Kaman Corp. (USA; NASDAQ: KAMN) reported results for second quarter 2008, ended June 27.

Sales in the quarter were $316.3 million, up 16.1% from 2007's $272.4 million. Last year's results include sales from Kaman Music, which was sold off to Fender in late 2007.

Net income dropped to $6 million from $9 million in 2007. Net was hit particularly hard by higher costs and operating troubles in the Aerospace group, triggering a $7.8 million charge against goodwill.

Kaman is a diversified industrial product manufacturer and distributor. Important operating markets are defined by reporting segments: Aerostructures, Precision Products (formerly Fuzing), Helicopters, and Specialty Bearings -- all under Aerospace; and Industrial Distribution. The military, aerospace and industrial target markets are primarily OEM, but include a large parallel aftermarket.

In early July 2008, Greg Steiner was appointed President of Kaman's Aerospace group, which includes Specialty Bearings. Mr. Steiner had been with GE Aerospace. John Kornegay continues to run the Specialty Bearings division, reporting to Mr. Steiner.

Kaman's proprietary self-lubricating bearings are currently in used in almost every military and commercial aircraft produced in Europe, North America, and South America. They are the leading products for applications requiring sophisticated engineering and specialization in the aircraft bearing market. They also find applications in marine, hydropower and industrial applications.

Proprietary bearings has long been part of the former Kamatics operation, primarily targeting bearings for aircraft and aerospace applications. It also owns German aircraft bearing manufacturer RWG Frankenjura-Industrie Flugwerklager GmbH, which it acquired in 2001. Bearing manufacturing takes place in Bloomfield, Connecticut and Dachsbach, Germany.

Specialty Bearings reported record second quarter sales of $36.7 million, up 16% from $31.5 million in 2007.

Bearings also continues to lead the company in profitability, with operating income of $13.9 million this past quarter, gaining 37% from $10.2 million in second quarter 2007.

Both are more than double the contribution made by any division other than Industrial Distribution, and with the troubles and distractions endemic across its other Aerospace operations, Kaman undoubtedly wishes it all ran as well as Bearings.

Kaman said the increase in bearing sales was the result of higher shipments to customers in the commercial jetliner market, regional jet market, military aircraft market and commercial helicopter market. Operating income was up primarily due to the higher sales volume leveraging against fixed costs, helped by continued internal efficiency gains. Kaman also increased Bearings' capex, but did not put it in detail.

Specialty Bearings sales are divided approximately 60% OEM, 40% aftermarket.

Looking forward, bearing sales should continue strong, although key customers Airbus and Boeing are reporting new aircraft orders have slowed. Kaman said its mix of commercial, military, OEM and replacement market sales have allowed it to continue the steady growth in bearings and experience stability in a changing economy. In the quarterly earnings call, Kaman CEO Neal Keating said the potential impact of parked aircraft or lower manufacturing on Bearings would be "fairly muted," no more than $3 million to $5 million for all of 2009.

Other than the prospect of a generalized aviation market slowdown, Kaman said the only other risk factor for the bearing business at this point is from foreign currency exchange rates.