SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 19971998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-1093
KAMAN CORPORATION
(Exact Name of Registrant)
Connecticut 06-0613548
(State of Incorporation) (I.R.S. Employer Identification No.)
1332 Blue Hills Avenue, Bloomfield, Connecticut 06002
(Address of principal executive offices)
Registrant's telephone number, including area code-(860) 243-7100
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
-Class A Common Stock, Par Value $1.00
-6% Convertible Subordinated Debentures Due 2012
-Series 2 Preferred Stock, Par Value $1.00
-Depositary Shares, each representing one quarter of a
share of Series 2 Preferred Stock
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ X ].
State the aggregate market value of the voting and non-voting
stock held by non-affiliates of the registrant. The aggregate
market value shall be computed by reference to the price at which
the stock was sold, or the average bid and asked prices of such
stock, as of a specified date within 60 days prior to the date of
filing.
$326,947,587.00$322,401,359.00 as of February 2, 1998.1, 1999.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock as of the latest practicable
date.
Class A Common 22,686,58822,971,946 shares
Class B Common 667,814 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Corporation's 19971998 Annual Report to Shareholders
are incorporated by reference and filed as Exhibit 13 to this
Report.
No other documents except those previously filed with
the Commission are incorporated herein by reference.
PART I
ITEM 1. BUSINESS
Kaman Corporation, incorporated in 1945, reports information
for itself and its subsidiaries (collectively, the "corporation"), serve customers through two
industry
in the following business segments: Aerospace, Industrial
Distribution, and Music Distribution. The corporation has
reorganized its business segment reporting in accordance with
new financial accounting standards applicable to the corporation
for calendar year 1998. Another segment identified as Scientific
Services was sold on December 30, 1997.
The Aerospace segment (formerly part of the Diversified
Technologies and Distribution. The
Diversified Technologies segmentsegment) serves commercial, foreign
military, and U.S. defense markets. The corporation retrofits
previously manufactured helicopters, manufactures new helicopters,
and manufactures specializedforeign
government markets with principal programs consisting of its SH-2G
maritime helicopter, K-MAX (Registered Trademark) "aerial truck"
helicopter, subcontract work involving airframe structures and the
manufacture of niche market products such as self-lubricating
bearings and components principallydriveline couplings for aircraft applications, airframe structures under subcontract
for commercial and military aircraft, and provides high technology
products and services.applications. The
Industrial Distribution segment serves commercial
markets. The corporation providesnearly every sector of U.S.
industry with industrial repair and OEM products as well as
support services. The Music Distribution segment serves
domestic and certain support services to customers in nearly every
sectorforeign markets with a wide variety of U.S. industry;music
instruments and distributesaccessories and manufactures guitars and other
music products for professional and amateur musicians. The
Scientific Services segment consisted of Kaman Sciences
Corporation, the corporation's defense information technology
business and professional musicians.
DIVERSIFIED TECHNOLOGIES
Thewas formerly part of the Diversified Technologies
segment.
In December of 1998, the Board of Directors of the corporation
established a committee of its members to conduct a search for a
new chief executive officer, at the recommendation of Charles H.
Kaman, the founder, chairman, chief executive officer and president
of the corporation. The search is in progress with the goal that
the corporation continue to be led in the cultural tradition that
has sustained it for more than 50 years. In August of 1998, Mr.
Kaman suffered a mild stroke following successful knee replacement
surgery. He has made excellent progress and resumed his role as
Chairman of the Board in January, 1999. Until his return to work,
the board of directors has designated Robert M. Garneau, the
corporation's executive vice president and chief financial officer,
to have the duties and responsibilities of the corporation's chief
executive officer. Mr. Garneau has held various corporate
financial officer positions since joining the corporation in 1981.
AEROSPACE
The Aerospace segment includesconsists of several wholly-owned subsidiaries:operating
subsidiaries of Kaman Diversified Technologies
Corporation,Aerospace Group, Inc., including Kaman
Aerospace Corporation, Kaman Aerospace International Corporation,
KamaticsK-MAX Corporation, K-MAXKamatics Corporation, Kaman Electromagnetics
Corporation and Kaman Instrumentation Corporation.
For 1997,Page 1
The SH-2G helicopter currently represents the segment also included Kaman Sciences
Corporation, which was sold on December 30, 1997 to ITT Industries,
Inc.
Currently the most significant portion of this segmentAerospace
segment's largest program and generally involves aircraft manufacturing operations. This includes the retrofit of the
corporation's SH-2F helicopters, previously manufactured Kaman SH-2F Navy helicopters
for foreign governments. There are currently three such programs
in process. The first involves a Foreign Military Sale (FMS)
contract valued at approximately $150 million for the
retrofitU.S. Navy (and currently in desert storage), to the "G"
configuration. The SH-2G aircraft is well suited to the smaller,
more powerful ships that several foreign navies are utilizing and
the corporation is currently performing work for the Governments of
Egypt, Australia, and New Zealand.
During 1998, the corporation completed delivery of ten (10)
previously manufactured Kaman SH-2FSH-2G(E) helicopters into the
upgraded SH-2G configuration forto the Republic of Egypt.Egypt under that country's
foreign military sale agreement with the U.S. Navy. This program
has a value of about $150 million. The firstcorporation is now
conducting pilot training and providing on site support services.
Under its commercial sale contract with the Commonwealth of
Australia, the corporation will provide eleven (11) retrofit
SH-2G(A) aircraft delivery under thisand support, including a support services
facility, for the Royal Australian Navy. This contract was accomplishedentered
into in October
1997. Two additional aircraft were delivered by1997 and has an anticipated value of nearly $600 million.
The Australian SH-2G will incorporate an integrated weapons system,
advanced sensors, a state-of-the-art cockpit, long range Penguin
missiles, and composite rotor blades. Under its commercial sale
contract with the endGovernment of 1997;
the remaining seven (7) aircraft are scheduled to be delivered in
1998. In June 1997,New Zealand, the corporation signed a commercial contract
valued at approximately $185 million, inclusive ofwill
provide four (4) SH-2G(NZ) aircraft and related logistical support, elements, to supply four (4) SH-2G
helicopters to thefor New Zealand
government.defense forces. These aircraft will be manufactured with new
airframes and remanufactured dynamic components from the stored
SH-2F aircraft. Deliveries are expectedThis contract was entered into in 1997 and has an
anticipated value of nearly $170 million. During 1998, work
proceeded on both the Australia and New Zealand programs with
deliveries scheduled to begin in 2000. Also in June 1997,the 2000 - 2001 time frame.
During 1998, the corporation signed a
contract valued at approximately $600 millioncontinued to supply eleven (11)
retrofit SH-2G helicopters topursue other potential
SH-2 business (including possible further orders from current
customers) as various countries develop their naval helicopter
requirements. This market is highly competitive and naturally
influenced by global economic and political conditions. Management
believes that conditions currently prevailing in some areas, most
notably economic difficulties in Asia, have slowed the Australian government. The
aircraft are scheduledprospects
for delivery inpotential sales. While the 2001-2002 time frame.
The contract includes an agreement withcorporation no longer manufactures
the Royal AustralianSH-2 for the United States Navy,
to provide ongoing in-country support services for an initial
period of ten years. The helicopters will incorporate an
Integrated Tactical Avionics System (ITAS) "glass cockpit," new
Page 1
sensors and advanced systems. There are currently fourteen (14)
SH-2G aircraft in the U.S. Naval Reserves. TheReserves has
twelve (12) SH-2G aircraft active in its fleet. It is anticipated
that at some point, such aircraft will be retired from this type of
service. In the meantime, the corporation expects to continue
providing logistics and spare parts support for thesethe aircraft for a period of time, even though this aircraft is no
longer manufactured forin the
U.S. government.Reserves.
The corporation continues to pursue potential opportunities for this class of
maritime helicopter in Malaysia, Norway, the Philippines, Taiwan,
Thailand and elsewhere. Each of these potential programs is
expected to involve considerable competition, and political and
financial conditions in some areas may slow the prospects for
potential sales. Management currently believes that there are
sufficient SH-2F aircraft available in storage to meet existing and
certain potential program requirements; at some point in the
future, however, it is possible that there may be a need to
manufacture totally new SH-2G aircraft. Management is beginning to
explore the factors that would be involved in reopening the
production line including recertifying certain dynamic components
of the aircraft.
In addition to its SH-2G programs, the corporationalso produces the K-MAX (Registered Trademark)
medium to heavy lift "aerial truck" helicopter an FAA
type certificated medium-to-heavy lift helicopter incorporatingwhich has a variety
of potential applications, including logging, oil and gas
exploration, power line construction, and fire fighting.
