Kaman Reports 2012 Third Quarter Results

  Kaman Reports 2012 Third Quarter Results

Third Quarter 2012 Highlights:

  *Diluted GAAP earnings per share of $0.56 ($0.59 adjusted*)
  *Consolidated net sales of $415 million
  *Delivery of over 10,000 Joint Programmable Fuzes during the quarter
  *Record quarterly Industrial Distribution sales of $263.3 million
  *Completed the acquisitions of the assets of Florida Bearings and Zeller
    Corporation

Business Wire

BLOOMFIELD, Conn. -- October 31, 2012

Kaman Corp. (NYSE:KAMN) today reported financial results for the third quarter
ended September 28, 2012.

                                                                
Table 1. Summary of Financial
Results
In thousands except per share       For the three months ended
amounts
                                    September 28,   September 30,   $ Change
                                    2012            2011
Net sales:
Industrial Distribution             $  263,328      $  239,132      $ 24,196
Aerospace                           151,285        117,388        33,897   
Net sales                           $  414,613     $  356,520     $ 58,093 
                                                                    
Operating income:
Industrial Distribution             $  13,171       $  12,252       $ 919
Aerospace                           24,410          19,173          5,237
Net gain (loss) on sale of assets   (53         )   (14         )   (39      )
Corporate expense                   (12,419     )   (10,092     )   (2,327   )
Operating income                    $  25,109      $  21,319      $ 3,790  
                                                                    
                                                                    
Diluted earnings per share          $  0.56        $  0.49        $ 0.07   
                                                                             

Neal J. Keating, Chairman, President and Chief Executive Officer, stated,
“During the third quarter we delivered solid performance in both of our
businesses. Aerospace delivered 28.9% sales growth driven by deliveries of
over 10,000 Joint Programmable Fuzes ("JPF") during the quarter, which offset
lower sales volume on certain other programs. In Distribution, we achieved
double digit sales growth and completed two strategic acquisitions that we
believe will continue to propel growth in the future.

Industrial Distribution sales growth was 10.1%, driven by our recent
acquisitions, while organic sales were flat during the quarter. We were able
to achieve a 5.0% operating profit margin for the third quarter by focusing on
cost control initiatives, despite flat organic sales and the September
acquisition of the assets of Zeller Corporation, which was dilutive to the
operating margin percentage for the period. In addition, we incurred higher
costs from our investment in our new ERP system and acquisition due diligence
and integrations.

Aerospace sales performance was led by the JPF program the strength of which
offset lower deliveries on several other programs, most notably the BLACK HAWK
and Unmanned K-MAX®. As expected, sales of our bearing product lines were
solid despite being lower sequentially coming off an extremely strong Q2
performance. The 16.1% operating profit margin in Aerospace benefited from
favorable JPF sales volume in the quarter, offset by a less profitable mix of
bearing sales and a one time charge for a contract claim settlement.

We are monitoring business conditions, particularly defense spending issues in
Aerospace and certain end market weakness within Distribution. Proactive
expense reduction actions have been taken where appropriate and contingency
plans have been developed in the event conditions warrant more aggressive
actions. Overall, we are pleased with our performance in the quarter and
believe we continue to make progress with our long term strategy.”

Segment reports follow:

Industrial Distribution segment

Sales increased 10.1% in the third quarter of 2012 to a record $263.3 million
compared to $239.1 million a year ago. Acquisitions contributed $24.4 million
in sales in the quarter (sales from acquisitions are classified as organic
beginning with the thirteenth month following the acquisition). On a sales per
sales day* basis, sales increased 10.1% over last year's third quarter, with
organic sales flat for the period. (See Table 3 for additional details
regarding the Segment's sales per sales day performance.) This was primarily
due to increases in primary metal and fabricated metals manufacturing,
merchant wholesalers and durable goods, and paper manufacturing mostly offset
by declines in the food and beverage industries.

