UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-1093
KAMAN CORPORATION
(Exact Name of Registrant)
Connecticut 06-0613548
(State of Incorporation) (I.R.S. Employer Identification No.)
1332 Blue Hills Avenue, Bloomfield, Connecticut 06002
(Address of principal executive offices)
Registrant's telephone number, including area code-
(860) 243-7100
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
-Class A Common Stock, Par Value $1.00
-6% Convertible Subordinated Debentures Due 2012
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ X ].
State the aggregate market value of the voting and
non-voting stock held by non-affiliates of the registrant. The
aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and asked
prices of such stock, as of a specified date within 60 days prior
to the date of filing.
$334,467,812 as of February 1, 2001.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock as of the latest
practicable date (February 1, 2001).
Class A Common 21,599,776 shares
Class B Common 667,814 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Corporation's 2000 Annual Report to
Shareholders are incorporated by reference and filed as
Exhibit 13 to this Report.
PART I
ITEM 1. BUSINESS
Kaman Corporation, incorporated in 1945, reports information for
itself and its subsidiaries (collectively, the "corporation") in
the following business segments: Aerospace, Industrial
Distribution, and Music Distribution.
The Aerospace segment serves commercial, U.S. defense and foreign
government markets. Its principal programs consist of its SH-2G
maritime helicopter, K-MAX (Registered Trademark) medium-to-heavy
lift helicopter, subcontract work involving aircraft structures
and the manufacture of components such as self-lubricating
bearings and advanced technology products. The Industrial
Distribution segment serves nearly every sector of U.S. industry
with industrial repair and OEM products as well as support
services. The Music Distribution segment serves domestic and
foreign markets with a wide variety of musical instruments and
accessories and manufactures guitars and other music products for
professional and amateur musicians.
AEROSPACE
The Aerospace segment consists of several operating subsidiaries
of Kaman Aerospace Group, Inc., including Kaman Aerospace
Corporation, Kaman Aerospace International Corporation, K-MAX
Corporation, and Kamatics Corporation.
The segment's largest program is the SH-2G Super Seasprite
helicopter, an advanced, intermediate-weight, multi-mission,
maritime aircraft that increases a ship's effectiveness by
expanding its surveillance capability, providing over-the-horizon
warning and targeting of potential threats, and contributing to
the ship's combat capabilities. At present, the program generally
involves retrofit of the corporation's SH-2F helicopters (in
storage) to the SH-2G configuration.
The corporation currently has commercial contracts with the
Commonwealth of Australia and the Government of New Zealand for
the supply of SH-2G helicopters. The aircraft is also in service
with the Egyptian Air Force and the U.S. Navy Reserves.
The program for New Zealand involves five (5) SH-2G(NZ) aircraft,
and support, for New Zealand defense forces. The contract has an
anticipated value of $180 million (US). Work is proceeding on
this program and deliveries are scheduled to begin early in the
second quarter of 2001.
Page 1
The program for Australia involves eleven (11) SH-2G(A) aircraft
with support, including a support services facility, for the Royal
Australian Navy. The total contract has an anticipated value of
about $680 million (US) and the helicopter production portion of
the work is valued at $559 million (US). The Australian SH-2G(A)
will contain an integrated tactical avionics system ("ITAS") that
will provide the most sophisticated, integrated cockpit and
weapons system available in an intermediate-weight helicopter.
With expanded surveillance capability that provides over-the-
horizon warning and targeting of potential threats, the SH-2G is
well adapted for foreign allies that have structured their navies
around smaller ships.
Litton Guidance and Control Systems, a division of Litton Systems,
Inc. and Litton Industries, Inc., has been a major subcontractor
for both the Australia and New Zealand programs, being responsible
for providing avionics system hardware and integration software.
In addition, Litton has been the designer and integrator of the
ITAS system specific to the Australia program. Litton had stated
that it was incurring additional costs to perform its fixed price
contract with the corporation for the Australia program and
submitted claims for such costs to the corporation during 2000.
The corporation's evaluation of the matter was different from
Litton's and the corporation had, in turn, submitted claims to
Litton. In an effort to resolve the entire matter, the parties
conducted a mediation in early February 2001. As a result of that
process, the parties arrived at an agreement in principle under
which the corporation will make certain milestone payments to
Litton as it completes work on hardware and certain software
contemplated under the fixed price contract and Litton will
release its claims against the corporation. In return, Litton
will transfer to the corporation a software integration
laboratory, software and intellectual property rights and the
corporation will release its claims against Litton. In addition,
upon performance of the items described above, Litton's
significant program responsibilities for the Australia program
will end and the corporation will assume responsibility for
several remaining elements of the project. The corporation has
already begun to work with identified subcontractors (who must be
acceptable to the Australian government) to negotiate contracts
to perform those elements. As these contracts are developed, the
overall impact of resolution of the Litton matter upon costs and
profitability for the Australia program will become better
understood. There will be a delay in delivery of the full ITAS
system to the Australian government, although deliveries of
helicopters without the full ITAS system are scheduled to begin
during the first quarter of 2001 and the corporation is working
with the Royal Australian Navy to coordinate these deliveries.
Page 2
During 2000, the corporation continued to provide on-site support
in the Republic of Egypt for ten (10) SH-2G helicopters that were
delivered in 1998 under that country's foreign military sale
agreement with the U.S. Navy.
The SH-2 is an aircraft that was originally manufactured for the
U.S. Navy. This is no longer done, however, there are currently
five (5) aircraft maintained in the U.S. Navy Reserve's active
fleet. While these aircraft remain in service, the corporation
will continue providing logistics and spare parts support for
the aircraft. The corporation has taken a consignment of the U.S.
Navy's inventory of SH-2 spare parts and has executed a longer
term agreement with the Department of the Navy. The overall
objective is for the corporation to provide further support of
U.S. Naval Reserve requirements while having the ability to
utilize certain inventory for support of other SH-2G programs.
The corporation continues efforts to build and enhance
familiarization with the SH-2's capabilities among various
governments around the world. This market is highly competitive,
takes time to develop, and is influenced by economic and
political conditions. The corporation continues to actively
pursue this business, including possible further orders from
current customers.
The corporation also manufactures the K-MAX medium-to-heavy lift
helicopter which has a variety of potential applications,
including logging, power line and oil rig construction, fire
fighting, and other commercial applications. The K-MAX program,
which began in late 1994, is based on the corporation's
intermeshing rotor technology with servo-flap control.
Constructed with fewer components and less airframe weight,
the K-MAX has increased payload capacity and lower manpower,
maintenance and spare parts inventory requirements, resulting
in a cost-effective tool for industries requiring medium-to-heavy
repetitive lift capabilities. The corporation has been
conservative in its production of this aircraft since inception.
During 2000, the Corporation sold four (4) helicopters to
commercial customers operating in the U.S., Europe, and Taiwan,
principally for logging and construction. In December, 2000, the
corporation was awarded a $21 million contract from the U.S.
State Department for the purchase of five (5) helicopters,
equipment and spare parts to be used in Peru in support of
anti-drug efforts. The corporation recognized revenue from
two (2) of these aircraft in 2000 and the contract is expected
to be completed during the second quarter of 2001. The
corporation continues its efforts to refocus sales development
on global market opportunities in industry and government. The
K-MAX program has experienced significant market difficulties
during the past few years, due in part to conditions in the
Page 3
commercial logging industry, the aircraft's principal application
to date. Overall, management expects that successful sales
development as well as profitability for the entire program will
take some time to achieve.
The corporation is a subcontractor on a number of commercial and
defense aviation programs, including production of wing structures
and other components for virtually all Boeing commercial aircraft
as well as components for the Boeing C-17 transport, the Comanche
helicopter and the F-22 fighter. The corporation also manufactures
self-lubricating bearings for use principally in aircraft flight
controls, turbine engines and landing gear, which are used
extensively in today's commercial jetliners, as well as driveline
couplings for use principally in helicopters. Although this
business experienced some softness in the market during the year,
there are signs that the commercial aircraft market is
strengthening. The corporation has been pursuing opportunities
and won several significant contracts during 2000. Specifically,
MD Helicopters selected the corporation to supply fuselages for
its entire line of single-engine helicopters, including the
MD600N, MD520N, MD530F and MD 500E helicopters. This multi-year
program has an estimated potential value of $100 million. MD
Helicopters also selected the corporation to supply composite
rotor systems for its MD Explorer helicopter under a multi-year
contract with an estimated potential value, including options,
of $75 million. Boeing, an important customer of the Aerospace
segment, awarded the corporation a three-year follow-on contract
to supply structural parts for Boeing's line of commercial
aircraft, including fixed trailing edge kits for Boeing 777 and
767 aircraft and other parts and subassemblies for those aircraft
as well as the 737, 747 and 757 aircraft. The Boeing contract
has an estimated potential value of $98 million and contains a
three-year option.
Among its smaller programs, the Aerospace segment develops and
manufactures advanced technology products, including high-
reliability memory systems used in many airborne, shipboard and
ground-based programs; safe, arm and fuzing devices used in a
wide range of missiles, including the Tomahawk Missile; high-
precision non-contact measuring systems and high-performance
microwave cable assemblies with commercial and military
applications; and high-power permanent magnet motors used
commercially in the oil service industry and militarily for a
variety of uses. In 2000, the corporation was chosen by Litton
Ingalls Shipbuilding as part of a Newport News Shipbuilding-led
team to begin preliminary design of electric propulsion motors
and drive electronics in an industry competition for the U.S.
Navy's proposed next-generation DD21 destroyer.
The Aerospace segment is continuing to implement
"lean-thinking" strategies throughout the organization in
order to further enhance efficiency and reduce costs.
Page 4
INDUSTRIAL DISTRIBUTION
The Industrial Distribution segment consists of Kaman Industrial
Technologies Corporation and its Canadian subsidiary, Kaman
Industrial Technologies, Ltd.
This segment is one of the nation's largest industrial
distributors, supplying nearly every sector of North American
industry with electrical and mechanical power transmission and
bearing, motion control and material handling components through
its network of branches and distribution centers across the U.S.
and in British Columbia, Canada. The company offers more than
one million individual items in various product groups, ranging
from virtually every type of bearing made, from simple nylon
sleeve bearings to super-precision ceramic hybrids; hydraulic
and pneumatic products and services; power transmission
components and materials handling equipment; electrical
products and components, including AC/DC electric motors,
AC/DC adjustable speed drives, controls and sensors; linear
motion components and subsystems, including linear bearings,
bushings, shafts, rails and ball screws; to accessories and
maintenance items such as lubricants, adhesives, sealants,
chemicals, specialty tools, and other products. The products
that the segment purchases for distribution are for the most
part derived from traditional technologies, although the
segment is increasingly selling products with the higher
technological content required to
support automated production processes.
In addition to providing products, the segment can also
monitor processes for efficiency and improvement opportunity,
and provide inventory management, just-in-time delivery, and
cost savings analysis (called Documented Savings). The
segment's state-of-the-art computer system provides
electronic data interchange and direct links to customers'
and suppliers' purchasing departments, handling the process
from invoice creation and proposal requests to purchase
orders while its technologically advanced warehouse management
system and strategically located distribution centers provide
the segment the ability to provide same day or next day
delivery of a great majority of products offered. In
addition, during 2000 the segment implemented its internet
e-Commerce site which contains a complete catalog of product
offerings and provides an important new channel for both
current and new customers to transact business with the
segment.
Page 5
The segment benefited during 2000 from healthy market conditions
and internal initiatives implemented early in the year in order
to increase efficiency and service to customers. These
initiatives included consolidation of branch operations, a
reorganization of the sales, marketing and field management
structure, and enhanced inventory controls. Since the segment's
customers include nearly every sector of U.S. industry, this
business tends to be influenced by industrial production levels.
Sales in the fourth quarter of the year were affected by some
weakness in industrial production and management is monitoring
the economic situation during 2001.
MUSIC DISTRIBUTION
The Music Distribution segment consists of Kaman Music
Corporation, KMI Europe, Inc., and a Canadian subsidiary,
B & J Music Ltd.
This segment is the largest independent distributor of musical
instruments and accessories in the U.S., offering more than
10,000 musical instruments and accessories world-wide for use
by amateurs and professionals. Products range from the
segment's proprietary products, including Ovation (Registered
Trademark) and Hamer (Registered Trademark) guitars, as well
as the Takamine (Registered Trademark) guitar line to a full
line of distributed fretted instruments, percussion
instruments, and music accessories. The segment's product
line was expanded in 2000 when it was selected
by Fred Gretsch Enterprises to manage global sales and
marketing for Gretsch (Registered Trademark) brand
professional quality drum products. To enhance its service
to customers, the segment maintains a state-of-the-art supply
chain management software system that enables it to offer
customers such services as inventory management, just-in-time
delivery, Internet access, and electronic data interchange.
The segment has also implemented a business to business
e-Commerce site and continues to look for ways to reduce
costs and improve efficiency.
Page 6
FINANCIAL INFORMATION
Information concerning each segment's performance for the
last three fiscal years is included in the corporation's 2000
Annual Report to Shareholders (Exhibit 13 to this Form 10-K)
and is incorporated by reference.
PRINCIPAL PRODUCTS AND SERVICES
Following is information for the three preceding fiscal
years concerning the percentage contribution of each business
segment's products and services to the corporation's
consolidated net sales:
Years Ended December 31
1998* 1999* 2000
------ ------ ------
Aerospace 37.6% 37.3% 37.0%
Industrial Distribution 50.6% 50.8% 50.5%
Music Distribution 11.8% 11.9% 12.5%
------ ------ ------
Total 100.0% 100.0% 100.0%
*Effective December 31, 2000, the corporation adopted Emerging
Issues Task Force Issue No. 00-10, "Accounting for Shipping
and Handling Fees and Costs." Therefore, freight charged to
customers in the Industrial Distribution and Music
Distribution segments is now included in sales rather than
as an offset to freight expense. Therefore, the percentage
contribution for 1998 and 1999 have been restated.
RESEARCH AND DEVELOPMENT EXPENDITURES
Government sponsored research expenditures by the
Aerospace segment were $10.2 million in 2000, $11.3 million
in 1999, and $13.2 million in 1998. Independent research
and development expenditures were $5.5 million in 2000,
$4.9 million in 1999, and $8.5 million in 1998.
Page 7
BACKLOG
Program backlog of the Aerospace segment was approximately
$439.9 million at December 31, 2000, $580.1 million at
December 31, 1999, and $757.1 million at December 31,1998. The
Aerospace segment's award of the commercial contracts with the
governments of Australia and New Zealand resulted in a
significant increase in backlog during 1997. As the Aerospace
segment completes its work on these programs, the segment's
backlog is decreasing and returning to more historic levels.
The corporation anticipates that approximately 56% of its
backlog at the end of 2000 will be performed in 2001.
Approximately 15.1% of the backlog at the end of 2000 is related
to U.S. government contracts or subcontracts which are included
in backlog to the extent that funding has been appropriated by
Congress and allocated to the particular contract by the relevant
procurement agency. Virtually all of these funded government
contracts have been signed.
GOVERNMENT CONTRACTS
During 2000, approximately 87.4% of the work performed by
the corporation directly or indirectly for the U.S. government
was performed on a fixed-price basis and the balance was
performed on a cost-reimbursement basis. Under a fixed-price
contract, the price paid to the contractor is negotiated at the
outset of the contract and is not generally subject to
adjustment to reflect the actual costs incurred by the
contractor in the performance of the contract. Cost
reimbursement contracts provide for the reimbursement of
allowable costs and an additional negotiated fee.
The corporation's United States government contracts and
subcontracts contain the usual required provisions permitting
termination at any time for the convenience of the government
with payment for work completed and associated profit at the
time of termination.
COMPETITION
The Aerospace segment operates in a highly competitive
environment with many other organizations which are
substantially larger and have greater financial and other
resources. The corporation competes with other helicopter
manufacturers on the basis of price, performance, and mission
capabilities; and also on the basis of its experience as a
manufacturer of helicopters, the quality of its products and
services, and the availability of facilities, equipment and
personnel to perform contracts. Consolidation in the industry
has increased the level of international competition for
helicopter programs. The corporation is also affected by the
political and economic circumstances of its potential foreign
Page 8
customers. The corporation's FAA certified K-MAX helicopters
compete with military surplus helicopters and other commercial
helicopters used for lifting, as well as with alternative
methods of meeting lifting requirements. The corporation
competes for its subcontract aircraft structures and
components business on the basis of price and quality;
product endurance and special performance characteristics;
proprietary knowledge; and the reputation of the corporation.
Industrial distribution operations are subject to a high
degree of competition from several other national distributors,
two of which are substantially larger than the corporation;
and from many regional and local firms. Competitive forces
are intensifying as the major competitors grow through
consolidation.
Music distribution operations compete with domestic and
foreign distributors. Certain musical instrument products
manufactured by the corporation are subject to competition from
U.S. and foreign manufacturers as well. The corporation competes
in these markets on the basis of service, price, performance, and
inventory variety and availability. The corporation also competes
on the basis of quality and market recognition of its music
products and has established certain trademarks and trade names
under which certain of its music products are produced, as well as
under private label manufacturing in a number of foreign
countries.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking information relating
to the corporation's business and prospects, including the SH-2G
and K-MAX helicopter programs, aircraft structures and
components, the industrial and music distribution businesses,
and other matters that involve a number of uncertainties that
may cause actual results to differ materially from expectations.
Those uncertainties include, but are not limited to: 1)
political developments in countries where the corporation
intends to do business; 2) standard government contract
provisions permitting renegotiation of terms and termination
for the convenience of the government; 3) economic and
competitive conditions in markets served by the corporation,
including industry consolidation in the United States and
global economic conditions; 4) timing of satisfactory
completion of the Australian SH-2G(A) program; 5) the
timing, degree and scope of market acceptance for products
such as a repetitive lift helicopter; 6) U.S. industrial
production levels; 7) currency exchange rates, taxes, laws
and regulations, inflation rates, general business conditions
and other factors. Any forward-looking information should be
considered with these factors in mind.
Page 9
EMPLOYEES
As of December 31, 2000, the Corporation employed 3,825
individuals throughout its business segments and corporate
headquarters as follows:
Aerospace 1,885
Industrial Distribution 1,493
Music Distribution 382
Corporate Headquarters 65
-----
3,825
PATENTS AND TRADEMARKS
The corporation holds patents reflecting scientific and
technical accomplishments in a wide range of areas covering both
basic production of certain products, including aerospace
products and musical instruments, as well as highly specialized
devices and advanced technology products in defense related
and commercial fields.
Although the corporation's patents enhance its competitive
position, management believes that none of such patents or patent
applications is singularly or as a group essential to its
business as a whole. The corporation holds or has applied for
U.S. and foreign patents with expiration dates that range through
the year 2020.
These patents are allocated among the corporation's business
segments as follows:
U.S. PATENTS FOREIGN PATENTS
Segment Issued Pending Issued Pending
Aerospace 66 4 35 7
Industrial Distribution 0 0 0 0
Music Distribution 6 3 14 0
-- -- -- --
72 7 49 7
Trademarks of Kaman Corporation include Adamas, Applause,
Hamer, KAflex, KAron, K-MAX, Magic Lantern, and Ovation. In all,
the corporation maintains 210 U.S. and foreign trademarks with 23
applications pending, most of which relate to music products in
the Music Distribution segment.
Page 10
COMPLIANCE WITH ENVIRONMENTAL PROTECTION LAWS
In the opinion of management, based on the corporation's
knowledge and analysis of relevant facts and circumstances,
compliance with any environmental protection laws is not likely
to have a material adverse effect upon the capital expenditures,
earnings or competitive position of the corporation or any of
its subsidiaries.
The corporation is subject to the usual reviews, inspections
and enforcement actions by various federal and state
environmental and enforcement agencies and has entered into
agreements and consent decrees at various times in connection with
such reviews. One such matter, Rocque vs. Kaman, is discussed in
Item 3 (Legal Proceedings). Also on occasion the corporation has
been identified as a potentially responsible party ("PRP") by the
U.S. Environmental Protection Agency ("EPA") in connection with
the EPA's investigation of certain third party facilities. In
each instance, the corporation has provided appropriate responses
to all requests for information that it has received, and the
matters have been resolved either through de minimis settlements,
consent agreements, or through no further action being taken by
the EPA or the applicable state agency with respect to the
corporation. With respect to any such matters which may
currently be pending, the corporation has been able to determine,
based on its current knowledge, that resolution of such matters
is not likely to have a material adverse effect on the future
financial condition of the corporation.
In arriving at this conclusion, the corporation has taken
into consideration site-specific information available regarding
total costs of any work to be performed, and the extent of work
previously performed. Where the corporation has been identified
as a PRP at a particular site, the corporation, using information
available to it, also has reviewed and considered a number of
other factors, including: (i) the financial resources of other
PRPs involved in each site, and their proportionate share of the
total volume of waste at the site; (ii) the existence of
insurance, if any, and the financial viability of the insurers;
and (iii) the success others have had in receiving reimbursement
for similar costs under similar policies issued during the
periods applicable to each site.
Page 11
FOREIGN SALES
Twenty-three and four tenths percent (23.4%) of the sales
of the corporation made in 2000 were to customers located outside
the United States. In 2000, the corporation continued its
efforts to develop international markets for its products and
foreign sales (including sales for export); and during 2000 the
corporation continued to perform work under contracts with the
Commonwealth of Australia and the Government of New Zealand for
the supply of retrofit SH-2G helicopters. Additional information
required by this item is included in the corporation's 2000
Annual Report to Shareholders (Exhibit 13 to this Form 10-K)and
is incorporated herein by reference.
ITEM 2. PROPERTIES
The corporation occupies approximately 3.26 million square
feet of space throughout the United States and in Canada and
Australia, distributed as follows:
SEGMENT SQUARE FEET
(in thousands as of 12/31/00)
Aerospace 1,613
Industrial Distribution 1,096
Music Distribution 513
Corporate Headquarters 40
-----
Total 3,262
The Aerospace segment's principal facilities are located in
Arizona, Connecticut, and Massachusetts; other facilities
including offices and smaller manufacturing and assembly
operations are located in several other states. These
facilities are used for manufacturing, research and development,
engineering and office purposes. The U.S. Government owns
154 thousand square feet of the space occupied by Kaman
Aerospace Corporation in Bloomfield, Connecticut in accordance
with a Facilities Lease Agreement with a five (5) year term
expiring in March 2003. The corporation also occupies a
facility in Nowra, New South Wales, Australia under a contract
providing for a ten (10) year term expiring in June, 2010.
Page 12
The Industrial Distribution segment's facilities are located
throughout the United States with principal facilities located in
California, Connecticut, New York, Kentucky and Utah. Additional
Industrial Distribution segment facilities are located in British
Columbia, Canada. These facilities consist principally of regional
distribution centers, branches and office space with a portion
used for fabrication and assembly work.
The Music Distribution segment's facilities in the United
States are located in Connecticut, California, and Tennessee.
An additional Music Distribution facility is located in Ontario,
Canada. These facilities consist principally of regional
distribution centers, source centers and office space. Also
included are facilities used for manufacturing musical
instruments.
The corporation occupies a 40 thousand square foot Corporate
headquarters building in Bloomfield, Connecticut.
The corporation's facilities are suitable and adequate to
serve its purposes and substantially all of such properties
are currently fully utilized. Many of the properties, especially
within the Industrial Distribution segment, are leased.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the
corporation or any of its subsidiaries is a party or to which any
of their property is subject. Legal proceedings or enforcement
actions relating to environmental matters are discussed in the
section entitled Compliance with Environmental Protection Laws.
On August 3, 2000, Arthur J. Rocque, Jr., Commissioner of
Environmental Protection for the State of Connecticut instituted
suit in state court naming Kaman Aerospace Corporation, Kamatics
Corporation and the Ovation Division of Kaman Music Corporation
as defendants. The complaint alleges certain regulatory
violations (the majority of which are administrative in nature)
at facilities located in Connecticut related to routine
inspections which took place between 1988 and 1998. The
complaint seeks civil penalties and injunctive relief.
Management believes that in all cases where corrective action
was required at the time of such inspections, such action was
promptly taken at the time and management does not anticipate
that the resolution of this matter will be material to the
business or financial condition of the corporation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security
holders during the fourth quarter of 2000.
Page 13
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
CAPITAL STOCK AND PAID-IN CAPITAL
Information required by this item is included in the
corporation's 2000 Annual Report to Shareholders (Exhibit 13
to this Form 10-K) and is incorporated herein by reference.
INVESTOR SERVICES PROGRAM
Shareholders of Kaman Class A common stock are eligible to
participate in the Mellon Investor Services Program
administered by Mellon Bank, N.A. which offers a variety of
services including dividend reinvestment. A booklet describing
the program may be obtained by writing to the program's
Administrator, Mellon Bank, N.A., P. O. Box 3338, South
Hackensack, NJ 07606-1938.
QUARTERLY CLASS A COMMON STOCK INFORMATION
- -----------------------------------------------------------------
High Low Close Dividend
2000
First $12.81 $8.77 $9.75 $.11
Second 11.69 9.44 10.69 .11
Third 15.25 10.50 12.63 .11
Fourth 17.75 11.00 16.88 .11
- -----------------------------------------------------------------
1999
First $16.13 $11.56 $12.81 $.11
Second 16.00 10.75 15.69 .11
Third 16.00 12.31 12.75 .11
Fourth 13.13 10.06 12.88 .11
- -----------------------------------------------------------------
QUARTERLY DEBENTURE INFORMATION (6% Conv. Subordinated)
- -----------------------------------------------------------------
High Low Close
- -----------------------------------------------------------------
2000
First $ 94.00 $86.00 $88.00
Second 93.00 82.00 82.00
Third 90.00 82.00 84.00
Fourth 92.00 84.00 87.00
- -----------------------------------------------------------------
1999
First $ 99.88 $94.00 $ 97.00
Second 103.00 96.00 100.00
Third 100.00 94.00 97.50
Fourth 97.50 91.00 97.00
- -----------------------------------------------------------------
Page 14
NASDAQ market quotations reflect inter-dealer prices,
without retail mark-up, mark-down, or commission and may not
necessarily represent actual transactions.
ANNUAL MEETING
The Annual Meeting of Shareholders of the corporation will
be held on Tuesday, April 10, 2001 at 11:00 a.m. in the offices
of the corporation, 1332 Blue Hills Avenue, Bloomfield,
Connecticut 06002. Holders of all classes of Kaman securities
are invited to attend, however it is expected that matters on
the agenda for the meeting will require the vote of Class B
shareholders only.
ITEM 6. SELECTED FINANCIAL DATA
Information required by this item is included in the
corporation's 2000 Annual Report to Shareholders (Exhibit 13
to this Form 10-K) and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Information required by this item is included in the
corporation's 2000 Annual Report to Shareholders (Exhibit 13
to this Form 10-K) and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item is included in the
corporation's 2000 Annual Report to Shareholders (Exhibit 13
to this Form 10-K) and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Page 15
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Following is information concerning each Director and
Executive Officer of Kaman Corporation including name, age,
position with the corporation, and business experience during
the last five years:
Brian E. Barents Mr. Barents, 57, has been a Director
since 1996. He is President and
Chief Executive Officer of Galaxy
Aerospace Company L.P. Prior to that
he was President and Chief Executive
Officer of Learjet, Inc.
T. Jack Cahill Mr. Cahill, 52, has held various
positions with Kaman Industrial
Technologies Corporation, a subsidiary
of the corporation, since 1975, and has
been President of that subsidiary since
1993.
E. Reeves Callaway, III Mr. Callaway, 53, has been a Director
since 1995. He is President of The
Callaway Advanced Technology Corporation.
Frank C. Carlucci Mr. Carlucci, 70, has been a Director
since 1989. Prior to that he served as
U.S. Secretary of Defense. He is
Chairman of The Carlyle Group, merchant
bankers, and Chairman of Nortel Networks
Corporation (formerly Northern Telecom).
Mr. Carlucci is also a director of
Ashland, Inc., Neurogen Corporation,
Pharmacia & Upjohn, Inc., Quaker Oats
Company, Sun Resorts, Ltd., N.V., and
Texas Biotechnology Corporation.
Laney J. Chouest, M.D. Dr. Chouest, 47, has been a Director
since 1996. He is Owner-Manager
of Edison Chouest Offshore, Inc.
Candace A. Clark Ms. Clark, 46, has been Senior Vice
President, Chief Legal Officer and
Secretary since 1996. Prior to that
she served as Vice President and
Counsel. Ms. Clark has held various
positions with the corporation since
1985.
Page 16
John A. DiBiaggio Dr. DiBiaggio, 68, has been a Director
since 1984. He is President and Chief
Executive Officer of Tufts University.
Prior to that he was President and Chief
Executive Officer of Michigan State
University.
Ronald M. Galla Mr. Galla, 50, has been Senior Vice
President and Chief Information Officer
since 1995. Prior to that he served as
Vice President and director of the
corporation's Management Information
Systems, a position which he held since
1990. Mr. Galla has been director of
the corporation's Management Information
Systems since 1984.
Robert M. Garneau Mr. Garneau, 56, has been Executive Vice
President and Chief Financial Officer
since 1995. Previously he served as
Senior Vice President, Chief Financial
Officer and Controller. Mr. Garneau has
held various positions with the
corporation since 1981.
Huntington Hardisty Admiral Hardisty (USN-Ret.), 72,
is the retired President of Kaman
Aerospace International Corporation, a
subsidiary of the corporation.
He has been a Director since 1991
and serves as a consultant
to the corporation. He retired from the
U.S. Navy in 1991 having served as
Commander-in-Chief for the U.S. Navy
Pacific Command since 1988.
Charles H. Kaman Mr. Kaman, 81, has been Chairman of the
Board of Directors since 1945. Until
1999 he was also President and Chief
Executive Officer of the corporation.
He is presently on disability leave.
C. William Kaman II Mr. Kaman, 49, has been a Director
since 1992. He is Chairman and CEO of
AirKaman of Jacksonville, Inc., an
entity unaffiliated with the
corporation. Previously he was
Executive Vice President of the
corporation and was President of
Kaman Music Corporation, a subsidiary
of the corporation. Mr. Kaman is the
son of Charles H. Kaman, Chairman of
the Board of Directors of the
corporation.
