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, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-1093
KAMAN CORPORATION
(Exact Name of Registrant)
Connecticut 06-0613548
(State of Incorporation) (I.R.S. Employer Identification No.)
1332 Blue Hills Avenue, Bloomfield, Connecticut 06002
(Address of principal executive offices)
Registrant's telephone number, including area code-(860) 243-7100
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
-Class A Common Stock, Par Value $1.00
-6% Convertible Subordinated Debentures Due 2012
-Series 2 Preferred Stock, Par Value $1.00
-Depositary Shares, each representing one quarter of a
share of Series 2 Preferred Stock
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ X ].
State the aggregate market value of the voting 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.
$1,582,872 as of February 3, 1997.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock as of the latest practicable
date.
Class A Common 18,088,015 shares
Class B Common 667,814 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Corporation's 1996 Annual Report to Shareholders
are incorporated by reference and filed as Exhibit 13 to this
Report. No other documents except those previously filed with
the Commission are incorporated herein by reference.
PART I
ITEM 1. BUSINESS
Kaman Corporation, incorporated in 1945, and its
subsidiaries (collectively, the "Corporation") serve government
and commercial markets through two industry segments:
Diversified Technologies and Distribution. The Diversified
Technologies segment provides aircraft manufacturing, design and
manufacture of advanced technology products and systems, and
advanced technology services. The Distribution segment distributes
industrial products, distributes and manufactures music products
and provides support services to its customers.
DIVERSIFIED TECHNOLOGIES
The Diversified Technologies segment consists of several
wholly-owned subsidiaries, including Kaman Diversified
Technologies Corporation, Kaman Aerospace Corporation, Kaman
Aerospace International Corporation, Kaman Sciences Corporation,
Kamatics Corporation, Kaman Electromagnetics Corporation, and
Kaman Instrumentation Corporation.
An important element of the Diversified Technologies
segment's business is aircraft manufacturing, including the
development and manufacture of helicopters and the integration of
systems related to helicopters, such as advanced electronic systems
and certain of the Corporation's own proprietary systems. The
Corporation has been the prime contractor for the U.S. Navy for the
SH-2 series helicopter, a multi-mission aircraft. Although the
Corporation is not presently manufacturing further aircraft for the
U.S. Navy, sixteen (16) aircraft of the SH-2G configuration are in
the U.S. Navy's Reserve fleet and the Corporation expects to
continue to provide logistics and spare parts support for these
aircraft. The Corporation continues to explore the potential for
use of the SH-2G helicopters by foreign military services that are
buying or building the smaller ships for which this aircraft is
well-suited. In 1996, the Corporation performed work pursuant to a
letter agreement between the Republic of Egypt and the U.S. Navy
for the retrofit into the SH-2G configuration of ten (10) SH-2F
helicopters previously manufactured for the U.S. Navy. The contract
between the Corporation and the U.S. Navy for this work was
finalized in December 1996 and has a value of approximately $150
million, with deliveries scheduled to begin in the fourth quarter
of 1997 and to be completed by the end of 1998. In January 1997
the Corporation was notified by the Australian government that it
had been selected as the "preferred tenderer" in a competition to
supply eleven (11) SH-2G multi-mission helicopters for deployment
aboard Royal Australian Navy ANZAC frigates with deliveries
expected to begin not earlier than 2001. Contract negotiations are
expected to begin in the first quarter of 1997 and take several
months to complete. The aircraft will incorporate an Integrated
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Tactical Avionics System (ITAS) "glass cockpit," new sensors and
advanced systems; therefore while the contract value is presently
undetermined it is expected to be significantly higher in dollar
value than the program for Egypt. In March 1997 the Corporation
was notified by the New Zealand government that it was also
selected as the "preferred tenderer" in a competition to supply
four (4) SH-2G multi-mission helicopters for deployment aboard New
Zealand's ANZAC and Leander class frigates. The total contract
value and deliveries are to be determined during formal contract
negotiations which are expected to begin shortly. In addition, the
Corporation continues to pursue anticipated competitions in
Malaysia, the Philippines, Taiwan, Thailand and elsewhere.
The Corporation also produces a commercial helicopter, known as
the K-MAX (Registered Trademark) "aerial truck" incorporating
intermeshing rotor technology developed by the Corporation. The
K-MAX is an FAA type certificated medium-to-heavy lift helicopter
with operating characteristics that distinguish it from other
helicopters for use in logging, fire fighting, reforestation,
utility power line work, and other applications. The aircraft is
now certified in the United States, Canada, Germany, Switzerland
and Japan. The K-MAX program completed its second full year of
commercial operation in 1996. The production lot of K-MAX
helicopters for 1996 consisted of six (6) aircraft and a similar
number are scheduled for production in 1997. In April 1996, the
U.S. Navy Military Sealift Command ("MSC") awarded the Corporation
a contract to provide an extended demonstration of the K-MAX
helicopter's vertical replenishment ("VERTREP") capability. This
was the second such award which the Corporation received. That
demonstration began in May, with two (2) K-MAX helicopters
supporting MSC airborne cargo movement for a period of seven (7)
months. The value of the contract was $5.7 million. The
demonstration was conducted under a charter/lease arrangement
whereby the Corporation provided the aircraft, crew, and all
maintenance and logistics support. Late in 1996, the MSC announced
a third VERTREP competition for a seven-month deployment with the
Atlantic Fleet in the Mediterranean Sea. The Corporation bid for
this third demonstration, as well, but in February 1997, MSC
announced it had decided to evaluate the services of another
provider. The Corporation has been the only commercial
organization to carry out such VERTREP demonstrations to date, so
the Corporation does not consider it unusual that the government
would choose to award the latest project to another provider in
order to obtain comparative performance data.
Kaman manufactures subcontract aircraft products for
government and commercial customers on programs such as the
McDonnell Douglas C-17 and the Boeing 767 and 777, and is
involved in various programs requiring development of new
technologies such as composite structural components for the F-22
aircraft. It also manufactures ruggedized tape and disk memory
systems used primarily in aircraft, and airborne laser-based
electro-optical imaging and detection systems for military and
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commercial operations. Such electro-optical systems include
imaging LIDAR systems and the Corporation's proprietary Magic
Lantern (Registered Trademark) system which allows underwater
objects to be detected from an airborne platform. In 1996 the
Corporation delivered the first Magic Lantern (registered
trademark) laser-based mine detection system to the U.S. Navy
Reserve forces for deployment on the Corporation's SH-2G
helicopters.
