x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
FOR
THE FISCAL YEAR ENDED December 31,
2006.
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934 FOR THE TRANSITION PERIOD FROM _________ TO
_________
|
Connecticut
|
06-0613548
|
|
(State
or other jurisdiction
|
(I.R.S. Employer
|
|
of
incorporation or organization)
|
Identification
No.)
|
-
Common Stock, Par Value $1.00
|
-
6% Convertible Subordinated Debentures Due
2012
|
Large
accelerated filer o
|
Accelerated
filer x
|
Non-accelerated
filer o
|
Common Stock
|
24,156,214
|
$1
par value per share
|
Document
|
Parts
Into Which Incorporated
|
|
Proxy
Statement for the Annual Meeting of Shareholders to be held April
17, 2007
(Proxy Statement)
|
Part
III
|
Page
#
|
||
EXPLANATORY
NOTE
|
||
Part
I
|
||
Business
|
4
|
|
Risk
Factors
|
16
|
|
Unresolved
Staff Comments
|
20
|
|
Properties
|
20
|
|
Legal
Proceedings
|
21
|
|
Submission
of Matters to a Vote of Security Holders
|
21
|
|
Part
II
|
||
Market
for Registrant’s Common Equity, Related Stockholder Matters, and Issuer
Purchases of Equity Securities
|
21
|
|
Selected
Financial Data
|
24
|
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
25
|
|
Quantitative
and Qualitative Disclosures About Market Risk
|
49
|
|
Financial
Statements and Supplementary Data
|
51
|
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
82
|
|
Controls
and Procedures
|
83
|
|
Other
Information
|
84
|
|
Part
III
|
||
Directors,
Executive Officers and Corporate Governance
|
84
|
|
Executive
Compensation
|
85
|
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
85
|
|
Certain
Relationships and Related Transactions and Director
Independence
|
85
|
|
Principal
Accounting Fees and Services
|
85
|
|
Part
IV
|
||
Exhibits,
Financial Statement Schedules
|
85
|
·
|
The
company experienced record consolidated net sales for 2006 of $1.2
billion, an increase of 9.5 percent over 2005, with the Specialty
Bearings
segment and the Industrial Distribution segment generating record
sales
for 2006.
|
·
|
Net
earnings were $31.8 million, or $1.30 per share diluted, compared
to net
earnings for 2005 of $13.0 million, or $0.57 per share
diluted. The improvement compared to 2005 is due in significant
part to higher sales volume, increased gross profit and continued
focus on
controlling operating expenses.
|
·
|
We
completed our first full year of operations since recapitalizing
into a
single class of voting stock in November 2005. The
recapitalization replaced the company’s previously existing dual class
common stock structure (Class A non-voting common and Class B voting
common, $1 par value each) with one class of voting common stock
($1 par
value).
|
·
|
The
Industrial Distribution segment experienced record operating income
for
2006.
|
·
|
The
combined Aerospace Segments continued to improve profitability through
operating efficiencies and further developing relationships with
many key
customers including Sikorsky, Boeing and Airbus, which resulted in
broadening our business base and record operating income for the
combined
Aerospace Segments for 2006.
|
·
|
In
the fourth quarter of 2006, the U.S. Air Force released production
for
Option 4 of the Joint Programmable Fuze (JPF) program. This
Option, valued at $39.6 million, is in addition to other JPF contract
modifications signed during 2006 totaling $38.9
million.
|
·
|
The
company continued to work with our customer towards completion of
the
Australia SH-2G(A) program and we recorded an additional $9.7 million
loss
reserve related to incremental anticipated costs to complete the
contract. Please refer to the Helicopters segment narrative for
further information regarding the Australia
program.
|
·
|
The
Industrial Distribution segment won significant new business in 2006
with
two prestigious, nationally known companies. One of these new
accounts is expected to become one of the segment's
largest. The segment also won renewal of all of its major
agreements that were due to expire during the
year.
|
·
|
As
the Music segment worked to finalize the plan to consolidate our
2005
Musicorp acquisition, we have also increased our market presence
as well
as our ability to provide service to both our national and mid to
small
size customers.
|
·
|
As
of December 31, 2006, the company had a $150 million revolving credit
facility (Revolving Credit Agreement) expiring August 4, 2010 containing
an “accordion” feature that provided the company the opportunity to
request, subject to bank approval, an expansion of up to $50 million
in
the overall size of the facility. In January 2007, this
accordion was activated, thereby expanding the Revolving Credit Agreement
to $200 million. In conjunction with this exercise, the
Revolving Credit Agreement was amended to add another $50 million
accordion feature for possible future activation, bringing the total
potential arrangement to $250
million.
|
Years
Ended December 31
|
||||||||||||
2006
|
2005
|
2004
|
||||||||||
Aerostructures
|
6.5 | % | 5.0 | % | 4.6 | % | ||||||
Fuzing
|
5.9 | % | 5.8 | % | 6.4 | % | ||||||
Helicopters
|
5.8 | % | 7.0 | % | 6.7 | % | ||||||
Specialty
Bearings
|
8.8 | % | 8.3 | % | 7.7 | % | ||||||
Subtotal
Aerospace
|
27.0 | % | 26.1 | % | 25.4 | % | ||||||
Industrial
Distribution
|
55.2 | % | 56.5 | % | 58.5 | % | ||||||
Music
|
17.8 | % | 17.4 | % | 16.1 | % | ||||||
Total
|
100.0 | % | 100.0 | % | 100.0 | % |
U.S.
PATENTS
|
FOREIGN
PATENTS
|
|||||||||||||||
Industry
|
Issued
|
Pending
|
Issued
|
Pending
|
||||||||||||
Aerospace
|
34
|
4
|
8
|
4
|
||||||||||||
Industrial
Distribution
|
0
|
0
|
0
|
0
|
||||||||||||
Music
|
26
|
0
|
45
|
16
|
||||||||||||
Total
|
60
|
4
|
53
|
20
|
·
|
accounting
for start-up costs
|
·
|
the
effect of non-recurring work
|
·
|
delay
in contract start-up
|
·
|
transition
of work from the customer or other
vendors
|
·
|
claims
or unapproved change orders
|
·
|
product
warranty issues
|
·
|
delay
in completion of certain programs for which inventory has been built
up
|
·
|
accrual
of contract losses
|
·
|
The
U.S. Government may modify, curtail or terminate our contracts. The
U.S. Government may modify, curtail or terminate its contracts and
subcontracts at its convenience without prior notice, upon payment
for
work done and commitments made at the time of termination. Modification,
curtailment or termination of our major programs or contracts could
have a
material adverse effect on our future results of operations and financial
condition.
|
·
|
Our
U.S. Government business is subject to specific procurement regulations
and other requirements. These requirements, although customary in
U.S. Government contracts, increase our performance and compliance
costs.
These costs might increase in the future, reducing our margins, which
could have a negative effect on our financial condition. Failure
to comply
with these regulations and requirements could lead to suspension
or
debarment, for cause, from U.S. Government contracting or subcontracting
for a period of time and could have a negative effect on our reputation
and ability to procure other U.S. Government contracts in the
future.
|
·
|
Our
contract costs are subject to audits by U.S. Government agencies. The
costs we incur on our U.S. Government contracts, including allocated
indirect costs, may be audited by U.S. Government representatives.
These
audits may result in adjustments to our contract costs. Any costs
found to
be improperly allocated to a specific contract will not be reimbursed,
and
such costs already reimbursed must be refunded. We normally negotiate
with
the U.S. Government representatives before settling on final adjustments
to our contract costs. We have recorded contract revenues based upon
costs
we expect to realize upon final audit. However, we do not know the
outcome
of any future audits and adjustments and we may be required to reduce
our
revenues or profits upon completion and final negotiation of these
audits.
If any audit uncovers improper or illegal activities, we may be subject
to
civil and criminal penalties and administrative sanctions, including
termination of contracts, forfeiture of profits, suspension of payments,
fines and suspension or prohibition from doing business with the
U.S.
Government.
|
·
|
Our
business is subject to potential U.S. Government inquiries and
investigations. We are from time to time subject to certain U.S.
Government inquiries and investigations of our business practices
due to
our participation in government contracts. Such inquiry or investigation
could have a material adverse effect on our results of operations
and
financial condition.
|
·
|
Assimilating
operations and products may be unexpectedly
difficult;
|
·
|
Management’s
attention may be diverted from other business
concerns;
|
·
|
The
company may enter markets in which it has limited or no direct
experience;
|
·
|
The
company may lose key employees of an acquired business;
and
|
·
|
The
company may not realize the value of the acquired assets relative
to the
price paid.
|
·
|
changes
in demand for our products;
|
·
|
introduction,
enhancement or announcement of products by us or our
competitors;
|
·
|
market
acceptance of our new products;
|
·
|
the
growth rates of certain market segments in which we
compete;
|
·
|
size
and timing of significant orders;
|
·
|
budgeting
cycles of customers;
|
·
|
mix
of distribution channels;
|
·
|
mix
of products and services sold;
|
·
|
mix
of international and North American
revenues;
|
·
|
fluctuations
in currency exchange rates;
|
·
|
changes
in the level of operating expenses;
|
·
|
changes
in our sales incentive plans;
|
·
|
inventory
obsolescence;
|
·
|
additional
contract losses;
|
·
|
completion
or announcement of acquisitions by us or our competitors;
and
|
·
|
general
economic conditions in regions in which we conduct
business.
|
·
|
longer
payment cycles;
|
·
|
greater
difficulties in accounts receivable
collection;
|
·
|
unexpected
changes in regulatory requirements;
|
·
|
export
restrictions, tariffs and other trade
barriers;
|
·
|
difficulties
in staffing and managing foreign
operations;
|
·
|
seasonal
reductions in business activity during the summer months in Europe
and
certain other parts of the world;
|
·
|
economic
instability in emerging markets;
|
·
|
potentially
adverse tax consequences; and
|
·
|
cultural
and legal differences in the conduct of
business.