Page 17
John C. Kornegay Mr. Kornegay, 51, has been President of
Kamatics Corporation, a subsidiary of
the corporation, since 1999, and has
held various positions with Kamatics
Corporation since 1988.
Walter R. Kozlow Mr. Kozlow, 65, has been President of
Kaman Aerospace Corporation, a
subsidiary of the corporation, since
1986, and has held various positions
with Kaman Aerospace Corporation since
1960.
Eileen S. Kraus Ms. Kraus, 62, has been a Director
since 1995. She is the retired
Chairman (Connecticut) of Fleet
National Bank. Since 1979 she has
held various positions at Shawmut
Bank Connecticut and Shawmut
National Corporation, predecessors
of Fleet Bank, N.A. and its holding
company, Fleet Financial Group. She
is a director of The Stanley Works and
Chairman of Connecticare Holding
Company and Connecticare, Inc.
Paul R. Kuhn Mr. Kuhn, 59, was appointed President
and Chief Executive Officer of the
corporation and was elected a Director
in 1999. From 1998 to 1999 he was
Senior Vice President, Operations,
Aerospace Engine Business, for Coltec
Industries, Inc. Prior to that
he was Group Vice President, Coltec
Industries, Inc. and President of its
Chandler Evans division. He is a
director of the Connecticut Business
and Industry Association.
Hartzel Z. Lebed Mr. Lebed, 73, has been a Director
since 1982, and served as Vice Chairman
of the Board of Directors from January,
1999 to September, 1999. He is the
retired President of CIGNA Corporation.
Walter H. Monteith, Jr. Mr. Monteith, 70, has been a Director
since 1987. He is the retired Chairman
of Southern New England Telecommuni-
cations Corporation.
Wanda L. Rogers Mrs. Rogers, 68, has been a Director
since 1991. She is President and Chief
Executive Officer of Rogers Helicopters,
Inc. She is also a director of Clovis
Community Bank.
Page 18
Robert H. Saunders, Jr. Mr. Saunders, 59, became President of
Kaman Music Corporation, a subsidiary
of the corporation, in 1998. He served
as Senior Vice President of the
corporation since 1995 and also held
the position of Senior Executive Vice
President of Kaman Music Corporation
during a portion of that period.
Each Director and Executive Officer has been elected for a
term of one year and until his or her successor is elected.
The terms of all Directors and Executive Officers are expected
to expire as of the Annual Meeting of the Shareholders and
Directors of the corporation to be held on April 10, 2001.
Section 16(a) Beneficial Ownership Reporting Compliance.
Based upon information provided to the corporation by
persons required to file reports under Section 16(a) of the
Securities Exchange Act of 1934, no Section 16(a) reporting
delinquencies occurred in 2000.
Page 19
ITEM 11. EXECUTIVE COMPENSATION
A) GENERAL. The following tables provide certain information
relating to the compensation of the corporation's Chief
Executive Officer and its four other most highly compensated
executive officers.
B) SUMMARY COMPENSATION TABLE.
Annual Compensation Long Term Compensation
------------------- ----------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
All
Name and Other AWARDS Other
Principal Salary Bonus Annual RSA Options/SARs LTIP Comp.
Position Year ($) ($) Comp.(1)($)(2) (#Shares) Payments ($)(3)
- ---------------------------------------------------------------------------
C. H. Kaman* 2000 850,000 ------- 223,316 ------- ------- --- 57,022
Chairman
1999 850,000 200,000 363,229 ------- ------- --- 140,000
1998 850,000 408,000 116,201 ------- 0/ --- 64,120
125,000
P. R. Kuhn 2000 650,000 570,000 ------- 154,688 20,000/ --- 11,924
President 50,000
and Chief
Executive 1999 250,000(4) 360,000 ------- 706,250 100,000/--- 3,661
Officer 180,000
1998 ------- ------- ------- ------- ------- --- ------
R.M.Garneau 2000 425,000 310,000 ------- 77,344 10,000/ --- 25,181
Executive 30,000
Vice Pres- 1999 400,000 175,000 ------- 43,500 9,000/--- 12,329
ident and 30,000
Chief 1998 375,000 175,000 ------- 127,500 7,500/--- 12,418
Financial 12,500
Officer
W.R.Kozlow 2000 300,000 160,000 ------- 61,875 9,000/ --- 26,341
President, 25,000
Kaman 1999 275,000 140,000 ------- 36,250 7,500/ --- 18,150
Aerospace 20,000
Corporation 1998 255,000 100,000 ------- 85,000 7,500/ --- 13,170
10,000
T.J. Cahill 2000 260,000 160,000 ------- 41,250 6,000/ --- 15,670
President, 15,000
Kaman 1999 255,000 51,000 ------- 36,250 7,500/ --- 7,449
Industrial 15,000
Technologies 1998 245,000 80,000 ------- 85,000 7,500/ --- 7,397
Corporation 7,500
Page 20
* Mr. Kaman began disability leave on June 15, 2000.
1. The corporation maintains a program pursuant to which it pays
for tax and estate planning services provided to executive
officers by third parties, up to certain limits. Amounts
reported in this column include payments for such services as
follows: $146,806 on behalf of C.H. Kaman in 2000, $152,788 on
behalf of C.H. Kaman in 1999, and $91,060 on behalf of C.H.
Kaman in 1998. In addition, domestic services were provided to
C.H. Kaman in the amount of $98,807 in 1999.
2. As of December 31, 2000, aggregate restricted stock holdings
and their year end value were: C.H. Kaman, none; P.R. Kuhn,
55,000 shares valued at $928,400; R.M. Garneau, 18,900 shares
valued at $319,032; W.R. Kozlow, 14,600 shares valued at
$246,448; and T.J. Cahill, 12,600 shares valued at $212,688.
Restrictions lapse at the rate of 20% per year for all awards,
beginning one year after the grant date provided recipient
remains an employee of the corporation or a subsidiary.
Awards reported in this column are as follows: P. R. Kuhn,
5,000 shares in 2000 and 50,000 shares in 1999; R. M. Garneau,
7,500 shares in 2000, 3,000 shares in 1999, and 7,500 shares
in 1998; W.R. Kozlow, 6,000 shares in 2000, 2,500 shares in
1999, and 5,000 shares in 1998; and T.J. Cahill, 4,000 shares
in 2000, 2,500 shares in 1999, and 5,000 shares in 1998.
Dividends are paid on the restricted stock.
3. Amounts reported in this column consist of: C.H. Kaman,
$53,000 - Officer 162 Insurance Program, $4,022 - medical
expense reimbursement program ("MERP") plus amounts
attributable to the corporation's direct medical expense
reimbursement to Mr. Kaman; P.R. Kuhn, $5,362 - Senior
executive life insurance program ("Executive Life"),
$4,250 - employer matching contributions to the Kaman
Corporation Thrift and Retirement Plan (the "Thrift Plan
employer match"); $2,312 - MERP; R.M. Garneau, $4,544-
Executive Life, $851 - Officer 162 Insurance Program,
$4,250 - Thrift Plan employer match, $1,411 - MERP,
$14,125 - all supplemental employer contributions under
the Kaman Corporation Deferred Compensation Plan
("supplemental employer contributions"); W.R. Kozlow,
$9,841 - Executive Life, $4,250 - Thrift Plan employer
match, $5,000 - MERP, $7,250 - supplemental employer
contributions; and T.J. Cahill, $3,219- Executive Life,
$4,250 - Thrift Plan employer match, $1,951 - MERP, $6,250-
supplemental employer contributions.
4. P.R. Kuhn joined the corporation on August 2, 1999 as
President and Chief Executive Officer.
Page 21
C) OPTION/SAR GRANTS IN THE LAST FISCAL YEAR:
- ----------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term*
- ----------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options/
SARs**
Options/ Granted to
SARs** Employees Exercise or
Granted in Fiscal Base Price Expiration
Name (#) Year ($/Sh) Date 5%($) 10%($)
- ----------------------------------------------------------------------------
C. H. Kaman 0/ 0/ ----- ------- --------- ---------
0 0
P. R. Kuhn 20,000/ 8.87/ 10.3125 2/15/10 453,983.31 1,150,482.84
50,000 38.46
R. M. Garneau 10,000/ 4.43/ 10.3125 2/15/10 259,419.03 657,418.76
30,000 23.08
W. R. Kozlow 9,000/ 3.99/ 10.3125 2/15/10 220,506.18 558,805.95
25,000 19.23
T. J. Cahill 6,000/ 2.66/ 10.3125 2/15/10 136,194.99 345,144.85
15,000 11.54
*The information provided herein is required by Securities
and Exchange Commission rules and is not intended to be a
projection of future common stock prices.
**Stock Appreciation Rights (SARs) are payable in cash only,
not in shares of common stock.
Options and SARs relate to the corporation's Class A common
stock and vest at the rate of 20% per year, beginning one
year after the grant date.
Page 22
D) AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR, AND
FISCAL YEAR-END OPTION/SAR VALUES.
Number of
Shares under- Value of
lying Unexercised
Unexercised in-the-money
options options*
Shares at FY-end (#) at FY-end ($)
acquired on Value exercisable/ exercisable/
Name Exercise(#) realized unexercisable unexercisable
(a) (b) (c) (d) (e)
- -------------------------------------------------------------------
C. H. Kaman 10,000 47,500 10,000/0 88,800/0
P. R. Kuhn none - 20,000/100,000 55,100/351,750
R. M. Garneau 3,000 19,140 38,300/27,700 212,451.50/110,341
W. R. Kozlow 3,000 22,140 36,600/24,900 204,355.50/98,164.50
T. J. Cahill 1,000 6,750 33,100/21,900 175,525.50/78,462
Value of
Number of Unexercised
Unexercised in-the-money
SARs SARs*
SARs at FY-end (#) at FY-end ($)
acquired on Value exercisable/ exercisable/
Name Exercise(#) realized unexercisable unexercisable
(a) (b) (c) (d) (e)
- -------------------------------------------------------------------
C. H. Kaman none none 50,000/75,000 0/0
P. R. Kuhn " " 36,000/194,000 99,180/725,095
R. M. Garneau " " 71,000/101,500 232,080/399,345
W. R. Kozlow " " 38,000/67,000 118,420/274,867.50
T. J. Cahill " " 36,000/51,500 116,040/199,672.50
*Difference between the 12/31/00 Fair Market Value and the
exercise price(s).
Page 23
E) LONG TERM INCENTIVE PLAN AWARDS: Except as described above,
no long term incentive plan awards were made to any named
executive officer in the last fiscal year.
F) PENSION AND OTHER DEFINED BENEFIT DISCLOSURE. The
following table shows estimated annual benefits payable at
normal retirement age to participants in the corporation's
Pension Plan at various compensation and years of service
levels using the benefit formula applicable to Kaman
Corporation. Pension benefits are calculated based on
60 percent of the average of the highest five consecutive
years of "covered compensation" out of the final ten years
of employment less 50 percent of the primary social security
benefit, reduced proportionately for years of
service less than 30 years:
PENSION PLAN TABLE
Years of Service
Remuneration* 15 20 25 30 35
- ---------------------------------------------------------------
125,000 33,198 44,485 55,109 66,396 66,396
150,000 40,698 54,535 67,559 81,396 81,396
175,000 48,198 64,585 80,009 96,396 96,396
200,000 55,698 74,635 92,459 111,396 111,396
225,000 63,198 84,685 104,909 126,396 126,396
250,000 70,698 94,735 117,359 141,396 141,396
300,000 85,698 114,835 142,259 171,396 171,396
350,000 100,698 134,935 167,159 201,396 201,396
400,000 115,698 155,035 192,059 231,396 231,396
450,000 130,698 175,135 216,959 261,396 261,396
500,000 145,698 195,235 241,859 291,396 291,396
750,000 220,698 295,735 366,359 441,396 441,396
1,000,000 295,698 396,235 490,859 591,396 591,396
1,250,000 370,698 496,735 615,359 741,396 741,396
1,500,000 445,698 597,235 749,859 891,396 891,396
1,750,000 520,698 697,735 864,359 1,041,396 1,041,396
2,000,000 595,698 798,235 988,859 1,191,396 1,191,396
*Remuneration: Average of the highest five consecutive years of
"Covered Compensation" out of the final ten years of service.
"Covered Compensation" means "W-2 earnings" or "base
earnings", if greater, as defined in the Pension Plan. W-2
earnings for pension purposes consist of salary (including 401(k)
and Section 125/129 Plan contributions but not deferrals under a
non-qualified Deferred Compensation Plan), bonus and taxable
income attributable to restricted stock awards and the cash out
of employee stock options. Salary and bonus amounts for the
Page 24
named Executive Officers for 2000 are as shown on the Summary
Compensation Table. Compensation deferred under the
corporation's non-qualified deferred compensation plan is
included in Covered Compensation here because it is covered by
the corporation's unfunded supplemental employees' retirement
plan for the participants in that plan.
Current Compensation covered by the Pension Plan for any
named executive whose Covered Compensation differs by more than
10% from the compensation disclosed for that executive in the
Summary Compensation Table: Mr. Cahill, $365,243.
Federal law imposes certain limitations on annual pension
benefits under the Pension Plan. For the named executive
officers who are participants, the excess will be paid under the
Corporation's unfunded supplemental employees' retirement plan.
The Executive Officers named in Item 11(b) are participants
in the plan and as of December 31, 2000, had the number of
years of credited service indicated: Mr. Kaman - 55.1 years;
Mr. Kuhn - 4.0; Mr. Garneau - 19.48 years; Mr. Kozlow - 40.7
years; Mr. Cahill - 25.7 years.
Benefits are computed generally in accordance with the
benefit formula described above.
G) COMPENSATION OF DIRECTORS. In general, non-employee members
of the Board of Directors of the corporation receive an annual
retainer of $20,000 and a fee of $1,000 for attending each
meeting of the Board and each meeting of a Committee of the
Board, except that the Chairman of the Audit Committee receives
a fee of $1,250 for attending each meeting of that Committee.
Such fees may be received on a deferred basis. In addition,
each non-employee director will receive a Restricted Stock
Award for 500 shares (issued pursuant to the corporation's
Stock Incentive Plan), providing for immediate vesting upon
election as a director at the corporation's 2001 Annual
Meeting of Shareholders.
H) EMPLOYMENT CONTRACTS AND TERMINATION, SEVERANCE AND CHANGE
OF CONTROL ARRANGEMENTS. The corporation has an arrangement
with Mr. C. H. Kaman that (1) in the event he retires or dies
during active employment with the corporation, he and/or
Mrs. Kaman will be provided with medical/dental benefits for
the remainder of their lives; and (2) in the event he becomes
disabled during active employment, he will be assured of
receiving an amount equal to his then current annual base
salary for the remainder of his life.
In addition, the corporation has entered into Employment
Agreements and Change in Control Agreements with certain
executive officers,
Page 25
copies of which were filed as exhibits to the following filings
made by the corporation with the Securities and Exchange
Commission: Form 10-Q (Document 54381-99-14) filed on November
12, 1999; Form 10-K (Document No. 54381-00-03 filed on March 21,
2000; and Form 10-Q (Document 54381-00-500006) filed on November
14, 2000. The employment agreements generally provide for a
severance payment to be made to any such officer if he or she is
terminated from employment (other than for willful failure to
perform proper job responsibilities or violations of law) or if
he or she leaves employment for good reason (e.g., due to a
diminution in job responsibilities). The agreements have a two
year term which began on September 21, 1999. The change in
control agreements generally provide that, for a three year
period following a change in control of Kaman Corporation or, in
certain cases, a subsidiary thereof, a severance payment will be
made to any such officer if his or her employment ends following
the change in control (unless the termination was for cause, the
officer dies or becomes disabled or if he or she leaves
employment without good reason). The change in control
agreements do not have a fixed term.
The corporation has also entered into an agreement with
Admiral Hardisty providing him with certain payments in the
amount of $370,000 and retaining him as a consultant for a
period of two years following his retirement from regular
employment effective March 1, 2000 at a per diem rate of
$1,000.00. A copy of such agreement was attached as Exhibit
10d to the corporation's 1999 Form 10-K (Document 54381-99-3)
filed with the Securities and Exchange Commission on March 21,
2000.
In addition, the corporation has an agreement with Mr. C. William
Kaman, retaining him as a Senior Executive Advisor through
December 31, 2001 at the annual rate of $245,000. A copy of
such agreement appears as Exhibit 10(c) to the corporation's
1998 Form 10-K (Document 54381-99-3) filed with the Securities
and Exchange Commission on March 16, 1999.
Except as disclosed in Item 13, and except as described above and
in connection with the corporation's Pension Plan and the
corporation's non-qualified Deferred Compensation Plan, the
corporation has no other employment contract, plan or arrangement
with respect to any named executive which relates to employment
termination for any reason, including resignation, retirement or
otherwise, or a change in control of the corporation or a change
in any such executive officer's responsibilities following a
change of control, which exceeds or could exceed $100,000.
I) Not Applicable.
Page 26
J) COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
IN COMPENSATION DECISIONS.
1) The following persons served as members of the Personnel
and Compensation Committee of the Corporation's Board of
Directors during the last fiscal year: Frank C. Carlucci, Brian
E. Barents, Eileen S. Kraus, and Walter H. Monteith, Jr.
None of these individuals was an officer or employee of the
corporation or any of its subsidiaries during either the last
fiscal year or any portion thereof in which he or she served as a
member of the Personnel and Compensation Committee.
2) During the last fiscal year no executive officer of the
corporation served as a director of or as a member of the
compensation committee (or other board committee performing
equivalent functions) of another entity, one of whose executive
officers served as a director of, or on the Personnel and
Compensation Committee of the corporation.
K) Not Applicable.
L) Not Applicable.
Page 27
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.
Following is information about persons known to the
corporation to be beneficial owners of more than five percent
(5%) of the Corporation's voting securities. Ownership is
direct unless otherwise noted.
- -----------------------------------------------------------------
Number of Shares
Class of Beneficially Owned
Common Name and Address as of February 1, Percentage
Stock Beneficial Owner 2001 of Class
- -----------------------------------------------------------------
Class B Charles H. Kaman 258,375(1) 38.69%
Kaman Corporation
Blue Hills Avenue
Bloomfield, CT 06002
Class B Newgate Associates 199,802 29.91%
Limited Partnership
c/o Murtha, Cullina, LLP
CityPlace I
185 Asylum Street
Hartford, CT 06103
Class B C. William Kaman, II 64,446(2) 9.65%
c/o AirKaman of
Jacksonville, Inc.
Jacksonville International
Airport
14700 Yonge Drive
Jacksonville, FL 32218
Class B Robert D. Moses 51,177(3) 7.66%
Farmington Woods
Avon, CT 06001
(1) Excludes 1,471 shares held by Mrs. Kaman.
(2) Excludes 4,800 shares held as trustee for the benefit of
certain family members.
(3) Includes 39,696 shares held by a partnership controlled by
Mr. Moses.
Page 28
(b) SECURITY OWNERSHIP OF MANAGEMENT. The following is
information concerning beneficial ownership of the corporation's
stock by each Director of the corporation, each Executive
Officer of the corporation named in the Summary Compensation
Table, and all Directors and Executive Officers of the
corporation as a group. Ownership is direct unless
otherwise noted.
Number of Shares
Class of Beneficially Owned Percentage
Name Common Stock as of February 1, 2001 of Class
- --------------------------------------------------------------------
Brian E. Barents Class A 2,000 *
T. Jack Cahill Class A 81,942(1) *
E. Reeves Callaway Class A 2,000 *
Frank C. Carlucci Class A 5,000(2) *
Laney J. Chouest Class A 7,331 *
John A. DiBiaggio Class A 2,000 *
Robert M. Garneau Class A 87,031(3) *
Class B 23,236 3.48%
Huntington Hardisty Class A ------(4) *
Charles H. Kaman Class A 152,467(5) *
Class B 258,375(6) 38.69%
C. William Kaman, II Class A 69,988(7) *
Class B 64,446(8) 9.65%
Walter R. Kozlow Class A 92,278(9) *
Class B 296 *
Paul R. Kuhn Class A 89,501(10) *
Class B 1,440 *
Eileen S. Kraus Class A 2,713 *
Hartzel Z. Lebed Class A 18,263(11) *
Walter H. Monteith, Jr. Class A 2,200 *
Wanda L. Rogers Class A 2,000 *
All Directors and
Executive Officers Class A 739,495(12) 3.28%
as a group ** Class B 349,675 52.36%
* Less than one percent.
** Excludes 23,612 Class A shares and 1,471 Class B shares
held by spouses of certain Directors and Executive
Officers.
(1) Includes 40,900 shares subject to stock options exercisable
or which will become exercisable within 60 days.
(2) Includes 3,500 shares held jointly with Mrs. Carlucci.
(3) Includes 47,600 shares subject to stock options exercisable
or which will become exercisable within 60 days.
(4) Excludes 21,400 shares held by Mrs. Hardisty.
Page 29
(5) Excludes the following: 23,132 shares held by Mrs. Kaman;
8,010 shares held by Fidelco Guide Dog Foundation, Inc., a
charitable foundation of which Mrs. Kaman is President and
Mr. Kaman is a Director, in which shares Mr. Kaman disclaims
beneficial ownership; 184,434 shares held by Newgate
Associates Limited Partnership, a limited partnership
established by Mr. Kaman and for which Mr. Kaman previously
served as general partner; 21,816 shares held by Oldgate
Limited Partnership ("Oldgate") a limited partnership
established by Mr. Kaman and for which Mr. Kaman previously
served as the general partner; 127,034 shares held by Oldgate
and as to which shares Mr. Kaman disclaims beneficial
interest, such portion of Oldgate having been placed in an
irrevocable trust; and 70,500 shares held by the Charles H.
Kaman Charitable Foundation, a private charitable foundation.
Includes 10,000 shares subject to stock options exercisable
or which will become exercisable within 60 days.
(6) Excludes the following: 1,471 shares held by Mrs. Kaman.
Also excludes 199,802 shares held by Newgate Associates
Limited Partnership, a limited partnership, which shares
together with the 258,375 shares beneficially owned by
Mr. Kaman, are the subject of a power of attorney and voting
trust established by Mr. Kaman as more particularly described
in Exhibit 10d.
(7) Includes 7,000 shares subject to stock options exercisable
or which will become exercisable within 60 days; and excludes
89,891 shares held by Mr. Kaman as Trustee, in which shares
Mr. Kaman disclaims any beneficial ownership.
(8) Excludes 4,800 shares held by Mr. Kaman as Trustee in which
shares Mr. Kaman disclaims any beneficial ownership.
(9) Includes 45,000 shares subject to stock options exercisable
or which will become exercisable within 60 days.
(10)Includes 24,000 shares subject to stock options exercisable
or which will become exercisable within 60 days.
(11)Includes shares held jointly with Mrs. Lebed and
8,000 shares held in an Individual Retirement Account, but
excludes 480 shares held by Mrs. Lebed.
(12)Includes 227,700 shares subject to stock options exercisable
or which will become exercisable within 60 days.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 2000, the corporation obtained legal services from
the Hartford, Connecticut law firm of Murtha Cullina LLP of
which Mr. John S. Murtha, who served as a Director of the
corporation through April, 2000, is of counsel. The
corporation also obtained video production services in the
amount of $58,088 from Polykonn Corporation, a corporation
controlled by Mr. Steven Kaman, son of Charles H. Kaman,
Chairman of the corporation. In addition, in 2000 the
corporation paid rental payments in the amount of
Page 30
$92,809 under a lease arrangement with AirKaman of Jacksonville,
Inc. for certain premises occupied by the corporation in
Jacksonville, Florida. AirKaman of Jacksonville, Inc. is a
corporation controlled by C. William Kaman, II, a director of
the corporation. Such lease arrangement was in effect for a
number of years prior to Mr. Kaman's acquisition of AirKaman
of Jacksonville, Inc., was terminated effective December 31,
2000 and in February, 2001, AirKaman of Jacksonville, Inc. paid
the corporation a termination fee of $100,000 as consideration
for such termination. Also in 2000 the corporation utilized
the services of Mr. Ivan Humberto Iraola Pellane as a sales
representative in connection with the sale of the corporation's
K-MAX and SH-2 helicopters for use in Peru. Mr. Iraola Pellane
is the son-in-law of Mr. Walter Kozlow, an Executive Officer
of the corporation. The corporation's agreement with Mr. Iraola
Pellane with respect to the SH-2 helicopter provides for a fee
of $3,000 per month for certain in-country support and marketing
services and also provides for a commission of 2 1/2% on any
sale of the SH-2 helicopter which may ensue. To date no such
sales have occurred. The corporation's agreement with
Mr. Iraola Pellane with respect to the K-MAX helicopter
provides for a commission arrangement of 5% on such sales with
an additional 1% as compensation for after market support
services. In December, 2000, the corporation was awarded a
contract valued at $21 million with the U.S. State Department
for the sale of five K-MAX helicopters for use in Peru.
Payments to Mr. Iraola Pellane for his services under his
commission arrangement are subject to the corporation's
receipt of payment from the customer.
Page 31
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a)(1) FINANCIAL STATEMENTS.
See Item 8 concerning financial statements appearing
as Exhibit 13 to this Report.
(a)(2) FINANCIAL STATEMENT SCHEDULES.
An index to the financial statement schedules
immediately precedes such schedules.
(a)(3) EXHIBITS.
An index to the exhibits filed or incorporated by
reference immediately precedes such exhibits.
(b) REPORTS ON FORM 8-K: None
Page 32
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of Bloomfield, State of
Connecticut, on this 15th day of March, 2001.
KAMAN CORPORATION
(Registrant)
By Paul R. Kuhn, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Signature: Title: Date:
- ---------------------------------------------------------------
Paul R. Kuhn President, Chief Executive March 15, 2001
Officer and Director
Robert M. Garneau Executive Vice President March 15, 2001
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
Paul R. Kuhn March 15, 2001
Attorney-in-Fact for:
Brian E. Barents Director
E. Reeves Callaway, III Director
Frank C. Carlucci Director
Laney J. Chouest Director
John A. DiBiaggio Director
Huntington Hardisty Director
C. William Kaman, II Director
Eileen S. Kraus Director
Hartzel Z. Lebed Director
Walter H. Monteith, Jr. Director
Wanda L. Rogers Director
Page 33
KAMAN CORPORATION AND SUBSIDIARIES
Index to Financial Statement Schedules
Report of Independent Auditors
Financial Statement Schedules:
Schedule V - Valuation and Qualifying Accounts
Page 34
REPORT OF INDEPENDENT AUDITORS
KPMG LLP
Certified Public Accountants
One Financial Plaza
Hartford, Connecticut 06103
The Board of Directors and Shareholders
Kaman Corporation:
Under date of February 5, 2001, we reported on the consolidated
balance sheets of Kaman Corporation and subsidiaries as of
December 31, 2000 and 1999 and the related consolidated
statements of operations, changes in shareholders' equity and
cash flows for each of the years in the three-year period ended
December 31, 2000, as contained in the 2000 annual report to
shareholders. These consolidated financial statements and our
report thereon are included in the annual report on Form 10-K
for 2000. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related
consolidated financial statement schedule as listed in the
accompanying index. This financial statement schedule is the
responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule
based on our audits.
In our opinion, such schedule, when considered in relation to
the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set
forth therein.
/s/ KPMG LLP
Hartford, Connecticut
February 5, 2001
Page 35
KAMAN CORPORATION AND SUBSIDIARIES
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in Thousands)
YEAR ENDED DECEMBER 31, 1998
Additions
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1998 EXPENSES OTHERS DEDUCTIONS 1998
Allowance for
doubtful
accounts $3,827 $1,058 $----- $ 838(A) $4,047
====== ====== ====== ====== ======
Accumulated
amortization
of goodwill $1,378 $ 110 $----- $----- $1,488
====== ====== ====== ====== ======
YEAR ENDED DECEMBER 31, 1999
Additions
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1999 EXPENSES OTHERS DEDUCTIONS 1999
Allowance for
doubtful
accounts $4,047 $1,355 $----- $ 883(A) $4,519
====== ====== ====== ====== ======
Accumulated
amortization
of goodwill $1,488 $ 110 $----- $----- $1,598
====== ====== ====== ====== ======
YEAR ENDED DECEMBER 31, 2000
Additions
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 2000 EXPENSES OTHERS DEDUCTIONS 2000
Allowance for
doubtful
accounts $4,519 $1,490 $----- $1,373(A) $4,636
====== ====== ====== ====== ======
Accumulated
amortization
of goodwill $1,598 $ 110 $----- $----- $1,708
====== ====== ====== ====== ======
(A) Write-off of bad debts, net of recoveries
Page 36
KAMAN CORPORATION
INDEX TO EXHIBITS
Exhibit 3a The Amended and Restated by reference
Certificate of Incorporation
of the corporation, as amended,
has been filed with the Securities
and Exchange Commission on form
S-8POS on May 11, 1994, as
Document No. 94-20.
Exhibit 3b The By-Laws of the corporation by reference
as amended on February 9, 1999
has been filed with the Securities
and Exchange Commission on Form
10-K on March 16, 1999, as
Document No. 99-03.
Exhibit 4a Indenture between the corporation by reference
and Manufacturers Hanover Trust
Company, as Indenture Trustee,
with respect to the
Corporation's 6% Convertible
Subordinated Debentures, has
been filed as Exhibit 4.1 to
Registration Statement No. 33 -
11599 on Form S-2 of the
corporation filed with the
Securities and Exchange
Commission on January 29, 1987
and is incorporated in this
report by reference.
Exhibit 4b Revolving Credit Agreement by reference
between the corporation and The
Bank of Nova Scotia and Fleet
National Bank as Co-Administrative
Agents and Bank One, N.A. as the
Documentation Agent and The Bank of
Nova Scotia and Fleet Securities, Inc.
as the Co-Lead Arrangers and Various
Financial Institutions dated as of
November 13, 2000 filed as Exhibit 4
to form 10-Q filed with the Securities
and Exchange Commission on November 14,
2000, Document No. 54381-00-500006.
Page 37
Exhibit 4c The corporation is party to certain by reference
long-term debt obligations, such
as real estate mortgages, copies
of which it agrees to furnish to
the Commission upon request.
