SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
- --- SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED
September 30, 2000.
------------------
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
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 the number of shares outstanding of each of the issuer's
classes of common stock as of October 31, 2000:
Class A Common 21,563,787
Class B Common 667,814
Page 1 of 18 Pages
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets(In thousands)
Assets September 30, 2000 December 31,1999
------ ------------------ ------------------
Current assets:
Cash and cash equivalents $ 63,156 $ 76,249
Accounts receivable (net of
allowance for doubtful
accounts of $4,544 in
2000, $4,519 in 1999) 198,991 156,173
Inventories:
Contracts and other
work in process 54,179 51,987
Finished goods 52,047 58,560
Merchandise for resale 88,828 195,054 89,184 199,731
------- -------
Other current assets 29,854 27,958
-------- -------
Total current assets 487,055 460,111
Property, plant & equip., at cost 169,381 166,754
Less accumulated depreciation
and amortization 106,711 102,422
------- -------
Net property, plant & equipment 62,670 64,332
Other assets 7,940 9,760
-------- --------
$557,665 $534,203
======== ========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Notes payable $ 4,066 $ 4,514
Accounts payable 53,556 48,760
Accrued liabilities 29,802 31,421
Advances on contracts 44,652 50,243
Other current liabilities 33,812 29,499
Income taxes payable 6,116 3,937
-------- -------
Total current liabilities 172,004 168,374
Deferred credits 23,792 22,906
Long-term debt, excl. current portion 24,886 26,546
Shareholders' equity 336,983 316,377
-------- --------
$557,665 $534,203
======== ========
- 2 -
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 1. Financial Statements, Continued:
Condensed Consolidated Statements of Operations
(In thousands except per share amounts)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
-------------------- ------------------
2000 1999 2000 1999
---- ---- ---- ----
Revenues $251,776 $242,581 $768,103 $739,097
Costs and expenses:
Cost of sales 187,323 179,082 574,134 546,446
Selling, general and
administrative expense 49,631 50,601 151,484 154,551
Interest income, net (466) (453) (1,380) (978)
Other expense, net 378 404 1,103 910
-------- -------- -------- --------
236,866 229,634 725,341 700,929
-------- -------- -------- --------
Earnings before income taxes 14,910 12,947 42,762 38,168
Income taxes 5,375 4,750 15,400 14,667
-------- -------- -------- --------
Net earnings $ 9,535 $ 8,197 $ 27,362 $ 23,501
======== ======== ======== ========
Net earnings per share:
Basic $ .41 $ .35 $ 1.18 $ 1.00
Diluted $ .40 $ .34 $ 1.15 $ .97
======== ======== ======== ========
Dividends declared per share $ .11 $ .11 $ .33 $ .33
======== ======== ======== ========
- 3 -
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 1. Financial Statements, Continued:
Condensed Consolidated Statements of Cash Flows
(In thousands)
For the Nine Months
Ended September 30,
--------------------
2000 1999
--------- --------
Cash flows from operating activities:
Net earnings $ 27,362 $ 23,501
Depreciation and amortization 8,657 9,042
Accounts receivable (42,818) 50,334
Inventory 4,677 (3,502)
Accounts payable 4,796 1,195
Advances on contracts (5,591) (37,427)
Income taxes payable 2,179 1,531
Changes in other current assets and liabilities 787 (794)
Other, net 3,949 1,525
-------- --------
Cash provided by (used in) operating
activities 3,998 45,405
-------- --------
Cash flows from investing activities:
Proceeds from sale of businesses and other assets -- 442
Expenditures for property, plant & equipment (7,081) (6,938)
Other, net (623) 54
-------- --------
Cash provided by (used in) investing
activities (7,704) (6,442)
-------- --------
Cash flows from financing activities:
Reductions to notes payable (448) (205)
Reductions to long-term debt (1,660) (1,660)
Purchase of treasury stock (1,116) (8,146)
Dividends paid (7,640) (7,790)
Other, net 1,477 1,323
-------- --------
Cash provided by (used in) financing
activities (9,387) (16,478)
-------- --------
Net increase (decrease) in cash and cash equivalents (13,093) 22,485
Cash and cash equivalents at beginning of period 76,249 65,130
-------- --------
Cash and cash equivalents at end of period $ 63,156 $ 87,615
======== ========
- 4 -
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 1. Financial Statements, Continued:
Notes to Condensed Consolidated Financial Statements
(In thousands)
Basis of Presentation
- ----------------------
The December 31, 1999 condensed consolidated balance sheet amounts
have been derived from the previously audited consolidated balance
sheet of Kaman Corporation and subsidiaries.
