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, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-1093
KAMAN CORPORATION
(Exact Name of Registrant)
Connecticut 06-0613548
(State of Incorporation) (I.R.S. Employer Identification No.)
1332 Blue Hills Avenue, Bloomfield, Connecticut 06002
(Address of principal executive offices)
Registrant's telephone number, including area code-(860) 243-7100
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
-Class A Common Stock, Par Value $1.00
-6% Convertible Subordinated Debentures Due 2012
-Series 2 Preferred Stock, Par Value $1.00
-Depositary Shares, each representing one quarter of a
share of Series 2 Preferred Stock
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ X ].
State the aggregate market value of the voting and non-voting
stock held by non-affiliates of the registrant. The aggregate
market value shall be computed by reference to the price at which
the stock was sold, or the average bid and asked prices of such
stock, as of a specified date within 60 days prior to the date of
filing.
$326,947,587.00 as of February 2, 1998.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock as of the latest practicable
date.
Class A Common 22,686,588 shares
Class B Common 667,814 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Corporation's 1997 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 customers through two
industry segments: Diversified Technologies and Distribution. The
Diversified Technologies segment serves commercial, foreign
military, and U.S. defense markets. The corporation retrofits
previously manufactured helicopters, manufactures new helicopters,
and manufactures specialized bearings and components principally
for aircraft applications, airframe structures under subcontract
for commercial and military aircraft, and provides high technology
products and services. The Distribution segment serves commercial
markets. The corporation provides industrial repair and OEM
products and certain support services to customers in nearly every
sector of U.S. industry; and distributes and manufactures guitars
and other music products for amateur and professional musicians.
DIVERSIFIED TECHNOLOGIES
The Diversified Technologies segment includes several
wholly-owned subsidiaries: Kaman Diversified Technologies
Corporation, Kaman Aerospace Corporation, Kaman Aerospace
International Corporation, Kamatics Corporation, K-MAX Corporation,
Kaman Electromagnetics Corporation, and Kaman Instrumentation
Corporation. For 1997, the segment also included Kaman Sciences
Corporation, which was sold on December 30, 1997 to ITT Industries,
Inc.
Currently the most significant portion of this segment
involves aircraft manufacturing operations. This includes the
retrofit of previously manufactured Kaman SH-2F Navy helicopters
for foreign governments. There are currently three such programs
in process. The first involves a Foreign Military Sale (FMS)
contract valued at approximately $150 million for the retrofit of
ten (10) previously manufactured Kaman SH-2F helicopters into the
upgraded SH-2G configuration for the Republic of Egypt. The first
aircraft delivery under this contract was accomplished in October
1997. Two additional aircraft were delivered by the end of 1997;
the remaining seven (7) aircraft are scheduled to be delivered in
1998. In June 1997, the corporation signed a commercial contract
valued at approximately $185 million, inclusive of aircraft and
related logistical support elements, to supply four (4) SH-2G
helicopters to the New Zealand government. These aircraft will be
manufactured with new airframes and remanufactured dynamic
components from stored SH-2F aircraft. Deliveries are expected to
begin in 2000. Also in June 1997, the corporation signed a
contract valued at approximately $600 million to supply eleven (11)
retrofit SH-2G helicopters to the Australian government. The
aircraft are scheduled for delivery in the 2001-2002 time frame.
The contract includes an agreement with the Royal Australian Navy
to provide ongoing in-country support services for an initial
period of ten years. The helicopters will incorporate an
Integrated Tactical Avionics System (ITAS) "glass cockpit," new
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sensors and advanced systems. There are currently fourteen (14)
SH-2G aircraft in the U.S. Naval Reserves. The corporation expects
to continue providing logistics and spare parts support for these
aircraft for a period of time, even though this aircraft is no
longer manufactured for the U.S. government. The corporation
continues to pursue potential opportunities for this class of
maritime helicopter in Malaysia, Norway, the Philippines, Taiwan,
Thailand and elsewhere. Each of these potential programs is
expected to involve considerable competition, and political and
financial conditions in some areas may slow the prospects for
potential sales. Management currently believes that there are
sufficient SH-2F aircraft available in storage to meet existing and
certain potential program requirements; at some point in the
future, however, it is possible that there may be a need to
manufacture totally new SH-2G aircraft. Management is beginning to
explore the factors that would be involved in reopening the
production line including recertifying certain dynamic components
of the aircraft.
In addition to its SH-2G programs, the corporation produces
the K-MAX (Registered Trademark) "aerial truck" helicopter, an FAA
type certificated medium-to-heavy lift helicopter incorporating
intermeshing rotor technology developed by the corporation. K-MAX
is designed for efficient, cost-effective repetitive lifting of
loads of up to 6,000 pounds on an external hook. Initial customers
have been in markets that demonstrate the aircraft in a range of
applications, such as logging and forest fire fighting,
construction of utility lines and ski lifts in remote and
mountainous terrain, and operations in extremes of heat and high
altitudes which tend to limit lifting capacity, particularly in
other helicopter types. The company is following conservative
policy in introducing this new aircraft while it evaluates
potential new markets including a ship resupply role called
Vertical Replenishment (VERTREP) for the U.S. Military Sealift
Command, and various infrastructure construction uses around the
world. The K-MAX program is in its fourth year of commercial
operations with aircraft operating in six countries and certified
in the United States, Canada, Germany, Switzerland, and Japan. It
is anticipated that the effects of the current financial crisis in
Asia could delay the expansion of production for a time.