|
SQUARE
FEET
|
||||
(in
thousands as of 12/31/06)
|
||||
Aerostructures
segment
|
338
|
|||
Fuzing
segment
|
331
|
|||
Helicopters
segment
|
1,065
|
|||
Specialty
Bearings segment
|
83
|
|||
Subtotal
Aerospace Segments
|
1,817
|
|||
Industrial
Distribution segment
|
1,464
|
|||
Music
segment
|
760
|
|||
Corporate
Headquarters
|
40
|
|||
Total
|
4,081
|
MARKET
FOR REGISTRANT'S COMMON EQUITY, RELATED
STOCKHOLDER
|
|
MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
|
QUARTERLY
COMMON STOCK INFORMATION
|
||||||||||||||||
High
|
Low
|
Close
|
Dividend
|
|||||||||||||
2006
|
||||||||||||||||
First
|
$ |
25.45
|
$ |
18.91
|
$ |
25.16
|
$ |
.125
|
||||||||
Second
|
25.69
|
15.52
|
18.20
|
.125
|
||||||||||||
Third
|
19.00
|
17.25
|
18.01
|
.125
|
||||||||||||
Fourth
|
24.50
|
17.70
|
22.39
|
.125
|
||||||||||||
2005
|
||||||||||||||||
First
|
$ |
13.38
|
$ |
10.95
|
$ |
12.45
|
$ |
.11
|
||||||||
Second*
|
18.17
|
11.54
|
18.04
|
.125
|
||||||||||||
Third
|
24.48
|
17.47
|
20.45
|
.125
|
||||||||||||
Fourth
|
23.95
|
17.10
|
19.69
|
.125
|
Total
Number
|
||||||||
of
Shares
|
Maximum
|
|||||||
Purchased
as
|
Number
of
|
|||||||
Total
|
Part
of
|
Shares
That
|
||||||
Number
|
Average
|
Publicly
|
May
Yet Be
|
|||||
of
Shares
|
Price
Paid
|
Announced
|
Purchased
Under
|
|||||
Period
|
Purchased
|
per
Share
|
Plan
|
the
Plan
|
||||
9/30/06-
|
||||||||
10/27/06
|
-
|
-
|
269,611
|
1,130,389
|
||||
10/28/06-
|
||||||||
11/24/06
|
-
|
-
|
269,611
|
1,130,389
|
||||
11/25/06-
|
||||||||
12/31/06
|
-
|
-
|
269,611
|
1,130,389
|
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
|
Kaman
|
100
|
73.3
|
87.2
|
89.6
|
137.8
|
158.3
|
S&P
600
|
100
|
83.7
|
117.4
|
140.5
|
149.8
|
170.8
|
Russell
2000
|
100
|
79.2
|
114.0
|
133.7
|
137.8
|
161.2
|
NASDAQ
Non Financial
|
100
|
65.8
|
100.01
|
108.6
|
111.1
|
121.9
|
20061,4
|
20051,2,3,4,8,
|
20041,5
|
20031,6,8
|
20021,7,8
|
||||||||||||||||
OPERATIONS
|
||||||||||||||||||||
Net
sales
|
$ |
1,206,154
|
$ |
1,101,196
|
$ |
995,192
|
$ |
894,499
|
$ |
880,776
|
||||||||||
Cost
of sales
|
873,868
|
814,385
|
770,285
|
671,591
|
723,176
|
|||||||||||||||
Selling,
general and administrative expense
|
275,110
|
256,241
|
239,368
|
206,416
|
199,520
|
|||||||||||||||
Net
(gain) loss on sale of product lines and other assets
|
52
|
27
|
(199 | ) | (18,163 | ) | (2,299 | ) | ||||||||||||
Restructuring
costs
|
—
|
—
|
—
|
—
|
8,290
|
|||||||||||||||
Other
operating income
|
(2,253 | ) | (2,214 | ) | (1,731 | ) | (1,448 | ) | (1,302 | ) | ||||||||||
Operating
income (loss)
|
59,377
|
32,757
|
(12,531 | ) |
36,103
|
(46,609 | ) | |||||||||||||
Interest
expense, net
|
6,179
|
3,046
|
3,580
|
3,008
|
2,486
|
|||||||||||||||
Other
expense, net
|
919
|
860
|
1,053
|
1,265
|
1,831
|
|||||||||||||||
Earnings
(loss) before income taxes
|
52,279
|
28,851
|
(17,164 | ) |
31,830
|
(50,926 | ) | |||||||||||||
Income
tax benefit (expense)
|
(20,493 | ) | (15,823 | ) |
5,342
|
(12,425 | ) |
17,325
|
||||||||||||
Net
earnings (loss)
|
31,786
|
13,028
|
(11,822 | ) |
19,405
|
(33,601 | ) | |||||||||||||
FINANCIAL
POSITION
|
||||||||||||||||||||
Current
assets
|
$ |
477,920
|
$ |
458,808
|
$ |
450,335
|
$ |
418,851
|
$ |
414,245
|
||||||||||
Current
liabilities
|
198,337
|
223,276
|
226,105
|
160,555
|
157,094
|
|||||||||||||||
Working
capital
|
279,583
|
235,532
|
224,230
|
258,296
|
257,151
|
|||||||||||||||
Property,
plant and equipment, net
|
54,165
|
51,592
|
48,958
|
51,049
|
61,635
|
|||||||||||||||
Total
assets
|
630,413
|
598,497
|
562,331
|
528,311
|
535,540
|
|||||||||||||||
Long-term
debt
|
72,872
|
62,235
|
18,522
|
36,624
|
60,132
|
|||||||||||||||
Shareholders’
equity
|
296,561
|
269,754
|
284,170
|
303,183
|
291,947
|
|||||||||||||||
PER
SHARE AMOUNTS
|
||||||||||||||||||||
Net
earnings (loss) per share – basic
|
$ |
1.32
|
$ |
.57
|
$ | (.52 | ) | $ |
.86
|
$ | (1.50 | ) | ||||||||
Net
earnings (loss) per share – diluted
|
|
1.30
|
.57
|
(.52 | ) |
.86
|
(1.50 | ) | ||||||||||||
Dividends
declared
|
.50
|
.485
|
.44
|
.44
|
.44
|
|||||||||||||||
Shareholders’
equity
|
12.28
|
11.28
|
12.48
|
13.40
|
13.00
|
|||||||||||||||
Market
price range – High
|
25.69
|
24.48
|
15.49
|
14.91
|
18.81
|
|||||||||||||||
–
Low
|
15.52
|
10.95
|
10.71
|
9.40
|
9.42
|
|||||||||||||||
AVERAGE
SHARES OUTSTANDING
|
||||||||||||||||||||
Basic
|
24,036
|
23,038
|
22,700
|
22,561
|
22,408
|
|||||||||||||||
Diluted
|
24,869
|
23,969
|
22,700
|
23,542
|
22,408
|
|||||||||||||||
GENERAL
STATISTICS
|
||||||||||||||||||||
Registered
shareholders
|
4,468
|
4,779
|
5,192
|
5,509
|
5,634
|
|||||||||||||||
Employees
|
3,906
|
3,712
|
3,581
|
3,499
|
3,615
|
1.
|
Cost
of sales includes charges for the Australia SH-2G(A) helicopter program
as
follows: 2006 - $9,701; 2005 - $16,810; 2004 - $5,474; 2003 - $0;
2002 -
$27,413.
|
2.
|
Results
for 2005 include $8,265 of expense for the company’s stock appreciation
rights, $3,339 for legal and financial advisory fees associated with
the
recapitalization and $6,754 recovery of previously written off amounts
for
MD Helicopters, Inc. (MDHI).
|
3.
|
The
effective tax rate for 2005 was 54.8 percent, which was unusually
high
principally due to the non-deductibility of expenses associated with
stock
appreciation rights and the company’s
recapitalization.
|
4.
|
Average
shares outstanding for 2006 and 2005 increased principally due to
the
completion of the recapitalization in November
2005.
|
5.
|
Results
for 2004 include the following adjustments: $20,083 (including $18,211
negative sales adjustments and $1,872 increase in bad debt reserve)
related to the company’s investment in MDHI programs; $7,086 non-cash
adjustment for the Boeing Harbour Point program; $3,507 warranty
reserve
for two product warranty related issues and $3,471 non-cash adjustment
related to the University of Arizona
matter.
|
6.
|
The
company sold its Electromagnetics Development Center during 2003
which
resulted in a pre-tax gain of
$17,415.
|
7.
|
Cost
of sales for 2002 includes the write-off of K-MAX inventories and
fixed
assets of $50,000 and Moosup facility assets of
$2,679.
|
8.
|
Results
include the activity of certain significant entities from date of
acquisition as follows: 2005 - Musicorp; 2003 - Industrial
Supplies, Inc.; and 2002 - Latin Percussion, Inc., RWG
Frankenjura-Industrie Flugwerklager GmbH, Dayron, majority equity
interest
in Delamac de Mexico S.A. de C.V.
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
I.
|
Overview
of Business
|
II.
|
Executive
Summary
|
III.
|
Results
of Operations
|
IV.
|
Liquidity
and Capital Resources
|
V.
|
Critical
Accounting Estimates
|
VI.
|
Contractual
Obligations and Off-Balance Sheet
Arrangements
|
VII.
|
Recent
Accounting Standards
|
II.
|
EXECUTIVE
SUMMARY
|
·
|
The
company experienced record consolidated net sales for 2006 of $1.2
billion, an increase of 9.5 percent over 2005, with the Specialty
Bearings
segment and the Industrial Distribution segment generating record
sales
for 2006.
|
·
|
Net
earnings were $31.8 million, or $1.30 per share diluted, compared
to net
earnings for 2005 of $13.0 million, or $0.57 per share
diluted.
|
·
|
Our
net earnings increased in 2006 as compared to 2005 due in significant
part
to higher sales volume, increased gross profit and continued focus
on
controlling operating expenses.
|
·
|
We
completed our first full year of operations since recapitalizing
into a
single class of voting stock in November
2005.
|
·
|
The
Industrial Distribution segment experienced record operating income
for
2006.
|
·
|
The
Aerostructures, Fuzing and Specialty Bearings segments continued
to
improve profitability through operating efficiencies and further
developing relationships with many key customers including Sikorsky,
Boeing and Airbus, which resulted in the broadening of our business
base.
|
·
|
In
the fourth quarter of 2006, the U.S. Air Force released production
for
Option 4 of the Joint Programmable Fuze (JPF) program. This
Option, valued at $39.6 million, is in addition to other JPF contract
modifications signed during 2006 totaling $38.9
million.
|
·
|
During
the year, as the company continued to work with our customer towards
completion of the Australian SH-2G(A) program, we recorded an additional
$9.7 million loss accrual related to incremental anticipated costs
to
complete the contract.
|
·
|
The
Industrial Distribution segment has continued to win new business
with two
prestigious, nationally known companies, and maintained its current
customer base with successful renewals of all of its major agreements
that
were due to expire during 2006.
|
·
|
As
the Music segment has worked to finalize the plan to consolidate
our 2005
Musicorp acquisition, we have also increased our market presence
as well
as our ability to provide service to our national and mid to small
size
customers.
|
III.