Segment operating income for the third quarter of 2012 was $13.2 million
compared to operating income of $12.3 million in the third quarter of 2011.
The operating profit margin for the third quarter of 2012 was 5.0%. Operating
profit dollars were higher year over year due to the contribution of operating
income from our 2011 and 2012 acquisitions. This increase was partially offset
by increased employee related costs, higher ERP implementation costs and
acquisition integration expenses.

Aerospace segment

Sales were $151.3 million, an increase of $33.9 million from sales of $117.4
million in the third quarter of 2011. This increase was due to deliveries of
over 10,000 JPF to the US Government. Additionally, strong performance from
bearing product lines; increased deliveries under the A-10 re-wing program;
higher volume of sales on our legacy fuze programs; higher sales on our
helicopter aftermarket programs, including the Egypt SH-2G(E) upgrade program
and K-MAX spares; and contributions from the acquisition of Vermont Composites
contributed to the increased sales. The increases were partially offset by
lower sales on several programs including the Unmanned K-MAX and BLACK HAWK
cockpit production programs and lower engineering design work on certain
commercial aircraft programs.

Operating income for the third quarter of 2012 was $24.4 million, compared to
operating income of $19.2 million in the third quarter of 2011. The operating
margin in this year's third quarter was 16.1% as compared to 16.3% in the
prior year. The increase in operating income resulted from higher deliveries
of JPF and higher gross profit resulting from increased sales volume on other
legacy fuze programs. Also benefiting margin was the absence of legal fees
related to FMU-143 litigation. These increases were offset by a less
profitable mix of bearing products, the declines mentioned in the preceding
paragraph and the write-off of $0.6 million related to the settlement of a
claim for one of our legacy fuze programs.

Outlook

The Company's updated expectations for 2012 are as follows:

  *Industrial Distribution:

       *Sales of $1,040 million to $1,055 million
       *Operating margin of 5.1% to 5.3%

  *Aerospace:

       *Sales of $585 million to $595 million
       *Operating margin between 15.7% and 16.0%

  *Corporate expenses of approximately $49 million
  *Interest expense of approximately $11.5 million
  *Estimated tax rate of between 34.5% and 35.0%
  *Free cash flow* in the range of $25 million to $30 million.

Chief Financial Officer, William C. Denninger, commented, "While significantly
stronger than last year our results for the quarter were slightly below
expectations, and with additional push outs in Aerospace we are lowering our
outlook for the full year. At Aerospace, the ability to increase our JPF
deliveries has allowed us to offset some delivery push outs on other programs.
This lower volume, although disappointing, has been driven by a shift in near
term customer requirements. At Distribution, our strategy of focused growth
through acquisition delivered double digit sales growth for the period, while
weakness in certain end markets we serve resulted in flat organic sales. We
believe organic sales trends will remain weak through the fourth quarter.
Corporate expense was higher in the quarter as a result of $1.0 million of
acquisition costs incurred and $0.6 million of severance costs. We are
managing costs across the company in an effort to ensure we maintain our
profit margin and are able to react to changing market conditions. Our free
cash flow* generation in the quarter was strong at $34.0 million.”

Please see the MD&A section of the Company's SEC Form 10-Q filed concurrent
with the issuance of this release for greater detail on our results and
various company programs.

A conference call has been scheduled for tomorrow, November 1, 2012 at 8:30 AM
EDT. Listeners may access the call live by telephone at (800) 884-5695 and
from outside the U.S. at (617) 786-2960 (passcode: 54733525); or, over the
Internet through a link on the home page of the Company's website at
http://www.kaman.com. In its discussion, management may include certain
non-GAAP measures related to company performance. If so, a reconciliation of
that information to GAAP, if not provided in this release, will be provided in
the exhibits to the conference call and will be available through the Internet
link provided above.