Exhibit 10a The Kaman Corporation 1993 Stock attached
Incentive Plan as amended effective
November 18, 1997 has been filed
as an exhibit to the Corporation's
Form 10-K Document No. 54381-98-09
filed with the Securities and
Exchange Commission on March 16,
1998 as amended by Document
No. 54381-98-13 on March 27, 1998
and by Document No. 54381-00-500006
on November, 14, 2000) and as amended
effective February 13, 2001,
which amendment is attached hereto.
Exhibit 10b The Kaman Corporation Employees by reference
Stock Purchase Plan as amended
effective November 19, 1997 has been
filed as an exhibit to the Corporation's
Form 10-K Document No. 54381-98-09
filed with the Securities and
Exchange Commission on March 16, 1998
(as amended by Document No. 54381-98-13
on March 27, 1998) and is incorporated
in this report by reference.
Exhibit 10c Kaman Corporation Supplemental attached
Employees' Retirement Plan,
as amended
Exhibit 10d Kaman Corporation Deferred attached
Compensation Plan, as amended
Exhibit 10e Kaman Corporation Cash Bonus Plan, attached
as amended
Exhibit 10f Employment Agreements and Change in by reference
Control Agreements with certain
executive officers have been filed
as exhibits to the following
filings by the corporation with the
Securities and Exchange Commission:
Form 10-Q (Document No. 54381-99-14)
filed November 12, 1999; Form 10-K
(Document No. 54381-00-03) filed
March 21, 2000; and Form 10-Q
(Document No. 54381-00-500006)
Filed November 14, 2000.
Page 38
Exhibit 10f(IV) Agreement between Kaman by reference
Corporation and Huntington
Hardisty dated February 24, 2000
has been filed as Exhibit 10d to
the corporation's Form 10-K
Document No. 54381-00-03.
Exhibit 10g Notice of change of control by reference
filed as Exhibit 99 to the
corporation's Form 8-K dated
August 16, 2000 as Document
No. 54381-00-000010.
Exhibit 11 Statement regarding computation attached
of per share earnings.
Exhibit 13 Portions of the Corporation's attached
2000 Annual Report to
Shareholders as required by
Item 8.
Exhibit 21 Subsidiaries. attached
Exhibit 23 Consent of Independent Auditors. attached
Exhibit 24 Power of attorney under which attached
this report has been signed on
behalf of certain directors.
Page 39
EXHIBIT 10a
KAMAN CORPORATION
1993 STOCK INCENTIVE PLAN
As Amended effective February 13, 2001
1. Purpose. This Plan includes a continuation and extension of
the incentive stock program of the Corporation set forth in the
First Predecessor Plan and the Second Predecessor Plan and is
designed to give directors, officers and key employees of the
Corporation and other persons an expanded opportunity to acquire
stock in the Corporation or receive other long-term incentive
remuneration in order that they may better participate in the
Corporation's growth and be motivated to remain with the
Corporation and promote its further development and success.
2. Definitions. The following terms shall have the meanings
given below unless the context otherwise requires:
(a) "Act" means the Securities Exchange Act of 1934, as amended.
(b) "Award" or "Awards" except where referring to a particular
category of grant under the Plan shall include Incentive Stock
Options, Non-Statutory Stock Options, Stock Appreciation Rights
and Restricted Stock Awards.
(c) "Board" means the Board of Directors of the Corporation.
(d) "Code" means the Internal Revenue Code of 1986, as amended,
and any successor Code, and related rules, regulations and
interpretations.
(e) "Committee" means the committee of the Board established
under Section 9 hereof.
(f) "Corporation" means the committee of the Board established
as defined by the Code.
(g) "Disability" or "disabled" means disability or disabled as
defined by the Code.
(h) "Eligible Person" means any person, including a person who
is not an employee of the Corporation or a Subsidiary, or entity
who satisfies all the eligibility requirements set forth in
either Section 3(a) or 3(b) hereof, excluding, however, any
member of the Committee and any alternate member of the
Committee.
Page 1
(i) "Fair Market Value" of the Stock on any given date
shall be the mean between the highest and lowest quoted selling
prices of the Stock in the NASDAQ National Market System on such
date. If there were no sales on the valuation date, "Fair Market
Value" shall be the closing price of the Stock in the NASDAQ
National Market System on the most recent trading day preceding
the valuation date on which sales of the Stock occurred.
(j) "First Predecessor Plan" means the Kaman Corporation 1973
Stock Option Plan.
(k) "Incentive Stock Option" means a stock option qualifying
under the provisions of Section 422 of the Code.
(l) "Non-Employee Director" shall have the meaning set forth in
Rule 16b-3(b)(3)(i) promulgated under the Act, and any successor
to such rule.
(m) "Non-Employee Director Participant" means an Eligible
Person, who at the time of grant of an Award is a director of the
Corporation but not an employee of the Corporation or a
Subsidiary.
(n) "Non-Statutory Option" means a stock option not qualifying
for incentive stock option treatment under the provisions of
Section 422 of the Code.
(o) "Optionee" means the holder of any option granted under the
Plan.
(p) "Participant" means the holder of any Award granted under
the Plan.
(q) "Plan" means the Kaman Corporation 1993 Stock Incentive
Plan.
(r) "Principal Shareholder" means any individual owning stock
possessing more than ten percent (10%) of the total combined
voting power of all classes of capital stock of the Corporation.
(s) "Restricted Stock" means Stock received pursuant to a
Restricted Stock Award.
(t) "Restricted Stock Award" is defined in Section 8(a).
(u) "Second Predecessor Plan" means the Kaman Corporation 1983
Stock Incentive Plan.
Page 2
(v) "Stock" or "shares" means shares of Class A Common Stock of
the Corporation.
(w) "Stock Appreciation Right" or "Right" means a right
described in Section 7.
(x) "Subsidiary" means any corporation in which the Corporation
owns, directly or indirectly, a majority of the outstanding
voting stock.
3. Eligibility.
(a) Incentive Stock Options. Incentive Stock Options may be
granted to any Eligible Persons who are full-time, salaried
employees of the Corporation or a Subsidiary and who in the sole
opinion of the Committee are, from time to time, responsible for
the management and/or growth of all or part of the business of
the Corporation.
(b) Awards Other than Incentive Stock Options. Awards, other
than Incentive Stock Options, may be granted to any Eligible
Persons who in the sole opinion of the Committee are, from time
to time, responsible for the growth and/or the management of all
or a part of the business of the Corporation.
(c) Substitute Awards. The Committee, in its discretion, may
also grant Awards in substitution for any stock incentive awards
previously granted by companies acquired by the Corporation or
one of its Subsidiaries. Such substitute awards may be granted
on such terms and conditions as the Committee deems appropriate
in the circumstances, provided, however, that substitute
Incentive Stock Options shall be granted only in accordance with
the Code.
4. Term of Plan. The Plan shall take effect on November 1,
1993 and shall remain effective for ten (10) years thereafter,
expiring on October 31, 2003.
5. Stock Subject to the Plan. The aggregate number of shares
of Stock which may be issued pursuant to all Awards granted under
the Plan shall not exceed 2,210,000 shares of Stock, subject to
adjustment as hereinafter provided in Section 10, which shall be
in addition to all shares of Stock issued or reserved for
issuance pursuant to options granted under the First Predecessor
Plan and the Second Predecessor Plan, and which may be treasury
shares or authorized but unissued shares. In the event that any
Award under the Plan for any reason expires, is terminated,
forfeited, reacquired by the Corporation, or satisfied without
the issuance of Stock (except in the cases of (i) the Stock
otherwise issuable
Page 3
under an Award but retained by the Corporation for payment of
withholding taxes under Section 14(b) hereof; and (ii) stock
otherwise issuable under a stock option but for which the
Corporation has made a discretionary payment under Section 7(d)
hereof) the shares allocable to the unexercised portion of such
Award may again be made subject to an Award under the Plan. Any
award of a Stock Appreciation Right, to the extent that such
Stock Appreciation Right may be settled only for cash, shall not
be deemed to reduce the aggregate number of shares of Stock
authorized to be issued pursuant to Awards granted under the
Plan.
6. Stock Options. The following terms and conditions shall
apply to each option granted under the Plan and shall be set
forth in a stock option agreement between the Corporation and the
Optionee together with such other term and conditions not
inconsistent herewith as the Committee may deem appropriate in
the case of each Optionee:
(a) Option Price. The purchase price under each Incentive
Stock Option shall be as determined by the Committee but not less
than 100% of the Fair Market Value of the shares subject to such
option on the date of grant, provided that such option price
shall not be less than 110% of such Fair Market Value in the case
of any Incentive Stock Option granted to a Principal Shareholder.
The purchase price per share of Stock deliverable upon the
exercise of a Non-Statutory Option shall be determined by the
Committee, but shall not be less than 85% of the Fair Market
Value of such Stock on the date of grant and in no event less
than the par value per share of such Stock.
(b) Type of Option. All options granted under the Plan
shall be either Incentive Stock Options or Non-Statutory Options.
All provisions of the Plan applicable to Incentive Stock Options
shall be interpreted in a manner consistent with the provisions
of, and regulations under, Section 422 of the Internal Revenue
Code.
(c) Period of Incentive Stock Option. Each Incentive Stock
Option shall have a term not in excess of ten (10) years from the
date on which it is granted, except in the case of any Incentive
Stock Option granted to a Principal Shareholder which shall have
a term not in excess of five (5) years from the date on which it
is granted; provided that any Incentive Stock Option granted or
the unexercised portion thereof, to the extent exercisable at the
time of termination of employment, shall terminate at the close
of business on the day three (3) months following the date on
which the Optionee ceases to be employed by the Corporation or a
Subsidiary unless sooner expired or unless a longer period is
provided under Subsection (g) of this Section in the event of the
death or disability of such an Optionee.
Page 4
(d) Period of Non-Statutory Option. Each Non-
Statutory Option granted under the Plan shall have a term not in
excess of ten (10) years and one (1) day from the date on which
it is granted; provided that any Non-Statutory Option granted to
an employee of the Corporation or a Subsidiary or to a Non-
Employee Director Participant, or the unexercised portion thereof
shall terminate not later than the close of business on the day
one (1) year following the date on which such employee ceases to
be employed by the Corporation or a Subsidiary or the date on
which such Non-Employee Director ceases to be a director of the
Corporation, as the case may be. Such an Optionee's Non-
Statutory Option shall be exercisable, if at all, during such one
(1) year period only to the extent exercisable on the date such
Optionee's employment terminates or the date on which such
Optionee ceases to be a director, as the case may be.
(e) Exercise of Option.
(i) Each option granted under the Plan shall
become exercisable on such date or dates and in such amount or
amounts as the Committee shall determine. In the absence of any
other provision by the Committee, each option granted under the
Plan shall be exercisable with respect to not more than twenty
percent (20%) of such shares subject thereto after the expiration
of one (1) year following the date of its grant, and shall be
exercisable as to an additional twenty percent (20%) of such
shares after the expiration of each of the succeeding four (4)
years, on a cumulative basis, so that such option, or any
unexercised portion thereof, shall be fully exercisable after a
period of five (5) years following the date of its grant;
provided, however, that in the absence of any other provision by
the Committee, each Incentive Stock Option granted to a Principal
Shareholder shall be exercisable with respect to not more than
twenty-five percent (25%) of the shares subject thereto after the
expiration of one (1) year following the date of its grant, and
shall be exercisable as to an additional twenty-five percent
(25%) after the expiration of each of the succeeding three (3)
years, on a cumulative basis, so that such option, or any
unexercised portion thereof, shall be fully exercisable after a
period of four (4) years following the date of its grant.
(ii) The Committee, in its sole discretion, may,
from time to time and at any time, accelerate the vesting
provisions of any outstanding option, subject, in the case of
Incentive Stock Options, to the provisions of Subsection (6)(i)
relating to "Limit on Incentive Options".
Page 5
(iii) Notwithstanding anything herein to the
contrary, except as provided in subsection (g) of this Section,
no Optionee who was, at the time of the grant of an option, an
employee of the Corporation or a Subsidiary, may exercise such
option or any part thereof unless at the time of such exercise he
shall be employed by the Corporation or a Subsidiary and shall
have been so employed continuously since the date of grant of
such option, excepting leaves of absence approved by the
Committee; provided that the option agreement (i) in the case of
Incentive Stock Options may provide that such an Optionee may
exercise his option, to the extent exercisable on the date of
termination of such continuous employment, during the three (3)
month period, ending at the close of business on the day three
(3) months following the termination of such continuous
employment unless such option shall have already expired by its
term, and (ii) in the case of Non-Statutory Options may provide
that such an Optionee may exercise his option, to the extent
exercisable on the date of termination of such continuous
employment, during the one (1) year period ending at the close of
business on the day one (1) year following the termination of
such continuous employment, unless such option shall have already
expired by its term.
(iv) An option shall be exercised in accordance
with the related stock option agreement by serving written notice
of exercise on the Corporation accompanied by full payment of the
purchase price in cash. As determined by the Committee, in its
discretion, at (or, in the case of Non-Statutory Options, at or
after) the time of grant, payment in full or in part may also be
made by delivery of (i) irrevocable instructions to a broker to
deliver promptly to the Corporation the amount of sale or loan
proceeds to pay the exercise price, or (ii) previously owned
shares of Stock not then subject to restrictions under any
Corporation plan (but which may include shares the disposition of
which constitutes a disqualifying disposition for purposes of
obtaining incentive stock option treatment for federal tax
purposes), or (iii) shares of Stock otherwise receivable upon the
exercise of such option; provided, however, that in the event the
Committee shall determine in any given instance that the exercise
of such option by withholding shares otherwise receivable would
be unlawful, unduly burdensome or otherwise inappropriate, the
Committee may require that such exercise be accomplished in
another acceptable manner. For purposes of this subsection (iv),
such surrendered shares shall be valued at the closing price of
the Stock in the NASDAQ National Market System on the most recent
trading day preceding the date of exercise on which sales of the
Stock occurred.
(f) Nontransferability. No option granted under the Plan
shall be transferable by the Optionee otherwise than by will or
by the laws of descent and distribution, and such option shall be
exercisable, during his lifetime, only by him.
Page 6
(g) Death or Disability of Optionee. In the event of the
death or disability of an Optionee while in the employ of the
Corporation or a Subsidiary or while serving as a director of the
Corporation, his stock option or the unexercised portion thereof
may be exercised within the period of one (1) year succeeding his
death or disability, but in no event later than (i) ten (10)
years (five (5) years in the case of a Principal Shareholder)
from the date the option was granted in the case of an Incentive
Stock Option, and (ii) ten (10) years and one (1) day in the case
of a Non-Statutory Option, by the person or persons designated in
the Optionee's will for that purpose or in the absence of any
such designation, by the legal representative of his estate, or
by the legal representative of the Optionee, as the case may be.
Notwithstanding anything herein to the contrary and in the
absence of any contrary provision by the Committee, during the
one-year period following termination of employment or cessation
as a director by reason of death or disability, an Optionee's
stock option shall continue to vest in accordance with its terms
and be and become exercisable as if employment or service as a
director had not ceased.
(h) Shareholder Rights. No Optionee shall be entitled to
any rights as a shareholder with respect to any shares subject to
his option prior to the date of issuance to him of a stock
certificate representing such shares.
(i) Limit on Incentive Stock Options. The aggregate Fair
Market Value (determined at the time an option is granted) of
shares with respect to which Incentive Stock Options granted to
an employee are exercisable for the first time by such employee
during any calendar year (under all incentive stock option plans
of the Corporation and its Subsidiaries to the extent required
under the Code) shall not exceed $100,000.
(j) Notification of Disqualifying Disposition.
Participants granted Incentive Stock Options shall undertake, in
the Incentive Stock Option agreements, as a precondition to the
granting of such option by the Corporation, to promptly notify
the Corporation in the event of a disqualifying disposition
(within the meaning of the Code) of any shares acquired pursuant
to such Incentive Stock Option agreement and provide the
Corporation with all relevant information related thereto.
7. Stock Appreciation Rights; Discretionary Payments.
(a) Nature of Stock Appreciation Right. A Stock
Appreciation Right is an Award entitling the Participant to
receive an amount in cash or shares of Stock (or forms of payment
permitted under Section 7(d) hereof) or a combination thereof, as
determined
Page 7
by the Committee at the time of grant, having a value equal to
(or if the Committee shall so determine at time of grant, less
than) the excess of the closing price of the Stock on the NASDAQ
National Market System on the most recent trading day preceding
the date of exercise on which sales of the Stock occurred over
the Fair Market Value of a share of Stock on the date of grant
(or over the option exercise price, if the Stock Appreciation
Right was granted in tandem with a stock option) multiplied by
the number of shares with respect to which the Stock Appreciation
Right shall have been exercised.
(b) Grant and Exercise of Stock Appreciation Rights.
(i) Stock Appreciation Rights may be granted in tandem
with, or independently of, any stock option granted under the
Plan. In the case of a Stock Appreciation Right granted in
tandem with a Non-Statutory Option, such Right may be granted
either at or after the time of grant of such option. In the case
of a Stock Appreciation Right granted in tandem with an Incentive
Stock Option such Right may be granted only at the time of the
grant of such option. A Stock Appreciation Right or applicable
portion thereof granted in tandem with a given stock option shall
terminate and no longer be exercisable upon the termination or
exercise of the related stock option, except that a Stock
Appreciation Right granted with respect to less than the full
number of shares covered by a related stock option shall not be
reduced until the exercise or termination of the related stock
option exceeds the number of shares not covered by the Stock
Appreciation Right.
(ii) Each Stock Appreciation Right granted under the
Plan shall become exercisable on such date or dates and in such
amount or amounts as the Committee shall determine; provided,
however, that any Stock Appreciation Right granted in tandem with
a stock option shall be exercisable in relative proportion to and
to the extent that such related stock option is exercisable;
provided further, however, that, notwithstanding anything herein
to the contrary, any Stock Appreciation Right granted in tandem
with a Non-Statutory Option which has a purchase price at the
date of grant of less than Fair Market Value shall not be
exercisable at all until at least one (1) year after the date of
grant of such option. Except as provided in the immediately
preceding sentence, in the absence of any other provision by the
Committee, each Stock Appreciation Right granted under the Plan
shall be exercisable with respect to not more than twenty percent
(20%) of such shares subject thereto after the expiration of one
(1) year following the date of its grant, and shall be
exercisable as to an additional twenty percent (20%) of such
shares after the expiration of each of
Page 8
the succeeding four (4) years, on a cumulative basis, so that
such Right, or any unexercised portion thereof, shall be fully
exercisable after a period of five (5) years following the date
of its grant. The Committee, in its sole discretion, may, from
time to time and at any time, accelerate the vesting provisions
of any outstanding Stock Appreciation Right.
(iii) Notwithstanding anything herein to the contrary,
except as provided in subsections (c)(v) and (c)(vi) of this
Section, no Participant who was, at the time of the grant of a
Stock Appreciation Right, an employee of the Corporation or a
Subsidiary, may exercise such Right or any part thereof unless at
the time of such exercise, he shall be employed by the
Corporation or a Subsidiary and shall have been so employed
continuously since the date of grant of such Right, excepting
leaves of absence approved by the Committee; provided that the
Stock Appreciation Right agreement may provide that such a
Participant may exercise his Stock Appreciation Right, to the
extent exercisable on the date of termination of such continuous
employment, during the one (1) year period ending at the close of
business on the day one (1) year following the termination of
such continuous employment, unless such Right shall have already
expired by its terms.
(iv) Notwithstanding anything herein to the contrary,
except as provided in subsections (c)(v) and (c)(vi) of this
Section, no Non-Employee Director Participant may exercise a
Stock Appreciation Right or part thereof unless at the time of
such exercise he shall be a director of the Corporation and shall
have been a director of the Corporation continuously since the
date of grant of such Right excepting leaves of absence approved
by the Committee; provided that the Stock Appreciation Right
agreement may provide that such Participant may exercise his
Stock Appreciation Right, to the extent exercisable on the date
he ceased to be a director of the Corporation, during the one (1)
year period ending at the close of business on the day one (1)
year following the cessation of such continuous service as a
director unless such Right shall already have expired by its
terms.
(v) A Stock Appreciation Right shall be exercised in
accordance with the related Stock Appreciation Right Agreement by
serving written notice of exercise on the Corporation.
(c) Terms and Conditions of Stock Appreciation Rights.
Stock Appreciation Rights shall be subject to such terms and
conditions as shall be determined from time to time by the
Committee, subject to the following:
Page 9
(i) Stock Appreciation Rights granted in tandem with
stock options shall be exercisable only at such time or times and
to the extent that the related stock options shall be
exercisable;
(ii) Upon the exercise of a Stock Appreciation Right,
the applicable portion of any related stock option shall be
surrendered.
(iii) Stock Appreciation Rights granted in tandem with
a stock option shall be transferable only with such option.
Stock Appreciation Rights shall not be transferable otherwise
than by will or the laws of descent and distribution. All Stock
Appreciation Rights shall be exercisable during the Participant's
lifetime only by the Participant or the Participant's legal
representative.
(iv) A Stock Appreciation Right granted in tandem with
a stock option may be exercised only when the then Fair Market
Value of the Stock subject to the stock option exceeds the
exercise price of such option. A Stock Appreciation Right not
granted in tandem with a stock option may be exercised only when
the then Fair Market Value of the Stock exceeds the Fair Market
Value of the Stock on the date of grant of such Right.
(v) Each Stock Appreciation Right shall have a term
not in excess of ten (10) years from the date on which it is
granted (ten (10) years and one (1) day in the case of a Stock
Appreciation Right granted in tandem with a Non-Statutory
Option); provided that any Stock Appreciation Right granted to
(aa) an employee of the Corporation or a Subsidiary shall
terminate not later than the close of business on the day one (1)
year following the date such Participant ceases to be employed by
the Corporation or a Subsidiary, excepting leaves of absences
approved by the Committee, and (bb) a Non-Employee Director
Participant shall terminate not later than the close of business
on the day one (1) year following the date such Participant
ceases to be a director of the Corporation. Such a Participant's
Stock Appreciation Right shall be exercisable, if at all, during
such one (1) year period only to the extent exercisable on the
date his employment terminates or the date he ceases to be a
director, as the case may be.
(vi) In the event of the death or disability of a
Participant while in the employ of the Corporation or a
Subsidiary or while serving as a director of the Corporation, his
Stock Appreciation Right or the unexercised portion thereof may
be exercised within the period of one (1) year succeeding his
death or
disability, but in no event later than (i) ten (10) years from
the
Page 10
date on which it was granted (ten (10) years and one (1) day in
the case of a Stock Appreciation Right granted in tandem with a
Non-Statutory Option), by the person or persons designated in the
Participant's will for that purpose or in the absence of any such
designation, by the legal representative of his estate, or by the
legal representative of the Participant, as the case may be.
Notwithstanding anything herein to the contrary and in the
absence of any contrary provision by the Committee, during the
one-year period following termination of employment or cessation
as a director by reason of death or disability, a Participant's
Stock Appreciation Right shall continue to vest in accordance
with its terms and be and become exercisable as if employment or
service as a director had not ceased.
(d) Discretionary Payments. Upon the written request of an
Optionee whose stock option is not accompanied by a Stock
Appreciation Right, the Committee may, in its discretion, cancel
such option if the Fair Market Value of the shares subject to the
option at the exercise date exceeds the exercise price thereof;
in that event, the Corporation shall pay to the Optionee an
amount equal to the difference between the Fair Market Value of
the shares subject to the cancelled option (determined as of the
date the option is cancelled) and the exercise price. Such
payment shall be by check or in Stock having a Fair Market Value
(determined on the date the payment is to be made) equal to the
amount of such payments or any combination thereof, as determined
by the Committee.
8. Restricted Stock.
(a) Nature of Restricted Stock Award. A Restricted Stock
Award is an Award entitling the Participant to receive shares of
Stock, subject to such conditions, including a Corporation right
during a specified period or periods to require forfeiture of
such shares upon the Participant's termination of employment with
the Corporation or a Subsidiary or cessation as a director of the
Corporation, as the case may be, as the Committee may determine
at the time of grant. The Committee, in its sole discretion,
may, from time to time and at any time, waive any or all
restrictions and/or conditions contained in the Restricted Stock
Award agreement. Notwithstanding anything herein to the
contrary, the Committee, in its discretion, may grant Restricted
Stock without any restrictions or conditions whatsoever.
Restricted Stock shall be granted in respect of past services or
other valid consideration.
Page 11
(b) Award Agreement. A Participant who is granted a
Restricted Stock Award shall have no rights with respect to such
Award unless the Participant shall have accepted the Award within
60 days (or such shorter date as the Committee may specify)
following the Award date by executing and delivering to the
Corporation a Restricted Stock Award Agreement in such form as
the Committee shall determine.
(c) Rights as a Shareholder. Upon complying with paragraph
(b) above, a Participant shall have all the rights of a
shareholder with respect to the Restricted Stock including voting
and dividend rights, subject to nontransferability and
Corporation forfeiture rights described in this Section 8 and
subject to any other conditions contained in the Award agreement.
Unless the Committee shall otherwise determine, certificates
evidencing shares of Restricted Stock shall remain in the
possession of the Corporation until such shares are free of any
restrictions under the Plan. The Committee in its discretion
may, as a precondition of the Corporation's obligation to issue a
Restricted Stock Award, require the Participant to execute a
stock power or powers or other agreement or instruments necessary
or advisable in connection with the Corporation's forfeiture
rights with respect to such shares.
(d) Restrictions. Shares of Restricted Stock may not be
sold, assigned, transferred or otherwise disposed of or pledged
or otherwise encumbered. In the event of termination of
employment of the Participant with the Corporation or a
Subsidiary for any reason, or cessation as a director of the
Corporation in the case of a Non-Employee Director Participant,
such shares shall be forfeited to the Corporation, except as set
forth below:
(i) The Committee at the time of grant shall specify
the date or dates (which may depend upon or be related to the
attainment of performance goals and other conditions) on which
the nontransferability of the Restricted Stock and the
Corporation's forfeiture rights with respect thereto shall lapse.
The Committee at any time may accelerate such date or dates and
otherwise waive or, subject to Section 13, amend any conditions
of the Award.
(ii) Except as may otherwise be provided in the Award
agreement, in the event of termination of a Participant with the
Corporation or a Subsidiary for any reason or cessation as a
director of the Corporation for any reason, all of the
Participant's Restricted Stock shall be forfeited to the
Corporation without the necessity of any further act by the
Corporation, the Participant or the Participant's legal
representative; provided, however, that in the event of
termination
Page 12
of employment or cessation of service as a director of the
Corporation by reason of death or disability, all conditions and
restrictions relating to a Restricted Stock Award held by such a
Participant shall thereupon be waived and shall lapse.
(iii) In the absence of any other provision by the
Committee, each Restricted Stock Award granted to (A) an employee
of the Corporation or a Subsidiary shall be subject to forfeiture
to the Corporation conditioned on the Participant's continued
employment and (B) Non-Employee Director Participants shall be
subject to forfeiture to the Corporation conditioned on the
Participant's continued service as a director of the Corporation,
and in the case of clause (A) or (B), such forfeiture rights
shall lapse as follows: with respect to twenty percent (20%) of
the shares subject to the Restricted Stock Award on the date one
year following the date of grant, and with respect to an
additional twenty percent (20%) of such shares after the
expiration of each of the succeeding four (4) years thereafter,
on a cumulative basis, so that such Restricted Stock shall be
free of such risk of forfeiture on the date five (5) years
following the date of its grant.
(e) Waiver, Deferral, and Investment of Dividends. The
Restricted Stock Award agreement may require or permit the
immediate payment, waiver, deferral or investment of dividends
paid with respect to the Restricted Stock.
9. The Committee.
(a) Administration. The Committee shall be a committee of
not less than three (3) members of the Board who are Non-Employee
Directors, appointed by the Board. Vacancies occurring in
membership of the Committee shall be filled by the Board. The
Committee shall keep minutes of its meetings. One or more
members of the Committee may participate in a meeting of the
Committee by means of conference telephone or similar
communications equipment provided all persons participating in
the meeting can hear one another. A majority of the entire
Committee shall constitute a quorum, and the acts of a majority
of the members present at or so participating in any meeting at
which a quorum is constituted shall be the acts of the Committee.
The Committee may act without meeting by unanimous written
consent. Absent some other provision by the Board, the power and
responsibilities of the Committee shall be vested in and assumed
by the Personnel and Compensation Committee of the Board.
Page 13
(b) Authority of Committee. Subject to the provisions of
the Plan, the Committee shall have full and final authority to
determine the persons to whom Awards shall be granted, the number
of shares to be subject to each Award, the term of the Award, the
vesting provisions of the Award, if any, restrictions on the
Award, if any, and the price at which the shares subject thereto
may be purchased. The Committee is empowered, in its discretion,
to modify, extend or renew any Award theretofore granted and
adopt such rules and regulations and take such other action as it
shall deem necessary or proper for the administration of the
Plan. The Committee shall have full power and authority to
construe, interpret and administer the Plan, and the decisions of
the Committee shall be final and binding upon all interested
parties.
10. Adjustments. Any limitations, restrictions or other
provisions of this Plan to the contrary notwithstanding, each
Award agreement shall make such provision, if any, as the
Committee may deem appropriate for the adjustment of the terms
and provisions thereof (including, without limitation, terms and
provisions relating to the exercise price and the number and
class of shares subject to the Award) in the event of any merger,
consolidation, reorganization, recapitalization, stock dividend,
divisive reorganization, issuance of rights, combination or
split-up or exchange of shares, or the like. In the event of any
merger, consolidation, reorganization, recapitalization, stock
dividend, divisive reorganization, issuance of rights,
combination or split-up or exchange of shares, or the like, the
Committee shall make an appropriate adjustment in the number of
shares authorized to be issued pursuant to the Plan.
11. Options Under First Predecessor Plan and Second Predecessor
Plan. Options presently outstanding which have been granted
under either the First Predecessor Plan or the Second Predecessor
Plan shall continue to be governed and interpreted under the
terms of such plans, respectively, and not by the terms hereof.