|
RESULTS
OF OPERATIONS
|
In
millions, except per share data
|
2006
|
2005
|
2004
|
|||||||||
Net
sales
|
$ |
1,206.2
|
$ |
1,101.2
|
$ |
995.2
|
||||||
%
change
|
9.5 | % | 10.7 | % | 11.3 | % | ||||||
Gross
profit
|
$ |
332.3
|
$ |
286.8
|
$ |
224.9
|
||||||
%
of net sales
|
27.5 | % | 26.0 | % | 22.6 | % | ||||||
Selling,
general & administrative expenses (S,G&A)
|
$ |
275.1
|
$ |
256.2
|
$ |
239.4
|
||||||
%
of net sales
|
22.8 | % | 23.3 | % | 24.1 | % | ||||||
Operating
income (loss)
|
$ |
59.4
|
$ |
32.8
|
$ | (12.5 | ) | |||||
%
of net sales
|
4.9 | % | 3.0 | % | (1.3 | )% | ||||||
Interest
expense, net
|
(6.2 | ) | (3.0 | ) | (3.6 | ) | ||||||
Other
expense, net
|
(0.9 | ) | (0.9 | ) | (1.1 | ) | ||||||
Net
earnings (loss)
|
$ |
31.8
|
$ |
13.0
|
$ | (11.8 | ) | |||||
Net
earnings (loss) per share – basic
|
$ |
1.32
|
$ |
.57
|
$ | (.52 | ) | |||||
Net
earnings (loss) per share – diluted
|
1.30
|
.57
|
(.52 | ) |
In
millions
|
2006
|
2005
|
2004
|
|||||||||
Net
sales
|
$ |
326.0
|
$ |
288.0
|
$ |
252.4
|
||||||
%
change
|
13.2 | % | 14.1 | % | 0.5 | % | ||||||
Operating
income
|
$ |
48.1
|
$ |
33.3
|
$ | (14.3 | ) | |||||
%
of net sales
|
14.8 | % | 11.6 | % | (5.7 | )% | ||||||
%
change
|
44.6 | % | 332.7 | % | (196.3 | )% |
In
millions
|
2006
|
2005
|
2004
|
|||||||||
Net
sales
|
$ |
78.7
|
$ |
55.0
|
$ |
45.4
|
||||||
%
change
|
43.2 | % | 21.2 | % | 5.3 | % | ||||||
Operating
income
|
$ |
11.5
|
$ |
3.8
|
**
|
|||||||
%
of net sales
|
14.7 | % | 6.9 | % |
**
|
|||||||
%
change
|
205.6 | % |
**
|
**
|
In
millions
|
2006
|
2005
|
2004
|
|||||||||
Net
sales
|
$ |
71.1
|
$ |
64.1
|
$ |
63.0
|
||||||
%
change
|
10.9 | % | 1.7 | % | 18.2 | % | ||||||
Operating
income
|
$ |
7.8
|
$ |
3.1
|
**
|
|||||||
%
of net sales
|
10.9 | % | 4.8 | % |
**
|
|||||||
%
change
|
149.9 | % |
**
|
**
|
In
millions
|
2006
|
2005
|
2004
|
|||||||||
Net
sales
|
$ |
69.9
|
$ |
76.7
|
$ |
66.9
|
||||||
%
change
|
(8.8 | )% | 14.5 | % | (24.6 | )% | ||||||
Operating
income
|
$ |
0.2
|
$ |
1.2
|
**
|
|||||||
%
of net sales
|
0.3 | % | 1.6 | % |
**
|
|||||||
%
change
|
(82.2 | )% |
**
|
**
|
In
millions
|
2006
|
2005
|
2004
|
|||||||||
Net
sales
|
$ |
106.3
|
$ |
92.2
|
$ |
77.1
|
||||||
%
change
|
15.2 | % | 19.7 | % | 17.0 | % | ||||||
Operating
income
|
$ |
28.6
|
$ |
25.2
|
$ |
18.3
|
||||||
%
of net sales
|
26.9 | % | 27.3 | % | 23.8 | % | ||||||
%
change
|
13.8 | % | 37.3 | % | 56.3 | % |
In
millions
|
2006
|
2005
|
2004
|
|||||||||
Net
sales
|
$ |
665.4
|
$ |
621.9
|
$ |
581.8
|
||||||
%
change
|
7.0 | % | 6.9 | % | 16.9 | % | ||||||
Operating
income
|
$ |
35.2
|
$ |
29.4
|
$ |
19.3
|
||||||
%
of net sales
|
5.3 | % | 4.7 | % | 3.3 | % | ||||||
%
change
|
19.5 | % | 52.1 | % | 52.6 | % |
In
millions
|
2006
|
2005
|
2004
|
|||||||||
Net
sales
|
$ |
214.8
|
$ |
191.3
|
$ |
161.0
|
||||||
%
change
|
12.2 | % | 18.8 | % | 10.7 | % | ||||||
Operating
income
|
$ |
11.6
|
$ |
13.0
|
$ |
11.1
|
||||||
%
of net sales
|
5.4 | % | 6.8 | % | 6.9 | % | ||||||
%
change
|
(11.2 | )% | 17.4 | % | 16.6 | % |
IV.
|
LIQUIDITY
AND CAPITAL RESOURCES
|
In
millions
|
2006
|
2005
|
$
Change
|
%
Change
|
2004
|
|||||||||||||||
Total
cash provided by
(used
in)
|
||||||||||||||||||||
Operating
activities
|
$ |
6.8
|
$ |
42.8
|
$ | (36.0 | ) | (84.1 | )% | $ |
29.9
|
|||||||||
Investing
activities
|
(15.7 | ) | (40.6 | ) |
24.9
|
61.4 | % | (10.4 | ) | |||||||||||
Financing
activities
|
8.4
|
(1.6 | ) |
10.0
|
637.5 | % | (14.4 | ) | ||||||||||||
Increase
(decrease) in cash
|
(0.5 | ) |
0.6
|
(1.1 | ) | (178.3 | )% |
5.1
|
VI.
|
CONTRACTUAL
OBLIGATION AND OFF-BALANCE SHEET
ARRANGEMENTS
|
Payments
due by period (in millions)
|
||||||||||||||||||||
More
|
||||||||||||||||||||
Contractual
|
Within
|
1-3
|
3-5
|
than
5
|
||||||||||||||||
Obligations
|
Total
|
1
year
|
years
|
years
|
years
|
|||||||||||||||
Long-term
debt
|
$ |
74.4
|
$ |
1.6
|
$ |
3.1
|
$ |
61.1
|
$ |
8.6
|
||||||||||
Interest
payments on debt (A)
|
22.5
|
6.6
|
8.5
|
5.1
|
2.3
|
|||||||||||||||
Operating
leases
|
49.1
|
17.5
|
19.6
|
7.9
|
4.1
|
|||||||||||||||
Purchase
obligations (B)
|
145.1
|
86.2
|
28.2
|
21.1
|
9.6
|
|||||||||||||||
Other
long-term obligations (C)
|
20.3
|
5.3
|
5.7
|
1.7
|
7.6
|
|||||||||||||||
Planned
funding of pension and SERP (D)
|
49.8
|
14.8
|
22.2
|
1.6
|
11.2
|
|||||||||||||||
Total
|
$ |
361.2
|
$ |
132.0
|
$ |
87.3
|
$ |
98.5
|
$ |
43.4
|
(A)
|
Interest
payments on debt within one year are based upon the long-term debt
that
existed at December 31, 2006. After one year interest payments
are based upon average estimated long-term debt balances outstanding
each
year.
|
(B)
|
This
category includes purchase commitments with suppliers for materials
and
supplies as part of the ordinary course of business, consulting
arrangements and support services. Only obligations in the
amount of at least fifty thousand dollars are
included.
|
(C)
|
This
category includes obligations under the company's long-term incentive
plan, deferred compensation plan and a supplemental disability income
arrangement for one former company
officer.
|
(D)
|
This
category includes planned funding of the company’s supplemental employees’
retirement plan and qualified defined benefit pension
plan. Projected funding for the qualified defined benefit
pension plan beyond one year has not been included as there are several
significant factors, such as the future market value of plan assets
and
projected investment return rates, which could cause actual funding
requirements to differ materially from projected
funding.
|
PAYMENTS
DUE BY PERIOD (IN MILLIONS)
|
||||||||||||||||||||
OFF-BALANCE
SHEET ARRANGEMENTS
|
TOTAL
|
WITHIN
1
YEAR
|
1–3
YEARS
|
3–5
YEARS
|
MORE
THAN
5 YEARS
|
|||||||||||||||
Outstanding
commercial letters of credit
|
$ |
1.4
|
$ |
1.4
|
$ |
-
|
$ |
-
|
$ |
-
|
||||||||||
Acquisition
earn-outs 1
|
5.9
|
2.7
|
0.6
|
1.3
|
1.3
|
|||||||||||||||
Total
|
$ |
7.3
|
$ |
4.1
|
$ |
0.6
|
$ |
1.3
|
$ |
1.3
|
FIRST
QUARTER
|
SECOND
QUARTER
|
THIRD
QUARTER
|
FOURTH
QUARTER
|
TOTAL
YEAR
|
||||||||||||||||
NET
SALES
|
||||||||||||||||||||
2006
|
$ |
296,637
|
$ |
292,967
|
$ |
307,610
|
$ |
308,940
|
$ |
1,206,154
|
||||||||||
2005
|
263,306
|
271,263
|
278,111
|
288,516
|
1,101,196
|
|||||||||||||||
GROSS
PROFIT
2006
|
$ |
81,345
|
$ |
80,505
|
$ |
84,126
|
$ |
86,310
|
$ |
332,286
|
||||||||||
2005
|
70,895
|
70,690
|
62,212
|
83,014
|
286,811
|
|||||||||||||||
NET
EARNINGS (LOSS)
|
||||||||||||||||||||
2006
|
$ |
5,920
|
$ |
7,486
|
$ |
8,738
|
$ |
9,642
|
$ |
31,786
|
||||||||||
2005
|
4,705
|
2,757
|
(3,612 | ) |
9,178
|
13,028
|
||||||||||||||
PER
SHARE - BASIC
2006
|
$ |
.25
|
$ |
.31
|
$ |
.36
|
$ |
.40
|
$ |
1.32
|
||||||||||
2005
|
.21
|
.12
|
(.16 | ) |
.39
|
.57
|
||||||||||||||
PER
SHARE - DILUTED
2006
|
$ |
.24
|
$ |
.31
|
$ |
.36
|
$ |
.39
|
$ |
1.30
|
||||||||||
2005
|
.21
|
.12
|
(.16 | ) |
.38
|
.57
|
1.
|
Included
within the 2006 quarterly gross profit are charges related to the
Australia SH-2G(A) program as follows: first quarter, $2,508; second
quarter, $2,810; third quarter, $2,497; fourth quarter,
$1,886. Charges related to this program for each quarter in
2005 are as follows: first quarter, $191; second quarter, $3,063;
third
quarter, $11,040; fourth quarter,
$2,516.
|
2.
|
Second
and third quarter 2006 results include stock appreciation rights
income of
$762 and $10, respectively, as compared to stock appreciation rights
expense of $3,938 and $4,416, respectively, for the same quarters
of
2005.
|
3.
|
Third
and fourth quarter of 2005 net sales, gross profit and net earnings
include the results of Musicorp, which was acquired in August 2005,
as
compared to a full year of Musicorp operating results for
2006.
|
4.
|
Fourth
quarter 2005 results include $5,103 recorded for the recovery of
previously written off amounts due from MDHI, and interest
thereon.
|
|
The
quarterly per share amounts for 2005 do not equal the “Total Year” figure
due to the third quarter loss causing the modified earnings per share
calculation to be anti-dilutive.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
/s/ Paul
R.
Kuhn
|
/s/ Robert
M.