                                                            
Table 2.
Summary of
Segment
Information
(in thousands)
                 For the three months ended      For the nine months ended
                 September 28,   September 30,   September 28,   September 30,
                 2012            2011            2012            2011
Net sales:
Industrial       $  263,328      $  239,132      $ 779,082       $ 717,309
Distribution
Aerospace        151,285        117,388        429,733        402,120     
Net sales        $  414,613     $  356,520     $ 1,208,815    $ 1,119,429 
                                                                 
Operating
income:
Industrial       $  13,171       $  12,252       $ 40,596        $ 37,002
Distribution
Aerospace        24,410          19,173          66,469          62,952
Net gain
(loss) on sale   (53         )   (14         )   (21         )   (50         )
of assets
Corporate        (12,419     )   (10,092     )   (36,256     )   (29,947     )
expense
Operating        $  25,109      $  21,319      $ 70,788       $ 69,957    
income
                                                                             

Non-GAAP Measure Disclosure

Management believes that the non-GAAP (Generally Accepted Accounting
Principles) measures indicated by an asterisk (*) used in this release or in
other disclosures provide important perspectives into the Company's ongoing
business performance. The Company does not intend for the information to be
considered in isolation or as a substitute for the related GAAP measures.
Other companies may define the measures differently. We define the non-GAAP
measures used in this report and other disclosures as follows:

Organic Sales per Sales Day - Organic sales per sales day is defined as GAAP
“Net sales from the Industrial Distribution segment” less sales derived from
acquisitions, divided by the number of sales days in a given period. Sales
days are essentially business days that the Company's branch locations are
open for business and exclude weekends and holidays. Sales days are provided
as part of this release. Management believes organic sales per sales day
provides an important perspective on how net sales may be impacted by the
number of days the segment is open for businessand provides a basis for
comparing periods in which the number of sales days differ.

The following table illustrates the calculation of organic sales per sales day
using “Net sales: Industrial Distribution” from the “Segment and Geographic
Information” footnote in the “Notes to Condensed Consolidated Financial
Statements” from the Company's Form 10-Q filed with the Securities and
Exchange Commission on October 31, 2012. Sales from acquisitions are
classified as organic beginning with the thirteenth month following the
acquisition. Prior period information is adjusted to reflect acquisition sales
for that period as organic sales when calculating organic sales per sales day.

                                                              
Table 3. Industrial Distribution - Organic
Sales
Per Sales Day (in thousands, except days)
                                                 For the three months ended
                                                 September 28,   September 30,
                                                 2012            2011
Net sales: Industrial Distribution               $  263,328      $  239,132
Acquisition related sales                        24,368         —           
Organic sales                                    $  238,960      $  239,132
Sales days                                       63             63          
Organic sales per sales day                      $  3,793       $  3,796    
% change                                         (0.1       )%   7.2         %
                                                                             

Free Cash Flow - Free cash flow is defined as GAAP “Net cash provided by (used
in) operating activities” less “Expenditures for property, plant & equipment.”
Management believes free cash flow provides an important perspective on the
cash available for dividends to shareholders, debt repayment, and acquisitions
after making capital investments required to support ongoing business
operations and long-term value creation. Free cash flow does not represent the
residual cash flow available for discretionary expenditures as it excludes
certain mandatory expenditures such as repayment of maturing debt. Management
uses free cash flow internally to assess both business performance and overall
liquidity. The following table illustrates the calculation of free cash flow
using “Net cash provided by (used in) operating activities” and “Expenditures
for property, plant & equipment”, GAAP measures from the Condensed
Consolidated Statements of Cash Flows.

