UNITED STATES 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, 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
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.
$334,467,812 as of February 1, 2001.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock as of the latest
practicable date (February 1, 2001).
Class A Common 21,599,776 shares
Class B Common 667,814 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Corporation's 2000 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) medium-to-heavy
lift helicopter, subcontract work involving aircraft structures
and the manufacture of components such as self-lubricating
bearings and advanced technology products. The Industrial
Distribution segment serves nearly every sector of U.S. industry
with industrial repair and OEM products as well as support
services. The Music Distribution segment serves domestic and
foreign markets with a wide variety of musical instruments and
accessories and manufactures guitars and other music products for
professional and amateur musicians.
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.
The segment's largest 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 (in
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 Reserves.
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 $180 million (US). Work is proceeding on
this program and deliveries are scheduled to begin early in the
second quarter of 2001.
Page 1
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 $680 million (US) and the helicopter production portion of
the work is valued at $559 million (US). The Australian SH-2G(A)
will contain an integrated tactical avionics system ("ITAS") that
will provide the most sophisticated, integrated cockpit and
weapons system available in an intermediate-weight helicopter.
With expanded surveillance capability that provides over-the-
horizon warning and targeting of potential threats, the SH-2G is
well adapted for foreign allies that have structured their navies
around smaller ships.
Litton Guidance and Control Systems, a division of Litton Systems,
Inc. and Litton Industries, Inc., has been a major subcontractor
for both the Australia and New Zealand programs, being responsible
for providing avionics system hardware and integration software.
In addition, Litton has been the designer and integrator of the
ITAS system specific to the Australia program. Litton had stated
that it was incurring additional costs to perform its fixed price
contract with the corporation for the Australia program and
submitted claims for such costs to the corporation during 2000.
The corporation's evaluation of the matter was different from
Litton's and the corporation had, in turn, submitted claims to
Litton. In an effort to resolve the entire matter, the parties
conducted a mediation in early February 2001. As a result of that
process, the parties arrived at an agreement in principle under
which the corporation will make certain milestone payments to
Litton as it completes work on hardware and certain software
contemplated under the fixed price contract and Litton will
release its claims against the corporation. In return, Litton
will transfer to the corporation a software integration
laboratory, software and intellectual property rights and the
corporation will release its claims against Litton. In addition,
upon performance of the items described above, Litton's
significant program responsibilities for the Australia program
will end and the corporation will assume responsibility for
several remaining elements of the project. The corporation has
already begun to work with identified subcontractors (who must be
acceptable to the Australian government) to negotiate contracts
to perform those elements. As these contracts are developed, the
overall impact of resolution of the Litton matter upon costs and
profitability for the Australia program will become better
understood. There will be a delay in delivery of the full ITAS
system to the Australian government, although deliveries of
helicopters without the full ITAS system are scheduled to begin
during the first quarter of 2001 and the corporation is working
with the Royal Australian Navy to coordinate these deliveries.
Page 2
During 2000, the corporation continued 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 SH-2 is an aircraft that was originally manufactured for the
U.S. Navy. This is no longer done, however, there are currently
five (5) aircraft 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 taken a consignment of the U.S.
Navy's inventory of SH-2 spare parts and has executed a longer
term agreement with the Department of the Navy. 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 other SH-2G programs.
The corporation continues efforts to build and enhance
familiarization with the SH-2's capabilities among various
governments around the world. This market is highly competitive,
takes time to develop, and is influenced by economic and
political conditions. The corporation continues to actively
pursue this business, including possible further orders from
current customers.
The corporation also manufactures the K-MAX medium-to-heavy lift
helicopter which has a variety of potential applications,
including logging, power line and oil rig construction, fire
fighting, and other commercial applications. The K-MAX program,
which began in late 1994, 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.
During 2000, the Corporation sold four (4) helicopters to
commercial customers operating in the U.S., Europe, and Taiwan,
principally for logging and construction. In December, 2000, the
corporation was awarded a $21 million contract from the U.S.
State Department for the purchase of five (5) helicopters,
equipment and spare parts to be used in Peru in support of
anti-drug efforts. The corporation recognized revenue from
two (2) of these aircraft in 2000 and the contract is expected
to be completed during the second quarter of 2001. The
corporation continues its efforts to refocus sales development
on global market opportunities in industry and government. The
K-MAX program has experienced significant market difficulties
during the past few years, due in part to conditions in the
Page 3
commercial logging industry, the aircraft's principal application
to date. Overall, management expects that successful sales
development as well as profitability for the entire program will
take some time to achieve.