Garneau
|
|
Paul
R. Kuhn
|
Robert
M. Garneau
|
|
Chairman,
President and
|
Executive
Vice President and
|
|
Chief
Executive Officer
|
Chief
Financial Officer
|
|
December
31
|
2006
|
2005
|
||||||
ASSETS
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ |
12,720
|
$ |
12,998
|
||||
Accounts
receivable, net
|
189,328
|
176,285
|
||||||
Inventories
|
231,350
|
220,714
|
||||||
Deferred
income taxes
|
25,425
|
31,652
|
||||||
Other
current assets
|
19,097
|
17,159
|
||||||
Total
current assets
|
477,920
|
458,808
|
||||||
PROPERTY,
PLANT AND EQUIPMENT, NET
|
54,165
|
51,592
|
||||||
GOODWILL
|
56,833
|
54,693
|
||||||
OTHER
INTANGIBLE ASSETS, NET
|
19,264
|
19,836
|
||||||
DEFERRED
INCOME TAXES
|
14,000
|
7,908
|
||||||
OTHER
ASSETS
|
8,231
|
5,660
|
||||||
TOTAL
ASSETS
|
$ |
630,413
|
$ |
598,497
|
||||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
CURRENT
LIABILITIES
Notes
payable
|
$ |
-
|
$ |
915
|
||||
Current
portion of long-term debt
|
1,551
|
1,660
|
||||||
Accounts
payable – trade
|
95,059
|
94,716
|
||||||
Accrued
salaries and wages
|
26,129
|
22,170
|
||||||
Accrued
pension costs
|
2,965
|
13,150
|
||||||
Accrued
contract losses
|
11,542
|
19,950
|
||||||
Advances
on contracts
|
10,215
|
14,513
|
||||||
Other
accruals and payables
|
42,661
|
49,779
|
||||||
Income
taxes payable
|
8,215
|
6,423
|
||||||
Total
current liabilities
|
198,337
|
223,276
|
||||||
LONG-TERM
DEBT, EXCLUDING CURRENT PORTION
|
72,872
|
62,235
|
||||||
OTHER
LONG-TERM LIABILITIES
|
62,643
|
43,232
|
||||||
COMMITMENTS
AND CONTINGENCIES
|
||||||||
SHAREHOLDERS'
EQUITY
Capital
stock, $1 par value per share:
|
||||||||
Preferred
stock, 200,000 shares authorized; none outstanding
|
-
|
-
|
||||||
Common
stock, 50,000,000 shares authorized, voting,
24,565,111
shares issued
|
24,565
|
24,565
|
||||||
Additional
paid-in capital
|
60,631
|
58,637
|
||||||
Retained
earnings
|
219,137
|
199,383
|
||||||
Unamortized
restricted stock awards
|
-
|
(454 | ) | |||||
Accumulated
other comprehensive loss
|
(2,462 | ) | (4,145 | ) | ||||
301,871
|
277,986
|
|||||||
Less
421,840 shares and 660,382 shares of common stock in 2006 and 2005,
respectively, held in treasury, at cost
|
(5,310 | ) | (8,232 | ) | ||||
Total
shareholders’ equity
|
296,561
|
269,754
|
||||||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ |
630,413
|
$ |
598,497
|
Year
ended December 31
|
2006
|
2005
|
2004
|
|||||||||
NET
SALES
|
$ |
1,206,154
|
$ |
1,101,196
|
$ |
995,192
|
||||||
COSTS
AND EXPENSES
|
||||||||||||
Cost
of sales
|
873,868
|
814,385
|
770,285
|
|||||||||
Selling,
general and administrative expense
|
275,110
|
256,241
|
239,368
|
|||||||||
Net
(gain) loss on sale of assets
|
52
|
27
|
(199 | ) | ||||||||
Other
operating income
|
(2,253 | ) | (2,214 | ) | (1,731 | ) | ||||||
Interest
expense, net
|
6,179
|
3,046
|
3,580
|
|||||||||
Other
expense, net
|
919
|
860
|
1,053
|
|||||||||
1,153,875
|
1,072,345
|
1,012,356
|
||||||||||
EARNINGS
(LOSS) BEFORE INCOME TAXES
|
52,279
|
28,851
|
(17,164 | ) | ||||||||
INCOME
TAX BENEFIT (EXPENSE)
|
(20,493 | ) | (15,823 | ) |
5,342
|
|||||||
NET
EARNINGS (LOSS)
|
$ |
31,786
|
$ |
13,028
|
$ | (11,822 | ) | |||||
PER
SHARE
|
||||||||||||
Net
earnings (loss) per share:
|
||||||||||||
Basic
|
$ |
1.32
|
$ |
.57
|
$ | (.52 | ) | |||||
Diluted
|
1.30
|
.57
|
(.52 | ) | ||||||||
Dividends
declared
|
.50
|
.485
|
.44
|
Year
ended December 31
|
2006
|
2005
|
2004
|
|||||||||
PREFERRED
STOCK
|
$ |
-
|
$ |
-
|
$ |
-
|
||||||
CLASS
A COMMON STOCK
|
||||||||||||
Balance-beginning
of
year
|
-
|
23,066
|
23,066
|
|||||||||
Recapitalization
|
-
|
(23,066 | ) |
-
|
||||||||
Balance-end
of
year
|
-
|
-
|
23,066
|
|||||||||
CLASS
B COMMON STOCK
|
||||||||||||
Balance-beginning
of
year
|
-
|
668
|
668
|
|||||||||
Recapitalization
|
-
|
(668 | ) |
-
|
||||||||
Balance-end
of
year
|
-
|
-
|
668
|
|||||||||
COMMON
STOCK
|
||||||||||||
Balance-beginning
of
year
|
24,565
|
-
|
-
|
|||||||||
Recapitalization
|
-
|
24,565
|
-
|
|||||||||
Balance-end
of
year
|
24,565
|
24,565
|
-
|
|||||||||
ADDITIONAL
PAID-IN CAPITAL
|
||||||||||||
Balance-beginning
of
year
|
58,637
|
76,468
|
76,744
|
|||||||||
Stock
awards issued and related
tax benefit
|
855
|
(3,110 | ) | (276 | ) | |||||||
Share
based compensation
expense
|
1,450
|
-
|
-
|
|||||||||
Conversion
of
debentures
|
143
|
2
|
-
|
|||||||||
Recapitalization
|
-
|
(14,723 | ) |
-
|
||||||||
Adoption
of SFAS
123(R)
|
(454 | ) |
-
|
-
|
||||||||
Balance-end
of
year
|
60,631
|
58,637
|
76,468
|
|||||||||
RETAINED
EARNINGS
|
||||||||||||
Balance-beginning
of
year
|
199,383
|
197,586
|
219,401
|
|||||||||
Net
earnings
(loss)
|
31,786
|
13,028
|
(11,822 | ) | ||||||||
Dividends
declared
|
(12,032 | ) | (11,231 | ) | (9,993 | ) | ||||||
Balance-end
of
year
|
219,137
|
199,383
|
197,586
|
|||||||||
UNAMORTIZED
RESTRICTED STOCK AWARDS
|
||||||||||||
Balance-beginning
of
year
|
(454 | ) | (893 | ) | (1,727 | ) | ||||||
Stock
awards
issued
|
-
|
(116 | ) | (133 | ) | |||||||
Amortization
of stock
awards
|
-
|
555
|
967
|
|||||||||
Adoption
of SFAS
123(R)
|
454
|
-
|
-
|
|||||||||
Balance-end
of
year
|
-
|
(454 | ) | (893 | ) | |||||||
ACCUMULATED
OTHER COMPREHENSIVE LOSS
|
||||||||||||
Balance-beginning
of
year
|
(4,145 | ) | (684 | ) | (1,311 | ) | ||||||
Adoption
of SFAS 158, net of tax
of $255
|
415
|
-
|
-
|
|||||||||
Pension
plan adjustments, net of
tax of $2,430
|
-
|
(3,964 | ) |
-
|
||||||||
Foreign
currency translation
adjustments
|
1,268
|
503
|
627
|
|||||||||
Balance-end
of
year
|
(2,462 | ) | (4,145 | ) | (684 | ) | ||||||
TREASURY
STOCK
|
||||||||||||
Balance-beginning
of
year
|
(8,232 | ) | (12,041 | ) | (13,658 | ) | ||||||
Shares
acquired in 2006 – 0; 2005
– 4; 2004 – 757
|
-
|
-
|
(9 | ) | ||||||||
Shares
reissued in 2006 –
238,542; 2005 – 311,275; 2004 – 132,740
|
2,922
|
3,809
|
1,626
|
|||||||||
Balance-end
of
year
|
(5,310 | ) | (8,232 | ) | (12,041 | ) | ||||||
TOTAL
SHAREHOLDERS’ EQUITY
|
$ |
296,561
|
$ |
269,754
|
$ |
284,170
|
COMPREHENSIVE
INCOME (LOSS)
|
||||||||||||
Net
earnings
(loss)
|
$ |
31,786
|
$ |
13,028
|
$ | (11,822 | ) | |||||
Foreign
currency translation
adjustments
|
1,268
|
503
|
627
|
|||||||||
Pension
plan adjustments, net of
tax benefit of $2,430
|
-
|
(3,964 | ) |
-
|
||||||||
Other
comprehensive
income (loss)
|
1,268
|
(3,461 | ) |
627
|
||||||||
TOTAL
COMPREHENSIVE INCOME (LOSS)
|
$ |
33,054
|
$ |
9,567
|
$ | (11,195 | ) |
Year
ended December 31
|
2006
|
2005
|
2004
|
|||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
Net
earnings (loss)
|
$ |
31,786
|
$ |
13,028
|
$ | (11,822 | ) | |||||
Adjustments
to reconcile net earnings (loss)
to
cash provided by (used in) operating activities:
Depreciation
and amortization
|
10,472
|
9,555
|
8,969
|
|||||||||
Provisions
for (recovery of) losses on accounts receivable
|
(47 | ) | (2,120 | ) |
2,180
|
|||||||
Net
(gain) loss on sale of assets
|
52
|
27
|
(199 | ) | ||||||||
Stock
compensation expense
|
2,867
|
8,820
|
1,179
|
|||||||||
Non-cash
write-down of assets
|
-
|
-
|
962
|
|||||||||
Non-cash
sales adjustment for costs – not billed
|
-
|
-
|
21,332
|
|||||||||
Deferred
income taxes
|
(243 | ) |
3,183
|
(11,421 | ) | |||||||
Changes
in assets and liabilities,
excluding
effects of acquisitions/divestitures:
Accounts
receivable
|
(12,624 | ) |
20,487
|
(20,179 | ) | |||||||
Inventories
|
(10,280 | ) | (9,825 | ) | (18,175 | ) | ||||||
Income
taxes receivable
|
-
|
-
|
1,043
|
|||||||||
Other
current assets
|
(1,932 | ) | (1,435 | ) | (2,695 | ) | ||||||
Other
assets
|
-
|
-
|
257
|
|||||||||
Accounts
payable – trade
|
(7,041 | ) |
10,986
|
19,561
|
||||||||
Accrued
contract losses
|
(8,429 | ) | (17,550 | ) |
13,458
|
|||||||
Advances
on contracts
|
(4,298 | ) | (2,208 | ) | (2,972 | ) | ||||||
Accrued expenses
and payables
|
(5,520 | ) | (4,062 | ) |
14,620
|
|||||||
Income
taxes payable
|
1,300
|
3,660
|
2,807
|
|||||||||
Pension
liabilities
|
8,560
|
8,811
|
9,039
|
|||||||||
Other
long-term liabilities
|
2,196
|
1,419
|
1,938
|
|||||||||
Cash
provided by (used in) operating activities
|
6,819
|
42,776
|
29,882
|
|||||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
Proceeds
from sale of assets
|
545
|
346
|
376
|
|||||||||
Expenditures
for property, plant and equipment
|
(13,219 | ) | (9,866 | ) | (7,539 | ) | ||||||
Acquisition
of businesses including earn out adjustments
|
(1,341 | ) | (31,875 | ) | (2,435 | ) | ||||||
Other,
net
|
(1,675 | ) |
788
|
(770 | ) | |||||||
Cash
provided by (used in) investing activities
|
(15,690 | ) | (40,607 | ) | (10,368 | ) | ||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
Net
borrowings (repayments) under revolver credit agreements
|
11,735
|
23,211
|
310
|
|||||||||
Issuance
of debt
|
-
|
-
|
413
|
|||||||||
Debt
repayments
|
(2,122 | ) | (1,807 | ) | (1,660 | ) | ||||||
Changes
in book overdraft
|
7,264
|
1,912
|
(4,412 | ) | ||||||||
Recapitalization
|
-
|
(13,892 | ) |
-
|
||||||||
Proceeds
from exercise of employee stock plans
|
3,238
|
585
|
1,218
|
|||||||||
Purchases
of treasury stock
|
-
|
-
|
(9 | ) | ||||||||
Dividends
paid
|
(12,002 | ) | (10,747 | ) | (9,979 | ) | ||||||
Debt
issuance costs
|
-
|
(824 | ) |
-
|
||||||||
Other
|
283
|
-
|
(305 | ) | ||||||||
Cash
provided by (used in) financing activities
|
8,396
|
(1,562 | ) | (14,424 | ) | |||||||
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(475 | ) |
607
|
5,090
|
||||||||
EFFECT
OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
197
|
22
|
149
|
|||||||||
CASH
AND CASH EQUIVALENTS AT BEGINNING OF YEAR
|
12,998
|
12,369
|
7,130
|
|||||||||
CASH
AND CASH EQUIVALENTS AT END OF YEAR
|
$ |
12,720
|
$ |
12,998
|
$ |
12,369
|
2005
|
2004
|
|||||||
Net
earnings (loss):
|
||||||||
As
reported
|
$ |
13,028
|
$ | (11,822 | ) | |||
Stock
compensation expense
reported in
|
||||||||
net
earnings, net of tax
effect
|
5,468
|
1,330
|
||||||
Less
pro forma stock compensation expense, net
|
||||||||
of
tax effect
|
(6,215 | ) | (2,069 | ) | ||||
|
||||||||
Pro
forma net earnings (loss)
|
$ |
12,281
|
$ | (12,561 | ) | |||
Earnings
(loss) per share - basic:
|
||||||||
As
reported
|
.57
|
(.52 | ) | |||||
Pro
forma
|
.53
|
(.55 | ) | |||||
Earnings
(loss) per share - diluted:
|
||||||||
As
reported
|
.57
|
(.52 | ) | |||||
Pro
forma
|
.53
|
(.55 | ) |
Before
application of Statement 158
|
Adjustments
|
Reported
as of December 31, 2006
|
||||||||||
Liability
for pension benefits
|
$ |
49,084
|
$ | (670 | ) | $ |
48,414
|
|||||
Deferred
income taxes assets
|
39,680
|
(255 | ) |
39,425
|
||||||||
Accumulated
other comprehensive loss
|
(2,877 | ) |
415
|
(2,462 | ) | |||||||
Total
shareholders’ equity
|
296,146
|
415
|
296,561
|
2.
