Kaman have just released their quarterly numbers, and as usual (well, for at least the last 4 quarters), they have been forced by accounting standards, or their CPAs, or both, to make a statement on their MD contract. Note the last sentence in bold
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Helicopter subcontract work involves commercial and military helicopter programs. Commercial programs include multi-year contracts for production of fuselages for the MD Helicopters, Inc. (MDHI) 500 and 600 series helicopters and composite rotor blades for the MD Explorer helicopter. Total orders from MDHI have run at significantly lower rates than originally anticipated due to lower than expected demand. The company's investment in these contracts consists principally of $4.2 million in billed receivables and $16.2 million in recoverable costs-not billed, including start-up costs and other program expenditures, as of June 30, 2004. To date in 2004, the company has received only nominal payments. The recoverability of unbilled costs will depend to a significant extent upon MDHI's future requirements through 2013, the year to which both contracts extend. The company stopped production on these contracts in the second quarter of 2003, but continues to work closely with the customer to resolve overall payment issues and establish conditions under which production could be resumed, including the timing thereof. Management believes that some progress has been made in this regard. Based upon MDHI's projected future requirements and inventory on hand at both MDHI and the company, resumption of production would not be expected to occur until late in 2004 at the earliest. Although the outcome is not certain, the company understands from MDHI management that it is close to executing its strategy to improve current financial and operational circumstances.
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