As a second category of its business, the Diversified
Technologies segment also provides advanced technology services
to a number of customers, including all branches of the armed
forces, various Government agencies, the Department of Energy,
Department of Transportation, various defense contractors,
utilities and industrial organizations. The services offered
include software engineering and maintenance, operation of
Government information analysis centers, field and laboratory
testing services, communication system design and analysis,
specialized sensor design, electromagnetic interference and
compatibility evaluations, analysis and simulation of electronic
signals, various types of artificial intelligence systems,
intrusion detection systems, and weapon system evaluation. During
1996 the Corporation was awarded a contract from the U.S. Air Force
for software support services to the Cheyenne Mountain Air Station,
Colorado Springs, Colorado. The contract represents the third
consecutive five year award to the Corporation for this work,
dating back to 1987. The estimated value of the contract is $150
million, inclusive of options, over the next five years.
A third category of this segment's business is developing
and manufacturing various advanced technology products and
systems which are used in markets that the Corporation serves.
Among the products manufactured are self lubricating bearings for
use on aircraft, marine vessels and hydropower plants; flexible
couplings for helicopters; precision measuring instruments used
in a variety of industries; composite flyer bows used in wire
making machinery; RF transmission and delay lines;
telecommunication products; photonic and optical systems; and
safing and fuzing systems for use in missiles. The Corporation
also develops and produces various motors, generators,
alternators, launchers and electric drive systems using
electromagnetic technology. In addition, the Corporation has
contracts with the U.S. government for a number of advanced
technology programs relating to some of the systems described
above and to other proprietary systems developed by the
Corporation.
DISTRIBUTION
The Distribution segment consists of several wholly-owned
subsidiaries including Kaman Industrial Technologies Corporation,
and Kaman Music Corporation. This segment distributes industrial
products, and manufactures and distributes music products.
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Kaman Industrial Technologies Corporation is a national
distributor of industrial products operating through more than
175 locations in 35 states and British Columbia, Canada. The
Corporation supplies a broad range of industries with original
equipment, repair and replacement products needed to maintain
traditional manufacturing processes and, increasingly, with
products of higher technological content that are required to
support automated production processes. The Corporation serves
nearly every sector of heavy and light industry, including
automobile manufacturing, agriculture, food processing, pulp and
paper manufacturing, mining, chemicals, electronics and general
manufacturing. Products available include various types of
standard and precision mounted and unmounted bearings; mechanical
power transmission equipment such as V-belts, couplings, and gear
reducers; electrical power transmission products, motors, AC/DC
controls, sensors and motion control devices; materials handling
equipment, belts, conveyor idlers and pulleys; linear motion
products; hydraulic drive systems and parts; and accessory products
such as lubricants and seals. Although the vast majority of the
Corporation's business consists of resale of products, operations
include some design, fabrication, and assembly work in connection
with products sold.
The Corporation continues to develop certain support service
capabilities in order to meet the maintenance needs of its
customers' manufacturing operations. These services include
electrical panel and systems fabrication centers capabilities and
similar capabilities for hydraulic and pneumatic control panels,
linear positioning systems, and material handling systems. In
1996 the Corporation, on a limited basis, continued to act as a
supplier of capital equipment to various systems engineering and
manufacturing customers by acting as a sales agent for certain
equipment manufacturers. As the Corporation has entered new
market areas, it has invested in new product inventory and in
some instances it has established inventory on consignment in
customer locations. The Corporation maintains a management
information system, consisting of an on-line computer network
linking all of its mainland U.S. and Canadian industrial
distribution facilities, which enhances its ability to provide
more efficient nationwide service and to improve inventory
management. In addition, the Corporation has undertaken
initiatives to address the needs of certain national account
customers that desire to consolidate their vendor base by
entering into "partnering" relationships to broaden geographical
coverage. For larger customers, the Corporation has also
been given the opportunity to provide an "integrated supply"
function involving management of parts inventories and associated
personnel as well as selection of suppliers for the customer's
facility. In 1996 the Corporation opened new branches in the South
and Midwest regions of the United States to service new customers
and develop additional business.
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Kaman Music Corporation distributes more than 10,000
different music instruments and accessories to independent
retailers in the United States and Canada and to
international distributors in over 65 countries. Products
include acoustic, acoustic-electric and electric guitars and
basses, music strings for all fretted instruments, drums,
percussion products and related accessories, instrument and P.A.
amplification systems, electronic tuners and metronomes,
educational percussion and brass instruments and a full range of
accessories for all musical instruments. The Corporation
manufactures and distributes certain guitars under the
Corporation's various brand names including Ovation and Hamer
guitars, and the Trace Elliot range of stringed instrument
amplification equipment. In 1996 the Corporation discontinued its
manufacture of musical instrument strings. Operations of Kaman
Music Corporation are conducted through seven (7)distribution
centers in the United States and Canada, an international sales
division based in the United States, one (1) manufacturing facility
in the United States and one (1) manufacturing facility in Great
Britain.
In 1996 the segment also distributed aviation fuel and
provided aviation services for general and commercial aviation at
Jacksonville International Airport, Jacksonville, Florida where the
Corporation conducted fixed base operations under a contract
with the Port Authority of the City of Jacksonville. This
operation, which was the last of several such operations previously
owned by the Corporation, was sold in February, 1997. See Item 13.
FINANCIAL INFORMATION
Information concerning each segment's performance for the
last three fiscal years appears in the Corporation's 1996 Annual
Report to Shareholders and is included in Exhibit 13 to this Form
10-K, and is incorporated by reference.
PRINCIPAL PRODUCTS AND SERVICES
Following is information for the three preceding fiscal
years concerning the percentage contribution of the Corporation's
classes of products and services to the Corporation's
consolidated net sales:
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Years Ended December 31
1994 1995 1996
------ ------ ------
Diversified Technologies:
Advanced Technology Products
and Systems 6.2%* 5.3% 5.5%
Advanced Technology Services 13.5 12.7 13.2
Aircraft Manufacturing 18.2* 18.0 18.3
---- ---- ----
Segment Total 37.9 36.0 37.0
Distribution:
Industrial Products 46.7 48.0 47.2
Music Products and Other Services 15.4 16.0 15.8
---- ---- ----
Segment Total 62.1 64.0 63.0
Total 100.0% 100.0% 100.0%
===== ===== =====
*Reflects re-configuration of certain business lines.
RESEARCH AND DEVELOPMENT EXPENDITURES
Government sponsored research expenditures by the
Diversified Technologies segment were $68.8 million in 1996,
$70.2 million in 1995, and $82.2 million in 1994. Amounts
shown for 1994 reflect reconfiguration of certain government
sponsored contracts. Independent research and development
expenditures were $8.0 million in 1996, $13.7 million in 1995, and
$21.1 million in 1994.