The corporation manufactures airframe structures and
components on subcontract, principally for Boeing on programs
including the 767, 777, and McDonnell Douglas C-17. The Kamatics
subsidiary makes proprietary self-lubricated bearings that are used
on nearly every commercial and military aircraft produced in the
Western world for flight controls, turbine engines, and landing
gear systems. Kamatics also makes driveline couplings for
helicopters and self-lubricated bearings for hydropower
installations, ships and submarines.
Subsidiaries in this segment also make RF transmission and
delay lines involved in aircraft stealth technology and other
applications; telecommunication products; photonic and optical
systems, such as the Magic Lantern (Registered Trademark)
Page 2
laser-based mine detection system; safing and fuzing systems for
use in missiles; ruggedized tape and disk memory systems used
primarily in aircraft; composite "flyer bows" for use in the wire
making industry and various motors, generators, alternators,
launchers and electric drive systems using electromagnetic
technology.
The corporation's former Kaman Sciences subsidiary provided
advanced technology services to various agencies of the U.S.
Government. Management's decision to sell Kaman Sciences was based
upon its assessment of trends in the defense sciences industry,
including increasing consolidation and a tendency for defense
sciences contracts to become larger in size and longer in duration
in relation to the corporation's determination to focus capital
investment in its aerospace and industrial distribution businesses.
DISTRIBUTION
The Distribution segment includes several wholly owned
subsidiaries, including principally Kaman Industrial Technologies
Corporation and Kaman Music Corporation. A small additional
subsidiary, AirKaman of Jacksonville, Inc. was sold in February,
1997.
Kaman Industrial Technologies (KIT) is the larger of the
corporation's distribution subsidiaries, currently representing
more than three quarters of segment revenues. KIT is a national
distributor of industrial products operating through approximately
195 locations in 38 states and British Columbia, Canada. The
corporation serves customers in nearly every segment of heavy and
light industry with the products needed to maintain various
manufacturing processes. The business is therefore influenced by
national economic trends such as U.S. industrial production levels.
The corporation purchases the products it sells from manufacturers,
including various types of bearing products such as ball, roller,
tapered, linear motion, sleeve and mounted units; mechanical power
transmission products such as ball screws, belts, brakes, chain,
clutches, couplings, gears, sheaves, speed reducers, sprockets,
take-up units, tension devices, torque limiters, and universal
joints; electrical power transmission products such as motors and
variable speed drives; fluid power products such as air preparation
units, air motors, ball valves, boosters, cylinders, filters,
gauges, heat exchangers, hose, fittings, hydraulic power
units, pumps and motors, couplers, rotary actuators; and a wide
range of accessory products such as lubricants and seals. Most of
these products use common and traditional technologies, however the
corporation is increasingly selling products with a higher
technological content that are required to support automated
production processes. 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. As the
corporation has entered new market areas, it has invested in new
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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; and a Documented Savings (Registered Trademark) program
that looks at all elements of procurement cost and reports on
savings and improvements generated by the corporation's products
and services. In addition, the corporation has 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 customers' facility. In 1997 the
corporation continued to open new branches in the South and Midwest
regions of the United States to service new customers and develop
additional business. Also in 1997 the corporation acquired the
business of Alliance Industrial Supply Company, a small industrial
distribution company with five (5) locations in Texas.
Kaman Music Corporation distributes music instruments and
accessory products principally to independent retailers in the
United States and Canada, and to certain international
distributors. Products include acoustic, acoustic-electric and
electric guitars and basses, music strings for fretted instruments,
drums and other percussion products, brass instruments, electronic
tuners and metronomes, and musical instrument accessories. The
corporation manufactures and distributes a range of amateur to
professional quality guitars under the corporation's various brand
names including Ovation (Registered Trademark) and Hamer
(Registered Trademark). Actions were taken in 1997 to
streamline and focus the corporation's music business. These
actions include the sale of the corporation's Trace Elliot Limited
amplifier manufacturing facility in Great Britain to a Trace Elliot
management group; the merger and consolidation of Ovation and Hamer
into a single production facility; the elimination of certain
distributed product lines; and the closure and consolidation of
certain distribution facilities. Operations of Kaman Music
Corporation are currently conducted through six (6) distribution
centers in the United States and Canada, an international sales
division based in the United States, and one (1) manufacturing
facility in the United States.
FINANCIAL INFORMATION
Information concerning each segment's performance for the
last three fiscal years appears in the corporation's 1997 Annual
Report to Shareholders and is included in Exhibit 13 to this Form
10-K, and is incorporated by reference.
Page 4
PRINCIPAL PRODUCTS AND SERVICES
Following is information for the three preceding fiscal
years concerning the percentage contribution of the corporation's
classes of products and services to the corporation's
consolidated net sales:
Years Ended December 31
1995 1996 1997
------ ------ ------
Diversified Technologies:
Advanced Technology Products
and Systems 5.3% 5.5% 7.4%
Advanced Technology Services 12.7 13.2 13.9(1)
Aircraft Manufacturing 18.0 18.3 20.2
---- ---- ----
Segment Total 36.0 37.0 41.5
Distribution:
Industrial Products 48.0 47.2 45.9
Music Products and Other Services 16.0 15.8 12.6
---- ---- ----
Segment Total 64.0 63.0 58.5
Total 100.0% 100.0% 100.0%
===== ===== =====
<FN>
(1) Includes revenues from Kaman Sciences Corporation which was
sold on December 30, 1997.
</FN>
RESEARCH AND DEVELOPMENT EXPENDITURES
Government sponsored research expenditures by the
Diversified Technologies segment were $75.7 million in 1997,
$68.8 million in 1996, and $70.2 million in 1995. Independent
research and development expenditures were $6.9 million in 1997,
$8.0 million in 1996, and $13.7 million in 1995.