The K-MAX, which received its Federal Aviation Administration
certification in August, 1994, is based on the corporation's
intermeshing rotor technology developed bywith servo-flap control. Constructed
with fewer components and less airframe weight, the corporation. K-MAX is designedhas
increased payload capacity and lower manpower, maintenance and
Page 2
spare parts inventory requirements, making it a generally cost
effective tool for efficient, cost-effectiveindustries requiring medium to heavy repetitive
liftinglift capabilities. The corporation has been conservative in its
production of loads of upthis aircraft (generally, six (6) aircraft per year)
since its introduction because it has been anticipated that it
would take some time to 6,000 pounds on an external hook. Initial customers
havedevelop markets for a new aircraft and thus
achieve sales and profitability. There are currently fifteen (15)
aircraft in operations located in six (6) countries. The principal
application for the K-MAX to date has been in marketsthe commercial
logging industry, a market that demonstratehas weakened significantly in the
aircraft in a range of
applications, such as logging and forest fire fighting,
construction of utility lines and ski lifts in remote and
mountainous terrain, and operations in extremes of heat and high
altitudes which tend to limit lifting capacity,past two years, particularly in the U.S. Pacific Northwest and
Canada, due in part to the effect of economic conditions in Asia
upon export sales. These circumstances appear to be affecting
certain current customers as well as potential sales of the K-MAX
and production has been further adjusted to address these
circumstances. The corporation has been working to further develop
other helicopter types. The company is following conservative
policy in introducing this new aircraft while it evaluates
potential new markets including a ship resupply role called
Vertical Replenishment (VERTREP)uses for the K-MAX. The K-MAX also has a potential
non-combat role for the military in the task of vertical
replenishment ("VERTREP"). As the federal government has explored
the concept of outsourcing this role to commercial providers, the
U.S. Navy Military Sealift Command and various infrastructure construction uses around the
world. Thehas awarded K-MAX program istwo separate
demonstration projects using charter/lease arrangements. Although
there were no developments in its fourth year of commercial
operations with aircraft operating in six countries and certified
in the United States, Canada, Germany, Switzerland, and Japan. It
is anticipatedthis arena during 1998, it appears
that the effects offederal government is continuing to consider the
current financial crisis in
Asia could delay the expansion of production for a time.commercial outsourcing alternative.
The corporation also performs subcontract work for certain
airframe manufacturing programs and manufactures airframe structures and
components on subcontract,various niche
market products, including self-lubricating bearings for use
principally for Boeing on programs
including the 767, 777, and McDonnell Douglas C-17. The Kamatics
subsidiary makes proprietary self-lubricated bearings that are used
on nearly every commercial and militaryin aircraft produced in the
Western world for flight controls, turbine engines and
landing gear, systems. Kamatics also makesas well as driveline couplings for helicoptersuse principally in
helicopters. The corporation provides aircraft structures and
self-lubricated bearingscomponents for hydropower
installations, shipsmost commercial jetliners made today, including all
Boeing 700 series aircraft and submarines.
Subsidiariesmost commuter and executive jets.
The corporation also supplies parts for a variety of U.S. military
aircraft, including the C-17 transport, F-22 fighter, E2-C airborne
early warning aircraft and the Comanche helicopter. These
operations have benefitted in the past few years from growth in the
aviation industry, a trend which appears to be leveling off.
Boeing, for example, is an important and long standing customer for
the corporation's airframe subcontract work and certain niche
market products and, while it is believed that the corporation is
well positioned to maintain its level of business with this
segmentcustomer, pricing pressure is expected to intensify.
Among its smaller programs, the corporation also make RF transmissionproduces
computer memory systems for a variety of military aircraft,
including the F-16 fighter and delay lines involved in aircraft stealth technologythe C-130J transport; fuzing and
other
applications; telecommunication products;safety devices for missiles, including the Tomahawk and AMRAAM; and
photonic and optical systems such as the Magic Lantern (Registered
Trademark) Page 2
a laser-based mine detection system; safing and fuzing systems for
use in missiles; ruggedized tape and disk memory systems used
primarily in aircraft; composite "flyer bows" for use in the wire
making industry and various motors, generators, alternators,
launchers and electric drive systems using electromagnetic
technology.system.
Page 3
INDUSTRIAL DISTRIBUTION
The corporation's former Kaman Sciences subsidiary provided
advanced technology services to various agenciesIndustrial Distribution segment (formerly part of the
U.S.
Government. Management's decision to sell Kaman Sciences was based
upon its assessmentDistribution segment) consists of trends in the defense sciences industry,
including increasing consolidation and a tendency for defense
sciences contracts to become larger in size and longer in duration
in relation to the corporation's determination to focus capital
investment in its aerospace and industrial distribution businesses.
DISTRIBUTION
The Distribution segment includes several wholly owned
subsidiaries, including principally Kaman Industrial Technologies
Corporation and Kaman Music Corporation. A small additionalits Canadian subsidiary, AirKaman of Jacksonville, Inc. was sold in February,
1997. Kaman Industrial
Technologies, (KIT) is the larger of the
corporation's distribution subsidiaries, currently representing
more than three quarters of segment revenues. KIT is a national
distributor of industrial products operating through approximately
195Ltd.
Operating from 190 locations in 38thirty-six (36) states and
British Columbia, Canada. The
corporation serves customers in nearly every segmentthis segment's business is one of heavythe nation's
leading distributors of industrial products, including bearings,
power transmission, electrical, motion control, material-handling
components and light industry with the productsother equipment and services needed to maintain
various manufacturing processes. Its customers constitute
virtually every segment of U.S. industry, including agriculture,
automotive, bottling, chemical processing, construction, consumer
goods, entertainment, food processing, general manufacturing, heavy
equipment, logging, materials conveyance, mining, oil refining,
paper, petrochemical, pharmaceutical, power generation,
semiconductors, steel, and transportation. The business is therefore influenced by
national economic trends such as U.S. industrial production levels.corporation's
computer-linked distribution centers are strategically located to
position the segment to more efficiently serve its customers.
During 1998, an additional distribution center was opened in
Louisville, KY. The products that the corporation purchases for
distribution are for the products it sellsmost part derived from manufacturers,
including various types of bearing products such as ball, roller,
tapered, linear motion, sleeve and mounted units; mechanical power
transmission products such as ball screws, belts, brakes, chain,
clutches, couplings, gears, sheaves, speed reducers, sprockets,
take-up units, tension devices, torque limiters, and universal
joints; electrical power transmission products such as motors and
variable speed drives; fluid power products such as air preparation
units, air motors, ball valves, boosters, cylinders, filters,
gauges, heat exchangers, hose, fittings, hydraulic power
units, pumps and motors, couplers, rotary actuators; and a wide
range of accessory products such as lubricants and seals. Most of
these products use common and traditional
technologies, howeveralthough the corporation is increasingly selling
products with athe higher technological content that are required to support
automated production processes. The corporation continues to develop certainalso offers
additional support service capabilities, including asset
management, value-added engineering and systems/fabrication
capabilities, just-in-time delivery, cost savings analysis (called
Documented Savings (trademark)), inventory management services, and
a direct link between its state-of-the-art computer system and
customers' and suppliers' purchasing departments in order to
meetstreamline order processing and improve transaction time. Given
the maintenance needsspectrum of its customers' manufacturing operations. These services include
electrical panel and systems fabrication centers capabilities, and
similar capabilities for hydraulic and pneumatic control panels,
linear positioning systems, and material handling systems. Asindustry that the corporation has entered new market areas, it has investedserves, its business
tends to be influenced by industrial production levels. During
1998, export demand in new
Page 3
product inventorycertain industries such as lumber,
chemicals, paper, and semiconductors was adversely affected by
economic difficulties in some instances it has established
inventoryAsia, which resulted in increased price
pressures on consignmentthis segment. In this environment, the corporation is
working to focus sales efforts in customer locations. The corporation
maintains a management information system, consisting of an on-line
computer network linking all of its mainland U.S. and Canadian
industrial distribution facilities, which enhances its ability to
provide more efficient nationwide servicethe markets that offer the best
opportunities and to improve inventory
management; and a Documented Savings (Registered Trademark) program
that looks at all elements of procurement cost and reports on
savings and improvements generated by the corporation's products
and services. In addition, the corporation has undertakencarry out initiatives to addressenhance operating
efficiencies, including consolidation and centralization of various
organizational support functions.
MUSIC DISTRIBUTION
The Music Distribution segment (formerly part of the
needsDistribution segment) consists of certain national account
customers that desire to consolidate their vendor base by entering
into "partnering" relationships to broaden geographical coverage.
For larger customers,Kaman Music Corporation, KMI
Europe Inc., and its Canadian subsidiary, B&J Music Ltd.
This segment is one of the corporation has also been given the
opportunity to provide an "integrated supply" function involving
managementlargest distributors of parts inventoriesmusic
instruments and associated personnel as well as
selection of suppliers for the customers' facility. In 1997 the
corporation continued to open new branchesaccessories in the South and Midwest
regions of the United States, to service new customers and develop
additional business. Also in 1997 the corporation acquired the
business of Alliance Industrial Supply Company, a small industrial
distribution company with five (5) locations in Texas.
Kaman Music Corporation distributes music instruments and
accessory productsproviding product
principally to independent retailers in the United States and Canada andas well as
to certain international distributors. Products include acoustic, acoustic-electric and
electricAmong its offerings are
Page 4
more than 13,000 items, including guitars, and basses, music strings for fretted instruments,violins, horns, drums
and other percussion products, brass instruments, electronic tuners and metronomes and
musicalmusic instrument accessories. The
corporation manufactures and distributesThis segment also provides a rangevariety
of amateur to
professional quality guitars under the corporation's various brand
namesproprietary products, including Ovation (Registered Trademark)
and Hamer (Registered Trademark). Actions were taken in 1997 guitars. During 1998, this
segment continued its initiatives to streamlineimprove operating efficiency,
including consolidation of warehouse facilities and focus the corporation's music business. These
actions include the saleintroduction of
the corporation's Trace Elliot Limited
amplifier manufacturinga new warehouse facility in Great Britain to a Trace Elliot
management group; the merger and consolidation of Ovation and Hamer
into a single production facility; the elimination of certain
distributed product lines; and the closure andNashville, Tennessee, as well as
consolidation of certain distribution facilities.organizational support functions.
Operations of Kaman Music
Corporation are currently conducted through six (6)seven (7) distribution
centers in the United States and Canada, and an international sales
division based in the United States, and one (1)a manufacturing facility, both of which are located in
the United States.
FINANCIAL INFORMATION
Information concerning each segment's performance for the
last three fiscal years appears in the corporation's 19971998 Annual
Report to Shareholders and is included in Exhibit 13 to this Form
10-K, and is incorporated by reference.