12. Amendment to and Termination of the Plan. The Board may
from time to time amend the Plan in such way as it shall deem
advisable provided the Board may not extend the expiration date
of the Plan, change the class of Eligible Persons, increase the
maximum Award term, decrease the minimum exercise price or
increase the total number of authorized shares (except in
accordance with Section 10 hereof) for which Awards may be
granted. The Board, in its discretion, may at any time terminate
the Plan prior to its expiration in accordance with Section 4
hereof. No amendment to or termination of the Plan shall in any
way adversely affect Awards then outstanding hereunder.
Page 14
13. Status of Plan. Until shares pursuant to an Award or
exercise thereof are actually delivered to a Participant, a
Participant shall have no rights to or with respect to such
shares greater than those of a general creditor of the
Corporation unless the Committee shall otherwise expressly
determine in connection with any Award or Awards.
14. General Provisions.
(a) Other Compensation Arrangements; No Right to Receive
Awards; No Employment or Other Rights. Nothing contained in this
Plan shall prevent the Board from adopting other or additional
capital stock based compensation arrangements, subject to
stockholder approval if such approval is required, and such
arrangements may be either generally applicable or applicable
only in specific cases. No Eligible Person shall have any right
to receive Awards except as the Committee may determine. The
Plan does not confer upon any employee any right to continued
employment with the Corporation or a Subsidiary or upon any
director or officer of the Corporation any right to continued
service as a director or officer of the Corporation, nor does it
interfere in any way with the right of the Corporation or a
Subsidiary to terminate the employment of any of its employees or
for the Corporation to remove a director or officer with or
without cause at any time.
(b) Tax Withholding, Etc. Any obligation of the
Corporation to issue shares pursuant to the grant or exercise of
any Award shall be conditioned on the Participant having paid or
made provision for payment of all applicable tax withholding
obligations, if any, satisfactory to the Committee. The
Corporation and its Subsidiaries shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment
of any kind otherwise due to the Participant. In the case of
Non-Statutory Options, and Stock Appreciation Rights exercisable
only for Stock, the Committee in its discretion, but only upon
the written request of a Participant exercising such an Award,
may permit such Participant to satisfy federal income tax
withholding requirements occasioned by the exercise thereof by
the surrender of shares otherwise to be received on the exercise
of such Award. For purposes of this subsection (b), such
surrendered shares shall be valued at the closing price of the
Stock in the NASDAQ National Market System on the most recent
trading day preceding the date of exercise on which sales of the
Stock occurred.
(c) Section 83(b) of the Code. Participants may not make,
and each Award agreement shall prohibit, an election under
Section 83(b) of the Code, with respect to any Award.
Page 15
(d) Restrictions on Transfers of Shares. Although the
Corporation presently intends to register under applicable
securities laws all shares acquired or received by Participants
under the Plan, the Corporation is not required to cause such
shares to be registered under the Securities Act of 1933 or the
securities laws of any State. Accordingly, the shares acquired
or received may be "restricted securities" as defined in Rule 144
under said Securities Act of 1933 or other rule or regulation of
the Securities and Exchange Commission. Any certificate
evidencing any such shares may bear a legend restricting the
transfer of such shares, and the recipient may be required to
assert that the shares are being acquired for his own account and
not with a view to the distribution thereof as a condition to the
granting or exercise of an Award.
(e) Issuance of Shares. Any obligation of the Corporation
to issue shares pursuant to the grant or exercise of any Award
shall be conditioned on the Corporation's ability at nominal
expense to issue such shares in compliance with all applicable
statutes, rules or regulations of any governmental authority.
The Participant shall provide the Corporation with any assurances
or agreements which the Committee, in its sole discretion, shall
deem necessary or advisable in order that the issuance of such
shares shall comply with any such statutes, rules or regulations.
(f) Date of Grant. The date on which each Award under the
Plan shall be considered as having been granted shall be the date
on which the award is authorized by the Committee, unless a later
date is specified by the Committee; provided, however, in the
case of options intended to qualify as Incentive Stock Options,
the date of grant shall be determined in accordance with the
Code.
Page 16
EXHIBIT 10c
KAMAN CORPORATION
SUPPLEMENTAL EMPLOYEES' RETIREMENT PLAN
(Amended and Restated as of January 1, 1994)
THIS AMENDMENT AND RESTATEMENT is adopted by KAMAN
CORPORATION, a Connecticut corporation (the "Company"), effective
as of January 1, 1994.
WHEREAS, the Company adopted the Kaman Corporation
Supplemental Employees' Retirement Plan (originally known as the
"Kaman Corporation Excess Benefit Plan") (the "Plan" or "SERP")
on April 30, 1976 effective as of January 1, 1976 and amended the
same by the First, Second, and Third Amendments effective
February 11, 1986, November 26, 1986, and June 30, 1987,
respectively, and
WHEREAS, the SERP was amended and restated as of January 1,
1989, and the Amended and Restated SERP was subsequently amended
by the First Amendment effective January 1,1990, and
WHEREAS, the SERP was amended and restated a second time as
of October 1, 1993 upon the occasion of the Company's adoption of
the Kaman Corporation Deferred Compensation Plan ("Deferral
Plan") pursuant to which certain Employees (as defined herein)
may elect to defer the payment of a portion of their
compensation, which, if paid currently, would otherwise be
Page 1
included in the compensation of the Employee utilized for
purposes of determining benefits under the Kaman Corporation
Employees' Pension Plan (the "Pension Plan"), and
WHEREAS, the Company has amended the Deferral Plan document
to provide for a separate and distinct Supplemental Deferred
Compensation Plan for the benefit of certain key management
employees who are not Participants in the SERP, and
WHEREAS, the Company reserved the right to amend the SERP in
Paragraph 6 of the SERP, and
WHEREAS, the Company wishes to amend and restate the SERP
in various respects,
NOW, THEREFORE, the SERP is amended and restated as
follows:
1. Purposes. This Plan is maintained by the Company for
the following purposes:
(a) Providing to certain Employees who are
participants in the Pension Plan benefits which are in excess of
the limitations on contributions and benefits imposed on the
Pension Plan by Section 415 of the Internal Revenue Code of 1986
(the "Code") and benefits which are in excess of the Pension Plan
benefits that are produced when taking into account the
limitation on compensation imposed by Code Section 401(a)(17).
Page 2
This portion of the Plan is to have the effect of treating all
Participants whose Pension Benefits would be limited by Code
Section 415 or Code Section 401(a)(17) in the same manner as
participants in the Pension Plan who are not so limited are
treated, to the end that aggregate benefits payable to any
Participant or his Beneficiary under the Pension Plan pursuant to
the Pension Plan and this Plan shall be equal to the Pension
Benefits which would otherwise have been payable but for the
limitations imposed by Code Section 415 and Code Section
401(a)(17).
(b) Providing to certain Participants who also
participate in the Deferral Plan an additional benefit which is
the equivalent of the reduction in benefits under the Pension
Plan that results from the exclusion of any "Deferral Amounts"
(as defined in the Deferral Plan) from the compensation of the
Employee utilized for purposes of determining the benefits under
the Pension Plan. This portion of the Plan is to have the effect
of putting such Participants in the same position they would have
been in had they not made any Deferral Elections under the
Deferral Plan.
(c) Providing to those Participants who are Employees
of a subsidiary of the Company an additional benefit which is the
Page 3
equivalent of the additional benefit that they would have
received under the Pension Plan if they were direct Employees of
the Company rather than Employees of a subsidiary of the Company.
2. Definitions. Benefits under this Plan will hereinafter
be referred to as "Benefits." Benefits under the Pension Plan
will hereinafter be referred to as "Pension Benefits." The terms
"Beneficiary" and "Employee" shall have the same meaning as under
the Pension Plan. The term "Participant" means any Employee of
the Company or any subsidiary who is designated as a Participant
on June 23, 1987 or who is thereafter so designated by action of
the Personnel and Compensation Committee of the Board of
Directors or the Board of Directors of the Company. References in
this Plan to sections of the Code and ERISA shall include
references to the comparable or succeeding provisions of any
legislation which amends or replaces such sections.
3. Determination of Benefits. Benefits under this Plan
shall be the difference between (i) the amount of annual benefit
which would have accrued for a Participant under the Pension Plan
(A) if the Participant did not participate in the Deferral Plan
and (B) had the Company not been limited by Code Section 415 or
Code Section 401(a)(17) but had continued to fund the amount of a
Page 4
Participant's annual benefit to the same extent as in the case of
other Participants with respect to whom the Company was not so
limited and (ii) the amount of annual benefit to which the
Participant is entitled under the Pension Plan. In the case of
Participants who are Employees of a subsidiary of the Company,
beginning January 1, 1995, the Benefit under this Plan shall also
include the difference, if any, between (i) the amount of annual
benefit which would have accrued for a Participant under the
Pension Plan if the Participant were a direct Employee of the
Company and (ii) the amount of annual benefit to which the
Participant is entitled under the Pension Plan. This Plan shall
have the effect of providing the Participant with an unfunded
benefit subject to the same terms and conditions as contained in
the Pension Plan.
4. Form and Time of Payments. (a) The form and time of
Benefit payments under this Plan shall be in the same form and at
the same time or times as the payments being made under the
Pension Plan to which the payments hereunder are supplemental.
Any election of an optional form of payment under the Pension
Plan shall be deemed an election of payment in similar form
hereunder.
Page 5
(b) Notwithstanding any provision in this Plan to the
contrary, if payments under the Pension Plan commence earlier
than the date the Participant actually retires, dies, or
otherwise terminates employment, then Benefits under this Plan
shall be paid in the same form as payments being made under the
Pension Plan, but shall not commence until the Participant
actually retires, dies or otherwise terminates employment and the
Participant shall not be entitled to the Benefits under this Plan
that were not paid during the period before he actually retired,
died, or otherwise terminated employment.
(c) If on the first day that the Participant is entitled to
receive a Benefit payment under this Plan, the Participant's
Benefit under this Plan is not greater than $100 per month or
said Benefit does not have a present value greater than $10,000,
then the Company shall pay the present value of said Benefit to
the Participant in a single lump sum on said date and the
Participant shall not have any further rights hereunder.
(d) Any Participant who is actively employed at January 1,
1994 and who subsequently commences receiving Benefits under this
Plan pursuant to Section 4(b), shall be entitled to receive a
distribution equal to ninety percent (90%) of the present value
Page 6
of his remaining Benefit under this Plan in a single lump sum by
providing written notice to the Committee of his desire to
receive such a distribution. The distribution shall be made
within ninety (90) days of the receipt by the Committee of the
Participant's election, and, upon such payment, the Participant
shall have no further interest in the Plan. If at any time there
shall be an administrative determination by the Internal Revenue
Service ("IRS") that the inclusion of this provision in this Plan
will cause the Participants to be in constructive receipt of any
Benefits payable hereunder, then this provision shall be deemed
null and void ab initio and no Participant shall have any right
to make any such election.
5. Administration. This Plan shall be administered by a
Committee appointed or designated by the Board of Directors of
the Company for this purpose (the "Committee") which shall have
the authority and discretion to operate, administer, interpret
and construe this Plan, to make all computations of Benefits
hereunder and to determine all questions of eligibility, status
and rights of Participants and their beneficiaries hereunder. The
determination or action of the Committee respecting the
administration of this Plan shall be final, conclusive and
binding on all persons having an interest herein.
Page 7
6. Amendment and Termination. (a) The Board of Directors
of the Company reserves the right to amend or terminate this Plan
at any time, in whole or in part. The Board of Directors may
delegate the authority to amend or terminate this Plan to a
committee of the Board of Directors or to the Committee.
Notwithstanding the foregoing, no amendment or termination shall
have the effect of reducing or discontinuing any payments then
being made or due to be made under the terms hereof immediately
prior to such action, nor of reducing or terminating any rights
to future payments of Benefits accrued under this Plan as of the
date of termination. Future payments of Benefits accrued under
this Plan at any particular date shall be determined in the same
manner as under the Pension Plan.
(b) Any Change in Control (as defined in paragraph (c)
below) shall be regarded as a termination of this Plan.
Notwithstanding paragraph (a), upon any such termination
occasioned by a Change in Control, the Company shall be required
to (i) distribute to each Participant hereunder in a cash lump
sum the respective present value of the Participant's Benefit
accrued under this Plan as of the date of termination, such
Page 8
amount to be payable within sixty days of the Change in Control,
or (ii) fund the Benefits under this Plan accrued as of the date
of termination by establishing a so-called "Rabbi Trust" for such
purposes and arranging for a renewable letter of credit (X) in an
amount equal to the aggregate present value of all Benefits
accrued under this Plan as of the date of termination, (Y) which
may be drawn upon by the Trustee of the Rabbi Trust for purposes
of paying Benefits to Participants, and (Z) which provides by its
terms that the trustee may draw upon the letter of credit prior
to its expiration unless the interests of Participants are
reasonably protected either by the issuance of a replacement
letter of credit in the amount of the then present value of
remaining Benefits accrued under this Plan or by the funding of
the trust in the same amount with money market funds or
investment grade securities other than securities of the Company
or any affiliate.
(c) "Change in Control" means the first to occur of any of
the following events:
(i) Any "person" (as that term is used in Section 13
and 14(d)(2) of the Securities Exchange Act of 1934 ("Exchange
Act")) is or becomes the beneficial owner (as that term is used
Page 9
in Section 13(d) of the Exchange Act), directly or indirectly, of
50% or more of the Company's capital stock entitled to vote in
the election of directors (a "Change in Ownership"); provided,
however, that a Change in Ownership shall not result in a Change
in Control unless within the two year period following the
particular Change in Ownership there is also a change in the
members of the Board of Directors of the Company such that those
persons serving as directors of the Company immediately prior to
the Change in Ownership cease to represent at least one-half of
the members of the Board of Directors of the Company.
(ii) Any consolidation or merger of the Company, other
than a merger of the Company in which the holders of the common
stock of the Company immediately prior to the merger hold more
than 50% of the common stock of the surviving corporation
immediately after the merger.
(iii) The shareholders of the Company approve any plan
or proposal for the dissolution of the Company; or
(iv) Substantially all of the assets of the Company
are sold or otherwise transferred to parties that are not within
a "controlled group of corporations" (as defined in Section 1563
of the Internal Revenue Code of 1986, as amended) in which the
Company is a member.
Page 10
7. General Provisions. (a) Benefits payable hereunder
will be made from the Company's general funds; (b) nothing herein
contained shall be construed to give any person the right to be
retained in the service of the Company or to interfere with the
rights of the Company to discharge any Employee at any time; (c)
Benefits hereunder may not be assigned or anticipated and no such
Benefits shall be subject to legal process or attachment for the
payment of any claims against any person entitled to receive such
Benefits; and (d) this Plan shall be administered and construed
in accordance with Connecticut law.
8. Elections. A Participant shall be entitled to make an
irrevocable election to terminate his participation in this Plan
in order to receive the supplemental deferred compensation under
the Deferral Plan. The election shall be made on the form
prescribed by the Committee. Any such election shall be effective
upon the Committee's receipt of a properly completed election
form. As soon as practicable thereafter, the Company agrees to
credit the Participant's account balance under Section 6A of the
Deferral Plan in an amount equal to the then present value of his
accrued Benefit under this Plan, after assuming that Benefits
would commence at early retirement age (or the actual age of the
Participant if older at the time), and the former Participant
Page 11
shall not have any further rights hereunder. Any Participant who
makes the election provided for in this Section 8 shall be
ineligible to participate in this Plan thereafter.
9. Calculation of Present Value of Accrued Benefit. Whenever
it shall be necessary to calculate the present value of a
Participant's accrued Benefit hereunder, such calculation shall
be made based upon the interest and/or mortality assumptions used
for FASB purposes with respect to the Pension Plan which are in
effect as of the close of the most recently concluded fiscal year
of the Company.
IN WITNESS WHEREOF, Kaman Corporation has caused this
Amendment and Restatement to be executed on its behalf by its
duly authorized officer and its corporate seal to be hereunto
affixed this 28th day of December, 1994.
ATTEST: KAMAN CORPORATION
Candace A. Clark By Robert M. Garneau
Assistant Secretary Its Senior Vice President
Page 12
FIRST AMENDMENT
TO
KAMAN CORPORATION SUPPLEMENTAL EMPLOYEES' RETIREMENT PLAN
WHEREAS, Kaman Corporation ("Kaman") established the Kaman
Corporation Supplemental Employees' Retirement Plan (originally
known as the "Kaman Corporation Excess Benefit Plan") (the "Plan"
or "SERP") on April 30, 1976 effective as of January 1, 1976
which has been amended from time to time and, most recently, was
restated in its entirety on January 1, 1994; and
WHEREAS, section 6 of the SERP permits the amendment of the
SERP at any time and from time to time; and
WHEREAS, Kaman desires to amend the SERP in certain respects
hereafter enumerated;
NOW THEREFORE, the SERP is hereby amended as follows:
1. Beginning with the 1998 Plan Year, section 3 of the
SERP is hereby deleted and replaced with the following:
"Determination of Benefits. Benefits under this Plan shall
be the difference between (i) the amount of annual benefit
which would have accrued for a Participant under the Pension
Plan (A) if the Participant did not participate in the
Deferral Plan and (B) had the Company not been limited by
Code Section 415 or Code Section 401(a)(17) but had
continued to fund the amount of a Participant's annual
benefit to the same extent as in the case of other
Participants with respect to whom the Company was not so
limited, without reduction for any prior minimum
distributions required to have been made under Code Section
401(a)(9), and (ii) the amount of the annual benefit to
which the Participant is entitled under the Pension Plan. In
the case of Participants who are Employees of a subsidiary
of the Company, beginning January 1, 1995, the Benefit under
this Plan shall also include the difference, if any, between
(i) the amount of annual benefit which would have accrued
for a Participant under the Pension Plan if the Participant
were a direct Employee of the Company without reduction for
any prior minimum distributions required to have been made
under Code Section 401(a)(9) and (ii) the amount of annual
benefit to which the Participant is entitled to under the
Pension Plan. This Plan shall have the effect of providing
the Participant with an unfunded benefit subject to the same
terms and conditions as contained in the Pension Plan."
Page 13
EXCEPT AS AMENDED HEREIN, the terms of the SERP, as amended
and restated, as of January 1, 1994, are confirmed and remain
unchanged.
IN WITNESS WHEREOF, Kaman Corporation has caused this First
Amendment to be executed on its behalf by its duly authorized
officer as of the 10th day of February, 1998.
KAMAN CORPORATION
By:
Robert M. Garneau
Executive Vice President
ATTEST:
Candace A. Clark
2/10/98
Date
Page 14
SECOND AMENDMENT TO KAMAN CORPORATION
SUPPLEMENTAL EMPLOYEES' RETIREMENT PLAN
WHEREAS, Kaman Corporation ("Kaman") established the Kaman
Corporation Supplemental Employees' Retirement Plan (originally
known as the "Kaman Corporation Excess Benefit Plan") (the "Plan"
or "SERP") on April 30, 1976, effective as of January 1, 1976,
which has been amended from time to time and, most recently, was
restated in its entirety on January 1, 1994; and
WHEREAS, Section 6 of the SERP permits the amendment of the
SERP at any time and from time to time; and
WHEREAS, Kaman desires to amend the SERP in certain respects
hereafter enumerated;
NOW THEREFORE, the SERP is hereby amended as follows:
1. The following new Section 10 is added to the SERP,
effective August 2, 1999:
"10. Provisions Relating Solely to Paul R. Kuhn.
(a) In the case of Paul R. Kuhn, benefits under this
Plan shall generally be determined in accordance with the
foregoing provisions of this Plan. However, in computing the
amount of annual benefit which would have accrued for a
Participant under the Pension Plan for purposes of part (i) of
the first sentence of Section 3 (as set forth in the First
Amendment to the Plan), but not for purposes of part (ii) of said
first sentence of Section 3, the following adjustments shall be
made solely in the case of Paul R. Kuhn:
1) Credited Service and Continuous Service (as those
terms are defined in the Pension Plan) shall accrue at a rate of
two (2) years for each completed calendar year of employment, for
the first five calendar years of employment (i.e., through
December 31, 2003). For this purpose, the period from August 2,
1999 through December 31, 1999 shall be deemed to constitute one
completed calendar year of employment.
Page 15
(2) Credited Service and Continuous Service (as those
terms are defined in the Pension Plan) shall accrue at a rate of
three (3) years for each completed calendar year of employment,
for each completed calendar year of employment thereafter (i.e.,
each calendar year beginning on or after January 1, 2004).
(3) If his employment ends within two (2) years after
August 2, 1999 (i.e., prior to August 2, 2001), he will be deemed
to have earned a total of eight (8) years of Credited Service and
Continuous Service (as those terms are defined in the Pension
Plan) at the date which would have been his Normal Retirement
Date (as that term is defined in the Pension Plan) had his
employment not ended. In such event, benefits shall be due and
payable only at what would have been his Normal Retirement Date.
(b) His benefit shall otherwise be computed in
accordance with the provisions of Section 3 (as set forth in the
First Amendment), to the extent such provisions are not
inconsistent with the provisions of this Section 10."
EXCEPT AS AMENDED HEREIN, the terms of the SERP, as amended
and restated as of January 1, 1994, and as amended by a First
Amendment, are confirmed and remained unchanged.
IN WITNESS WHEREOF, Kaman Corporation has caused this Second
Amendment to be executed on its behalf by its duly authorized
officer this 2nd day of September, 1999.
KAMAN CORPORATION
By: Robert M. Garneau
Title
Attest:
Candace A. Clark
Date: 9/2/99
Page 16
THIRD AMENDMENT TO KAMAN CORPORATION
SUPPLEMENTAL EMPLOYEES' RETIREMENT PLAN
WHEREAS, Kaman Corporation ("Kaman") established the Kaman
Corporation Supplemental Employees' Retirement Plan (originally
known as the "Kaman Corporation Excess Benefit Plan") (the "Plan"
or "SERP") on April 30, 1976, effective as of January 1, 1976,
which has been amended from time to time and, most recently, was
restated in its entirety on January 1, 1994; and
WHEREAS, Section 6 of the SERP permits the amendment of the
SERP at any time and from time to time; and
WHEREAS, Kaman desires to amend the SERP in certain respects
hereafter enumerated;
NOW THEREFORE, the SERP is hereby amended as follows:
1. Beginning with the 1999 Plan Year (as defined in the
SERP), the following new Section 11 is added to the SERP:
"11. Provisions Relating to Other Participants Affected by
Other Agreements.
It is possible that one or more Participants shall enter
into a legally binding agreement or agreements with the Company
or a subsidiary thereof which relate (in whole or in part) to the
Participant's participation in this Plan and benefits hereunder.
Such agreement may include, without limitation, providing for
additional Continuous and Credited Service (as those terms are
defined in the Kaman Corporation Employees' Pension Plan) in
computing benefits under this Plan, in all cases or only upon the
occurrence of one or more events. Any benefits payable hereunder
shall be determined with reference to any such agreement."
Page 17
EXCEPT AS AMENDED HEREIN, the terms of the SERP, as amended
and restated as of January 1, 1994, and as amended by a First
Amendment and a Second Amendment, are confirmed and remain
unchanged.
IN WITNESS WHEREOF, Kaman Corporation has caused this Third
Amendment to be executed on its behalf by its duly authorized
officer this 16th day of November, 1999.
KAMAN CORPORATION
By: Robert M. Garneau
Title Executive Vice
President
Attest:
Candace A. Clark
Date: Nov. 16, 1999
Page 18
FOURTH AMENDMENT TO KAMAN CORPORATION
SUPPLEMENTAL EMPLOYEES' RETIREMENT PLAN
WHEREAS, Kaman Corporation ("Kaman" or the "Company")
established the Kaman Corporation Supplemental Employees'
Retirement Plan (originally known as the "Kaman Corporation
Excess Benefit Plan") (the "Plan" or "SERP") on April 30, 1976,
effective as of January 1, 1976, which has been amended from time
to time and, most recently, was restated in its entirety on
January 1, 1994; and
WHEREAS, Section 6 of the SERP permits the amendment of the
SERP at any time and from time to time; and
WHEREAS, Kaman desires to amend the SERP in certain respects
hereafter enumerated;
NOW THEREFORE, the SERP is hereby amended as follows:
1. Paragraph (b) of Section 4 is amended to read as
follows:
"(b) Notwithstanding any provision in this Plan to the
contrary, if payments under the Pension Plan commence
earlier than the date the Participant actually retires,
dies, or otherwise terminates employment, then Benefits
under this Plan shall be paid in the same form as payments
being made under the Pension Plan, but except as provided in
the following sentence, shall not commence until the
Participant actually retires, dies or otherwise terminates
employment; and the Participant shall not be entitled to the
Benefits under this Plan that were not paid during the
period before he actually retired, died, or otherwise
terminated employment. In the case of Charles H. Kaman,
however, payments shall commence following a determination
by the Committee that Charles H. Kaman is Totally Disabled,
if earlier. Charles H. Kaman shall be considered to be
Totally Disabled hereunder if the Committee determines that
he is unable to perform the essential duties of his
Page 19
occupation due to injury or sickness, and that such
condition has existed for a period of at least six (6)
months. Such payments shall cease if Charles H. Kaman
returns to active employment with Kaman Corporation.
Charles H. Kaman shall not be entitled to receive benefits
under this Plan that were not paid during the period before
the Committee determines him to be Totally Disabled."
2. Paragraph (a) of Section 6 is amended to read as
follows:
"(a) The Board of Directors of the Company reserves
the right to amend or terminate this Plan at any time, in
whole or in part. The Board of Directors may delegate the
authority to amend or terminate this Plan to a committee of
the Board of Directors or to the Committee. Notwithstanding
the foregoing, no amendment or termination shall have the
effect of reducing or discontinuing any payments then being
made or due to be made under the terms hereof immediately
prior to such action, nor of reducing or terminating any
rights to future payments of Benefits accrued under this
Plan as of the date of termination. Future payments of
Benefits accrued under this Plan at any particular date
shall be determined in the same manner as under the Pension
Plan. In the event of a Change in Control, as defined in
paragraph (c) hereof, then in addition to any other
protections contained in this paragraph (a), no amendments
may be made to the Plan which would adversely affect current
Participants or Participants receiving distributions as to
the calculation or payment of benefits accrued under the
Plan to the date of the amendment."
3. Paragraph (b) of Section 6 is amended to read as
follows:
"(b) In the event of a Change in Control, as defined
in paragraph (c) below, the Company shall have the
obligation to promptly establish a "rabbi trust" with an
independent corporate trustee, similar in nature to the
Kaman Corporation Deferred Compensation Plan Trust
Agreement, if one had not previously been established.
Under the terms of the Trust, any assets placed in trust
shall continue to be available to the creditors of the
Company in the event of the Company's bankruptcy or
insolvency, and accordingly, the rights of Participants, and
their Beneficiaries, shall be and remain those of an
unsecured general creditor of the Company notwithstanding
the establishment of such a Trust. The Company shall
immediately upon establishment of such Trust make
Page 20
contributions to the Trust in cash, in an amount sufficient
to cause the Trust Fund to equal at least the present value
of all benefits accrued under the Plan for Participants and
beneficiaries thereof as of the Change in Control. If such
Trust had been established prior to the Change of Control,
however, such contributions shall be made on or before the
occurrence of such Change in Control. Thereafter, on at
least an annual basis (the "valuation date"), the Company
shall have the obligation to make additional contributions
to the Trust, and shall make such additional contributions
to the Trust in cash, in an amount sufficient to cause the
Trust Fund to equal at least the present value of all
benefits accrued under the Plan for Participants and
beneficiaries thereof as of such valuation date. Any such
contribution shall be made within ten (10) days of such
valuation date. The first valuation date must be at or
within twelve (12) months of the date the Change in Control
occurred. If the Company fails to satisfy any of the
requirements of this paragraph (b) of this Section 6, the
Plan will automatically terminate and notwithstanding
anything to the contrary contained in paragraph (a) of this
Section 6 or elsewhere in the Plan, the present value of all
accrued benefits under the Plan will be paid out immediately
in lump sum payments to Participants and beneficiaries of
deceased Participants."
4. Paragraph (a) of Section 7 is amended to read as
follows:
"(a) Benefits payable hereunder will be made from the
Company's general funds or from any "rabbi trust" which may
be established in connection with the Plan;"
5. Section 9 is amended to read as follows:
"9. Calculation of Present Value of Accrued Benefit.
Whenever it shall be necessary to calculate the present
value of a Participant's accrued Benefit hereunder, such
calculation shall be made based upon the following interest
and mortality assumptions and based on the assumption that
such Benefits would commence at early retirement age (or the
actual age of the Participant, if older at the time):
(a) For all purposes other than for determining
present value of accrued benefits upon Plan termination:
the interest and mortality assumptions which would then be
utilized in computing the value of lump sum benefits under
the Kaman Corporation Employees' Pension Plan shall be
utilized hereunder. Currently, such assumptions are set
forth in Section 2.1(c) of said Plan, as amended.
Page 21
(b) For purposes of determining the present value
of accrued benefits upon Plan termination:
(1) Interest: Interest shall be the annual
rate(s) determined under Appendix B to Part 4044 of the
Pension Benefit Guaranty Corporation Regulations, Interest
Rates Used to Value Benefits, determined for the month in
which the Plan termination occurs. If Appendix B should
change, reference hereto shall be deemed to include
reference to any substitute for or successor to such
Appendix B.
(2) Mortality: Mortality shall be
determined based upon Table 1, Mortality Table for Healthy
Male Participants, set forth in Appendix A to Part 4022 of
the Pension Benefit Guaranty Corporation regulations. If
such Table 1 should change, reference hereto shall be deemed
to include reference to any substitute for or successor to
such Table 1."
6. This Amendment is effective as of November 14, 2000.
EXCEPT AS AMENDED HEREIN, the terms of the SERP, as amended
and restated as of January 1, 1994, and as amended by a First
Amendment, a Second Amendment, and a Third Amendment, are
confirmed and remain unchanged.
IN WITNESS WHEREOF, Kaman Corporation has caused this Fourth
Amendment to be executed on its behalf by its duly authorized
officer this 14th day of November, 2000.
