is operational and ready to
accept new business, although the plant's capabilities are taking
time to develop. Production man-hour performance is improving;
however on certain programs, it continues to be well below the
levels that had existed at the Moosup facility, in large part due
to the continuing process of training a new labor force. The
company is working to improve this measure of performance and as
it pursues that goal, it is also working to reestablish the level
of product quality and customer quality rankings that had been
maintained at the Moosup facility, and believes that progress is
being made. As the Jacksonville plant continues to develop its
capabilities, operating costs have also increased due to manpower
and third-party processing costs that have been required to
expedite deliveries, and the standard FAA and customer
requirements to requalify manufacturing and quality processes
made necessary by the move. Management believes that these
conditions are temporary and continues to expect that the move
from Moosup to Jacksonville will ultimately provide a lower cost
base from which to compete.
Taken together, these factors have resulted in lower sales, which
in turn has resulted in overhead and general and administrative
expenditures being absorbed at higher rates by active Aerospace
company programs, and generally lower profitability or losses for
these programs. The company continues to evaluate ways to grow in
a competitive global business environment that requires
progressively lower costs. In addition to the actions taken to
shift production to other U.S. locations expected to provide
lower cost structures, such as Jacksonville, the company is also
continuing to adjust its manpower, and is taking other actions,
as appropriate, to help bring its cost structure in line with the
reduced business base.
Helicopter subcontract work involves commercial and military
helicopter programs. Commercial programs include multi-year
contracts for production of fuselages for the MD Helicopters,
Inc. (MDHI) 500 and 600 series helicopters and composite rotor
blades for the MD Explorer helicopter. Total orders from MDHI
have run at significantly lower rates than originally anticipated
due to lower than expected demand. The company's investment in
these contracts consists principally of $4.3 million in billed
receivables and $16.2 million in recoverable costs-not billed,
including start-up costs and other program expenditures, as of
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"Kaman Reports First Quarter 2004 Results"
April 20, 2004
March 31, 2004. In 2003, the company received payments totaling
$4.4 million, primarily for items shipped during 2003. The
company received nominal payments in the first quarter of 2004.
The recoverability of unbilled costs will depend to a significant
extent upon MDHI's future requirements through 2013, the year to
which both contracts extend. The company stopped production on
these contracts in the second quarter of 2003, but continues to
work closely with the customer to resolve overall payment issues
and establish conditions under which production could be resumed,
including the timing thereof. Based upon MDHI's projected
future requirements and inventory on hand at both MDHI and the
company, this would not be expected to occur until late in the
second half of 2004 at the earliest. Although the outcome is not
certain, the company understands that MDHI management is pursuing
strategies to improve its current financial and operational
circumstances.
Sales and operating profits for the company's Kamatics specialty
bearing business were higher in the quarter than the year-ago
period and were the source of a significant portion of total
segment operating profits, with military and commercial
aftermarket sales helping to offset continued softness in
commercial and regional aircraft manufacturing. Kamatics
products are in wide use in commercial airliners operated by the
major and regional airlines, and increasingly in military
programs.
Advanced Technology Products
Sales of the company's advanced technology products in the first
quarter were $11.3 million, compared to $11.8 million a year ago.
The business accounted for approximately 19 percent of Aerospace
segment sales, the same as a year ago.
The company manufactures products for military and commercial
markets, including safe, arm and fuzing devices for a number of
major missile and bomb programs; and precision measuring systems,
mass memory systems and electro-optic systems. The Kaman Dayron
operation, acquired in 2002, manufactures fuzes 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. Qualification testing
conducted by Kaman as the prime contractor was completed in the
fourth quarter of 2003 and qualification testing by the Air Force
was completed in April 2004. Management believes that the test
phase has been successfully completed and is now waiting for the
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"Kaman Reports First Quarter 2004 Results"
April 20, 2004
Air Force to perform a final analysis of the tests, after which
authorization for production is expected.
