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Kaman Corporation Form 10-K for Fiscal Year Ended December 31, 2004

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, 2004.

o	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 as specified in its charter)

Connecticut		06-0613548
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

1332 Blue Hills Avenue

Bloomfield, Connecticut 06002

(Address of principal executive offices)

(860) 243-7100

Registrant's telephone number, including area code

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 o

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 herein by reference in Part III of this Form 10-K or any amendment to this Form 10-K x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes x No o

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter.

$291,018,917 as of June 30, 2004.

Indicate the number of shares outstanding of each of the registrant's classes of common stock as of the latest practicable date (January 15, 2005).

Class A Common	22,106,361
Class B Common	667,814

Documents Incorporated Herein By Reference

Portions of the Corporation's 2004 Annual Report to Shareholders are incorporated herein by reference and filed as Exhibit 13 to this report.

Page 1

Kaman Corporation

Index to Form 10-K

Year Ended December 31, 2004

		Page
Part I
Item 1	Business	3
Item 2	Properties	10
Item 3	Legal Proceedings	11
Item 4	Submission of Matters to a Vote of Security Holders	11

Part II
Item 5	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	11
Item 6	Selected Financial Data	12
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	12
Item 8	Financial Statements and Supplementary Data	13
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	13
Item 9A	Controls and Procedures	13
Item 9B	Other Information	13

Part III
Item 10	Directors and Executive Officers of the Registrant	14
Item 11	Executive Compensation	16
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	21
Item 13	Certain Relationships and Related Transactions	24
Item 14	Principal Accounting Fees and Services	24

Part IV
Item 15	Exhibits and Financial Statement Schedules	25

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PART I

ITEM 1. BUSINESS

INTRODUCTION

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.

During 2004, the Aerospace segment's programs were conducted through three principal businesses, consisting of Aircraft Structures and Components, Advanced Technology Products, and Helicopter Programs. The Aircraft Structures and Components business involves commercial and military aircraft programs, including proprietary aircraft bearings, the production of aircraft subassemblies and other parts for commercial airliners as well as the C-17 military transport, and helicopter subcontract work. This business constituted about 46 percent of Aerospace segment sales for the year ended December 31, 2004. The Advanced Technology Products business manufactures products for military and commercial markets, including safe, arm and fuzing devices for a number of major missile and bomb programs; and precision measuring systems, mass memory systems and electro-optic systems. This business constituted approximately 25 percent of segment sales for the year ended December 31, 2004. Helicopter Programs include the SH-2G Super Seasprite multi-mission maritime helicopter and the K-MAX medium-to-heavy external lift helicopter along with spare parts and support. This business constituted about 29 percent of segment sales for the year ended December 31, 2004.

The Industrial Distribution segment is the third largest North American industrial distributor servicing the bearings, electrical/mechanical power transmission, fluid power, motion control and materials handling markets. This segment offers more than 1.5 million items, as well as value-added services to a base of more than 50,000 customers spanning nearly every sector of industry from its geographically broad-based footprint of nearly 200 locations in the United States, Canada, and Mexico.

The Music segment is the largest independent distributor of musical instruments and accessories in the United States, offering more than 15,000 products from several facilities in the United States and Canada to retailers of all sizes worldwide for professional and amateur musicians.

AEROSPACE SEGMENT

This segment had an operating loss of $14.3 million for the year ended December 31, 2004. The loss involved a variety of factors, including principally, lack of new helicopter orders, a negative $18.2 million sales adjustment associated with the MD Helicopters, Inc. ("MDHI") program, lack of sufficient work at the Jacksonville facility, adjustments involving various aspects of the segment's operations, and the delay experienced in achieving final qualification for the JPF fuze program. These items are discussed below.

The corporation undertook a realignment of segment operations in 2004, creating three new operating divisions from existing Aerospace subsidiary operations. The purpose of the realignment was to address differences among the segment's various businesses and the changing markets they serve with the expectation that each division will be in a position to effectively control expenses for the services and functions that they require and achieve optimal customer service. The three new operating divisions are: Aerostructures, responsible for the Aerospace subsidiary's Jacksonville facility and the PlasticFab operation in Wichita; Fuzing, responsible for the Aerospace subsidiary's Middletown, Conn. facility and Orlando (Dayron) operations; and Helicopters, responsible for the Aerospace subsidiary's Bloomfield, Conn. operation. These divisions, together with Kamatics, a separate subsidiary in the Aerospace segment (including RWG Frankenjura-Industrie Flugwerklager GmbH, the corporation's German aircraft bearing manufacturer) constitute the four principal operating elements of the Aerospace segment. For the year 2004, results for the segment have been reported in the traditional format. Beginning with results for the first quarter of 2005, the corporation will separately report sales and discuss business developments for each of the Aerospace subsidiary's divisions and Kamatics.

Aircraft Structures and Components

Aircraft Structures and Components business involves commercial and military aircraft programs, including proprietary aircraft bearings produced and sold by Kamatics, the production of aircraft subassemblies and other parts for commercial airliners as well as the C-17 military transport, and helicopter subcontract work. Operations are generally conducted at the Jacksonville and Wichita facilities, and at Kamatics located in Bloomfield.

The move from Moosup, Conn. to the expanded Jacksonville aircraft subassemblies and parts facility was completed in 2003. Since then, the Jacksonville operation has been addressing the complexities of training new workers and requalifying manufacturing processes at the facility. This, together with an insufficient volume of sales, has resulted in an inability to achieve profitability at this location. This has resulted in overhead and general and administrative expenditures being absorbed at higher rates by active programs and generally lower profitability or losses for these programs. Improving performance metrics and reestablishing levels of customer satisfaction continue to be a focus at the Jacksonville facility and management believes that progress was made during 2004 as the operation completed much of the requalification task and began to win new business. The principal example is that in 2004, Sikorsky Aircraft Corporation awarded the corporation a multi-year contract with an initial two-year value of $27.7 million under which the corporation will manufacture the pilot cockpit for four models of the Sikorsky BLACK HAWK helicopter. The initial work covers approximately 84 units and includes installation of all wiring harnesses, hydraulic assemblies, control pedals and sticks, seat tracks, pneumatic lines, and the composite structure that holds the windscreen. The contract includes follow-on options that, if fully exercised, would include the fabrication of approximately 349 units, and bring the total potential value of the contract to approximately $100.0 million over five years.

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Regarding potential future work, in January 2005, the U.S. government selected an international team that includes Lockheed Martin, Bell Helicopter, and AgustaWestland to provide the next "Marine One" presidential helicopter. As a member of the winning team, the corporation anticipates that it will have the opportunity to share in the work being sourced into the United States.

Management continues to believe that operating conditions at the Jacksonville facility will improve and that the move from Moosup to Jacksonville will ultimately provide a lower cost structure from which to compete.

During 2004, the corporation recorded non-cash adjustments in two programs conducted in the Aircraft Structures and Components operation. The first relates to the corporation's multi-year contracts with MDHI for production of fuselages for the MDHI 500 and 600 series helicopters and composite rotor blades for the MD Explorer helicopter. The corporation stopped work on the program in 2003 due to payment issues with this customer. It had been the corporation's expectation that MDHI would be successful in executing its strategy to improve its then current financial and operational circumstances, however, in the third quarter of 2004 MDHI management indicated that it had not thus far been able to resolve the situation. As a result, the corporation recorded a sales and non-cash pre-tax earnings charge of $20.1 million, consisting of an $18.2 million negative sales adjustment and a $1.9 million addition to the corporation's bad debt reserve, eliminating its investment in the program. The charge is not expected to result in any future cash expenditures. The corporation intends to maintain a business relationship with MDHI should it be successful in improving its financial and operational situation.