In the opinion of management, the balance of the condensed
financial information reflects all adjustments which are necessary
for a fair presentation of the financial position, results of
operations and cash flows for the interim periods presented and are
of a normal recurring nature, unless otherwise disclosed in this
report.
The statements should be read in conjunction with the notes to the
consolidated financial statements included in Kaman Corporation's
1999 Annual Report as filed on Form 10-K.
Cash Flow Items
- ---------------
Cash payments for interest were $2,215 and $2,264 for the nine
months ended September 30, 2000 and 1999, respectively. Cash
payments for income taxes for the comparable periods were $14,682
and $14,436, respectively.
Comprehensive Income
- --------------------
Comprehensive income was $27,235 and $23,595 for the nine months
ended September 30, 2000 and 1999, respectively, as the result of
foreign currency translation adjustments.
Revolving Credit Agreement
- --------------------------
On November 13, the corporation entered into a new revolving credit
agreement that involves eight financial institutions, many of whom
were involved in the previous agreement. The new agreement has a
maximum unsecured line of credit of $225 million which consists of
a $150 million commitment for five years and a $75 million
commitment under a "364 day" arrangement which is renewable
annually for an additional 364 days. The new agreement contains
various covenants, including debt to capitalization and
consolidated interest coverage ratio requirements.
- 5 -
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 1. Financial Statements, Continued:
Notes to Condensed Consolidated Financial Statements
(In thousands)
Stock Repurchase
- ----------------
Subsequent to September 30, 2000, the corporation used $12.2
million to repurchase approximately one million Class A shares
under the corporation's stock repurchase program.
Stock Plans
- -----------
Effective November 14, 2000, the corporation's 1993 Stock Incentive
Plan was amended to extend the period during which then exercisable
non-statutory options or stock appreciation rights can be exercised
to up to one year following a termination of service, but in no
event beyond the term of the option or right. The exercise period
of up to three months for incentive stock options has not changed.
- 6 -
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 1. Financial Statements, Continued:
Notes to Condensed Consolidated Financial Statements
(In thousands except share amounts)
Business Segments
- -----------------
Summarized financial information by business segment is as follows:
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
--------------------- --------------------
2000 1999 2000 1999
--------- --------- --------- --------
Net sales:
Aerospace $ 85,608 $ 86,457 $280,958 $276,396
Industrial Distribution 130,265 123,164 393,599 377,647
Music Distribution 35,630 32,395 92,710 83,706
-------- -------- -------- --------
$251,503 $242,016 $767,267 $737,749
======== ======== ======== ========
Operating profit:
Aerospace $ 10,856 $ 10,327 $ 33,047 $ 33,399
Industrial Distribution 5,200 4,040 16,845 11,216
Music Distribution 2,527 1,618 4,556 3,278
-------- -------- -------- --------
18,583 15,985 54,448 47,893
Interest, corporate and
other expense, net (3,673) (3,038) (11,686) (9,725)
-------- -------- -------- --------
Earnings before income
taxes $ 14,910 $ 12,947 $ 42,762 $ 38,168
======== ======== ======== ========
September 30, December 31,
2000 1999
-------- --------
Identifiable assets:
Aerospace $278,401 $251,443
Industrial Distribution 147,679 141,913
Music Distribution 62,210 53,714
Corporate 69,375 87,133
-------- --------
$557,665 $534,203
======== ========
- 7 -
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 1. Financial Statements, Continued:
Notes to Condensed Consolidated Financial Statements
(In thousands)
Restructuring Charge
- --------------------
The corporation's Industrial Distribution segment has undertaken
initiatives to streamline its operational structure and increase
efficiency. As a result, the segment took a restructuring charge
of $4,132 in the fourth quarter of 1999. Of the total
restructuring charge, approximately $1,300 relates to severance
costs for approximately 65 branch operations and regional
management employees that the segment expects to separate from
service in 2000. During the first nine months of 2000, 47 people
have been separated from service. The remaining balance of the
restructuring charge relates to costs to close ten branches and
three other facilities in 2000.