Since 2001, the company's Electro-Optics Development Center
(EODC) in Tucson, Ariz., has been teamed with the University of
Arizona's Steward Observatory to build a 6.5-meter aperture
collimator that will be used for testing large optical systems in
a vacuum environment. The EODC has been working under a $12.8
million fixed-price contract to design and fabricate the
structural, electrical, mechanical and software control systems
for the collimator. The EODC has experienced significant cost
growth in its portion of the program as a result of changes in
the scope of the project, and believes that it has a valid basis
to recover these amounts. As a result, in April 2004, the
company submitted a claim in the amount of $6.3 million to the
university to recover these additional costs.
Helicopter Programs
Sales generated by the SH-2G Super Seasprite and K-MAX helicopter
programs, including spare parts and sales support, totaled $15.0
million in the first quarter, compared to $17.7 million in the
period last year. This represented approximately 25 percent of
segment sales for the quarter, compared to approximately 29
percent a year ago.
Production of the eleven SH-2G(A) aircraft for the Australia
program is essentially complete. As previously reported, the
aircraft lack the full Integrated Tactical Avionics System (ITAS)
software and progress is continuing on this element of the
program. In September 2003 the Royal Australian Navy (RAN) began
the process of provisionally accepting these aircraft after
receiving a decision to proceed from the Australian government.
Since that date, the RAN has provisionally accepted four of the
11 aircraft. The company expects to be able to deliver the full
capability of the ITAS weapons system software in late 2004 with
a final acceptance anticipated in 2005. While the company
believes its reserves are sufficient to cover estimated costs to
complete the program, final development of the software and its
integration are underway, and these are complex tasks.
The company is marketing its existing K-MAX aircraft inventory,
which was written down to an estimated fair market value in 2002,
using sales and short-term leasing programs. There were no sales
or new leases of K-MAX helicopters in the first quarter of 2004.
Kuhn said, "To establish clear lines of responsibility and
improve decision-making, Aerospace recently initiated a
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"Kaman Reports First Quarter 2004 Results"
April 20, 2004
reorganization to address differences between its various
businesses and their specific requirements. Three divisions are
being created to replace portions of the existing structure:
Kaman Aerostructures, having production facilities in
Jacksonville, Fla. and Wichita, Kans., will be responsible for
fixed-wing aircraft subcontract programs; Kaman Fuzing, having
production facilities in Middletown, Conn. and Orlando, Fla.,
will be responsible for fuze operations; and Kaman Helicopters,
having production facilities in Bloomfield, Conn., will be
responsible for prime and subcontract helicopter programs,
including the SH-2G, K-MAX and MDHI programs. By placing
purchasing, operations, finance, contracts and human resources
personnel within each division we expect each will be better able
to effectively manage expenses for the services and/or functions
they require, and achieve optimal customer service. The company
expects to complete the reorganization by the end of 2004."
Industrial Distribution
- -----------------------
First quarter operating profits for the Industrial Distribution
segment were $5.0 million, compared to $2.8 million in the 2003
period. Sales were $145.6 million in the first quarter, including
$7.2 million from Industrial Supplies, Inc. (ISI), which was
acquired in the fourth quarter of 2003, compared to $120.3
million a year ago.
Kuhn said, "The Industrial Distribution segment made good gains
in the first quarter. It appears that the economy is continuing
to strengthen as demand for manufactured goods increases to
levels not seen in recent years, and that is good news for our
distribution business. The `lean-thinking' practices and
adherence to strict cost controls that we have been implementing
have helped to see us through the hard times and continue to
benefit the company competitively. Vendor incentives in the form
of rebates continue to be an important contributor to the
segment's operating profits."
Kaman is the third largest U.S. industrial distributor servicing
the bearings, electrical/mechanical power transmission, fluid
power, motion control and materials handling markets in the
United States. Kaman offers more than 1.5 million items, as well
as value-added services to a base of more than 50,000 customers
spanning nearly every sector of U.S. industry.