The second program is the corporation's contract with Boeing called "Harbour Pointe" covering parts and subassemblies for various Boeing aircraft. This contract has generated a lower than expected order flow and an unprofitable mix of work. In the second quarter of 2004, the corporation determined that future demand for these parts, many of which are associated with programs that Boeing is either cutting back or eliminating, would be lower than previously anticipated. As a result, the corporation recorded a $7.1 million non-cash adjustment, consisting of an estimated accrued contract loss of $4.3 million and a valuation adjustment of $2.8 million associated with portions of the program inventory.

Kamatics manufactures proprietary self-lubricating bearings used in aircraft flight controls, turbine engines and landing gear and produces driveline couplings for helicopters. Market conditions improved during 2004 and the company experienced increased order activity from Boeing, Airbus and other customers in both the commercial and military sectors. While the market for specialized high-performance products is becoming increasingly competitive, Kamatics parts are currently in use in almost every jet-powered aircraft built in North and South America and Europe.

Advanced Technology Products

This business involves manufacture of products for military and commercial markets, including safe, arm and fuzing devices for a number of major missile and bomb programs, and precision measuring systems, mass memory systems and electro-optic systems. Principal operations are conducted at the Middletown, Conn. and Orlando facilities. In conjunction with the realignment of the Aerospace segment during the year, management worked to identify and correct certain internal operational issues that have adversely affected the Orlando facility, which consists of the Dayron operation that was acquired by the corporation in 2002.

A $3.5 million charge was recorded in the fourth quarter of 2004 to provide for two product warranty-related issues. The first involves a supplier's recall of a switch embedded in certain of Dayron's bomb fuzes. The other involves bomb fuzes manufactured according to procedures in place at the time that Dayron was acquired that have been found to contain an incorrect part. Management is currently working with its customers and other parties to resolve these issues appropriately.

Dayron has a contract with the U.S. Air Force for production of the advanced FMU-152A/B joint programmable fuze ("JPF"). This contract, which was the principal motivation for the acquisition of Dayron, achieved final qualification in the second quarter of 2004, about a year later than originally anticipated. The JPF contract has a value of $13.6 million covering low rate initial production and production of Lot 1 that extends through 2005 and includes options for eight additional years of production, which, if fully exercised, would bring the total potential value of the contract to $168.7 million. In the past few months, the Air Force has released production for Lot 2 (including some additional production) for $11.4 million. These releases under the contract, plus development and engineering activity along with special tool and test equipment, bring the total to approximately $36.4 million to date. Work has continued on materials flow and manpower ramp-up to meet production requirements. Now that final qualification has been achieved, the fuze is ready to market to allied militaries. Management expects program profitability to improve as deliveries to the U.S. military ramp up and be further enhanced once orders are received from allied militaries.

Since 2001, the Electro-Optics Development Center ("EODC") portion of this business (located in Tucson, Ariz.) had been teamed with the University of Arizona ("University") to build a 6.5-meter aperture collimator that will be used for testing large optical systems in a vacuum environment. EODC had been working under a $12.8 million fixed-price contract to design and fabricate the structural, electrical, mechanical and software control systems for the collimator. EODC has experienced significant cost growth in its portion of the program which it believes is a result of changes in the scope of the project, and in April 2004 submitted a claim in the amount of $6.3 million to the University to recover these additional costs. Having been unable to satisfactorily resolve this matter, the company filed suit against the University on September 17, 2004 to recover these costs and stopped production on the program. The University has since filed a counterclaim and the litigation process is ongoing. Although additional efforts were made to resolve the matter out of court, it became clear during the fourth quarter that EODC is not likely to complete the project and therefore, a $3.5 million sales and pre-tax earnings adjustment was recorded in the fourth quarter to reflect the contract's curtailed status.

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Helicopter Programs

The segment's helicopter products include the SH-2G Super Seasprite multi-mission maritime helicopter and the K-MAX medium-to-heavy external lift helicopter along with spare parts and support. Operations are conducted at the Bloomfield facility. The vast majority of 2004 activity was attributable to the SH-2G helicopter.

SH-2G programs have generally consisted of retrofit of the corporation's SH-2F helicopters to the SH-2G configuration or refurbishment of existing SH-2G helicopters. The SH-2, including its F and G configurations, was originally manufactured for the U.S. Navy. The SH-2G aircraft is currently in service with the Egyptian Air Force and the New Zealand and Polish navies.

Work continues on the SH-2G(A) program for Australia which involves eleven helicopters with support, including a support services facility, for the Royal Australian Navy ("RAN"). The total contract has a current anticipated value of about $738 million. The helicopter production portion of the program is valued at approximately $605 million, essentially all of which has been recorded as sales through December 31, 2004. This contract has been in a loss position since 2002, due to increases in anticipated costs to complete the program. The in-service support center portion of the program has a current anticipated value of about $133 million of which about 31 percent has been recorded as sales through December 31, 2004.

Production of the eleven SH-2G(A) aircraft for the program is essentially complete. The aircraft lack the full Integrated Tactical Avionics System ("ITAS") software and progress is continuing on this element of the program. The Australian government provisionally accepted three additional helicopters during the fourth quarter of 2004, bringing the number of aircraft now provisionally accepted to eight. The corporation currently expects to deliver the first fully operational aircraft by mid-year 2005, to be followed by the final acceptance process for all eleven aircraft. Due to the complexity of the integration process and test results that indicate additional work to be done, the corporation added $5.5 million to its accrued contract loss during the year, $3.8 million of which was added in the fourth quarter, to reflect the current estimate of costs to complete the program.

The corporation maintains a consignment of the U.S. Navy's inventory of SH-2 spare parts under a multi-year agreement that provides the corporation the ability to utilize certain inventory for support of its SH-2G programs.

Although no retrofit orders have been awarded since 1997, the corporation continues to market the SH-2G helicopter on an international basis, recognizing that this market is highly competitive and heavily influenced by economic and political conditions.

The corporation continues to support K-MAX helicopters that are operating with customers, which number less than thirty. At December 31, 2004, K-MAX inventories included approximately $20.1 million in K-MAX spare parts and $9.8 million in aircraft owned by the corporation. As previously reported, the corporation wrote down the value of existing aircraft, excess spare parts, and equipment inventories in 2002, following a market evaluation of the K-MAX helicopter program, which had experienced several years of market difficulties.

Management is currently in discussions with the U.S. Naval Air Systems Command ("NAVAIR") regarding the potential purchase of a portion of the Bloomfield campus that the Aerospace subsidiary currently leases from NAVAIR and has operated for several decades for the principal purpose of performing U.S. government contracts. Management believes that ownership of the facility, which is currently utilized for flight and ground test operations and limited parts manufacturing, can be helpful to its ongoing operations. As part of its decision-making process, the company is discussing with NAVAIR and the General Services Administration the method that would be used to calculate the purchase price of the facility, which could possibly include the company undertaking some level of the environmental remediation that may be legally required in the event of a sale of the property. In applying the guidance of Statement of Financial Accounting Standards No. 5 "Accounting for Contingencies", the corporation's management has concluded that, while not probable, it is reasonably possible that the corporation may agree to undertake some level of environmental remediation, should the facility be sold to the corporation. Based on the discussions so far, however, it is not possible to determine the magnitude, if any, of such a potential undertaking. Therefore, no liability for environmental remediation at the facility has been recorded to date.

The corporation is also working with government and environmental authorities to prepare the closed Moosup facility for eventual sale.