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 Boeing C-17 transport, the Comanche
helicopter and the F-22 fighter. 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 jetliners, as well as driveline
couplings for use principally in helicopters. Although this
business experienced some softness in the market during the year,
there are signs that the commercial aircraft market is
strengthening. The corporation has been pursuing opportunities
and won several significant contracts during 2000. Specifically,
MD Helicopters selected the corporation to supply fuselages for
its entire line of single-engine helicopters, including the
MD600N, MD520N, MD530F and MD 500E helicopters. This multi-year
program has an estimated potential value of $100 million. MD
Helicopters also selected the corporation to supply composite
rotor systems for its MD Explorer helicopter under a multi-year
contract with an estimated potential value, including options,
of $75 million. Boeing, an important customer of the Aerospace
segment, awarded the corporation a three-year follow-on contract
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. The Boeing contract
has an estimated potential value of $98 million and contains a
three-year option.
Among its smaller programs, the Aerospace segment develops and
manufactures advanced technology products, including high-
reliability memory systems used in many airborne, shipboard and
ground-based programs; safe, arm and fuzing devices used in a
wide range of missiles, including the Tomahawk Missile; high-
precision non-contact measuring systems and high-performance
microwave cable assemblies with commercial and military
applications; and high-power permanent magnet motors used
commercially in the oil service industry and militarily for a
variety of uses. In 2000, the corporation was chosen by Litton
Ingalls Shipbuilding as part of a Newport News Shipbuilding-led
team to begin preliminary design of electric propulsion motors
and drive electronics in an industry competition for the U.S.
Navy's proposed next-generation DD21 destroyer.
The Aerospace segment is continuing to implement
"lean-thinking" strategies throughout the organization in
order to further enhance efficiency and reduce costs.
Page 4
INDUSTRIAL DISTRIBUTION
The Industrial Distribution segment consists of Kaman Industrial
Technologies Corporation and its Canadian subsidiary, Kaman
Industrial Technologies, Ltd.
This segment is one of the nation's largest industrial
distributors, supplying nearly every sector of North American
industry with electrical and mechanical power transmission and
bearing, motion control and material handling components through
its network of branches and distribution centers across the U.S.
and in British Columbia, Canada. The company offers more than
one million individual items in various product groups, ranging
from virtually every type of bearing made, from simple nylon
sleeve bearings to super-precision ceramic hybrids; hydraulic
and pneumatic products and services; power transmission
components and materials handling equipment; electrical
products and components, including AC/DC electric motors,
AC/DC adjustable speed drives, controls and sensors; linear
motion components and subsystems, including linear bearings,
bushings, shafts, rails and ball screws; to 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). 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 while its technologically advanced warehouse management
system and strategically located distribution centers provide
the segment the ability to provide same day or next day
delivery of a great majority of products offered. In
addition, during 2000 the segment implemented its internet
e-Commerce site which contains a complete catalog of product
offerings and provides an important new channel for both
current and new customers to transact business with the
segment.
Page 5
The segment benefited during 2000 from healthy market conditions
and internal initiatives implemented early in the year in order
to increase efficiency and service to customers. These
initiatives included consolidation of branch operations, a
reorganization of the sales, marketing and field management
structure, and enhanced inventory controls. Since the segment's
customers include nearly every sector of U.S. industry, this
business tends to be influenced by industrial production levels.
Sales in the fourth quarter of the year were affected by some
weakness in industrial production and management is monitoring
the economic situation during 2001.
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 musical
instruments and accessories in the U.S., offering more than
10,000 musical instruments and accessories world-wide for use
by amateurs and professionals. Products range from the
segment's proprietary products, including Ovation (Registered
Trademark) and Hamer (Registered Trademark) guitars, as well
as the Takamine (Registered Trademark) guitar line to a full
line of distributed fretted instruments, percussion
instruments, and music accessories. The segment's product
line was expanded in 2000 when it was selected
by Fred Gretsch Enterprises to manage global sales and
marketing for Gretsch (Registered Trademark) brand
professional quality drum products. To enhance its service
to customers, the segment maintains 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.
The segment has also implemented a business to business
e-Commerce site and continues to look for ways to reduce
costs and improve efficiency.