|
RESTATEMENT
|
December
31
|
2006
|
2005
|
||||||
Trade
receivables
|
$ |
97,752
|
$ |
96,776
|
||||
U.S.
Government contracts:
Billed
|
26,938
|
16,140
|
||||||
Costs
and accrued profit – not billed
|
4,544
|
956
|
||||||
Commercial
and other
government
contracts:
Billed
|
21,479
|
19,569
|
||||||
Costs
and accrued profit – not billed
|
41,968
|
46,244
|
||||||
Less
allowance for doubtful accounts
|
(3,353 | ) | (3,400 | ) | ||||
Total
|
$ |
189,328
|
$ |
176,285
|
December
31
|
2006
|
2005
|
||||||
Merchandise
for resale
|
$ |
130,694
|
$ |
124,936
|
||||
Contracts
in process:
U.S.
Government, net of progress
payments
of $25,203 and $18,951
in
2006 and 2005, respectively
|
47,086
|
44,710
|
||||||
Commercial
and other government contracts
|
18,949
|
14,554
|
||||||
Other
work in process (including
certain
general stock materials)
|
21,102
|
21,750
|
||||||
Finished
goods
|
13,519
|
14,764
|
||||||
Total
|
$ |
231,350
|
$ |
220,714
|
December
31
|
2006
|
2005
|
||||||
Land
|
$ |
4,327
|
$ |
4,302
|
||||
Buildings
|
32,420
|
30,165
|
||||||
Leasehold
improvements
|
14,317
|
14,449
|
||||||
Machinery,
office furniture
and
equipment
|
117,811
|
118,583
|
||||||
Total
|
168,875
|
167,499
|
||||||
Less
accumulated depreciation
|
(114,710 | ) | (115,907 | ) | ||||
Property,
plant and equipment, net
|
$ |
54,165
|
$ |
51,592
|
December
31
|
2006
|
2005
|
||||||
Goodwill:
|
||||||||
Aerostructures
|
$ |
7,810
|
$ |
7,810
|
||||
Fuzing
|
23,089
|
21,337
|
||||||
Helicopters
|
-
|
-
|
||||||
Specialty
Bearings
|
7,233
|
6,431
|
||||||
Subtotal
Aerospace
|
$ |
38,132
|
$ |
35,578
|
||||
Industrial
Distribution
|
4,078
|
4,081
|
||||||
Music
|
14,623
|
15,034
|
||||||
$ |
56,833
|
$ |
54,693
|
December
31
|
2006
|
2005
|
||||||
Other
intangible assets:
Other
intangible assets-subject
to amortization:
|
||||||||
Customer
relationships
|
$ |
3,400
|
$ |
3,400
|
||||
Trade
names
|
2,000
|
2,000
|
||||||
Patents
|
1,293
|
1,937
|
||||||
Total
|
6,693
|
7,337
|
||||||
Less
accumulated
amortization
|
(1,248 | ) | (1,320 | ) | ||||
Other
intangible assets – subject
to amortization, net
|
5,445
|
6,017
|
||||||
Trade
name – not subject to
amortization
|
13,819
|
13,819
|
||||||
Other
intangible assets, net
|
$ |
19,264
|
$ |
19,836
|
2006
|
2005
|
|||||||
Balance
at January 1
|
$ |
6,007
|
$ |
3,762
|
||||
Costs
incurred
|
(1,940 | ) | (2,070 | ) | ||||
Additions
|
-
|
4,315
|
||||||
Net
adjustment to goodwill
|
(600 | ) |
-
|
|||||
Balance
at December 31
|
$ |
3,467
|
$ |
6,007
|
2006
|
2005
|
|||||||
Balance
at January 1
|
$ |
19,950
|
$ |
37,533
|
||||
Costs
incurred
|
(18,079 | ) | (35,759 | ) | ||||
Additions
to loss accrual
|
10,937
|
19,147
|
||||||
Release
to income
|
(1,266 | ) | (971 | ) | ||||
Balance
at December 31
|
$ |
11,542
|
$ |
19,950
|
December
31
|
2006
|
2005
|
||||||
Other
credit arrangements
|
$ |
-
|
$ |
915
|
||||
Total
|
$ |
-
|
$ |
915
|
December
31
|
2006
|
2005
|
||||||
Revolving
credit agreement
|
$ |
58,033
|
$ |
45,518
|
||||
Other
credit arrangements
|
-
|
135
|
||||||
Convertible
subordinated debentures
|
16,390
|
18,242
|
||||||
Total
|
74,423
|
63,895
|
||||||
Less
current portion
|
1,551
|
1,660
|
||||||
Total
excluding current portion
|
$ |
72,872
|
$ |
62,235
|
2007
|
$ |
1,551
|
||
2008
|
1,551
|
|||
2009
|
1,551
|
|||
2010
|
59,584
|
|||
2011
|
1,551
|
|||
Thereafter
|
8,635
|
2006
|
2005
|
|||||||
Balance
at January 1
|
$ |
4,304
|
$ |
3,827
|
||||
Warranty
costs incurred
|
(2,737 | ) | (505 | ) | ||||
Product
warranty accrual
|
500
|
3,404
|
||||||
Release
to income
|
(39 | ) | (2,422 | ) | ||||
Balance
at December 31
|
$ |
2,028
|
$ |
4,304
|
2006
|
2005
|
2004
|
||||||||||
Current:
|
||||||||||||
Federal
|
$ |
15,254
|
$ |
8,558
|
$ |
2,370
|
||||||
State
|
2,062
|
1,646
|
1,770
|
|||||||||
Foreign
|
3,181
|
2,451
|
1,935
|
|||||||||
20,497
|
12,655
|
6,075
|
||||||||||
Deferred:
|
||||||||||||
Federal
|
39
|
3,083
|
(9,359 | ) | ||||||||
State
|
(30 | ) |
74
|
(1,918 | ) | |||||||
Foreign
|
(13 | ) |
11
|
(140 | ) | |||||||
(4 | ) |
3,168
|
(11,417 | ) | ||||||||
Total
|
$ |
20,493
|
$ |
15,823
|
$ | (5,342 | ) |
December
31
|
2006
|
2005
|
||||||
Deferred
tax assets:
Long-term
contracts
|
$ |
4,539
|
$ |
7,383
|
||||
Deferred
employee benefits
|
29,800
|
27,116
|
||||||
Inventory
|
9,227
|
8,077
|
||||||
Tax
loss and credit carry-forwards
|
4,298
|
3,484
|
||||||
Accrued
liabilities and other items
|
5,966
|
6,612
|
||||||
Total
deferred tax assets
|
53,830
|
52,672
|
||||||
Deferred
tax liabilities:
Depreciation
and amortization
|
(4,225 | ) | (5,756 | ) | ||||
Intangibles
|
(5,473 | ) | (3,666 | ) | ||||
Other
items
|
(1,222 | ) | (1,183 | ) | ||||
Total
deferred tax liabilities
|
(10,920 | ) | (10,605 | ) | ||||
Net
deferred tax asset
before
valuation allowance
|
42,910
|
42,067
|
||||||
Valuation
allowance
|
(3,740 | ) | (2,883 | ) | ||||
Net
deferred tax asset
after
valuation allowance
|
$ |
39,170
|
$ |
39,184
|
2006
|
2005
|
2004
|
||||||||||
Federal
tax (benefit) at 35% statutory rate
|
$ |
18,298
|
$ |
10,098
|
$ | (6,007 | ) | |||||
State
income taxes, net of federal benefit
|
1,320
|
1,118
|
(127 | ) | ||||||||
Tax
effect of:
|
||||||||||||
Compensation
|
1,311
|
3,467
|
617
|
|||||||||
Recapitalization
costs
|
-
|
1,169
|
93
|
|||||||||
Meals
and entertainment
|
478
|
424
|
413
|
|||||||||
Other,
net
|
(914 | ) | (453 | ) | (331 | ) | ||||||
Income
taxes (benefit)
|
$ |
20,493
|
$ |
15,823
|
$ | (5,342 | ) |
Qualified
Pension Plan
|
SERP
|
|||||||||||||||
December
31
|
2006
|
2005
|
2006
|
2005
|
||||||||||||
Projected
benefit obligation at beginning of year
|
$ |
467,146
|
$ |
432,354
|
$ |
31,044
|
$ |
20,205
|
||||||||
Service
cost
|
12,570
|
11,492
|
2,113
|
1,408
|
||||||||||||
Interest
cost
|
26,411
|
25,469
|
1,727
|
1,330
|
||||||||||||
Plan
amendments (A)
|
-
|
-
|
(4,510 | ) |
-
|
|||||||||||
Actuarial
liability (gain) loss (B)
|
(2,856 | ) |
18,562
|
5,076
|
8,850
|
|||||||||||
Benefit
payments
|
(21,311 | ) | (20,731 | ) | (841 | ) | (749 | ) | ||||||||
Projected
benefit obligation at end of year
|
$ |
481,960
|
$ |
467,146
|
$ |
34,609
|
$ |
31,044
|
Fair
value of plan assets at beginning of year
|
$ |
424,266
|
$ |
407,182
|
$ |
-
|
$ |
-
|
||||||||
Actual
return on plan assets
|
57,843
|
33,068
|
-
|
-
|
||||||||||||
Employer
contribution
|
7,357
|
4,747
|
841
|
749
|
||||||||||||
Benefit
payments
|
(21,311 | ) | (20,731 | ) | (841 | ) | (749 | ) | ||||||||
Fair
value of plan assets at end of year
|
$ |
468,155
|
$ |
424,266
|
$ |
-
|
$ |
-
|
||||||||
Funded
status at end of year
|
$ | (13,805 | ) | $ | (42,880 | ) | $ | (34,609 | ) | $ | (31,044 | ) | ||||
Unrecognized
prior service cost
|
**
|
558
|
**
|
-
|
||||||||||||
Unrecognized
net (gain) loss
|
**
|
31,791
|
**
|
8,627
|
||||||||||||
Additional
minimum liability
|
**
|
-
|
**
|
(6,394 | ) | |||||||||||
Prepaid
(accrued) pension costs including
minimum
pension liability
|
$ | (13,805 | ) | $ | (10,531 | ) | $ | (34,609 | ) | $ | (28,811 | ) |
Qualified
Pension Plan
|
SERP
|
|||||||||||||||
December
31
|
2006
|
2005
|
2006
|
2005
|
||||||||||||
Current
liabilities
|
$ |
-
|
$ | (10,531 | ) | $ | (2,438 | ) | $ | (850 | ) | |||||
Noncurrent
liabilities
|
(13,805 | ) |
-
|
(32,171 | ) | (27,961 | ) | |||||||||
$ | (13,805 | ) | $ | (10,531 | ) | $ | (34,609 | ) | $ | (28,811 | ) |
Qualified
Pension Plan
|
SERP
|
|||||||||||||||
December
31
|
2006
|
2005
|
2006
|
2005
|
||||||||||||
Net
loss (gain)
|
$ | (2,421 | ) | $ |
-
|
$ |
11,070
|
$ |
-
|
|||||||
Additional
minimum liability
|
-
|
-
|
-
|
6,394
|
||||||||||||
Prior
service cost (credit)
|
511
|
-
|
(3,436 | ) |
-
|
|||||||||||
Accumulated
other comprehensive income (loss)
|
$ | (1,910 | ) | $ |
-
|
$ |
7,634
|
$ |
6,394
|
Qualified
Pension Plan
|
SERP
|
|||||||||||||||||||||||
2006
|
2005
|
2004
|
2006
|
2005
|
2004
|
|||||||||||||||||||
Service
cost for benefits earned during the year
|
$ |
12,570
|
$ |
11,492
|
$ |
10,233
|
$ |
2,113
|
$ |
1,408
|
$ |
1,262
|
||||||||||||
Interest
cost on projected benefit obligation
|
26,411
|
25,469
|
24,653
|
1,727
|
1,330
|
1,080
|
||||||||||||||||||
Expected
return on plan assets
|
(29,448 | ) | (28,476 | ) | (28,675 | ) |