The following table summarizes the payments made against the
restructuring reserve in 2000:
Employee Branch
Termination Consolidation and
Benefits Facility Closures Total
------------ ----------------- -------
Restructuring reserve-
December 31, 1999 $ 1,300 $ 2,832 $ 4,132
Cash payments (389) (1,247) (1,636)
------ ------ ------
Restructuring reserve-
September 30, 2000 $ 911 $ 1,585 $ 2,496
====== ====== ======
- 8 -
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
- ---------------------
Consolidated revenues for the quarter and nine months ended
September 30, 2000 increased 3.8% and 3.9% respectively, compared
to the same periods of 1999.
Aerospace segment net sales decreased 1.0% and increased 1.7%,
respectively, for the quarter and nine months ended September 30,
2000, compared to the same periods of 1999. The Aerospace
segment's principal programs include the SH-2G multi-mission naval
helicopter and the K-MAX repetitive lift helicopter (which together
currently constitute about 60% of segment sales), subcontract work
involving aircraft structures and the manufacture of components
such as self-lubricating bearings and driveline couplings for
aircraft applications (currently about 30% of segment sales). The
remaining approximately 10% of segment sales currently consist of
advanced technology products.
The SH-2G helicopter program (which constitutes the primary
component of the segment's total helicopter program sales)
generally involves retrofit of the corporation's SH-2F helicopters,
previously manufactured for the U.S. Navy (and in storage) to the
SH-2G configuration. The corporation is currently performing this
work under commercial contracts with the governments of Australia
and New Zealand that were awarded in 1997. The program for New
Zealand involves five (5) aircraft and support for the New Zealand
defense forces. The contract has an anticipated value of $180
million (US), of which 77% has now been recorded as revenue. The
first New Zealand production aircraft began flight testing in
November. Deliveries to New Zealand are scheduled to begin in the
first quarter of 2001.
The program for Australia involves eleven (11) helicopters with
support, including a support services facility, for the Royal
Australian Navy. The total contract has an anticipated value of
about $680 million (US). The helicopter production portion of the
work is valued at $559 million, of which 69% has been recorded as
revenue.
- 9 -
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
The SH-2G(A) helicopter for Australia will contain an integrated
tactical avionics system ("ITAS") which will provide the most
sophisticated, integrated cockpit and weapons system available in
an intermediate weight helicopter. Litton Guidance and Control
Systems, a division of Litton Industries, Inc., is a major
subcontractor for the Australia and New Zealand SH-2G programs,
being responsible for providing avionics system hardware and
integration software. In addition, for the Australia program,
Litton is the designer and integrator of the ITAS software
described above. Litton has indicated publicly that it is incurring
additional costs to perform its fixed price contract with the
corporation for the Australian program. Litton submitted proposals
to the corporation for certain elements of its additional costs
during the first quarter of this year and those matters were either
resolved or continue to be discussed between the parties. In the
third quarter Litton made an additional request for contract
adjustment and the parties are working together and also through a
planned mediation to arrive at a mutually satisfactory resolution
of Litton's performance and funding issues. Litton has also
publicly expressed its commitment to work with the corporation and
the Australian government to successfully complete the SH-2G
program and Litton's work on the Australia program is continuing.
The corporation expects to begin deliveries of a flight
capable helicopter to Australia (albeit without the full ITAS
software) in the first quarter of 2001.
Management anticipates that overall revenues from the Australia and
New Zealand programs will decrease in 2001, as deliveries are made.
The corporation continues to provide on-site support in the
Republic of Egypt for ten (10) SH-2G helicopters that were
delivered in 1998 under that country's foreign military sale
agreement with the U.S. Navy.
The corporation continues its marketing program to build and
enhance familiarization with the SH-2's capabilities among various
foreign governments. This market is highly competitive, takes time
-10-
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
to develop, and is influenced by economic and political conditions.
The corporation continues to pursue this business, including
possible further orders from current customers.
The SH-2 is an aircraft that was originally manufactured for the
U.S. Navy. This is no longer done; however, the U.S. Naval Reserve
maintains ten (10) SH-2G aircraft active in its fleet. While these
aircraft remain in service, the corporation will continue providing
logistics and spare parts support for the aircraft. The
corporation has taken a consignment of the U.S. Navy's inventory of
SH-2 spare parts and has executed a multi-year agreement for this
work with the Department of the Navy. The overall objective is for
the corporation to provide further support of the U.S. Naval
Reserve requirements while having the ability to utilize certain
inventory for support of the corporation's other SH-2 programs.