Page 6
FINANCIAL INFORMATION
Information concerning each segment's performance for the
last three fiscal years is included in the corporation's 2000
Annual Report to Shareholders (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 each business
segment's products and services to the corporation's
consolidated net sales:
Years Ended December 31
1998* 1999* 2000
------ ------ ------
Aerospace 37.6% 37.3% 37.0%
Industrial Distribution 50.6% 50.8% 50.5%
Music Distribution 11.8% 11.9% 12.5%
------ ------ ------
Total 100.0% 100.0% 100.0%
*Effective December 31, 2000, the corporation adopted Emerging
Issues Task Force Issue No. 00-10, "Accounting for Shipping
and Handling Fees and Costs." Therefore, freight charged to
customers in the Industrial Distribution and Music
Distribution segments is now included in sales rather than
as an offset to freight expense. Therefore, the percentage
contribution for 1998 and 1999 have been restated.
RESEARCH AND DEVELOPMENT EXPENDITURES
Government sponsored research expenditures by the
Aerospace segment were $10.2 million in 2000, $11.3 million
in 1999, and $13.2 million in 1998. Independent research
and development expenditures were $5.5 million in 2000,
$4.9 million in 1999, and $8.5 million in 1998.
Page 7
BACKLOG
Program backlog of the Aerospace segment was approximately
$439.9 million at December 31, 2000, $580.1 million at
December 31, 1999, and $757.1 million at December 31,1998. The
Aerospace segment's award of the commercial contracts with the
governments of Australia and New Zealand resulted in a
significant increase in backlog during 1997. As the Aerospace
segment completes its work on these programs, the segment's
backlog is decreasing and returning to more historic levels.
The corporation anticipates that approximately 56% of its
backlog at the end of 2000 will be performed in 2001.
Approximately 15.1% of the backlog at the end of 2000 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. Virtually all of these funded government
contracts have been signed.
GOVERNMENT CONTRACTS
During 2000, approximately 87.4% of the work performed by
the corporation directly or indirectly for the U.S. 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
Page 8
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 of meeting lifting requirements. The corporation
competes for its subcontract aircraft structures and
components 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, 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 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; 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.
Page 9
EMPLOYEES
As of December 31, 2000, the Corporation employed 3,825
individuals throughout its business segments and corporate
headquarters as follows:
Aerospace 1,885
Industrial Distribution 1,493
Music Distribution 382
Corporate Headquarters 65
-----
3,825
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 business
segments as follows:
U.S. PATENTS FOREIGN PATENTS
Segment Issued Pending Issued Pending
Aerospace 66 4 35 7
Industrial Distribution 0 0 0 0
Music Distribution 6 3 14 0
-- -- -- --
72 7 49 7
Trademarks of Kaman Corporation include Adamas, Applause,
Hamer, KAflex, KAron, K-MAX, Magic Lantern, and Ovation. In all,
the corporation maintains 210 U.S. and foreign trademarks with 23
applications pending, most of which relate to music products in
the Music Distribution segment.
Page 10
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. One such matter, Rocque vs. Kaman, is discussed in
Item 3 (Legal Proceedings). 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.
Page 11
FOREIGN SALES
Twenty-three and four tenths percent (23.4%) of the sales
of the corporation made in 2000 were to customers located outside
the United States. In 2000, the corporation continued its
efforts to develop international markets for its products and
foreign sales (including sales for export); and during 2000 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. Additional information
required by this item is included in the corporation's 2000
Annual Report to Shareholders (Exhibit 13 to this Form 10-K)and
is incorporated herein by reference.
ITEM 2. PROPERTIES
The corporation occupies approximately 3.26 million square
feet of space throughout the United States and in Canada and
Australia, distributed as follows:
SEGMENT SQUARE FEET
(in thousands as of 12/31/00)
Aerospace 1,613
Industrial Distribution 1,096
Music Distribution 513
Corporate Headquarters 40
-----
Total 3,262
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 in June, 2010.
Page 12
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, and Tennessee.
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. Legal proceedings or enforcement
actions relating to environmental matters are discussed in the
section entitled Compliance with Environmental Protection Laws.
On August 3, 2000, Arthur J. Rocque, Jr., Commissioner of
Environmental Protection for the State of Connecticut instituted
suit in state court 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 the resolution of this matter will be material to the
business or financial condition of the corporation.
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 2000.
Page 13
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 is included in the
corporation's 2000 Annual Report to Shareholders (Exhibit 13
to this Form 10-K) and is incorporated herein by reference.