BACKLOG
Program backlog of the Diversified Technologies segment was
approximately $935.2 million at December 31, 1997, $267 million at
December 31, 1996, and $218.7 million at December 31, 1995.
The corporation anticipates that approximately 39.5% of its
backlog at the end of 1997 will be performed in 1998.
Approximately 9.8% of the backlog at the end of 1997 is related
to government contracts or subcontracts which are included in
backlog to the extent that funding has been appropriated by
Congress and allocated to the particular contract by the relevant
procurement agency. Certain of these government contracts, less
than 1% of the backlog, have been funded but not signed.
Page 5
GOVERNMENT CONTRACTS
During 1997, approximately 44.6% of the work performed by
the corporation directly or indirectly for the United States
government was performed on a fixed-price basis and the balance
was performed on a cost-reimbursement basis. Under a fixed-price
contract, the price paid to the contractor is negotiated at the
outset of the contract and is not generally subject to adjustment
to reflect the actual costs incurred by the contractor in the
performance of the contract. Cost reimbursement contracts
provide for the reimbursement of allowable costs and an
additional negotiated fee.
The corporation's United States government contracts and
subcontracts contain the usual required provisions permitting
termination at any time for the convenience of the government
with payment for work completed and associated profit at the time
of termination.
COMPETITION
The Diversified Technologies segment operates in a highly
competitive environment with many other organizations which are
substantially larger and have greater financial and other
resources. The corporation competes with other helicopter
manufacturers on the basis of price, performance, and mission
capabilities; and also on the basis of its experience as a
manufacturer of helicopters, the quality of its products and
services, and the availability of facilities, equipment and
personnel to perform contracts. Consolidation in the industry, the
change in defense program emphasis and constraints in the defense
budgets of various countries have increased the level of
international competition for helicopter programs. The corporation
is also affected by the political and economic circumstances of its
potential foreign customers, such as the current economic crisis in
certain Asian markets. The corporation's FAA 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. The corporation competes for its
subcontract aircraft structure, specialty aircraft component, and
advanced technology products business on the basis of price and
quality; product endurance and special performance characteristics;
proprietary knowledge; and the reputation of the corporation.
Industrial distribution operations are subject to a high
degree of competition from several other national distributors, two
of which are substantially larger than the corporation; and from
many regional and local firms. Competitive forces are intensifying
as the major competitors grow through consolidation. Music
distribution operations compete with domestic and foreign
distributors. Certain musical instrument products manufactured by
the corporation are subject to competition from U.S. and foreign
Page 6
manufacturers as well. The corporation competes in these markets
on the basis of service, price, performance, and inventory variety
and availability.
The corporation also competes on the basis of quality and
market recognition of its music products and has established
certain trademarks and trade names under which certain of its music
products are produced, as well as under private label manufacturing
in a number of foreign countries.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking information relating to
the corporation's business and prospects, including the SH-2G and
K-MAX helicopter programs, and specialty self-lubricating bearings
and couplings, as well as other matters that involve a number of
uncertainties that may cause actual results to differ materially
from expectations. Those uncertainties include, but are not
limited to: 1) the successful conclusion of contract negotiations
with government authorities, including foreign governments; 2)
political developments in countries where the corporation intends
to do business; 3) standard government contract provisions
permitting renegotiation of terms and termination for the
convenience of the government; 4) economic and competitive
conditions in markets served by the corporation including in
particular economic conditions in Southeast Asia; 5) the degree of
acceptance of new products in the marketplace; 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.
EMPLOYEES
As of December 31, 1997, the Corporation employed 4,318
individuals throughout its industry segments as follows:
Diversified Technologies 2,064(1)
Distribution 2,173
Corporate Headquarters 81
-----
4,318
<FN>
(1) Excludes 1,100 employees employed by the Corporation's Kaman
Sciences Corporation subsidiary which was sold on December 30,
1997.
<FN>
Page 7
PATENTS AND TRADEMARKS
The corporation holds patents reflecting scientific and
technical accomplishments in a wide range of areas covering both
basic production of certain products, including aerospace
products and musical instruments, as well as highly specialized
devices and advanced technology products in defense related
and commercial fields.
Although the corporation's patents enhance its competitive
position, management believes that none of such patents or patent
applications is singularly or as a group essential to its
business as a whole. The corporation holds or has applied for
U.S. and foreign patents with expiration dates that range through
the year 2012.
These patents are allocated among the corporation's industry
segments as follows:
U.S. PATENTS FOREIGN PATENTS
Segment Issued Pending Issued Pending
Diversified Technologies 78 4 62 17
Distribution 19 3 9 2
Trademarks of Kaman Corporation include Adamas, Applause,
Hamer, KAflex, KAron, K-MAX, Magic Lantern, and Ovation. In all,
the corporation maintains 191 U.S. and foreign trademarks with 18
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
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.
Page 8
In arriving at this conclusion, the corporation has taken
into consideration site-specific information available regarding
total costs of any work to be performed, and the extent of work
previously performed. Where the corporation has been identified
as a PRP at a particular site, the corporation, using information
available to it, also has reviewed and considered a number of
other factors, including: (i) the financial resources of other
PRPs involved in each site, and their proportionate share of the
total volume of waste at the site; (ii) the existence of
insurance, if any, and the financial viability of the insurers;
and (iii) the success others have had in receiving reimbursement
for similar costs under similar policies issued during the
periods applicable to each site.
FOREIGN SALES
Eleven and two tenths percent (11.2%) of the sales of
the corporation are made for customers located outside the United
States. Certain retrofit work on SH-2 series helicopters for
delivery to the Republic of Egypt is presently being performed by
the corporation under an agreement between it and the U.S. Navy
and, because such work is a "foreign military sale" with the U.S.
