MRO Magazine

Kaman Reports 2015 Third Quarter Results


October 29, 2015
By Business Wire News

BLOOMFIELD, Conn.

Kaman Corp. (NYSE:KAMN) today reported financial results for the third fiscal quarter ended October 2, 2015.

         
Table 1. Summary of Financial Results
In thousands except per share amountsFor the Three Months Ended
October 2,
2015
September 26,
2014
Change
Net sales from continuing operations:
Distribution $ 296,312 $ 302,294 $ (5,982 )
Aerospace 137,430   153,761   (16,331 )
Net sales $ 433,742   $ 456,055   $ (22,313 )
 
Operating income from continuing operations:
Distribution $ 14,422 $ 14,561 $ (139 )
% of sales4.9%4.8%0.1%
Aerospace 27,801 26,813 988
% of sales20.2%17.4%2.8%
Net gain (loss) on sale of assets 10 (55 ) 65
Corporate expense (12,450 ) (14,082 ) 1,632  
Operating income $ 29,783   $ 27,237   $ 2,546  
 
Adjusted EBITDA*:
Distribution $ 18,503 $ 18,667 $ (164 )
Aerospace 31,748 30,715 1,033
Net gain (loss) on sale of assets 10 (55 ) 65
Corporate expense (11,252 ) (12,698 ) 1,446  
Adjusted EBITDA* $ 39,009   $ 36,629   $ 2,380  
     
Adjusted diluted earnings per share from continuing operations* $ 0.62   $ 0.64   $ (0.02 )
 
 

Neal J. Keating, Chairman, President and Chief Executive Officer, said, “Third quarter performance was led by a 20.2% operating margin at Aerospace and continued expense control across the company resulting in diluted earnings per share of $0.62 for the third quarter. Aerospace continues to be driven by improved operating performance from our bearing products and direct sales of the JPF to foreign militaries. Looking ahead, increased interest in the JPF from our customers has prompted us to take steps to increase production capacity in 2016 and beyond. We are also planning an expansion of our domestic production capacity for our bearings products to meet increased demand.

At Distribution, we achieved an operating margin of 4.9% for the quarter despite continued weakness in industrial markets which put pressure on our top line for the period. Operating income dollars were flat for the quarter as compared to the third quarter of the prior year on a decline in sales of 5.2%, when measured on a sales-per-sales day basis. This demonstrates our disciplined cost control which mitigated the negative impact of lower sales levels.

Finally, last week we acquired Timken Alcor Aerospace Technologies, Inc., which has been renamed EXTEX Engineered Products, Inc. This is the first acquisition in our Aerospace segment since 2011 and expands our offerings of engineered products in the Aerospace MRO market. We have begun integrating this acquisition into our Aerospace segment and expect it to be accretive in 2016.”

Chief Financial Officer, Robert D. Starr, stated, “We had another quarter of strong free cash flow*, generating $26.7 million and bringing our year-to-date free cash flow* to $61.7 million, or 119% of our net earnings. This allowed us to execute our share repurchase program and pay down debt, reducing our debt to capital ratio by 370 bps to 31.5% at the end of the quarter. The strength of our balance sheet supports our ongoing effort to pursue strategic acquisitions to grow our business.

As we look ahead to the fourth quarter, we are revising our outlook for the full year. At Distribution, a number of the end markets we serve continue to show reduced demand which resulted in weaker than expected revenues in the quarter. We are projecting continued weakness for the remainder of the year and are reducing Distribution’s forecasted sales range to $1,175 million – $1,200 million and we are modestly reducing our operating margin range for the year to 4.6% – 4.7%. We believe these margin rates can be achieved as we continue to strive to match our cost structure with current revenues.

At Aerospace, improved operational performance and a favorable sales mix continue to deliver strong operating margins. Based on our anticipated sales mix and program timing for the fourth quarter we are lowering our forecasted sales range to $600 million – $610 million; however, we now expect the improved operating margin performance seen through the first nine months of the year to continue so we are raising our operating margin outlook for the year to 19.3% – 19.5% from our previously reported range of 18.1% – 18.4%.

We now expect Corporate expense to be $54.0 million to $55.0 million, primarily related to higher acquisition expenses.

