The answer is yes - KDS can produce *.srec files.
From the top menu select
Project --> Properties
Then in the left-hand pane select "C/C++ Build" --> "Settings" then select the toolchains tab/button in the dialog box that appears. In the dialog box select/check "Create Flash Image"
Next, select the Tool Settings Tab - you'll see a folder tree appear within the dialog box. In that folder tree select "Cross ARM GNU Create Flash Image" --> "General"
Toward the upper right where it says Output file format (-O) Select from dropdown "Motorola S-record"
Now the *.srec file will get generated