During the first nine months of this year, the corporation has
sold a total of three (3) K-MAX medium to heavy lift "aerial
truck" helicopters to operators in Europe and the United States,
principally for logging and general construction. During the past
two years, the K-MAX program has experienced market difficulties
due in significant part to conditions in the commercial logging
industry, the aircraft's principal application to date. The
corporation continues its efforts to refocus sales development on
other global market opportunities in industry and government,
including oil and gas exploration, power line and other utility
construction, fire fighting, law enforcement, and movement of
equipment. During the past year, the aircraft has experienced a
few incidents in field operations which have involved clutch
damage. The causes of each incident are still under investigation
by the corporation and appropriate authorities; however, as a
precautionary measure, all customer aircraft have been retrofit.
The corporation is also developing a modified clutch assembly for
the aircraft. Overall, management expects that successful sales
development as well as profitability for the entire program will
take some time to achieve.
The Aerospace segment also performs subcontract work for certain
airframe manufacturing programs and manufactures various
-11-
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
components, including self-lubricating bearings for use principally
in aircraft. During the first nine months of 2000, this business
continued to experience some softness due to a slowdown of growth
trends in the commercial aviation industry. Meanwhile, the
corporation has been pursuing opportunities and has received three
important contracts so far this year. Specifically, MD Helicopters
has awarded the corporation two (2) contracts. The first is a
multi-year program for construction of fuselages for MD 500 and MD
600 commercial helicopters with an estimated potential value of
$100 million. The second is also a multi-year program for the
supply of composite rotor blades for the MD Explorer (Registered
Trademark) helicopter with an estimated potential value, including
options, of $75 million. In addition, Boeing, which is an
important customer of this segment, awarded the corporation a
three-year follow-on contract in August to supply structural parts
for Boeing's line of commercial aircraft, including fixed trailing
edge kits for Boeing 777 and 767 aircraft and other parts and
subassemblies for those aircraft as well as the 737, 747 and 757
aircraft. This Boeing contract has a potential value of $98
million and also contains a three-year option.
The Aerospace segment also produces advanced technology products,
including missile fuzing devices, precision measuring systems,
electromagnetic motors and electro-optic devices. For example, the
segment is part of an industry team, led by Litton Ingalls
Shipbuilding, that is involved in a competition to design an
electric-drive propulsion system for the U.S. Navy's proposed next-
generation DD-21 destroyer. The segment is responsible for
designing the permanent magnet motor that would drive the ship.
The Aerospace segment is continuing to implement "lean thinking"
strategies throughout the organization in order to further enhance
efficiency and reduce costs.
-12-
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Industrial Distribution segment net sales increased 5.8% and 4.2%
for the quarter and nine months ended September 30, 2000,
respectively, compared to the same periods of 1999. These results
are attributable to healthy market conditions as well as internal
initiatives implemented earlier in the year in order to increase
efficiency and service to customers. Customers of this segment
include nearly every sector of U.S. industry, so this business
tends to be influenced by industrial production levels. Management
is closely monitoring recent indications that U.S. industrial
production growth may be slowing.
The Industrial Distribution segment has also implemented its
Internet e-Commerce site which contains a complete catalog of
product offerings (including more than one million industrial
products) and provides an important new channel for both current
and potential customers to transact business with the segment.
Music Distribution net sales increased 10.0% and 10.8% for the
quarter and nine months ended September 30, 2000, respectively,
compared to the same periods of 1999, reflecting continued
improvement in domestic markets as well as some increase in demand
internationally. In July, this segment was selected by Fred
Gretsch Enterprises to assume global sales and marketing
responsibility for Gretsch brand professional quality drum
products, a business that complements the segment's current drum
set offerings.