We are very pleased with the results for the third quarter which were achieved in the face of challenging market conditions, demonstrating the underlying strength of our Company and the dedication and talent of our employees who make it possible.”

2015 Outlook

Our revised 2015 outlook is as follows:

  • Distribution:
    • Sales of $1,175 million to $1,200 million
    • Operating margins of 4.6% to 4.7%
  • Aerospace:
    • Sales of $600 million to $610 million
    • Operating margins of 19.3% to 19.5%
  • Interest expense of approximately $13 million
  • Corporate expenses of $54 million to $55 million
  • Estimated annualized tax rate of approximately 31%
  • Depreciation and amortization expense of approximately $40 million
  • Capital expenditures of $30 million to $40 million
  • Free cash flow* in the range of $75 million to $90 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, October 30, 2015, at 8:30 AM ET. Listeners may access the call live by telephone at (866) 291-5954 and from outside the U.S. at (412) 455-6203 using the passcode: 30840357; or, via the Internet at www.kaman.com. A replay will also be available two hours after the call and can be accessed at (855) 859-2056 or (404) 537-3406 using the passcode: 30840357. 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 EndedFor the Nine Months Ended
October 2,
2015
September 26,
2014
October 2,
2015
September 26,
2014
Net sales:
Distribution $ 296,312 $ 302,294 $ 911,832 $ 859,305
Aerospace 137,430   153,761   411,016   457,726  
Net sales $ 433,742   $ 456,055   $ 1,322,848   $ 1,317,031  
 
Operating income:
Distribution $ 14,422 $ 14,561 $ 42,789 $ 42,470
Aerospace 27,801 26,813 78,775 75,515
Net gain (loss) on sale of assets 10 (55 ) 415 (228 )
Corporate expense (12,450 ) (14,082 ) (39,435 ) (40,494 )
Operating income $ 29,783   $ 27,237   $ 82,544   $ 77,263  
 
 
Table 3. Depreciation and Amortization by Segment (in thousands)          
For the Three Months EndedFor the Nine Months Ended
October 2,
2015
September 26,
2014
October 2,
2015
September 26,
2014
Depreciation and Amortization:
Distribution
Depreciation $ 2,074 $ 2,111 $ 6,233 $ 4,877
Amortization 2,007   1,995   6,108   5,427
Total $ 4,081   $ 4,106   $ 12,341   $ 10,304
Aerospace
Depreciation $ 3,074 $ 3,037 $ 9,085 $ 9,119
Amortization 873   865   2,582   2,549
Total $ 3,947   $ 3,902   $ 11,667   $ 11,668
Corporate
Depreciation $ 874 $ 988 $ 2,633 $ 3,154
Amortization 324   396   1,168   1,182
Total $ 1,198   $ 1,384   $ 3,801   $ 4,336
 
 

Non-GAAP Measures 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:

Adjusted EBITDA – Adjusted EBITDA is defined as operating income before depreciation and amortization.

Adjusted EBITDA is calculated for our consolidated results as well as the results of our reportable segments. Adjusted EBITDA differs from Segment Operating Income, as calculated in accordance with GAAP, in that it excludes depreciation and amortization. We have made numerous investments in our business, such as acquisitions and capital expenditures, including facility improvements, new machinery and equipment, improvements to our information technology infrastructure and new ERP systems. Management believes Adjusted EBITDA provides an additional perspective on the operating results of the organization and its earnings capacity and helps improve the comparability of our results between periods by eliminating the impact of non-cash depreciation and amortization expense. Adjusted EBITDA does not give effect to cash used for debt service requirements and thus does not reflect funds available for distributions, reinvestment or other discretionary uses. Adjusted EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP. No other adjustments were made during the three-month or nine-month fiscal periods ended October 2, 2015, and September 26, 2014. The following table illustrates the calculation of Adjusted EBITDA using GAAP measures, “Operating Income” and “Depreciation and Amortization”.