INVESTOR SERVICES PROGRAM
Shareholders of Kaman Class A common stock are eligible to
participate in the Mellon 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
2000
First $12.81 $8.77 $9.75 $.11
Second 11.69 9.44 10.69 .11
Third 15.25 10.50 12.63 .11
Fourth 17.75 11.00 16.88 .11
- -----------------------------------------------------------------
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
- -----------------------------------------------------------------
QUARTERLY DEBENTURE INFORMATION (6% Conv. Subordinated)
- -----------------------------------------------------------------
High Low Close
- -----------------------------------------------------------------
2000
First $ 94.00 $86.00 $88.00
Second 93.00 82.00 82.00
Third 90.00 82.00 84.00
Fourth 92.00 84.00 87.00
- -----------------------------------------------------------------
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
- -----------------------------------------------------------------
Page 14
NASDAQ market quotations reflect inter-dealer prices,
without retail mark-up, mark-down, or commission and may not
necessarily represent actual transactions.
ANNUAL MEETING
The Annual Meeting of Shareholders of the corporation will
be held on Tuesday, April 10, 2001 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 is included in the
corporation's 2000 Annual Report to Shareholders (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 is included in the
corporation's 2000 Annual Report to Shareholders (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 is included in the
corporation's 2000 Annual Report to Shareholders (Exhibit 13
to this Form 10-K) and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Page 15
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, 57, 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.
T. Jack Cahill Mr. Cahill, 52, 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, 53, has been a Director
since 1995. He is President of The
Callaway Advanced Technology Corporation.
Frank C. Carlucci Mr. Carlucci, 70, 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 Telecom).
Mr. Carlucci is also a director of
Ashland, Inc., Neurogen Corporation,
Pharmacia & Upjohn, Inc., Quaker Oats
Company, Sun Resorts, Ltd., N.V., and
Texas Biotechnology Corporation.
Laney J. Chouest, M.D. Dr. Chouest, 47, has been a Director
since 1996. He is Owner-Manager
of Edison Chouest Offshore, Inc.
Candace A. Clark Ms. Clark, 46, has been Senior Vice
President, 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.
Page 16
John A. DiBiaggio Dr. DiBiaggio, 68, 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, 50, 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.
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.), 72,
is the retired President of Kaman
Aerospace International Corporation, a
subsidiary of the corporation.
He has been a Director since 1991
and serves as a consultant
to the corporation. He retired from the
U.S. Navy in 1991 having served as
Commander-in-Chief for the U.S. Navy
Pacific Command since 1988.
Charles H. Kaman Mr. Kaman, 81, has been Chairman of the
Board of Directors since 1945. Until
1999 he was also President and Chief
Executive Officer of the corporation.
He is presently on disability leave.
C. William Kaman II Mr. Kaman, 49, has been a Director
since 1992. He is Chairman and CEO of
AirKaman of Jacksonville, Inc., an
entity unaffiliated 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.
Page 17
John C. Kornegay Mr. Kornegay, 51, has been President of
Kamatics Corporation, a subsidiary of
the corporation, since 1999, and has
held various positions with Kamatics
Corporation since 1988.
Walter R. Kozlow Mr. Kozlow, 65, 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.
Eileen S. Kraus Ms. Kraus, 62, has been a Director
since 1995. She is the retired
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 The Stanley Works and
Chairman of Connecticare Holding
Company and Connecticare, Inc.
Paul R. Kuhn Mr. Kuhn, 59, 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. He is a
director of the Connecticut Business
and Industry Association.
Hartzel Z. Lebed Mr. Lebed, 73, 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, 70, has been a Director
since 1987. He is the retired Chairman
of Southern New England Telecommuni-
cations Corporation.
Wanda L. Rogers Mrs. Rogers, 68, 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.
Page 18
Robert H. Saunders, Jr. Mr. Saunders, 59, became President of
Kaman Music Corporation, a subsidiary
of the corporation, in 1998. 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.
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 10, 2001.
Section 16(a) Beneficial Ownership Reporting Compliance.
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 2000.
Page 19
ITEM 11. EXECUTIVE COMPENSATION
A) GENERAL. The following tables provide certain information
relating to the compensation of the corporation's Chief
Executive Officer and its four other most highly compensated
executive officers.