Government, it is not included in the calculation of foreign
sales. In 1997, the corporation continued its efforts to develop
international markets for its products and foreign sales
(including sales for export); and during 1997 the corporation
entered into contracts with the Commonwealth of Australia and the
Government of New Zealand for the supply of retrofit SH-2G
helicopters with deliveries under both programs expected to begin
in the 2000-2001 time frame. Additional information required by
this item appears in the corporation's 1997 Annual Report to
Shareholders, and is included in Exhibit 13 to this Form 10-K, and
is incorporated herein by reference.
ITEM 2. PROPERTIES
The corporation occupies approximately 3.34 million square
feet of space throughout the United States and Canada, distributed
as follows:
SEGMENT SQUARE FEET (in thousands)
Diversified Technologies 1,514(1)
Distribution 1,786
Corporate Headquarters 40
<FN>
(1) Excludes 540 thousand square feet of space attributable to the
corporation's Kaman Sciences Corporation subsidiary which
was sold on December 30, 1997.
</FN>
Diversified Technologies principal facilities are located in
Arizona, Connecticut, and Massachusetts; other facilities including
offices and smaller manufacturing and assembly operations are
located in several other states, and the corporation also has an
Page 9
office in Turner, Australia. These facilities are used for
manufacturing, research and development, engineering and office
purposes. The U.S. Government owns 154 thousand square feet of the
space occupied by Kaman Aerospace Corporation in Bloomfield,
Connecticut in accordance with a facility contract.
The Distribution segment's facilities are located throughout
the United States with principal facilities located in California,
Connecticut, Kentucky, New York, Tennessee, Texas and Utah with
smaller facilities located in several other states. Additional
Distribution segment facilities are located in British Columbia,
and Ontario, Canada. These facilities consist principally of
regional distribution centers, service centers and office space
with a portion used for fabrication and assembly work. 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 Distribution segment, are leased.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the
corporation or any of its subsidiaries is a party or to which any
of their property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security
holders during the fourth quarter of 1997.
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 1997 Annual Report to Shareholders and is included
in 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 Investor Services Program administered by Mellon
Bank, N.A. which offers a variety of services including dividend
reinvestment. A booklet describing the program may be obtained by
writing to the program's Administrator, Mellon Bank, N.A., P. O.
Box 3338, South Hackensack, NJ 07606-1938.
Page 10
QUARTERLY CLASS A COMMON STOCK INFORMATION
- -----------------------------------------------------------------
High Low Close Dividend
- -----------------------------------------------------------------
1997
First $14.75 $12.25 $ 13.50 $.11
Second 16.00 12.00 15.38 .11
Third 18.88 14.50 18.38 .11
Fourth 20.38 15.25 16.38 .11
- -----------------------------------------------------------------
1996
First $11.13 $10.00 $10.88 $.11
Second 13.38 10.00 10.13 .11
Third 11.25 9.38 10.63 .11
Fourth 13.00 10.00 13.00 .11
- -----------------------------------------------------------------
QUARTERLY DEBENTURE INFORMATION (6% Conv. Subordinated)
- -----------------------------------------------------------------
High Low Close
- -----------------------------------------------------------------
1997
First $92.00 $84.00 $92.00
Second 96.00 87.00 94.00
Third 100.00 94.00 96.00
Fourth 101.00 96.00 96.50
- -----------------------------------------------------------------
1996
First $87.00 $82.00 $84.00
Second 86.00 81.00 82.00
Third 85.13 80.00 82.00
Fourth 87.50 82.00 87.00
- -----------------------------------------------------------------
QUARTERLY DEPOSITARY SHARES INFORMATION
- -----------------------------------------------------------------
High Low Close Dividend
- -----------------------------------------------------------------
1997
First $57.68 $53.50 $56.00 $.8125
Second 59.13 54.94 59.13 .8125
Third 73.75 62.50 73.75 .8125
Fourth 80.25 68.00 68.50 .8125
- -----------------------------------------------------------------
1996
First $50.75 $47.00 $48.63 $.8125
Second 56.50 49.00 52.00 .8125
Third 51.50 47.50 48.50 .8125
Fourth 54.00 48.50 53.00 .8125
- -----------------------------------------------------------------
NASDAQ market quotations reflect inter-dealer prices,
without retail mark-up, mark-down, or commission and may not
necessarily represent actual transactions.
Page 11
ANNUAL MEETING
The Annual Meeting of Shareholders of the corporation's
Class A and Class B common stock will be held on Tuesday, April 14,
1998 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 1997 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 1997 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 1997 Annual Report to Shareholders and is included
in Exhibit 13 to this Form 10-K, and is incorporated herein by
reference. Additional financial information is contained in the
Financial Data Schedule included as Exhibit 27 to this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Following is information concerning each Director and
Executive Officer of Kaman Corporation including name, age,
position with the corporation, and business experience during the
last five years:
Brian E. Barents Mr. Barents, 54, was 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 12
Fred A. Breidenbach Mr. Breidenbach, 51, was elected a
Director in February 1998. He is the
owner of F. A. Breidenbach & Associates,
LLC., and is the former President and
Chief Operating Officer of
Gulfstream Aerospace Corp. Prior to
that he held various positions with
General Electric Corporation.
T. Jack Cahill Mr. Cahill, 49, 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, 50, has been a Director
since 1995. He is President of The
Callaway Companies, Inc.
Frank C. Carlucci Mr. Carlucci, 67, has been a Director
since 1989. He is Chairman of The
Carlyle Group, merchant bankers. Prior to
that he served as U.S. Secretary of
Defense. Mr. Carlucci is also a director
of Ashland, Inc., Neurogen Corporation,
Northern Telecom, Ltd., Pharmacia &
Upjohn, Inc., Quaker Oats Company, Sun
Resorts, Ltd., N.V., Texas
Biotechnology Corporation, and
Westinghouse Electric Corporation.