Success in the market requires a combination of competitive
pricing and value-added services that save the customer money
while helping them become more efficient and productive. Over
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Page 8 of 12
"Kaman Reports First Quarter 2004 Results"
April 20, 2004
the past several years, large companies have increasingly
centralized their purchasing, focusing on suppliers that can
service all of their plant locations across a wide geographic
area. To meet these requirements, Kaman has expanded its
geographic presence through the selective opening of new
branches, and acquisitions in key markets of the upper Midwest,
the South, and Mexico. The company's footprint of nearly 200
branches and regional distribution centers now covers 70 of the
top 100 industrial markets in the U.S.
Music
- -----
The Music segment's first quarter operating profit was $2.0
million, compared to $1.9 million in the period a year ago.
Sales for the quarter were $40.3 million, compared to $34.0
million a year ago. Notwithstanding the increase in sales, the
gross profit rate was lower in the quarter due to the addition of
several lower margin products to the catalog, a shift in sales
mix toward lower margin products, increased guitar manufacturing
costs in the U.S., and increased sales of products to some larger
customers that carry a lower gross profit rate.
Kuhn said, "The steadily improving national economy and resilient
consumer confidence have had a positive impact on the music
industry and on our business. Sales to both independent
retailers and the large chain store accounts exceeded
expectations for the quarter, with sales to the latter being
particularly strong."
The segment is America's largest independent distributor of
musical instruments and accessories, and is involved in some
combination of designing, manufacturing, marketing and
distributing more than 15,000 products from five facilities in
the U.S. and Canada to retailers of all sizes for musicians of
all skill levels.
Concluding Remark
Kuhn concluded, "Going forward, our confidence in the
strengthening economy remains intact for our Industrial
Distribution and Music segments. However, we will be watching
for the effect of rising steel prices, energy costs and other
influences on these businesses. For Aerospace, we remain focused
on cost control, efficiency improvement, and the marketing of our
manufacturing and engineering capabilities and are confident that
we will be well-positioned to take advantage of the eventual
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Page 9 of 12
"Kaman Reports First Quarter 2004 Results"
April 20, 2004
turnaround in the commercial aerospace market when it comes, just
like we are successfully doing with our Industrial Distribution
business."
Forward-Looking Statements
- --------------------------
This release contains forward-looking information relating to the
company's business and prospects, including aerostructures and
helicopter subcontract programs and components, advanced
technology products, SH-2G and K-MAX helicopter programs, the
industrial and music businesses, 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 company 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
company, 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 company's investment in the MD Helicopters,
Inc. contracts; 7) actual costs for recertifying products and
processes in connection with start-up of the expanded
Jacksonville facility; 8) JPF program final qualification test
results and receipt of production orders; 9) satisfactory
resolution of the EODC Collimator claim and completion of
contract performance, 10) achievement of enhanced business base
in the Aerospace segment in order to better absorb overhead and
general and administrative expenses; 11) successful sale or lease
of existing K-MAX inventory; 12) the condition of consumer
markets for musical instruments; 13) profitable integration of
acquired businesses into the company's operations; 14) changes in
supplier sales or vendor incentive policies; 15) the effect of
price increases or decreases; and 16) 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.