Table 4. Adjusted EBITDA (in thousands)      
For the Three Months EndedFor the Nine Months Ended
October 2,
2015
 September 26,
2014
October 2,
2015
 September 26,
2014
Adjusted EBITDA
Distribution
Operating Income $ 14,422 $ 14,561 $ 42,789 $ 42,470
Depreciation and Amortization 4,081   4,106   12,341   10,304  
Adjusted EBITDA $ 18,503   $ 18,667   $ 55,130   $ 52,774  
 
Aerospace
Operating Income $ 27,801 $ 26,813 $ 78,775 $ 75,515
Depreciation and Amortization 3,947   3,902   11,667   11,668  
Adjusted EBITDA $ 31,748   $ 30,715   $ 90,442   $ 87,183  
 
Corporate expense
Operating expense $ (12,450 ) $ (14,082 ) $ (39,435 ) $ (40,494 )
Depreciation and Amortization 1,198   1,384   3,801   4,336  
Adjusted EBITDA $ (11,252 ) $ (12,698 ) $ (35,634 ) $ (36,158 )
 
Net gain (loss) on sale of assets 10   (55 ) 415   (228 )
Total Adjusted EBITDA $ 39,009   $ 36,629   $ 110,353   $ 103,571  
 
 

Organic Sales per Sales Day – Organic sales per sales day is defined as GAAP net sales of the Distribution segment less sales derived from acquisitions, divided by the number of sales days in a given period. Sales days are essentially days that the Company’s branch locations are open for business and exclude weekends and holidays. 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 business and provides a basis for comparing periods in which the number of sales days differs.

The following table illustrates the calculation of organic sales per sales day using “Net sales: 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 29, 2015. 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 5. Distribution – Organic Sales Per Sales Day (in thousands, except days)      
For the Three Months EndedFor the Nine Months Ended
October 2,
2015
September 26,
2014
October 2,
2015
September 26,
2014
Current period
Net sales: Distribution $ 296,312 $ 302,294 $ 911,832 $ 859,305
Acquisition sales 5,098   31,069   47,893   63,605  
Organic sales $ 291,214 $ 271,225 $ 863,939 $ 795,700
Sales days 64   63   193   189  
Organic sales per sales day for the current period a $ 4,550   $ 4,305   $ 4,476   $ 4,210  
 
Prior period
Net sales from the prior year $ 302,294 $ 266,108 $ 859,305 $ 779,770
Sales days from the prior year 63   63   189   190  
Sales per sales day from the prior year b $ 4,798   $ 4,224   $ 4,547   $ 4,104  
 
% change (a-b)÷b (5.2 )% 1.9 % (1.6 )% 2.6 %
 
 

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 operating activities” and “Expenditures for property, plant & equipment”, GAAP measures from the Consolidated Statements of Cash Flows included in this release.

Table 6. Free Cash Flow from continuing operations (in thousands)        
For the NineFor the SixFor the Three
Months EndedMonths EndedMonths Ended
October 2,July 3,October 2,
2015  2015  2015
Net cash provided by operating activities $ 84,827 $ 48,489 $ 36,338
Expenditures for property, plant & equipment (23,130 )   (13,475 )   (9,655 )
Free Cash Flow $ 61,697     $ 35,014     $ 26,683  
 
 
Table 7. Free Cash Flow – 2015 Outlook (in millions)    2015 Outlook
Free Cash Flow:      
Net cash provided by operating activities $ 105.0 to $ 130.0
Expenditures for property, plant and equipment 30.0   to 40.0
Free Cash Flow $ 75.0   to $ 90.0
 
 

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 8. Debt to Capitalization (in thousands)      
October 2,
2015
December 31,
2014
Notes payable $ $
Current portion of long-term debt 5,000 10,000
Long-term debt, excluding current portion 251,149   271,232  
Debt 256,149 281,232
Total shareholders’ equity 556,053   517,665  
Capitalization $ 812,202   $ 798,897  
Debt to capitalization 31.5 % 35.2 %
 
 

Adjusted Net Earnings and Adjusted Diluted Earnings Per Share – Adjusted net earnings and adjusted diluted earnings per share 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 adjusted net earnings and adjusted diluted earnings per share 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 seeking to analyze and compare companies on the basis of operating performance.

The following table illustrates the calculation of adjusted net earnings and adjusted diluted earnings per share 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 29, 2015.