BACKLOG
Program backlog of the Diversified Technologies segment was
approximately $267 million at December 31, 1996, $218.7 million at
December 31, 1995, and $228.9 million at December 31, 1994.
The Corporation anticipates that approximately 82.6% of its
backlog at the end of 1996 will be performed in 1997.
Approximately 65.5% of the backlog at the end of 1996 is related
to government contracts or subcontracts which are included in
backlog to the extent that funding has been appropriated by
Congress and allocated to the particular contract by the relevant
procurement agency. Certain of these government contracts, less
than 1% of the backlog, have been funded but not signed.
GOVERNMENT CONTRACTS
During 1996, approximately 50.5% of the work performed by
the Corporation directly or indirectly for the United States
government was performed on a fixed-price basis and the balance
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was performed on a cost-reimbursement basis. Under a fixed-price
contract, the price paid to the contractor is negotiated at the
outset of the contract and is not generally subject to adjustment
to reflect the actual costs incurred by the contractor in the
performance of the contract. Cost reimbursement contracts
provide for the reimbursement of allowable costs and an
additional negotiated fee.
The Corporation's United States government contracts and
subcontracts contain the usual required provisions permitting
termination at any time for the convenience of the government
with payment for work completed and associated profit at the time
of termination.
COMPETITION
The Diversified Technologies segment operates in a highly
competitive environment with many other organizations which are
substantially larger and have greater financial and other
resources. For sales of advanced technology products and
systems, the Corporation competes with a wide range of
manufacturers primarily on the basis of price and the quality,
endurance, reliability and special performance characteristics of
those products. Operations also depend in part on the ability to
develop new technologies which have effective commercial and
military applications. Examples of proprietary or patented
products developed by the Corporation include the Magic Lantern
(Registered Trademark) system for detecting underwater objects
from a helicopter, the Kamatics line of specialty bearings and
the Corporation's line of electromagnetic motors and drives,
among others. In providing scientific services and systems
development, the Corporation competes primarily on the basis of
the technical capabilities and experience of its personnel in
specific fields. When bidding for aerospace contracts and
subcontracts, the Corporation competes on the basis of price and
quality of its products and services as well as the availability of
its facilities, equipment and personnel to perform the contract. In
providing spare parts, the Corporation competes with other
helicopter manufacturers on the basis of price, performance and
product capabilities and also on the basis of its experience as a
manufacturer of helicopters. The Corporation's FAA certificated
K-MAX helicopters compete with military surplus helicopters and
other helicopters used for lifting, as well as with alternative
methods of meeting lifting requirements. During 1996 the Department
of Defense continued to pursue its implementation of defense
acquisition reform by emphasizing the use of commercially developed
state-of-the-art technology products and performance-based
procurement standards rather than traditional military
specification standards. The change in defense program
emphasis and greater constraints in the federal budget have
increased the level of competition for defense programs. In
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pursuing opportunities for foreign sales, the Corporation's
competitive position is affected by the political circumstances of
its foreign customers, in addition to budgetary considerations and
other matters.
Distribution operations are subject to a high degree of
competition from several other national distributors and many
regional and local firms both in the U.S. and elsewhere in the
world. Certain musical instrument products of the Corporation
are subject to competition from U.S. and foreign manufacturers
also. 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 both in the United States and Great
Britain, 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 prospects, including future contract
awards and negotiations, the SH-2G and K-MAX helicopter programs,
and other matters that involve a number of uncertainties that may
cause actual results to differ materially from expectations. Those
uncertainties include, but are not limited to: 1) the successful
conclusion of contract negotiations with government authorities,
including foreign governments; 2) political developments in
countries where the Corporation intends to do business; 3) standard
government contract provisions permitting termination for the
convenience of the government; 4) competitive conditions in markets
served by the Corporation; 5) the degree of acceptance of new
products in the marketplace; 6) 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.
EMPLOYEES
As of December 31, 1996, the Corporation employed 5,476
individuals throughout its industry segments as follows:
Diversified Technologies 3,058
Distribution 2,347
Corporate Headquarters 71
-----
5,476
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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 such areas as nuclear
sciences, strategic defense and other commercial, scientific and
defense related 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 2016.
These patents are allocated among the Corporation's industry
segments as follows:
U.S. PATENTS FOREIGN PATENTS
Segment Issued Pending Issued Pending
Diversified Technologies 96 12 59 32
Distribution 22 7 14 4
Trademarks of Kaman Corporation include Adamas, Applause,
Hamer, KAflex, KAron, K-MAX, Magic Lantern, and Ovation. In all,
the Corporation maintains 214 U.S. and foreign trademarks with 34
applications pending, most of which relate to music products in
the Distribution segment.
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 and
inspections by various federal and state environmental agencies and
has entered into agreements and consent decrees at various times in
connection with such reviews. Also on occasion the Corporation
has been identified as a potentially responsible party ("PRP") by
the U.S. Environmental Protection Agency ("EPA") in connection with
the EPA's investigation of certain third party facilities. In each
instance, the Corporation has provided appropriate responses to all
requests for information that it has received, and the matters have
been resolved either through de minimis settlements, consent
agreements, or through no further action being taken by the EPA or
the applicable state agency with respect to the Corporation. With
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respect to such matters, the Corporation has been able to
determine, based on its current knowledge, that resolution of such
matters is not likely to have a material adverse effect on the
future financial condition of the Corporation.
In arriving at this conclusion, the Corporation has taken
into consideration site-specific information available regarding
total costs of any work to be performed, and the extent of work
previously performed. Where the Corporation has been identified
as a PRP at a particular site, the Corporation, using information
available to it, also has reviewed and considered a number of
other factors, including: (i) the financial resources of other
PRPs involved in each site, and their proportionate share of the
total volume of waste at the site; (ii) the existence of
insurance, if any, and the financial viability of the insurers;
and (iii) the success others have had in receiving reimbursement
for similar costs under similar policies issued during the
periods applicable to each site.
FOREIGN SALES
Ninety one and five tenths percent (91.5%) of the sales of
the Corporation are made to customers located in the United
States. Certain retrofit work on SH-2 series helicopters for
delivery to the Republic of Egypt is presently being performed by
the Corporation under an agreement between it and the U.S. Navy
and, because such work is a "foreign military sale" with the U.S.
Government, it is not included in the calculation of foreign
sales. In 1996, the Corporation continued its efforts to develop
international markets for its products and foreign sales
(including sales for export).