###
Contact: Russell H. Jones
SVP, Chief Investment Officer & Treasurer
(860) 243-6307
rhj-corp@kaman.com
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"Kaman Reports First Quarter 2004 Results"
April 20, 2004
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands except per share amounts)
<table>
For the Three Months
Ended March 31,
---------------
2004 2003
- -----------------------------------------------------------------
<s> <c> <c>
Net sales $ 245,678 $ 216,010
Costs and expenses:
Cost of sales 183,023 159,956
Selling, general and administrative expense 59,427 49,137
Other operating (income) / expense, net (318) (273)
Interest expense, net 795 768
Gain on sale of product line and other assets - (16,849)
Other expense, net 484 405
- -----------------------------------------------------------------
243,411 193,144
- -----------------------------------------------------------------
Earnings before income taxes 2,267 22,866
Income taxes 975 8,900
- -----------------------------------------------------------------
Net earnings $ 1,292 $ 13,966
=================================================================
Net earnings per share:
Basic $ .06 $ .62
Diluted $ .06 $ .60
=================================================================
Average shares outstanding:
Basic 22,648 22,495
Diluted 23,660 23,480
=================================================================
Dividends declared per share $ .11 $ .11
=================================================================
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"Kaman Reports First Quarter 2004 Results"
April 20, 2004
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
March 31, December 31,
2004 2003
- -----------------------------------------------------------------
<s> <c> <c>
Assets
Current assets:
Cash and cash equivalents $ 9,825 $ 7,130
Accounts receivable, net 209,442 193,243
Inventories 189,202 178,952
Income taxes receivable - 1,043
Deferred income taxes 26,026 26,026
Other current assets 11,627 12,457
- -----------------------------------------------------------------
Total current assets 446,122 418,851
- -----------------------------------------------------------------
Property, plant and equipment, net 50,561 51,049
Goodwill and other intangible assets, net 53,476 53,347
Other assets 4,843 5,064
- -----------------------------------------------------------------
$ 555,002 $ 528,311
=================================================================
Liabilities and shareholders' equity
Current liabilities:
Notes payable $ 10,857 $ 7,673
Accounts payable 58,810 59,600
Accrued contract loss 23,805 23,611
Accrued restructuring costs 5,445 6,109
Other accrued liabilities 24,141 26,123
Advances on contracts 19,966 19,693
Other current liabilities 16,810 17,746
Income taxes payable 759 -
- -----------------------------------------------------------------
Total current liabilities 160,593 160,555
- -----------------------------------------------------------------
Long-term debt, excluding current portion 62,620 36,624
Other long-term liabilities 28,491 27,949
Shareholders' equity 303,298 303,183
- -----------------------------------------------------------------
$ 555,002 $ 528,311
=================================================================
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"Kaman Reports First Quarter 2004 Results"
April 20, 2004
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
<table> For the Three Months
Ended March 31,
- -----------------------------------------------------------------------------
2004 2003
---- ----
<s> <c> <c>
Cash flows from operating activities:
Net earnings $ 1,292 $ 13,966
Depreciation and amortization 2,238 2,626
Net gain on sale of product line and other assets - (16,849)
Other, net 1,025 191
Changes in current assets and liabilities,
excluding effects of divestiture:
Accounts receivable (16,125) (24,209)
Inventory (10,163) (7,108)
Income taxes receivable 1,043 5,192
Accounts payable (807) 6,393
Advances on contracts 273 (747)
Income taxes payable 763 5,260
Changes in other current assets and liabilities (2,598) (1,510)
- -----------------------------------------------------------------------------
Cash provided by (used in) operating activities (23,059) (16,795)
- -----------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sale of product line and other assets - 28,021
Expenditures for property, plant & equipment (1,586) (1,789)
Other, net 370 (461)
- -----------------------------------------------------------------------------
Cash provided by (used in) investing activities (1,216) 25,771
- -----------------------------------------------------------------------------
Cash flows from financing activities:
Changes to notes payable 3,158 1,926
Additions/(reductions) to long-term debt 25,996 (5,897)
Proceeds from exercise of employee stock plans 309 324
Purchases of treasury stock (4) (205)
Dividends paid (2,489) (2,471)
- -----------------------------------------------------------------------------
Cash provided by (used in) financing activities 26,970 (6,323)
- -----------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 2,695 2,653
Cash and cash equivalents at beginning of period 7,130 5,571
- -----------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 9,825 $ 8,224
=============================================================================
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