Table 9. Reconciliation of Non-GAAP Financial Information – Net Earnings
(In thousands except per share amounts)
     
For the Three Months EndedFor the Nine Months Ended
October 2,
2015
 September 26,
2014
October 2,
2015
 September 26,
2014
ADJUSTED NET EARNINGS AND ADJUSTED DILUTED EARNINGS PER SHARE:
GAAP Earnings from continuing operations, as reported $ 17,224 $ 15,797 $ 51,664 $ 44,450
Recognition of tax benefit from tax law changes (4,402 )
Severance costs, net of tax 367 425 367
Cost associated with the sale of Moosup   1,544     1,544
Adjusted net earnings from continuing operations $ 17,224   $ 17,708   $ 47,687   $ 46,361
GAAP diluted earnings per share from continuing operations $ 0.62 $ 0.57 $ 1.85 $ 1.60
Recognition of tax benefit from tax law changes (0.16 )
Severance costs, net of tax 0.01 0.02 0.01
Costs associated with the sale of Moosup   0.06     0.06
Adjusted diluted earnings per share from continuing operations $ 0.62   $ 0.64   $ 1.71   $ 1.67
Diluted weighted average shares outstanding 27,770   27,862   27,915   27,766
 
 

Adjusted operating income for Distribution – Adjusted operating income for Distribution is defined as operating income for Distribution, less items that are not indicative of the operating performance of Distribution for the period presented. These items are included in the reconciliation below. Management uses Adjusted operating income to evaluate performance period over period, to analyze the underlying trends and to assess performance relative to competitors. We believe that this information is useful for investors and financial institutions seeking to analyze and compare companies on the basis of operating performance.

The following table illustrates the calculation of adjusted operating profit for Distribution using Footnote 15, Segment and Geographic Information, to the Condensed Consolidated Financial Statements from the Company’s Form 10-Q filed with the Securities and Exchange Commission on October 29, 2015.

Table 10. Reconciliation of Non-GAAP Financial Information – Distribution
(In thousands)
   For the Three Months Ended  For the Nine Months Ended
October 2,
2015
 September 26,
2014
October 2,
2015
 September 26,
2014
DISTRIBUTION SEGMENT OPERATING INCOME:
Net Sales $ 296,312 $ 302,294 $ 911,832 $ 859,305
GAAP operating income from continuing operations – Distribution segment $ 14,422 $ 14,561 $ 42,789 $ 42,470
% of GAAP net sales from continuing operations 4.9 % 4.8 % 4.7 % 4.9 %
Severance costs at Distribution $   $ 550   $   $ 550  
Non-GAAP adjusted operating income – Distribution segment $ 14,422   $ 15,111   $ 42,789   $ 43,020  
% of adjusted net sales 4.9 % 5.0 % 4.7 % 5.0 %
 
 

About Kaman Corporation

Kaman Corporation (NYSE:KAMN), which was founded in 1945 by aviation pioneer Charles H. Kaman is headquartered in Bloomfield, Connecticut. Kaman conducts business in the aerospace and distribution markets. The Company is a leading distributor of industrial parts, and operates more than 240 customer service centers and five distribution centers across the United States and Puerto Rico. 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. Kaman also 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. Additionally, 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; K-MAX® medium-to-heavy lift helicopters; and support for the company’s SH-2G Super Seasprite maritime helicopters and K-MAX® aircraft. More information is available at www.kaman.com.

