KAMN
#Sure, <UNK>, in fact that got a lot of attention since the Wall Street Journal article from last week.
We have a relatively low amount of content about $35,000 to $50,000 on the narrow body aircraft.
We certainly like it when they go to 40 aircraft a month but it certainly much less than we would have on for example and A350 which helped drive some of the increase in our self lube bearing revenues from 2015 to 2016.
Relatively small just because it is a smaller aircraft and still important to us based on the volumes that they are going to be shipping those aircraft or delivery those aircraft at in the coming years.
<UNK>, for the K-MAX there are a number of milestone payments.
Upon contract signing we receive a certain amount then as we hit key production milestones and certainly, delivery is one of those.
Certainly a very large percentage of the overall cash flow relating does come upon delivery as we would expect.
But we do receive meaningful in process payments or advance payments from our customers on the program.
Sure.
We currently anticipate roughly on the range of somewhere between three and four orders on K-MAX.
That is a key top line metric for us and certainly we would also have a cash flow benefit to that out what's really important is that to make sure our production costs stay in line.
And that we are able to get the aircraft off the line because we have six firm orders and one under deposit so we are in pretty good as it relates to 2017, <UNK>.
There is a little bit of ---+ (multiple speakers) execute those contracts but we feel very confident in our ability to get there.
<UNK>, actually nothing went wrong, things went a little bit better than anticipated and as you can see from our underlying performance in distribution they really made significant progress during the year.
The impact from the overall performance in particular in the fourth quarter was that they reached levels that resulted in higher costs.
It had disproportionate impact on the fourth quarter as we trued up for the full-year, but those costs we believe our now behind us ---+ the vast majority of those costs are behind us.
It's really been an investment to build a much stronger business which I think is indicative from the underlying gross margin improvement that we demonstrated year-to-year.
Thank you, <UNK>.
<UNK>ert, this is <UNK>.
We certainly in conjunction with this productivity initiative program have invested in infrastructure to support this program going forward because this is really important for us.
We anticipate that, as we mentioned the vast majority of expenses or incurred and 2016, there will be some ongoing cost that are reflective in built into the outlook that we have for 2017 or distribution.
I would say rougher magnitude about 75% to 80% of the cost are behind us as we move into 2017.
Sure.
It was actually very interesting.
For each of the months in the fourth quarter we were quite literally down about 4.8%, it was eerily similar performance month to month.
We certainly were anticipating a stronger result on what we've got missing the line of the range by just a bit.
In the first quarter we are also running about mid-single digits but I would point out that our expectations for the first quarter daily sales rate is below prior year and we expect that to improve as we move through to the balance of the year.
So we are actually tracking fairly close to our original expectations so far through the quarter.
<UNK>ert, it certainly an environment where higher defense spending is good for us.
Obviously for Lockheed, Martin and Sikorsky with the Black Hawk we benefit greatly from that.
As you know we are a key team mate with Bell on the AH-1Z for the Marine Corps so as they continue to increase requirements for the Marine Corps and also for foreign military sales that's certainly good for us.
We are seeing another 15% unit volume increase in JPF from 2016 to 2017 after 25% increase from 2015 to 2016.
That and if we keep the A-10 program going it is really going to be favorable for us, but as you said, we need to have the proposed budget turn into a real budget and then have it come through the appropriation process.
I think perhaps one of the most significant advantages for us would be that if we actually have a defense budget as opposed to operating under a continuing resolution that it would provide the opportunity for the US Marine Corps to initiate a new program of record for the unmanned K-MAX.
With a continuing resolution the only way that you are able to start a new program is under an urgent operational need which is how we were able to deliver two aircraft to the Marine Corps for use in Afghanistan that are now out in Yuma.
We see certainly advantages to higher defense spending and certainly other key advantages to action having a budget.
Sure.
<UNK>, we're certainly ---+ currently we're doing our alternatives.
Take a look at command in our spending in the capital markets.
We do have never of options available to us ranging from replacing it with another convertible note or perhaps even considering high-yield offering.
Even just replacing it with bank debt.
Those are our three broad options that we look at.
I don't think we're going to do anything exotic.
We are in a good place.
The capital market environment today is still remains very favorable and as you would anticipate looking at the general pricing levels even though Treasurys have sold off since the election overall corporate spreads have tightened in as much if not more.
We feel very encouraged by the conditions and we are working with our financial counterparties on addressing the upcoming maturity.
Certainly we will be keeping everyone informed as we move to that process and certainly as we announced what we are going to do with that upcoming maturity.
At this point I would say that's highly unlikely.
Certainly, we appreciate where the value of the currency but I think we would use that certainly more in line with a something more strategic than refinancing the existing debt on the balance sheet.
<UNK>, I will start with the second part of the question.
I cannot say that we have seen any change in the M&A environment due to the transition of administration or any of the proposed either tax or export import discussions that we have heard about and that we've all heard about.
But I would say that obviously we did two very important acquisitions late in 2015 including GRW, the largest acquisition we'd ever done.
We very consciously took a step back so that we could focus on the integration of those businesses and to assure that we had a focus on delivering to the acquisition plan we presented to our Board.
We just crossed over that year and we did meet those expectations so we are very interested and now very active again in the M&A area.
We have looked at a couple of Aerospace businesses that would fit very nicely with our engineered products focus.
They continue to be highly priced but we will continue to be active in pursue those that we think can make sense in where we can deliver value as we have with the last few.
That's really it.
Certainly tax law changes what impact those returned but until we know what it is really going to be we have not brought any of those new calculations into our existing analysis.
Thanks, <UNK>.
<UNK>, I don't think we can comment on that.
It will be ---+ when the contract is awarded there will be an ability for people to look at that and work backwards and understand what that pricing is, but at this point in time at this stage of negotiations we're really going to shy away in fact were not going to make any comment on pricing.
Thank you, <UNK>.
<UNK>, are you there.
We did have a bit of a change in the methodology.
We did have a bit of a catch up adjustment that we made on our backlog.
Certainly that's really been indicative of rough backlog levels that we've had.
We just ---+ in terms of how we recognize it we [didn't] make a change.
Those are firm, similar to how we view our Aerospace backlog, those are all firm POs.
<UNK>, we are ---+ I would call it towards the middle innings on that program but we do expect to see a year over year positive increase on the top line top line relating to Peru this year.
We do expect that to contribute positively to the top line.
2018 ---+ if I had to estimate of this is what is difficult to say based on how the program will completely unfold, <UNK>.
I would say it is probably on level with where we are going to see on a 2017, not materially different.
Sure, <UNK>.
Obviously what we would be looking at is two factors.
One, as we go past our current contractual commitments with Bell is that we will benefit hopefully from slightly higher pricing as well as being well down our learning curve so we will attack both sides of that, both price and the cost side.
We think we made some actually some good progress over the course of the last six to nine months.
Bell is very encouraged by the reception of the aircraft in the world market today in fact they was news this morning about Australia and competition in Australia including the AH-1Z.
We feel very good and we're doing everything that we can to support them and those efforts.
Thank you, <UNK>
Thank you for joining us for today's call.
We look forward to speaking with you again when we report our first-quarter results in May.