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* 2000 850,000 ------- 223,316 ------- ------- --- 57,022
Chairman
1999 850,000 200,000 363,229 ------- ------- --- 140,000
1998 850,000 408,000 116,201 ------- 0/ --- 64,120
125,000
P. R. Kuhn 2000 650,000 570,000 ------- 154,688 20,000/ --- 11,924
President 50,000
and Chief
Executive 1999 250,000(4) 360,000 ------- 706,250 100,000/--- 3,661
Officer 180,000
1998 ------- ------- ------- ------- ------- --- ------
R.M.Garneau 2000 425,000 310,000 ------- 77,344 10,000/ --- 25,181
Executive 30,000
Vice Pres- 1999 400,000 175,000 ------- 43,500 9,000/--- 12,329
ident and 30,000
Chief 1998 375,000 175,000 ------- 127,500 7,500/--- 12,418
Financial 12,500
Officer
W.R.Kozlow 2000 300,000 160,000 ------- 61,875 9,000/ --- 26,341
President, 25,000
Kaman 1999 275,000 140,000 ------- 36,250 7,500/ --- 18,150
Aerospace 20,000
Corporation 1998 255,000 100,000 ------- 85,000 7,500/ --- 13,170
10,000
T.J. Cahill 2000 260,000 160,000 ------- 41,250 6,000/ --- 15,670
President, 15,000
Kaman 1999 255,000 51,000 ------- 36,250 7,500/ --- 7,449
Industrial 15,000
Technologies 1998 245,000 80,000 ------- 85,000 7,500/ --- 7,397
Corporation 7,500
Page 20
<FN>
* Mr. Kaman began disability leave on June 15, 2000.
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: $146,806 on behalf of C.H. Kaman in 2000, $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, 2000, aggregate restricted stock holdings
and their year end value were: C.H. Kaman, none; P.R. Kuhn,
55,000 shares valued at $928,400; R.M. Garneau, 18,900 shares
valued at $319,032; W.R. Kozlow, 14,600 shares valued at
$246,448; and T.J. Cahill, 12,600 shares valued at $212,688.
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,
5,000 shares in 2000 and 50,000 shares in 1999; R. M. Garneau,
7,500 shares in 2000, 3,000 shares in 1999, and 7,500 shares
in 1998; W.R. Kozlow, 6,000 shares in 2000, 2,500 shares in
1999, and 5,000 shares in 1998; and T.J. Cahill, 4,000 shares
in 2000, 2,500 shares in 1999, and 5,000 shares in 1998.
Dividends are paid on the restricted stock.
3. Amounts reported in this column consist of: C.H. Kaman,
$53,000 - Officer 162 Insurance Program, $4,022 - medical
expense reimbursement program ("MERP") plus amounts
attributable to the corporation's direct medical expense
reimbursement to Mr. Kaman; P.R. Kuhn, $5,362 - Senior
executive life insurance program ("Executive Life"),
$4,250 - employer matching contributions to the Kaman
Corporation Thrift and Retirement Plan (the "Thrift Plan
employer match"); $2,312 - MERP; R.M. Garneau, $4,544-
Executive Life, $851 - Officer 162 Insurance Program,
$4,250 - Thrift Plan employer match, $1,411 - MERP,
$14,125 - all supplemental employer contributions under
the Kaman Corporation Deferred Compensation Plan
("supplemental employer contributions"); W.R. Kozlow,
$9,841 - Executive Life, $4,250 - Thrift Plan employer
match, $5,000 - MERP, $7,250 - supplemental employer
contributions; and T.J. Cahill, $3,219- Executive Life,
$4,250 - Thrift Plan employer match, $1,951 - MERP, $6,250-
supplemental employer contributions.
4. P.R. Kuhn joined the corporation on August 2, 1999 as
President and Chief Executive Officer.
</FN>
Page 21
C) OPTION/SAR GRANTS IN THE LAST FISCAL YEAR:
- ----------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term*
- ----------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options/
SARs**
Options/ Granted to
SARs** Employees Exercise or
Granted in Fiscal Base Price Expiration
Name (#) Year ($/Sh) Date 5%($) 10%($)
- ----------------------------------------------------------------------------
C. H. Kaman 0/ 0/ ----- ------- --------- ---------
0 0
P. R. Kuhn 20,000/ 8.87/ 10.3125 2/15/10 453,983.31 1,150,482.84
50,000 38.46
R. M. Garneau 10,000/ 4.43/ 10.3125 2/15/10 259,419.03 657,418.76
30,000 23.08
W. R. Kozlow 9,000/ 3.99/ 10.3125 2/15/10 220,506.18 558,805.95
25,000 19.23
T. J. Cahill 6,000/ 2.66/ 10.3125 2/15/10 136,194.99 345,144.85
15,000 11.54
*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) are payable in cash only,
not in shares of common stock.
Options and SARs relate to the corporation's Class A common
stock and vest at the rate of 20% per year, beginning one
year after the grant date.
Page 22
D) AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR, AND
FISCAL YEAR-END OPTION/SAR VALUES.