INDUSTRIAL DISTRIBUTION SEGMENT

This segment experienced significant increases in sales and operating profits for the year ended December 31, 2004. These results reflect the combined effects of an improved industrial economy, a full year of benefit from the acquisition of Industrial Supplies, Inc., and market share gains as well as the impact of cost control, process improvement, and the company’s “lean-thinking” practices that were implemented during the difficult economic times of the past few years. Vendor incentives in the form of rebates (i.e., vendors provide inventory purchase rebates to distributors at specified volume-purchasing levels), while still important, represented a smaller percentage of operating profits than it has in recent years because of the increase in sales.

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This segment is the third largest North American industrial distributor servicing the bearings, electrical/mechanical power transmission, fluid power, motion control and materials handling markets. Products and value-added services are offered to a customer base of more than 50,000 companies representing a highly diversified cross section of North American industry. Because of its diversified customer base, segment performance tends to track the U.S. Industrial Production Index and is affected to a large extent by the overall business climate for its customer industries, including plant capacity utilization levels and the effect of pricing spikes and/or interruptions for basic commodities such as steel and oil. A weaker U.S. dollar is currently stimulating customers' export sales and the demand from China for raw materials continues to benefit the segment's locations that participate in mining, steel and cement production markets.

Success in the segment's markets requires a combination of competitive pricing (with pricing pressures more pronounced with respect to larger customers) and value-added services that save customers money while helping them become more efficient and productive. Management believes that this segment has the appropriate platforms, including technology, systems management and customer and supplier relationships to compete effectively in the evolving and highly fragmented industrial distribution industry. The segment's size and scale of operations allow it to attract highly skilled personnel and realize internal operating efficiencies, and also to take advantage of vendor incentives, which tend to favor the larger distributors. Management believes that the segment's resources and product knowledge enable it to offer a comprehensive product line and invest in sophisticated inventory management and control systems while its position in the industry enhances its ability to rebound during economic recoveries and grow through acquisitions.

Over the past several years, large companies have increasingly centralized their purchasing, focusing on suppliers that can service all of their plant locations across a wide geographic area. To meet these requirements, the segment has expanded its geographic presence through the selective opening of new branches and acquisitions in key markets of the upper midwest, the south, and Mexico. The segment's footprint of nearly 200 locations now covers 70 of the top 100 industrial markets in the United States. Management's goal is to grow the Industrial Distribution segment by expanding into additional areas that enhance its ability to compete for large regional and national customer accounts. In the third quarter of 2004, the company acquired Brivsa de Mexico, a small distributor located in Monterrey, thus expanding the company's ability to serve its national account customers with operations in this important Mexican industrial center.

In addition to providing timely access to power transmission, motion control, material handling electrical components, bearings, accessories and services, the segment seeks to assist customers in identifying opportunities to utilize these maintenance and production items in ways that help them increase efficiency, reduce downtime, and lower production costs. In part, this explains the segment's approach to competing for large regional and national multi-location accounts, which now constitute about 20 percent of annual sales. During 2004, the segment implemented new national account business with Tyco International (US), Inc. Phelps Dodge, James Hardie and Quad Graphics. In addition, the segment was named a national distributor for IMI Norgren, Inc., providing an additional major line to sell through the segment's entire U.S. branch network. In the fourth quarter of the year, Procter & Gamble, already a customer of the segment, selected the segment as its bearings and power transmission supplier in Canada, complementing the segment's U.S. business with this large national account customer. A new location in Toronto was opened to serve that account while providing a platform for expansion in the area.

From 1997 to the present, a total of forty-three legal proceedings (relating to approximately eighty-five individuals) involving alleged asbestos-containing products have been instituted against the corporation, virtually all of which have involved this segment. In all proceedings, the corporation was one of many unrelated defendants. The proceedings involving this segment relate primarily to products allegedly supplied to the U.S. Navy by a company from which the segment acquired assets, more than twenty-five years ago. Management believes that it has good defenses to these claims. Nine of the proceedings were resolved with no payments being made. Six proceedings are outstanding at this time. The remainder of the proceedings have been settled for an aggregate amount that is immaterial, with contribution from insurance carriers (who address these matters on a case-by-case basis with no assurance of contribution in any potential future case). Because of the immaterial nature of these settlements in each instance and in the aggregate, no reserve has so far been required. At this time, management continues to believe that its overall exposure to liability in these matters is de minimis in nature.

MUSIC SEGMENT

The segment experienced increased sales and operating profits for the year ended December 31, 2004. There was good demand for the segment's lines of branded musical instruments and accessories and a reasonably good Christmas season for the retail sector. Sales for both the guitar and percussion lines were up for the year along with continued growth in sales to both large and small retailers with such products as Gretsch^® drums and Sabian^® cymbals. The Ovation LX series premier guitar was also introduced in 2004 and has received high acceptance ratings from players and positive reviews in the national music trade press.

The segment's array of fretted instruments includes premier and proprietary products, such as the Ovation^® and Hamer^® guitars, and Takamine^® guitars under an exclusive distribution agreement. The segment has also significantly extended its line of percussion products and accessories over the past few years, augmenting its CB^®, Toca^® and Gibraltar^® lines to include an exclusive distribution agreement with Gretsch^® drums and acquiring Latin Percussion and Genz Benz (an amplification equipment manufacturer).

The business is affected by consumer sentiment as retailers gauge how aggressively to stock for the holiday selling season, and by actual consumer spending levels. It is also affected by changes in consumers' musical tastes and interests. Consequently, a principal strategy of the segment over the past several years has been to add popular premier branded products that can be brought to market exclusively by the segment.

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An important industry trend of the past several years has been consolidation in the retail market with the growth in the very large retail chains. The concentration of sales to these large customers is increasing and along with this is an increase in pricing pressures. Management believes that it has built upon its competitive advantages by creating and maintaining industry-leading distribution systems and the computerized business-to-business capabilities that large national retailers increasingly require, while continuing to support its traditional base of small retailers.

Technology is an important part of the segment's business. The segment's customers have access to kmconline.com, an industry-leading e-commerce site for expedited direct ordering of merchandise that helps customers cut costs and improve efficiencies through electronic exchange of information. Approximately 25% of sales orders were received and transmitted to the warehouse for shipment with little or no manual intervention in 2004, more than double the number of the prior year.

While the vast majority of the segment's sales are to North American customers, the segment has been building its presence in European, Asian and Australian markets as well. In addition, to ensure high quality while offering value at different price points, the segment's products are manufactured both in the United States and abroad.

*Sabian and Gretsch are registered trademarks of other organizations.

AVAILABLE INFORMATION

The corporation's website address is www.kaman.com. The corporation's Annual Report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K as well as amendments to those reports filed or furnished pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, together with Section 16 insider beneficial stock ownership reports, are available free of charge through the website as soon as reasonably practicable after they are electronically filed or furnished to the Securities and Exchange Commission. The information contained in the corporation's website is not intended to be incorporated into this Annual Report on Form 10-K.

The Corporation's Governance Principles and all Board of Directors' standing Committee Charters (including Audit, Corporate Governance, Personnel & Compensation and Finance) are also located on the corporation's website.

FINANCIAL INFORMATION

Information concerning each segment's performance for the last three fiscal years is included in the Segment Information section of the corporation's 2004 Annual Report to Shareholders (Exhibit 13 to this Form 10-K) and such section is incorporated herein 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
	2002	2003	2004
Aerospace	31.3%	28.1%	25.4%
Industrial Distribution	54.2%	55.7%	58.5%
Music	14.5%	16.2%	16.1%
Total	100.0%	100.0%	100.0%

RESEARCH AND DEVELOPMENT EXPENDITURES

Aerospace segment government sponsored research expenditures, included in cost of sales, were $5.9 million in 2004; $4.9 million in 2003, and $9.8 million in 2002. Independent research and development expenditures, included in selling, general and administrative expenses, were $4.0 million in 2004, $4.3 million in 2003 and $5.4 million in 2002.