KAMAN CORPORATION
By:
Robert M. Garneau
Its Executive Vice President & CFO
Attest:
Candace A. Clark, Secretary
Date: 11/14/00
Page 22
EXHIBIT 10d
KAMAN CORPORATION
AMENDED AND RESTATED
DEFERRED COMPENSATION PLAN
(Effective January 1, 1994)
This Amended and Restated Kaman Corporation Deferred
Compensation Plan is adopted by Kaman Corporation effective as of
January 1, 1994.
WHEREAS, the Corporation adopted the Plan effective
October 1, 1993; and
WHEREAS, the Corporation amended the Plan by a First
Amendment also effective as of October 1, 1993; and
WHEREAS, the Corporation has reserved the right to amend the
Plan; and
WHEREAS, the Corporation wishes to amend the Plan effective
January 1, 1994 to provide for an additional benefit for certain
Participants in the Plan who do not participate in the Kaman
Corporation Supplemental Employees' Retirement Plan; and
WHEREAS, on September 19, 1994, the Board of Directors of
the Corporation adopted a resolution authorizing the amendment of
the Plan as provided for herein;
NOW, THEREFORE, the Plan is hereby amended and restated in
its entirety as follows:
Purpose
The purpose of this Plan is to provide specified benefits to
a select group of senior management or highly compensated
employees of Kaman Corporation, a Connecticut corporation, and
its subsidiaries.
Page 1
Section 1
Definitions
For purposes of this Plan, the following phrases or terms
shall have the following indicated meanings, unless the context
requires otherwise:
1.1 "Account Balance" means, as to each Participant, the
sum of (i) all amounts of Base Salary and/or Bonus deferred by
the Participant pursuant to this Plan plus (ii) any additional
deferred compensation payable pursuant to Section 6.1, plus (iii)
all interest credited thereon in accordance with the applicable
interest crediting provisions of the Plan, less (iv) any
distributions to the Participant or his Beneficiary. For purposes
of the Plan established by Section 6A, "Account Balance" means
the sum of (i) all amounts of Supplemental Deferred Compensation,
plus (ii) all interest credited thereon in accordance with the
applicable interest crediting provisions of the Plan, less (iv)
any distributions to the Participant or his Beneficiary. These
accounts shall be bookkeeping entries only and shall be utilized
solely as a device for the measurement and determination of the
amounts to be paid to Participant pursuant to this Plan.
1.2 "Additional Deferred Compensation" means the deferred
compensation payable to a Participant pursuant to Section 6.1.
1.3 "Base Salary" means a Participant's salary from the
Corporation, inclusive of any elective deferrals made under this
Plan or any other plan of the Corporation.
1.4 "Beneficiary" means one or more persons, trusts,
estates or other entities, designated in accordance with
Section 7, that are entitled to receive payments under this Plan
after the death of a Participant.
1.5 "Beneficiary Designation Form" means the form
established from time to time by the Committee that a Participant
completes, signs and returns to the Committee to designate one or
more Beneficiaries.
1.6 "Board" means the Board of Directors of Kaman
Corporation.
Page 2
1.7 "Bonus" means the cash, incentive compensation that
may be awarded to a Participant under the Kaman Corporation Cash
Bonus Plan or any successor plan, inclusive of any elective
deferrals made under this Plan or any other plan of the
Corporation.
1.8 "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
1.9 "Committee" means those persons identified as the
Plan Administrators of the Kaman Corporation Compensation
Administration Plan, or such other persons that may be appointed
by the Board to manage and administer the Plan pursuant to
Section 9.
1.10 "Corporation" means Kaman Corporation, a Connecticut
corporation, and, where the context requires, each of its
wholly-owned subsidiaries or the particular corporation that
employs the Participant.
1.11 "Crediting Rate" means, for each Plan Year, that rate
of interest equal to 120% of the applicable federal long-term
rate compounded monthly (as prescribed under section 1274(d) of
the Code) in effect for the first month of each Plan Year.
1.12 "Deferral Amount" means that portion of a
Participant's Base Salary and/or Bonus that the Participant
elects to defer in accordance with Section 3.
1.13 "Deferral Election" means a Participant's election to
defer a portion of his Base Salary and/or Bonus as provided in
Section 3 for a particular Plan Year.
1.14 "Disability" means a period of disability during
which a Participant qualifies for benefits under any Corporation
sponsored long-term disability plan in which the Participant
participates, or, if a Participant does not participate in such a
plan, a period of disability during which the Participant would
have qualified for benefits under such a plan had the Participant
been a participant in such a plan, as determined in the sole
discretion of the Committee.
Page 3
1.15 "Election Form" means the form prescribed from time
to time by the Committee that a Participant must use to make a
Deferral Election under the Plan.
1.16 "Financial Hardship" means a severe financial
hardship to the Participant resulting from a sudden and
unexpected illness or accident of the Participant or of a
dependent (as defined in Section 152(a) of the Code) of the
Participant, loss of the Participant's property due to casualty,
or other similar extraordinary and unforeseeable circumstances
arising from events beyond the control of the Participant. The
circumstances that will constitute a Financial Hardship will
depend upon the facts of each case, but, in any case, the
particular circumstances will not be regarded as giving rise to a
Financial Hardship to the extent that any hardship is or may be
relieved:
(a) Through reimbursement or compensation by
insurance or otherwise;
(b) By liquidation of the Participant's assets, to
the extent the liquidation of such assets would not itself cause
severe financial hardship; or
(c) By cessation of deferrals under the Plan.
1.17 "Participant" means any employee of the Corporation
(i) who is selected to participate in the Plan by the Board in
accordance with Section 2.1, (ii) who participates in the Thrift
Plan to the extent required as a condition to participation in
this Plan, (iii) who elects to participate in the Plan, (iv) who
signs a Plan Agreement, an Election Form, and a Beneficiary
Designation Form (v) whose signed Plan Agreement, Election Form
and Beneficiary Designation Form are accepted by the Committee,
(vi) who satisfies any other enrollment requirements that may be
established by the Committee, (vii) who commences participation
in the Plan, and (viii) whose Plan Agreement has not terminated.
"Participant" in the Supplemental Plan established by Section 6A
means any employee of the Corporation who is selected to
participate in the Supplemental Plan by the Board in accordance
with Section 2.1 and who satisfies any other enrollment
requirements that may be established by the Committee; provided,
however, that the term shall not include any person who is
Page 4
entitled by contract to receive a payment in lieu of the
supplemental deferred compensation provided for in Section 6A,
including, but not limited to, retirement benefits in addition to
those provided under the Pension Plan. Where the context
requires, the term "Participant" shall also mean an employee or
former employee who previously participated on an active basis
and who still has a positive Account Balance.
1.18 "Payroll Taxes" means any tax imposed on compensation
paid to a Participant that an employer is required to collect
from the Participant including, but not limited to, any employee
contributions for old age, survivors and disability insurance or
hospital insurance.
1.19 "Pension Plan" means the Kaman Corporation Employees
Pension Plan.
1.20 "Plan" means this Deferred Compensation Plan.
1.21 "Plan Agreement" means the written agreement, as it
may be amended from time to time, that is entered into by and
between the Corporation and a Participant. Each Plan Agreement
executed by a Participant shall provide for the entire benefit to
which such Participant is entitled to under the Plan, and the
Plan Agreement bearing the latest date of acceptance by the
Committee shall govern such entitlement.
1.22 "Plan Year" means the calendar year, except that the
initial Plan Year shall begin on October 1, 1993, and end on
December 31, 1993.
1.23 "Retirement", "Retires" or "Retired" means a
Termination of Service on or after the attainment of Early
Retirement Age under the Pension Plan and otherwise in accordance
with the Pension Plan.
1.24 "SERP" means the Amended and Restated Kaman
Corporation Supplemental Employees' Retirement Plan.
1.25 "Supplemental Deferred Compensation" means the
deferred compensation payable to a Participant pursuant to
Section 6A.1.
Page 5
1.24 "Termination of Service" means the cessation of
employment with the Corporation other than in connection with an
authorized leave of absence.
1.27 "Thrift Plan" means the Kaman Corporation Thrift and
Retirement Plan.
Section 2
Eligibility and Enrollment
2.1 Selection by Board. Participation in the Plan shall
be limited to a select group of management or highly compensated
employees whose eligibility to participate in the Plan is
approved by the Board on its own initiative, or upon the
recommendation of the Committee. The Board may terminate an
employee's eligibility to participate in the Plan at any time in
its sole discretion.
2.2 Enrollment Requirements. As a condition to
participation, an eligible employee must complete, execute and
return to the Committee, within the time prescribed by the
Committee, a Plan Agreement, and an Election Form. In addition,
in order to participate in the Plan for any particular Plan Year,
an eligible employee must elect to make the maximum contribution
that he is allowed to make under section 402(g) of the Code and
the terms of the Thrift Plan. The Committee may establish from
time to time such other enrollment requirements as it determines
in its sole discretion are necessary or appropriate for purposes
of administering the Plan. The Committee may in its sole
discretion waive the requirement that the eligible employee make
the maximum contribution to the Thrift Plan where such maximum
contribution to the Thrift Plan would have an adverse financial
impact on the employee as a result of the application of any laws
or regulations relating to limitations on contributions to, or
taxation of distributions from, employee welfare benefit plans.
2.3 Commencement of Participation. An employee shall
commence participation in the Plan upon the timely completion of
all enrollment requirements and the Committee's acceptance of all
submitted documents. Eligible employees who wish to participate
in the Plan for any particular Plan Year must satisfy the
enrollment requirements prior to the commencement of the Plan
Year; provided, however, that in the first year in which an
employee first becomes eligible to participate in the Plan, the
Page 6
newly eligible employee must satisfy the enrollment requirements
within thirty (30) days after the date on which he became
eligible. If an eligible employee does not meet all enrollment
requirements within the time prescribed, that employee shall not
be allowed to participate in the Plan until the first day of the
Plan Year following the completion of all enrollment
requirements.
Section 3
Deferral Commitments/Interest Crediting
3.1 Maximum Deferral. For each Plan Year, a Participant
may elect to defer a percentage of his Base Salary not to exceed
50% and/or all or a percentage of his Bonus.
3.2 Election to Defer: Effect of Election Form. In order
to make a Deferral Election for any Plan Year a Participant must
deliver a completed and signed Election Form to the Committee
prior to the commencement of the Plan Year to which it relates.
In the case of a newly admitted Participant, the Deferral
Election must be made within the thirty (30) day period provided
for in Section 2.3, and shall not apply to any Base Salary earned
prior to the commencement of his participation. A separate
Election Form is required for each Plan Year. The Election Form
must specify the percentage of the Base Salary and/or Bonus that
the Participant has elected to defer. Except as otherwise
expressly provided for herein, each Deferral Election shall be
irrevocable for the Plan Year for which it is made, and shall be
deemed to apply to any salary increases occurring during that
year. No Election Form shall be effective unless accepted by the
Committee.
3.3 Additions to Account Balances. The percentage of a
Participant's Base Salary deferred pursuant to Section 3.2 shall
be credited to the Participant's Account Balance as of the last
day of each month in which the deferred portion of the Base
Salary would have been paid if not deferred. The percentage of a
Participant's Bonus deferred pursuant to Section 3.2 shall be
credited to the Participant's Account Balance as of the last day
of each month in which the deferred portion of the Bonus would
have been paid if not deferred.
Page 7
3.4 Interest Crediting. Interest shall be credited
monthly and compounded monthly on all Deferral Amounts credited
to a Participant's Account Balance. Interest shall be credited
only with respect to amounts in the Account Balance at the end of
the month, and no interest shall be credited with respect to any
portion of an Account Balance withdrawn or distributed from an
Account Balance during the month. The rate of interest shall be
the applicable Crediting Rate.
3.5 Payroll Taxes. The Corporation shall ratably withhold
from that portion of the Participant's Base Salary or Bonus that
is not being deferred, any Payroll Taxes imposed on the
Participant with respect to any Deferral Amount, Additional
Deferred Compensation or Supplemental Deferred Compensation. If
necessary, the Committee shall reduce the Deferral Amount in any
Plan Year in order to comply with this Section 3.5.
3.6 Suspension of Election upon Financial Hardship. If a
Participant believes he has experienced a Financial Hardship, the
Participant may request the Committee to suspend the
Participant's Deferral Election for the remainder of the Plan
Year in which the Financial Hardship occurs. The Committee shall
grant the request if the Committee, in its sole discretion,
determines that the Participant has suffered a Financial
Hardship.
3.7 Suspension of Election Upon Disability. In the event
of the Disability of a Participant, the Committee shall
automatically suspend the Participant's Deferral Election for the
remainder of the Plan Year in which the Disability occurs
effective upon the determination of Disability.
Section 4
Distributions Upon Retirement
4.1 Distributions Upon Retirement. The Account Balance of a
Participant who Retires shall be distributed in a lump sum or in
monthly installments over a period of 5, 10 or 15 years, as the
Participant shall have elected pursuant to Section 4.2.
Notwithstanding the foregoing, for purposes of the plan
established by Section 6A, the Participant may elect only between
receiving distributions in monthly installments over a period of
10 years or 15 years.
Page 8
4.2 Election of Method of Payment. Each Participant, in
connection with his commencement of participation in the Plan,
must elect the manner in which he wishes to have his Account
Balance distributed upon Retirement. As part of this election,
the Participant shall indicate whether he wishes the lump sum
payment to be made or the installment payments to commence (i) on
the first day of the third month following the date the
Participant Retires, or (ii) on the later of (A) the first day of
the third month following the date the Participant Retires or (B)
on the second day of the January next following the date the
Participant Retires. The election shall be made on the form
prescribed by the Committee. A Participant must make a separate
election with respect to the payment of supplemental deferred
compensation pursuant to Section 6A. A Participant may change his
election to an allowable alternative method of payment by
submitting a new election to the Committee, but any such change
shall be applicable only with respect to subsequent Deferral
Elections. The election made for purposes of the plan established
by Section 6A shall be irrevocable once made.
4.3 Calculation of Monthly Distributions. If a
Participant elects to receive distributions in the form of
monthly installments, the distribution shall be made in the form
of equal monthly installments adjusted on an annual basis at the
beginning of each Plan Year to provide for annual amortization of
the remaining Account Balance over the remaining payment period
with interest at the Crediting Rate in effect at the beginning of
the Plan Year. Each monthly installment shall be one-twelfth of
the annual payment.
Section 5
Distributions Other than Upon Retirement
5.1 Distributions After Lapse of Years. In connection
with each Deferral Election, a Participant may also elect to
receive a distribution of that portion of his Account Balance
equal to the Deferral Amount for that Plan Year plus any interest
credited thereon after the lapse of seven or more Plan Years as
specified in the Election Form. Any such distributions shall be
made in a lump-sum no later than ninety (90) days after the lapse
of the number of years specified in the Election Form.
Notwithstanding any provision herein to the contrary, no interest
shall be credited on the Account Balance for any period
subsequent to the last day of the last Plan Year in the lapse
period.
Page 9
5.2 Distributions Upon Disability or Death of
Participant. Upon the Disability or death of a Participant,
including a Participant who has commenced receiving distributions
of his Account Balance, the Participant's entire Account Balance
shall be distributed to the Participant or, in the case of a
deceased Participant, to the Participant's Beneficiary in a lump
sum. If the Participant's Account Balance at the time of
Disability or death exceeds $25,000, and the Participant has not
commenced receiving a distribution of his Account Balance at such
time, then, at the sole discretion of the Committee, the
Participant's Account Balance shall be distributed in 120 monthly
installments in the manner provided for in Section 4.3. The lump
sum distribution shall be made, or the installment payments shall
commence, on the first day of the third month following the
determination of the Disability of the Participant or the death
of the Participant.
5.3 Distributions Upon Termination of Service. In the
case of a Participant who has experienced a Termination of
Service not occasioned by Retirement, Disability or death, the
entire Account Balance of the Participant shall be distributed to
the Participant on the second day of the January next following
the date on which the Termination of Service occurs; provided,
however, that the Committee may, in its sole discretion,
authorize an earlier Distribution. For purposes of the plan
established by Section 6A, the Account Balance of a Participant
who has experienced a Termination of Service not occasioned by
Retirement, Disability or death, shall be distributed in monthly
installments over a period of 10 years or 15 years (as elected by
the Participant) commencing on the second day of the January next
following the date on which the Termination of Service occurs
unless the Committee elects, in its discretion, to make an
earlier distribution.
5.4 In-service Distributions Upon Financial Hardship. If
a Participant believes he has experienced a Financial Hardship,
then, in addition to requesting a suspension of his Deferral
Election pursuant to Section 3.6, the Participant may also
request a distribution of part or all of the Participant's
Account Balance on account of Financial Hardship. The Committee
may, in its sole discretion, grant the request provided, however,
that in no circumstances shall the amount of the distribution
from the Participant's Account Balance exceed the amount that the
Committee, in its sole discretion, determines is necessary to
satisfy the Financial Hardship. If the Committee approves the
distribution, the distribution shall be made as soon as
practicable in the discretion of the Committee.
Page 10
5.5 In-service Withdrawals. A Participant shall be
entitled to withdraw all of his Account Balance without regard to
Financial Hardship, provided, however, that if a Participant
elects an in-service withdrawal pursuant to this Section 5.5,
then immediately prior to such withdrawal: (i) the Participant's
Account Balance will automatically be reduced by the lesser of
(X) any portion of the Account Balance attributable to interest
credited on Deferral Amounts or (Y) ten percent (10%) of the
Participant's Account Balance, calculated in either case as of
the date of withdrawal; and (ii) the Participant's Deferral
Election for the current Plan Year shall be suspended and the
Participant shall not be eligible to make any additional Deferral
Elections for any future Plan Years. The distribution shall be
made within ninety (90)days after the Participant provides the
Committee with written notice of his intent to withdraw his
Account Balance and executes a written acknowledgment of the
reduction in his Account Balance and his ineligibility to
participate in the Plan as set forth above.
Section 6
Additional Deferred Compensation
6.1 Additional Deferred Compensation. The Corporation shall
pay Additional Deferred Compensation to each Participant in an
amount equal to 25% of the Participant's Deferral Amount for such
Plan Year, provided, however, that the Additional Deferred
Compensation payable to a Participant for any Plan Year shall not
exceed an amount equal to 1.25% of the Participant's Base Salary
and Bonus (or such lower percentage as the Corporation shall
determine) reduced by any matching contribution that the
Corporation made to the Participant's account under the Thrift
Plan. Any Additional Deferred Compensation shall be credited to
the Account Balance of the Participant and shall be treated as a
Deferral Amount with respect to the Plan Year to which it
relates, and, as such, shall be governed by the Deferral Election
in effect for that Plan Year. The Additional Deferred
Compensation shall be calculated within ninety (90) days after
the close of the Plan Year and shall be credited to the
Participant's Account Balance as of January 1 of the succeeding
Plan Year to each such Participant employed on said date.
Interest shall be credited on said amount thereafter in
accordance with Section 3.4.
Page 11
6.2 Other Benefits. This Plan shall supplement and shall
not supersede, modify or amend any other plan or program
maintained by the Corporation except as may otherwise be
expressly provided.
Section 6A
Supplemental Deferred Compensation
6A. 1 Supplemental Deferred Compensation. The Corporation
shall pay Supplemental Deferred Compensation to each Participant
who is not also a participant in the SERP. The amount of the
Supplemental Deferred Compensation shall be ten percent (10%) of
the amount by which the Participant's "W-2 Earnings" (as defined
in the Pension Plan) for the most recently concluded fiscal year
of the Pension Plan exceed the "Compensation Limit" set forth in
section 401(a)(17) of the Code, as adjusted from time to time as
provided for in said section 401(a)(17). The Supplemental
Deferred Compensation shall be calculated within ninety (90) days
after the close of the Plan Year and shall be credited to the
Participant's Account Balance as of January 1 of the succeeding
Plan Year to each such Participant employed on said date.
Interest shall be credited on said amount thereafter in
accordance with Section 3.4.
6A.2 Separate Treatment. This Section 6A establishes a
separate and distinct plan for the payment of deferred
compensation, which Plan shall be governed by and administered in
accordance with the provisions of this Section and Sections 1,
2.1, 3.4, 3.5, 4.1, 4.2, 4.3, 5.2, 5.3, 7, 8, 9 and 10 hereof. By
way of example, and not by way of limitation: Supplemental
Deferred Compensation and the interest credited on such
Compensation shall be credited to a separate account; a
Participant shall be entitled to make a separate election as to
the distribution of his Account Balance attributable to
Supplemental Deferred Compensation; a Participant in this
Supplemental Plan will not be entitled to receive a distribution
of his Account Balance attributable to this Plan until the time
provided for in Section 4.1, 5.2 or 5.3; and a Participant who is
otherwise eligible to receive Supplemental Deferred Compensation
hereunder shall be entitled to continue to receive such
compensation even though the Participant is ineligible to make
any additional Deferral Elections because he has elected to take
an in-service withdrawal pursuant to Section 5.5.
Page 12
6A.3 Transfer of Benefits. If an employee would be eligible
to participate in the Supplemental Plan established pursuant to
this Article 6A but for the fact that he participates in the
SERP, then he may elect to terminate his participation in the
SERP and thenceforth participate in this Plan. If he so elects,
his initial Account Balance for purposes of this Supplemental
Plan shall be credited with the present value of his accrued SERP
benefits as determined in accordance with the provisions of the
SERP.
6A.4 Cash-out Option. Notwithstanding any election by a
Participant to receive distributions in monthly installments, in
the discretion of the Committee, the remaining Account Balance of
a Participant who has commenced receiving distributions in
monthly installments shall be distributed in a single lump sum if
the monthly payment is less than $100 or the remaining Account
Balance is less than $10,000. This cash-out option shall be
applicable only to the Supplemental Plan established pursuant to
this Section 6A.
Section 7
Beneficiary Designation
7.1 Beneficiary. Each Participant shall have the right, at
any time, to designate a Beneficiary (both primary as well as
contingent) to receive any distributions of the Account Balance
upon the death of the Participant.
7.2 Beneficiary Designation. A Participant shall
designate his Beneficiary by completing and signing the
Beneficiary Designation Form, and returning it to the Committee.
A Participant shall have the right to change his Beneficiary
Designation by completing, signing and otherwise complying with
the terms of the Beneficiary Designation Form and the Committee's
rules and procedures. Upon the acceptance by the Committee of a
new Beneficiary Designation Form, all prior Beneficiary
designations shall be canceled. No designation or change in
designation of a Beneficiary shall be effective until received
and accepted by the Committee. The Committee shall be entitled to
rely on the last Beneficiary Designation Form filed by the
Participant and accepted by the Committee prior to his death
except to the extent superseded by any applicable law or court
order.
Page 13
7.3 Failure to Designate Beneficiary. If a Participant
fails to designate a Beneficiary as provided above or, if all
designated Beneficiaries predecease the Participant or die prior
to complete distribution of the Participant's Account Balance,
then the Participant's designated Beneficiary shall be deemed to
be his surviving spouse. If the Participant has no surviving
spouse, the Participant's Account Balance shall be distributed to
the executor or personal representative of the Participant's
estate.
7.4 Doubt as to Beneficiary. If the Committee has any doubt
as to the proper Beneficiary to receive payments pursuant to this
Plan, the Committee shall have the right, exercisable in its sole
discretion, to cause the Corporation to withhold such payments
until this matter is resolved to the Committee's satisfaction.
Section 8
Termination or Amendment
8.1 Termination. The Board reserves the right, at any time,
to terminate the Plan as to any future deferrals or to terminate
the Plan in its entirety. If the Plan is terminated then all
Account Balances shall be distributed in a cash lump sum within
60 days of the effective date of such termination unless the
Corporation has established the trust referred to in Section 10.1
and such trust is funded by letter of credit or otherwise in an
amount not less than the aggregate Account Balances of all
Participants on the date of termination.
8.2 Amendment. The Board may amend the Plan at any time,
in whole or in part; provided, however, that no amendment shall
be effective to (i) reduce a Participant's Account Balance in
existence on the effective date of the amendment or the
Corporation's obligation to fund or distribute such Account
Balance in the event of a termination of the Plan, (ii) reduce
the Crediting Rate on any Account Balance existing on the
effective date of the amendment, or (iii) allow the Participant
to accelerate the receipt of any portion of the Participant's
Account Balance existing on the effective date of the amendment
beyond the authority currently granted. The Board may delegate
the authority to amend the Plan to a committee of the Board or to
the Committee.
Page 14
Section 9
Administration
9.1 Committee Duties. This Plan shall be administered by
the Committee, which shall have the discretion and authority to
make, amend, interpret, and enforce all appropriate
rules and regulations for the administration of this Plan and
decide or resolve any and all questions including interpretations
of this Plan, as may arise in connection with the Plan. Members
of the Committee may be Participants under this Plan, provided,
however, that no Committee member shall participate in any
decision in which he has an interest other than an interest as a
participant in the Plan generally. The decision or action of the
Committee with respect to any question arising out of or in
connection with the administration, interpretation and
application of the Plan and the rules and regulations promulgated
hereunder shall be final, conclusive and binding upon all persons
having any interest in the Plan.
9.2 Agents. The Committee may, from time to time, (i)
employ agents and delegate to them such administrative duties as
it sees fit and (ii) consult with counsel who may be counsel to
the Corporation.
9.3 Indemnity of Committee. The Corporation shall indemnify
and hold harmless the members of the Committee, or any of its
agents, against any and all claims, losses, damages, expenses or
liabilities arising from any action or failure to act with
respect to this Plan, except in the case of willful misconduct.
9.4 Information Requirement. The Corporation shall supply
full and timely information to the Committee on all matters
relating to the compensation of its Participants, the date and
circumstances of the Retirement, Disability, death or Termination
of Service of any Participant, and such other pertinent
information as the Committee may reasonably require in order to
enable the Committee to perform its functions.
9.5 Claims Procedures. The Committee shall establish a
claims procedure under the Plan. Any determination or action of
the Committee with respect to the administration of the Plan
shall be final, conclusive and binding on all persons interested
herein.
Page 15
Section 10
Miscellaneous
10.1 Unsecured General Creditor. Participants and their
Beneficiaries, heirs, successors and assigns shall have no legal
or equitable rights, interest or claims in any property or assets
of the Corporation. Any and all of the Corporation's assets shall
be, and remain, the general, unpledged, unrestricted assets of
the Corporation. The Corporation's obligation under the Plan
shall be merely that of an unfunded and unsecured promise to pay
money in the future. The Corporation intends to establish a trust
for the purposes of providing Participants with assurance that
the Corporation's obligations under this Plan will be honored.
Under the terms of the trust, however, any assets placed in trust
shall continue to be available to the creditors of the
Corporation in the event of the Corporation's insolvency, and,
accordingly, the rights of Participants, and their Beneficiaries,
heirs, successors and assigns, shall remain those of an unsecured
general creditor notwithstanding the establishment of such a
trust.
10.2 Corporation's Liability. The Corporation shall have
no obligation to a Participant or his Beneficiary under the Plan
except as expressly provided in the Plan and the Participant's
Plan Agreement.
10.3 Nonassignability. Neither a Participant nor any other
person shall have any right to commute, sell, assign, transfer,
pledge, anticipate, mortgage or otherwise encumber, transfer,
hypothecate or convey in advance of actual receipt, the amounts,
if any, payable hereunder, or any part thereof, which are, and
all rights to which are expressly declared to be unassignable and
non-transferable. No part of the amounts payable shall, prior to
actual payment, be subject to seizure or sequestration for the
payment of any debts, judgments, alimony or separate maintenance
owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant's or any other
person's bankruptcy or insolvency.
10.4 Not a Contract of Employment. The terms and
conditions of this Plan shall not be deemed to constitute a
contract of employment between the Corporation and the
Page 16
Participant. Such employment is hereby acknowledged to be an "at
will" employment relationship that can be terminated at any time
unless expressly provided in a written employment agreement.
Nothing in this Plan shall be deemed to give a Participant the
right to be retained in the service of the Corporation, or to
interfere with the right of the Corporation to discipline or
discharge the Participant at any time.
10.5 Furnishing Information. As a condition to
participation, each Participant agrees to cooperate with the
Committee by furnishing any and all information requested by the
Committee and take such other actions as may be requested in
order to facilitate the administration of the Plan, including but
not limited to taking such physical examinations as the Committee
may deem necessary.
10.6 Terms. Whenever any words are used herein in the
singular or in the plural, they shall be construed as though they
were used in the plural or the singular, as the case may be, in
all cases where they would so apply. Any reference to the
masculine gender shall be deemed to include the feminine gender
as well.
10.7 Captions. The captions in the articles, sections and
paragraphs of this Plan are for convenience only and shall not
control or affect the meaning or construction of any of its
provisions.
10.8 Governing Law. The provisions of this Plan shall be
construed and interpreted according to the laws of the State of
Connecticut.
10.9 Notice. Any notice or filing required or permitted to
be given to a Participant under this plan shall be sufficient if
in writing and hand delivered or sent by mail to the last known
address of the Participant. Any notice or filing required or
permitted to be given to the Committee under this Plan shall be
sufficient if in writing and hand delivered, or sent by
registered or certified mail, to:
Kaman Corporation
P.O. Box 1
Bloomfield, CT 06002
Attention: Deferred Compensation Plan Committee
Page 17
Such notice shall be deemed given as of the date of hand delivery
or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification.
10.10 Successors. The provisions of this Plan shall bind
and inure to the benefit of the Corporation and its successors
and assigns and the Participant, the Participant's Beneficiaries,
and their permitted successors and assigns.
10.11 Validity. In case any provision of this Plan shall be
illegal or invalid for any reason, said illegality or invalidity
shall not affect the remaining parts hereof, but this Plan shall
be construed and enforced as if such illegal or invalid provision
had never been inserted herein.
10.12 Incompetency. If a distribution under this Plan is
payable (i) to a minor, or (ii) to a person the Committee
determines in its discretion to be incompetent or incapable of
handling the disposition of that person's property, the Committee
may direct payment of such benefit to the guardian, legal
representative or person having the care and custody of such
minor, incompetent or incapable person.
10.13 Distribution in the Event of Taxation. If, for any
reason, all or any portion of a Participant's benefit under this
Plan becomes taxable to the Participant prior to receipt, a
Participant may request that the Committee distribute a portion
of the Participant's Account Balance sufficient to meet the
Participant's tax liability (including additions to tax,
penalties and interest).