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 issued by the Company and in oral statements made by our officers and representatives from time to time. These forward-looking statements are intended to provide management’s current expectations or plans for our 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,” “would,” “could,” “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, government and customer shut-downs, 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); (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 (including new, follow-on and successor programs) and thereafter successful contract negotiations with government authorities (both foreign and domestic) for the terms and conditions of the programs; (v) the existence of standard government contract provisions permitting renegotiation of terms and termination for the convenience of the government; (vi) the successful resolution of government inquiries or investigations relating to our businesses and programs; (vii) risks and uncertainties associated with the successful implementation and ramp up of significant new programs, including the ability to manufacture the products to the detailed specifications required and recover start-up costs and other investments in the programs; (viii) potential difficulties associated with variable acceptance test results, given sensitive production materials and extreme test parameters; (ix) the receipt and successful execution of production orders under the Company’s existing U.S. government JPF contract, including the exercise of all contract options and receipt of orders from allied militaries, but excluding any next generation programmable fuze programs, as all have been assumed in connection with goodwill impairment evaluations; (x) the continued support of the existing K-MAX® helicopter fleet, including sale of existing K-MAX® spare parts inventory and the receipt of orders for new aircraft sufficient to recover our investment in the restart of the K-MAX® production line; (xi) the accuracy of current cost estimates associated with environmental remediation activities; (xii) the profitable integration of acquired businesses into the Company’s operations; (xiii) the ability to implement our ERP systems in a cost-effective and efficient manner, limiting disruption to our business, and allowing us to capture their planned benefits while maintaining an adequate internal control environment; (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, future contributions and the pension freeze; (xvii) future levels of indebtedness and capital expenditures; (xviii) the continued availability of raw materials and other commodities in adequate supplies and the effect of increased costs for such items; (xix) the effects of currency exchange rates and foreign competition on future operations; (xx) changes in laws and regulations, taxes, interest rates, inflation rates and general business conditions; (xxi) future repurchases and/or issuances of common stock; and (xxii) other risks and uncertainties set forth herein and in our 2014 Form 10-K.

Any forward-looking information provided in this release should be considered with these factors in mind. We assume no obligation to update any forward-looking statements contained in this report.

KAMAN CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts) (unaudited)

     
For the Three Months Ended  For the Nine Months Ended
October 2,
2015
 September 26,
2014
 October 2,
2015
 September 26,
2014
Net sales $ 433,742 $ 456,055 $ 1,322,848   $ 1,317,031
Cost of sales 303,816   326,690     933,059     945,117  
Gross profit 129,926 129,365 389,789 371,914
Selling, general and administrative expenses 100,153 102,073 307,660 294,423
Net (gain) loss on sale of assets (10 ) 55     (415 )   228  
Operating income 29,783 27,237 82,544 77,263
Interest expense, net 3,208 3,438 9,757 9,942
Other expense, net 185   220     120     540  
Earnings from continuing operations before income taxes 26,390 23,579 72,667 66,781
Income tax expense 9,166   7,782     21,003     22,331  
Earnings from continuing operations 17,224 15,797 51,664 44,450
Losses from discontinued operations, net of taxes (924 ) (1,926 )
Gain on disposal of discontinued operations, net of taxes   (94 )       285  
Net earnings $ 17,224   $ 14,779     $ 51,664     $ 42,809  
 
Earnings per share:
Basic earnings per share from continuing operations $ 0.63 $ 0.58 $ 1.90 $ 1.64
Basic loss per share from discontinued operations (0.03 ) (0.07 )
Basic earnings per share from disposal of discontinued operations           0.01  
Basic earnings per share $ 0.63   $ 0.55     $ 1.90     $ 1.58  
 
Diluted earnings per share from continuing operations $ 0.62 $ 0.57 $ 1.85 $ 1.60
Diluted loss per share from discontinued operations (0.04 ) (0.07 )
Diluted earnings per share from disposal of discontinued operations           0.01  
Diluted earnings per share $ 0.62   $ 0.53     $ 1.85     $ 1.54  
Average shares outstanding:
Basic 27,179 27,113 27,203 27,025
Diluted 27,770   27,862     27,915     27,766  
Dividends declared per share $ 0.18   $ 0.16     $ 0.54     $ 0.48  
 
 

KAMAN CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts) (unaudited)

