Kaman Corp. Issues Advisory on Third Quarter 2005 Results
September 29 2005 - 5:24PM
PR Newswire (US)
BLOOMFIELD, Conn., Sept. 29 /PRNewswire-FirstCall/ -- Kaman Corp.
(NASDAQ:KAMNA) announced today that based on current information it
expects to report a loss in the range of $0.20 to $0.26 per share
for the third quarter ending September 30, 2005 primarily as a
result of approximately $5.0 million, or $0.22 per share, in
additional expenses related to market-driven stock appreciation
rights in the quarter that are predominately non tax- deductible;
and approximately $9.0 to $11.0 million, or $0.25 to $0.31 per
share of additional loss accruals associated with final completion
of the Australian SH-2G(A) helicopter program. Operating results
for each of the segments have continued to reflect the relatively
good conditions in the markets served by the company. The company
said, however, that as a result of a more than 30 percent increase
in the price of the company's shares since the end of the second
quarter of 2005, it has incurred additional expense related to
stock appreciation rights. Due to the non-deductibility of most of
this expense, the tax rate for 2005 is expected to be slightly over
65% for the year. Stock appreciation rights are driven by changes
in the market value of Kaman shares and were granted to certain
principal executives of the company from 1997 to 2003 as a
long-term incentive to enhance the value of shareholders' interests
in the company. Since a majority of these rights have now been
exercised and no new stock appreciation rights have been awarded
since early 2003, the impact of future changes in the stock price
will have a diminished effect on earnings in future periods: each
dollar of increase in the price of Kaman shares from $23.00 will be
expected to result in approximately $250 thousand of expense while
the remaining rights are unexercised, and moderate decreases in the
price of the shares would result in a proportionate decrease in
expense. The company said that the charge taken against the
SH-2G(A) helicopter program for Australia is due to higher than
anticipated costs associated with final completion of the program.
While significant progress has been made by Northrop Grumman and
CSC Australia on the development and testing of the software for
the aircrafts' Integrated Tactical Avionics System (ITAS), the time
and effort required to complete that complex process has been
greater than expected. The Australian Government has funded certain
additions to the testing protocol that will also extend the
schedule. Production of the 11 SH- 2G(A)s for the Royal Australian
Navy is essentially complete and nine of the aircraft have been
provisionally accepted by the Navy. Provisional acceptance of the
tenth aircraft is expected shortly, and delivery of the first fully
operational aircraft along with final acceptance by the customer is
now targeted to occur in the first quarter of 2006. Kaman Corp.
conducts business in the aerospace, industrial distribution and
music markets. Forward-Looking Statements This press release may
contain forward-looking information relating to the company's
business and prospects, including the aerospace, industrial
distribution and music businesses, operating cash flow, the
benefits of the recapitalization transaction, 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 for government programs and thereafter contract
negotiations with government authorities, both foreign and
domestic; 2) political conditions in countries where the company
does or 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 defense,
commercial aviation, industrial production and consumer market for
music products, as well as global economic conditions; 5)
satisfactory completion of the Australian SH-2G(A)program,
including successful completion and integration of the full ITAS
software; 6) receipt and successful execution of production orders
for the JPF U.S. government contract including the exercise of all
contract options and receipt of orders from allied militaries, as
both have been assumed in connection with goodwill impairment
evaluations; 7) satisfactory resolution of the EODC/University of
Arizona litigation; 8) achievement of enhanced business base in the
Aerospace segment in order to better absorb overhead and general
and administrative expenses, including successful execution of the
contract with Sikorsky for the BLACK HAWK Helicopter program; 9)
satisfactory results of negotiations with NAVAIR concerning the
company's leased facility in Bloomfield, Conn.; 10) profitable
integration of acquired businesses into the company 's operations;
11) changes in supplier sales or vendor incentive policies; 12) the
effect of price increases or decreases; 13) pension plan
assumptions and future contributions; 14) continued availability of
raw materials in adequate supplies; 15) satisfactory resolution of
the supplier switch and incorrect part issues at Dayron and the
DCIS investigation; 16) cost growth in connection with potential
environmental remediation activities related to the Bloomfield and
Moosup facilities; 17) whether the proposed recapitalization is
completed; 18) risks associated with the course of litigation; 19)
changes in laws and regulations, taxes, interest rates, inflation
rates, general business conditions and other factors; 20) the
effects of currency exchange rates and foreign competition on
future operations; and 21) other risks and uncertainties set forth
in the company 's annual, quarterly and current reports, and proxy
statements. Any forward-looking information provided in this press
release should be considered with these factors in mind. The
company assumes no obligation to update any forward-looking
statements contained in this press release. On August 18, 2005,
Kaman filed with the Securities and Exchange Commission a
Registration Statement on Form S-4, which has since been declared
effective by the Securities and Exchange Commission. The
Registration Statement on Form S-4 contains a proxy
statement/prospectus, which describes the proposed
recapitalization. STOCKHOLDERS OF KAMAN ARE ADVISED TO READ THE
PROXY STATEMENT/PROSPECTUS, BECAUSE IT CONTAINS IMPORTANT
INFORMATION. Such proxy statement/prospectus and other relevant
documents may be obtained, free of charge, on the Securities and
Exchange Commission's website (http://www.sec.gov/) or from Kaman
by contacting Russell H. Jones, SVP, Chief Investment Officer &
Treasurer, by telephone at (860) 243-6307 or by email at . Kaman
and certain persons may be deemed to be participants in the
solicitation of proxies relating to the proposed recapitalization.
The participants in such solicitation may include Kaman's executive
officers and directors. Further information regarding persons who
may be deemed participants is available in Kaman's proxy
statement/prospectus. DATASOURCE: Kaman Corp. CONTACT: Russell H.
Jones, SVP, Chief Investment Officer & Treasurer,
+1-860-243-6307, Web site: http://www.kaman.com/ Company News
On-Call: http://www.prnewswire.com/comp/480450.html
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