Total operating profit for the corporation's segments for the
quarter ended September 30, 2000 increased 16.3% from the same
quarter of 1999; total operating profit for the segments for the
nine months ended September 30, 2000 increased 13.7% compared to
the same period of 1999. The second quarter of 1999 included the
reversal of a $2.5 million reserve established in 1994 associated
with Raymond Engineering (now part of Kaman Aerospace). If this
gain is not included in the calculation, the segments' total
operating profit for the nine months' period increased 19.9% over
the comparable period of 1999. These results are principally
- 13 -
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
attributable to increased sales and improved operating efficiency
in the Industrial and Music Distribution segments. For the
Industrial Distribution segment, operating profit increased 28.7%
and 50.2% for the quarter and nine months ended September 30, 2000,
respectively. Operating profit for the Music Distribution business
was up 56.2% and 39.0% for the quarter and the nine months ended
September 30, 2000. In the Aerospace segment, operating profit
increased 5.1% for the quarter ended September 30, 2000. Operating
profit in the Aerospace segment was down 1.1% for the nine months
ended September 30, 2000, however if such reserve reversal is not
included in the calculation, operating profit for the Aerospace
segment increased 7.0% for the nine months' period. The principal
contributors to Aerospace segment operating profit during these
periods were the aircraft structures and components business and
the SH-2G helicopter programs.
Net earnings for the third quarter of 2000 were $9.5 million
compared to $8.2 million for the third quarter of 1999. For the
first nine months of 2000, net earnings were $27.4 million,
compared to $23.5 million a year ago. The second quarter of 1999
included a gain from the Aerospace segment reserve reversal
described above. If the reserve reversal is not included in
earnings, the 1999 nine months net earnings were $22.0 million.
For the nine months ended September 30, 2000, interest income
earned from investment of surplus cash more than offset interest
expense.
The consolidated effective income tax rate was 36.0% for the first
nine months of 2000 compared to 38.4% for the same period of 1999.
Liquidity and Capital Resources
- -------------------------------
The corporation's cash flow from operations has generally been
sufficient to finance a significant portion of its working capital
and other capital requirements.
-14-
KAMAN CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION, Continued
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
During the first nine months of 2000, positive cash flows from
operating activities were significantly impacted by increases in
accounts receivable for the Aerospace segment's SH-2G helicopter
program as well as accounts receivable increases in the Industrial
Distribution segment due to increased sales. Decreases in
inventories for the Aerospace segment and an increase in accounts
payable in the Industrial Distribution segment offset this impact
to some degree. During the nine month period, cash used in
investing activities was for items such as acquisition of machinery
and computer equipment used in manufacturing and distribution.
Cash used by financing activities was primarily attributable to the
payment of dividends to common shareholders and the sinking fund
requirement for the corporation's debentures (described below).
In February 2000, the corporation's board of directors approved a
stock repurchase program providing for repurchase of an additional
1.4 million Class A common shares for use in connection with
administration of the corporation's stock plans and for general
corporate purposes. Subsequent to September 30, 2000, approximately
1 million Class A shares were repurchased under the program, for a
total of 1.044 million Class A shares to the date of this report.
The corporation had $63.2 million in cash and cash equivalents at
September 30, 2000, with an average of $62.5 million for the nine
month period. These funds have been invested in high quality short
term investments.
At September 30, the corporation had approximately $26.5 million of
its 6% convertible subordinated debentures outstanding. The
debentures are convertible into shares of Class A common stock at
any time on or before March 15, 2012 at a conversion price of
$23.36 per share, generally at the option of the holder. Pursuant
to a sinking fund requirement that began March 15, 1997, the
corporation redeems approximately $1.7 million of the outstanding
principal of the debentures each year.
-15-
As of September 30, 2000, the corporation had no outstanding
borrowings under its $250 million revolving credit agreement that
was scheduled to expire in January 2001. On November 13,
the corporation entered into a new revolving credit agreement that
is better suited to its projected borrowing needs. The arrangement
involves eight financial institutions, many of whom were involved
in the previous agreement. The new agreement has a maximum
unsecured line of credit of $225 million which consists of a $150
million commitment for five years and a $75 million commitment
under a "364 day" arrangement which is renewable annually for an
additional 364 days. The new agreement contains various covenants,
including debt to capitalization and consolidated interest coverage
ratio requirements. The corporation has received a BBB investment
grade rating from Standard & Poors for the new agreement.
Letters of credit are generally considered borrowings for purposes
of the new and the previous revolving credit agreements. The
governments of Australia and New Zealand made advance payments of
$104.3 million in connection with their SH-2G contracts in 1997 and
those payments were fully secured by the corporation through
issuance of irrevocable letters of credit. At present, the face
amount of these letters of credit has been reduced to $41.2 million
in accordance with the terms of the relevant contracts. Further
reductions are anticipated as certain contract milestones are
reached.