                                                             
Table 4. Free Cash Flow (in
thousands)
                                  For the nine    For the six    For the three
                                  months ended    months ended   months ended
                                  September 28,   June 29,       September 28,
                                  2012            2012           2012
Net cash provided by (used in)    $   38,077      $  (4,501  )   $  42,578
operating activities
Expenditures for property,        (19,565     )   (10,967    )   (8,598     )
plant & equipment
Free Cash Flow                    $   18,512     $  (15,468 )   $  33,980  
                                                                            

Debt to Capitalization Ratio - Debt to capitalization ratio is calculated by
dividing debt by capitalization. Debt is defined as GAAP “Notes payable” plus
“Current portion of long-term debt” plus “Long-term debt, excluding current
portion.” Capitalization is defined as Debt plus GAAP “Total shareholders'
equity.” Management believes that debt to capitalization is a measurement of
financial leverage and provides an insight into the financial structure of the
Company and its financial strength. The following table illustrates the
calculation of debt to capitalization using GAAP measures from the condensed
consolidated balance sheets included in this release.

                                                              
Table 5. Debt to Capitalization (in thousands)
                                                 September 28,   December 31,
                                                 2012            2011
Notes payable                                    $  628          $  1,685
Current portion of long-term debt                5,000           5,000
Long-term debt, excluding current portion        268,567        198,522    
Debt                                             274,195         205,207
Total shareholders' equity                       418,627        373,071    
Capitalization                                   $  692,822     $  578,278 
Debt to capitalization                           39.6        %   35.5       %
                                                                            

Non-GAAP adjusted net earnings and Non-GAAP adjusted net earnings per common
share diluted - Non-GAAP adjusted net earnings and Non-GAAP adjusted net
earnings per common share diluted are defined as net earnings and diluted
earnings per share, less items that are not indicative of the operating
performance of the business for the period presented. These items are included
in the reconciliation below. Management uses Non-GAAP adjusted net earnings
and Non-GAAP adjusted net earnings per common share diluted to evaluate
performance period over period, to analyze the underlying trends in our
business and to assess its performance relative to its competitors. We believe
that this information is useful for investors and financial institutions to
analyze and compare companies on the basis of operating performance.

The following table illustrates the calculation of Non-GAAP adjusted net
earnings and Non-GAAP adjusted net earnings per common share diluted using
“Net earnings” and “Diluted earnings per share” from the “Condensed
Consolidated Statement of Operations” from the Company's Form 10-Q filed with
the Securities and Exchange Commission on October 31, 2012.

                                                                            
Table 6. Reconciliation of Non-GAAP Financial Information
(In thousands except share and per share amounts) (Unaudited)


                                                  
                     For the three months ended      For the nine months ended
                     September 28,   September 30,   September      September
                     2012           2011            28,           30,
                                                     2012           2011
NET EARNINGS:
GAAP net earnings    14,982          12,965          40,864         41,184
as reported
Non-recurring
benefit associated
with the death of    —               —               —              (1,900  )
a former
executive, net of
tax
Severance related
to Aerospace         361                             361            —
realignment, net
of tax
Aerospace contract
claim settlement,    381            —              381           —       
net of tax
Non-GAAP adjusted    15,724         12,965         41,606        39,284  
net earnings
                                                                    
GAAP earnings per
common share -       0.56            0.49            1.54           1.55
diluted
Non-recurring
benefit associated
with the death of    —               —               —              (0.07   )
a former
executive, net of
tax
Severance related
to Aerospace         0.01            —               0.01           —
realignment, net
of tax
Aerospace contract
claim settlement,    0.02           —              0.02          —       
net of tax
Non-GAAP adjusted
net earnings per     0.59           0.49           1.57          1.48    
common share
diluted
                                                                    
Diluted weighted
average shares       26,623          26,561          26,540         26,530
outstanding (in
thousands)
                                                                            

About Kaman Corporation

Kaman Corporation, founded in 1945 by aviation pioneer Charles H. Kaman, and
headquartered in Bloomfield, Connecticut conducts business in the aerospace
and industrial distribution markets. The company produces and/or markets
widely used proprietary aircraft bearings and components; complex metallic and
composite aerostructures for commercial, military and general aviation fixed
and rotary wing aircraft; aerostructure engineering design analysis and FAA
certification services; safe and arm solutions for missile and bomb systems
for the U.S. and allied militaries; subcontract helicopter work; and support
for the company's SH-2G Super Seasprite maritime helicopters and K-MAX
medium-to-heavy lift helicopters. The company is a leading distributor of
industrial parts, and operates more than 200 customer service centers and five
distribution centers across North America. Kaman offers more than four million
items including bearings, mechanical power transmission, electrical, material
handling, motion control, fluid power, automation and MRO supplies to
customers in virtually every industry. Additionally, Kaman provides
engineering, design and support for automation, electrical, linear, hydraulic
and pneumatic systems as well as belting and rubber fabrication, customized
mechanical services, hose assemblies, repair, fluid analysis and motor
management.