Page 4
PRINCIPAL PRODUCTS AND SERVICES
Following is information for the three preceding fiscal
years concerning the percentage contribution of the corporation's
classes of products and services to the corporation's
consolidated net sales:
Years Ended December 31
1995 1996 1997 1998
------ ------ ------
Diversified Technologies:
Advanced Technology Products
and Systems 5.3% 5.5% 7.4%
Advanced TechnologyAerospace 23.7% 27.6% 38.1%
Scientific Services 12.7 13.2 13.9(1)
Aircraft Manufacturing 18.0 18.3 20.2
---- ---- ----
Segment Total 36.0 37.0 41.5
Distribution:(1) 13.2% 13.9% --
Industrial Products 48.0 47.2 45.9Distribution 47.3% 45.9% 50.1%
Music Products and Other Services 16.0 15.8 12.6
---- ---- ----
Segment Total 64.0 63.0 58.5Distribution 15.8% 12.6% 11.8%
----- ----- -----
Total 100.0% 100.0% 100.0%
===== ===== =====
(1) Includes revenues fromThe Scientific Services segment, which consisted of Kaman
Sciences Corporation, which was sold on December 30, 1997.
RESEARCH AND DEVELOPMENT EXPENDITURES
Government sponsored research expenditures by the
Diversified Technologies segmentAerospace and Scientific Services segments were $13.2 million in
1998, $75.7 million in 1997, and $68.8 million in 1996, and $70.2 million in 1995.1996. Independent
research and development expenditures were $8.5 million in 1998,
$6.9 million in 1997, and $8.0 million in 1996. The Scientific
Services segment which conducted significant government sponsored
research in 1996 and $13.7 million in 1995.1997 was sold on December 30, 1997.
Page 5
BACKLOG
Program backlog of the Diversified Technologies segmentAerospace and Scientific Services
segments was approximately $757.1 million at December 31, 1998,
$935.2 million at December 31, 1997, and $267 million at December
31, 1996, and $218.7 million at December 31, 1995.1996. The corporation anticipates that approximately 39.5%44% of
its backlog at the end of 19971998 will be performed in 1998.1999.
Approximately 9.8%7.7% of the backlog at the end of 19971998 is related to
government contracts or subcontracts which are included in backlog
to the extent that funding has been appropriated by Congress and
allocated to the particular contract by the relevant procurement
agency. Certain of these government contracts, less than 1% of the
backlog, have been funded but not signed.
Page 5
GOVERNMENT CONTRACTS
During 1997,1998, approximately 44.6%81.7% of the work performed by
the corporation directly or indirectly for the United States
government was performed on a fixed-price basis and the balance
was performed on a cost-reimbursement basis. Under a fixed-price
contract, the price paid to the contractor is negotiated at the
outset of the contract and is not generally subject to adjustment
to reflect the actual costs incurred by the contractor in the
performance of the contract. Cost reimbursement contracts
provide for the reimbursement of allowable costs and an
additional negotiated fee.
The corporation's United States government contracts and
subcontracts contain the usual required provisions permitting
termination at any time for the convenience of the government
with payment for work completed and associated profit at the time
of termination.
COMPETITION
The Diversified TechnologiesAerospace segment operates in a highly competitive
environment with many other organizations which are
substantially larger and have greater financial and other
resources. The corporation competes with other helicopter
manufacturers on the basis of price, performance, and mission
capabilities; and also on the basis of its experience as a
manufacturer of helicopters, the quality of its products and
services, and the availability of facilities, equipment and
personnel to perform contracts. Consolidation in the industry, the
change in defense program emphasis and constraints in the defense
budgets of various countries have increased the level of
international competition for helicopter programs. The corporation
is also affected by the political and economic circumstances of its
potential foreign customers, such as the current economic crisis in
certain Asian markets. The corporation's FAA certificatedcertified K-MAX
helicopters compete with military surplus helicopters and other
helicopters used for lifting, as well as with alternative methods
Page 6
of meeting lifting requirements. The corporation competes for its
subcontract aircraft structure, specialty aircraft component, and
advanced technology products business on the basis of price and
quality; product endurance and special performance characteristics;
proprietary knowledge; and the reputation of the corporation.
Industrial distribution operations are subject to a high
degree of competition from several other national distributors, two
of which are substantially larger than the corporation; and from
many regional and local firms. Competitive forces are intensifying
as the major competitors grow through consolidation.
Music distribution operations compete with domestic and
foreign distributors. Certain musical instrument products
manufactured by the corporation are subject to competition from
U.S. and foreign Page 6
manufacturers as well. The corporation competes
in these markets on the basis of service, price, performance, and
inventory variety and availability. The corporation also competes
on the basis of quality and market recognition of its music
products and has established certain trademarks and trade names
under which certain of its music products are produced, as well as
under private label manufacturing in a number of foreign countries.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking information relating to
the corporation's business and prospects, including the SH-2G and
K-MAX helicopter programs, and specialty self-lubricating bearings
and couplings, as well asthe industrial and music distribution businesses,
and other matters that involve a number of uncertainties that may
cause actual results to differ materially from expectations. Those
uncertainties include, but are not limited to: 1) the successful
conclusion of contract negotiations with government authorities,
including foreign governments; 2) political developments in
countries where the corporation intends to do business; 3) standard
government contract provisions permitting renegotiation of terms
and termination for the convenience of the government; 4) economic
and competitive conditions in markets served by the corporation
including industry consolidation in particularthe United States and global
economic conditions (most notably in Southeast Asia;Asia); 5) the degree of
acceptance of new products in the marketplace; 6) U.S. industrial
production levels; 7) achievement of Year 2000 compliance by the
corporation, its customers, suppliers and service providers,
including various federal, state and foreign governments and
agencies thereof; 8) currency exchange rates, taxes, laws and
regulations, inflation rates, general business conditions and other
factors. Any forward-looking information should be considered with
these factors in mind.
Page 7
EMPLOYEES
As of December 31, 1997,1998, the Corporation employed 4,3184,276
individuals throughout its industry segments and corporate
headquarters as follows:
Diversified Technologies 2,064(1)Aerospace 2,101
Industrial Distribution 2,1731,691
Music Distribution 405
Corporate Headquarters 8179
-----
4,318
(1) Excludes 1,100 employees employed by the Corporation's Kaman
Sciences Corporation subsidiary which was sold on December 30,
1997.
4,276
Page 7
PATENTS AND TRADEMARKS
The corporation holds patents reflecting scientific and
technical accomplishments in a wide range of areas covering both
basic production of certain products, including aerospace
products and musical instruments, as well as highly specialized
devices and advanced technology products in defense related
and commercial fields.
Although the corporation's patents enhance its competitive
position, management believes that none of such patents or patent
applications is singularly or as a group essential to its
business as a whole. The corporation holds or has applied for
U.S. and foreign patents with expiration dates that range through
the year 2012.2019.
These patents are allocated among the corporation's industry
segments as follows:
U.S. PATENTS FOREIGN PATENTS
Segment Issued Pending Issued Pending
Diversified Technologies 78Aerospace 81 28 57 15
Industrial Distribution 0 0 0 0
Music Distribution 15 3 8 4
62 17
Distribution-- -- -- --
96 31 65 19 3 9 2
Trademarks of Kaman Corporation include Adamas, Applause,
Hamer, KAflex, KAron, K-MAX, Magic Lantern, and Ovation. In all,
the corporation maintains 191213 U.S. and foreign trademarks with 1814
applications pending, most of which relate to music products in
the Music Distribution segment.
Page 8
COMPLIANCE WITH ENVIRONMENTAL PROTECTION LAWS
In the opinion of management, based on the corporation's
knowledge and analysis of relevant facts and circumstances,
compliance with any environmental protection laws is not likely to
have a material adverse effect upon the capital expenditures,
earnings or competitive position of the corporation or any of its
subsidiaries.
The corporation is subject to the usual reviews, inspections
and inspectionsenforcement actions by various federal and state environmental
and enforcement agencies and has entered into agreements and
consent decrees at various times in connection with such reviews.
Also on occasion the corporation has been identified as a
potentially responsible party ("PRP") by the U.S. Environmental
Protection Agency ("EPA") in connection with the EPA's investigation
of certain third party facilities. In each instance, the
corporation has provided appropriate responses to all requests for
information that it has received, and the matters have been
resolved either through de minimis settlements, consent agreements,
or through no further action being taken by the EPA or the
applicable state agency with respect to the corporation. With
respect to any such matters which may currently be pending, the
corporation has been able to determine, based on its current
knowledge, that resolution of such matters is not likely to have a
material adverse effect on the future financial condition of the
corporation.
Page 8
In arriving at this conclusion, the corporation has taken
into consideration site-specific information available regarding
total costs of any work to be performed, and the extent of work
previously performed. Where the corporation has been identified
as a PRP at a particular site, the corporation, using information
available to it, also has reviewed and considered a number of
other factors, including: (i) the financial resources of other
PRPs involved in each site, and their proportionate share of the
total volume of waste at the site; (ii) the existence of
insurance, if any, and the financial viability of the insurers;
and (iii) the success others have had in receiving reimbursement
for similar costs under similar policies issued during the
periods applicable to each site.
FOREIGN SALES
ElevenTwenty-Two and two tenthsThree Tenths percent (11.2%(22.3%) of the sales of
the corporation are made forin 1998 were to customers located outside the
United States. Certain retrofit work on SH-2 series helicopters for
delivery to the Republic of Egypt is presently being performed by
the corporation under an agreement between it and the U.S. Navy
and, because such work is a "foreign military sale" with the U.S.