BACKLOG

Program backlog of the Aerospace segment was approximately $309.6 million at December 31, 2004, $322.4 million at December 31, 2003 and $370.0 million at December 31, 2002.

The corporation anticipates that approximately 73% of its backlog at the end of 2004 will be performed in 2005. Approximately 46.9% of the backlog at the end of 2004 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.

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GOVERNMENT CONTRACTS

During 2004, approximately 93.3% 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 U.S. 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, some of which are substantially larger and have greater financial and other resources.

The corporation competes for its aircraft structures and components business on the basis of price, product quality, and the reputation of the corporation. Competitors for this business include small machine shops and offshore manufacturing facilities. The corporation competes for its specialty aircraft bearing business based on quality and proprietary knowledge; product endurance; and special performance characteristics. The corporation competes for its advanced technology fuzing business primarily on the basis of technical competence, product quality, and to some extent, price; and also on the basis of its experience as a developer and manufacturer of such products for particular applications and the availability of facilities, equipment and personnel. The corporation competes for its helicopter programs business 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 and equipment to perform contracts. The corporation's K-MAX helicopter competes with military surplus helicopters and other used commercial helicopters employed for lifting, as well as with alternative methods of meeting lifting requirements. 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 customers.

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. In addition, the corporation faces competition from low-cost industrial products manufactured off shore and introduced into the U.S. market from a number of sources. Competitive forces have intensified due to the increasing importance of large national and North American accounts and the increasing use of independent purchasing consultants retained by such national accounts. In addition, competitive forces have increased due to the increased use of supplier “partnering” agreements or other contractual arrangements providing the customer with a variety of cost savings opportunities.

Music 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 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 and exclusive distribution agreements with other manufacturers of recognized trademarked products.

FORWARD-LOOKING STATEMENTS

This report may contain forward-looking information relating to the corporation's business and prospects, including aerostructures and helicopter subcontract programs and components, advanced technology products, the SH-2G and K-MAX helicopter programs, the industrial distribution and music 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) the successful conclusion of competitions for government programs and thereafter contract negotiations with government authorities, both foreign and domestic; 2) political conditions in countries where the corporation does, or intends to do, business; 3) standard government contract provisions permitting renegotiation of terms and termination for the convenience of the government; 4) economic and competitive conditions in markets served by the corporation, particularly defense, commercial aviation, industrial production and consumer market for music products, as well as global economic conditions; 5) satisfactory completion of the Australian SH-2G(A)program, including successful completion and integration of the full ITAS software; 6) receipt and successful execution of production orders for the JPF U.S. government contract (including the exercise of all contract options as such exercise has been assumed in connection with goodwill impairment evaluations) and receipt of orders from allied militaries; 7) satisfactory resolution of the EODC/University of Arizona litigation; 8) achievement of enhanced business base in the Aerospace segment in order to better absorb overhead and general and administrative expenses; 9) satisfactory results of negotiations with NAVAIR concerning the corporation's leased facility in Bloomfield, Conn.; 10) profitable integration of acquired businesses into the corporation's operations; 11) changes in supplier sales or vendor incentive policies; 12) the effect of price increases or decreases; 13) pension plan assumptions and future contributions; 14) continued availability of raw materials in adequate supplies; 15) satisfactory resolution of the supplier switch and incorrect part issues attributable to Dayron suppliers and others; 16) cost growth in connection with potential environmental remediation activities related to the Bloomfield and Moosup facilities; and 17) successful replacement of the corporation's revolving credit facility upon its expiration; and 18) currency exchange rates, taxes, changes in laws and regulations, interest rates, inflation rates, general business conditions and other factors. Any forward-looking information provided in this report should be considered with these factors in mind. The corporation assumes no obligation to update any forward-looking statements contained in this report.

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EMPLOYEES

As of December 31, 2004, the Corporation employed 3,581 individuals throughout its business segments and corporate headquarters as follows:

Aerospace		1,597
Industrial Distribution		1,483
Music		411
Corporate Headquarters		90

PATENTS AND TRADEMARKS

The corporation holds patents and trademarks reflecting functional, design and technical accomplishments in a wide range of areas covering both basic production of certain products, including aerospace products and music instruments, as well as highly specialized devices and advanced technology products in defense related and commercial fields.

Although the corporation's patents and trademarks enhance its competitive position, management believes that none of such patents or trademarks 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 2023.

These patents are allocated among the corporation's business segments as follows:

	U.S. PATENTS		FOREIGN PATENTS
Segment	Issued	Pending	Issued	Pending

Aerospace	41	3	7	7
Industrial Distribution	0	0	0	0
Music	30	1	29	21
Total	71	4	36	28

Registered trademarks of Kaman Corporation include Adamas, Applause, Hamer, KAflex, KAron, K-MAX, Magic Lantern, Ovation, LP, Genz Benz, Takamine and Latin Percussion. In all, the corporation maintains 348 U.S. and foreign trademarks with 62 applications pending, most of which relate to music products in the Music segment.

COMPLIANCE WITH ENVIRONMENTAL PROTECTION LAWS

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, was previously reported by the corporation in its Form 10-K for the year ended December 31, 2003, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004. In addition, the Corporation engages in various environmental studies and investigations and, where legally required to do so, undertakes appropriate remedial actions at facilities owned or controlled by it, either voluntarily or in connection with the acquisition, disposal or operation of such facilities. Such studies and investigations are ongoing at the Corporation's Bloomfield, and Moosup, Conn. facilities with voluntary remediation activities also being undertaken at the Moosup facility. The corporation is cooperating with the U.S. Government in the environmental studies required to be undertaken by the Government in connection with the Government’s proposed sale of the Bloomfield facility to the corporation discussed in Item 2 (Properties). In connection with such studies various testing of air, soil and water on or in the vicinity of the Corporation’s facilities have been conducted in 2004 and are continuing. 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. One such matter involved the Barkhamsted Landfill site located in New Hartford, Connecticut (the "Barkhamsted site") which the corporation has previously reported in its report on Form 10-Q for the quarter ended June 30, 2002, Document No. 0000054381-02-000022 filed with the Securities and Exchange Commission on August 14, 2002, and on Form 10-K for the year-ended December 31, 2003, Document No. 0000054381-04-000032, filed with the Securities and Exchange Commission on March 5, 2004.

With respect to all such matters which may currently be pending and which relate to its Bloomfield and Moosup, Conn. facilities, the corporation has been unable to determine, based on its current knowledge, the ultimate effect resolution of such matters may have on the future financial condition of the corporation. With respect to all other matters which may currently be pending, in the opinion of management, based on the corporation’s analysis of relevant facts and circumstances, compliance with relevant environmental protection laws is not likely to have a material adverse effect upon the capital expenditures, earnings or competitive position of the corporation.

Page 9

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 insurance policies issued during the periods applicable to each site.

FOREIGN SALES

Thirteen and six-tenths percent (13.6%) of the sales of the corporation made in 2004 were to customers located outside the United States. In 2004, the corporation continued its efforts to develop international markets for its products and foreign sales (including sales for export). The corporation also continued to perform work under contracts with the Commonwealth of Australia for the supply of retrofit SH-2G helicopters. Additional information required by this item is included in the Segment Information section of the corporation's 2004 Annual Report to Shareholders (Exhibit 13 to this Form 10-K) which section is incorporated herein by reference.