-
|
-
|
-
|
|||||||||||||||
Amortization
of transition assets
|
(13 | ) | (55 | ) | (55 | ) |
-
|
-
|
-
|
|||||||||||||||
Amortization
of prior service cost
|
61
|
61
|
61
|
(1,074 | ) |
-
|
-
|
|||||||||||||||||
Recognized
net (gain) loss
|
2,960
|
1,668
|
-
|
2,632
|
223
|
2,663
|
||||||||||||||||||
Net
pension benefit cost (income)
|
$ |
12,541
|
$ |
10,159
|
$ |
6,217
|
$ |
5,398
|
$ |
2,961
|
$ |
5,005
|
Net
loss (gain)
|
$ | (2,421 | ) | $ |
-
|
$ |
-
|
$ |
11,070
|
$ |
-
|
$ |
-
|
|||||||||||
Prior
service cost (credit)
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Amortization
of prior service cost
|
511
|
-
|
-
|
(3,436 | ) |
-
|
-
|
|||||||||||||||||
Additional
minimum liability
|
-
|
-
|
-
|
(6,394 | ) |
6,394
|
-
|
|||||||||||||||||
Total
recognized in accumulated
other
comprehensive income
|
$ | (1,910 | ) | $ |
-
|
$ |
-
|
$ |
1,240
|
$ |
6,394
|
$ |
-
|
|||||||||||
Total
recognized in net periodic
benefit
cost and accumulated
other
comprehensive income
|
$ |
10,631
|
$ |
10,159
|
$ |
6,217
|
$ |
6,638
|
$ |
9,355
|
$ |
5,005
|
Qualified
Pension Plan
|
SERP
|
|||||||
2007 | $ | 23,362 | $ | 2,438 | ||||
2008
|
23,916
|
12,820
|
||||||
2009
|
24,723
|
9,360
|
||||||
2010
|
25,785
|
807
|
||||||
2011
|
26,513
|
797
|
||||||
2012
– 2016
|
147,821
|
11,231
|
Qualified
Pension Plan
|
SERP
|
|||||||||||||||
December
31
|
2006
|
2005
|
2006
|
2005
|
||||||||||||
Discount
rate
|
5.85 | % | 5.75 | % | 5.60 | % | 5.75 | % | ||||||||
Average
rate of increase
in
compensation levels
|
3.5 | % | 3.5 | % | 3.5 | % | 3.5 | % |
Qualified
Pension Plan
|
SERP
|
|||||||||||||||
December
31
|
2006
|
2005
|
2006
|
2005
|
||||||||||||
Discount
rate
|
5.75 | % | 6.0 | % | 5.75 | % | 6.0 | % | ||||||||
Expected
return on plan assets
|
8.0 | % | 8.0 | % |
-
|
-
|
||||||||||
Average
rate of increase
in
compensation levels
|
3.5 | % | 3.5 | % | 3.5 | % | 3.5 | % |
December
31
|
2006
|
2005
|
||||||
Equity
securities
|
66 | % | 64 | % | ||||
Fixed
income securities
|
34 | % | 36 | % | ||||
Total
|
100 | % | 100 | % |
December
31
|
2006
|
2005
|
||||||
Supplemental
employees’
retirement
plan
|
$ |
32,171
|
$ |
27,961
|
||||
Long-term
pension liability
|
13,805
|
-
|
||||||
Deferred
compensation
|
10,309
|
9,519
|
||||||
Minority
interest
|
409
|
387
|
||||||
Other
|
5,949
|
5,365
|
||||||
Total
|
$ |
62,643
|
$ |
43,232
|
2007
|
$ |
17,464
|
||
2008
|
11,778
|
|||
2009
|
7,773
|
|||
2010
|
4,716
|
|||
2011
|
3,245
|
|||
Thereafter
|
4,120
|
|||
Total
|
$ |
49,096
|
2006
|
2005
|
2004
|
||||||||||
Earnings
(loss)
per
share – basic
Net
earnings (loss)
|
$ |
31,786
|
$ |
13,028
|
$ | (11,822 | ) | |||||
Weighted
average shares
outstanding
(000)
|
24,036
|
23,038
|
22,700
|
|||||||||
Earnings
(loss)
per
share – basic
|
$ |
1.32
|
$ |
.57
|
$ | (.52 | ) | |||||
Earnings
(loss)
per
share – diluted
Net
earnings (loss)
|
$ |
31,786
|
$ |
13,028
|
$ | (11,822 | ) | |||||
Plus:
After-tax
interest
savings
on convertible
debentures
|
609
|
546
|
-
|
|||||||||
Net
earnings (loss)
assuming
conversion
|
$ |
32,395
|
$ |
13,574
|
$ | (11,822 | ) | |||||
Weighted
average
shares
outstanding (000)
|
24,036
|
23,038
|
22,700
|
|||||||||
Plus
shares issuable on:
Conversion
of
6%
convertible
debentures
|
719
|
796
|
-
|
|||||||||
Exercise
of
dilutive
options
|
114
|
135
|
-
|
|||||||||
Weighted
average
shares
outstanding
assuming
conversion (000)
|
24,869
|
23,969
|
22,700
|
|||||||||
Earnings
(loss)
per
share – diluted 1
|
$ |
1.30
|
$ |
.57
|
$ | (.52 | ) |
2006
|
2005
|
2004
|
||||||||||
Stock
options
|
$ |
893
|
$ |
-
|
$ |
-
|
||||||
Restricted
stock awards
|
729
|
555
|
967
|
|||||||||
Stock
appreciation rights
|
1,036
|
8,265
|
212
|
|||||||||
Employee
stock purchase plan
|
209
|
-
|
-
|
|||||||||
Total
share-based compensation
expense
|
$ |
2,867
|
$ |
8,820
|
$ |
1,179
|
STOCK
OPTIONS OUTSTANDING:
|
OPTIONS
|
WEIGHTED-
AVERAGE
EXERCISE
PRICE
|
||||||
Balance
at January 1, 2004
|
1,275,670
|
$ |
13.67
|
|||||
Options
granted
|
176,565
|
14.03
|
||||||
Options
exercised
|
(48,350 | ) |
10.13
|
|||||
Options
forfeited or expired
|
(76,080 | ) |
14.07
|
|||||
Balance
at December 31, 2004
|
1,327,805
|
13.82
|
||||||
Options
granted
|
305,500
|
11.62
|
||||||
Options
exercised
|
(663,262 | ) |
13.84
|
|||||
Options
forfeited or expired
|
(59,800 | ) |
12.89
|
|||||
Balance
at December 31, 2005
|
910,243
|
13.13
|
||||||
Options
granted
|
161,600
|
21.32
|
||||||
Options
exercised
|
(137,244 | ) |
13.13
|
|||||
Options
forfeited or expired
|
(33,960 | ) |
15.97
|
|||||
Balance
at December 31, 2006
|
900,639
|
$ |
14.49
|
Weighted-average
contractual remaining term - options outstanding
|
6.53
years
|
|||
Aggregate
intrinsic value - options outstanding
|
$ |
7,320
|
||
Options
exercisable
|
357,420
|
|||
Weighted-average
exercise price - options exercisable
|
$ |
14.20
|
||
Aggregate
intrinsic value - options exercisable
|
$ |
3,008
|
||
Weighted-average
contractual remaining term - options exercisable
|
4.58
years
|
2006
|
2005
|
2004
|
||||||||||
Expected
option term
|
6.5
years
|
8
years
|
8
years
|
|||||||||
Expected
volatility
|
41.5 | % | 40.0 | % | 45.0 | % | ||||||
Risk-free
interest rate
|
4.5 | % | 4.2 | % | 4.1 | % | ||||||
Expected
dividend yield
|
2.5 | % | 3.8 | % | 3.1 | % | ||||||
Per
share fair value of options granted
|
$ |
7.96
|
$ |
3.73
|
$ |
5.36
|
Restricted
Stock outstanding:
|
RSA
|
Weighted-Average
Grant
Date Fair Value
|
||||||
Nonvested
at January 1, 2006
|
56,580
|
$ |
12.79
|
|||||
RSA
granted
|
45,475
|
22.24
|
||||||
RSA
vested
|
(46,260 | ) |
17.35
|
|||||
RSA
forfeited or expired
|
(2,100 | ) |
21.38
|
|||||
Nonvested
at December 31, 2006
|
53,695
|
$ |
16.52
|
SARs
outstanding:
|
SARs
|
Weighted-Average
Exercise
Price
|
||||||
Balance
at January 1, 2006
|
241,780
|
$ |
11.51
|
|||||
SARs
granted
|
-
|
-
|
||||||
SARs
exercised
|
(102,720 | ) |
12.67
|
|||||
SARs
forfeited or expired
|
-
|
-
|
||||||
Balance
at December 31, 2006
|
139,060
|
$ |
10.65
|
2006
|
2005
|
2004
|
||||||||||
Net
sales:
|
||||||||||||
Aerostructures
|
$ |
78,742
|
$ |
54,983
|
$ |
45,362
|
||||||
Fuzing
|
71,068
|
64,069
|
62,996
|
|||||||||
Helicopters
|
69,914
|
76,652
|
66,927
|
|||||||||
Specialty
Bearings
|
106,278
|
92,241
|
77,063
|
|||||||||
Subtotal
Aerospace
|
$ |
326,002
|
$ |
287,945
|
$ |
252,348
|
||||||
Industrial
Distribution
|
665,420
|
621,933
|
581,843
|
|||||||||
Music
|
214,732
|
191,318
|
161,001
|
|||||||||
$ |
1,206,154
|
$ |
1,101,196
|
$ |
995,192
|
|||||||
Operating
income (loss):
|
||||||||||||
Aerostructures
|
$ |
11,538
|
$ |
3,775
|
**
|
|||||||
Fuzing
|
7,750
|
3,101
|
**
|
|||||||||
Helicopters
|
222
|
1,245
|
**
|
|||||||||
Specialty
Bearings
|
28,630
|
25,164
|
18,330
|
|||||||||
Subtotal
Aerospace
|
$ |
48,140
|
$ |
33,285
|
$ | (14,303 | ) | |||||
Industrial
Distribution
|
35,160
|
29,415
|
19,338
|
|||||||||
Music
|
11,555
|
13,016
|
11,085
|
|||||||||
Net
gain (loss) on sale of assets
|
(52 | ) | (27 | ) |
199
|
|||||||
Corporate
expense
|
(35,426 | ) | (42,932 | ) | (28,850 | ) | ||||||
Operating
income (loss)
|
59,377
|
32,757
|
(12,531 | ) | ||||||||
Interest
expense, net
|
(6,179 | ) | (3,046 | ) | (3,580 | ) | ||||||
Other
expense, net
|
(919 | ) | (860 | ) | (1,053 | ) | ||||||
Earnings
(loss)
before
income taxes
|
$ |
52,279
|
$ |
28,851
|
$ | (17,164 | ) | |||||
Identifiable
assets:
|
||||||||||||
Aerostructures
|
$ |
58,533
|
$ |
44,124
|
**
|
|||||||
Fuzing
|
77,946
|
75,889
|
**
|
|||||||||
Helicopters
|
100,353
|
103,237
|
**
|
|||||||||
Specialty
Bearings
|
48,774
|
43,119
|
39,081
|
|||||||||
Subtotal
Aerospace
|
$ |
285,606
|
$ |
266,369
|
$ |
289,343
|
||||||
Industrial
Distribution
|
188,672
|
175,725
|
164,711
|
|||||||||
Music
|
111,861
|
117,347
|
76,764
|
|||||||||
Corporate
|
44,274
|
39,056
|
31,513
|
|||||||||
$ |
630,413
|
$ |
598,497
|
$ |
562,331
|
|||||||
Capital
expenditures:
|
||||||||||||
Aerostructures
|
$ |
1,698
|
$ |
808
|
**
|
|||||||
Fuzing
|
1,555
|
1,573
|
**
|
|||||||||
Helicopters
|
1,042
|
277
|
**
|
|||||||||
Specialty
Bearings
|
4,572
|
2,787
|
1,604
|
|||||||||
Subtotal
Aerospace
|
$ |
8,867
|
$ |
5,445
|
$ |
3,615
|
||||||
Industrial
Distribution