Laney J. Chouest, M.D. Mr. Chouest, 44, was elected 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, 43, 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, 65, has been a Director
since 1984. He is President and Chief
Executive Officer of Tufts University.
Prior to that he was President and Chief
Executive Officer of Michigan State
University.
Page 13
Edythe J. Gaines Dr. Gaines, 75, has been a Director
since 1982. She is a retired
Commissioner of the Public Utility
Control Authority of the State of
Connecticut.
Ronald M. Galla Mr. Galla, 47, 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, 53, has been Executive Vice
President and Chief Financial Officer
since 1995. Previously he served as
Senior Vice President, Chief Financial
Officer and Controller. Mr. Garneau has
held various positions with the
corporation since 1981.
Huntington Hardisty Admiral Hardisty (USN-Ret.), 68, has
been President of Kaman Aerospace
International Corporation, a
subsidiary of the corporation, since 1995
and he has been a Director since 1991.
He retired from the U.S. Navy in 1991
having served as Commander-in-Chief for
the U.S. Navy Pacific Command since
1988. He is also a director of
Contraves, Inc., MPR Inc., and
CNA Corporation.
Charles H. Kaman Mr. Kaman, 78, has been Chief Executive
Officer and Chairman of the Board of
Directors since 1945. He was also
appointed President in December, 1995,
a position he previously held from 1945
to 1990.
C. William Kaman II Mr. Kaman, 46, 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.
Page 14
Walter R. Kozlow Mr. Kozlow, 62, has held various
positions with Kaman Aerospace
Corporation, a subsidiary of the
corporation, since 1960. He has been
President of Kaman Aerospace since 1986.
Eileen S. Kraus Ms. Kraus, 59, has been a Director since
1995. She is Chairman of Connecticut
Fleet National Bank. Since 1979 she has
held various positions at Shawmut Bank
Connecticut and Shawmut National
Corporation, predecessors of Fleet Bank,
N.A. and its holding company, Fleet
Financial Group. She is a director of
Yankee Energy System, Inc., The Stanley
Works, and Bestfoods Corporation.
Hartzel Z. Lebed Mr. Lebed, 70, has been a Director since
1982. He is the retired President of
CIGNA Corporation.
Walter H. Monteith, Jr. Mr. Monteith, 67, has been a Director
since 1987. He is the retired Chairman
of Southern New England Telecommuni-
cations Corporation. Mr. Monteith is
also a director of Fleet Bank.
John S. Murtha Mr. Murtha, 84, has been a Director
since 1948. He is counsel to, and a
former senior partner of, the law firm of
Murtha, Cullina, Richter and Pinney LLP.
Patrick L. Renehan Mr. Renehan, 64, was 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 of
that subsidiary. Mr. Renehan has held
various positions with the corporation
since 1983.
Wanda L. Rogers Mrs. Rogers, 65, 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.
Robert H. Saunders, Jr. Mr. Saunders, 57, 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.
Page 15
Each Director and Executive Officer has been elected for a
term of one year and until his or her successor is elected, except
in the case of Mr. Breidenbach who was elected a director at the
February, 1998 meeting of the Corporation's Board of Directors.
Mr. Breidenbach's term as well as the terms of all other Directors
and Executive Officers are expected to expire as of the Annual
Meeting of the Shareholders and Directors of the corporation to be
held on April 14, 1998.
Based upon information provided to the corporation by persons
required to file reports under Section 16(a) of the Securities
Exchange Act of 1934, no Section 16(a) Reporting delinquencies
occurred in 1997.
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 16
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) (#Shares) Payments ($)(2)
- ---------------------------------------------------------------------------
C. H. Kaman 1997 750,000 400,000 ------- ------ ------ --- 56,793
Chairman and 1996 725,000 340,000 56,252(3) ------ ------ --- 58,412
Chief 1995 660,000 275,000 ------ ------ ------ --- 56,145
Executive
Officer
R.M.Garneau 1997 340,000 185,000 ------ 99,375 10,000*/ --- 10,896
Executive 100,000**
Vice Pres- 1996 240,000 82,000 ------ 77,812 10,000*/ --- 7,935
ident and 0**
Chief 1995 216,000 80,000 ------ 56,875 7,500*/ --- 6,485
Financial 0**
Officer
W.R.Kozlow 1997 240,000 100,000 ------ 79,500 9,000*/ --- 13,588
President 50,000**
Kaman 1996 233,000 65,000 ------ 62,250 9,000*/ --- 10,881
Aerospace 0**
Corporation 1995 226,000 60,000 ------ 56,875 7,500*/ --- 9,515
0**
T.J. Cahill 1997 230,000 90,000 ------ 79,500 9,000*/ --- 7,754
President, 50,000**
Kaman 1996 210,000 70,000 ------ 62,250 9,000*/ --- 7,952
Industrial 0**
Technologies 1995 190,000 55,000 ------ 56,875 7,500*/ --- 6,530
Corporation 0**
H. Hardisty 1997 215,000 90,000 ------ 79,500 9,000*/ --- 13,012
President 50,000**
Kaman 1996 200,000 55,000 ------ 62,250 9,000*/ --- 9,198
Aerospace 0**
Inter- 1995 61,282 40,000 ------ ------ ----- --- -----
national
Corporation
*Stock Options ("Options")
**Stock Appreciation Rights ("SARs") payable in cash only
Page 17
<FN>
1. As of December 31, 1997, aggregate restricted stock holdings
and their year end value were: C.H. Kaman, none; R.M. Garneau,
17,100 shares valued at $280,013; W.R. Kozlow, 14,400 shares
valued at $235,800; T.J. Cahill, 14,300 shares valued at $234,163;
and H. Hardisty, 10,800 shares valued at $176,850. Restrictions
lapse at the rate of 20% per year for all awards, beginning one
year after the grant date. Awards reported in this column are
as follows: R.M. Garneau, 7,500 shares in 1997, 7,500 shares in
1996, and 5,000 shares in 1995; W.R. Kozlow, 6,000 shares in 1997,
6,000 shares in 1996, and 5,000 shares in 1995; T.J. Cahill, 6,000
shares in 1997, 6,000 shares in 1996, and 5,000 shares in 1995; H.