ITEM 2. PROPERTIES

The corporation occupies approximately 3,574 thousand square feet of space throughout the United States and in Australia, Canada, Germany and Mexico, distributed as follows:

SEGMENT	SQUARE FEET
	(in thousands as of 12/31/04)
Aerospace	1,810
Industrial Distribution	1,233
Music	491
Corporate Headquarters	40
Total	3,574

The Aerospace segment's principal facilities are located in Connecticut, Florida, and Kansas; other facilities, including offices and smaller manufacturing and assembly operations are located in Arizona, and in Dachsbach, Germany. 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 an initial five (5) year term which is presently scheduled to expire in March 2005. The corporation has entered into discussions with the Government for the purchase of the facility. The Government has indicated its intention to renew the lease for an additional one year term, pending such purchase discussions. The corporation occupies 133,000 square feet of space in Wichita, Kansas under a lease agreement with a current term scheduled to expire in March, 2005. The corporation is engaged in discussions to extend the term of such lease. The corporation also occupies a facility in Nowra, New South Wales, Australia under a contract expiring September 30, 2012. Approximately 500,000 square feet of space listed above is attributable to the Aerospace segment facility located in Moosup (the "Moosup facility") which was closed in 2003.

The Industrial Distribution segment's facilities are located throughout the United States with principal facilities located in Alabama, California, Connecticut, New York, Indiana, Kentucky and Utah. Additional Industrial Distribution segment facilities are located in Mexico, Ontario and British Columbia, Canada. These facilities consist principally of regional distribution centers, branches and office space.

The Music segment's facilities in the United States are located in Arizona, Connecticut, California, New Jersey and Tennessee. An additional Music facility is located in Ontario, Canada. These facilities consist principally of regional distribution centers and office space. Also included are facilities used for manufacturing music instruments.

The corporation occupies a 40 thousand square foot Corporate headquarters building in Bloomfield, Connecticut.

The corporation's facilities are generally suitable and adequate to serve its purposes. Substantially all of its facilities are currently fully utilized with the exception of certain properties in the Aerospace segment. Within the Aerospace segment, the Moosup manufacturing facility is now closed for operation and awaiting disposition, while the expanded Jacksonville facility and the helicopter program-related space at the Bloomfield facility are currently underutilized due to the factors discussed in Item 1 of this report.

The corporation is a lessee of many of its facilities, particularly in the Industrial Distribution segment.

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ITEM 3. LEGAL PROCEEDINGS

Certain legal proceedings which relate to specific segments of the corporation are discussed in Item 1 (Business) in the narrative for such segments. The corporation believes that none of the foregoing legal proceedings, either individually or in the aggregate is, or will be, material to the business of the corporation. Other legal proceedings or enforcement actions relating to environmental matters are discussed in the section entitled Compliance with Environmental Protection Laws.

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 2004.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET FOR CLASS A COMMON STOCK

The Class A Common Stock of the corporation is traded on the NASDAQ Stock Market under the symbol "KAMNA". The corporation's Class B Common Stock is not actively traded.

HOLDERS OF COMMON STOCK

As of February 2, 2005, there were approximately 5,091 holders of record of the corporation's Class A Common Stock and 72 holders of record of the corporation's Class B Common Stock.

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., c/o Mellon Investor Services, P.O. Box 3338, South Hackensack, NJ 07606-1938.

QUARTERLY CLASS A COMMON STOCK INFORMATION
		High		Low		Close		Dividend
2004
First	$	15.23	$	12.57	$	14.88	$	.11
Second		15.49		10.91		13.99		.11
Third		13.96		10.92		11.94		.11
Fourth		12.93		10.71		12.65		.11
2003							$	.11
First	$	13.24	$	9.40	$	9.78		.11
Second		11.80		9.42		11.49		.11
Third		14.91		10.72		12.96		.11
Fourth		14.29		11.67		12.73		.11

QUARTERLY DEBENTURE INFORMATION (6% Conv. Subordinated)
		High		Low		Close
2003
First	$	92.00	$	92.00	$	92.00
Second		95.00		94.75		94.75
Third		99.00		99.00		99.00
Fourth		- - - - - - -		No Trades*		- - - - - - -

*Effective January 29, 2004, this security was delisted from the NASDAQ Small Cap Market.

NASDAQ market quotations reflect inter-dealer prices, without retail mark-up, mark-down, or commission and may not necessarily represent actual transactions.

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ISSUER PURCHASES OF EQUITY SECURITIES

In November 2000, the corporation's board of directors approved a replenishment of the corporation's stock repurchase program providing for repurchase of an aggregate of 1.4 million Class A common shares for use in administration of the corporation's stock plans and for general corporate purposes.

The following table provides information about purchases of Class A common shares by the corporation during the three months ended December 31, 2004:

			Total Number
			of Shares	Maximum
			Purchased as	Number of
	Total		Part of	Shares That
	Number	Average	Publicly	May Yet Be
	of Shares	Price Paid	Announced	Purchased Under
Period	Purchased	per Share	Plan	the Plan

10/01/04-
10/31/04	-	-	269,607	1,130,393

11/01/04-
11/30/04	-	-	269,607	1,130,393

12/01/04-
12/31/04	-	-	269,607	1,130,393

ITEM 6. SELECTED FINANCIAL DATA

Information required by this item is included in the Five-Year Selected Financial Data section of the corporation's 2004 Annual Report to Shareholders (Exhibit 13 to this Form 10-K) and that section 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 Management's Discussion and Analysis section of the corporation's 2004 Annual Report to Shareholders (Exhibit 13 to this Form 10-K) and that section is incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The corporation has various market risk exposures that arise from its normal business operations, including interest rates, currency exchange rates, and supplier price changes as well as other factors described in the Forward-Looking Statements section of this report.

The corporation's exposure to interest rate risk relates primarily to its financial instruments, and is managed principally through the use of long-term debt obligations with fixed interest rates and revolving credit facilities with interest at current market rates. Fees and interest rates charged on revolving credit commitments and borrowings are based upon borrowing levels, market interest rates, and the corporation's credit rating. Letters of credit are generally considered borrowings for purposes of the corporation's revolving credit agreement.

The corporation's primary interest rate risk is derived from its outstanding variable-rate revolving credit facilities. Changes in market interest rates or the corporation's credit rating would impact the interest rates on these facilities. There was some increase in the corporation's exposure to this market risk factor during 2004, as average bank borrowings increased principally for working capital purposes and acquisitions during the past few years. For the year ended December 31, 2004, the result of a hypothetical 1% increase in the average cost of the corporation's revolving credit facilities would have reduced earnings before income taxes by approximately $500,000.

The corporation has manufacturing, sales, and distribution facilities in certain locations throughout the world and makes investments and conducts business transactions denominated in various currencies, including the U.S. dollar, the European Euro, the Japanese yen, the Canadian dollar, the Mexican peso, and the Australian dollar. The corporation's exposure to currency exchange rates is managed at the corporate and subsidiary operations levels as an integral part of the business. Management believes that any near-term changes in currency exchange rates would not materially affect the consolidated financial position, results of operations or cash flows of the corporation.