ITEM 2. PROPERTIES
The Corporation occupies approximately 3.9 million square
feet of space throughout the United States, Canada, and Great
Britain, distributed as follows:
SEGMENT SQUARE FEET (in thousands)
Diversified Technologies 1,953
Distribution 1,908
Corporate Headquarters 40
Diversified Technologies principal facilities are located in
Arizona, Colorado, Connecticut, Massachusetts, Pennsylvania and
Virginia; other facilities including offices and smaller
manufacturing and assembly operations are located in several other
states, and in 1996 the Corporation opened an office in Turner,
Australia. These facilities are used for manufacturing, scientific
research and development, engineering and office purposes. The
U.S. Government owns 154 thousand square feet of the space occupied
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by Kaman Aerospace Corporation in Bloomfield, Connecticut in
accordance with a facility contract. In 1996 the Corporation sold
approximately 26 acres of land previously owned by it in Colorado
Springs, Colorado to an unrelated third party.
The Distribution segment's facilities are located throughout
the United States with principal facilities located in California,
Connecticut, New York, Texas and Utah with smaller facilities
located in several other states. Additional Distribution segment
facilities are located in British Columbia, and Ontario, Canada;
and in Essex, England. These facilities consist principally of
regional distribution centers, service centers and office space
with a portion used for fabrication and assembly work. Also
included are facilities used for manufacturing musical instruments.
Kaman 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 Distribution segment, are leased and certain of the
Corporation's properties are subject to mortgages.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the
Corporation or any of its subsidiaries is a party or to which any
of their property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security
holders during the fourth quarter of 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
CAPITAL STOCK AND PAID-IN CAPITAL
Information required by this item appears in the
Corporation's 1996 Annual Report to Shareholders and is included
in Exhibit 13 to this Form 10-K, and is incorporated herein by
reference.
DIVIDEND REINVESTMENT PLAN
Registered shareholders of Kaman Class A common stock are
eligible to participate in the Automatic Dividend Reinvestment
Program. A booklet describing the plan may be obtained by
writing to the Corporation's transfer agent, ChaseMellon
Shareholder Services, L.L.C., P. O. Box 590, Ridgefield Park, NJ
07660.
Page 11
QUARTERLY CLASS A COMMON STOCK INFORMATION
- -----------------------------------------------------------------
High Low Close Dividend
- -----------------------------------------------------------------
1996
First $11 1/8 $10 $10 7/8 $.11
Second 13 3/8 10 10 1/8 $.11
Third 11 1/4 9 3/8 10 5/8 $.11
Fourth 13 10 13 $.11
- -----------------------------------------------------------------
1995
First $11 1/2 $10 $ 11 1/8 $.11
Second 13 3/8 10 7/8 12 3/4 $.11
Third 13 11 1/2 11 7/8 $.11
Fourth 12 1/8 10 1/2 11 1/8 $.11
- -----------------------------------------------------------------
QUARTERLY DEBENTURE INFORMATION (6% Conv. Subordinated)
- -----------------------------------------------------------------
High Low Close
- -----------------------------------------------------------------
1996
First $87 $82 $84
Second 86 81 82
Third 85 1/8 80 82
Fourth 87 1/2 82 87
- -----------------------------------------------------------------
1995
First $77 $72 1/2 $74
Second 82 1/2 74 79 1/4
Third 86 80 86
Fourth 87 82 82
- -----------------------------------------------------------------
QUARTERLY DEPOSITARY SHARES INFORMATION
- -----------------------------------------------------------------
High Low Close Dividend
- -----------------------------------------------------------------
1996
First $50 3/4 $47 $48 5/8 $.81 1/4
Second 56 1/2 49 52 $.81 1/4
Third 51 1/2 47 1/2 48 1/2 $.81 1/4
Fourth 54 48 1/2 53 $.81 1/4
- -----------------------------------------------------------------
1995
First $50 $44 3/16 $45 $.81 1/4
Second 56 46 54 1/4 $.81 1/4
Third 54 50 3/4 52 $.81 1/4
Fourth 53 47 47 $.81 1/4
- -----------------------------------------------------------------
NASDAQ market quotations reflect inter-dealer prices,
without retail mark-up, mark-down, or commission and may not
necessarily represent actual transactions.
Page 12
ANNUAL MEETING
The Annual Meeting of Shareholders will be held on Tuesday,
April 15, 1997 at 11:00 a.m. in the offices of the Corporation,
1332 Blue Hills Avenue, Bloomfield, Connecticut 06002.
ITEM 6. SELECTED FINANCIAL DATA
Information required by this item appears in the
Corporation's 1996 Annual Report to Shareholders and is included
in Exhibit 13 to this Form 10-K, and is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Information required by this item appears in the
Corporation's 1996 Annual Report to Shareholders and is included
in Exhibit 13 to this Form 10-K, and is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item appears in the
Corporation's 1996 Annual Report to Shareholders and is included
in Exhibit 13 to this Form 10-K, and is incorporated herein by
reference. Additional financial information is contained in the
Financial Data Schedule included as Exhibit 27 to this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Following is information concerning each Director and
Executive Officer of Kaman Corporation including name, age,
position with the Corporation, and business experience during the
last five years:
Brian E. Barents Mr. Barents, 53, was elected a Director
in November 1996. He is President and
Chief Executive Officer of Galaxy
Aerospace Corp. Prior to that he was
President and Chief Executive Officer of
Lear Jet Inc., a subsidiary of Bombardier,
Inc. He is a director of Intrust Bank of
Wichita and Interactive Flight
Technologies, Inc.
Page 13
T. Jack Cahill Mr. Cahill, 48, has held various
positions with Kaman Industrial
Technologies Corporation, a subsidiary
of the Corporation, since 1975, and has
been President of Kaman Industrial
Technologies since 1993.
E. Reeves Callaway, III Mr. Callaway, 49, has been a Director
since 1995. He is President of The
Callaway Companies, Inc.
Frank C. Carlucci Mr. Carlucci, 66, has been a Director
since 1989. He is Chairman of The
Carlyle Group, merchant bankers. Prior to
that he served as U.S. Secretary of
Defense. Mr. Carlucci is also a director
of Ashland, Inc., Bell Atlantic
Corporation, BDM International,
General Dynamics Corporation, Neurogen
Corporation, Northern Telecom, Ltd.,
Pharmacia & Upjohn, Inc., Quaker Oats
Company, Sun Resorts, Ltd., N.V., Texas
Biotechnology Corporation, and
Westinghouse Electric Corporation.
Laney J. Chouest, M.D. Mr. Chouest, 43, was appointed a Director
at the Corporation's 1996 Annual Meeting
of Shareholders. He is owner-manager of
Edison Chouest Offshore, Inc. and Galliano
Marine. Dr. Chouest is also a director of
Deeptech International, Inc.