     
October 2,December 31,
20152014
Assets
Current assets:
Cash and cash equivalents $ 11,579 $ 12,411
Accounts receivable, net 233,113 234,648
Inventories 370,391 359,741
Deferred income taxes 25,220 25,888
Income tax refunds receivable 3,493
Other current assets 35,960   29,568  
Total current assets 679,756   662,256  
Property, plant and equipment, net of accumulated depreciation of $197,253 and $183,829, respectively 150,042 147,825
Goodwill 246,035 238,581
Other intangible assets, net 89,635 94,491
Deferred income taxes 33,401 34,784
Other assets 24,835   23,268  
Total assets $ 1,223,704   $ 1,201,205  
Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of long-term debt 5,000 10,000
Accounts payable – trade 132,668 116,787
Accrued salaries and wages 35,136 42,214
Advances on contracts 13,916 2,406
Other accruals and payables 50,154 47,583
Income taxes payable 3,252   2,734  
Total current liabilities 240,126   221,724  
Long-term debt, excluding current portion 251,149 271,232
Deferred income taxes 2,247 3,391
Underfunded pension 129,682 141,546
Other long-term liabilities 44,447 45,647
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; 27,710,821 and 27,518,226 shares issued, respectively 27,711 27,518
Additional paid-in capital 154,912 145,845
Retained earnings 516,962 479,984
Accumulated other comprehensive income (loss) (125,222 ) (126,261 )
Less 599,852 and 385,942 shares of common stock, respectively, held in treasury, at cost (18,310 ) (9,421 )
Total shareholders’ equity 556,053   517,665  
Total liabilities and shareholders’ equity $ 1,223,704   $ 1,201,205  
 
 

KAMAN CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands) (unaudited)

 
   For the Nine Months Ended
October 2,  September 26,
20152014
Cash flows from operating activities:
Earnings from continuing operations $ 51,664 $ 44,450
Adjustments to reconcile earnings from continuing operations to net cash provided by (used in) operating activities of continuing operations:
Depreciation and amortization 27,809 26,308
Accretion of convertible notes discount 1,516 1,439
Provision for doubtful accounts 1,925 241
Net loss on sale of assets (415 ) 228
Net gain (loss) on derivative instruments 423 615
Stock compensation expense 5,304 4,307
Excess tax benefit from share-based compensation arrangements (324 ) (766 )
Deferred income taxes (2,001 ) 8,669
Changes in assets and liabilities, excluding effects of acquisitions/divestitures:
Accounts receivable 1,583 (41,505 )
Inventories (10,430 ) 18,969
Income tax refunds receivable (3,493 ) (1,037 )
Other current assets (6,498 ) (1,064 )
Accounts payable – trade 18,051 (5,539 )
Accrued contract losses 28 (1,613 )
Advances on contracts 11,511 (8,119 )
Other accruals and payables (5,807 ) 11,592
Income taxes payable 529 (977 )
Pension liabilities (4,225 ) (8,430 )
Other long-term liabilities (2,323 ) (2,636 )
Net cash provided by (used in) operating activities of continuing operations $ 84,827 $ 45,132
Net cash provided by operating activities of discontinued operations   (1,378 )
Net cash provided by (used in) operating activities $ 84,827   $ 43,754  
Cash flows from investing activities:
Proceeds from sale of assets $ 660 $ 28
Expenditures for property, plant & equipment (23,130 ) (22,177 )
Acquisition of businesses (11,877 ) (77,018 )
Other, net (696 ) (1,205 )
Cash used in investing activities of continuing operations $ (35,043 ) $ (100,372 )
Cash used in investing activities of discontinued operations   2  
Cash used in investing activities $ (35,043 ) $ (100,370 )
Cash flows from financing activities:
Net borrowings under revolving credit agreements $ (43,291 ) $ 66,978
Proceeds from issuance of long-term debt 100,000
Debt repayment (82,500 ) (5,000 )
Net change in book overdraft (3,537 ) 1,893
Proceeds from exercise of employee stock awards 4,024 5,387
Purchase of treasury shares (8,642 ) (845 )
Dividends paid (14,140 ) (12,950 )
Debt issuance costs (2,271 )
Other (117 )
Windfall tax benefit 324   766  
Cash provided by financing activities of continuing operations $ (50,150 ) $ 56,229
Cash provided by financing activities of discontinued operations    
Cash provided by financing activities $ (50,150 ) $ 56,229  
Net increase (decrease) in cash and cash equivalents (366 ) (387 )
Effect of exchange rate changes on cash and cash equivalents (466 ) (237 )
Cash and cash equivalents at beginning of period 12,411   10,384  
Cash and cash equivalents at end of period $ 11,579   $ 9,760  

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