Management believes that the corporation's cash flow from
operations and available unused bank line of credit under its
revolving credit agreement will be sufficient to finance its
working capital and other capital requirements for the foreseeable
future.
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, aircraft structures and components, 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) political
-16-
developments in countries where the corporation intends to do
business; 2) standard government contract provisions permitting
renegotiation of terms and termination for the convenience of the
government; 3) economic and competitive conditions in markets
served by the corporation, including industry consolidation in the
United States and global economic conditions; 4) timing of
satisfactory completion of the Australian SH-2G(A) program; 5) the
timing, degree and scope of market acceptance for products such as
a repetitive lift helicopter; 6) U.S. industrial production
levels; and 7) 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.
-17-
KAMAN CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On September 19, 2000, Arthur J. Rocque, Jr., Commissioner of
Environmental Protection for the State of Connecticut instituted
suit in the Superior Court for the Judicial District of Hartford-
New Britain, at Hartford, naming Kaman Aerospace Corporation,
Kamatics Corporation and the Ovation Division of Kaman Music
Corporation as defendants. The complaint alleges certain
regulatory violations (the majority of which are administrative in
nature) at facilities located in Connecticut related to routine
inspections which took place between 1988 and 1998. The complaint
seeks civil penalties and injunctive relief. Management believes
that in all cases where corrective action was required at the time
of such inspections, such action was promptly taken at the time
and management does not anticipate that this matter will be
material to the business or financial condition of the
Corporation.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits to Form 10-Q:
(4) Revolving Credit Agreement between the
corporation and The Bank of Nova Scotia and
Fleet National Bank as Co-Administrative Agents
and Bank One, N.A. as the Documentation
Agent and The Bank of Nova Scotia and Fleet
Securities, Inc. as the Co-Lead Arrangers and
Various Financial Institutions dated as of
November 13, 2000.
(10a) Amendment to Kaman Corporation 1993 Stock
Incentive Plan dated November 14, 2000.
(10b)(i) Employment Agreement between Kaman Aerospace
Corporation and Walter R. Kozlow, dated
September 21, 1999.
-18-
(10b)(ii) Change in Control Agreement between Kaman
Aerospace Corporation and Walter R. Kozlow,
dated September 21, 1999.
(11) Earnings per share computation.
(27) Financial Data Schedule.
(b) Reports on Form 8-K filed in the third quarter of
2000:
A report on Form 8-K was filed on August 16, 2000
reporting that due to Mr. Charles H. Kaman's personal
physician's determination of Mr. Kaman's incapacity
as a result of hospitalization, the power to vote
shares of Class B common stock (the corporation's
only class of voting securities) owned beneficially,
either directly or indirectly by Mr. Kaman and
representing approximately 68.6% of the total voting
power of all voting shares of the corporation, was
transferred to fiduciaries previously designated by
him.
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SIGNATURES
Pursuant to the requirements 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.
KAMAN CORPORATION
Registrant
Date: November 14, 2000 By Paul R. Kuhn
President and Chief
Executive Officer
(Duly Authorized Officer)
Date: November 14, 2000 By Robert M. Garneau
Executive Vice President and
Chief Financial Officer
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KAMAN CORPORATION AND SUBSIDIARIES
Index to Exhibits
Exhibit 4 Revolving Credit Agreement between the corporation
and The Bank of Nova Scotia and Fleet National
Bank as Co-Administrative Agents and Bank One,
N.A. as the Documentation Agent and The
Bank of Nova Scotia and Fleet Securities, Inc. as
the Co-Lead Arrangers and Various Financial
Institutions dated as of November 13, 2000.
Exhibit 10a Amendment to Kaman Corporation 1993 Stock
Incentive Plan as dated November 14, 2000. The
Kaman Corporation 1993 Stock 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(i) Employment Agreement between Kaman Aerospace
Corporation and Walter R. Kozlow, dated September
21, 1999.
Exhibit 10b(ii) Change in Control Agreement between Kaman
Aerospace Corporation and Walter R. Kozlow, dated
September 21, 1999.
Exhibit 11 Earnings Per Share Computation Attached
Exhibit 27 Financial Data Schedule Attached
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