Government, it is not included in the calculation of foreign
sales. In 1997,1998, the corporation continued its efforts to
develop international markets for its products and foreign sales
(including sales for export); and during 19971998 the corporation
entered intocontinued to perform work under contracts with the Commonwealth of
Australia and the Government of New Zealand for the supply of
retrofit SH-2G helicopters with deliveries under both programs
expected to begin in the 2000-2001 time frame. Additional
information required by this item appears in the corporation's 19971998
Page 9
Annual Report to Shareholders, and is included in Exhibit 13 to
this Form 10-K, and is incorporated herein by reference.
YEAR 2000 ("Y2K") COMPLIANCE
During 1998, the corporation utilized the services of KPMG LLP
as a consultant to assist in formalizing the corporation's Y2K
compliance program and to provide periodic assessment of the
corporation's progress. Each operating subsidiary designated a
program manager responsible for coordinating its activities and
developed a plan providing for assessment, problem solving and
compliance testing of Y2K related matters. The initial planning
and assessment phases were completed in 1998, and testing to
confirm compliance was also conducted. To date, compliance time
tables are being met with a target date to achieve overall Y2K
compliance, including compliance testing, as of June 30, 1999. In
addition, the corporation and each operating subsidiary are
currently working with suppliers, customers and service providers
to gauge their Y2K readiness and monitor their progress toward
compliance. An oversight committee reporting to the executive vice
president and chief financial officer, has been established at
corporate headquarters to monitor the progress of each subsidiary's
compliance work. Senior management provides progress reports to
the corporation's board of directors and audit committee on a
regular basis. The corporation separately identifies costs of Y2K
efforts as an internal management tool and based upon information
known to it at this time, management does not anticipate that the
costs of addressing Y2K issues will be material to the
corporation's financial position, results of operations, or cash
flows in future periods. Although the corporation does not
anticipate incurring significant costs to modify its computer
systems, there can be no assurance that significant costs will not
be incurred. Additional information concerning this item appears
in the corporation's 1998 Annual Report to Shareholders and is
included in Exhibit 13 to the form 10-K, and is incorporated herein
by reference.
ITEM 2. PROPERTIES
The corporation occupies approximately 3.343.39 million square
feet of space throughout the United States and Canada, distributed
as follows:
SEGMENT SQUARE FEET
(in thousands)thousands as of 12/31/98)
Diversified Technologies 1,514(1)Aerospace 1,553
Industrial Distribution 1,7861,396
Music Distribution 399
Corporate Headquarters 40
(1) Excludes 540 thousand square feet of space attributable to the
corporation's Kaman Sciences Corporation subsidiary which
was sold on December 30, 1997.
-----
Total 3,388
Diversified TechnologiesPage 10
The Aerospace segment's principal facilities are located in
Arizona, Connecticut, and Massachusetts; other facilities including
offices and smaller manufacturing and assembly operations are
located in several other states, and the corporation also has an
Page 9
office in Turner, Australia. These facilities are used for
manufacturing, research and development, engineering and office
purposes. The U.S. Government owns 154 thousand square feet of
the space occupied by Kaman Aerospace Corporation in Bloomfield,
Connecticut in accordance with a facility contract.Facilities Lease Agreement with a
five (5) year term expiring in March 2003.
The Industrial Distribution segment's facilities are located
throughout the United States with principal facilities located in
California, Connecticut, Kentucky, New York, Tennessee, TexasKentucky and Utah with
smaller facilities located in several other states.Utah. Additional
Industrial Distribution segment facilities are located in British
Columbia,
and Ontario, Canada. These facilities consist principally of
regional distribution centers, service centers and office space
with a portion used for fabrication and assembly work.
The Music Distribution segment's facilities in the United
States are located in Connecticut, California, Georgia, Tennessee
and Texas. An additional Music Distribution facility is located in
Ontario, Canada. These facilities consist principally of regional
distribution centers, source centers and office space. Also
included are facilities used for manufacturing musical instruments.
The corporation occupies a 40 thousand square foot
Corporate headquarters building in Bloomfield, Connecticut.
The corporation's facilities are suitable and adequate to
serve its purposes and substantially all of such properties
are currently fully utilized. Many of the properties, especially
within the Industrial Distribution segment, are leased.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the
corporation or any of its subsidiaries is a party or to which any
of their property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security
holders during the fourth quarter of 1997.1998.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
CAPITAL STOCK AND PAID-IN CAPITAL
Information required by this item appears in the
corporation's 19971998 Annual Report to Shareholders and is included
in Exhibit 13 to this Form 10-K, and is incorporated herein by
reference.
Page 11
INVESTOR SERVICES PROGRAM
Shareholders of Kaman Class A common stock are eligible to
participate in the ChaseMellon Investor Services Program
administered by Mellon Bank, N.A. which offers a variety of
services including dividend reinvestment. A booklet describing the
program may be obtained by writing to the program's Administrator,
Mellon Bank, N.A., P. O. Box 3338, South Hackensack, NJ 07606-1938.
Page 10
QUARTERLY CLASS A COMMON STOCK INFORMATION
- -----------------------------------------------------------------
High Low Close Dividend
- -----------------------------------------------------------------
High Low Close Dividend
1998
First $18.38 $15.75 $18.38 $.11
Second 20.38 17.63 19.03 .11
Third 19.38 13.00 17.13 .11
Fourth 17.13 14.50 16.06 .11
- -----------------------------------------------------------------
1997
First $14.75 $12.25 $ 13.50 $.11
Second 16.00 12.00 15.38 .11
Third 18.88 14.50 18.38 .11
Fourth 20.38 15.25 16.38 .11
- -----------------------------------------------------------------
1996
First $11.13 $10.00 $10.88 $.11
Second 13.38 10.00 10.13 .11
Third 11.25 9.38 10.63 .11
Fourth 13.00 10.00 13.00 .11
- -----------------------------------------------------------------
QUARTERLY DEBENTURE INFORMATION (6% Conv. Subordinated)
- -----------------------------------------------------------------
High Low Close
- -----------------------------------------------------------------
1998
First $101.00 $96.00 $100.00
Second 100.50 98.00 98.00
Third 100.63 96.00 96.50
Fourth 104.00 96.50 97.50
- -----------------------------------------------------------------
1997
First $92.00$ 92.00 $84.00 $92.00
Second 96.00 87.00 94.00
Third 100.00 94.00 96.00
Fourth 101.00 96.00 96.50
- -----------------------------------------------------------------
1996
First $87.00 $82.00 $84.00
Second 86.00 81.00 82.00
Third 85.13 80.00 82.00
Fourth 87.50 82.00 87.00
- -----------------------------------------------------------------
QUARTERLY DEPOSITARY SHARES INFORMATION
- -----------------------------------------------------------------
High Low Close Dividend
- -----------------------------------------------------------------
1997
First $57.68 $53.50 $56.00 $.8125
Second 59.13 54.94 59.13 .8125
Third 73.75 62.50 73.75 .8125
Fourth 80.25 68.00 68.50 .8125
- -----------------------------------------------------------------
1996
First $50.75 $47.00 $48.63 $.8125
Second 56.50 49.00 52.00 .8125
Third 51.50 47.50 48.50 .8125
Fourth 54.00 48.50 53.00 .8125
- -----------------------------------------------------------------
NASDAQ market quotations reflect inter-dealer prices,
without retail mark-up, mark-down, or commission and may not
necessarily represent actual transactions.
Page 1112
ANNUAL MEETING
The Annual Meeting of Shareholders of the corporation's
Class A and Class B common stockCorporation will be
held on Tuesday, April 14,
199813, 1999 at 11:00 a.m. in the offices of the
corporation, 1332 Blue Hills Avenue, Bloomfield, Connecticut 06002.
Holders of all classes of Kaman securities are invited to attend,
however matters on the agenda for the meeting will require the vote
of Class B shareholders only.
ITEM 6. SELECTED FINANCIAL DATA
Information required by this item appears in the
corporation's 19971998 Annual Report to Shareholders and is included
in Exhibit 13 to this Form 10-K, and is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Information required by this item appears in the
corporation's 19971998 Annual Report to Shareholders and is included
in Exhibit 13 to this Form 10-K, and is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item appears in the
corporation's 19971998 Annual Report to Shareholders and is included
in Exhibit 13 to this Form 10-K, and is incorporated herein by
reference. Additional financial information is contained in the
Financial Data Schedule included as Exhibit 27 to this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Following is information concerning each Director and
Executive Officer of Kaman Corporation including name, age,
position with the corporation, and business experience during the
last five years:
Brian E. Barents Mr. Barents, 54, was elected55, has been a Director
in Novembersince 1996. He is President and
Chief Executive Officer of Galaxy
Aerospace Corp.Company L.P. Prior to that
he was President and Chief Executive
Officer of Lear Jet Inc., a subsidiary of Bombardier,Learjet, Inc. He is a
director of Intrust Bank of
Wichita and Interactive Flight
Technologies, Inc.Tri-Star Aerospace Corp.
Page 1213
Fred A. Breidenbach Mr. Breidenbach, 51,52, was elected a
Director in February 1998. He is the
owner of F. A. Breidenbach & Associates,
LLC.,LLC, and is the former President and
Chief Operating Officer of
Gulfstream Aerospace Corp. Prior to
that he held various positions with
General Electric Corporation. He is a
director of Sensormatic Electronics
Corporation.
T. Jack Cahill Mr. Cahill, 49,50, has held various
positions with Kaman Industrial
Technologies Corporation, a subsidiary
of the corporation, since 1975, and has
been President of Kaman Industrial
Technologiesthat subsidiary since
1993.
