Kaman Corp. Issues Advisory on Third Quarter 2005 Results

Kaman Corp. announced today that based on current information it expects to report a loss in the range of $0.20 to $0.26 per share for the third quarter ending September 30, 2005 primarily as a result of approximately $5.0 million, or $0.22 per share, in additional expenses related to market-driven stock appreciation rights in the quarter that are predominately non tax- deductible; and approximately $9.0 to $11.0 million, or $0.25 to $0.31 per share of additional loss accruals associated with final completion of the Australian SH-2G(A) helicopter program.

Operating results for each of the segments have continued to reflect the relatively good conditions in the markets served by the company. The company said, however, that as a result of a more than 30 percent increase in the price of the company’s shares since the end of the second quarter of 2005, it has incurred additional expense related to stock appreciation rights. Due to the non-deductibility of most of this expense, the tax rate for 2005 is expected to be slightly over 65% for the year. Stock appreciation rights are driven by changes in the market value of Kaman shares and were granted to certain principal executives of the company from 1997 to 2003 as a long-term incentive to enhance the value of shareholders’ interests in the company. Since a majority of these rights have now been exercised and no new stock appreciation rights have been awarded since early 2003, the impact of future changes in the stock price will have a diminished effect on earnings in future periods: each dollar of increase in the price of Kaman shares from $23.00 will be expected to result in approximately $250 thousand of expense while the remaining rights are unexercised, and moderate decreases in the price of the shares would result in a proportionate decrease in expense.

The company said that the charge taken against the SH-2G(A) helicopter program for Australia is due to higher than anticipated costs associated with final completion of the program. While significant progress has been made by Northrop Grumman and CSC Australia on the development and testing of the software for the aircrafts’ Integrated Tactical Avionics System (ITAS), the time and effort required to complete that complex process has been greater than expected. The Australian Government has funded certain additions to the testing protocol that will also extend the schedule. Production of the 11 SH- 2G(A)s for the Royal Australian Navy is essentially complete and nine of the aircraft have been provisionally accepted by the Navy. Provisional acceptance of the tenth aircraft is expected shortly, and delivery of the first fully operational aircraft along with final acceptance by the customer is now targeted to occur in the first quarter of 2006.