FORWARD-LOOKING STATEMENTS

This release contains "forward-looking statements" within the meaning of the
safe harbor provisions of the U.S. Private Securities Litigation Reform Act of
1995. Forward-looking statements also may be included in other publicly
available documents from time to time issued by the Company and in oral
statements from time to time made by our officers and representatives. These
forward-looking statements are intended to provide management's current
expectations or plans for the Company's future operating and financial
performance, based on assumptions currently believed to be valid. They can be
identified by the use of words such as "anticipate," "intend," "plan," "goal,"
"seek," "believe," "project," "estimate," "expect," "strategy," "future,"
"likely," "may," "should," "will" and other words of similar meaning in
connection with a discussion of future operating or financial performance.
Examples of forward looking statements include, among others, statements
relating to future sales, earnings, cash flows, results of operations, uses of
cash and other measures of financial performance.

Because forward-looking statements relate to the future, they are subject to
inherent risks, uncertainties and other factors that may cause the Company's
actual results and financial condition to differ materially from those
expressed or implied in the forward-looking statements. Such risks,
uncertainties and other factors include, among others: (i) changes in domestic
and foreign economic and competitive conditions in markets served by the
Company, particularly the defense, commercial aviation and industrial
production markets; (ii) changes in government and customer priorities and
requirements (including cost-cutting initiatives, the potential deferral of
awards, terminations or reductions of expenditures to respond to the
priorities of Congress and the Administration, or budgetary cuts resulting
from Congressional actions or automatic sequestration under the Budget Control
Act of 2011); (iii) changes in geopolitical conditions in countries where the
Company does or intends to do business; (iv) the successful conclusion of
competitions for government programs and thereafter contract negotiations with
government authorities, both foreign and domestic; (v) the existence of
standard government contract provisions permitting renegotiation of terms and
termination for the convenience of the government; (vi) the satisfactory
conclusion to government inquiries or investigations regarding government
programs, including the satisfactory resolution of the Wichita subpoena
matter; (vii) risks and uncertainties associated with the successful
implementation and ramp up of significant new programs; (viii) potential
difficulties associated with variable acceptance test results, given sensitive
production materials and extreme test parameters; (ix) the successful resale
of the SH-2G(I) aircraft, equipment and spare parts; (x) the 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 all have been assumed in connection with goodwill
impairment evaluations; (xi) the continued support of the existing K-MAX®
helicopter fleet, including sale of existing K-MAX® spare parts inventory;
(xii) the accuracy of current cost estimates associated with environmental
remediation activities at the Bloomfield, Moosup and New Hartford, CT
facilities and our U.K. facilities; (xiii) the profitable integration of
acquired businesses into the Company's operations; (xiv) changes in supplier
sales or vendor incentive policies; (xv) the effects of price increases or
decreases; (xvi) the effects of pension regulations, pension plan assumptions,
pension plan asset performance and future contributions; (xvii) future levels
of indebtedness and capital expenditures; (xviii) the future availability of
credit and the Company's ability or desire to maintain its current credit
rating; (xix) the continued availability of raw materials and other
commodities in adequate supplies and the effect of increased costs for such
items; (xx) the effects of currency exchange rates and foreign competition on
future operations; (xxi) changes in laws and regulations, taxes, interest
rates, inflation rates and general business conditions; (xxii) future
repurchases and/or issuances of common stock; and (xxiii) such other risks and
uncertainties as are discussed in Part II, Item 1A. "Risk Factors" of our
Quarterly Reports on Form 10-Q for the quarters ended June 29 and September
28, 2012 and in Part I, Item 1A. “Risk Factors” of our Annual Report on Form
10-K for the year ended December 31, 2011.