E. Reeves Callaway, III Mr. Callaway, 50,51, has been a Director
since 1995. He is President of The
Callaway Companies, Inc.Advanced Technology Corporation.
Frank C. Carlucci Mr. Carlucci, 67,68, has been a Director
since 1989. He is Chairman of The
Carlyle Group, merchant bankers. Prior to
that he served as U.S. Secretary of
Defense. Mr. Carlucci is also a director
of Ashland, Inc., Neurogen Corporation,
Northern Telecom, Ltd., Pharmacia &
Upjohn, Inc., Quaker Oats Company, Sun
Resorts, Ltd., N.V., Texas
Biotechnology Corporation, and
Westinghouse ElectricIRI International Corporation.
Laney J. Chouest, M.D. Mr.Dr. Chouest, 44, was elected45, has been a Director
at the corporation's 1996 Annual Meeting
of Shareholders.since 1996. He is owner-managerSenior Vice President
of Edison Chouest Offshore, Inc. and
Galliano Marine.
Dr. Chouest is also a director of
Deeptech International, Inc.
Candace A. Clark Ms. Clark, 43, was appointed44, has been Senior Vice
President and Chief Legal Officer in
Aprilsince
1996. Prior to that she served as
Vice President and Counsel. Ms. Clark has
held various positions with the
corporation since 1985.
John A. DiBiaggio Dr. DiBiaggio, 65,66, has been a Director
since 1984. He is President and Chief
Executive Officer of Tufts University.
Prior to that he was President and Chief
Executive Officer of Michigan State
University.
Page 1314
Edythe J. Gaines Dr. Gaines, 75,76, has been a Director
since 1982. She is a retired
Commissioner of the Public Utility
Control Authority of the State of
Connecticut.
Ronald M. Galla Mr. Galla, 47,48, has been Senior Vice
President and Chief Information Officer
since 1995. Prior to that he served as
Vice President and director of the
corporation's Management Information
Systems, a position which he held since
1990. Mr. Galla has been Directordirector of the
corporation's Management Information
Systems since 1984.
Robert M. Garneau Mr. Garneau, 53,55, has been Executive Vice
President and Chief Financial Officer
since 1995. Previously he served as
Senior Vice President, Chief Financial
Officer and Controller. Mr. Garneau has
held various positions with the
corporation since 1981.
Huntington Hardisty Admiral Hardisty (USN-Ret.), 68,70, has
been President of Kaman Aerospace
International Corporation, a
subsidiary of the corporation, since 1995
and he has been a Director since 1991.
He retired from the U.S. Navy in 1991
having served as Commander-in-Chief for
the U.S. Navy Pacific Command since
1988. He is also a director of
Contraves, Inc., MPR Inc., and
CNA Corporation.
Charles H. Kaman Mr. Kaman, 78,79, has been Chief Executive
Officer and Chairman of the Board of
Directors since 1945. He was also
appointed President in December, 1995,
a position he previously held from 1945
to 1990.
C. William Kaman II Mr. Kaman, 46,47, has been a Director
since 19921992. He is Chairman and has beenCEO of
AirKaman of Jacksonville, Inc., a former
subsidiary of the corporation which was
sold in 1997 and is no longer affiliated
with the corporation. Previously he was
Executive Vice President since 1995. He
has held various positions withof the
corporation and was President of
Kaman Music Corporation, a subsidiary of
the corporation, since 1974, and continues
to serve as President of that
subsidiary.corporation. Mr. Kaman is the son of
Charles H. Kaman, Chairman, President and
Chief Executive Officer of the
corporation.
Page 1415
Walter R. Kozlow Mr. Kozlow, 62,63, has held various
positions with Kaman Aerospace
Corporation, a subsidiary of the
corporation, since 1960. He has been
President of Kaman Aerospace Corporation
since 1986.
Eileen S. Kraus Ms. Kraus, 59,60, has been a Director since
1995. She is Chairman of Connecticut
Fleet National Bank. Since 1979 she has
held various positions at Shawmut Bank
Connecticut and Shawmut National
Corporation, predecessors of Fleet Bank,
N.A. and its holding company, Fleet
Financial Group. She is a director of
Yankee Energy System, Inc., The Stanley
Works, and Bestfoods Corporation.
Hartzel Z. Lebed Mr. Lebed, 70,71, has been a Director since
1982.1982, and became Vice Chairman of the
Board of Directors in January, 1999. He
is the retired President of CIGNA
Corporation.
Walter H. Monteith, Jr. Mr. Monteith, 67,68, has been a Director
since 1987. He is the retired Chairman
of Southern New England Telecommuni-
cations Corporation.
Mr. Monteith is
also a director of Fleet Bank.
John S. Murtha Mr. Murtha, 84,85, has been a Director
since 1948. He is counsel to, and a
former senior partner of, the law firm of
Murtha, Cullina, Richter and Pinney LLP.
Patrick L. Renehan Mr. Renehan, 64, was appointed65, has been Senior
Vice President of Kaman Aerospace Group,
Inc. (formerly Kaman Diversified
Technologies Corporation,Corporation), a subsidiary
of the corporation, in Aprilsince 1996. Prior
to that he served as Vice President of
that subsidiary. Mr. Renehan has held
various positions with the corporation
since 1983.
Wanda L. Rogers Mrs. Rogers, 65,66, has been a Director
since 1991. She is President and Chief
Executive Officer of Rogers Helicopters,
Inc. She is also Chairman of the Boarda director of Clovis
Community Bank.
Page 16
Robert H. Saunders, Jr. Mr. Saunders, 57, has been58, became President of
Kaman Music Corporation, a subsidiary
of the corporation in 1998. Previously
he served as Senior Vice President of
the corporation since 1995.
Previously1995 and also held
the position of Senior Executive Vice
President of Kaman Music Corporation
during a portion of that period. Prior
to that he was Vice President and Chief
Financial Officer of the University of
Hartford from 1993 to
1995. Prior to that he was President
of J. M. Ney Corporation.
Page 15
Hartford.
Each Director and Executive Officer has been elected for a
term of one year and until his or her successor is elected, except
in the case of Mr. Breidenbach who was elected a director at the
February, 1998 meeting of the Corporation's Board of Directors.
Mr. Breidenbach's term as well as theelected.
The terms of all other Directors and Executive Officers are expected to
expire as of the Annual Meeting of the Shareholders and Directors
of the corporation to be held on April 14, 1998.13, 1999.
Based upon information provided to the corporation by persons
required to file reports under Section 16(a) of the Securities
Exchange Act of 1934, no Section 16(a) Reporting delinquencies
occurred in 1997.1998.
ITEM 11. EXECUTIVE COMPENSATION
A) GENERAL. The following tables provide certain information
relating to the compensation of the Corporation's Chief Executive
Officer, its four other most highly compensated executive
officers and its directors.
Page 1617
B) SUMMARY COMPENSATION TABLE.
Annual Compensation Long Term Compensation
------------------- ----------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
All
Name and Other AWARDS Other
Principal Salary Bonus Annual RSA Options*/SARs**Options/SARs LTIP Comp.
Position Year ($) ($) Comp.(1)($)(1)(2) (#Shares) Payments ($)(2)(3)
- ---------------------------------------------------------------------------
C. H. Kaman 1998 850,000 408,000 116,201 ------- 0/ --- 64,120
Chairman and 125,000
Chief 1997 750,000 400,000 ------- ------------- ------ --- 56,793
Chairman andExecutive 1996 725,000 340,000 56,252(3) ------56,252 ------- ------ --- 58,412
Chief 1995 660,000 275,000 ------ ------ ------Officer
R.M.Garneau 1998 375,000 175,000 ------- 127,500 7,500/ --- 56,14512,418
Executive Officer
R.M.Garneau12,500
Vice Pres- 1997 340,000 185,000 ------------- 99,375 10,000*/10,000/ --- 10,896
Executive 100,000**
Vice Pres-ident and 100,000
Chief 1996 240,000 82,000 ------------- 77,812 10,000*/10,000/ --- 7,935
ident and 0**
Chief 1995 216,000 80,000 ------ 56,875 7,500*/Financial 0
Officer
W.R.Kozlow 1998 255,000 100,000 ------- 85,000 7,500/ --- 6,485
Financial 0**
Officer
W.R.Kozlow13,170
President 10,000
Kaman 1997 240,000 100,000 ------------- 79,500 9,000*/9,000/ --- 13,588
President 50,000**
KamanAerospace 50,000
Corporation 1996 233,000 65,000 ------------- 62,250 9,000*/9,000/ --- 10,881
Aerospace 0**
Corporation 1995 226,000 60,000 ------ 56,875 7,500*/0
T.J. Cahill 1998 245,000 80,000 ------- 85,000 7,500/ --- 9,515
0**
T.J. Cahill7,397
President, 7,500
Kaman 1997 230,000 90,000 ------------- 79,500 9,000*/9,000/ --- 7,754
President, 50,000**
KamanIndustrial 50,000
Technologies 1996 210,000 70,000 ------------- 62,250 9,000*/9,000/ --- 7,952
Industrial 0**
Technologies 1995 190,000 55,000 ------ 56,875 7,500*/Corporation 0
H. Hardisty 1998 225,000 90,000 ------- 85,000 7,500/ --- 6,530
Corporation 0**
H. Hardisty20,141
President 10,000
Kaman 1997 215,000 90,000 ------------- 79,500 9,000*/9,000/ --- 13,012
President 50,000**
KamanAerospace 50,000
Interna- 1996 200,000 55,000 ------------- 62,250 9,000*/9,000/ --- 9,198
Aerospace 0**
Inter- 1995 61,282 40,000 ------ ------ ----- --- -----
nationaltional 0
Corporation
*Stock Options ("Options")
**Stock Appreciation Rights ("SARs") payable in cash only
Page 1718
1. The corporation maintains a program pursuant to which it pays
for tax and estate planning services provided to executive officers
by third parties, up to certain limits. Amounts reported in this
column include payments for such services as follows: $91,060 on
behalf of C.H. Kaman in 1998 and $45,314 on behalf of C. H. Kaman
in 1996.