Number of
Shares under- Value of
lying Unexercised
Unexercised in-the-money
options options*
Shares at FY-end (#) at FY-end ($)
acquired on Value exercisable/ exercisable/
Name Exercise(#) realized unexercisable unexercisable
(a) (b) (c) (d) (e)
- -------------------------------------------------------------------
C. H. Kaman 10,000 47,500 10,000/0 88,800/0
P. R. Kuhn none - 20,000/100,000 55,100/351,750
R. M. Garneau 3,000 19,140 38,300/27,700 212,451.50/110,341
W. R. Kozlow 3,000 22,140 36,600/24,900 204,355.50/98,164.50
T. J. Cahill 1,000 6,750 33,100/21,900 175,525.50/78,462
Value of
Number of Unexercised
Unexercised in-the-money
SARs SARs*
SARs at FY-end (#) at FY-end ($)
acquired on Value exercisable/ exercisable/
Name Exercise(#) realized unexercisable unexercisable
(a) (b) (c) (d) (e)
- -------------------------------------------------------------------
C. H. Kaman none none 50,000/75,000 0/0
P. R. Kuhn " " 36,000/194,000 99,180/725,095
R. M. Garneau " " 71,000/101,500 232,080/399,345
W. R. Kozlow " " 38,000/67,000 118,420/274,867.50
T. J. Cahill " " 36,000/51,500 116,040/199,672.50
*Difference between the 12/31/00 Fair Market Value and the
exercise price(s).
Page 23
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.
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 33,198 44,485 55,109 66,396 66,396
150,000 40,698 54,535 67,559 81,396 81,396
175,000 48,198 64,585 80,009 96,396 96,396
200,000 55,698 74,635 92,459 111,396 111,396
225,000 63,198 84,685 104,909 126,396 126,396
250,000 70,698 94,735 117,359 141,396 141,396
300,000 85,698 114,835 142,259 171,396 171,396
350,000 100,698 134,935 167,159 201,396 201,396
400,000 115,698 155,035 192,059 231,396 231,396
450,000 130,698 175,135 216,959 261,396 261,396
500,000 145,698 195,235 241,859 291,396 291,396
750,000 220,698 295,735 366,359 441,396 441,396
1,000,000 295,698 396,235 490,859 591,396 591,396
1,250,000 370,698 496,735 615,359 741,396 741,396
1,500,000 445,698 597,235 749,859 891,396 891,396
1,750,000 520,698 697,735 864,359 1,041,396 1,041,396
2,000,000 595,698 798,235 988,859 1,191,396 1,191,396
*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
Page 24
named Executive Officers for 2000 are as shown on the Summary
Compensation Table. Compensation deferred under the
corporation's non-qualified deferred compensation plan is
included in Covered Compensation here because it is covered by
the corporation's unfunded supplemental employees' retirement
plan for the participants in that plan.
Current Compensation covered by the Pension Plan for any
named executive whose Covered Compensation differs by more than
10% from the compensation disclosed for that executive in the
Summary Compensation Table: Mr. Cahill, $365,243.
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, 2000, had the number of
years of credited service indicated: Mr. Kaman - 55.1 years;
Mr. Kuhn - 4.0; Mr. Garneau - 19.48 years; Mr. Kozlow - 40.7
years; Mr. Cahill - 25.7 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 2001 Annual
Meeting of Shareholders.
H) EMPLOYMENT CONTRACTS AND TERMINATION, SEVERANCE AND CHANGE
OF CONTROL ARRANGEMENTS. The corporation has 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 Employment
Agreements and Change in Control Agreements with certain
executive officers,
Page 25
copies of which were filed as exhibits to the following filings
made by the corporation with the Securities and Exchange
Commission: Form 10-Q (Document 54381-99-14) filed on November
12, 1999; Form 10-K (Document No. 54381-00-03 filed on March 21,
2000; and Form 10-Q (Document 54381-00-500006) filed on November
14, 2000. The employment agreements generally provide for a
severance payment to be made to any such officer if he or she is
terminated from employment (other than for willful failure to
perform proper job responsibilities or violations of law) or if
he or she leaves employment for good reason (e.g., due to a
diminution in job responsibilities). The agreements have a two
year term which began on September 21, 1999. The change in
control agreements generally provide that, for a three year
period following a change in control of Kaman Corporation or, in
certain cases, a subsidiary thereof, a severance payment will be
made to any such officer if his or her employment ends following
the change in control (unless the termination was for cause, the
officer dies or becomes disabled or if he or she leaves
employment without good reason). The change in control
agreements do not have a fixed term.
The corporation has also entered into an agreement with
Admiral Hardisty providing him with certain payments 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 was attached as Exhibit
10d to the corporation's 1999 Form 10-K (Document 54381-99-3)
filed with the Securities and Exchange Commission on March 21,
2000.