All forward-looking statements made in this release are based solely on
information that is currently available as of the date of this release, and
the Company undertakes no obligation to update any such forward-looking
statement, whether as a result of new information, future developments or
otherwise.


KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands except per share amounts)

                 For the Three Months Ended    For the Nine Months Ended
                  September 28,   September      September 28,   September 30,
                  2012           30,            2012           2011
                                  2011
Net sales         $  414,613      $  356,520     $ 1,208,815     $ 1,119,429
Cost of sales     299,309        254,868       872,114        806,628     
Gross profit      115,304         101,652        336,701         312,801
Selling,
general and       90,142          80,319         265,892         242,794
administrative
expenses
Net (gain)/loss
on sale of        53             14            21             50          
assets
Operating         25,109          21,319         70,788          69,957
income
Interest          2,924           2,733          8,634           8,624
expense, net
Other (income)    (71         )   (176       )   (234        )   (590        )
expense, net
Earnings before   22,256          18,762         62,388          61,923
income taxes
Income tax        7,274          5,797         21,524         20,739      
expense
Net earnings      $  14,982      $  12,965     $ 40,864       $ 41,184    
                                                                 
Net earnings
per share:
Basic net
earnings per      $  0.57         $  0.49        $ 1.55          $ 1.57
share
Diluted net
earnings per      $  0.56         $  0.49        $ 1.54          $ 1.55
share
Average shares
outstanding:
Basic             26,455          26,339         26,380          26,250
Diluted           26,623         26,561        26,540         26,530      
Dividends
declared per      $  0.16        $  0.16       $ 0.48         $ 0.44      
share
                                                 
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
                                                 
                  For the Three Months Ended     For the Nine Months Ended
                  September 28,   September      September 28,   September 30,
                  2012            30,            2012            2011
                                  2011
Net earnings      $  14,982       $  12,965      $ 40,864        $ 41,184
Other
comprehensive
income, net of
tax:
Foreign
currency          2,961           (6,088     )   3,487           (1,386      )
translation
adjustments
Change in
unrealized loss
on derivative
instruments,
net of tax        —               135            —               378
expense of $0
and $81, and $0
and $231,
respectively
Pension plan
adjustments,
net of tax
expense of $834   1,361          471           4,084          1,413       
and $288, and
$2,503 and
$866,
respectively
Comprehensive     $  19,304      $  7,483      $ 48,435       $ 41,589    
income
                                                                             


KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)

                                                 September 28,  December 31,
                                                  2012            2011
Assets
Current assets:
Cash and cash equivalents                         $ 12,241        $  14,985
Accounts receivable, net                          210,488         190,081
Inventories                                       364,213         339,846
Deferred income taxes                             25,872          25,018
Income tax refunds receivable                     —               527
Other current assets                              26,903         29,645     
Total current assets                              639,717        600,102    
Property, plant and equipment, net of
accumulated depreciation of $148,541 and          120,691         111,895
$142,657, respectively
Goodwill                                          193,153         153,267
Other intangible assets, net                      93,599          73,816
Deferred income taxes                             34,987          38,434
Other assets                                      16,830         18,884     
Total assets                                      $ 1,098,977    $  996,398 
Liabilities and Shareholders’ Equity
Current liabilities:
Notes payable                                     $ 628           $  1,685
Current portion of long-term debt                 5,000           5,000
Accounts payable – trade                          116,595         106,025
Accrued salaries and wages                        39,261          35,766
Current portion of amount due to Commonwealth     6,657           6,487
of Australia
Other accruals and payables                       56,440          62,748
Income taxes payable                              926            987        
Total current liabilities                         225,507        218,698    
Long-term debt, excluding current portion         268,567         198,522
Deferred income taxes                             6,387           6,827
Underfunded pension                               127,198         135,829
Due to Commonwealth of Australia, excluding       —               6,566
current portion
Other long-term liabilities                       52,691          56,885
Commitments and contingencies                     —               —
Shareholders' equity:
Preferred stock, $1 par value, 200,000 shares     —               —
authorized; none outstanding
Common stock, $1 par value, 50,000,000 shares
authorized; voting; 26,807,272 and 26,495,828     26,807          26,496
shares issued, respectively
Additional paid-in capital                        119,715         109,584
Retained earnings                                 389,568         361,389
Accumulated other comprehensive income (loss)     (110,375    )   (117,946   )
Less 271,998 and 258,424 shares of common         (7,088      )   (6,452     )
stock, respectively, held in treasury, at cost
Total shareholders’ equity                        418,627        373,071    
Total liabilities and shareholders’ equity        $ 1,098,977    $  996,398 
                                                                             

