Kaman Industrial Reports Strong Second Quarter

Kaman Industrial Technologies, Windsor, CT, reported revenues for its second quarter ended July 1, 2005 were $157.5 million, up 8.4% from $145.3 million for the same period last year. For the first six months of this year revenues were $313.5 million, up 7.8% from $290.9 million for the same period last year.

 

For its parent company, Kaman Corporation, net earnings for the second quarter of 2005 were $2.8 million, compared to a net loss of $1.7 million in the 2004 period. The 2004 second quarter loss was attributable to the Aerospace segment. Net sales for the second quarter were $271.3 million, compared to $247.5 million in the second quarter of 2004, an increase of 9.6 percent.

 

For the first six months of 2005 the company reported net earnings of $7.5 million, or $0.33 per share diluted, compared to a net loss of $0.5 million, or $0.02 loss per share diluted, in the first six months of 2004. First six-month net sales for 2005 rose 8.5 percent to $534.6 million, compared to $492.7 million in the 2004 period. Results for the second quarter and six-month periods include the effect of higher corporate expenses and substantially higher tax rates arising from the non-deductibility of certain compensation expenses during the quarter and expenses associated with the company's proposed recapitalization plan.

 

"The Industrial Distribution and Music segments along with the Kamatics subsidiary within the Aerospace segment continued their good momentum of the first quarter, each delivering favorable performance comparisons to earlier periods," said Paul R. Kuhn, chairman, president and CEO of parent company Kaman Corporation. "Progress was also made in the Aerostructures, Fuzing and Helicopters divisions of the Aerospace segment with all contributing to operating profits for the three-and six-month periods ended July 1, 2005. Kamatics, including the company's German bearing manufacturer, RWG, continued to produce a substantial majority of Aerospace segment profits for the reporting periods."

 

On June 7, 2005, the company announced that it had entered into an agreement with certain members of the Kaman family that contemplated a proposed recapitalization that would simplify the company's capital structure and enhance its corporate governance by eliminating the longstanding two-class structure of common stock. As reported, the Kaman family subsequently indicated its intention to terminate the recapitalization agreement in order to accept an alternate offer, as permitted under the terms of the recapitalization agreement.

 

The matter was submitted to arbitration and following the arbiter's conclusion that the alternate offer was permissible under the terms of the recapitalization agreement, the company's board of directors approved a substitute recapitalization proposal on July 28, 2005. In accordance with the terms of the recapitalization agreement, the Kaman family has agreed to support the substitute recapitalization proposal and abandon the alternate transaction.

 

The substitute proposal provides for an exchange ratio of 3.58 voting common shares for each share of Class B common stock and includes a part stock/part cash alternative under which Class B shareholders would have the right to elect instead to receive 1.84 voting common shares and $27.10 in cash for each of their shares of Class B common stock.