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The corporation's exposure to supplier sales policies and price changes relates primarily to its distribution businesses and the corporation seeks to manage this risk through its procurement policies and maintenance of favorable relationships with suppliers. Except for vendor incentives, management believes that any near-term changes in supplier sales policies and price changes would not materially affect the consolidated financial position, results of operations or cash flows of the corporation. Vendor incentives have been an important contributor to the Industrial Distribution segment's operating profits. While management believes that vendors will continue to offer incentives, there can be no assurance that the segment will continue to receive comparable amounts in the future.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information required by this item is included in the Consolidated Financial Statements, Notes to Consolidated Financial Statements and Selected Quarterly Financial Data sections of the corporation's 2004 Annual Report to Shareholders (Exhibit 13 to this Form 10-K) and such sections are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

(a) Disclosure Controls and Procedures. Under the supervision and with the participation of the corporation’s management, including the Chief Executive Officer and the Chief Financial Officer, the corporation has carried out an evaluation of the effectiveness of the design and operation of the corporation’s disclosure controls and procedures. The evaluation was undertaken acknowledging that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of December 31, 2004, the disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports the corporation files and submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported as and when required.

(b) Internal Control Over Financial Reporting. The corporation’s management is responsible for establishing and maintaining an adequate system of internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Management has assessed the effectiveness of the corporation’s internal control over financial reporting as of December 31, 2004. In making its assessment, management has utilized the criteria set forth by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission in Internal Control—Integrated Framework. Management concluded that based on its assessment, the corporation’s internal control over financial reporting was effective as of December 31, 2004. Management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2004 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report, which is included in Exhibit 13 to this report.

(c) Changes in Internal Control Over Financial Reporting. Management of the corporation has evaluated, with the participation of the corporation’s Chief Executive Officer and Chief Financial Officer, changes in the corporation's internal controls over financial reporting during the fourth quarter of 2004. During the fourth quarter, the corporation corrected its method of accounting for certain leases, specifically the accounting for escalating rent, rent holidays and upfront payments for tenant allowances and implemented additional policies and procedures to strengthen its controls over proper accounting for leases. The corporation also re-evaluated its Aerospace subsidiary’s percentage of completion revenue recognition policy, specifically over accounting for claims. For one of its long-term contracts, the corporation corrected the way it accounts for contract claims and implemented additional policies, during the fourth quarter, which provided guidance regarding the proper treatment for accounting for claims in the contract’s estimate to complete. In addition, the corporation also corrected its accounting for certain adjustments to group insurance, and during the fourth quarter has implemented additional reconciliation and review procedures to strengthen its controls over accounting for a product liability reserve relating to the Industrial Distribution segment and its accounting for sales allowances in its Music segment.

During the fourth quarter of 2004 management made other improvements to the corporation’s internal control over financial reporting. These changes did not materially affect the corporation’s internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

Page 13

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, 61, has been a Director since 1996. He is the retired President and Chief Executive Officer of Galaxy Aerospace Corp. Prior to that he was President and Chief Executive Officer of Learjet, Inc. He is also a director of Eclipse Aviation Corp., The Nordam Group, CAE, Inc. and the Aerion Corp.

T. Jack Cahill	Mr. Cahill, 56, has been President of Kaman Industrial Technologies Corporation, a subsidiary of the corporation, since 1993. He has held various positions with the corporation since 1975.

E. Reeves Callaway III	Mr. Callaway, 57, has been a Director since 1995. He is the Founder and Chief Executive Officer of The Callaway Companies, an engineering services firm.

Candace A. Clark	Ms. Clark, 50, 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.

John A. DiBiaggio	Dr. DiBiaggio, 72, has been a Director since 1984. He is now President Emeritus of Tufts University, having served as President until the fall of 2001. Prior to that he was President and Chief Executive Officer of Michigan State University.

Ronald M. Galla	Mr. Galla, 53, 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, 60, 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.

Edwin A. Huston	Mr. Huston, 66, has been a director since 2002. Mr. Huston is the retired Vice Chairman of Ryder System, Incorporated, an international logistics and transportation solutions company. He served as Senior Executive Vice President-Finance and Chief Financial Officer of that company from 1986 to 1999. Mr. Huston is a director of Unisys Corporation, Answerthink, Inc. and Enterasys Networks, Inc.

Russell H. Jones	Mr. Jones, 60, has been Senior Vice President, Chief Investment Officer, and Treasurer since 2003. Prior to that he served as Vice President and Treasurer. He has held various positions with the Corporation since 1973.

C. William Kaman II	Mr. Kaman, 53, has been a Director since 1992 and is Vice Chairman of the board of directors of the corporation. He is the retired Chairman and CEO of AirKaman of Jacksonville, Inc., an entity no longer affiliated with the corporation. Previously he was Executive Vice President of the corporation and President of Kaman Music Corporation, a subsidiary of the corporation.

John C. Kornegay	Mr. Kornegay, 55, has been President of Kamatics Corporation, a subsidiary of the corporation, since 1999. He has held various positions with Kamatics Corporation since 1988.

Eileen S. Kraus	Ms. Kraus, 66, has been a Director since 1995. As the current Chairman of the Corporate Governance Committee, she also serves as the Board's Lead Director. She is the retired Chairman of Fleet Bank Connecticut. She is a director of The Stanley Works and Rogers Corporation.

Paul R. Kuhn	Mr. Kuhn, 63, has been a Director since 1999. He has been President and Chief Executive Officer of the corporation since August 1999 and was appointed to the additional position of Chairman in 2001.

Walter H. Monteith, Jr.	Mr. Monteith, 74, has been a Director since 1987. He is the retired Chairman of Southern New England Telecommunications Corporation.

Wanda L. Rogers	Mrs. Rogers, 72, has been a Director since 1991. She is President and Chief Executive Officer of Rogers Helicopters, Inc., President of Sco-Matt, Inc., Vice President of Heavy Lift Helicopters and President of Whirlwide, Inc. d/b/a TGR Helicopters. She is also a director of both Central Valley Community Bancorp and its subsidiary, Central Valley Community Bank.

Robert H. Saunders, Jr.	Mr. Saunders, 63, has been President of Kaman Music Corporation, a subsidiary of the corporation, since 1998. He has held various positions with the corporation since 1995.

Richard J. Swift	Mr. Swift, 60, has been a director since 2002. Mr. Swift is currently Chairman of the Financial Accounting Standards Advisory Council. In 2001, he retired as Chairman, President and Chief Executive Officer of Foster Wheeler Ltd., a provider of design, engineering, construction, and other services, a position he held since 1994. Mr. Swift is a director of Ingersoll-Rand Company Ltd., Public Service Enterprise Group Incorporated and Hubbell Incorporated.

Page 14

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 2005 Annual Meeting of the Shareholders and Directors of the corporation.

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 2004.

Board Independence

A majority of the corporation's Board of Directors are "independent" directors as required and defined by NASDAQ Stock Market, Inc. Rule 4350(c)(1) and Rule 4200(a)(15). The Board of Directors has determined that the following persons are independent: Brian E. Barents, E. Reeves Callaway III, John A. DiBiaggio, Edwin A. Huston, C. William Kaman II, Eileen S. Kraus, Walter H. Monteith, Jr., Richard J. Swift, and Wanda Lee Rogers.

Audit Committee Financial Expert(s)

The Corporation's Board of Directors has for many years maintained an Audit Committee which is currently composed of the following directors: Walter H. Monteith, Jr., Chairman, E. Reeves Callaway III, Eileen S. Kraus, and Richard J. Swift.

The corporation's Board of Directors has determined that the Chairman of the Audit Committee, Walter H. Monteith, Jr., and Richard J. Swift are "audit committee financial experts" within the meaning of Item 401(h) of Regulation S-K. In addition, each member of the Audit Committee is "independent" as that term is used in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act.

Code of Business Conduct

The corporation has for several years maintained a Code of Business Conduct applicable to all of its employees and the Board of Directors. This Code of Business Conduct is also applicable to the corporation's principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. The Code of Business Conduct was filed as Exhibit 14 to the corporation’s report on Form 10-K for 2003 filed with the Securities and Exchange Commission on March 5, 2004 as Document No. 0000054381-04-000032.