Hardisty, 6,000 shares in 1997 and 6,000 shares in 1996. Dividends
are paid on the restricted stock.
2. Amounts reported in this column consist of: C.H. Kaman, $53,000
- - Officer 162 Insurance Program, $3,793 - medical expense
reimbursement program ("MERP"); R.M. Garneau, $3,049 - Senior
executive life insurance program ("Executive Life"), $851 - Officer
162 Insurance Program, $2,000 - employer matching contributions to
the Kaman Corporation Thrift and Retirement Plan (the "Thrift Plan
employer match"), $434 - MERP, $4,562 - all supplemental employer
contributions under the Kaman Corporation Deferred Compensation
Plan ("supplemental employer contributions"); W.R. Kozlow, $5,763
- - Executive Life, $2,000 - Thrift Plan employer match, $3,575 -
MERP, $2,250 - supplemental employer contributions; T.J. Cahill,
$1,527 - Executive Life, $2,000 - Thrift Plan employer match,
$2,227 - MERP, $2,000 - supplemental employer contributions; H.
Hardisty, $13,012 - 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. $45,314 of the figure
reported in this column relates to payments for such services on
behalf of Mr. Kaman.
</FN>
Page 18
C) OPTION/SAR GRANTS IN THE LAST FISCAL YEAR:
- ----------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term*
- ----------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options/
SARs**
Options/ Granted to
SARs** Employees Exercise or
Granted in Fiscal Base Price Expiration
Name (#) Year ($/Sh) Date 5%($) 10%($)
- ----------------------------------------------------------------------------
C. H. Kaman none ---- --- --- ----- -----
R. M. Garneau 10,000/ 5.16/ 13.25 2/11/07 916,614 2,322,880
100,000** 28.57
W. R. Kozlow 9,000/ 4.65/ 13.25 2/11/07 491,638 1,245,908
50,000** 14.29
T. J. Cahill 9,000/ 4.65/ 13.25 2/11/07 491,638 1,245,908
50,000** 14.29
H. Hardisty 9,000/ 4.65/ 13.25 2/11/07 491,638 1,245,908
50,000** 14.29
*The information provided herein is required by Securities and Exchange
Commission rules and is not intended to be a projection of future common
stock prices.
**Stock Appreciation Rights (SARs) payable in cash only, not in shares of
common stock.
Page 19
D) AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR, AND
FISCAL YEAR-END OPTION/SAR VALUES.
Value of
Number of Unexercised
Unexercised in-the-money
options options*
Shares at FY-end (#) at FY-end ($)
acquired on Value exercisable/ exercisable/
Name Exercise(#) realized unexercisable unexercisable
(a) (b) (c) (d) (e)
- -------------------------------------------------------------------
C. H. Kaman 25,000 200,625 20,000/-0- 172,500/-0-
R. M. Garneau None ------ 20,200/24,300 145,250/114,125
W. R. Kozlow 3,000 33,375 21,000/22,500 152,550/106,200
T. J. Cahill 1,000 10,250 13,800/22,200 92,800/104,138
H. Hardisty None ------ 1,800/16,200 10,800/71,325
Value of
Number of Unexercised
Unexercised in-the-money
SARs SARs*
Shares at FY-end (#) at FY-end ($)
acquired on Value exercisable/ exercisable/
Name Exercise(#) realized unexercisable unexercisable
(a) (b) (c) (d) (e)
- -------------------------------------------------------------------
C. H. Kaman N/A N/A -0-/-0- -0-/-0-
R. M. Garneau " " -0-/100,000 -0-/312,500
W. R. Kozlow " " -0-/50,000 -0-/156,250
T. J. Cahill " " -0-/50,000 -0-/156,250
H. Hardisty " " -0-/50,000 -0-/156,250
*Difference between the 12/31/97 FMV and the exercise price(s).
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:
Page 20
PENSION PLAN TABLE
Years of Service
Remuneration* 15 20 25 30 35
- -----------------------------------------------------------------
125,000 33,519 44,915 55,642 67,038 67,038
150,000 41,019 54,965 68,092 82,038 82,038
175,000 48,519 65,015 80,542 97,038 97,038
200,000 56,019 75,065 92,992 112,038 112,038
225,000 63,519 85,115 105,442 127,038 127,038
250,000 71,019 95,165 117,892 142,038 142,038
300,000 86,019 115,265 142,792 172,038 172,038
350,000 101,019 135,365 167,692 202,038 202,038
400,000 116,019 155,465 192,592 232,038 232,038
450,000 131,019 175,565 217,492 262,038 262,038
500,000 146,019 195,665 242,392 292,038 292,038
*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 1997 are as shown on
the Summary Compensation Table. Compensation deferred under the
Corporation's non-qualified deferred compensation plan is
included in Covered Compensation here because it is covered by
the Corporation's unfunded supplemental employees' retirement
plan for the participants in that plan.