|
2,930
|
2,748
|
2,709
|
|||||||||
Music
|
1,120
|
1,474
|
1,074
|
|||||||||
Corporate
|
302
|
199
|
141
|
|||||||||
$ |
13,219
|
$ |
9,866
|
$ |
7,539
|
|||||||
Depreciation
and amortization::
|
||||||||||||
Aerostructures
|
$ |
1,943
|
$ |
1,907
|
**
|
|||||||
Fuzing
|
936
|
834
|
**
|
|||||||||
Helicopters
|
1,137
|
1,251
|
**
|
|||||||||
Specialty
Bearings
|
1,818
|
1,604
|
1,513
|
|||||||||
Subtotal
Aerospace
|
$ |
5,834
|
$ |
5,596
|
$ |
5,468
|
||||||
Industrial
Distribution
|
2,285
|
2,057
|
1,972
|
|||||||||
Music
|
1,718
|
1,371
|
963
|
|||||||||
Corporate
|
635
|
531
|
566
|
|||||||||
$ |
10,472
|
$ |
9,555
|
$ |
8,969
|
2006
|
2005
|
2004
|
||||||||||
United
States
|
$ |
1,036,380
|
$ |
943,159
|
$ |
859,539
|
||||||
Australia/New
Zealand
|
28,854
|
26,106
|
44,278
|
|||||||||
Canada
|
48,598
|
45,039
|
37,205
|
|||||||||
Europe
|
48,623
|
40,198
|
29,857
|
|||||||||
Mexico
|
19,327
|
18,469
|
13,462
|
|||||||||
Japan
|
11,569
|
18,671
|
4,272
|
|||||||||
Other
|
12,803
|
9,554
|
6,579
|
|||||||||
$ |
1,206,154
|
$ |
1,101,196
|
$ |
995,192
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
T.
Jack Cahill
|
Mr.
Cahill, 58, has been President of Kaman Industrial Technologies
Corporation, a subsidiary of the company, since 1993. He has
held various positions with the company since 1975.
|
Candace
A. Clark
|
Ms.
Clark, 52, has been Senior Vice President, Chief Legal Officer and
Secretary since 1996. Ms. Clark has held various positions with
the company since 1985.
|
Ronald
M. Galla
|
Mr.
Galla, 55, has been Senior Vice President and Chief Information Officer
since 1995. Mr. Galla has been director of the company's
Management Information Systems since 1984.
|
Robert
M. Garneau
|
Mr.
Garneau, 62, has been Executive Vice President and Chief Financial
Officer
since 1995. Mr. Garneau has held various positions with the
company since 1981.
|
Russell
H. Jones
|
Mr.
Jones, 62, has been Senior Vice President, Chief Investment Officer,
and
Treasurer since 2003. Prior to that he served as Vice President
and Treasurer. He has held various positions with the company
since 1973.
|
John
C. Kornegay
|
Dr.
Kornegay, 57, has been President of Kamatics Corporation, a subsidiary
of
the company, since 1999. He has held various positions with
Kamatics Corporation since 1988.
|
Paul
R. Kuhn
|
Mr.
Kuhn, 65, has been a Director since 1999. He has been President
and Chief Executive Officer of the company since August 1999 and
was
appointed to the additional position of Chairman in 2001.
|
Robert
H. Saunders, Jr.
|
Mr.
Saunders, 65, has been President of Kaman Music Corporation, a subsidiary
of the company, since 1998. He has held various positions with the
company
since 1995.
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND
|
|
RELATED
STOCKHOLDER MATTERS
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
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KAMAN
CORPORATION
(Registrant)
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By:
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/s/ Paul
R. Kuhn
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Paul
R. Kuhn
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|
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Chairman,
President and
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Chief
Executive Officer
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Signature
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Title:
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Date:
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/s/ Paul
R. Kuhn
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||
Paul
R. Kuhn
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Chairman,
President and
Chief
Executive Officer
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August
2, 2007
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/s/ Robert
M. Garneau
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||
Robert
M. Garneau
|
Executive
Vice President
and
Chief Financial Officer
(Principal
Financial Officer)
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August
2, 2007
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/s/ Paul
R. Kuhn
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||
Paul
R. Kuhn
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August
2, 2007
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Attorney-in-Fact
for:
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||
Robert
Alvine
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Director
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Brian
E. Barents
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Director
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E.
Reeves Callaway III
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Director
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John
A. DiBiaggio
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Director
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Karen
M. Garrison
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Director
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Edwin
A. Huston
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Director
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Eileen
S. Kraus
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Director
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Richard
J. Swift
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Director
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YEAR
ENDED DECEMBER 31,
2006
|
|||||||||||||||||
Additions
|
|||||||||||||||||
DESCRIPTION
|
BALANCE
JANUARY 1,
2006
|
CHARGED
TO COSTS AND EXPENSES
|
OTHERS
|
DEDUCTIONS
|
BALANCE
DECEMBER 31,
2006
|
||||||||||||
Allowance
for doubtful accounts
|
$ |
3,400
|
$ |
925
|
$ |
-
|
$
972 (A)
|
$ |
3,353
|
YEAR
ENDED DECEMBER 31, 2005
|
||||||||||||||
Additions
|
||||||||||||||
DESCRIPTION
|
BALANCE
JANUARY 1,
2005
|
CHARGED
TO COSTS AND EXPENSES
|
OTHERS
|
DEDUCTIONS
|
BALANCE
DECEMBER
31, 2005
|
|||||||||
Allowance
for doubtful accounts
|
$ |
5,520
|
$ | (1,226 | ) |
$
167 (B)
|
$
1,061 (A)
|
$ |
3,400
|
YEAR
ENDED DECEMBER 31, 2004
|
|||||||||||||||||
Additions
|
|||||||||||||||||
DESCRIPTION
|
BALANCE
JANUARY 1,
2004
|
CHARGED
TO COSTS AND EXPENSES
|
OTHERS
|
DEDUCTIONS
|
BALANCE
DECEMBER 31,
2004
|
||||||||||||
Allowance
for doubtful accounts
|
$ |
3,340
|
$ |
3,768
|
-
|
$
1,588 (A)
|
$ |
5,520
|
YEAR
ENDED DECEMBER 31, 2006
|
||||||||||||||||
Additions
|
||||||||||||||||
DESCRIPTION
|
BALANCE
JANUARY 1,
2006
|
CURRENT
YEAR PROVISION (BENEFIT)
|
OTHERS
|
BALANCE
DECEMBER 31,
2004
|
||||||||||||
Valuation
allowance on deferred tax assets
|
$ |
2,883
|
$ |
880
|
$ | (23 | ) | $ |
3,740
|
YEAR
ENDED DECEMBER 31, 2005
|
||||||||||||||||
Additions
|
||||||||||||||||
DESCRIPTION
|
BALANCE
JANUARY 1,
2005
|
CURRENT
YEAR PROVISION (BENEFIT)
|
OTHERS
|
BALANCE
DECEMBER 31,
2005
|
||||||||||||
Valuation
allowance on deferred tax assets
|
$ |
2,163
|
$ |
786
|
$ | (66 | ) | $ |
2,883
|
YEAR
ENDED DECEMBER 31, 2004
|
||||||||||||||||
Additions
|
||||||||||||||||
DESCRIPTION
|
BALANCE
JANUARY 1,
2004
|
CURRENT
YEAR PROVISION (BENEFIT)
|
OTHERS
|
BALANCE
DECEMBER 31,
2004
|
||||||||||||
Valuation
allowance on deferred tax assets
|
$ |
2,005
|
$ |
109
|
$ |
49
|
$ |
2,163
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Exhibit
3a
|
The
Amended and Restated Certificate of Incorporation of the company,
was
filed as Exhibit 3.1 to Form 8-K on November 4, 2005, Document No.
0001341004-05-000188.
|
by
reference
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Exhibit
3b
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The
Amended and Restated Bylaws of the company were filed as Exhibit
3.2 to
Form 8-K on November 4, 2005, Document No.
0001341004-05-000188.
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by
reference
|
Exhibit
4a
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Indenture
between the company and Manufacturers Hanover Trust Company, as Indenture
Trustee, with respect to the company's 6% Convertible Subordinated
Debentures was filed as Exhibit 4.1 to Registration Statement No.