Candace A. Clark Ms. Clark, 42, was appointed Senior Vice
President and Chief Legal Officer in
April 1996. Prior to that she served as
Vice President and Counsel. Ms. Clark has
held various positions with the
Corporation since 1985.
John A. DiBiaggio Dr. DiBiaggio, 64, 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.
Edythe J. Gaines Dr. Gaines, 74, has been a Director
since 1982. She is a retired
Commissioner of the Public Utility
Control Authority of the State of
Connecticut.
Page 14
Ronald M. Galla Mr. Galla, 46, 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, 52, 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.), 67, has
been President of Kaman Aerospace
International Corporation, a
subsidiary of the Corporation, since 1995
and he has been a Director since 1991.
He retired from the U.S. Navy in 1991
having served as Commander-in-Chief for
the U.S. Navy Pacific Command since
1988. He is also a director of
Contraves, Inc., MPR Inc., and
CNA Corporation.
Charles H. Kaman Mr. Kaman, 77, has been Chief Executive
Officer and Chairman of the Board of
Directors since 1945. He was also
appointed President in December, 1995,
a position he previously held from 1945
to 1990.
C. William Kaman II Mr. Kaman, 45, has been a Director
since 1992 and has been Executive
Vice President since 1995. He
has held various positions with Kaman
Music Corporation, a subsidiary of the
Corporation, since 1974, and continues
to serve as President of that
subsidiary. Mr. Kaman is the son
of Charles H. Kaman, Chairman, President
and Chief Executive Officer of the
Corporation.
Walter R. Kozlow Mr. Kozlow, 61, has held various
positions with Kaman Aerospace
Corporation, a subsidiary of the
Corporation, since 1960. He has been
President of Kaman Aerospace since 1986.
Page 15
Eileen S. Kraus Ms. Kraus, 58, has been a Director since
1995. She is Chairman of Fleet Bank,
N.A. Since 1979 she has held various
positions at Shawmut Bank Connecticut
and Shawmut National Corporation,
predecessors of Fleet Bank, N.A. and
its holding company, Fleet Financial
Group. She is a director of Yankee
Energy System, Inc., The Stanley Works,
and CPC International, Inc.
Hartzel Z. Lebed Mr. Lebed, 69, has been a Director since
1982. He is the retired President of
CIGNA Corporation and is a director of
Shawmut National Trust Co., a subsidiary
of Fleet Financial Corporation.
Harvey S. Levenson Mr. Levenson, 56, has been a Director
since 1989. He is a managing member
of Hamleg Enterprises, LLC, a private
investment company, having previously
served as President and Chief Operating
Officer of the Corporation from 1990
until his retirement in December, 1995.
Mr. Levenson is also a director of
Connecticut Natural Gas Corporation
and Security-Connecticut Corporation.
Walter H. Monteith, Jr. Mr. Monteith, 66, has been a Director
since 1987. He is the retired Chairman
of Southern New England Telecommuni-
cations Corporation. Mr. Monteith is
also a director of Fleet Bank.
John S. Murtha Mr. Murtha, 83, has been a Director
since 1948. He is counsel to and a
former senior partner of the law firm of
Murtha, Cullina, Richter and Pinney.
Patrick L. Renehan Mr. Renehan, 63, was appointed Senior
Vice President of Kaman Diversified
Technologies Corporation, a subsidiary
of the Corporation, in April 1996. Prior
to that he served as Vice President.
Mr. Renehan has held various positions
with the Corporation since 1983.
Wanda L. Rogers Mrs. Rogers, 64, has been a Director
since 1991. She is President and Chief
Executive Officer of Rogers Helicopters,
Inc. She is also Chairman of the Board of
Clovis Community Bank.
Page 16
Robert H. Saunders, Jr. Mr. Saunders, 56, has been Senior
Vice President since 1995.
Previously he was Vice President and
Chief Financial Officer of the
University of Hartford from 1993 to
1995. Prior to that he was President
of J. M. Ney Corporation.
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 such 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 15, 1997.
No Section 16(a) Reporting delinquencies occurred in 1996.
ITEM 11. EXECUTIVE COMPENSATION
A) GENERAL. The following tables provide certain information
relating to the compensation of the Corporation's Chief Executive
Officer, its four other most highly compensated executive
officers and its directors.
Page 17
B) SUMMARY COMPENSATION TABLE.
Annual Compensation Long Term Compensation
------------------- ----------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
All
Name and Other AWARDS Other
Principal Salary Bonus Annual RSA Options LTIP Comp.
Position Year ($) ($) Comp. ($)(1)(#Shares)Payments ($)(2)
- ---------------------------------------------------------------------------
C. H. Kaman 1996 725,000 340,000 56,252(3) ------ ------ --- 58,412
Chairman and 1995 660,000 275,000 ------ ------ ------ --- 56,145
Chief 1994 660,000 ------- ------ ------ ------ --- 55,261
Executive
Officer
R.M.Garneau 1996 240,000 82,000 ------ 77,813 10,000 --- 7,935
Executive 1995 216,000 80,000 ------ 56,875 7,500 --- 6,485
Vice Pres- 1994 200,000 60,000 ------ ------ ------ --- 4,845
ident and
Chief
Financial
Officer
W.R.Kozlow 1996 233,000 65,000 ------ 62,250 9,000 --- 10,881
President, 1995 226,000 60,000 ------ 56,875 7,500 --- 9,515
Kaman 1994 216,000 60,000 ------ ------ ------ --- 8,636
Aerospace
Corporation
C. W. Kaman 1996 224,000 61,000 ------ 77,813 10,000 --- 3,163
Executive 1995 200,000 25,000 ------ 56,875 7,500 --- 4,398
Vice Presi- 1994 190,000 55,000 ------ ------ ------ --- 3,714
dent and
President,
Kaman Music
Corporation
T. J. Cahill 1996 210,000 70,000 ------ 62,250 9,000 --- 7,952
President, 1995 190,000 55,000 ------ 56,875 7,500 --- 6,530
Kaman 1994 172,000 40,000 ------ ------ ------ --- 5,126
Industrial
Technologies
Corporation
Page 18
1. As of December 31, 1996, aggregate restricted stock holdings and
their year end value were: C.H.Kaman, none; R.M.Garneau, 13,300
shares valued at $172,900; W.R.Kozlow, 11,800 shares valued at
$153,400; C.W. Kaman II, 13,200 shares values at $171,600; and T.