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.
Page 26
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 27
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.
- -----------------------------------------------------------------
Number of Shares
Class of Beneficially Owned
Common Name and Address as of February 1, Percentage
Stock Beneficial Owner 2001 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, 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.
(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 28
(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.
Number of Shares
Class of Beneficially Owned Percentage
Name Common Stock as of February 1, 2001 of Class
- --------------------------------------------------------------------
Brian E. Barents Class A 2,000 *
T. Jack Cahill Class A 81,942(1) *
E. Reeves Callaway Class A 2,000 *
Frank C. Carlucci Class A 5,000(2) *
Laney J. Chouest Class A 7,331 *
John A. DiBiaggio Class A 2,000 *
Robert M. Garneau Class A 87,031(3) *
Class B 23,236 3.48%
Huntington Hardisty Class A ------(4) *
Charles H. Kaman Class A 152,467(5) *
Class B 258,375(6) 38.69%
C. William Kaman, II Class A 69,988(7) *
Class B 64,446(8) 9.65%
Walter R. Kozlow Class A 92,278(9) *
Class B 296 *
Paul R. Kuhn Class A 89,501(10) *
Class B 1,440 *
Eileen S. Kraus Class A 2,713 *
Hartzel Z. Lebed Class A 18,263(11) *
Walter H. Monteith, Jr. Class A 2,200 *
Wanda L. Rogers Class A 2,000 *
All Directors and
Executive Officers Class A 739,495(12) 3.28%
as a group ** Class B 349,675 52.36%
* 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 40,900 shares subject to stock options exercisable
or which will become exercisable within 60 days.
(2) Includes 3,500 shares held jointly with Mrs. Carlucci.
(3) Includes 47,600 shares subject to stock options exercisable
or which will become exercisable within 60 days.
(4) Excludes 21,400 shares held by Mrs. Hardisty.
Page 29
(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 Mrs. Kaman is President and
Mr. Kaman is a Director, in which shares Mr. Kaman disclaims
beneficial ownership; 184,434 shares held by Newgate
Associates Limited Partnership, a limited partnership
established by Mr. Kaman and for which Mr. Kaman previously
served as general partner; 21,816 shares held by Oldgate
Limited Partnership ("Oldgate") a limited partnership
established by Mr. Kaman and for which Mr. Kaman previously
served as 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 10,000 shares subject to stock options exercisable
or which will become exercisable within 60 days.
(6) Excludes the following: 1,471 shares held by Mrs. Kaman.
Also excludes 199,802 shares held by Newgate Associates
Limited Partnership, a limited partnership, which shares
together with the 258,375 shares beneficially owned by
Mr. Kaman, are the subject of a power of attorney and voting
trust established by Mr. Kaman as more particularly described
in Exhibit 10d.
(7) Includes 7,000 shares subject to stock options exercisable
or which will become exercisable within 60 days; and excludes
89,891 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 45,000 shares subject to stock options exercisable
or which will become exercisable within 60 days.
(10)Includes 24,000 shares subject to stock options exercisable
or which will become exercisable within 60 days.
(11)Includes shares held jointly with Mrs. Lebed and
8,000 shares held in an Individual Retirement Account, but
excludes 480 shares held by Mrs. Lebed.
(12)Includes 227,700 shares subject to stock options exercisable
or which will become exercisable within 60 days.
</FN>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 2000, the corporation obtained legal services from
the Hartford, Connecticut law firm of Murtha Cullina LLP of
which Mr. John S. Murtha, who served as a Director of the
corporation through April, 2000, is of counsel. The
corporation also obtained video production services in the
amount of $58,088 from Polykonn Corporation, a corporation
controlled by Mr. Steven Kaman, son of Charles H. Kaman,
Chairman of the corporation. In addition, in 2000 the
corporation paid rental payments in the amount of
Page 30
$92,809 under a lease arrangement with AirKaman of Jacksonville,
Inc. for certain premises occupied by the corporation in
Jacksonville, Florida. AirKaman of Jacksonville, Inc. is a
corporation controlled by C. William Kaman, II, a director of
the corporation. Such lease arrangement was in effect for a
number of years prior to Mr. Kaman's acquisition of AirKaman
of Jacksonville, Inc., was terminated effective December 31,
2000 and in February, 2001, AirKaman of Jacksonville, Inc. paid
the corporation a termination fee of $100,000 as consideration
for such termination. Also in 2000 the corporation utilized
the services of Mr. Ivan Humberto Iraola Pellane as a sales
representative in connection with the sale of the corporation's
K-MAX and SH-2 helicopters for use in Peru. Mr. Iraola Pellane
is the son-in-law of Mr. Walter Kozlow, an Executive Officer
of the corporation. The corporation's agreement with Mr. Iraola
Pellane with respect to the SH-2 helicopter provides for a fee
of $3,000 per month for certain in-country support and marketing
services and also provides for a commission of 2 1/2% on any
sale of the SH-2 helicopter which may ensue. To date no such
sales have occurred. The corporation's agreement with
Mr. Iraola Pellane with respect to the K-MAX helicopter
provides for a commission arrangement of 5% on such sales with
an additional 1% as compensation for after market support
services. In December, 2000, the corporation was awarded a
contract valued at $21 million with the U.S. State Department
for the sale of five K-MAX helicopters for use in Peru.