10.14 Effect of Payment. The full payment of a
Participant's Account Balance to the person the Committee
determines is the proper person to receive the distribution shall
completely discharge all obligations to the Participant under
this Plan and the Participant's Plan Agreement shall terminate.
IN WITNESS WHEREOF, the Corporation has signed this Amended
and Restated Plan document on this 9th day of December, 1994.
KAMAN CORPORATION
By Harvey S. Levenson
Its President
Page 18
FIRST AMENDMENT
TO
KAMAN CORPORATION AMENDED AND RESTATED
DEFERRED COMPENSATION PLAN
THIS AMENDMENT made by Kaman Corporation for the
purpose of amending its Amended and Restated Deferred
Compensation Plan,
WITNESSETH:
WHEREAS, by Written Plan Instrument dated December 9, 1994,
Kaman Corporation (hereinafter referred to as the "Corporation")
adopted an Amended and Restated Deferred Compensation Plan; and
WHEREAS, the Corporation reserved the right, in Section 8.2
thereof, to amend the Plan; and
WHEREAS, the Corporation now wishes to amend the Plan in the
particulars set forth below;
NOW, THEREFORE, the Corporation hereby amends the Plan as
follows:
1. The last sentence in Subsection 2.2 is hereby deleted
and replaced with the following sentence:
"The Committee may in its sole discretion waive the
requirement that the eligible employee make the maximum
contribution that he is allowed to make under section
402(g) of the Code and the terms of the Thrift Plan,
provided, however, that in granting such a waiver, the
Comminee shall not require, as a condition to
participation in the Plan, that the eligible employee
make or not make elective contributions to the Thrift
Plan or make a particular level of elective
contributions to the Thrift Plan (other than the
maximum elective contribution that he is allowed to
make under section 402(g) of the Code and the terms of
the Thrift Plan)."
Page 19
2. The first sentence of subsection 6.1 is hereby deleted
and replaced with the following sentence:
"6.1 Additional Deferred Compensation. The Corporation
shall pay Additional Deferred Compensation to each
Participant in an amount equal to 25% of the Participant's
Deferral Amount for such Plan Year, provided, however, that
the Additional Deferred Compensation payable to a
Participant for any Plan Year shall not exceed an amount
equal to 1.25% of the Participant's Base Salary and Bonus
(or such lower percentage as the Corporation shall
determine) reduced by an amount equal to the maximum
matching contribution allowed for the Participant's benefit
under the Thrift Plan determined on the assumption that the
Participant makes or has made the maximum elective
contribution that he is allowed to make under Section 402(g)
of the Code and the terms of the Thrift Plan."
3. Except as hereinabove modified and amended, the
Amended and Restated Deferred Compensation Plan shall remain in
full force and effect.
4. This First Amendment is effective January 1, 1997.
IN WITNESS WHEREOF, Kaman Corporation has caused this First
amendment to be executed on this 13th day of August, 1997
WITNESS KAMAN CORPORATION
Candace A. Clark By: Robert M. Garneau
Page 20
SECOND AMENDMENT
TO
KAMAN CORPORATION DEFERRED COMPENSATION PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1994)
THIS AMENDMENT made this 9th day of September, 1997, by
Kaman Corporation, hereinafter referred to as the "Company", for
the purpose of amending certain provisions of the Deferred
Compensation Plan,
WITNESSETH:
WHEREAS, the Company amended and restated the Kaman
Corporation Deferred Compensation Plan (hereinafter referred to
as the "Plan") by written Plan instrument adopted generally
effective as of January 1, 1994, and further amended the same by
a First Amendment thereto effective January 1, 1997; and
WHEREAS, the Company reserved the right to amend the Plan in
Section 8 thereof; and
WHEREAS, the Company desires to amend the Plan in the
following particulars;
NOW , THEREFORE, the Company hereby amends the Plan as
follows;
1. The definition of "Base Salary" in Section 1.3 is hereby
amended to add the following:
"Base Salary may also include other forms of compensation to
which a Participant may become entitled to receive from the
Company or an affiliated company thereof including, but not
limited to, separation compensation. The determination as to
the types of compensation which may be eligible for deferral
under the Plan shall be made prior to the time such
compensation is due and owing to the Participant. The type
of compensation and the extent to which a Participant may
defer such amounts shall be made by the Committee in its
sole discretion."
2. Section 5.3 shall be redesignated as Section 5.3A and
the first sentence of said section shall be amended by adding at
the beginning thereof the following:
"Except as otherwise provided in paragraph 5.3B below,".
Page 21
3. Section 5.3 shall be further amended by adding a new
paragraph 5.3B to read as follows:
"5.3B. Distributions Related to a Sale, Merger, et.
a1. In the case of a Participant who has experienced
a Termination of Service as a result of a sale, merger
or other disposition by the Company of an affiliated
company or in the event of a disposition by the
Company of substantially all the assets of a line of
business, the Participant's Account Balance shall be
distributed as if he Retired at the time of his
Termination of Service; provided, however, that
notwithstanding anything to the contrary in Section
4.2, prior to the final closing of the sale, merger,
or other disposition of the affiliated company or line
of business, an affected Participant shall have the
right to change his election under Section 4.2 to any
form of distribution then allowable under the Plan.
Any such change of elections to the form of
distribution shall apply to the Participant's entire
Account Balance."
3. The above amendments shall be effective on
September 9, 1997.
4. As hereinabove modified and amended, the Plan shall
remain in full force and effect.
IN WITNESS WHEREOF, the Company has caused this Amendment to
be executed by one of its duly authorized officers.
WITNESS KAMAN CORPORATION
Candace A. Clark By: Robert M. Garneau
Its Executive Vice President
Page 22
THIRD AMENDMENT
TO
KAMAN CORPORATION DEFERRED COMPENSATION PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1994)
THIS AMENDMENT made this 15th day of February, 2000, by
Kaman Corporation, hereinafter referred to as the ("Company", for
the purpose of amending certain provisions of the Deferred
Compensation Plan,
WITNESSETH:
WHEREAS, the Company amended and restated the Kaman
Corporation Deferred Compensation Plan (hereinafter referred to
as the "Plan") by written Plan instrument adopted generally
effective as of January 1, 1994, and further amended the same by
a First Amendment thereto effective January 1, 1997 and a Second
Amendment thereto effective September 9, 1997; and
WHEREAS, the Company reserved the right to amend the Plan in
Section 8 thereof; and
WHEREAS, the Company desires to amend the Plan in the
following particulars;
NOW, THEREFORE, the Company hereby amends the Plan as
follows:
1. The first sentence of Section 6.1, as set forth in the
First Amendment, is further amended by the deletion of "1.25%"
where the same shall appear therein and the substitution of
"2.5%" in lieu thereof.
2. The above amendment shall be effective as of January 1,
2000.
3. As hereinabove modified and amended, the Plan as
amended shall remain in full force and effect.
IN WITNESS WHEREOF, the Company has caused this Amendment to
be executed by one of its duly authorized officers.
WITNESS KAMAN CORPORATION
Candace A. Clark By: Robert M. Garneau
Secretary Its Executive Vice President
and CFO
Page 23
FOURTH AMENDMENT
TO
KAMAN CORPORATION DEFERRED COMPENSATION PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1994)
THIS AMENDMENT made this 14th day of November, 2000, by
Kaman Corporation, hereinafter referred to as the "Corporation",
for the purpose of amending certain provisions of the Deferred
Compensation Plan,
WITNESSETH:
WHEREAS, the Corporation amended and restated the Kaman
Corporation Deferred Compensation Plan (hereinafter referred to
as the "Plan") by written Plan instrument adopted generally
effective as of January 1, 1994, and further amended the same by
a First Amendment thereto effective January 1, 1997, a Second
Amendment thereto effective September 9, 1997, and a Third
Amendment thereto effective January 1, 2000; and
WHEREAS, the Corporation reserved the right to amend the
Plan in Section 8 thereof; and
WHEREAS, the Corporation desires to amend the Plan in the
following particulars;
NOW, THEREFORE, the Corporation hereby amends the Plan as
follows:
Page 24
1. Section 4.2 is amended to read as follows, effective
November 14, 2000:
"4.2 Election of Method of Payment. Each Participant,
in connection with his commencement of participation in the
Plan, must elect the manner in which he wishes to have his
Account Balance distributed upon Retirement. As part of this
election, the Participant shall indicate whether he wishes
the lump sum payment to be made or the installment payments
to commence (i) on the first day of the third month
following the date the Participant Retires, or (ii) on the
later of (A) the first day of the third month following the
date the Participant Retires or (B) on the second day of the
January next following the date the Participant Retires. The
election shall be made on the form prescribed by the
Committee. A Participant must make a separate election with
respect to the payment of supplemental deferred compensation
pursuant to Section 6A. A Participant may change his
election to an allowable alternative method of payment any
time or any number of times by submitting a new election to
the Committee. Any such change made prior to November 14,
2000 shall be applicable only with respect to subsequent
Deferral Elections. Any change made on or after November 14,
2000 may apply to all previous deferrals as well; provided,
however, that if the event which triggers the distribution
occurs within one year of any such change made on or after
November 14, 2000, that change shall be totally null and
void. Effective November 14, 2000, an election made for
purposes of the plan established by Section 6A (including
elections made prior to November 14, 2000) shall not be
irrevocable once made; and any change made on or after
November 14, 2000 shall be subject to the same rules as are
prescribed in the previous sentence."
2. Section 8.2 is amended to read as follows, effective
November 14, 2000:
Page 25
"8.2 Amendment. The Board may amend the Plan at any
time, in whole or in part; provided, however, that no
amendment shall be effective to (i) reduce a
Participant's Account Balance in existence on the
effective date of the amendment or the Corporation's
obligation to fund or distribute such Account Balance
in the event of a termination of the Plan, or (ii)
reduce the Crediting Rate on any Account Balance
existing on the effective date of the Amendment. In the
event of a Change in Control, the additional
restrictions an amendment set forth in Section 11.2
shall also apply. The Board may delegate the authority
to amend the Plan to a committee of the Board or to the
Committee."
3. The following new Section 11 is added to the Plan,
effective November 14, 2000:
"Section 11
Change in Control
11.1 Contributions to Rabbi Trust. (a) In the event of
a Change in Control, as defined herein, the Corporation
shall have the obligation to make contributions to the Kaman
Corporation Deferred Compensation Plan Trust Agreement, and
shall make contributions to the Trust in cash, in an amount
sufficient to cause the Trust Fund to equal at least the
amount of all benefits accrued under the Plan for
Participants and beneficiaries thereof as of the Change in
Control. Such contribution shall be made on or before the
occurrence of such Change in Control.
(b) Thereafter, on at least an annual basis (the
"valuation date"), the Corporation shall have the obligation
to make additional contributions to the Kaman Corporation
Deferred Compensation Plan Trust Agreement, and shall make
such additional contributions to the Trust in cash, in an
amount sufficient to cause the Trust Fund to equal at least
the amount of all benefits accrued under the Plan for
Participants and beneficiaries thereof as of such valuation
date. Any such contribution shall be made within ten (10)
days of such valuation date. The first valuation date must
be at or within twelve (12) months of the date the Change in
Control occurred.
Page 26
(c) If the Corporation fails to satisfy any of the
requirements of paragraphs (a) or (b) of this Section 11.1,
the Plan will automatically terminate and notwithstanding
anything to the contrary contained in Section 8.1 or
elsewhere in the Plan, all accrued benefits under the Plan
will be paid out immediately in lump sum payments to
Participants and beneficiaries of deceased Participants.
11.2 Restrictions on Amendment. In the event of a
Change in Control, as defined herein, then in addition to
any other protections provided in Section 8.2, the Plan may
not be amended in any way that would have an adverse effect
upon the calculation or payment of the benefits hereunder of
any current Participant or any Participant receiving
distributions which have accrued as of the date of such
amendment.
11.3 Change in Control Defined. As used herein, the
term "Change in Control" means the first to occur of any of
the following events:
(a) Any "person" (as that term is used in Section 13
and 14(d)(2) of the Securities Exchange Act of 1934
("Exchange Act")) is or becomes the beneficial owner (as
that term is used in Section 13(d) of the Exchange Act),
directly or indirectly, of 50% or more of Kaman
Corporation's capital stock entitled to vote in the election
of directors (a "Change in Ownership"); provided, however,
that a Change in Ownership shall not result in a Change in
Control unless within the two year period following the
particular Change in Ownership there is also a change in the
members of the Board of Directors of Kaman Corporation such
that those persons serving as directors of Kaman Corporation
immediately prior to the Change in Ownership cease to
represent at least one-half of the members of the Board of
Directors of Kaman Corporation.
(b) Any consolidation or merger of Kaman Corporation,
other than a merger of Kaman Corporation in which the
holders of the common stock of Kaman Corporation immediately
prior to the merger hold more than 50% of the common stock
of the surviving corporation immediately after the merger.
Page 27
(c) The shareholders of Kaman Corporation approve any
plan or proposal for the liquidation or dissolution of Kaman
Corporation; or
(d) Substantially all of the assets of Kaman
Corporation are sold or otherwise transferred to parties
that are not within a "controlled group of corporations" (as
defined in Section 1563 of the Internal Revenue Code of
1986, as amended) in which Kaman Corporation is a member.
(e) It is the intent of the Corporation that this
definition be identical to the definition of Change in
Control set forth in the Kaman Corporation Deferred
Compensation Plan Trust Agreement.
4. As hereinabove modified and amended, the Plan as
amended shall remain in full force and effect.
5. This Amendment is effective as of November 14, 2000.
IN WITNESS WHEREOF, the Corporation has caused this
Amendment to be executed by one of its duly authorized officers.
WITNESS KAMAN CORPORATION
Candace A. Clark By: Paul R. Kuhn
Page 28
EXHIBIT 10e
KAMAN CORPORATION
CASH BONUS PLAN
(Amended and Restated as of September 21, 1999)
1. Plan Name, Objective and Administration
a. Plan Name. The name of this Plan is the Kaman
Corporation Cash Bonus Plan (the "Bonus Plan"). This plan
supersedes and replaces that certain Cash Bonus Plan previously
adopted by the Board of Directors of Kaman Corporation (the
"Board").
b. Objective. The objective of the Bonus Plan is to
provide an incentive for certain employees of Kaman Corporation
("Kaman") and its subsidiaries (each subsidiary being referred to
as a "Business Unit" and collectively with Kaman, the "Company")
to perform at levels beyond those ordinarily associated with
competent fulfillment of the roles and responsibilities of their
positions.
c. Administration. The Bonus Plan will be administered
by a committee (the "Plan Administrators") consisting of the
Chief Executive Officer, Chief Financial Officer, and Chief Legal
Officer.
2. Eligibility to Participate.
a. The employees eligible to participate ("Participant" or
collectively, "Participants") in the Bonus Plan for a particular
Award Year shall be determined annually and shall be those
persons designated as Key Management Personnel under the Kaman
Corporation Compensation Administration Plan.
3. Initial Target Bonus Opportunity.
a. Each year, the Plan Administrators assign a target
bonus opportunity percentage (TBO) to each salary grade. A
Participant's initial target bonus opportunity is determined by
multiplying the applicable TBO times the Participant's base
annual salary.
4. Fund Determinations.
a. Initial Target Bonus Pool. The sum of the individual
initial target bonus opportunities determined under Section 3
will determine the Initial Target Bonus Pool.
b. Modified Target Bonus Pool. The Initial Target Bonus
Pool shall be modified by the then estimated Company and
individual Business Unit Performance Ratings for the Award Year.
Kaman will budget an appropriate estimated amount and accrue it
over the course of the Award Year. Following the conclusion of
the Award Year, the Modified Target Bonus Pool will be adjusted
to reflect the actual Company and individual Business Unit
Performance Ratings.
Page 1
c. Maximum Target Bonus Pool. Subject to the provisions
of this Bonus Plan, the Maximum Target Bonus Pool shall not
exceed one and one-half times (150%) of the Initial Target Bonus
Pool.
d. Special Circumstances. The Board shall have the
authority and discretion to evaluate significant or extraordinary
circumstances affecting the business of the Company during an
Award Year and, if the Board deems it appropriate, to (i)
establish a maximum bonus fund which is greater than would
otherwise be authorized under the formula described in this
Section 4; and (ii) use the fund to pay cash bonus awards to some
or all of the Participants as it determines.
5. Award Year.
a. Fiscal Year. The Award Year shall be, and shall
coincide with, Kaman's fiscal year, commencing January 1 of each
year and concluding on December 31 of each year.
b. Circumstances Affecting Participation. Should any
Participant have been employed for less than a full Award Year or
cease to be in the Company's service for any reason prior to the
end of the Award Year, neither the Participant nor, in the case
of death or incompetency, such individual's personal
representatives, heirs, executors, administrators or assigns
shall be entitled to any distribution of a cash bonus award for
the Award Year except and to such extent, if any, as the Plan
Administrators and the Personnel and Compensation Committee of
the Board shall determine to be fair and equitable.
6. Business Unit Performance Objectives.
a. Return on Investment ("ROI") Goals. Prior to the
beginning of each Award Year, each Business Unit will establish
ROI goals for the upcoming Award Year. ROI is generally defined
as operating profit (pre-tax) return on average investment, and
as may be more specifically defined by the Plan Administrators.
Target returns will generally range from 20% to 25% for
manufacturing Business Units and from 17.5% to 20% for non-
manufacturing Business Units. The Plan Administrators shall
determine the classification of each Business Unit as
"manufacturing" or "non-manufacturing".
7. Company and Business Unit Performance Measurement.
a. Applicability. The Modified Target Bonus Opportunity
for a Participant employed by a Business Unit will be determined
solely by the Business Unit Performance Rating.
b. Business Unit Performance Factors. A Business Unit's
Performance Rating for an Award Year is determined by the Plan
Administrators' evaluation of the following Performance Factors:
Page 2
1. Target - the degree to which the Business Unit's earnings
forecast meets Kaman's ROI target returns;
2. Performance v. Forecast - actual performance measured
against the Business Unit's own forecast;
3. Performance v. Target - actual performance compared to the
ROI target returns;
4. Progress (Year to Year) - progress made each year compared
to the prior year toward attaining or exceeding ROI target
returns;
5. Other Factors - the degree to which the Business Unit has
been affected by mitigating, non-financial factors that the Plan
Administrators determine should be taken into consideration in
evaluating overall performance, such as, but not limited to,
undertaking a long-term capital investment program, the unique
nature of the product, and the complexity of operations.
c. Business Unit Performance Rating; Application. The sum
of the Performance Factors for each Business Unit will be
expressed as a percentage (the "Business Unit Performance
Rating") that, together with the weighting described in
subsection (a) shall be applied to the Initial Target Bonus
Opportunities of the Business Unit's Participants, in order to
determine the Modified Target Bonus Opportunity for each such
Participant.
d. Company Performance Rating; Application. The Company
Performance Rating shall be the weighted average of the Business
Unit Performance Ratings. The weighted average shall be
determined with reference to Kaman's average investment in each
Business Unit. The Company Performance Rating shall be
expressed as a percentage that will be applied to the Initial
Target Bonus Opportunities of the Kaman Participants in order to
determine the Modified Target Bonus Opportunity for each such
Participant.
8. Participant Actual Cash Bonus Award Determinations.
a. The Modified Target Bonus Opportunity for each
Participant shall be further modified, positively or negatively,
to reflect the individual's performance. The Plan Administrators
will evaluate each Participant's individual performance in
consultation with his or her supervisory management and based
thereon, shall make recommendations to the Personnel and
Compensation Committee of the Board for Actual Cash Bonus Awards,
which will approve or disapprove the recommendations based upon
its review thereof. The Personnel and Compensation Committee
will evaluate the performance of the Plan Administrators and
Page 3
based thereon shall determine the Actual Cash Bonus Awards for
those individuals. Final approval of all Actual Cash Bonus
Awards shall be made by the Board.
9. Form, Method, and Timing of Payments.
a. All bonus awards are to be paid in cash (i.e., payroll
check) no later than March 15 next following the end of the
applicable Award Year.
10. General.
a. Amendment, Suspension or Termination. On the
recommendation of the Plan Administrators and the Personnel and
Compensation Committee of the Board, the Board may amend,
suspend, or terminate the Bonus Plan, or any part thereof, at any
time, provided however, that no amendment, suspension or
termination shall apply to the payment to any Participant of an
award made prior to the effective date of such amendment,
suspension or termination.
b. Administration; Interpretation. The Plan
Administrators shall be responsible for the interpretation and
administration of the Bonus Plan, provided that the determination
of the Personnel and Compensation Committee of the Board on any
question concerning the interpretation or administration of the
Bonus Plan, or with respect to the officers and employees
participating or entitled to participate in the Bonus Plan, or as
to any payment made or to be made pursuant thereto, shall be
final and conclusive.
c. No Rights to Employment. The Bonus Plan does not
confer upon any employee any right to payment of a cash bonus or
any right to continued employment with Kaman or any Business
Unit, nor does it interfere in any way with the right of Kaman or
a Business Unit to terminate, or amend the terms of, the
employment of any of its employees, at any time, in accordance
with the "at will" employment relationship.
11. Effective Date.
The Effective Date of this Amendment and Restatement is
September 21, 1999. This Amendment and Restatement shall apply
to Award Years beginning on or after January 1, 1999.
Page 4
FIRST AMENDMENT TO
KAMAN CORPORATION
CASH BONUS PLAN
(Amended and Restated as of September 21, 1999)
The Kaman Corporation Cash Bonus Plan is hereby amended by a
First Amendment. The Effective Date of this Amendment is
November 14, 2000. This Amendment shall apply to Award Years
beginning on or after January 1, 2000.
1. Paragraph c of Section 4 is amended by the deletion of
the phrase "one and one-half times (150%)" and the substitution
of the phrase "two times (200%)" in lieu thereof.
2. Section 7(d) (Company Performance Rating; Application)
is hereby deleted in its entirety.
3. The following new Section 7A is added to the Plan,
immediately following Section 7:
7A. Performance Objectives for Corporate Participants.
a. Applicability. The provisions of this Section 7A
shall apply to Corporate Participants, i.e. Participants who
are employed by Kaman, excluding any such employee whose
principal responsibility is management of a Business Unit.
Furthermore, the provisions of Sections 6 and 7 hereof shall
not apply to Corporate Participants.
b. In General. The Modified Target Bonus Opportunity
for Corporate Participants shall be calculated solely based
upon the consolidated performance of the Company, using
growth in earnings per share ("EPS Growth") and return on
total capital ("ROI") as the financial performance goals.
Financial performance is determined by comparing the EPS
Growth and ROI performance of the Company for the applicable
Award Year with comparable numbers for the Standard & Poor's
600 and the Russell 2000 indices averaged over the prior 5
year period. For example, for Award Year 2000, the numbers
for the Company for EPS Growth and ROI will be compared to
comparable numbers for EPS Growth and ROI for the Standard
and Poor's 600 and the Russell 2000 indices averaged for
1995 - 1999. This Section 7A describes the approach to be
followed in determining the Modified Target Bonus
Opportunity for Corporate Participants. Without limiting
the authority provided by Section 10(b), the Plan
Administrators are authorized to prescribe reasonable rules
of operation and to resolve any ambiguities or matters of
interpretation, provided such rules and interpretations are
consistent with the approach provided herein. Furthermore,
Page 1
the Personnel and Compensation Committee is authorized to
include or exclude special items in determining the
Company's EPS Growth and/or ROI performance, provided that
the approach taken is followed consistently from year to
year.
c. EPS Growth. The EPS Growth for the Company for
the Award Year will be calculated. Calculations of average
EPS Growth for the S&P 600 and the Russell 2000 for the
prior five (5) years shall also be made, and shall be
averaged together, giving equal weight to both indices.
Percentile rankings shall be developed. The Personnel and
Compensation Committee shall establish percentages of
initial target bonus opportunity earned for EPS Growth
corresponding to the various percentile rankings. The
percent of the initial target bonus opportunity earned for
EPS Growth for an Award Year shall be determined by the Plan
Administrators based upon the percentile ranking of the
Company.
d. Return on Total Capital. The ROI for the Company
for the Award Year will be calculated. Calculations of
average ROI for the S&P 600 and the Russell 2000 for the
prior five (5) years shall also be made, and shall be
averaged together, giving equal weight to both indices.
Percentile rankings shall be developed. The Personnel and
Compensation Committee shall establish percentages of
initial target bonus opportunity earned for ROI
corresponding to the various percentile rankings. The
percent of the initial target bonus opportunity earned for
ROI for an Award Year shall be determined by the Plan
Administrators based upon the percentile ranking of the
Company.
e. Percentile Calculations. The percentile ranking
of the Company must be at least 25th for EPS Growth in order
to generate a percentage of initial target bonus opportunity
earned for EPS Growth. The percentile ranking of the
Company must be at least 25th for ROI in order to generate a
percentage of initial target bonus opportunity earned for
ROI. If the Company is in at least the 75th percentile for
either category (EPS Growth or ROI), it will generate the
maximum award with respect to that category. The Personnel
and Compensation Committee may, but shall not be required
to, extend the maximum award earned for either EPS Growth or
ROI, from 100% to a larger percentage. In making
calculations and determinations hereunder, in no event will
the 25th percentile for EPS Growth or ROI for either the S&P
600 5 year average or the Russell 2000 5 year average be
considered to be less than zero.
Page 2
f. Computation of Modified Target Bonus Opportunity.
The percentages of initial target bonus opportunity earned
for EPS Growth and ROI, determined in accordance with the
foregoing, shall be added together. This combined
percentage may be greater than 100%. This combined
percentage, when multiplied by a Corporate Participant's
initial target bonus opportunity, shall equal the Corporate
Participant's Modified Target Bonus Opportunity.
4. Except as modified and amended by this document, the
Kaman Corporation Cash Bonus Plan shall remain in full force and
effect.
IN WITNESS WHEREOF, Kaman Corporation hereby executes this
Amendment as of the 14th day of November, 2000.
ATTEST: KAMAN CORPORATION
By
Its
Page 3
EXHIBIT 11
KAMAN CORPORATION AND SUBSIDIARIES
EARNINGS PER COMMON SHARE COMPUTATION
The computations and information required to be furnished in this Exhibit
appear in the Corporation's Annual Report to Shareholders, which is filed
herein as Exhibit 13 to this report, and is incorporated herein by
reference.
Five-Year Selected Financial Data
Kaman Corporation and Subsidiaries
(In thousands except per share amounts, shareholders and employees)
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
OPERATIONS:
Revenues $1,032,326 $ 997,177 $1,018,589 $1,056,289 $ 964,548
Cost of sales 774,264 751,291* 756,057 801,088 721,088
Selling, general
and administrative
expense 202,319 201,807 210,969 207,120 192,058
Restructuring
costs (1,680) 4,132 -- -- --
Operating income 57,423 39,947 51,563 48,081 51,402
Net gain on sale
of businesses -- -- -- 80,351 --
Interest expense
(income), net (1,660) (1,614) (353) 7,894 10,023
Other expense,
net 1,363 1,088 1,558 234 702
Earnings before
income taxes 57,720 40,473 50,358 120,304 40,677
Income taxes 20,800 15,400 20,350 49,800 17,100
Net earnings 36,920 25,073 30,008 70,504 23,577
FINANCIAL POSITION:
Current assets $ 482,000 $ 460,111 $ 516,504 $ 535,304 $ 434,131
Current liabilities 173,342 168,374 228,975 259,525 195,638
Working capital 308,658 291,737 287,529 275,779 238,493
Property, plant
and equipment, net 63,705 64,332 65,773 57,625 76,393
Total assets 553,830 534,203 587,230 598,161 521,736
Long-term debt 24,886 26,546 28,206 29,867 83,940
Shareholders' equity 332,046 316,377 309,494 290,010 228,130
PER SHARE AMOUNTS:
Net earnings per
common share
- basic $ 1.61 $ 1.07 $ 1.28 $ 3.53 $ 1.07
Net earnings per
common share
- diluted 1.57 1.05 1.23 2.86 1.00
Dividends declared
- Series 2 preferred
stock -- -- -- 13.00 13.00
Dividends declared
- common stock .44 .44 .44 .44 .44
Shareholders' equity
- common stock 14.92 13.68 13.07 12.25 9.13
Market price range 17.75 16.13 20.38 20.38 13.38
8.77 10.06 13.00 12.00 9.38
Page 1
Five-Year Selected Financial Data
Kaman Corporation and Subsidiaries
(In thousands except per share amounts, shareholders and employees)
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
AVERAGE COMMON SHARES
OUTSTANDING:
Basic 22,936 23,468 23,407 18,941 18,607
Diluted 24,168 24,810 25,235 25,108 24,709
GENERAL STATISTICS:
Registered shareholders 6,136 6,522 6,921 7,291 7,632
Employees 3,825 4,016 4,276 4,318 5,476
====== ====== ====== ====== ======
* Cost of sales for 1999 includes the write-off of inventory of $8,250
associated with the charge taken in the Industrial Distribution segment.
Page 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Kaman Corporation and Subsidiaries
RESULTS OF OPERATIONS
Consolidated revenues were approximately $1.0 billion for
2000, 1999, and 1998. Each of the corporation's business segments
had increased revenues for 2000. In the Aerospace segment,
helicopter programs and the aircraft structures and components
business were significant revenue contributors.
Results for 1999 compared to 1998 reflect the Aerospace
segment's ongoing performance of Australia and New Zealand SH-2G
contracts, offset by lower revenues in the K-MAX(Registered
Trademark) helicopter program and in the aerospace structures and
components business. Results for 1998 reflect the first full year
of performance
for the Australia and New Zealand SH-2G programs.
Aerospace segment net sales increased 2.7% in 2000 compared to
a decrease of 2.9% in 1999 and an increase of 33% in 1998.
The Aerospace segment's programs include the SH-2G
multi-mission naval helicopter and the K-MAX medium-to-heavy lift
helicopter (which together currently constitute about 60% of
segment sales), aircraft structures subcontract work, and the
manufacture of components such as self-lubricating bearings and
driveline couplings for aircraft applications (currently about 30%
of segment sales) and advanced technology products (currently about
10% of segment sales).