J. Cahill, 12,500 shares valued at $162,500. Restrictions lapse at
the rate of 20% per year for all awards, beginning one year after
the grant date. Awards reported in this column are as follows:
R.M.Garneau, 7,500 shares in 1996 and 5,000 shares in 1995;
W.R.Kozlow, 6,000 shares in 1996 and 5,000 shares in 1995; C.W.
Kaman II, 7,500 shares in 1996 and 5,000 shares in 1995; and T.J.
Cahill, 6,000 shares in 1996 and 5,000 shares in 1995. Dividends
are paid on the restricted stock.
2. Amounts reported in this column consist of: C.H. Kaman,
$53,000 - Officer 162 Insurance Program, $ 5,412 - medical expense
reimbursement program ("MERP"); R.M. Garneau, $2,164 - Senior
executive life insurance program ("Executive Life"), $851 - Officer
162 Insurance Program, $1,875 - employer matching contributions to
the Kaman Corporation Thrift and Retirement Plan (the "Thrift Plan
employer match"), $895 - MERP, $2,150 - all supplemental employer
contributions under the Kaman Corporation Deferred Compensation
Plan ("supplemental employer contributions"); W.R. Kozlow, $5,212 -
Executive Life, $1,875 - Thrift Plan employer match, $1,944 - MERP,
$1,850 - supplemental employer contributions; C.W. Kaman II, $1,126
- - Executive Life, $1,875 - Thrift Plan employer match, $162 - MERP;
T. J. Cahill, $1,340 - Executive Life, $1,875 - Thrift Plan
employer match, $3,112 - MERP, $1,625 - supplemental employer
contributions.
3. The Corporation maintains a program pursuant to which it pays
for tax and estate planning services provided to executive officers
by third parties, up to certain limits. $45,314 of the figure
reported in this column relates to payments for such services on
behalf of Mr. Kaman.
Page 19
C) OPTION/SAR GRANTS IN THE LAST FISCAL YEAR:
- ---------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term*
- ---------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options/
SARs
Options/ Granted to
SARs Employees Exercise or
Granted in Fiscal Base Price Expiration
Name (#) Year ($/Sh) Date 5%($) 10%($)
- ----------------------------------------------------------------------------
C. H. Kaman none ---- --- --- --- ---
R. M. Garneau 10,000 5.9 10.375 2/13/06 16.90 26.91
W. R. Kozlow 9,000 5.3 10.375 2/13/06 16.90 26.91
C. W. Kaman II 10,000 5.9 10.375 2/13/06 16.90 26.91
T. J. Cahill 9,000 5.3 10.375 2/13/06 16.90 26.91
*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.
D) AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR, AND
FISCAL YEAR-END OPTION/SAR VALUES.
- -------------------------------------------------------------------
Value of
Number of Unexercised
Unexercised in-the-money
options/SARs options/SARs
Shares at FY-end (#) at FY-end ($)
acquired on Value exercisable/ exercisable/
Name Exercise(#) realized unexercisable unexercisable
(a) (b) (c) (d) (e)
- -------------------------------------------------------------------
C. H. Kaman None ------ 45,000/-0- 233,125/-0-
R. M. Garneau None ------ 14,900/19,600 63,087/48,600
W. R. Kozlow 1,600 5,000 18,900/18,600 83,587/45,975
C. W. Kaman II 3,200 13,200 14,900/19,600 62,837/48,600
T. J. Cahill 1,600 5,000 10,000/18,000 38,937/43,875
Page 20
E) LONG TERM INCENTIVE PLAN AWARDS: 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 33,750 45,225 56,025 67,500 67,500
150,000 41,250 55,275 68,475 82,500 82,500
175,000 48,750 65,325 80,925 97,500 97,500
200,000 56,250 75,375 93,375 112,500 112,500
225,000 63,750 85,425 105,825 127,500 127,500
250,000 71,250 95,475 118,275 142,500 142,500
300,000 86,250 115,575 143,175 172,500 172,500
350,000 101,250 135,675 168,075 202,500 202,500
400,000 116,250 155,775 192,975 232,500 232,500
450,000 131,250 175,875 217,875 262,500 262,500
500,000 146,250 195,975 242,775 292,500 292,500
750,000 221,250 296,475 367,275 442,500 442,500
1,000,000 296,250 396,975 491,775 592,500 592,500
1,250,000 371,250 497,475 616,275 742,500 742,500
1,500,000 446,250 597,975 740,775 892,500 892,500
*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 Plan contributions but not deferrals under a
non-qualified Deferred Compensation Plan), bonus and taxable
income attributable to restricted stock awards. Salary and bonus
amounts for the named Executive Officers for 1996 are as shown on
Page 21
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. C. H. Kaman, $1,000,000; Mr.
Garneau, $358,879; Mr. Kozlow, $331,384; Mr. C. W. Kaman, II,
$283,966; Mr. Cahill, $304,345.
Federal law imposes certain limitations on annual pension
benefits under the Pension Plan. For the named executive
officers, 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, 1996, had the number of years of
credited service indicated: Mr. C. H. Kaman - 51.10 years; Mr.
Garneau - 15.48 years; Mr. Kozlow - 36.70 years; Mr. C. W. Kaman,
II - 22.20; Mr. Cahill - 21.70 years.
Benefits are computed generally in accordance with the
benefit formula described above.
G) COMPENSATION OF DIRECTORS. Effective January 1, 1997,
non-officer 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 $1,250 for attending each meeting of that Committee.
These fees may be received on a deferred basis. In addition each
such person will receive a 500 share Restricted Stock Award (RSA)
providing for immediate vesting upon election as a director at the
Corporation's 1997 Annual Meeting of Shareholders.
H) EMPLOYMENT CONTRACTS AND TERMINATION, SEVERANCE AND CHANGE
OF CONTROL ARRANGEMENTS. Except as described in connection with
the Corporation's Pension Plan and the Corporation's non-
qualified Deferred Compensation Plan, the Corporation has no
employment contract, plan or arrangement with respect to any
named executive which relates to employment termination for any
reason, including resignation, retirement or otherwise, or a
change in control of the Corporation or a change in any such
executive officer's responsibilities following a change of
control, which exceeds or could exceed $100,000, except as
disclosed in Item 13.
Page 22
I) Not Applicable.
J) COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
IN COMPENSATION DECISIONS.
1) The following persons served as members of the Personnel
and Compensation Committee of the Corporation's Board of Directors
during the last fiscal year: Frank C. Carlucci, Laney J. Chouest,
Edythe J. Gaines, Walter H. Monteith, Jr. and John S. Murtha.