Payments to Mr. Iraola Pellane for his services under his
commission arrangement are subject to the corporation's
receipt of payment from the customer.
Page 31
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.
(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: None
Page 32
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 15th day of March, 2001.
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 15, 2001
Officer and Director
Robert M. Garneau Executive Vice President March 15, 2001
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
Paul R. Kuhn March 15, 2001
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
C. William Kaman, II Director
Eileen S. Kraus Director
Hartzel Z. Lebed Director
Walter H. Monteith, Jr. Director
Wanda L. Rogers Director
Page 33
KAMAN CORPORATION AND SUBSIDIARIES
Index to Financial Statement Schedules
Report of Independent Auditors
Financial Statement Schedules:
Schedule V - Valuation and Qualifying Accounts
Page 34
REPORT OF INDEPENDENT AUDITORS
KPMG LLP
Certified Public Accountants
One Financial Plaza
Hartford, Connecticut 06103
The Board of Directors and Shareholders
Kaman Corporation:
Under date of February 5, 2001, we reported on the consolidated
balance sheets of Kaman Corporation and subsidiaries as of
December 31, 2000 and 1999 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, 2000, as contained in the 2000 annual report to
shareholders. These consolidated financial statements and our
report thereon are included in the annual report on Form 10-K
for 2000. 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
February 5, 2001
Page 35
KAMAN CORPORATION AND SUBSIDIARIES
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in Thousands)
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
====== ====== ====== ====== ======
YEAR ENDED DECEMBER 31, 2000
Additions
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 2000 EXPENSES OTHERS DEDUCTIONS 2000
Allowance for
doubtful
accounts $4,519 $1,490 $----- $1,373(A) $4,636
====== ====== ====== ====== ======
Accumulated
amortization
of goodwill $1,598 $ 110 $----- $----- $1,708
====== ====== ====== ====== ======
<FN>
(A) Write-off of bad debts, net of recoveries
</FN>
Page 36
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 Revolving Credit Agreement by reference
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 filed as Exhibit 4
to form 10-Q filed with the Securities
and Exchange Commission on November 14,
2000, Document No. 54381-00-500006.
Page 37
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 attached
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 by Document No. 54381-00-500006
on November, 14, 2000) and as amended
effective February 13, 2001,
which amendment is attached hereto.
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 Kaman Corporation Supplemental attached
Employees' Retirement Plan,
as amended
Exhibit 10d Kaman Corporation Deferred attached
Compensation Plan, as amended
Exhibit 10e Kaman Corporation Cash Bonus Plan, attached
as amended
Exhibit 10f Employment Agreements and Change in by reference
Control Agreements with certain
executive officers have been filed
as exhibits to the following
filings by the corporation with the
Securities and Exchange Commission:
Form 10-Q (Document No. 54381-99-14)
filed November 12, 1999; Form 10-K
(Document No. 54381-00-03) filed
March 21, 2000; and Form 10-Q
(Document No. 54381-00-500006)
Filed November 14, 2000.
Page 38
Exhibit 10f(IV) Agreement between Kaman by reference
Corporation and Huntington
Hardisty dated February 24, 2000
has been filed as Exhibit 10d to
the corporation's Form 10-K
Document No. 54381-00-03.
Exhibit 10g Notice of change of control by reference
filed as Exhibit 99 to the
corporation's Form 8-K dated
August 16, 2000 as Document
No. 54381-00-000010.
Exhibit 11 Statement regarding computation attached
of per share earnings.
Exhibit 13 Portions of the Corporation's attached
2000 Annual Report to
Shareholders as required by
Item 8.
Exhibit 21 Subsidiaries. attached
Exhibit 23 Consent of Independent Auditors. attached
Exhibit 24 Power of attorney under which attached
this report has been signed on
behalf of certain directors.
Page 39