The SH-2G helicopter program (which constitutes the primary
component of the segment's total helicopter program sales)
generally involves retrofit of the corporation's SH-2F helicopters,
previously manufactured for the U.S. Navy (and in storage) to the
SH-2G configuration. The corporation is currently performing this
work under commercial contracts with the governments of Australia
and New Zealand.
The program for New Zealand involves five (5) aircraft, and
support, for the Royal New Zealand Navy. The contract has an
anticipated value of $180 million (US), of which about 84% has now
been recorded as revenue. Deliveries are scheduled to begin during
the first quarter of 2001.
The program for Australia involves eleven (11) helicopters
with support, including a support services facility, for the Royal
Australian Navy. The total contract has an anticipated value of
about $680 million (US). The helicopter production portion of the
Page 3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Kaman Corporation and Subsidiaries
work is valued at $559 million and about 75% of that amount has now
been recorded as revenue. The SH-2G(A) helicopter for Australia
will contain an integrated tactical avionics system ("ITAS") that
will provide the most sophisticated, integrated cockpit and weapons
system available in an intermediate-weight helicopter. Litton
Guidance and Control Systems, a division of Litton Systems, Inc.
and Litton Industries, Inc., has been a major subcontractor for
both the Australia and New Zealand programs, being responsible
for providing avionics system hardware and integration software. In
addition, Litton has been the designer and integrator of the ITAS
system specific to the Australia program. Litton had stated that it
was incurring additional costs to perform its fixed price contract
with the corporation for the Australia program and submitted claims
for such costs to the corporation during 2000. The corporation's
evaluation of the matter was different from Litton's and the
corporation had, in turn, submitted claims to Litton. In an effort
to resolve the entire matter, the parties conducted a mediation in
early February 2001. As a result of that process, the parties
arrived at an agreement in principle, under which the corporation
will make certain milestone payments to Litton as it completes
work on hardware and certain software contemplated under the fixed
price contract and Litton will release its claims against the
corporation. In return, Litton will transfer to the corporation a
software integration laboratory, software and intellectual property
rights and the corporation will release its claims against Litton.
In addition, upon performance of the items described above,
Litton's significant project responsibilities for the Australia
program will end and the corporation will assume responsibility for
several remaining elements of the project. Management has already
begun to work with identified subcontractors (who must be
acceptable to the Australian government) to negotiate contracts to
perform those elements. As these contracts are developed, the
overall impact of resolution of the Litton matter upon costs and
profitability for the Australia program will become better
understood. There will be a delay in delivery of the full ITAS
system to the Australian government, although deliveries of
helicopters without the full ITAS system are scheduled to begin in
the first quarter of 2001 and the corporation is working with the
Royal Australian Navy to coordinate these deliveries.
The corporation continues to provide on-site support in the
Republic of Egypt for ten (10) SH-2G helicopters that were
delivered in 1998 under that country's foreign military sale
agreement with the U.S. Navy.
Management expects that as deliveries to New Zealand and
Australia occur, revenues from SH-2G helicopter programs will
decrease in 2001.
Page 4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Kaman Corporation and Subsidiaries
The corporation continues its marketing program to build and
enhance familiarization with the SH-2G's capabilities among various
governments around the world. This market is highly competitive,
takes time to develop, and is influenced by economic and political
conditions. The corporation continues to actively pursue this
business, including possible further orders from current customers.
The SH-2 is an aircraft that was originally manufactured for
the United States Navy. This is no longer done, however the U.S.
Naval Reserve currently maintains five (5) SH-2G aircraft active in
its fleet. While these aircraft remain in service, the corporation
will continue providing logistics and spare parts support for the
aircraft. The corporation has taken a consignment of the U.S.
Navy's inventory of SH-2 spare parts and has executed a longer term
agreement with the Department of the Navy. The overall objective is
for the corporation to provide further support of U.S. Naval
Reserve requirements while having the ability to utilize certain
inventory for support of the corporation's other SH-2 programs.
During 2000, the corporation sold four (4) K-MAX helicopters
to commercial customers operating in the U.S., Europe and Taiwan,
principally for logging and construction. In December, the
corporation was awarded a $21 million contract from the U.S. State
Department for the purchase of five (5) K-MAX helicopters,
equipment and spare parts to be used in Peru in support of anti-
drug efforts. The corporation recognized revenue from two (2) of
these aircraft in 2000 and the contract is expected to be completed
during the second quarter of 2001. The corporation continues its
efforts to refocus sales development on global market opportunities
in industry and government, including oil and gas exploration,
power line and other utility construction, fire fighting, law
enforcement, and the movement of equipment. The K-MAX program,
which began in late 1994, has experienced significant market
difficulties during the past few years, due in part to conditions
in the commercial logging industry, the aircraft's principal
application to date . Overall, management expects that successful
sales development as well as profitability for the entire program
will take some time to achieve.
The Aerospace segment also performs subcontract work for
certain aerospace manufacturing programs and manufactures various
components, including self-lubricating bearings for use principally
in aircraft. Although the segment experienced some softness in the
market during the year, there are signs that the commercial
aircraft market is strengthening. The corporation has been
pursuing opportunities and won several significant contracts during
2000. Specifically, MD Helicopters selected the corporation to
supply fuselages for its entire line of single-engine helicopters,
Page 5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Kaman Corporation and Subsidiaries
including the MD600N, MD520N, MD530F and MD500E helicopters. This
multi-year program has an estimated potential value of $100
million. MD Helicopters also selected the corporation to supply
composite rotor systems for its MD Explorer helicopter under a
multi-year contract with an estimated potential value, including
options, of $75 million. Boeing, an important customer of the
segment, awarded the corporation a three-year follow-on contract to
supply structural parts for Boeing's line of commercial aircraft,
including fixed trailing edge kits for Boeing 777 and 767 aircraft
and other parts and subassemblies for those aircraft as well as the
737, 747 and 757 aircraft. The Boeing contract has an estimated
potential value of $98 million and contains a three-year option.
The Aerospace segment also produces advanced technology
products, including missile fuzing devices, precision measuring
systems, electromagnetic motors and electro-optic devices. During
2000, the corporation was chosen by Litton Ingalls Shipbuilding as
part of a Newport News Shipbuilding-led team to begin preliminary
design of electric propulsion motors and drive electronics in an
industry competition for the U.S. Navy's proposed next-generation
DD-21 destroyer.
The Aerospace segment is continuing to implement lean-
thinking strategies throughout the organization in order to further
enhance efficiency and reduce costs.
Industrial Distribution segment net sales increased 3.1% in
2000, decreased 1.8% in 1999, and increased 5.3% in 1998. In 2000,
the segment benefited from healthy market conditions and the
internal initiatives implemented early in the year in order to
increase efficiency and service to customers. These initiatives
included consolidation of branch operations, a reorganization of
its sales, marketing and field management structure, and enhanced
inventory controls. Since the segment's customers include nearly
every sector of U.S. industry, this business tends to be influenced
by industrial production levels. Sales in the fourth quarter of
2000 were affected by weakness in industrial production levels
and management is closely monitoring the economic situation.
During 2000, the Industrial Distribution segment implemented its
Internet e-Commerce site which contains a complete catalog of
product offerings (with more than one million industrial products)
and provides an important new channel for both current and new
customers to transact business with the segment.
Music Distribution segment net sales increased 8.6% in 2000, and
decreased by 1.4% in 1999 and 9.5% in 1998. Results in 2000 reflect
improvement in domestic markets and some increase in demand
internationally. The segment is working to improve its market share
for existing brands and is adding products that meet the needs
Page 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Kaman Corporation and Subsidiaries
of its dealer base. During 2000, the segment was selected by Fred
Gretsch Enterprises to assume global sales and marketing
responsibility for Gretsch(Registered Trademark) brand professional
quality drum products, a business that complements the segment's
current drum set offerings.
Total operating profit in 2000 for all the corporation's
business segments was $74.6 million compared to $52.6 million for
1999, due to good earnings performance on the part of each business
segment and to some degree a pretax charge described below relating
to the Industrial Distribution segment. Total operating profit for
all the corporation's business segments in 1998 was $67.2 million.
Operating profit for the Aerospace segment in 2000 was $44.2
million compared to $44.0 million for 1999, the SH-2G helicopter
programs and aircraft structures and components business being the
primary contributors. This performance was offset by a loss in the
K-MAX program which continues to require investment for technical
work and market development. Also included in operating profit for
1999 was a reversal of a reserve in the amount of $2.5 million that
was associated with the Raymond Engineering (now part of Kaman
Aerospace) operation. Operating profit for the Industrial
Distribution segment in 2000 was $22.9 million compared to $2.9
million in 1999, due to healthy market conditions during most of
the year and internal initiatives undertaken early in the year to
improve efficiency and service to customers. The 1999 performance
reflects market weakness in several important customer industries
and a $12.4 million pretax charge taken in the fourth quarter of
that year as a result of a reorganization of operations, including
a closure of certain facilities and the write-off of excess
inventory. Of the charge, $1.7 million was unused and added
back to operating profit for 2000. Operating profit for the Music
Distribution segment in 2000 was $7.4 million compared to $5.6
million a year ago, due to improvements in domestic and
international markets and improved productivity.
Total operating profit in 1999, for all the corporation's
business segments was down 21.8% compared to 1998, due primarily to
the pretax charge in the Industrial Distribution segment described
above. Operating profit for the Aerospace segment increased 1.7%
for 1999, primarily due to the SH-2G helicopter programs and the
aircraft structures and components business, offset by losses
in the K-MAX program which continued to require investment for
technical work and market development and by continuing
Page 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Kaman Corporation and Subsidiaries
difficulties in the segment's electromagnetics business in
developing new markets for niche market products (this operation
was merged with Kaman Aerospace during 1999). Also included in
operating profit for 1999 was the $2.5 million reserve reversal
attributable to Raymond Engineering. Operating profit for the
Industrial Distribution segment was down 84.3% for 1999, primarily
due to the pretax charge noted above and to weakness in certain
customer industries. Operating profit for the Music Distribution
segment was up 5.9% for 1999, primarily due to the domestic market,
which is the larger market for this business.
Net earnings for 2000 were $36.9 million compared to $25.1
million in 1999 and $30.0 million in 1998. Net earnings per common
share were $1.57 per diluted share in 2000 compared to $1.05 per
diluted share in 1999. Net earnings for 2000 were affected
positively by the add-back of $1.7 million of the 1999 charge in
the Industrial Distribution segment that was unused. Net earnings
for 1999 were affected positively by the reversal of a $2.5 million
reserve in the Aerospace segment, described above, and negatively
by the $12.4 million charge in the Industrial Distribution segment
which is also described above.
Net earnings for 1999 were $25.1 million compared to $30.0
million in 1998. Net earnings per common share for 1999 were $1.05
on a diluted basis compared to $1.23 for 1998. Net earnings for
1999 were impacted by the circumstances described in the previous
paragraph. Excluding these adjustments, net earnings per common
share increased to $1.31 on a diluted basis compared to $1.23 per
share in 1998.
For the years ended December 31, 2000 and December 31, 1999,
interest income earned from investment of cash more than offset
interest expense. For 1998, interest expense decreased almost 68%,
primarily due to the application of a substantial portion of
advance payments received for the Australia and New Zealand SH-2G
helicopter programs and a portion of the proceeds from the sale of
the Scientific Services segment to pay bank debt.
The consolidated effective income tax rate was 36.0% for 2000,
38.1% for 1999, and 40.4% for 1998. The decrease in effective
income tax rates is due to the reversal of prior years' tax
accruals as a result of the corporation's ongoing assessment of its
open tax years and lower effective state income tax rates.
Effective December 31, 2000, the corporation adopted Emerging
Issues Task Force Issue No. 00-10, "Accounting for Shipping and
Handling Fees and Costs." Therefore, freight charged to customers
in the Industrial Distribution and Music Distribution segments is
now included in sales rather than as an offset to freight expense.
Page 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Kaman Corporation and Subsidiaries
Specifically, $14.0 million is included in sales for 2000 and prior
year amounts in these segments have been restated to conform to the
current presentation ($12.9 million in 1999 and $12.6 million in
1998).
In June, 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 133,
"Accounting for Derivative Instruments and Hedging Activities."
SFAS 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging
activities. The effective date of SFAS 133 was deferred one year by
SFAS 137 which was issued in 1999. As a result, the corporation
adopted the Standard effective January 1, 2001. Given the
corporation's minimal use of derivatives, initial adoption of
the Standard did not have a material impact on the corporation's
financial position or results of operations.
LIQUIDITY AND CAPITAL RESOURCES
The corporation's cash flow from operations has generally been
sufficient to finance a significant portion of its working capital
and other capital requirements.
For calendar year 2000, operating activities provided cash in
the amount of $8.4 million. Such activities were significantly
impacted by increases in accounts receivable for the Aerospace
segment's SH-2G helicopter programs. Increases in accounts payable
in the Aerospace and Music Distribution businesses offset this
impact to some degree. For the year, cash used in investing
activities was for items such as acquisition of machinery and
computer equipment used in manufacturing and distribution. Cash
used in financing activities was primarily attributable to the
payment of dividends to common shareholders, repurchase of Class A
common stock pursuant to a repurchase program for use in
administration of the corporation's stock plans and general
corporate purposes, and the sinking fund requirement for the
corporation's debentures (described below).
The corporation had approximately $48.2 million in cash and
cash equivalents at December 31, 2000 with an average balance of
$59.3 million for the year. These funds have been invested in high
quality, short-term instruments.
Page 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Kaman Corporation and Subsidiaries
For calendar year 1999, operating activities provided cash in
the amount of $42.5 million. In the Aerospace segment this is
primarily a result of earnings from operations together with the
receipt of additional payments on accounts receivable, offset to
some extent by growth in K-MAX inventories, payments on accounts
payable, and ongoing reductions in the advances on the SH-2G
contracts. In the Industrial Distribution segment, this result
largely reflects reductions in inventories. For 1999, cash used in
investing activities was primarily for the acquisition of machinery
and computer equipment used in manufacturing and distribution. In
addition, cash used by financing activities was primarily
attributable to the payment of dividends to common shareholders and
repurchase of Class A common stock pursuant to a repurchase program
for use in administration of the corporation's stock plans and
general corporate purposes, and the sinking fund requirement for
the corporation's debentures (described below).
For calendar year 1998, operating activities used cash in the
amount of $16.4 million, principally due to increases in accounts
receivable and inventories in the Aerospace segment and payment of
taxes due on the Scientific Services segment sale that occurred in
1997, offset by increases in accounts payable in the Aerospace
segment. During the year, cash used in investing activities was for
items such as acquisition of machinery and computer equipment
used in manufacturing and distribution, while cash provided
by investing activities consisted principally of a post-closing
adjustment to the purchase price of the Scientific Services
segment. Cash used in financing activities was primarily
attributable to the repayment of debt, the payment of dividends to
common shareholders, and repurchase of Class A common stock
pursuant to a repurchase program for use in connection with
administration of the corporation's stock plans and general
corporate purposes, and the sinking fund requirement for the
corporation's debentures (described below).
At December 31, 2000, the corporation had $26.5 million of its
6% convertible subordinated debentures outstanding. The debentures
are convertible into shares of Class A common stock at any time on
or before March 15, 2012 at a conversion price of $23.36 per share,
generally at the option of the holder. Pursuant to a sinking fund
requirement that began March 15, 1997, the corporation redeems
approximately $1.7 million of the outstanding principal of the
debentures each year.
In February, 2000, the corporation's board of directors
approved a replenishment of the corporation's stock repurchase
program, providing for repurchase of an additional 1.4 million
Class A common shares for use in administration of the
corporation's stock plans and for general corporate purposes. In
November, 2000, the corporation's board of directors approved
Page 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Kaman Corporation and Subsidiaries
another replenishment of the stock repurchase program, providing
for the repurchase of an aggregate of 1.4 million Class A common
shares for the same purposes. Approximately 1.1 million shares were
repurchased during 2000.
In November, 2000, the corporation entered into a new
revolving credit agreement to replace the agreement that was
scheduled to expire in January 2001. The new agreement involves
eight financial institutions, many of whom were participants in the
prior agreement and is suited to the corporation's projected
borrowing needs. The new agreement has a maximum unsecured line of
credit of $225 million which consists of a $150 million commitment
for five (5) years and a $75 million commitment under a "364 day"
arrangement which is renewable annually for an additional 364 days.
The most restrictive of the covenants contained in the new
agreement requires the corporation to have EBITDA, as defined, at
least equal to 300% of interest expense and a ratio of consolidated
total indebtedness to total capitalization of not more than 55%.
Letters of credit are generally considered borrowings for
purposes of the new revolving credit agreement as they were under
the prior agreement. The governments of Australia and New Zealand
made advance payments of $104.3 million in connection with their
SH-2G contracts in 1997 and those payments were fully secured by
the corporation through the issuance of irrevocable letters of
credit. At present, the face amount of these letters of credit has
been reduced to $41.2 million in accordance with the terms of the
relevant contracts. Further reductions are anticipated as certain
contract milestones are achieved.
For 2000, average bank borrowings were $2.3 million, compared
to $3.3 million for 1999 and 1998.
As of December 23, 1997, 95,106 shares of the Corporation's
Series 2 preferred stock were converted to Class A common stock
pursuant to a call for partial redemption issued on November 20,
1997. During the first quarter of 1998, pursuant to another
redemption call, the corporation completed the process of
converting virtually all of its Series 2 preferred stock to Class A
common stock with an immaterial number of Series 2 preferred shares
being redeemed by the corporation and settled in cash.
Page 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Kaman Corporation and Subsidiaries
Management believes that the corporation's cash flow from
operations and available unused bank lines of credit under its
revolving credit agreement will be sufficient to finance its
working capital and other capital requirements for the foreseeable
future.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking information relating to the
corporation's business and prospects, including the SH-2G and K-MAX
helicopter programs, aircraft structures and components, the
industrial and music distribution businesses, operating cash flow,
and other matters that involve a number of uncertainties that may
cause actual results to differ materially from expectations. Those
uncertainties include, but are not limited to: 1) political
developments in countries where the corporation intends to do
business; 2) standard government contract provisions permitting
renegotiation of terms and termination for the convenience of the
government; 3) economic and competitive conditions in markets
served by the corporation, including industry consolidation in the
United States and global economic conditions; 4) timing of
satisfactory completion of the Australian SH-2G(A) program; 5) the
timing, degree and scope of market acceptance for products such as
a repetitive lift helicopter; 6) U.S. industrial production levels;
7) currency exchange rates, taxes, laws and regulations, inflation
rates, general business conditions and other factors. Any forward-
looking information should be considered with these factors in
mind.
Page 12
SELECTED QUARTERLY FINANCIAL DATA
Kaman Corporation and Subsidiaries
(In thousands except per share amounts)
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
------- ------- ------- ------- -----
NET SALES:
2000 $263,204 $259,610 $255,160 $253,260 $1,031,234
1999 252,734 249,483 245,247 247,940 995,404
GROSS PROFIT:
2000 $ 64,452 $ 63,482 $ 63,620 $ 65,416 $ 256,970
1999 64,288 63,225 62,155 54,445 244,113
NET EARNINGS:
2000 $ 8,556 $ 9,271 $ 9,535 $ 9,558 $ 36,920
1999 7,273 8,031 8,197 1,572 25,073
PER COMMON SHARE
- - BASIC:
2000 $ .37 $ .40 $ .41 $ .43 $ 1.61
1999 .31 .34 .35 .07 1.07
PER COMMON SHARE
- - DILUTED:
2000 $ .36 $ .39 $ .40 $ .42 $ 1.57
1999 .30 .33 .34 .07 1.05
======== ======== ======== ======== ==========
The quarterly per common share-diluted amounts for 1999 do
not equal the "Total Year" figure due to the calculation being
anti-dilutive in the fourth quarter.
Page 13
CONSOLIDATED BALANCE SHEETS
Kaman Corporation and Subsidiaries
(In thousands except share and per share amounts)
December 31 2000 1999
- ----------- ---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 48,157 $ 76,249
Accounts receivable 212,374 156,173
Inventories 196,148 199,731
Deferred income taxes 18,550 21,100
Other current assets 6,771 6,858
--------- ---------
Total current assets 482,000 460,111
--------- ---------
PROPERTY, PLANT AND EQUIPMENT, NET 63,705 64,332
OTHER ASSETS 8,125 9,760
--------- ---------
TOTAL ASSETS $ 553,830 $ 534,203
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable $ 2,060 $ 2,854
Current portion of long-term debt 1,660 1,660
Accounts payable - trade 58,057 48,760
Accrued salaries and wages 9,824 9,778
Accrued vacations 5,954 6,069
Advances on contracts 41,905 50,243
Other accruals and payables 49,766 45,073
Income taxes payable 4,116 3,937
--------- ---------
Total current liabilities 173,342 168,374
--------- ---------
DEFERRED CREDITS 23,556 22,906
LONG-TERM DEBT, EXCLUDING CURRENT PORTION 24,886 26,546
Page 14
CONSOLIDATED BALANCE SHEETS
Kaman Corporation and Subsidiaries
(In thousands except share and per share amounts)
December 31 2000 1999
- ----------- ---- ----
SHAREHOLDERS' EQUITY:
Capital stock, $1 par value per share:
Preferred stock, authorized
700,000 shares:
Series 2 preferred stock,
6 1/2% cumulative convertible,
authorized 500,000 shares,
none outstanding -- --
Common stock:
Class A, authorized 48,500,000
shares, nonvoting; $.10 per
common share dividend preference;
issued 23,066,260 shares in 2000
and 1999 23,066 23,066
Class B, authorized 1,500,000
shares, voting; issued 667,814
shares in 2000 and 1999 668 668
Additional paid-in capital 77,298 78,422
Retained earnings 251,526 224,702
Unamortized restricted stock awards (1,643) (1,944)
Accumulated other comprehensive
income (loss) (749) (625)
--------- ---------
350,166 324,289
Less 1,485,427 shares and 608,858
shares of Class A common stock in
2000 and 1999, respectively, held
in treasury, at cost (18,120) (7,912)
--------- ---------
Total shareholders' equity 332,046 316,377
--------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 553,830 $ 534,203
========= =========
See accompanying notes to consolidated financial statements.
Page 15
CONSOLIDATED STATEMENTS OF OPERATIONS
Kaman Corporation and Subsidiaries
(In thousands except per share amounts)
Year ended December 31 2000 1999 1998
- ---------------------- ---- ---- ----
REVENUES:
Net sales $1,031,234 $ 995,404 $1,017,124
Other 1,092 1,773 1,465
---------- -------- ----------
1,032,326 997,177 1,018,589
---------- -------- ----------
COSTS AND EXPENSES:
Cost of sales* 774,264 751,291 756,057
Selling, general and
administrative expense 202,319 201,807 210,969
Restructuring costs (1,680) 4,132 --
Interest expense (income), net (1,660) (1,614) (353)
Other expense, net 1,363 1,088 1,558
---------- --------- ----------
974,606 956,704 968,231
---------- --------- ----------
EARNINGS BEFORE INCOME TAXES 57,720 40,473 50,358
INCOME TAXES 20,800 15,400 20,350
---------- --------- ----------
NET EARNINGS $ 36,920 $ 25,073 $ 30,008
=========== ========= ==========
PER SHARE:
Net earnings per common
share:
Basic $ 1.61 $ 1.07 $ 1.28
Diluted 1.57 1.05 1.23
Dividends declared -
common stock .44 .44 .44
=========== ========= ==========
* Cost of sales for 1999 includes the write-off of inventory
of $8,250 associated with the charge taken in the Industrial
Distribution segment.
See accompanying notes to consolidated financial statements.
Page 16
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Kaman Corporation and Subsidiaries
(In thousands except share amounts)
Year ended December 31 2000 1999 1998
- ---------------------- ---- ---- ----
SERIES 2 PREFERRED STOCK:
Balance - beginning of year $ -- $ -- $ 37,691
Shares converted -- -- (37,691)
------- ------- --------
Balance - end of year -- -- --
------- ------- --------
CLASS A COMMON STOCK:
Balance - beginning of year 23,066 23,066 19,936
Shares issued upon conversion -- -- 3,000
Shares issued - other -- -- 130
------- ------- --------
Balance - end of year 23,066 23,066 23,066
------- ------- --------
CLASS B COMMON STOCK 668 668 668
------- ------- --------
ADDITIONAL PAID-IN CAPITAL:
Balance - beginning of year 78,422 78,899 42,876
Conversion of Series 2
preferred stock -- -- 34,691
Employee stock plans (897) (463) 318
Restricted stock awards (227) (14) 1,014
------- ------- --------
Balance - end of year 77,298 78,422 78,899
------- ------- --------
RETAINED EARNINGS:
Balance - beginning of year 224,702 209,920 190,336
Net earnings 36,920 25,073 30,008
Dividends declared -
common stock (10,096) (10,291) (10,424)
-------- -------- --------
Balance - end of year 251,526 224,702 209,920
--------- -------- --------
UNAMORTIZED RESTRICTED STOCK AWARDS:
Balance - beginning of year (1,944) (1,500) (1,147)
Stock awards issued (516) (1,288) (949)
Amortization of stock awards 817 844 596
--------- --------- ---------
Balance - end of year (1,643) (1,944) (1,500)
--------- --------- ---------
Page 17
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Kaman Corporation and Subsidiaries
(In thousands except share amounts)
Year ended December 31 2000 1999 1998
- ---------------------- ---- ---- ----
ACCUMULATED OTHER COMPREHENSIVE
INCOME (LOSS) :
Balance - beginning of year (625) (774) (320)
Foreign currency translation
adjustment* (124) 149 (220)
Reclassification adjustment -- -- (234)
--------- --------- ---------
Balance - end of year (749) (625) (774)
--------- --------- ---------
TREASURY STOCK:
Balance - beginning of year (7,912) (785) (30)
Shares acquired in 2000 -
1,126,888; 1999 - 802,721;
1998 - 131,462 (13,660) (10,596) (2,212)
Shares reissued under
various stock plans 3,452 3,469 1,457
--------- --------- ---------
Balance - end of year (18,120) (7,912) (785)
--------- --------- ---------
TOTAL SHAREHOLDERS' EQUITY $ 332,046 $ 316,377 $ 309,494
========= ========= =========
* Comprehensive income is $36,796, $25,222 and $29,788 for
2000, 1999, and 1998, respectively.
See accompanying notes to consolidated financial statements.
Page 18
CONSOLIDATED STATEMENTS OF CASH FLOWS
Kaman Corporation and Subsidiaries
(In thousands except share amounts)
Year ended December 31 2000 1999 1998
- ---------------------- ---- ---- ----
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net earnings $ 36,920 $ 25,073 $ 30,008
Adjustments to reconcile
net earnings to cash provided
by (used in) operating
activities:
Depreciation and
amortization 11,630 11,998 11,068
Restructuring costs (1,680) 4,132 --
Deferred income taxes (75) (800) 200
Other, net 6,551 3,690 2,805
Changes in current assets
and liabilities, net of
effects of businesses sold:
Accounts receivable (56,201) 52,077 (21,974)
Inventories* 3,583 8,166 (8,412)
Other current assets 87 2,591 768
Accounts payable - trade 9,297 (2,811) 6,307
Advances on contracts (8,338) (51,133) (3,347)
Accrued expenses and
payables 6,400 (8,449) (3,054)
Income taxes payable 179 (1,992) (30,799)
--------- --------- ---------
Cash provided by
(used in) operating
activities 8,353 42,542 (16,430)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of businesses
and other assets 56 538 5,642
Expenditures for property,
plant and equipment (11,044) (10,964) (19,184)
Other, net (963) 194 (478)
--------- --------- ---------
Cash provided by
(used in) investing
activities (11,951) (10,232) (14,020)
--------- --------- ---------
Page 19
CONSOLIDATED STATEMENTS OF CASH FLOWS
Kaman Corporation and Subsidiaries
(In thousands except share amounts)
Year ended December 31 2000 1999 1998
- ---------------------- ---- ---- ----
CASH FLOWS FROM FINANCING
ACTIVITIES:
Changes in notes payable (794) (287) (2,406)
Reduction of long-term debt (1,660) (1,660) (1,661)
Proceeds from exercise of
employee stock plans 1,813 1,704 1,970
Purchases of treasury stock (13,660) (10,596) (2,212)
Dividends paid - common stock (10,193) (10,352) (10,085)
--------- --------- ---------
Cash provided by
(used in) financing
activities (24,494) (21,191) (14,394)
--------- --------- ---------
NET INCREASE (DECREASE)
IN CASH AND CASH EQUIVALENTS (28,092) 11,119 (44,844)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 76,249 65,130 109,974
--------- --------- ---------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 48,157 $ 76,249 $ 65,130
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
During 1998, holders of the corporation's Series 2 preferred
stock converted 188,456 shares into 3,000,174 shares of Class A
common stock.
* The change in inventories for 1999 includes the write-off
of inventory of $8,250 associated with the charge taken in the
Industrial Distribution segment.
See accompanying notes to consolidated financial statements.
Page 20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The accompanying consolidated
financial statements include the accounts of the parent corporation
and its subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
Cash and Cash Equivalents - Surplus funds are invested in cash
equivalents which consist of highly liquid investments with
original maturities of three months or less.
Long-Term Contracts - Revenue Recognition - Sales and estimated
profits under long-term contracts are principally recognized on the
percentage-of-completion method of accounting. This method uses the
ratio that costs incurred bear to estimated total costs, after
giving effect to estimates of costs to complete based upon most
recent information for each contract. Sales and estimated
profits on other contracts are recorded as products are shipped or
services are performed. Reviews of contracts are made periodically
throughout their lives and revisions in profit estimates are
recorded in the accounting period in which the revisions are made.
Any anticipated contract losses are charged to operations when
first indicated.
Inventories - Inventory of merchandise for resale is stated at cost
(using the average costing method) or market, whichever is lower.
Contracts and work in process and finished goods are valued at
production cost represented by material, labor and overhead,
including general and administrative expenses where applicable.
Contracts and work in process and finished goods are not recorded
in excess of net realizable values.
