6309 Monarch Park Place, Suite 203
Niwot, CO 80503, USA
Phone (303) 443-5060
Toll free (888) 742-5060
In the quarter, the company recorded pre-tax charges totaling $86.0 million (of which $52.7 million are non-cash) 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 its Moosup, Conn. plant. Details are provided in the Aerospace segment discussion.
Including the pre-tax charges, the company reported a net loss for the second quarter of $50.4 million, compared to a net loss of $12.5 million in the 2001 second quarter. Excluding the charges, 2002 second quarter net earnings were $5.6 million.
The 2001 second quarter loss included a $31.2 million adjustment to sales and pre-tax earnings associated with a change in estimated costs to complete the SH-2G(A) helicopter program for Australia. Excluding the adjustment, 2001 second quarter net earnings were $8.3 million.
Revenues for the second quarter of 2002 were $209.4 million, compared to $194.6 million the previous year. The Australia program adjustments reduced revenue in the three-month period by $6.5 million in 2002 and by $31.2 million in 2001.
Paul R. Kuhn, chairman, president and CEO, said, "It was a difficult quarter as our Aerospace segment continued to work toward completion of the Australian SH-2G(A) program with new subcontractors while simultaneously reaching the decision to reduce the scope of the K-MAX program. The segment also continued to be affected by the absence of new helicopter orders and lower commercial aircraft production rates. This was reflected in our decision to phase out the Moosup plant and move the operations to other, more efficient company facilities. While these were not easy decisions, we believe they will position the company for future growth.
"During the quarter, we continued to win new aerostructures work and to build the advanced technology products businesses. We also worked to bring on line two strategically important acquisitions -- PlasticFab, a Wichita-based aircraft component manufacturer acquired late in 2001 and Dayron, a Florida- based leader in precision guided munitions fuzes for the U. S. Air Force and Army, acquired in July 2002. We also announced an agreement to acquire RWG Frankenjura-Industrie Flugwerklager GmbH, a German aerospace bearing manufacturer that complements our proprietary Kamatics bearings and increases Kaman's presence in vital European aerospace markets. This acquisition was completed on July 29.
"On the industrial side, we are starting to see some early signs of economic improvement in the manufacturing sector which, if they hold, would benefit our Industrial Distribution business several months down the road," Kuhn said. "Our acquisition of A-C Supply last fall has given us an expanded presence in the Upper Midwest, and we are seeing good results from our purchase this spring of a majority interest in a distributor in Mexico.
"Music Distribution had a reasonably good quarter despite the difficult economic conditions, and toward the end of the quarter we added another new premier product line, Sabian cymbals and percussion accessories, to our product offerings," Kuhn said.
For the 2002 first half, including the pre-tax charges, the company reported a net loss of $45.0 million, or $2.01 loss per share diluted, compared to a net loss of $3.8 million, or $0.17 loss per share diluted in the same period last year. Excluding the $86.0 million in pre-tax charges, the 2002 six-month net earnings were $11.0 million, or $0.48 per share diluted. Excluding the Australia program adjustment, 2001 six-month earnings were $17.0 million, or $0.74 per share diluted.
Six-month period revenues were $432.7 million in 2002, compared to $439.3 million for the first half of last year. The Australia program adjustments reduced