33 11599
on Form S-2 filed with the Securities and Exchange Commission on
January
29, 1987.
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by
reference
|
Exhibit
4b
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Revolving
Credit Agreement between the company and The Bank of Nova Scotia
and Fleet
National Bank as Co-Administrative Agents and Bank One, N.A. as the
Documentation Agent and The Bank of Nova Scotia and Fleet Securities,
Inc.
as the Co-Lead Arrangers and Various Financial Institutions dated
as of
August 5, 2005 was filed as Exhibit 1 to Form 8-K with the Securities
and
Exchange Commission on August 8, 2005, Document No. 0000054381-05-000051,
and Amendment No. 1 dated January 31, 2007 was filed as Exhibit 1 to
Form 8-K on January 31, 2007, Document No.
0000054381-07-000006.
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by
reference
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Exhibit
4c
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Credit
Agreement between the company, RWG Frankenjura-Industrie Flugwerklager
GmbH, and Wachovia Bank, N.A., dated July 29, 2002 was filed as Exhibit
4c
to Form 10-K filed with the Securities and Exchange Commission on
March
26, 2003, Document No. 0000054381-03-000079. Amendments to the
Agreement were filed as Exhibit 4.2 to Form 10-Q with the Securities
and
Exchange Commission on November 5, 2003, Document No.
0000054381-03-000124, Exhibit 4b to Form 8-K filed with the Securities
and
Exchange Commission on October 21, 2004, Document No.
0000054381-04-000070. Schedules and Exhibits to the Credit
Agreement, which are listed in its Table of Contents, are omitted
but will
be provided to the Commission upon request.
|
by
reference
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Exhibit
10a
|
The
Kaman Corporation 2003 Stock Incentive Plan effective November 1,
2003, as
amended effective February 17, 2004, was filed as Exhibit 10a to
Form 10-K
on March 5, 2004, Document No. 0000054381-04-000032.
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by
reference
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Exhibit
10b
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The
Kaman Corporation Employees Stock Purchase Plan as amended effective
November 18, 1997 was filed as Exhibit 10b to Form 10-K on March
16, 1998,
Document No. 0000054381-98-09.
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by
reference
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Exhibit
10c
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The
Kaman Corporation Supplemental Employees' Retirement Plan was filed
as
Exhibit 10c to Form 10-K on March 15, 2001, Document No.
0000054381-02-000005, and the Plan as amended was filed as Exhibit
10c to
Form 10-K on March 5, 2004, Document No. 0000054381-04-000032 and
as
Exhibit 10.10 to Form 8-K on February 26, 2007, Document No.
0000054381-07-000015.
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by
reference
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Exhibit
10c(i)
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The
Post-2004 Supplemental Employees’ Retirement Plan was filed as Exhibit
10.11 to Form 8-K on February 26, 2007, Document No.
000054381-07-000015.
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by
reference
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Exhibit
10d
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The
Kaman Corporation Amended and Restated Deferred Compensation Plan
(Effective as of November 12, 2002, except where otherwise indicated)
was
filed as Exhibit 10d to Form 10-K, Document No. 0000054381-03-000079,
filed with the Securities and Exchange Commission on March 26,
2003. Amendments to the Plan were filed as Exhibit 10d to Form
10-K, Document No. 0000054381-04-000032, filed with the Securities
and
Exchange Commission on March 5, 2004, and Exhibit 10(a) on Form 10-Q,
Document No. 0000054381-04-000059, filed with the Securities and
Exchange
Commission on August 3, 2004.
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by
reference
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Exhibit
10e(i)
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Kaman
Corporation Cash Bonus Plan (Amended and Restated Effective as of
January
1, 2002) and First Amendment thereto were filed as Exhibit 10e to
Form
10-K, Document No. 0000054381-02-000005, filed with the Securities
and
Exchange Commission on March 14, 2002. Amendments to the Plan
were filed as Exhibit 10e(ii) to Form 10-K, Document No.
0000054381-03-000079, with the Securities and Exchange Commission
on March
26, 2003 and Exhibit 10(b) to Form 10-Q, Document No.
0000054381-04-000059, filed with the Securities and Exchange Commission
on
August 3, 2004.
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by
reference
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Exhibit
10g (i)
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Amendment
No. 1 to Employment Agreement between Paul R. Kuhn and Kaman Corporation,
dated as of January 1, 2007, was filed as Exhibit 10.1 to Form 8-K,
Document No. 0000054381-07-000015, on February 26, 2007.
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by
reference
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Exhibit
10g(iv)
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Executive
Employment Agreement between Candace A. Clark and Kaman Corporation,
dated
as of January 1, 2007, was filed as Exhibit 10.3 to Form 8-K, Document
No.
0000054381-07-000015, on February 26, 2007.
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by
reference
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Exhibit
10g (v)
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Executive
Employment Agreement between Ronald M. Galla and Kaman Corporation,
dated
as of January 1, 2007 was filed as Exhibit 10g(v) to Form 10-K, Document
No. 0000054381-07-000022 on March 1, 2007.
|
by
reference
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Exhibit
10g (vi)
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Executive
Employment Agreement between Robert M. Garneau and Kaman Corporation,
dated as of January 1, 2007, was filed as Exhibit 10.2 to Form 8-K,
Document No. 0000054381-07-000015, on February 26, 2007.
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by
reference
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Exhibit
10g (vii)
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Executive
Employment Agreement between T. Jack Cahill and Kaman Industrial
Technologies Corporation, dated as of January 1, 2007, was filed
as
Exhibit 10.4 to Form 8-K, Document No. 0000054381-07-000015, on February
26, 2007.
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by
reference
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Exhibit
10g (ix)
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Executive
Employment Agreement between Robert H. Saunders, Jr. and Kaman Music
Corporation, dated as of January 1, 2007, was filed as Exhibit 10.5
to
Form 8-K, Document No. 0000054381-07-000015, on February 26,
2007.
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by
reference
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Exhibit
10g (x)
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Amended
and Restated Change in Control Agreement between Candace A. Clark
and
Kaman Corporation, dated as of January 1, 2007, was filed as Exhibit
10.7
to Form 8-K, Document No. 0000054381-07-000015, on February 26,
2007.
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by
reference
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Exhibit
10g (xi)
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Amended
and Restated Change in Control Agreement between Ronald M. Galla
and Kaman
Corporation, dated as of January 1, 2007 was filed as Exhibit 10g(xi)
to
Form 10-K, Document No. 0000054381-07-000022 on March 1,
2007.
|
by
reference
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Exhibit
10g (xii)
|
Amended
and Restated Change in Control Agreement between Robert M. Garneau
and
Kaman Corporation, dated as of January 1, 2007, was filed as Exhibit
10.6
to Form 8-K, Document No. 0000054381-07-000015, on February 26,
2007.
|
by
reference
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Exhibit
10g (xiii)
|
Amended
and Restated Change in Control Agreement between T. Jack Cahill and
Kaman
Industrial Technologies Corporation, dated as of January 1, 2007,
was
filed as Exhibit 10.8 to Form 8-K, Document No. 0000054381-07-000015,
on
February 26, 2007.
|
by
reference
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Exhibit
10g (xv)
|
Amended
and Restated Change in Control Agreement between Robert H. Saunders,
Jr.
and Kaman Music Corporation, dated as of January 1, 2007, was filed
as
Exhibit 10.9 to Form 8-K, Document No. 0000054381-07-000015, on February
26, 2007.
|
by
reference
|
Exhibit
10g (xvi)
|
Executive
Employment Agreement between Russell H. Jones and Kaman Corporation,
dated
as of January 1, 2007 was filed as Exhibit 10g(xvi) to Form 10-K,
Document
No. 0000054381-07-000022 on March 1, 2007.
|
by
reference
|
Exhibit
10g (xvii)
|
Amended
and Restated Change in Control Agreement between Russell H. Jones
and
Kaman Corporation, dated as of January 1, 2007 was filed as Exhibit
10g(xvii) to Form 10-K, Document No. 0000054381-07-000022 on March
1,
2007
|
by
reference
|
Exhibit
10h (i)
|
Form
of Incentive Stock Option Agreement under the Kaman Corporation 2003
Stock
Incentive Plan was filed as Exhibit 10h(i) to Form 10-K, Document
No.
0000054381-07-000022 on March 1, 2007.
|
by
reference
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Exhibit
10h (ii)
|
Form
of Non-Statutory Stock Option Agreement under the Kaman Corporation
2003
Stock Incentive Plan was filed as Exhibit 10h(ii) to Form 10-K, Document
No. 0000054381-05-000024, on March 16, 2005.
|
by
reference
|
Exhibit
10h (iii)
|
Form
of Stock Appreciation Rights Agreement under the Kaman Corporation
2003
Stock Incentive Plan was filed as Exhibit 10h(iii) to Form 10-K,
Document
No. 0000054381-05-000024, on March 16, 2005.
|
by
reference
|
Exhibit
10h (iv)
|
Form
of Restricted Stock Agreement under the Kaman Corporation 2003 Stock
Incentive Plan was filed as Exhibit 10h(iv) to Form 10-K, Document
No.
0000054381-06-000036, on February 27, 2006.
|
by
reference
|
Exhibit
10h(v)
|
Form
of Long Term Performance Award Agreement (Under the Kaman Corporation
2003
Stock Incentive Plan) was filed as Exhibit 10.2 to Form 8-K filed
on
November 10, 2005, Document No. 0000054381-05-000090.
|
by
reference
|
Exhibit
10h(vi)
|
Deferred
Compensation Agreement between Kaman Corporation and John A. DiBiaggio
dated June 26, 1984 and First Amendment dated July 3, 1991 was filed
as
Exhibit 10h(vi) to Form 10-K, Document No. 0000054381-06-000036,
on
February 27, 2006.
|
by
reference
|
Exhibit
10h(vii)
|
Deferred
Compensation Agreement between Kaman Corporation and Eileen S. Kraus
dated
August 8, 1995 and First Amendment dated December 8, 2005 was filed
as
Exhibit 10h(vii) to Form 10-K, Document No. 0000054381-06-000036,
on
February 27, 2006.
|
by
reference
|
Exhibit
10h(viii)
|
Deferred
Compensation Agreement between Kaman Corporation and Robert Alvine
dated
December 16, 2006 was filed as Exhibit 10h(viii) to Form 10-K, Document
No. 0000054381-07-000022 on March 1, 2007.
|
by
reference
|
Exhibit
14
|
Kaman
Corporation Code of Business Conduct was filed as Exhibit 10.2 to
Form
8-K, Document No. 0000054381-06-000104, on November 13,
2006.
|
by
reference
|
Exhibit
21
|
List
of Subsidiaries was filed as Exhibit 21 to Form 10-K, Document No.
0000054381-07-000022 on March 1, 2007.
|
by
reference
|
Exhibit
23
|
Consent
of Independent Registered Public Accounting Firm
|
attached
|
Exhibit
24
|
Power
of attorney under which this report was signed on behalf of certain
directors was filed as Exhibit 24 to Form 10-K, Document No.
0000054381-07-000022 on March 1, 2007.
|
by
reference
|
Exhibit
31.1
|
Certification
of Chief Executive Officer Pursuant to Rule 13a-14 under the Securities
and Exchange Act of 1934.
|
attached
|
Exhibit
31.2
|
Certification
of Chief Financial Officer Pursuant to Rule 13a-14 under the Securities
and Exchange Act of 1934.
|
attached
|
Exhibit
32.1
|
Certification
of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
attached
|
Exhibit
32.2
|
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
attached
|