Property, Plant and Equipment - Depreciation of property, plant and
equipment is computed primarily on a straight-line basis over the
estimated useful lives of the assets. At the time of retirement or
disposal, the acquisition cost of the asset and related accumulated
Page 21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
depreciation are eliminated and any gain or loss is credited or
charged against income.
Maintenance and repair items are charged against income as
incurred, whereas renewals and betterments are capitalized and
depreciated.
Research and Development - Research and development costs not
specifically covered by contracts are charged against income as
incurred. Such costs amounted to $5,463 in 2000, $4,877 in 1999,
and $8,534 in 1998.
Income Taxes - Deferred tax assets and liabilities are recognized
for the future tax consequences attributable to temporary
differences between the financial statement carrying amounts of
assets and liabilities and their respective tax bases using enacted
tax rates expected to apply in the years in which temporary
differences are expected to be recovered or settled.
Recent Accounting Pronouncements - Effective December 31, 2000, the
corporation adopted Emerging Issues Task Force Issue No. 00-10,
"Accounting for Shipping and Handling Fees and Costs." Therefore,
freight charged to customers in the Industrial Distribution and
Music Distribution segments is now included in sales rather than as
an offset to freight expense. Freight charged to customers was
$14,036, $12,944 and $12,583 for 2000, 1999 and 1998, respectively.
In addition, any freight expense previously recorded as part of
selling, general and administrative expenses has been reclassified
to cost of sales. All prior amounts have been restated to conform
to the current presentation.
RESTRUCTURING COSTS
In connection with the Industrial Distribution segment's
initiatives to streamline operational structure and increase
efficiency, the segment took a pretax charge of $12,382 ($7,670
after taxes or $.32 per share diluted) in the fourth quarter of
1999. The costs associated with the reorganization of operations,
consolidation of branches and the closure of other facilities
totaled $4,132. The write-off of excess inventory totaled $8,250
and is included in cost of sales.
Of the total restructuring charge, approximately $1,300
related to severance costs for approximately 65 branch operations
and regional management employees that the segment expected to
Page 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
separate from service in 2000. The remaining balance of the
restructuring charge related to costs to close down 10 branches and
three other facilities in 2000.
In the fourth quarter of 2000, the segment determined that the
cost for severance and facilities would be $1,680 lower than
originally planned and as a result, the segment recorded a
favorable change in estimate of that amount. The reduction in
severance costs of $686 is principally due to certain employees
transferring to other positions within the segment, which decreased
the number of people separated from service to 47. The reduction in
facilities costs of $994 is the result of favorable lease
terminations and more rapid exit from the various locations.
ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
December 31 2000 1999
- ----------- ---- ----
Trade receivables, net of allowance
for doubtful accounts of $4,636
in 2000, $4,519 in 1999 $ 72,248 $75,377
U.S. Government contracts:
Billed 6,996 9,938
Recoverable costs and accrued
profit - not billed 22,954 24,611
Commercial and other government contracts:
Billed 33,510 20,419
Recoverable costs and accrued
profit - not billed 76,666 25,828
-------- --------
Total $212,374 $156,173
======== ========
Recoverable costs and accrued profit - not billed represent
costs incurred on contracts which will become billable upon
future deliveries, achievement of specific contract milestones
or completion of engineering and service type contracts.
Management estimates that approximately $1,328 of such costs and
accrued profits at December 31, 2000 will be collected after
one year.
Page 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
INVENTORIES
Inventories are comprised as follows:
December 31 2000 1999
- ----------- ---- ----
Merchandise for resale $ 88,640 $ 89,184
Contracts in process:
U.S. Government 3,723 4,951
Commercial 10,312 7,844
Other work in process (including
certain general stock materials) 51,883 39,192
Finished goods 41,590 58,560
-------- --------
Total $196,148 $199,731
======== ========
Included above in other work in process and finished goods
at December 31, 2000 and 1999 is K-MAX inventory of $78,638
and $87,384, respectively.
The aggregate amounts of general and administrative costs
allocated to contracts in process during 2000, 1999 and 1998
were $53,387, $49,752, and $55,178, respectively.
The estimated amounts of general and administrative costs
remaining in contracts in process at December 31, 2000 and 1999
amount to $2,115, and $1,138, respectively, and are based on the
ratio of such allocated costs to total costs incurred.
Page 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment are recorded at cost and summarized
as follows:
December 31 2000 1999
- ----------- ---- ----
Land $ 6,230 $ 6,212
Buildings 34,637 34,640
Leasehold improvements 14,979 13,605
Machinery, office furniture
and equipment 115,049 112,297
-------- --------
Total 170,895 166,754
Less accumulated depreciation
and amortization 107,190 102,422
-------- --------
Property, plant and equipment, net $ 63,705 $ 64,332
======== ========
CREDIT ARRANGEMENTS -
SHORT-TERM BORROWINGS AND LONG-TERM DEBT
Revolving Credit Agreement - On November 13, 2000, the corporation
entered into a new revolving credit agreement with several banks to
replace its then existing revolving credit agreement. The new
agreement has a maximum unsecured line of credit of $225,000 which
consists of a $150,000 commitment expiring in November 2005 and a
$75,000 commitment under a "364 Day" arrangement which is renewable
annually for an additional 364 days. Outstanding letters of credit
at November 13, 2000, were transferred to the new revolving credit
agreement at that time and are also considered to be indebtedness
under the new agreement.
Short-Term Borrowings - Under its revolving credit agreement, the
corporation has the ability to borrow funds on both a short-term
and long-term basis. The corporation also has arrangements with
other banks, generally to borrow funds on a short-term basis with
interest at current market rates.
Page 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
Short-term borrowings outstanding are as follows:
December 31 2000 1999
- ----------- ---- ----
Revolving credit agreement $ -- $ --
Other credit arrangements 2,060 2,854
------ ------
Total $2,060 $2,854
====== ======
Long-Term Debt - The corporation has long-term debt as follows:
December 31 2000 1999
- ----------- ---- ----
Revolving credit agreement $ -- $ --
Convertible subordinated debentures 26,546 28,206
------- -------
Total 26,546 28,206
Less current portion 1,660 1,660
------- -------
Total excluding current portion $24,886 $26,546
======= =======
Restrictive Covenants - The most restrictive of the covenants
contained in the new revolving credit agreement requires the
corporation to have EBITDA, as defined, at least equal to 300% of
interest expense and a ratio of consolidated total indebtedness to
total capitalization of not more than 55%.
Certain Letters of Credit - The face amounts of irrevocable letters
of credit issued under the corporation's revolving credit agreement
totaled $41,195 and $47,208 at December 31, 2000 and 1999,
respectively.
Convertible Subordinated Debentures - The corporation issued its 6%
convertible subordinated debentures during 1987. The debentures are
convertible into shares of the Class A common stock of Kaman
Page 26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
Corporation at any time on or before March 15, 2012 at a conversion
price of $23.36 per share at the option of the holder unless
previously redeemed by the corporation. Pursuant to a sinking fund
requirement that began March 15, 1997, the corporation redeems
$1,660 of the outstanding principal amount of the debentures
annually. The debentures are subordinated to the claims of senior
debt holders and general creditors. These debentures have a fair
value of $23,095 at December 31, 2000 based upon current market
prices.
Long-Term Debt Annual Maturities - The aggregate amounts of annual
maturities of long-term debt for each of the next five years is
$1,660.
Interest Payments - Cash payments for interest were $2,407, $2,426
and $2,565 for 2000, 1999 and 1998, respectively.
ADVANCES ON CONTRACTS
Advances on contracts include customer advances together with
customer payments and billings associated with the achievement of
certain contract milestones in excess of costs incurred for SH-2G
helicopter contracts. Virtually all of the customer advances
continue to be secured by letters of credit. It is anticipated
that the advances on contracts along with the face amounts of these
letters of credit will be further reduced as various contract
milestones are achieved.
INCOME TAXES
The components of income taxes are as follows:
2000 1999 1998
---- ---- ----
Current:
Federal $ 17,690 $ 13,824 $ 15,650
State 3,185 2,376 4,500
-------- -------- --------
20,875 16,200 20,150
-------- -------- --------
Deferred:
Federal (65) (650) 150
State (10) (150) 50
-------- -------- --------
(75) (800) 200
-------- -------- --------
Total $ 20,800 $ 15,400 $ 20,350
======== ======== ========
Page 27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
The components of the deferred tax assets and deferred tax
liabilities are presented below:
December 31 2000 1999
- ----------- ---- ----
Deferred tax assets:
Long-term contracts $ 1,547 $ 1,474
Deferred employee benefits 14,539 14,309
Inventory 4,435 4,619
Accrued liabilities and other items 6,504 7,698
-------- -------
Total deferred tax assets 27,025 28,100
-------- --------
Deferred tax liabilities:
Depreciation and amortization (6,540) (7,834)
Other items (3,910) (3,766)
-------- --------
Total deferred tax liabilities (10,450) (11,600)
-------- --------
Net deferred tax asset $ 16,575 $ 16,500
======== ========
No valuation allowance has been recorded because the corporation
believes that these deferred tax assets will, more likely than not,
be realized. This determination is based largely upon the
corporation's historical earnings trend as well as its ability to
carryback reversing items within two years to offset taxes paid. In
addition, the corporation has the ability to offset deferred tax
assets against deferred tax liabilities created for such items as
depreciation and amortization.
The provisions for federal income taxes approximate the
amounts computed by applying the U.S. federal income tax rate to
earnings before income taxes after giving effect to state income
taxes. The consolidated effective tax rate was lower due to the
reversal of prior years' tax accruals of $1,534 and $1,250 in
2000 and 1999, respectively, as a result of the corporation's
ongoing assessment of its open tax years. Cash payments for income
taxes were $20,611, $18,204 and $51,590 in 2000, 1999 and 1998,
respectively.
Page 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
PENSION PLAN
The corporation has a non-contributory defined benefit pension plan
covering all of its full-time U.S. employees upon their completion
of hours of service requirements. Benefits under this plan are
generally based upon an employee's years of service and
compensation levels during employment with an offset provision for
social security benefits. It is the corporation's policy to fund
pension costs accrued. Plan assets are invested in a diversified
portfolio consisting of equity and fixed income securities
(including $12,868 of Class A common stock of Kaman Corporation at
December 31, 2000).
The pension plan costs were computed using the projected unit
credit actuarial cost method and include the following components:
2000 1999 1998
---- ---- ----
Service cost for benefits earned
during the year $ 9,528 $ 9,837 $ 8,794
Interest cost on projected
benefit obligation 21,688 20,348 19,648
Expected return on plan assets (29,050) (25,998) (22,757)
Net amortization and deferral (2,635) (1,909) (1,909)
-------- -------- --------
Net pension cost (income) $ (469) $ 2,278 $ 3,776
======== ======== ========
The change in actuarial present value of the projected benefit
obligation is as follows:
December 31 2000 1999
- ----------- ---- ----
Projected benefit obligation at
beginning of year $ 299,228 $ 297,516
Service cost 9,528 9,837
Interest cost 21,688 20,348
Actuarial liability (gain) loss (2,091) (13,442)
Benefit payments (16,080) (15,031)
--------- ---------
Projected benefit obligation at
end of year $ 312,273 $ 299,228
========= =========
Page 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
The actuarial liability gain of $2,091 for 2000 is attributable to
variations from anticipated experience while the actuarial
liability gain of $13,442 for 1999 consists principally of
adjustments for changes in the discount rate and average rate of
increase in compensation levels.
The change in fair value of plan assets is as follows:
December 31 2000 1999
- ----------- ---- ----
Fair value of plan assets at
beginning of year $ 415,358 $ 362,758
Actual return on plan assets 14,796 65,252
Employer contribution 379 2,379
Benefit payments (16,080) (15,031)
--------- ---------
Fair value of plan assets
at end of year $ 414,453 $ 415,358
========= =========
Excess of assets over projected
benefit obligation $ 102,180 $ 116,130
Unrecognized prior service cost (290) (345)
Unrecognized net gain (100,097) (112,987)
Unrecognized net transition asset (1,854) (3,707)
--------- ---------
Accrued pension cost $ 61 $ 909
========= =========
The actuarial assumptions used in determining the funded status of
the pension plan are as follows:
December 31 2000 1999
- ----------- ---- ----
Discount rate 7.5 % 7.5 %
Expected return on plan assets 8.625% 8.625%
Average rate of increase in
compensation levels 4.5 % 4.5 %
===== =====
Page 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
The corporation also has a thrift and retirement plan in which
all employees meeting the eligibility requirements may participate.
Employer matching contributions are currently made to the plan with
respect to a percentage of each participant's pretax contribution.
Effective January 1, 2000, certain participating subsidiaries
increased their employer contributions to fifty cents ($.50), up
from twenty five cents ($.25), for each dollar that a participant
contributed, up to 5% of compensation. Employer contributions to
the plan totaled $3,514, $1,691 and $1,683 in 2000, 1999, and 1998,
respectively.
COMMITMENTS AND CONTINGENCIES
Rent commitments under various leases for office space, warehouse,
land and buildings expire at varying dates from January 2001 to
December 2010. Certain annual rentals are subject to renegotiation,
with certain leases renewable for varying periods. Lease periods
for machinery and equipment vary from 1 to 5 years.
Substantially all real estate taxes, insurance and maintenance
expenses are obligations of the corporation. It is expected that in
the normal course of business, leases that expire will be renewed
or replaced by leases on other properties.
The following future minimum rental payments are required
under operating leases that have initial or remaining noncancelable
lease terms in excess of one year as of December 31, 2000:
2001 $13,295
2002 7,421
2003 3,555
2004 2,356
2005 1,389
Thereafter 2,306
-------
Total $30,322
=======
Lease expense for all operating leases, including leases with
terms of less than one year, amounted to $14,710, $15,413 and
$14,683 for 2000, 1999 and 1998, respectively.
Page 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
From time to time, the corporation is subject to various
claims and suits arising out of the ordinary course of business,
including commercial, employment and environmental matters. While
the ultimate result of all such matters is not presently
determinable, based upon its current knowledge, management does not
expect that their resolution will have a material adverse effect on
the corporation's consolidated financial position.
One such matter involves Litton Guidance and Control Systems,
a division of Litton Systems, Inc. and Litton Industries, Inc.,
which has been a major subcontractor for both the Australia and New
Zealand SH-2G Helicopter programs, being responsible for providing
avionics system hardware and integration software. In addition,
Litton has been the designer and integrator of the ITAS system
specific to the Australia program. Litton had stated that it was
incurring additional costs to perform its fixed price contract
with the corporation for the Australia program and submitted claims
for such costs to the corporation during 2000. The corporation's
evaluation of the matter was different from Litton's and the
corporation had, in turn, submitted claims to Litton. In an effort
to resolve the entire matter, the parties conducted a mediation in
early February 2001. As a result of that process, the parties
arrived at an agreement in principle, under which the corporation
will make certain milestone payments to Litton as it completes work
on hardware and certain software contemplated under the fixed price
contract and Litton will release its claims against the
corporation. In return, Litton will transfer to the corporation a
software integration laboratory, software and intellectual property
rights and the corporation will release its claims against Litton.
In addition, upon performance of the items described above,
Litton's significant project responsibilities for the Australia
program will end and the corporation will assume responsibility
for several remaining elements of the project.
COMPUTATION OF EARNINGS PER COMMON SHARE
The earnings per common share - basic computation is based on the
earnings applicable to common stock divided by the weighted average
number of shares of common stock outstanding for each year.
The earnings per common share - diluted computation includes
the common stock equivalency of options granted to employees under
the Stock Incentive Plan. The earnings per common share - diluted
computation also assumes that at the beginning of the year the 6%
convertible subordinated debentures are converted into Class A
common stock with the resultant reduction in interest costs net of
tax. Excluded from the earnings per common share - diluted
calculation are options granted to employees that are anti-dilutive
based on the average stock price for the year.
Page 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
2000 1999 1998
---- ---- ----
Earnings per common share - basic
Earnings applicable to
common stock $36,920 $25,073 $30,008
======= ======= =======
Weighted average shares
outstanding (000) 22,936 23,468 23,407
======= ======= =======
Earnings per common
share - basic $ 1.61 $ 1.07 $ 1.28
======= ======= =======
Earnings per common share - diluted
Earnings applicable
to common stock $36,920 $25,073 $30,008
Plus:
After-tax interest savings on
convertible debentures 1,031 1,046 1,075
------- ------- -------
Earnings applicable to common
stock assuming conversion $37,951 $26,119 $31,083
======= ======= =======
Weighted average shares
outstanding (000) 22,936 23,468 23,407
Plus shares issuable on:
Conversion of Series 2
preferred stock -- -- 282
Conversion of 6% convertible
debentures 1,151 1,221 1,293
Exercise of dilutive options 81 121 253
------- ------- -------
Weighted average shares
outstanding assuming
conversion (000) 24,168 24,810 25,235
======= ======= =======
Earnings per common
share - diluted $ 1.57 $ 1.05 $ 1.23
======= ======= =======
Page 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
As of December 23, 1997, 95,106 shares of the corporation's Series
2 preferred stock were converted to Class A common stock pursuant
to a call for partial redemption issued on November 20, 1997.
Pursuant to a redemption call on January 8, 1998 for the balance of
the Series 2 preferred stock, the remaining shares were converted
into 3,000,174 shares of Class A common stock as of February 9,
1998. An immaterial amount of Series 2 preferred stock shares were
redeemed by the corporation and settled in cash.
STOCK PLANS
Employees Stock Purchase Plan - The Kaman Corporation Employees
Stock Purchase Plan allows employees to purchase Class A common
stock of the corporation, through payroll deductions, at 85% of the
market value of shares at the time of purchase. The plan provides
for the grant of rights to employees to purchase a maximum of
1,500,000 shares of Class A common stock. There are no charges or
credits to income in connection with the plan. During 2000, 145,485
shares were issued to employees at prices ranging from $7.76 to
$13.60 per share. During 1999, 140,620 shares were issued to
employees at prices ranging from $9.03 to $13.49 per share. During
1998, 115,374 shares were issued to employees at prices
ranging from $12.43 to $16.47 per share. At December 31, 2000,
there were approximately 1,088,000 shares available for offering
under the plan.
Stock Incentive Plan - The corporation maintains a Stock Incentive
Plan which includes a continuation and extension of a predecessor
stock incentive program. The Stock Incentive Plan provides for the
grant of non-statutory stock options, incentive stock options,
restricted stock awards and stock appreciation rights
primarily to officers and other key employees. The number of shares
of Class A common stock reserved for issuance under this plan is
2,210,000 shares.
Stock options are generally granted at prices not less than
the fair market value at the date of grant. Options granted under
the plan generally expire ten years from the date of grant and are
exercisable on a cumulative basis with respect to 20% of the
optioned shares on each of the five anniversaries from the
date of grant. Restricted stock awards are generally granted with
restrictions that lapse at the rate of 20% per year and are
amortized accordingly. Stock appreciation rights generally expire
ten years from the date of grant and are exercisable on a
cumulative basis with respect to 20% of the rights on each of
the five anniversaries from the date of grant. These awards are
subject to forfeiture if a recipient separates from service with
the corporation.
Page 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
Restricted stock awards were made for 62,500 shares at prices
ranging from $10.31 to $10.75 per share in 2000, 91,000 shares at
prices ranging from $11.81 to $14.50 per share in 1999 and 62,500
shares at prices ranging from $17.00 to $19.25 per share in 1998.
At December 31, 2000, there were 161,000 shares remaining subject
to restrictions pursuant to these awards. Stock appreciation
rights were issued for 130,000 shares at $10.31 in 2000, 270,000
shares at prices ranging from $14.13 to $14.50 per share in 1999
and 165,000 shares at $17.00 per share in 1998, to be settled only
for cash. The corporation recorded $1,732 of expense in 2000,
income of $703 in 1999 due to the grant price being higher than the
year end market price and $203 of expense in 1998 for these stock
appreciation rights.
Page 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
Stock option activity is as follows:
Weighted-Average
Exercise
Stock options outstanding: Options Price
- -------------------------- ------- -----
Balance at January 1, 1998 791,080 10.50
Options granted 205,000 17.00
Options exercised (79,845) 8.94
Options cancelled (121,415) 10.56
---------- -----------
Balance at December 31, 1998 794,820 12.32
Options granted 312,800 14.38
Options exercised (26,760) 9.56
Options cancelled (39,850) 14.25
---------- -----------
Balance at December 31, 1999 1,041,010 12.94
Options granted 225,500 10.31
Options exercised (75,360) 8.86
Options cancelled (121,170) 13.65
---------- -----------
Balance at December 31, 2000 1,069,980 12.59
========== ===========
Weighted average contractual life
remaining at December 31, 2000 6.7 years
===========
Range of exercise prices for options $ 8.00- $ 12.51-
outstanding at December 31, 2000 $ 12.50 $ 17.00
---------- -----------
Options outstanding 511,880 558,100
Options exercisable 278,700 193,510
Weighted average contractual remaining
life of options outstanding 5.9 years 7.5 years
Weighted average exercise price:
Options outstanding $ 10.08 $ 14.89
Options exercisable $ 9.88 $ 14.85
========== ===========
As of December 31, 1999 and 1998, there were 438,720 and 349,950
options exercisable, respectively.
Page 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
As permitted by the Statement of Financial Accounting Standards No.
123 (SFAS 123), "Accounting for Stock-Based Compensation," the
corporation has elected to continue following the guidance of
Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," for measurement and recognition of stock-
based transactions with employees. Accordingly, no compensation
cost has been recognized for its stock plans other than for the
restricted stock awards and stock appreciation rights. Under the
disclosure alternative of SFAS 123, the pro forma net earnings and
earnings per common share information presented below includes the
compensation cost of stock options issued to employees based on the
fair value at the grant date and includes compensation cost for the
15% discount offered to participants in the employees stock
purchase plan.
2000 1999 1998
---- ---- ----
Net earnings:
As reported $36,920 $25,073 $30,008
Pro forma 36,288 24,497 29,534
Earnings per common share
- - basic:
As reported 1.61 1.07 1.28
Pro forma 1.58 1.04 1.26
Earnings per common share
- - diluted:
As reported 1.57 1.05 1.23
Pro forma 1.55 1.03 1.22
------- ------- -------
The fair value of each option grant is estimated on the date of
grant by using the Black-Scholes option-pricing model. The
following weighted-average assumptions were used for grants in
2000, 1999, and 1998:
Page 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
2000 1999 1998
---- ---- ----
Expected dividend yield 4.3% 3.1% 2.6%
Expected volatility 38.0% 34.0% 31.0%
Risk-free interest rate 6.5% 5.3% 5.6%
Expected option lives 8 years 8 years 8 years
Per share fair value of
options granted $ 3.35 $ 4.75 $ 5.78
======= ======= =======
SEGMENT INFORMATION
The corporation reports results in three business segments --
Aerospace, Industrial Distribution and Music Distribution.
The Aerospace segment consists primarily of aerospace related
business for global government and commercial markets, including
the retrofit of SH-2 helicopters from the SH-2F to the SH-2G
configuration as well as support services, logistics and spare
parts for that helicopter; manufacture of the K-MAX helicopter
together with spare parts and technical support; subcontract
work consisting of fabrication of aircraft structures; and
production of components, including self-lubricating bearings and
couplings.
The Industrial Distribution segment provides replacement
parts, including bearings, power transmission, motion control and
materials handling components to nearly every sector of industry in
North America, along with industrial engineering support services.
Operations are conducted from many locations across the United
States and British Columbia, Canada. In 1999, the segment took
a pretax charge of $12,382 to write-off inventory and streamline
its operational structure and increase efficiency. During 2000,
$1,680 of this pretax charge was unused and added back to operating
profit.
The Music Distribution segment consists of distribution of
musical instruments and accessories in the U.S. and abroad through
offices in the U.S. and Canada. Music operations also include some
manufacture of guitars.
Page 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
Summarized financial information by business segment is as
follows:
2000 1999 1998
---- ---- ----
Net sales:
Aerospace $ 381,932 $ 371,757 $ 382,697
Industrial Distribution 520,779 505,261 514,379
Music Distribution 128,523 118,386 120,048
---------- ---------- --------
$1,031,234 $ 995,404 $1,017,124
=========== ========= ==========
Operating profit:
Aerospace $ 44,236 $ 44,023 $ 43,304
Industrial Distribution 22,902 2,908 18,550
Music Distribution 7,441 5,627 5,315
---------- --------- ----------
74,579 52,558 67,169
Interest, corporate and other
expense, net (16,859) (12,085) (16,811)
---------- --------- ----------
Earnings before income taxes $ 57,720 $ 40,473 $ 50,358
========== ========= ==========
Identifiable assets:
Aerospace $ 307,762 $ 251,443 $ 294,566
Industrial Distribution 137,297 141,913 160,873
Music Distribution 53,444 53,714 54,577
Corporate 55,327 87,133 77,214
---------- --------- ----------
$ 553,830 $ 534,203 $ 587,230
========== ========= ==========
Capital expenditures:
Aerospace $ 6,110 $ 6,631 $ 11,369
Industrial Distribution 2,947 2,398 3,568
Music Distribution 812 1,773 1,770
Corporate 1,175 162 2,477
--------- -------- ---------
$ 11,044 $ 10,964 $ 19,184
========== ======== =========
Depreciation and amortization:
Aerospace $ 5,875 $ 5,963 $ 5,586
Industrial Distribution 3,138 3,395 3,077
Music Distribution 1,490 1,508 1,317
Corporate 1,127 1,132 1,088
--------- -------- ---------
$ 11,630 $ 11,998 $ 11,068
========== ======== =========
Page 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Kaman Corporation and Subsidiaries
December 31, 2000, 1999 and 1998
(In thousands except share and per share amounts)
2000 1999 1998
---- ---- ----
Geographic information - sales:
United States $ 789,533 $737,023 $ 793,544
Australia/New Zealand 186,537 200,796 158,068
Canada 29,455 28,724 35,438
Europe 12,765 11,590 11,980
Japan 6,862 10,172 9,527
Other 6,082 7,099 8,567
--------- -------- ---------
$1,031,234 $995,404 $1,017,124
========== ======== ==========
Operating profit is total revenues less cost of sales and selling,
general and administrative expense other than general corporate
expense.
Identifiable assets are year-end assets at their respective
net carrying value segregated as to segment and corporate use.
Corporate assets are principally cash and cash equivalents and net
property, plant and equipment.
Net sales by the Aerospace segment made under contracts with
U.S. Government agencies (including sales to foreign governments
through foreign military sales contracts with U.S. Government
agencies) account for $81,519 in 2000, $72,285 in 1999 and $92,539
in 1998.
Sales made by the Aerospace segment under a contract with one
customer were $130,285, $145,006 and $119,222 in 2000, 1999 and
1998, respectively.
Page 40
REPORT OF INDEPENDENT AUDITORS
Kaman Corporation and Subsidiaries
KPMG LLP
Certified Public Accountants
One Financial Plaza
Hartford, Connecticut 06103
THE BOARD OF DIRECTORS AND SHAREHOLDERS
KAMAN CORPORATION:
We have audited the accompanying consolidated balance sheets
of Kaman Corporation and subsidiaries as of December 31, 2000 and
1999, and the related consolidated statements of operations,
changes in shareholders' equity and cash flows for each of the
years in the three year period ended December 31, 2000. These
consolidated financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Kaman Corporation and subsidiaries at December 31, 2000
and 1999 and the results of their operations and their cash flows
for each of the years in the three year period ended December 31,
2000 in conformity with accounting principles generally accepted in
the United States of America.
KPMG LLP
February 5, 2001
Page 41
EXHIBIT 21
KAMAN CORPORATION
SUBSIDIARIES
Following is a list of the Corporation's subsidiaries, each of which
is wholly owned by the Corporation either directly or through another
subsidiary. Second-tier subsidiaries are listed under the name of the
parent subsidiary.
Name State of Incorporation
- ----------------------------------------------------------------------
Registrant: KAMAN CORPORATION Connecticut
Subsidiaries:
Kaman Aerospace Group, Inc. Connecticut
Kaman Aerospace Corporation Delaware
K-MAX Corporation Connecticut
Kaman Aerospace International Corporation Connecticut
Kaman X Corporation Connecticut
Kamatics Corporation Connecticut
Kaman Industrial Technologies Corporation Connecticut
Kaman Industrial Technologies, Ltd. Canada
Kaman Music Corporation Connecticut
KMI Europe, Inc. Delaware
B & J Music Ltd. Canada
Kaman Foreign Sales Corporation Barbados
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
KPMG LLP
Certified Public Accountants
One Financial Plaza
Hartford, Connecticut 06103
The Board of Directors and Shareholders
Kaman Corporation:
We consent to incorporation by reference in the Registration
Statements (Nos. 33-51483 and 33-51485) on Form S-8 of Kaman
Corporation of our reports dated February 5, 2001, relating to the
consolidated balance sheets of Kaman Corporation and subsidiaries
as of December 31, 2000 and 1999 and the related consolidated
statements of operations, changes in shareholders' equity and cash
flows for each of the years in the three-year period ended
December 31, 2000, and the related schedule, which reports appear
or are incorporated by reference in the December 31, 2000 annual
report on Form 10-K of Kaman Corporation.
/s/ KPMG LLP
Hartford, Connecticut
March 15, 2001
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned
does hereby appoint and constitute Paul R. Kuhn and Robert M.
Garneau and each of them as his or her agent and attorney-in-fact
to execute in his or her name, place and stead (whether on behalf
of the undersigned individually or as an officer or director of
Kaman Corporation or otherwise) the Annual Report on Form 10-K of
Kaman Corporation respecting its fiscal year ended December 31,
2000 and any and all amendments thereto and to file such Form 10-K
and any such amendment thereto with the Securities and Exchange
Commission. Each of the said attorneys shall have the power to act
hereunder with or without the other.
IN WITNESS WHEREOF, the undersigned have executed this
instrument this 13th day of March, 2001
Brian E. Barents C. William Kaman, II
E. Reeves Callaway, III Eileen S. Kraus
Frank C. Carlucci Paul R. Kuhn
Laney J. Chouest Hartzel Z. Lebed
John A. DiBiaggio Walter H. Monteith, Jr.
Huntington Hardisty Wanda L. Rogers
Charles H. Kaman