2. As of December 31, 1997,1998, aggregate restricted stock holdings
and their year end value were: C.H. Kaman, none; R.M. Garneau,
17,10020,000 shares valued at $280,013;$321,250; W.R. Kozlow, 14,40015,400 shares
valued at $235,800;$247,363; T.J. Cahill, 14,30015,400 shares valued at $234,163;$247,363;
and H. Hardisty, 10,80013,400 shares valued at $176,850.$215,238. Restrictions
lapse at the rate of 20% per year for all awards, beginning one
year after the grant date. Awards reported in this column are
as follows: R.M. Garneau, 7,500 shares in 1997,1998, 7,500 shares in
1996,1997, and 7,500 shares in 1996; W.R. Kozlow, 5,000 shares in 1995; W.R. Kozlow,1998,
6,000 shares in 1997, and 6,000 shares in 1996, and1996; T.J. Cahill, 5,000
shares in 1995; T.J. Cahill,1998, 6,000 shares in 1997, and 6,000 shares in 1996, and1996; H.
Hardisty, 5,000 shares in 1995; H.
Hardisty,1998, 6,000 shares in 1997 and 6,000
shares in 1996. Dividends are paid on the restricted stock.
2.3. Amounts reported in this column consist of: C.H. Kaman,
$53,000 - - Officer 162 Insurance Program, $3,793$11,120 - medical expense
reimbursement program ("MERP"); R.M. Garneau, $3,049$3,352 - Senior
executive life insurance program ("Executive Life"), $851 - Officer
162 Insurance Program, $2,000 - employer matching contributions to
the Kaman Corporation Thrift and Retirement Plan (the "Thrift Plan
employer match"), $434$1,340 - MERP, $4,562$4,875 - all supplemental employer
contributions under the Kaman Corporation Deferred Compensation
Plan ("supplemental employer contributions"); W.R. Kozlow, $5,763$6,375
- - Executive Life, $2,000 - Thrift Plan employer match, $3,575$2,358 -
MERP, $2,250$2,437 - supplemental employer contributions; T.J. Cahill,
$1,527$1,770 - Executive Life, $2,000 - Thrift Plan employer match,
$2,227$1,564 - MERP, $2,000$2,063 - supplemental employer contributions; H.
Hardisty, $13,012$20,141 - supplemental employer contributions.
3. The corporation maintains a program pursuant to which it pays
for tax and estate planning services provided to executive officers
by third parties, up to certain limits. $45,314 of the figure
reported in this column relates to payments for such services on
behalf of Mr. Kaman.
Page 1819
C) OPTION/SAR GRANTS IN THE LAST FISCAL YEAR:
- ----------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term*
- ----------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options/
SARs**
Options/ Granted to
SARs** Employees Exercise or
Granted in Fiscal Base Price Expiration
Name (#) Year ($/Sh) Date 5%($) 10%($)
- ----------------------------------------------------------------------------
C. H. Kaman none ---- --- --- ----- -----0/ 0.00/ 17.00 2/10/08 1,336,401 3,386,703
125,000 75.76
R. M. Garneau 10,000/ 5.16/ 13.257,500/ 3.66/ 17.00 2/11/07 916,614 2,322,880
100,000** 28.5710/08 213,824 541,872
12,500 7.58
W. R. Kozlow 9,000/ 4.65/ 13.257,500/ 3.66/ 17.00 2/11/07 491,638 1,245,908
50,000** 14.2910/08 187,096 474,138
10,000 6.06
T. J. Cahill 9,000/ 4.65/ 13.257,500/ 3.66/ 17.00 2/11/07 491,638 1,245,908
50,000** 14.2910/08 160,368 406,404
7,500 4.55
H. Hardisty 9,000/ 4.65/ 13.257,500/ 3.66/ 17.00 2/11/07 491,638 1,245,908
50,000** 14.2910/08 187,096 474,138
10,000 6.06
*The information provided herein is required by Securities and Exchange
Commission rules and is not intended to be a projection of future common
stock prices.
**Stock Appreciation Rights (SARs) payable in cash only, not in shares of
common stock.
Page 1920
D) AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR, AND
FISCAL YEAR-END OPTION/SAR VALUES.
Value of
Number of Unexercised
Unexercised in-the-money
options options*
Shares at FY-end (#) at FY-end ($)
acquired on Value exercisable/ exercisable/
Name Exercise(#) realized unexercisable unexercisable
(a) (b) (c) (d) (e)
- -------------------------------------------------------------------
C. H. Kaman 25,000 200,625none ------- 20,000/-0- 172,500/-0-0 166,250/0
R. M. Garneau None ------ 20,200/24,300 145,250/114,1252,000 15,875 25,500/24,500 158,406/70,688
W. R. Kozlow 3,000 33,375 21,000/22,500 152,550/106,20021,750 24,900/23,100 155,569/65,025
T. J. Cahill 1,000 10,250 13,800/22,200 92,800/104,1388,000 19,400/23,100 112,475/65,025
H. Hardisty Nonenone ------ 1,800/16,200 10,800/71,3255,400/20,100 25,538/50,963
Value of
Number of Unexercised
Unexercised in-the-money
SARs SARs*
Shares at FY-end (#) at FY-end ($)
acquired on Value exercisable/ exercisable/
Name Exercise(#) realized unexercisable unexercisable
(a) (b) (c) (d) (e)
- -------------------------------------------------------------------
C. H. Kaman N/A N/A -0-/-0- -0-/-0-0/125,000 0/0
R. M. Garneau " " -0-/100,000 -0-/312,50020,000/92,500 56,250/225,000
W. R. Kozlow " " -0-/10/000/50,000 -0-/156,25028,150/112,500
T. J. Cahill " " -0-/50,000 -0-/156,25010,000/47,500 28,125/112,500
H. Hardisty " " -0-/10,000/50,000 -0-/156,25028,125/112,500
*Difference between the 12/31/9798 FMV and the exercise price(s).
E) LONG TERM INCENTIVE PLAN AWARDS: NoExcept as described above, no
long term incentive plan awards were made to any named executive
officer in the last fiscal year.
Page 21
F) PENSION AND OTHER DEFINED BENEFIT DISCLOSURE. The following
table shows estimated annual benefits payable at normal
retirement age to participants in the Corporation's Pension Plan
at various compensation and years of service levels using the
benefit formula applicable to Kaman Corporation. Pension
benefits are calculated based on 60 percent of the average of the
highest five consecutive years of "covered compensation" out of
the final ten years of employment less 50 percent of the primary
social security benefit, reduced proportionately for years of
service less than 30 years:
Page 2022
PENSION PLAN TABLE
Years of Service
Remuneration* 15 20 25 30 35
- -----------------------------------------------------------------
125,000 33,519 44,915 55,642 67,038 67,03833,471 44,851 55,562 66,942 66,942
150,000 41,019 54,965 68,092 82,038 82,03840,971 54,901 68,012 81,942 81,942
175,000 48,519 65,015 80,542 97,038 97,03848,471 64,951 80,462 96,942 96,942
200,000 56,019 75,065 92,992 112,038 112,03855,971 75,001 92,912 111,942 111,942
225,000 63,519 85,115 105,442 127,038 127,03863,471 85,015 105,362 126,942 126,942
250,000 71,019 95,165 117,892 142,038 142,03870,971 95,101 117,812 141,942 141,942
300,000 86,019 115,265 142,792 172,038 172,03885,971 115,201 142,712 171,942 171,942
350,000 101,019 135,365 167,692 202,038 202,038100,971 135,301 167,612 201,942 201,942
400,000 116,019 155,465 192,592 232,038 232,038115,971 155,401 192,512 231,942 231,942
450,000 131,019 175,565 217,492 262,038 262,038130,971 175,501 217,412 261,942 261,942
500,000 146,019 195,665 242,392 292,038 292,038145,971 195,601 242,312 291,942 291,942
750,000 220,971 296,101 366,812 441,942 441,942
1,000,000 295,971 396,601 491,312 591,942 591,942
1,250,000 370,971 497,101 615,812 741,942 741,942
1,500,000 445,971 597,601 740,312 891,942 891,942
1,750,000 520,971 698,101 864,812 1,041,942 1,041,942
2,000,000 595,971 798,601 989,312 1,191,942 1,191,942
*Remuneration: Average of the highest five consecutive years of
"Covered Compensation" out of the final ten years of service.
"Covered Compensation" means "W-2 earnings" or "base
earnings", if greater, as defined in the Pension Plan. W-2
earnings for pension purposes consist of salary (including 401(k)
and Section 125125/129 Plan contributions but not deferrals under a
non-qualified Deferred Compensation Plan), bonus and taxable
income attributable to restricted stock awards.awards and the cash out
of employee stock options. Salary and bonus amounts for the named
Executive Officers for 19971998 are as shown on the Summary
Compensation Table. Compensation deferred under the
Corporation's non-qualified deferred compensation plan is
included in Covered Compensation here because it is covered by
the Corporation's unfunded supplemental employees' retirement
plan for the participants in that plan.
Current Compensation covered by the Pension Plan for any
named executive whose Covered Compensation differs by more than
10% from the compensation disclosed for that executive in the
Summary Compensation Table: Mr. Garneau, $510,077; Mr. Kozlow,
$363,046;Kaman, $1,250,000; Mr. Hardisty,
$290,124.$361,410.
Federal law imposes certain limitations on annual pension
benefits under the Pension Plan. For the named executive
officers who are participants, the excess will be paid under the
Corporation's unfunded supplemental employees' retirement plan.
Page 2123
The Executive Officers named in Item 11(b) are participants
in the plan and as of December 31, 1997,1998, had the number of years of
credited service indicated: Mr. Kaman - 51.153.1 years; Mr. Garneau -
16.4817.48 years; Mr. Kozlow - 37.738.7 years; Mr. Cahill - 22.723.7 years;
Mr. Hardisty - 2.453.45 years.
Benefits are computed generally in accordance with the
benefit formula described above.
G) COMPENSATION OF DIRECTORS. In 1997, non-officergeneral, non-employee members of
the Board of Directors of the corporation receive an annual
retainer of $20,000 and a fee of $1,000 for attending each meeting
of the Board and each meeting of a Committee of the Board, except
that the Chairman of the Audit Committee receives a fee of $1,250
for attending each meeting of that Committee. TheseNotwithstanding the
foregoing, (1) effective in January 1999, the position of Vice
Chairman of the Board was created with a retainer of $40,000 per
year and a fee of $2,000 for attending each meeting of the Board;
and (2) effective in September 1998, the Acting Chairman of the
Board received a monthly retainer of $8,000 (this position was
ended in February 1999) and a fee of $2,000 for attending each
meeting of the Board and each meeting of the Special Committee of
the Board. Such fees may be received on a deferred basis. In
addition, each such personnon-employee director will receive a Restricted
Stock Award (RSA) for 500 shares of Class A Common Stock (issued pursuant to the Corporation's 16b-3 qualifiedcorporation's
Stock Incentive Plan,Plan), providing for immediate vesting upon
election as a director at the Corporation's 1998corporation's 1999 Annual Meeting of
Shareholders.
H) EMPLOYMENT CONTRACTS AND TERMINATION, SEVERANCE AND CHANGE
OF CONTROL ARRANGEMENTS. The corporation has entered an
arrangement with Mr. C. H. Kaman that (1) in the event he retires
or dies during active employment with the corporation, he and/or
Mrs. Kaman will be provided with medical/dental benefits for the
remainder of their lives; and (2) in the event he becomes disabled
during active employment, he will be assured of receiving an amount
equal to his then current annual base salary for the remainder of
his life. Except as disclosed in Item 13, and except as described
above and in connection with the Corporation'scorporation's Pension Plan and the
Corporation's non-
qualifiedcorporation's non-qualified Deferred Compensation Plan, the
corporation has no employment contract, plan or arrangement with
respect to any named executive which relates to employment
termination for any reason, including resignation, retirement or
otherwise, or a change in control of the corporation or a change in
any such executive officer's responsibilities following a change of
control, which exceeds or could exceed $100,000, except as
disclosed in Item 13.$100,000.
I) Not Applicable.
Page 24
J) COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
IN COMPENSATION DECISIONS.
1) The following persons served as members of the Personnel
and Compensation Committee of the Corporation's Board of Directors
during the last fiscal year: Frank C. Carlucci, Brian E. Barents,
Edythe J. Gaines, Walter H. Monteith, Jr. and John S. Murtha.
None of these individuals was an officer or employee of the
corporation or any of its subsidiaries during either the last
fiscal year or any portion thereof in which he or she served as a
member of the Personnel and Compensation Committee. Mr. Murtha's
relationship with the corporation is further disclosed in Item 13
of this report.
Page 22
2) During the last fiscal year no executive officer of the
corporation served as a director of or as a member of the
compensation committee (or other board committee performing
equivalent functions) of another entity, one of whose executive
officers served as a director of, or on the Personnel and
Compensation Committee of the corporation.
K) Not Applicable.
L) Not Applicable.
Page 2325
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.
Following is information about persons known to the
corporation to be beneficial owners of more than five percent (5%)
of the Corporation's voting securities. Ownership is direct unless
otherwise noted.
- -----------------------------------------------------------------
Class of Number of Shares
Common Name and Address Owned as of Percentage
Stock Beneficial Owner February 1, 19981999 of Class
- -----------------------------------------------------------------
Class B Charles H. Kaman 258,375(1) 38.69%
Kaman Corporation
Blue Hills Avenue
Bloomfield, CT 06002
Class B Newgate Associates 199,802 29.91%
Limited Partnership
c/o Murtha, Cullina,
Richter &and Pinney LLP
CityPlace I
185 Asylum Street
Hartford, CT 06103
Class B C. William Kaman, II 64,206(2) 9.61%
Kaman Corporation
Blue Hills Avenue
Bloomfield, CT 0600264,446(2) 9.65%
c/o AirKaman of
Jacksonville, Inc.
Jacksonville International
Airport
14700 Yonge Drive
Jacksonville, FL 32218
Class B Robert D. Moses 48,729(3) 7.30%
Farmington Woods
Avon, CT 06001
(1) Excludes 1,471 shares held by Mrs. Kaman. Excludes
199,802 shares reported separately above and held by
Newgate Associates Limited Partnership, a limited
partnership in which Mr. Kaman serves as general
partner.
(2) Excludes 4,800 shares held as trustee for the benefit of
certain family members.
(3) Includes 37,24839,896 shares held by a partnership controlled by
Mr. Moses.
Page 2426
(b) SECURITY OWNERSHIP OF MANAGEMENT. The following is
information concerning beneficial ownership of the Corporation's
stock by each Director of the corporation, each Executive Officer
of the corporation named in the Summary Compensation Table, and all
Directors and Executive Officers of the corporation as a group.
Ownership is direct unless otherwise noted.
Class of Number of Shares Owned Percentage
Name Common Stock as of February 1, 19981999 of Class
- --------------------------------------------------------------------
Brian E. Barents Class A 5001,000 *
Fred A. Breidenbach ------- ------- -----Class A 4,500 *
T. Jack Cahill Class A 44,698(1)34,230(1) *
E. Reeves Callaway Class A 5001,000 *
Frank C. Carlucci Class A 3,500(2)4,000(2) *
Laney J. Chouest Class A 5,8316,331 *
John A. DiBiaggio Class A 5001,000 *
Edythe J. Gaines Class A 2,6973,269 *
Robert M. Garneau Class A 42,863(3)30,133(3) *
Class B 19,578 2.93%20,512 3.07%
Huntington Hardisty Class A 13,800(4)17,000(4) *
Charles H. Kaman Class A 222,920(5)217,884(5) *
Class B 258,375(6) 38.69%
C. William Kaman, II Class A 58,359(7)64,488(7) *
Class B 64,206(8) 9.61%64,446(8) 9.65%
Walter R. Kozlow Class A 64,967(9)50,412(9) *
Class B 296 *
Eileen S. Kraus Class A 1,0291,563 *
Hartzel Z. Lebed Class A 14,486(10)17,067(10) *
Walter H. Monteith, Jr. Class A 7001,200 *
John S. Murtha Class A 53,548(11)52,948(11) *
Class B 432 *
Wanda L. Rogers Class A 5001,000 *
All Directors and
Executive Officers Class A 690,672(12) 3.04%573,757(12) 2.5%
as a group ** Class B 344,625 51.60%345,799 51.8%
* Less than one percent.
** Excludes 23,612 Class A shares and 1,471 Class B shares held
by spouses of certain Directors and Executive Officers.
Page 25
(1) Includes 13,800Excludes 19,400 shares subject to the exercisable portion of
stock options.
(2) HeldIncludes 3,500 shares held jointly with Mrs. Carlucci.
(3) Includes 20,200Excludes 25,500 shares subject to the exercisable portion
of stock options.
Page 27
(4) Includes 1,800Excludes 5,400 shares subject to the exercisable portion of
stock options.
(5) Excludes the following: 23,132 shares held by Mrs. Kaman;
7,9117,952 shares held by Fidelco Guide Dog Foundation, Inc., a
charitable foundation of which Mr. Kaman is President and
Director, in which shares Mr. Kaman disclaims beneficial
ownership; 184,434 shares held by Newgate Associates
Limited Partnership, a limited partnership of which Mr.
Kaman is the general partner; 21,816 shares held by Oldgate
Limited Partnership ("Oldgate") a limited partnership of which
Mr. Kaman is the general partner; 125,034 shares held by
Oldgate and as to which shares Mr. Kaman disclaims beneficial
interest, such portion of Oldgate having been placed in an
irrevocable trust; and 72,500 shares held by the Charles H.
Kaman Charitable Foundation, a private charitable foundation.
Included are 20,000 shares subject to exercisable portion of
stock options.
(6) Excludes the following: 1,471 shares held by Mrs. Kaman and
199,802 shares held by Newgate Associates Limited Partnership,
a limited partnership of which Mr. Kaman is the general
partner.
(7) Includes 14,200Excludes 12,300 shares subject to exercisable portion of
stock options; and excludes 81,99884,516 shares held by Mr. Kaman
as Trustee, in which shares Mr. Kaman disclaims any
beneficial ownership.
(8) Excludes 4,800 shares held by Mr. Kaman as Trustee in which
shares Mr. Kaman disclaims any beneficial ownership.
(9) Includes 21,000Excludes 24,900 shares subject to exercisable portion of
stock options.
(10)Includes 6,000shares held jointly with Mrs. Lebed, excludes
8,000 shares held in an Individual Retirement Account and shares held jointly with Mrs. Lebed; excludes
480 shares held by Mrs. Lebed.
(11)Held by Fleet National Bank pursuant to a revocable trust.
ExcludesIncludes 7,980 shares held by Fleet National Bank pursuant
to a revocable trust for the benefit of Mrs. Murtha.
(12)Includes 115,700142,800 shares subject to exercisable portion of
stock options.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1997,1998, the corporation obtained legal services from the
Hartford, Connecticut law firm of Murtha, Cullina, Richter and
Pinney LLP of which Mr. Murtha, a Director of the corporation, is
of counsel. The corporation also obtained video production services
in the amount of $95,176$134,218 from Polykonn Corporation, a
corporation controlled by Mr. Steven Kaman, son of Charles H.
Kaman, Chairman and Chief Executive Officer of the corporation. On
February 20, 1997,In
addition, the corporation sold its interest in a
Page 26
subsidiary company, AirKaman of Jacksonville, Inc., to a
corporation controlled byentered into an agreement with Mr. C.
William Kaman, II, for cash in the
amount of approximately $3,615,000. C. William Kaman II is a directorDirector and former Executive Vice President
of the corporation, and is the
son of Charles H. Kaman. The purchase price received byconfirming his resignation from active
employment with the corporation was determined in accordance withand retaining him as Senior
Executive Advisor through December 31, 2001 at the annual rate of
$245,000. A copy of such agreement is attached hereto as Exhibit
10c. In arriving at the terms of such agreement the corporation
obtained the advice of an independent appraisal.professional consultant.
Page 28
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a)(1) FINANCIAL STATEMENTS.
See Item 8 concerning financial statements appearing as
Exhibit 13 to this Report and concerning the Financial
Data Schedule appearing as Exhibit 27 to this Report.
(a)(2) FINANCIAL STATEMENT SCHEDULES.
An index to the financial statement schedules immediately
precedes such schedules.
(a)(3) EXHIBITS.
An index to the exhibits filed or incorporated by
reference immediately precedes such exhibits.
(b) REPORTS ON FORM 8-K.
The following reports on Form 8-K were filed since the
filing of the Corporation's 19961997 Annual Report on
Form 10-K.
Date Filed Accession Number
------------------ ----------------
April 16, 1997 54381-97-7
July 3, 1997 54381-97-12
July 24, 1997 54381-97-14
NovemberDecember 17, 1997 54381-97-19
January 8, 1998 54381-98-2
January 13, 1998 54381-98-3
February 11, 1998 54381-98-554381-98-30
Page 2729
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of Bloomfield, State of
Connecticut, on this 16th day of March, 1998.1999.
KAMAN CORPORATION
(Registrant)
By Charles H. Kaman, Chairman, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Signature: Title: Date:
- -------------------------------------------------------------------
Charles H. Kaman Chairman, President, Chief March 16, 19981999
Executive Officer and Director
(Chief Executive Officer)
Robert M. Garneau Executive Vice President March 16, 19981999
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
Robert M. Garneau March 16, 19981999
Attorney-in-Fact for:
Brian E. Barents Director
Fred A. Breidenbach Director
E. Reeves Callaway, III Director
Frank C. Carlucci Director
Laney J. Chouest Director
John A. DiBiaggio Director
Edythe J. Gaines Director
Huntington Hardisty Director
C. William Kaman, II Director
Eileen S. Kraus Director
Hartzel Z. Lebed Director
Walter H. Monteith, Jr. Director
John S. Murtha Director
Wanda L. Rogers Director
Page 2830
KAMAN CORPORATION AND SUBSIDIARIES
Index to Financial Statement Schedules
Report of Independent Auditors
Financial Statement Schedules:
Schedule II - Valuation and Qualifying Accounts
Page 2931
REPORT OF INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
Certified Public Accountants
CityPlace II
Hartford, Connecticut 06103
The Board of Directors and Shareholders
Kaman Corporation:
Under date of January 29, 1998,27, 1999, we reported on the consolidated
balance sheets of Kaman Corporation and subsidiaries as of
December 31, 19971998 and 19961997 and the related consolidated
statements of operations, changes in shareholders' equity and cash
flows for each of the years in the three-year period ended
December 31, 1997,1998, as contained in the 19971998 annual report to
shareholders. These consolidated financial statements and our
report thereon are included in the annual report on Form 10-K for
1997.1998. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related
consolidated financial statement schedule as listed in the
accompanying index. This financial statement schedule is the
responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule
based on our audits.
In our opinion, such schedule, when considered in relation to
the basic consolidated financial statements taken as a whole,
presentpresents fairly, in all material respects, the information set
forth therein.
/s/ KPMG Peat Marwick LLP
Hartford, Connecticut
March 13, 199816, 1999
Page 3032
KAMAN CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in Thousands)
YEAR ENDED DECEMBER 31, 1995
Additions
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1995 EXPENSES OTHERS DEDUCTIONS 1995
Allowance for
doubtful
accounts $1,665 $2,476 $----- $1,852(A) $2,289
====== ====== ====== ====== ======
Accumulated
amortization
of goodwill $3,544 $ 355 $----- $----- $3,899
====== ====== ====== ====== ======
YEAR ENDED DECEMBER 31, 1996
Additions
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1996 EXPENSES OTHERS DEDUCTIONS 1996
Allowance for
doubtful
accounts $2,289 $1,288 $----- $1,003(A) $2,574
====== ====== ====== ====== ======
Accumulated
amortization
of goodwill $3,899 $ 365 $----- $ 397(B) $3,867
====== ====== ====== ====== ======
YEAR ENDED DECEMBER 31, 1997
Additions
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1997 EXPENSES OTHERS DEDUCTIONS 1997
Allowance for
doubtful
accounts $2,574 $2,950 $----- $1,697(A) $3,827
====== ====== ====== ====== ======
Accumulated
amortization
of goodwill $3,867 $ 345 $----- $2,834(B) $1,378
====== ====== ====== ====== ======
YEAR ENDED DECEMBER 31, 1998
Additions
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1998 EXPENSES OTHERS DEDUCTIONS 1998
Allowance for
doubtful
accounts $3,827 $1,058 $----- $ 838(A) $4,047
====== ====== ====== ====== ======
Accumulated
amortization
of goodwill $1,378 $ 110 $----- $----- $1,488
====== ====== ====== ====== ======
(A) Write-off of bad debts, net of recoveries
(B) Write-off of accumulated amortization of goodwill related to
the sale of a subsidiary or division.
Page 3133
KAMAN CORPORATION
INDEX TO EXHIBITS
Exhibit 3a The Amended and Restated by reference
Certificate of Incorporation
of the corporation, as amended,
including the form of amendment
designating the corporation's
Series 2 Preferred Stock has been
filed as Exhibits 2.1 and 2.2 to the
Corporation's Form 8-A (Document
No. 0-1093 filed on September 27, 1993),
and is incorporated in this report
by reference.
Exhibit 3b The By-Laws of the corporation by reference
were filed as Exhibit 3(b) to
the corporation's Annual Report
on Form 10-K for 1990 (Document
No. 0-1093, filed with the Securities
and Exchange Commission on March 14, 1991).form
S-8POS on May 11, 1994, as
Document No. 94-20.
Exhibit 3b The By-Laws of the corporation attached
as amended on February 9, 1999.
Exhibit 4a Indenture between the corporation by reference
and Manufacturers Hanover Trust
Company, as Indenture Trustee,
with respect to the
Corporation's 6% Convertible
Subordinated Debentures, has
been filed as Exhibit 4.1 to
Registration Statement No. 33 -
11599 on Form S-2 of the
corporation filed with the
Securities and Exchange
Commission on January 29, 1987
and is incorporated in this
report by reference.
Exhibit 4b The Amended and Restated by reference
Revolving Credit Agreement
between the corporation and The
Bank of Nova Scotia and Fleet National
Bank of Connecticut, as
Co-Administrative Agents, dated
as of July 3, 1997 has been filed
as an exhibit to the Corporation's
Form 10-Q Document No. 54381-97-16
filed with the Securities and
Exchange Commission on August 15, 1997
and is incorporated in this report
by reference.
Page 32
Exhibit 4c The corporation is party to certain by reference
long-term debt obligations, such
as real estate mortgages, copies
of which it agrees to furnish to
the Commission upon request.
Page 34
Exhibit 10a The 1983Kaman Corporation 1993 Stock by reference
Incentive Plan by reference
(formerly known as the 1983
Stock Option Plan)amended effective
November 18, 1997 has been filed
as Exhibit 10b(iii)an exhibit to the Corporation's
Annual Report on
Form 10-K for 1988 (DocumentDocument No. 0-109354381-98-09
filed with the Securities and
Exchange Commission on March 22, 1989)16, 1998
(as amended by Document No. 54381-98-13
on March 27, 1998) and is incorporated
in this report by reference.
Exhibit 10b The Kaman Corporation 1993 Stock Attached
Incentive Plan as amended effective
November 18, 1997.
Exhibit 10c The Kaman Corporation Employees Attachedby reference
Stock Purchase Plan as amended
effective November 19, 1997.1997 has been filed
as an exhibit to the Corporation's
Form 10-K Document No. 54381-98-09
filed with the Securities and
Exchange Commission on March 16, 1998
(as amended by Document No. 54381-98-13
on March 27, 1998) and is incorporated
in this report by reference.
Exhibit 10c Agreement dated August 10, 1998 Attached
between the corporation and
C. William Kaman, II.
Exhibit 11 Statement regarding computation Attached
of per share earnings.
Exhibit 13 Portions of the Corporation's Attached
19971998 Annual Report to
Shareholders as required by
Item 8.
Exhibit 21 Subsidiaries. Attached
Exhibit 23 Consent of Independent Auditors. Attached
Exhibit 24 Power of attorney under which Attached
this report has been signed on
behalf of certain directors.
Exhibit 27 Financial Data Schedule Attached
Page 3335