Current Compensation covered by the Pension Plan for any
named executive whose Covered Compensation differs by more than
10% from the compensation disclosed for that executive in the
Summary Compensation Table: Mr. Garneau, $510,077; Mr. Kozlow,
$363,046; Mr. Hardisty, $290,124.
Federal law imposes certain limitations on annual pension
benefits under the Pension Plan. For the named executive
officers who are participants, the excess will be paid under the
Corporation's unfunded supplemental employees' retirement plan.
Page 21
The Executive Officers named in Item 11(b) are participants
in the plan and as of December 31, 1997, had the number of years of
credited service indicated: Mr. Kaman - 51.1 years; Mr. Garneau -
16.48 years; Mr. Kozlow - 37.7 years; Mr. Cahill - 22.7 years;
Mr. Hardisty - 2.45 years.
Benefits are computed generally in accordance with the
benefit formula described above.
G) COMPENSATION OF DIRECTORS. In 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
Restricted Stock Award (RSA) for 500 shares of Class A Common Stock
(issued pursuant to the Corporation's 16b-3 qualified Stock
Incentive Plan, providing for immediate vesting upon election as a
director at the Corporation's 1998 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.
I) Not Applicable.
J) COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
IN COMPENSATION DECISIONS.
1) The following persons served as members of the Personnel
and Compensation Committee of the Corporation's Board of Directors
during the last fiscal year: Frank C. Carlucci, Brian E. Barents,
Edythe J. Gaines, Walter H. Monteith, Jr. and John S. Murtha.
None of these individuals was an officer or employee of the
corporation or any of its subsidiaries during either the last
fiscal year or any portion thereof in which he or she served as a
member of the Personnel and Compensation Committee. Mr. Murtha's
relationship with the corporation is further disclosed in Item 13
of this report.
Page 22
2) During the last fiscal year no executive officer of the
corporation served as a director of or as a member of the
compensation committee (or other board committee performing
equivalent functions) of another entity, one of whose executive
officers served as a director of, or on the Personnel and
Compensation Committee of the corporation.
K) Not Applicable.
L) Not Applicable.
Page 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, 1998 of Class
- -----------------------------------------------------------------
Class B Charles H. Kaman 258,375(1) 38.69%
Kaman Corporation
Blue Hills Avenue
Bloomfield, CT 06002
Class B Newgate Associates 199,802 29.91%
Limited Partnership
c/o Murtha, Cullina,
Richter & Pinney
CityPlace I
185 Asylum Street
Hartford, CT 06103
Class B C. William Kaman, II 64,206(2) 9.61%
Kaman Corporation
Blue Hills Avenue
Bloomfield, CT 06002
Class B Robert D. Moses 48,729(3) 7.30%
Farmington Woods
Avon, CT 06001
<FN>
(1) Excludes 1,471 shares held by Mrs. Kaman. Excludes
199,802 shares reported separately above and held by
Newgate Associates Limited Partnership, a limited
partnership in which Mr. Kaman serves as general
partner.
(2) Excludes 4,800 shares held as trustee for the benefit of
certain family members.
(3) Includes 37,248 shares held by a partnership controlled by
Mr. Moses.
</FN>
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, 1998 of Class
- --------------------------------------------------------------------
Brian E. Barents Class A 500 *
Fred A. Breidenbach ------- ------- -----
T. Jack Cahill Class A 44,698(1) *
E. Reeves Callaway Class A 500 *
Frank C. Carlucci Class A 3,500(2) *
Laney J. Chouest Class A 5,831 *
John A. DiBiaggio Class A 500 *
Edythe J. Gaines Class A 2,697 *
Robert M. Garneau Class A 42,863(3) *
Class B 19,578 2.93%
Huntington Hardisty Class A 13,800(4) *
Charles H. Kaman Class A 222,920(5) *
Class B 258,375(6) 38.69%
C. William Kaman, II Class A 58,359(7) *
Class B 64,206(8) 9.61%
Walter R. Kozlow Class A 64,967(9) *
Class B 296 *
Eileen S. Kraus Class A 1,029 *
Hartzel Z. Lebed Class A 14,486(10) *
Walter H. Monteith, Jr. Class A 700 *
John S. Murtha Class A 53,548(11) *
Class B 432 *
Wanda L. Rogers Class A 500 *
All Directors and
Executive Officers Class A 690,672(12) 3.04%
as a group ** Class B 344,625 51.60%
* Less than one percent.
** Excludes 23,612 Class A shares and 1,471 Class B shares held
by spouses of certain Directors and Executive Officers.
Page 25
<FN>
(1) Includes 13,800 shares subject to the exercisable portion of
stock options.
(2) Held jointly with Mrs. Carlucci.
(3) Includes 20,200 shares subject to the exercisable portion
of stock options.
(4) Includes 1,800 shares subject to the exercisable portion of
stock options.
(5) Excludes the following: 23,132 shares held by Mrs. Kaman;
7,911 shares held by Fidelco Guide Dog Foundation, Inc., a
charitable foundation of which Mr. Kaman is President and
Director, in which shares Mr. Kaman disclaims beneficial
ownership; 184,434 shares held by Newgate Associates
Limited Partnership, a limited partnership of which Mr.
Kaman is the general partner; 21,816 shares held by Oldgate
Limited Partnership ("Oldgate") a limited partnership of which
Mr. Kaman is the general partner; 125,034 shares held by
Oldgate and as to which shares Mr. Kaman disclaims beneficial
interest, such portion of Oldgate having been placed in an
irrevocable trust; and 72,500 shares held by the Charles H.
Kaman Charitable Foundation, a private charitable foundation.
Included are 20,000 shares subject to exercisable portion of
stock options.