None of these individuals was an officer or employee of the
Corporation or any of its subsidiaries during either the last
fiscal year or any portion thereof in which he or she served as a
member of the Personnel and Compensation Committee. Mr. Murtha's
relationship with the Corporation is further disclosed in Item 13
of this report.
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 23
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.
Following is information about persons known to the Corporation
to be beneficial owners of more than five percent (5%) of the
Corporation's voting securities. Ownership is direct unless
otherwise noted.
- -----------------------------------------------------------------
Class of Number of Shares
Common Name and Address Owned as of Percentage
Stock Beneficial Owner February 1, 1997 of Class
- -----------------------------------------------------------------
Class B Charles H. Kaman 258,375(1) 38.69%
Kaman Corporation
Blue Hills Avenue
Bloomfield, CT 06002
Class B Newgate Associates, Ltd. 199,802 29.91%
c/o Murtha, Cullina,
Richter & Pinney
CityPlace I
185 Asylum Street
Hartford, CT 06103
Class B C. William Kaman, II 55,206 8.27%
Kaman Corporation
Blue Hills Avenue
Bloomfield, CT 06002
Class B Robert D. Moses 48,729(2) 7.30%
Farmington Woods
Avon, CT 06001
(1) Excludes 1,471 shares held by Mrs. Kaman. Excludes
199,802 shares reported separately above and held by
Newgate Associates Limited Partnership, a limited
partnership in which Mr. Kaman serves as general
partner.
(2) Includes 15,192 shares held by Mr. Moses and
33,537 shares held by Paulson and Company as follows:
11,481 shares for the benefit of Mr. Moses, and
22,056 shares held for a partnership controlled by Mr.
Moses.
Page 24
(b) SECURITY OWNERSHIP OF MANAGEMENT. The following is
information concerning beneficial ownership of the Corporation's
stock by each Director of the Corporation, each Executive Officer
of the Corporation named in the Summary Compensation Table, and all
Directors and Executive Officers of the Corporation as a group.
Ownership is direct unless otherwise noted.
Class of Number of Shares Owned Percentage
Name Common Stock as of February 1, 1997 of Class
- --------------------------------------------------------------------
Brian E. Barents ------- ------- -----
T. Jack Cahill Class A 34,525(1) *
E. Reeves Callaway ------- ------- -----
Frank C. Carlucci Class A 3,000(2) *
Laney J. Chouest Class A 5,331 *
John A. DiBiaggio ------- ------- -----
Edythe J. Gaines Class A 2,136 *
Robert M. Garneau Class A 41,310(3) *
Class B 7,970 *
Huntington Hardisty Class A 6,000 *
Charles H. Kaman Class A 248,654(4) 1.13%
Class B 258,375(5) 38.69%
C. William Kaman, II Class A 74,844(6) *
Class B 55,206(7) 8.27%
Walter R. Kozlow Class A 65,439(8) *
Class B 296 *
Eileen S. Kraus Class A 514 *
Hartzel Z. Lebed Class A 13,544(9) *
Harvey S. Levenson Class A 12,120 *
Class B 19,500(10) 2.92%
Walter H. Monteith, Jr. Class A 200 *
John S. Murtha Class A 53,548(11) *
Class B 432 *
Wanda L. Rogers Class A 1,000 *
All Directors and
Executive Officers Class A 562,165(12) 3.03%
as a group ** Class B 341,779 51.18%
Page 25
(1) Includes 10,000 shares subject to the exercisable portion of
stock options.
(2) Held jointly with Mrs. Carlucci.
(3) Includes 14,900 shares subject to the exercisable portion
of stock options.
(4) Excludes the following: 24,132 shares held by Mrs. Kaman;
7,871 shares held by Fidelco Guide Dog Foundation, Inc., a
charitable foundation of which Mr. Kaman is President and
Director, in which shares Mr. Kaman disclaims beneficial
ownership; 184,434 shares held by Newgate Associates
Limited Partnership, a limited partnership of which Mr.
Kaman is the general partner; 21,816 shares held by Oldgate
Associates ("Oldgate") a limited partnership of which Mr. Kaman
is the general partner; 125,034 shares held by Oldgate and as
to which shares Mr. Kaman disclaims beneficial interest, such
portion of Oldgate having been placed in an irrevocable trust;
and 72,500 shares held by the Charles H. Kaman Charitable
Foundation, a private charitable foundation. Included are
45,000 shares subject to exercisable portion of stock options.
(5) Excludes the following: 1,471 shares held by Mrs. Kaman and
199,802 shares held by Newgate Associates Limited Partnership,
a limited partnership of which Mr. Kaman is the general
partner.
(6) Includes 14,900 shares subject to exercisable portion of
stock options; and excludes 79,728 shares held by Mr. Kaman
as Trustee, in which shares Mr. Kaman disclaims any
beneficial ownership.
(7) Excludes 4,800 shares held by Mr. Kaman as Trustee in which
shares Mr. Kaman disclaims any beneficial ownership.
(8) Includes 18,900 shares subject to exercisable portion of
stock options.
(9) Includes 6,000 shares held in an Individual Retirement Account,
and shares held jointly with Mrs. Lebed; excludes 480 shares
held by Mrs. Lebed.
(10)Excludes 500 shares held by Mrs. Levenson.
(11)Held by Fleet National Bank pursuant to a revocable trust.
Excludes 7,980 shares held by Fleet National Bank pursuant
to a revocable trust for the benefit of Mrs. Murtha.
(12)Includes 103,100 shares subject to exercisable portion of
stock options.
* Less than one percent.
** Excludes 24,612 Class A shares and 1,971 Class B shares held
by spouses of certain Directors and Executive Officers.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1996, the Corporation obtained legal services from the
Hartford, Connecticut law firm of Murtha, Cullina, Richter and
Pinney of which Mr. Murtha, a Director of the Corporation, is
counsel. The Corporation also obtained video production services
in the amount of $109,370 from Polykonn Corporation, a Corporation
controlled by Mr. Steven Kaman, son of Charles H. Kaman, Chairman
Page 26
and Chief Executive Officer of the Corporation. In addition the
Corporation obtained consultant's services from Mr. Levenson, a
Director of the Corporation in connection with a consultant's
agreement entered into with Mr. Levenson for a term of one year
under which the Corporation paid Mr. Levenson a consultant's fee at
the rate of $10,000 per month. The Corporation also paid premiums
on Mr. Levenson's Group Universal Life Insurance policy for 1996,
in the amount of approximately $3,800, and retained Mr. Levenson as
a participant in a program pursuant to which it paid for tax and
estate planning services in the amount of approximately $5,700.