                                               
KAMAN CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
                                                 
                                                 For the Nine Months Ended
                                                 September 28,  September 30,
                                                 2012            2011
Cash flows from operating activities:
Net earnings                                     $  40,864       $  41,184
Adjustments to reconcile net earnings to net
cash provided by (used in) operating
activities:
Depreciation and amortization                    20,440          16,562
Accretion of convertible notes discount          1,296           1,230
Change in allowance for doubtful accounts        (764       )    98
Net (gain) loss on sale of assets                21              50
Change in amount Due to Commonwealth of
Australia, net of gain (loss) on derivative      (287       )    (123       )
instruments
Stock compensation expense                       4,809           5,720
Excess tax (benefit) from share-based            (720       )    (742       )
compensation arrangements
Deferred income taxes                            (10        )    4,634
Changes in assets and liabilities, excluding
effects of acquisitions/divestitures:
Accounts receivable                              (5,289     )    (18,342    )
Inventories                                      (15,768    )    (9,563     )
Income tax refunds receivable                    527             (2,420     )
Other current assets                             5,763           13,353
Accounts payable - trade                         (529       )    3,880
Accrued contract losses                          (1,349     )    (31        )
Advances on contracts                            (138       )    453
Other accruals and payables                      (10,345    )    (22,176    )
Income taxes payable                             (73        )    854
Pension liabilities                              (1,843     )    (14,708    )
Other long-term liabilities                      1,472          (4,416     )
Net cash provided by (used in) operating         38,077         15,497     
activities
Cash flows from investing activities:
Proceeds from sale of assets                     337             242
Expenditures for property, plant & equipment     (19,565    )    (19,416    )
Acquisition of businesses including earn out     (83,390    )    (12,965    )
adjustments, net of cash received
Other, net                                       (407       )    252        
Cash provided by (used in) investing             (103,025   )    (31,887    )
activities
Cash flows from financing activities:
Net borrowings (repayments) under revolving      71,383          4,490
credit agreements
Debt repayment                                   (3,750     )    (3,750     )
Net change in book overdraft                     1,707           9,239
Proceeds from exercise of employee stock         5,730           4,537
awards
Purchase of treasury shares                      (733       )    (3,372     )
Dividends paid                                   (12,637    )    (10,998    )
Debt issuance costs                              (50        )    (715       )
Windfall tax benefit                             720             742
Other                                            —              (636       )
Cash provided by (used in) financing             62,370         (463       )
activities
Net increase (decrease) in cash and cash         (2,578     )    (16,853    )
equivalents
Effect of exchange rate changes on cash and      (166       )    (159       )
cash equivalents
Cash and cash equivalents at beginning of        14,985         32,232     
period
Cash and cash equivalents at end of period       $  12,241      $  15,220  

Contact:

Kaman Corporation
Eric Remington, 860-243-6334
V.P., Investor Relations
Eric.Remington@kaman.com