(6) Excludes the following: 1,471 shares held by Mrs. Kaman and
199,802 shares held by Newgate Associates Limited Partnership,
a limited partnership of which Mr. Kaman is the general
partner.
(7) Includes 14,200 shares subject to exercisable portion of
stock options; and excludes 81,998 shares held by Mr. Kaman
as Trustee, in which shares Mr. Kaman disclaims any
beneficial ownership.
(8) Excludes 4,800 shares held by Mr. Kaman as Trustee in which
shares Mr. Kaman disclaims any beneficial ownership.
(9) Includes 21,000 shares subject to exercisable portion of
stock options.
(10)Includes 6,000 shares held in an Individual Retirement
Account, and shares held jointly with Mrs. Lebed; excludes 480
shares held by Mrs. Lebed.
(11)Held by Fleet National Bank pursuant to a revocable trust.
Excludes 7,980 shares held by Fleet National Bank pursuant
to a revocable trust for the benefit of Mrs. Murtha.
(12)Includes 115,700 shares subject to exercisable portion of
stock options.
</FN>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1997, the corporation obtained legal services from the
Hartford, Connecticut law firm of Murtha, Cullina, Richter and
Pinney LLP of which Mr. Murtha, a Director of the corporation, is
of counsel. The corporation also obtained video production services
in the amount of $95,176 from Polykonn Corporation, a
corporation controlled by Mr. Steven Kaman, son of Charles H.
Kaman, Chairman and Chief Executive Officer of the corporation. On
February 20, 1997, the corporation sold its interest in a
Page 26
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.
The following reports on Form 8-K were filed since the
filing of the Corporation's 1996 Annual Report on
Form 10-K.
Date Filed Accession Number
------------------ ----------------
April 16, 1997 54381-97-7
July 3, 1997 54381-97-12
July 24, 1997 54381-97-14
November 17, 1997 54381-97-19
January 8, 1998 54381-98-2
January 13, 1998 54381-98-3
February 11, 1998 54381-98-5
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 16th day of March, 1998.
KAMAN CORPORATION
(Registrant)
By Charles H. Kaman, Chairman, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Signature: Title: Date:
- -------------------------------------------------------------------
Charles H. Kaman Chairman, President, Chief March 16, 1998
Executive Officer and Director
(Chief Executive Officer)
Robert M. Garneau Executive Vice President March 16, 1998
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
Robert M. Garneau March 16, 1998
Attorney-in-Fact for:
Brian E. Barents Director
Fred A. Breidenbach Director
E. Reeves Callaway, III Director
Frank C. Carlucci Director
Laney J. Chouest Director
John A. DiBiaggio Director
Edythe J. Gaines Director
Huntington Hardisty Director
C. William Kaman, II Director
Eileen S. Kraus Director
Hartzel Z. Lebed Director
Walter H. Monteith, Jr. Director
John S. Murtha Director
Wanda L. Rogers Director
Page 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 29, 1998, we reported on the consolidated
balance sheets of Kaman Corporation and subsidiaries as of
December 31, 1997 and 1996 and the related consolidated
statements of operations, changes in shareholders' equity and cash
flows for each of the years in the three-year period ended
December 31, 1997, as contained in the 1997 annual report to
shareholders. These consolidated financial statements and our
report thereon are included in the annual report on Form 10-K for
1997. 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
March 13, 1998
Page 30
KAMAN CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in Thousands)
YEAR ENDED DECEMBER 31, 1995
Additions
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1995 EXPENSES OTHERS DEDUCTIONS 1995
Allowance for
doubtful
accounts $1,665 $2,476 $----- $1,852(A) $2,289
====== ====== ====== ====== ======
Accumulated
amortization
of goodwill $3,544 $ 355 $----- $----- $3,899
====== ====== ====== ====== ======
YEAR ENDED DECEMBER 31, 1996
Additions
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1996 EXPENSES OTHERS DEDUCTIONS 1996
Allowance for
doubtful
accounts $2,289 $1,288 $----- $1,003(A) $2,574
====== ====== ====== ====== ======
Accumulated
amortization
of goodwill $3,899 $ 365 $----- $ 397(B) $3,867
====== ====== ====== ====== ======
YEAR ENDED DECEMBER 31, 1997
Additions
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1997 EXPENSES OTHERS DEDUCTIONS 1997
Allowance for
doubtful
accounts $2,574 $2,950 $----- $1,697(A) $3,827
====== ====== ====== ====== ======
Accumulated
amortization
of goodwill $3,867 $ 345 $----- $2,834(B) $1,378
====== ====== ====== ====== ======
<FN>
(A) Write-off of bad debts, net of recoveries
(B) Write-off of accumulated amortization of goodwill related to
the sale of a subsidiary or division.
</FN>
Page 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.
Exhibit 4b The Amended and Restated by reference
Revolving Credit Agreement
between the corporation and The
Bank of Nova Scotia and Fleet National
Bank of Connecticut, as
Co-Administrative Agents, dated
as of July 3, 1997 has been filed
as an exhibit to the Corporation's
Form 10-Q Document No. 54381-97-16
filed with the Securities and
Exchange Commission on August 15, 1997
and is incorporated in this report
by reference.
Page 32
Exhibit 4c The corporation is party to certain by reference
long-term debt obligations, such
as real estate mortgages, copies
of which it agrees to furnish to
the Commission upon request.
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.
Exhibit 10b The Kaman Corporation 1993 Stock Attached
Incentive Plan as amended effective
November 18, 1997.
Exhibit 10c The Kaman Corporation Employees Attached
Stock Purchase Plan as amended
effective November 19, 1997.
Exhibit 11 Statement regarding computation Attached
of per share earnings.
Exhibit 13 Portions of the Corporation's Attached
1997 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 33