On February 20, 1997, the Corporation sold its interest in a
subsidiary company, AirKaman of Jacksonville, Inc., to a
Corporation controlled by C. William Kaman II for cash in the
amount of approximately $3,615,000. C. William Kaman II is a
director and Executive Vice President of the Corporation and is the
son of Charles H. Kaman. The purchase price received by the
Corporation was determined in accordance with an independent
appraisal.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a)(1) FINANCIAL STATEMENTS.
See Item 8 concerning financial statements appearing as
Exhibit 13 to this Report and concerning the Financial
Data Schedule appearing as Exhibit 27 to this Report.
(a)(2) FINANCIAL STATEMENT SCHEDULES.
An index to the financial statement schedules immediately
precedes such schedules.
(a)(3) EXHIBITS.
An index to the exhibits filed or incorporated by
reference immediately precedes such exhibits.
(b) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed during the last
quarter of the year ended December 31, 1996, which
year is covered by this report.
Page 27
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 21st day of March, 1996.
KAMAN Corporation
(Registrant)
By Charles H. Kaman, Chairman, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Signature: Title: Date:
- -------------------------------------------------------------------
Charles H. Kaman Chairman, President, Chief March 21, 1997
Executive Officer and Director
(Chief Executive Officer)
Robert M. Garneau Executive Vice President March 21, 1997
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
Robert M. Garneau March 21, 1997
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
Edythe J. Gaines Director
Huntington Hardisty Director
C. William Kaman, II Director
Eileen S. Kraus Director
Hartzel Z. Lebed Director
Harvey S. Levenson Director
Walter H. Monteith, Jr. Director
John S. Murtha Director
Wanda L. Rogers Director
Page 28
KAMAN Corporation AND SUBSIDIARIES
Index to Financial Statement Schedules
Report of Independent Auditors
Financial Statement Schedules:
Schedule II - Valuation and Qualifying Accounts
Page 29
REPORT OF INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
Certified Public Accountants
CityPlace II
Hartford, Connecticut 06103
The Board of Directors and Shareholders
Kaman Corporation:
Under date of January 27, 1997, we reported on the consolidated
balance sheets of Kaman Corporation and subsidiaries as of
December 31, 1996 and 1995 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, 1996, as contained in the 1996 annual report to
shareholders. These consolidated financial statements and our
report thereon are included in the annual report on Form 10-K for
1996. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related
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,
present fairly, in all material respects, the information set
forth therein.
/s/ KPMG Peat Marwick LLP
Hartford, Connecticut
January 27, 1997
Page 30
KAMAN Corporation AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in Thousands)
YEAR ENDED DECEMBER 31, 1994
Additions
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1994 EXPENSES OTHERS DEDUCTIONS 1994
Allowance for
doubtful
accounts $1,576 $1,198 $----- $1,109(A) $1,665
====== ====== ====== ====== ======
Accumulated
amortization
of goodwill $9,998 $1,318 $----- $7,772(B) $3,544
====== ====== ====== ====== ======
YEAR ENDED DECEMBER 31, 1995
Additions
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1995 EXPENSES OTHERS DEDUCTIONS 1995
Allowance for
doubtful
accounts $1,665 $2,476 $----- $1,852(A) $2,289
====== ====== ====== ====== ======
Accumulated
amortization
of goodwill $3,544 $ 355 $----- $----- $3,899
====== ====== ====== ====== ======
YEAR ENDED DECEMBER 31, 1996
Additions
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1996 EXPENSES OTHERS DEDUCTIONS 1996
Allowance for
doubtful
accounts $2,289 $1,288 $----- $1,003(A) $2,574
====== ====== ====== ====== ======
Accumulated
amortization
of goodwill $3,899 $ 365 $----- $ 397(C) $3,867
====== ====== ====== ====== ======
(A) Write-off of bad debts, net of recoveries
(B) Write-off of accumulated amortization of goodwill related to
the write-down of goodwill in Raymond Engineering Inc.
(C) Write-off of accumulated amortization of goodwill related to
the sale of a division.
Page 31
KAMAN Corporation
INDEX TO EXHIBITS
Exhibit 3a The Amended and Restated by reference
Certificate of InCorporation
of the Corporation, as amended,
including the form of amendment
designating the Corporation's
Series 2 Preferred Stock has been
filed as Exhibits 2.1 and 2.2 to the
Corporation's Form 8-A (Document
No. 0-1093 filed on September 27, 1993),
and is incorporated in this report
by reference.
Exhibit 3b The By-Laws of the Corporation by reference
were filed as Exhibit 3(b) to
the Corporation's Annual Report
on Form 10-K for 1990 (Document
No. 0-1093, filed with the
Securities and Exchange Commission
on March 14, 1991).
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.
Page 32
Exhibit 4b The Revolving Credit Agreement by reference
between the Corporation and The
Bank of Nova Scotia and Fleet National
Bank of Connecticut, as
Co-Administrative Agents, dated
as of January 29, 1996. (Previously
filed as an Exhibit to the Corporation's
Annual Report on Form 10-K for the
year ended December 31, 1995
(Document No. 54381-96-2 filed with
the Securities and Exchange Commission
on March 22, 1996) and is incorporated
in this report by reference.
Exhibit 4c Deposit Agreement dated as of by reference
October 15, 1993 between the
Corporation and Chemical Bank as
Depositary and Holder of Depositary
Shares has been filed as
Exhibit (c)(1) to Schedule 13E-4
(Document No. 5-34114 filed with the
Securities and Exchange Commission
on September 15, 1993) and is
incorporated in this report by
reference.
Exhibit 4d 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 1983 Stock Incentive Plan by reference
(formerly known as the 1983
Stock Option Plan) has been
filed as Exhibit 10b(iii) to the
Corporation's Annual Report on
Form 10-K for 1988 (Document No.
0-1093 filed with the Securities
and Exchange Commission on
March 22, 1989) and is incorporated
in this report by reference.
Page 33
Exhibit 10b The Kaman Corporation 1993 Stock Attached
Incentive Plan as amended effective
November 19, 1996.
Exhibit 10c The Kaman Corporation Employees Attached
Stock Purchase Plan as amended
effective November 19, 1996.
Exhibit 11 Statement regarding computation Attached
of per share earnings.
Exhibit 13 Portions of the Corporation's Attached
1996 Annual Report to
Shareholders as required by
Item 8.
Exhibit 21 Subsidiaries. Attached
Exhibit 23 Consent of Independent Auditors. Attached
Exhibit 24 Power of attorney under which Attached
this report has been signed on
behalf of certain directors.
Exhibit 27 Financial Data Schedule Attached
Page 34