Page 15

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)
					AWARDS
Name and Principal Position	Year	Salary ($)	Bonus ($)	Other Annual Comp. ($)	RSA ($) ⁽¹⁾	Options/SARS (#Shares)	LTIP Payouts ($)	All Other comp. ($) ⁽²⁾
Paul R. Kuhn	2004	850,000	0	----	0	0 / 0	----	18,065
Chairman, President	2003	800,000	384,000	----	138,600	0 / 90,000	----	14,227
& Chief Executive Officer	2002	800,000	240,000	----	174,000	21,000 / 52,000	----	13,496

Robert M. Garneau	2004	500,000	0	----	0	0 / 0	----	12,124
Executive Vice President	2003	470,000	169,000	----	77,715	0 / 51,000	----	13,516
& Chief Financial Officer	2002	470,000	118,000	----	101,500	12,000 / 29,000	----	23,655

T. Jack Cahill	2004	310,000	310,000	----	0	0 / 0	----	17,047
President, Kaman Industrial	2003	295,000	74,000	----	44,550	0 / 29,200	----	16,431
Technologies Corporation	2002	280,000	56,000	----	58,000	7,000 / 18,000	----	12,230

Robert H. Saunders, Jr.	2004	270,000	270,000	----	0	0 / 0	----	22,196
President, Kaman Music	2003	255,000	198,000	----	58,410	0 / 38,300	----	18,083
Corporation	2002	245,000	196,000	----	50,750	6,000 / 15,000	----	18,383

John C. Kornegay	2004	217,000	165,000	----	0	0 / 0	----	34,258
President, Kamatics	2003	209,000	154,000	----	31,680	0 / 20,700	----	20,305
Corporation	2002	203,000	36,000	----	72,500	13,500 / 0	----	20,529

¹As of December 31, 2004, aggregate restricted stock holdings and their year-end value were: P.R. Kuhn, 27,800 shares valued at $351,670; R.M. Garneau, 15,980 shares valued at $202,147; T.J. Cahill, 9,200 shares valued at $116,380; R.H. Saunders Jr., 9,620 shares valued at $121,693; and J.C. Kornegay, 9,360 shares valued at $118,404. 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, 0 shares in 2004, 14,000 shares in 2003, and 12,000 shares in 2002; R.M. Garneau, 0 shares in 2004, 7,850 shares in 2003, and 7,000 shares in 2002; T.J. Cahill, 0 shares in 2004, 4,500 shares in 2003 and 4,000 shares in 2002; R.H. Saunders, Jr., 0 shares in 2004, 5,900 shares in 2003 and 3,500 shares in 2002; and J.C. Kornegay, 0 shares in 2004, 3,200 shares in 2003, and 5,000 shares in 2002. Dividends are paid on the restricted stock.

²Amounts reported in this column consist of: P.R. Kuhn, $8,717 - Senior executive life insurance program (“Executive Life”), $5,125 - employer matching contributions to the Kaman Corporation Thrift and Retirement Plan (the “Thrift Plan employer match”), $4,223 - medical expense reimbursement program (“MERP”); R.M. Garneau, $8,071 - Executive Life, $851 - Officer 162 Insurance Program, $5,125 - Thrift Plan employer match, $1,077 - MERP; T.J. Cahill, $3,776 - Executive Life, $5,125 - - Thrift Plan employer match, $2,721 - MERP, $5,425 - supplemental employer contributions; R.H. Saunders, Jr., $8,021 - Executive Life, $5,125 - Thrift Plan employer match, $5,000 - MERP, $4,050 - all supplemental employer contributions under the Kaman Corporation Deferred Compensation Plan (“supplemental employer contributions”); J.C. Kornegay, $3,035 - Executive Life, $5,125 - Thrift Plan employer match, $4,766 - MERP, $21,332 - supplemental employer contributions.

Page 16

C) OPTION/SAR GRANTS IN THE LAST FISCAL YEAR:

Individual Grants				Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term*
(a)	(b)	(c)	(d)	(e)	(f)	(g)
Name	Options/ SARs** Granted (#)	% of Total Options/SARs** Granted to Employees in Fiscal Year	Exercise or Base Price ($/share)	Expiration Date	5% ($)	10% ($)
P. R. Kuhn	0 / 0	0.00% / 0.00%	$ 0	--	$ 0.00	$ 0.00
R. M. Garneau	0 / 0	0.00% / 0.00%	$ 0	--	$ 0.00	$ 0.00
T. J. Cahill	0 / 0	0.00% / 0.00%	$ 0	--	$ 0.00	$ 0.00
R. H. Saunders, Jr.	0 / 0	0.00% / 0.00%	$ 0	--	$ 0.00	$ 0.00
J. C. Kornegay	0 / 0	0.00% / 0.00%	$ 0	--	$ 0.00	$ 0.00

*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.

**Outstanding 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 generally vest at the rate of 20% per year, beginning one year after the grant date provided the recipient remains an employee of the corporation or a subsidiary.

D) STOCK OPTION EXERCISES IN THE LAST FISCAL YEAR, AND FISCAL YEAR-END OPTION VALUES.

Name	Shares acquired on Exercise (#)	Value realized	Number of Shares underlying Unexercised options at FY-end (#) exercisable/unexercisable	Value of Unexercised in-the-money options* at FY-end ($) exercisable/unexercisable
(a)	(b)	(c)	(d)	(e)
P. R. Kuhn	none	-	139,400 / 26,600	$37,400/ $9,350
R. M. Garneau	none	-	46,800 / 14,200	$18,700/ $4,675
T. J. Cahill	none	-	53,500 / 9,000	$41,258/ $2,805
R. H. Saunders, Jr.	none	-	26,000 / 8,000	$11,220/ $2,805
J. C. Kornegay	1,000	$ 2,122.50	21,000 / 12,500	$10,488/ $2,338

*Difference between the 12/31/04 Fair Market Value and the exercise price.

STOCK APPRECIATION RIGHT ("SAR") EXERCISES IN THE LAST FISCAL YEAR AND YEAR-END SAR VALUES.

Name	SARs acquired on Exercise (#)	Value realized	Number of Unexercised SARs at FY-end (#) exercisable/unexercisable	Value of Unexercised in-the-money SARs* at FY-end ($) exercisable/unexercisable
(a)	(b)	(c)	(d)	(e)
P. R. Kuhn	none	none	297,800 / 139,200	$143,000/ $221,375
R. M. Garneau	none	none	137,300 / 80,200	$ 84,150/ $126,225
T. J. Cahill	none	none	109,540 / 45,160	$ 44,110/ $ 71,253
R. H. Saunders, Jr.	none	none	35,660 / 47,640	$ 39,760/ $ 88,935
J. C. Kornegay	none	none	4,140 / 16,560	$ 11,385/ $ 45,540

*Difference between the 12/31/04 Fair Market Value and the exercise price(s).

Page 17

E) LONG TERM INCENTIVE PLAN AWARDS:

	Estimated future payouts under non-stock price-based plans ⁽¹⁾
(a)	(b)	(c)	(d)	(e)	(f)
Name	Number of shares, Units or Other Rights (#)	Performance or other period until maturaton or payment	Threshold ($)	Target ($)	Maximum ($)
P.R. Kuhn	0	36 months	0	935,000	1,870,000
R.M. Garneau	0	36 months	0	420,000	840,000
T.J.Cahill	0	36 months	0	211,250	422,500
R. H. Saunders,Jr	0	36 months	0	183,300	366,600
J. C. Kornegay	0	36 months	0	136,200	272,460

⁽¹⁾ Payouts will generally be made in cash, however, up to one-third of the payment may be made in stock at the discretion of the Kaman Corporation Board of Directors’ Personnel and Compensation Committee. The executive may request the Committee to approve a greater percentage of the payout to be made in stock.

The Long Term Incentive Program (LTIP) was added to the corporation’s Stock Incentive Plan features effective with calendar year 2003. A new three-year performance cycle was approved at the November 2004 meeting of the Personnel and Compensation Committee and each of the executive officers shown in the above chart was identified as a participant in that performance cycle. Each participant is assigned a target award expressed as a percent of base salary in effect at the start of the performance period. These target percentages of base salary will vary with organizational level. The LTIP awards are based on the corporation’s relative performance against the Russell 2000 companies. The LTIP compares Kaman performance on average return on total capital (40%), growth in earnings per share (40%), and total return to shareholders (20%) over the performance period, which is generally three years. The LTIP will pay target awards if company performance is at the 50^th percentile of the Russell 2000. If relative performance is below the 25^th percentile of the Russell 2000, no award will be paid. Should the company’s relative performance be at the 75^th percentile or higher, the maximum award of 200% of target will be paid.

F) PENSION AND OTHER DEFINED BENEFIT DISCLOSURE. The following table shows estimated annual benefits payable at normal retirement age to participants in the corporation's Pension Plan at various compensation and years of service levels using the benefit formula applicable to Kaman Corporation. Pension benefits are calculated based on 60 percent of the average of the highest five consecutive years of "covered compensation" out of the final ten years of employment less 50 percent of the primary social security benefit, reduced proportionately for years of service less than 30 years:

Page 18

	PENSION PLAN TABLE Years of Credited Service
Remuneration*	15	20	25	30	35
125,000	32,148	43,078	53,366	64,296	64,296
150,000	39,648	53,128	65,816	79,296	79,296
175,000	47,148	63,178	78,266	94,296	94,296
200,000	54,648	73,228	90,716	109,296	109,296
225,000	62,148	83,278	103,166	124,296	124,296
250,000	69,648	93,328	115,616	139,296	139,296
300,000	84,648	113,428	140,516	169,296	169,296
350,000	99,648	133,528	165,416	199,296	199,296
400,000	114,648	153,628	190,316	229,296	229,296
450,000	129,648	173,728	215,216	259,296	259,296
500,000	144,648	193,828	240,116	289,296	289,296
750,000	219,648	294,328	364,616	439,296	439,296
1,000,000	294,648	394,828	489,116	589,296	589,296
1,250,000	369,648	495,328	613,616	739,296	739,296
1,500,000	444,648	595,828	738,116	889,296	889,296
1,750,000	519,648	696,328	862,616	1,039,296	1,039,296
2,000,000	594,648	796,828	987,116	1,189,296	1,189,296

*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 includes 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, stock appreciation rights, and the cash out of employee stock options. Salary and bonus amounts for the named executive officers for 2004 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. Kuhn: $1,543,996; Mr. Garneau: $775,673; Mr. Cahill: $447,152.

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 Pension Plan and as of December 31, 2004, had the number of years of credited service indicated: Mr. Kuhn - 13.0; Mr. Garneau - 23.5 years; Mr. Cahill - 29.7 years; Mr. Kornegay - - 16.7 years; Mr. Saunders - 9.0 years.

Benefits are computed generally in accordance with the benefit formula described above.

G) COMPENSATION OF DIRECTORS. Effective January 1, 2004, non-employee members of the Board of Directors of the corporation receive an annual retainer of $35,000, a fee of $1,500 for attending each meeting of the Board and a fee of $1,200 for attendance at each meeting of a standing Committee of the Board. From time to time, the Board of Directors may establish a special committee for a limited time and purpose. Fees paid for service of special committees are generally consistent with fees paid for service on standing committees, except that special committee members may also receive compensation for service beyond attendance at meetings, most recently at the rate of $1,000 per day up to a maximum equal to the current annual retainer applicable to the Board of Directors. The Chairman of each committee receives a fee of $1,600 for attending each meeting of that Committee and an annual retainer as follows: Audit, $7,500; Personnel and Compensation, $5,000; Finance and Governance, each $3,000. The Vice Chairman is entitled to a fee of $3,000 per meeting when serving as the Chairman. Such fees may be received on a deferred basis. The Lead Director receives an annual retainer equal to $5,000. In addition, each non-employee director will receive a Restricted Stock Award for 1,000 shares (issued pursuant to the corporation's 2003 Stock Incentive Plan), providing for immediate vesting upon election as a director at the corporation's 2005 Annual Meeting of Shareholders.

H) EMPLOYMENT CONTRACTS AND TERMINATION, SEVERANCE AND CHANGE OF CONTROL ARRANGEMENTS. The corporation has entered into Employment Agreements and Change in Control Agreements with certain executive officers, amendments to which were filed as exhibits to the corporation’s Form 10-K for 2003, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004. These agreements 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. Form 10-Q filed August 14, 2001 (Document No. 0000054381-01-500011 and Form 10-Q filed November 14, 2001 (Document No. 0000054381-01-500016. The employment agreements do not have a fixed term and 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 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.

Page 19

Except as disclosed in Item 13, and except as described above or in connection with the corporation's Pension Plan, Supplemental Employees' Retirement Plan, 2003 Stock Incentive Plan, non-qualified Deferred Compensation Plan, and the senior executive life insurance program, the corporation has no other employment contract, plan or arrangement with respect to any named executive officer 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.

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: Brian E. Barents, E. Reeves Callaway III, Edwin A. Huston, Wanda L. Rogers, and Richard J. Swift.

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 20

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.

Following is information about persons known to the corporation to be beneficial owners of more than five percent (5%) of the Corporation's voting securities. Ownership is direct unless otherwise noted.

Class of Common Stock	Name and Address Beneficial Owner	Number of Shares Beneficially Owned as of February 1, 2005	Percentage of Class
Class B	Charles H. Kaman Kaman Corporation 1332 Blue Hills Avenue Bloomfield, CT 06002	354,976 (1), (2), (3)	53.15%

	Holders of Mr. Kaman's (2) Power of Attorney c/o John C. Yavis, Jr. Murtha Cullina LLP CityPlace I 185 Asylum Street Hartford, CT 06105

Class B	Newgate Associates Limited Partnership c/o Murtha Cullina, LLP CityPlace I 185 Asylum Street Hartford, CT 06105	103,201 (3), (4)	15.45%

	Voting Trustees pursuant (4) to a Voting Trust Agreement, dated as of August 14, 2000 c/o John C. Yavis, Jr. Murtha Cullina LLP CityPlace I 185 Asylum Street Hartford, CT 06105

Class B	C. William Kaman II 5367 Florence Point Drive Fernandina Beach, FL 32034	64,446 (5)	9.65%

Class B	Robert D. Moses Farmington Woods Avon, CT 06001	51,177 (6)	7.66%

(1)	Excludes 1,471 shares held by Mrs. Kaman. Mr. Kaman shares beneficial ownership of these shares with the holders of a Power of Attorney, as described in note (2) below.

(2)

The power to vote Mr. Kaman's shares of Class B common stock is shared through a durable power of attorney (the "Power of Attorney") with certain individuals who have the authority to vote Mr. Kaman's shares by majority vote. These individuals are: John S. Murtha, a director emeritus of the corporation and of counsel to the Hartford, Connecticut law firm, Murtha Cullina LLP, counsel to the corporation, Robert M. Garneau, Executive Vice President and Chief Financial Officer of the corporation, Roberta C. Kaman, Mr. Kaman's wife, C. William Kaman II, Mr. