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, 1999
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
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.
$202,675,885.41 as of February 1, 2000.
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 22,438,667 shares
Class B Common 667,814 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Corporation's 1999 Annual Report to Shareholders
are incorporated by reference and filed as Exhibit 13 to this
Report.
PART I
ITEM 1. BUSINESS
Kaman Corporation, incorporated in 1945, reports information for
itself and its subsidiaries (collectively, the "corporation") in
the following business segments: Aerospace, Industrial
Distribution, and Music Distribution.
The Aerospace segment serves commercial, U.S. defense and foreign
government markets. Its principal programs consist of its SH-2G
maritime helicopter, K-MAX (Registered Trademark) "aerial truck"
helicopter, subcontract work involving aircraft structures and the
manufacture of products such as self-lubricating bearings and
driveline couplings for aircraft applications. The Industrial
Distribution segment serves nearly every sector of U.S. industry
with industrial replacement parts as well as support services. The
Music Distribution segment serves domestic and foreign markets with
a wide variety of music instruments and accessories and
manufactures guitars and other music products for professional and
amateur musicians.
On August 2, 1999, Paul R. Kuhn joined Kaman Corporation as
President, Chief Executive Officer, and a member of the Board of
Directors. Prior to that, Mr. Kuhn was senior vice president of the
aerospace engine business for Coltec Industries, Inc. which had
merged with BF Goodrich Co. Mr. Charles H. Kaman, founder of Kaman
Corporation, will continue in his role as Chairman of the Board.
AEROSPACE
The Aerospace segment consists of several operating subsidiaries of
Kaman Aerospace Group, Inc., including Kaman Aerospace Corporation,
Kaman Aerospace International Corporation, K-MAX Corporation, and
Kamatics Corporation. Kaman Electromagnetics Corporation and Kaman
Instrumentation Corporation, two of the smaller subsidiaries in
this group, were merged with Kaman Aerospace Corporation during
1999.
The segment's largest current program is the SH-2G Super Seasprite
helicopter, an advanced, intermediate weight, multi-mission,
maritime aircraft that increases a ship's effectiveness by
expanding its surveillance capability, providing over-the-horizon
warning and targeting of potential threats, and contributing to the
ship's combat capabilities. At present the program generally
involves retrofit of the corporation's SH-2F helicopters
(previously manufactured for the U.S. Navy and currently in desert
storage) to the SH-2G configuration.
The corporation currently has commercial contracts with the
Commonwealth of Australia and the Government of New Zealand for the
supply of SH-2G helicopters. The aircraft is also in service with
the Egyptian Air Force and the U.S. Navy Reserve. The program for
New Zealand involves five (5) SH-2G(NZ) aircraft, and support, for
New Zealand defense forces. The contract has an anticipated value
of $175.4 million (US). Work is proceeding on this program and
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deliveries are scheduled to begin in late 2000. The program for
Australia involves eleven (11) SH-2G(A) aircraft with support,
including a support services facility, for the Royal Australian
Navy. The total contract has an anticipated value of about $675
million (US) and the helicopter production portion of the work is
valued at $557 million (US). The Australian SH-2G(A) will contain
an integrated cockpit and weapons system known as ITAS (Integrated
Tactical Avionics System) that builds on developments in avionics,
sensors, navigation, communication and weaponry to enable a two-man
crew to fly the helicopter and maintain "total sea control" over a
large area of ocean. Initial flight testing of the production
prototype SH-2G(A) began in October of 1999 and deliveries are
scheduled to begin in early 2001. The corporation is actively
monitoring the work of its subcontractors and in certain cases
(specifically, Litton Guidance and Control Systems which is
responsible for a variety of integration software) has established
a resident manager at the subcontractor site. During 1999, the
corporation continued to provide on-site support services to the
Egyptian Air Force following completion of delivery of ten (10)
aircraft to the Republic of Egypt in 1998. The SH-2 is an aircraft
that was originally manufactured for the U.S. Navy and although
no longer being produced for the U.S. Navy, twelve (12) aircraft
are maintained in the U.S. Navy Reserve's active fleet. While these
aircraft remain in service, the corporation will continue providing
logistics and spare parts support for the aircraft. The corporation
has made an agreement with the appropriate federal agencies to take
a consignment of the U.S. Navy's inventory of SH-2 spare parts; the
initial agreement has been extended beyond the scheduled September
1999 expiration date in the expectation that the parties will
eventually reach agreement on a longer term arrangement. The
overall objective is for the corporation to provide further support
of U.S. Naval Reserve requirements while having the ability to
utilize certain inventory for support of the corporation's other
SH-2 programs. The corporation continues efforts to build and
further enhance familiarization with the SH-2's capabilities among
various foreign governments. This market is highly competitive and
is also influenced by economic and political conditions. The
corporation continues to pursue this business, including possible
further orders from current customers.
The corporation also manufactures the K-MAX medium to heavy lift
"aerial truck" helicopter which has a variety of potential
applications, including logging, oil and gas exploration, power
line and other utility construction, fire fighting, movement of
equipment and high altitude projects. K-MAX, now in its sixth year
of commercial operation, is based on the corporation's intermeshing
rotor technology with servo-flap control. Constructed with fewer
components and less airframe weight, the K-MAX has increased
payload capacity and lower manpower, maintenance and spare parts
inventory requirements, resulting in a cost-effective tool for
industries requiring medium to heavy repetitive lift capabilities.
The corporation has been conservative in its production of this
aircraft since inception, however the program continues to
experience market difficulties due in significant part to
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conditions in the U.S. and Canadian logging industries, the
aircraft's "launch" application and principal market to date.
During the past two years, significant weakness in the logging
industry has adversely affected certain current customers as well
as potential customers and curtailed sales of the aircraft. The
corporation's commercial efforts have been refocused on further
development of the aircraft's other applications. These efforts are
ongoing, however, successful sales development in these markets and
profitability for the program will take some time to achieve. In
addition, K-MAX has shown its capabilities in the noncombat role of
vertical replenishment for the military through two successful
demonstrations for the U.S. Navy Military Sealift Command; during
1999, the corporation bid on a three year charter/lease project
involving two aircraft and was notified during the fourth quarter
of the year that a helicopter operator had been awarded the
contract.
The corporation is a subcontractor on a number of commercial and
defense aviation programs, including production of wing structures
and other components for virtually all Boeing commercial aircraft
as well as components for the McDonnell Douglas C-17 transport, the
Comanche helicopter and the F-14 and F-22 fighters. The corporation
also manufactures self-lubricating bearings for use principally in
aircraft flight controls, turbine engines and landing gear, which
are used extensively in today's commercial airliners, as well as
driveline couplings for use principally in helicopters. During
1999, the corporation experienced some softness in these businesses
due to a slowdown of growth trends in the commercial aviation
industry and the efforts of major manufacturers, particularly
Boeing (which is a long standing and important customer of the
segment) to increase efficiency within their own operations by
implementing new inventory and procurement practices.
Among its smaller programs, the corporation develops and
manufactures high reliability memory systems that are used in over
120 airborne, shipboard and ground based programs. The corporation
also designs and manufactures fuzing and safing devices used in a
wide range of missiles and manufactures high precision non-contact
measuring systems and high performance microwave cable assemblies
for commercial, industrial and military applications.
INDUSTRIAL DISTRIBUTION
The Industrial Distribution segment consists of Kaman Industrial
Technologies Corporation and its Canadian subsidiary, Kaman
Industrial Technologies, Ltd.
This segment is the third largest distributor of industrial
parts in North America, serving the electrical/mechanical power
transmission and bearing, fluid power, motion control and materials
handling segment of the overall industrial distribution industry
through its computer linked network of branches and distribution
centers across the U.S. and in British Columbia, Canada. The
company supplies nearly every sector of manufacturing and
processing industry in North America, offering more than one
million individual items in various product groups representing
more than one thousand manufacturers. The segment's product
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offerings range from virtually every type of bearing made, from
simple nylon sleeve bearings to super-precision ceramic hybrids;
and include hydraulic and pneumatic products and services; power
transmission components and materials handling equipment;
electrical products and components, including AC/DC electric
motors, and AC/DC adjustable speed drives, controls and sensors;
linear motion components and subsystems, including linear bearings,
bushings, shafts, rails and ball screws; accessories and
maintenance items such as lubricants, adhesives, sealants,
chemicals, specialty tools, and other products. The products that
the segment purchases for distribution are for the most part
derived from traditional technologies, although the segment is
increasingly selling products with the higher technological content
required to support automated production processes. In addition to
providing products, the segment can also monitor processes for
efficiency and improvement opportunity, and provide inventory
management, just-in-time delivery, and cost savings analysis
(called Documented Savings (Trade Mark)). In addition, the
segment's state-of-the-art computer system provides electronic data
interchange and direct links to customers' and suppliers'
purchasing departments, handling the process from invoice creation
and proposal requests to purchase orders. During 1999, the segment
continued to experience pressure on operating margins due to the
depressed market for a number of key customer industries, chiefly,
mining, primary metals, paper and chemicals where low capacity
utilization adversely affected demand for products distributed by
the segment. In addition, while the distribution business has
traditionally been very competitive, increasing consolidation in
the industry has resulted in even more intense competition. To
address these conditions and bolster its competitive position, the
segment undertook several initiatives in late 1999, including a
reorganization of its sales, marketing, and field management
structure, a consolidation of certain branches and closure of
others and an extensive program to remove obsolete or excess
inventory to the ongoing organization.
MUSIC DISTRIBUTION
The Music Distribution segment consists of Kaman Music Corporation,
KMI Europe, Inc., and a Canadian subsidiary, B&J Music Ltd.
This segment is the largest independent distributor of music
instruments and accessories in the U.S., offering more than 10,000
music instruments and accessories to over 65 countries out of seven
facilities in the United States and Canada. Products range from
the segment's proprietary products, including Ovation (Registered
Trademark) and Hamer (Registered Trademark) guitars, to
distribution of the Takamine (Registered Trademark) guitar line, as
well as percussion instruments such as the Toca (Registered
Trademark) line of Latin-style percussion instruments and Gibraltar
(Registered Trademark) percussion hardware, to instructional
instruments such as violins, violas, horns, drums and other
percussion products and accessories. During 1999, the segment
implemented a state-of-the-art supply chain management software
system that enables it to offer customers such services as
inventory management, just-in-time delivery, Internet access, and
electronic data interchange.
Page 4
FINANCIAL INFORMATION
Information concerning each segment's performance for the
last three fiscal years appears in the corporation's 1999 Annual
Report to Shareholders and is included in Exhibit 13 to this Form
10-K, and is incorporated by reference.
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
1997 1998 1999
------ ------ ------
Aerospace 27.6% 38.1% 37.8%
Scientific Services (1) 13.9% ---- ----
Industrial Distribution 45.9% 50.1% 50.3%
Music Distribution 12.6% 11.8% 11.9%
------ ------ ------
Total 100.0% 100.0% 100.0%
(1) The Scientific Services segment, which consisted of
Kaman Sciences Corporation, the corporation's defense
information technology business, was sold on
December 30, 1997.
RESEARCH AND DEVELOPMENT EXPENDITURES
Government sponsored research expenditures by the
Aerospace and Scientific Services segments were $11.3
million in 1999, $13.2 million in 1998, and $75.7 million in
1997. Independent research and development expenditures were
$4.9 million in 1999, $8.5 million in 1998, and $6.9 million
in 1997. The Scientific Services segment which conducted
significant government sponsored research in 1997 was sold on
December 30, 1997.
Page 5
BACKLOG
Program backlog of the Aerospace segment was approximately
$580.1 million at December 31, 1999, $757.1 million at December 31,
1998, and (together with the Scientific Services segment which was
sold on December 30, 1997) $935.2 million at December 31, 1997.
The corporation anticipates that approximately 56% of its backlog
at the end of 1999 will be performed in 2000. Approximately 8.8%
of the backlog at the end of 1999 is related to U.S. 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.
GOVERNMENT CONTRACTS
During 1999, approximately 84.4% 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 Aerospace 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 has
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. The
corporation's FAA certified K-MAX helicopters compete with military
surplus helicopters and other commercial helicopters used for
lifting, as well as with alternative methods
Page 6
of meeting lifting requirements. The corporation competes for its
subcontract aircraft structure and specialty aircraft component
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 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, specialty self-lubricating bearings
and couplings, the 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 the United States and global
economic conditions; 5) the timing, degree and scope of market
acceptance for products such as a repetitive lift helicopter; 6)
U.S. industrial production levels; 7)achievement and continuation
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, 1999, the Corporation employed 4,025
individuals throughout its industry segments and corporate
headquarters as follows:
Aerospace 2,023
Industrial Distribution 1,532
Music Distribution 395
Corporate Headquarters 75
-----
4,025
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 2020.
These patents are allocated among the corporation's industry
segments as follows:
U.S. PATENTS FOREIGN PATENTS
Segment Issued Pending Issued Pending
Aerospace 77 4 55 10
Industrial Distribution 0 0 0 0
Music Distribution 9 0 4 0
-- -- -- --
86 4 59 10
Trademarks of Kaman Corporation include Adamas, Applause,
Hamer, KAflex, KAron, K-MAX, Magic Lantern, and Ovation. In all,
the corporation maintains 213 U.S. and foreign trademarks with 14
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 enforcement 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.
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
Twenty-Six and Three Tenths percent (26.3%) of the sales of
the corporation made in 1999 were to customers located outside the
United States. In 1999, the corporation continued its efforts to
develop international markets for its products and foreign sales
(including sales for export); and during 1999 the corporation
continued 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 late 2000/early 2001 time frame.
Additional information required by this item appears in the
Page 9
corporation's 1999 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 1999, 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. The corporation did not experience any
adverse impact upon its business operations with the arrival of the
year 2000, however the program managers from each of the operating
subsidiaries as well as the oversight committee at corporate
headquarters (both groups being part of the compliance program
described in the corporation's SEC reports during 1999) will
continue to monitor this item for several months. Additional
information concerning this item appears in the corporation's 1999
Annual Report to Shareholders and is included in Exhibit 13 to this
Form 10-K, and is incorporated herein by reference.
ITEM 2. PROPERTIES
The corporation occupies approximately 3.27 million square
feet of space throughout the United States, Canada and Australia,
distributed as follows:
SEGMENT SQUARE FEET
(in thousands as of 12/31/99)
Aerospace 1,641
Industrial Distribution 1,185
Music Distribution 399
Corporate Headquarters 40
-----
Total 3,265
Page 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. 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 Facilities Lease Agreement with a
five (5) year term expiring in March 2003. The corporation also
occupies a facility in Nowra, New South Wales, Australia under a
contract providing for a ten (10) year term expiring June, 2010.
The Industrial Distribution segment's facilities are located
throughout the United States with principal facilities located in
California, Connecticut, New York, Kentucky and Utah. Additional
Industrial Distribution segment facilities are located in British
Columbia, Canada. These facilities consist principally of regional
distribution centers, branches 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 1999.
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
1999 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.
QUARTERLY CLASS A COMMON STOCK INFORMATION
- -----------------------------------------------------------------
High Low Close Dividend
1999
First $16.13 $11.56 $12.81 $.11
Second 16.00 10.75 15.69 .11
Third 16.00 12.31 12.75 .11
Fourth 13.13 10.06 12.88 .11
- -----------------------------------------------------------------
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
- -----------------------------------------------------------------
QUARTERLY DEBENTURE INFORMATION (6% Conv. Subordinated)
- -----------------------------------------------------------------
High Low Close
- -----------------------------------------------------------------
1999
First $ 99.88 $94.00 $ 97.00
Second 103.00 96.00 100.00
Third 100.00 94.00 97.50
Fourth 97.50 91.00 97.00
- -----------------------------------------------------------------
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
- -----------------------------------------------------------------
NASDAQ market quotations reflect inter-dealer prices,
without retail mark-up, mark-down, or commission and may not
necessarily represent actual transactions.
Page 12
ANNUAL MEETING
The Annual Meeting of Shareholders of the corporation will be
held on Tuesday, April 11, 2000 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 it is expected that 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 1999 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
1999 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
1999 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, 56, has been a Director
since 1996. He is President and
Chief Executive Officer of Galaxy
Aerospace Company L.P. Prior to that
he was President and Chief Executive
Officer of Learjet, Inc.
Page 13
T. Jack Cahill Mr. Cahill, 51, has held various
positions with Kaman Industrial
Technologies Corporation, a subsidiary
of the corporation, since 1975, and has
been President of that subsidiary since
1993.
E. Reeves Callaway, III Mr. Callaway, 52, has been a Director
since 1995. He is President of The
Callaway Advanced Technology Corporation.
Frank C. Carlucci Mr. Carlucci, 69, has been a Director
since 1989. Prior to that he served as
U.S. Secretary of Defense. He is Chairman
of The Carlyle Group, merchant bankers,
and Chairman of Nortel Networks
Corporation (formerly Northern Telecon).
Mr. Carlucci is also a director of
Ashland, Inc., Neurogen Corporation,
Pharmacia & Upjohn, Inc., Quaker Oats
Company, Sun Resorts, Ltd., N.V., Texas
Biotechnology Corporation, and
IRI International Corporation.
Laney J. Chouest, M.D. Dr. Chouest, 46, has been a Director
since 1996. He is Owner-Manager
of Edison Chouest Offshore, Inc.
Candace A. Clark Ms. Clark, 45, has been Senior Vice
President and Chief Legal Officer and
Secretary since 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, 67, 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.
Ronald M. Galla Mr. Galla, 49, 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 director of the
corporation's Management Information
Systems since 1984.
Page 14
Robert M. Garneau Mr. Garneau, 56, 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.), 71,
President of Kaman Aerospace
International Corporation, a
subsidiary of the corporation, since
1995, retired from employment with
that company effective March 1, 2000.
He has been a Director since 1991
and will continue in that capacity.
In addition, he will be a consultant
to the corporation for a period of
two years. 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, 80, has been Chairman of the
Board of Directors since 1945. Until
1999 he was also President and Chief
Executive Officer of the corporation.
C. William Kaman II Mr. Kaman, 48, has been a Director
since 1992. He is Chairman and CEO 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 of the
corporation and was President of
Kaman Music Corporation, a subsidiary of
the corporation. Mr. Kaman is the son of
Charles H. Kaman, Chairman of the Board
of Directors of the corporation.
Walter R. Kozlow Mr. Kozlow, 64, has been President of
Kaman Aerospace Corporation, a subsidiary
of the corporation, since 1986, and has
held various positions with Kaman
Aerospace Corporation since 1960.
Page 15
Eileen S. Kraus Ms. Kraus, 61, has been a Director since
1995. She is Chairman (Connecticut) of
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, Bestfoods Corporation, ConnectiCare
Holding Co., Inc. and ConnectiCare, Inc.
Paul R. Kuhn Mr. Kuhn, 57, was appointed President and
Chief Executive Officer of the corporation
and was elected a Director in 1999. From
1998 to 1999 he was Senior Vice President,
Operations, Aerospace Engine Business,
for Coltec Industries, Inc. Prior to that
he was Group Vice President, Coltec
Industries, Inc. and President of its
Chandler Evans division.
Hartzel Z. Lebed Mr. Lebed, 72, has been a Director since
1982, and served as Vice Chairman of the
Board of Directors from January, 1999 to
September, 1999. He is the retired
President of CIGNA Corporation.
Walter H. Monteith, Jr. Mr. Monteith, 69, has been a Director
since 1987. He is the retired Chairman
of Southern New England Telecommuni-
cations Corporation.
Wanda L. Rogers Mrs. Rogers, 67, has been a Director
since 1991. She is President and Chief
Executive Officer of Rogers Helicopters,
Inc. She is also a director of Clovis
Community Bank.
Robert H. Saunders, Jr. Mr. Saunders, 59, 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 and also held
the position of Senior Executive Vice
President of Kaman Music Corporation
during a portion of that period.
Page 16
Each Director and Executive Officer has been elected for a
term of one year and until his or her successor is elected.
The terms of all 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 11, 2000.
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 1999.
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 17
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 LTIP Comp.
Position Year ($) ($) Comp.(1)($)(2) (#Shares) Payments ($)(3)
- ---------------------------------------------------------------------------
C. H. Kaman 1999 850,000 200,000 363,229 ------- ------- --- 140,000
Chairman
1998 850,000 408,000 116,201 ------- 0/ --- 64,120
125,000
1997 750,000 400,000 ------- ------- ------ --- 56,793
P. R. Kuhn 1999 250,000(4) 360,000 ------- 706,250 100,000/--- 3,661
President 180,000
and Chief 1998 ------- ------- ------- ------- ------- --- ------
Executive
Officer 1997 ------- ------- ------- ------- ------- --- ------
R.M.Garneau 1999 400,000 175,000 ------- 43,500 9,000/--- 12,329
Executive 30,000
Vice Pres- 1998 375,000 175,000 ------- 127,500 7,500/--- 12,418
ident and 12,500
Chief 1997 340,000 185,000 ------- 99,375 10,000/--- 10,896
Financial 100,000
Officer
W.R.Kozlow 1999 275,000 140,000 ------- 36,250 7,500/ --- 18,150
President 20,000
Kaman 1998 255,000 100,000 ------- 85,000 7,500/ --- 13,170
Aerospace 10,000
Corporation 1997 240,000 100,000 ------- 79,500 9,000/ --- 13,588
50,000
T.J. Cahill 1999 255,000 51,000 ------- 36,250 7,500/ --- 7,449
President, 15,000
Kaman 1998 245,000 80,000 ------- 85,000 7,500/ --- 7,397
Industrial 7,500
Technologies 1997 230,000 90,000 ------- 79,500 9,000/ --- 7,754
Corporation 50,000
Page 18
<FN>
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: $152,788 on
behalf of C.H. Kaman in 1999 and $91,060 on behalf of C. H. Kaman
in 1998. In addition, domestic services were provided to C.H. Kaman
in the amount of $98,807 in 1999.
2. As of December 31, 1999, aggregate restricted stock holdings
and their year end value were: C.H. Kaman, none; P.R. Kuhn,
50,000 shares valued at $643,750; R.M. Garneau, 17,500 shares
valued at $225,313; W.R. Kozlow, 13,500 shares valued at $173,813;
and T.J. Cahill, 13,500 shares valued at $173,813. Restrictions
lapse at the rate of 20% per year for all awards, beginning one
year after the grant date provided recipient remains an employee of
the corporation or a subsidiary. Awards reported in this column
are as follows: P. R. Kuhn, 50,000 shares in 1999; R. M. Garneau,
3,000 shares in 1999, 7,500 shares in 1998, and 7,500 shares in
1997; W.R. Kozlow, 2,500 shares in 1999, 5,000 shares in 1998, and
6,000 shares in 1997; and T.J. Cahill, 2,500 shares in 1999, 5,000
shares in 1998, and 6,000 shares in 1997. Dividends are paid on
the restricted stock.
3. Amounts reported in this column consist of: C.H. Kaman,
$53,000 - Officer 162 Insurance Program, $87,000 - medical expense
reimbursement program ("MERP") plus amounts attributable to the
corporation's direct medical expense reimbursement to Mr. Kaman;
P.R. Kuhn, $1,566 - Senior executive life insurance program
("Executive Life"), $2,000 - employer matching contributions to the
Kaman Corporation Thrift and Retirement Plan (the "Thrift Plan
employer match"); $95 - MERP; R.M. Garneau, $3,701- Executive Life,
$851 - Officer 162 Insurance Program, $2,000 - Thrift Plan employer
match, $590 - MERP, $5,187 - all supplemental employer
contributions under the Kaman Corporation Deferred Compensation
Plan ("supplemental employer contributions"); W.R. Kozlow, $7,963
- - Executive Life, $2,000 - Thrift Plan employer match, $5,000 -
MERP, $3,187 - supplemental employer contributions; and T.J.
Cahill, $2,296- Executive Life, $2,000 - Thrift Plan employer
match, $1,328 - MERP, $1,825- supplemental employer contributions.
4. P.R. Kuhn joined the corporation on August 2, 1999 as President
and Chief Executive Officer.
</FN>
Page 19
C) OPTION/SAR GRANTS IN THE LAST FISCAL YEAR:
- ----------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term*
- ----------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options/
SARs**
Options/ Granted to
SARs** Employees Exercise or
Granted in Fiscal Base Price Expiration
Name (#) Year ($/Sh) Date 5%($) 10%($)
- ----------------------------------------------------------------------------
C. H. Kaman 0/ 0/ ----- ------- --------- ---------
0 0
P. R. Kuhn 100,000/ 31.97/ 14.125 8/02/09 2,487,278 6,303,251
180,000 66.67
R. M. Garneau 9,000/ 2.88/ 14.50 2/09/09 355,640 901,261
30,000 11.11
W. R. Kozlow 7,500/ 2.40/ 14.50 2/09/09 250,772 635,505
20,000 7.41
T. J. Cahill 7,500/ 2.40/ 14.50 2/09/09 205,177 519,958
15,000 5.56
*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 20
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*
Options at FY-end (#) at FY-end ($)
acquired on Value exercisable/ exercisable/
Name Exercise(#) realized unexercisable unexercisable
(a) (b) (c) (d) (e)
- -------------------------------------------------------------------
C. H. Kaman none none 20,000/0 102,500/0
P. R. Kuhn " " 0/100,000 0/0
R. M. Garneau " " 32,500/26,500 85,125/12,250
W. R. Kozlow " " 31,500/24,000 83,625/11,250
T. J. Cahill " " 26,000/24,000 58,063/11,250
Value of
Number of Unexercised
Unexercised in-the-money
SARs SARs*
SARs at FY-end (#) at FY-end ($)
acquired on Value exercisable/ exercisable/
Name Exercise(#) realized unexercisable unexercisable
(a) (b) (c) (d) (e)
- -------------------------------------------------------------------
C. H. Kaman none none 25,000/100,000 0/0
P. R. Kuhn " " 0/180,000 0/0
R. M. Garneau " " 42,500/100,000 0/0
W. R. Kozlow " " 22,000/58,000 0/0
T. J. Cahill " " 21,500/51,000 0/0
*Difference between the 12/31/99 FMV and the exercise price(s).
E) LONG TERM INCENTIVE PLAN AWARDS: Except 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:
PENSION PLAN TABLE
Years of Service
Remuneration* 15 20 25 30 35
- -----------------------------------------------------------------
125,000 33,381 44,731 55,412 66,762 66,762
150,000 40,881 54,781 67,862 81,762 81,762
175,000 48,381 64,831 80,312 96,762 96,762
200,000 55,881 74,881 92,762 111,762 111,762
225,000 63,381 84,931 105,212 126,762 126,762
250,000 70,881 94,981 117,662 141,762 141,762
300,000 85,881 115,081 142,562 171,762 171,762
350,000 100,881 135,181 167,462 201,762 201,762
400,000 115,881 155,281 192,362 231,762 231,762
450,000 130,881 175,381 217,262 261,762 261,762
500,000 145,881 195,481 242,162 291,762 291,762
750,000 220,881 295,981 366,662 441,762 441,762
1,000,000 295,881 396,481 491,162 591,762 591,762
1,250,000 370,881 496,981 615,662 741,762 741,762
1,500,000 445,881 597,481 740,162 891,762 891,762
1,750,000 520,881 697,981 864,662 1,041,762 1,041,762
2,000,000 595,881 798,481 989,162 1,191,762 1,191,762
*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 125/129 Plan contributions but not deferrals under a
non-qualified Deferred Compensation Plan), bonus and taxable
income attributable to restricted stock awards and the cash out
of employee stock options. Salary and bonus amounts for the named
Executive Officers for 1999 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.
Page 22
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. Kaman, $1,258,000; Mr. Garneau,
$662,709; Mr. Cahill, $404,937.
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.
The Executive Officers named in Item 11(b) are participants
in the plan and as of December 31, 1999, had the number of years of
credited service indicated: Mr. Kaman - 54.1 years; Mr. Kuhn -
2.0; Mr. Garneau - 18.48 years; Mr. Kozlow - 39.7 years; Mr. Cahill
- - 24.7 years.
Benefits are computed generally in accordance with the
benefit formula described above.
G) COMPENSATION OF DIRECTORS. In general, 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. Such fees may be
received on a deferred basis. In addition, each non-employee
director will receive a Restricted Stock Award for 500 shares
(issued pursuant to the corporation's Stock Incentive Plan),
providing for immediate vesting upon election as a director at the
corporation's 2000 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. In addition, the corporation has entered into certain
Employment Agreements and Change in Control Agreements with certain
Executive Officers, copies of which were filed as exhibits to the
corporation's report on Form 10-Q (Document 54381-99-14) filed with
the Securities and Exchange Commission on November 12, 1999. The
Employment Agreement and Change in Control Agreement for Mr. P. R.
Kuhn were amended and restated as of November 16, 1999, and are
attached as Exhibit 10c(I) and 10c(II), respectively, to this Form
10-K.
Page 23
The corporation has also entered into an agreement with
Admiral Hardisty providing him with a separation payment in the
amount of $370,000 and retaining him as a consultant for a period
of two years following his retirement from regular employment
effective March 1, 2000 at a per diem rate of $1,000.00. A copy of
such agreement is attached as Exhibit 10d to this Form 10-K.
In addition, the corporation has an agreement with Mr. C. William
Kaman, retaining him as a Senior Executive Advisor through December
31, 2001 at the annual rate of $245,000. A copy of such agreement
appears as Exhibit 10(c) to the corporation's 1998 Form 10-K
(Document 54381-99-3) filed with the Securities and Exchange
Commission on March 16, 1999.
Except as disclosed in Item 13, and except as described above and
in connection with the corporation's Pension Plan and the
corporation's non-qualified Deferred Compensation Plan, the
corporation has no other 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.
I) Not Applicable.
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,
Eileen S. Kraus, and Walter H. Monteith, Jr.
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.
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 24
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, 2000 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 64,446(2) 9.65%
c/o AirKaman of
Jacksonville, Inc.
Jacksonville International
Airport
14700 Yonge Drive
Jacksonville, FL 32218
Class B Robert D. Moses 51,177(3) 7.66%
Farmington Woods
Avon, CT 06001
<FN>
(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 39,696 shares held by a partnership controlled by
Mr. Moses.
</FN>
Page 25
(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, 2000 of Class
- --------------------------------------------------------------------
Brian E. Barents Class A 1,500 *
T. Jack Cahill Class A 70,830(1) *
E. Reeves Callaway Class A 1,500 *
Frank C. Carlucci Class A 4,500(2) *
Laney J. Chouest Class A 6,831 *
John A. DiBiaggio Class A 1,500 *
Robert M. Garneau Class A 71,995(3) *
Class B 23,236 3.48%
Huntington Hardisty Class A 36,600(4) *
Charles H. Kaman Class A 160,004(5) *
Class B 258,375(6) 38.69%
C. William Kaman, II Class A 88,288(7) *
Class B 64,446(8) 9.65%
Walter R. Kozlow Class A 93,175(9) *
Class B 296 *
Paul R. Kuhn Class A 50,000 *
Eileen S. Kraus Class A 2,129 *
Hartzel Z. Lebed Class A 17,642(10) *
Walter H. Monteith, Jr. Class A 1,700 *
Wanda L. Rogers Class A 1,500 *
All Directors and
Executive Officers Class A 674,475(11) 2.98%
as a group ** Class B 348,235 52.14%
* 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.
<FN>
(1) Includes 34,100 shares subject to the exercisable portion of
stock options.
(2) Includes 3,500 shares held jointly with Mrs. Carlucci.
(3) Includes 41,300 shares subject to the exercisable portion
of stock options.
(4) Includes 17,100 shares subject to the exercisable portion
of stock options.
Page 26
(5) Excludes the following: 23,132 shares held by Mrs. Kaman;
8,010 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; 127,034 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 70,500 shares held by the Charles H.
Kaman Charitable Foundation, a private charitable foundation.
Includes 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 25,300 shares subject to exercisable portion of
stock options; and excludes 87,582 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 39,600 shares subject to exercisable portion of
stock options.
(10)Includes shares held jointly with Mrs. Lebed, and
8,000 shares held in an Individual Retirement Account,
excludes 480 shares held by Mrs. Lebed.
(11)Includes 212,000 shares subject to exercisable portion of
stock options.
</FN>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1999, the corporation obtained legal services from the
Hartford, Connecticut law firm of Murtha, Cullina, Richter and
Pinney LLP of which Mr. John S. Murtha, who served as a Director of
the corporation through April, 1999, is of counsel. The corporation
also obtained video production services in the amount of $103,642
from Polykonn Corporation, a corporation controlled by Mr. Steven
Kaman, son of Charles H. Kaman, Chairman of the corporation.
Page 27
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 report on Form 8-K was filed during the
fourth quarter of 1999.
Date Filed Item No. Accession Number
----------------------------------------------------
December 21, 1999 5, 7 54381-99-17
Page 28
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 20th day of March, 2000.
KAMAN CORPORATION
(Registrant)
By Paul R. Kuhn, 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:
- -------------------------------------------------------------------
Paul R. Kuhn President, Chief Executive March 20, 2000
Officer and Director
Robert M. Garneau Executive Vice President March 20, 2000
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
Paul R. Kuhn March 20, 2000
Attorney-in-Fact for:
Brian E. Barents Director
E. Reeves Callaway, III Director
Frank C. Carlucci Director
Laney J. Chouest Director
John A. DiBiaggio Director
Huntington Hardisty Director
Charles H. Kaman Director
C. William Kaman, II Director
Eileen S. Kraus Director
Hartzel Z. Lebed Director
Walter H. Monteith, Jr. Director
Wanda L. Rogers Director
Page 29
KAMAN CORPORATION AND SUBSIDIARIES
Index to Financial Statement Schedules
Report of Independent Auditors
Financial Statement Schedules:
Schedule II - Valuation and Qualifying Accounts
Page 30
REPORT OF INDEPENDENT AUDITORS
KPMG LLP
Certified Public Accountants
CityPlace II
Hartford, Connecticut 06103
The Board of Directors and Shareholders
Kaman Corporation:
Under date of January 24, 2000, we reported on the consolidated
balance sheets of Kaman Corporation and subsidiaries as of
December 31, 1999 and 1998 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, 1999, as contained in the 1999 annual report to
shareholders. These consolidated financial statements and our
report thereon are included in the annual report on Form 10-K for
1999. 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,
presents fairly, in all material respects, the information set
forth therein.
/s/ KPMG LLP
Hartford, Connecticut
March 17, 2000
Page 31
KAMAN CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in Thousands)
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
====== ====== ====== ====== ======
YEAR ENDED DECEMBER 31, 1999
Additions
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1999 EXPENSES OTHERS DEDUCTIONS 1999
Allowance for
doubtful
accounts $4,047 $1,355 $----- $ 883(A) $4,519
====== ====== ====== ====== ======
Accumulated
amortization
of goodwill $1,488 $ 110 $----- $----- $1,598
====== ====== ====== ====== ======
<FN>
(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.
</FN>
Page 32
KAMAN CORPORATION
INDEX TO EXHIBITS
Exhibit 3a The Amended and Restated by reference
Certificate of Incorporation
of the corporation, as amended,
has been filed with the Securities
and Exchange Commission on form
S-8POS on May 11, 1994, as
Document No. 94-20.
Exhibit 3b The By-Laws of the corporation by reference
as amended on February 9, 1999
has been filed with the Securities
and Exchange Commission on Form
10-K on March 16, 1999, as
Document No. 99-03.
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 33
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.
Exhibit 10a The Kaman Corporation 1993 Stock by reference
Incentive Plan as amended effective
November 18, 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 10b The Kaman Corporation Employees by reference
Stock Purchase Plan as amended
effective November 19, 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(I) Employment Agreement between Kaman Attached
Corporation and Paul R. Kuhn dated
November 16, 1999.
Exhibit 10c(II) Change of Control Agreement between Attached
Kaman Corporation and Paul R. Kuhn
dated November 16, 1999
Exhibit 10d Agreement between Kaman Corporation Attached
and Huntington Hardisty dated
February 24, 2000.
Exhibit 11 Statement regarding computation Attached
of per share earnings.
Exhibit 13 Portions of the Corporation's Attached
1999 Annual Report to
Shareholders as required by
Item 8.
Exhibit 21 Subsidiaries. Attached
Exhibit 23 Consent of Independent Auditors. Attached
Page 34
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 35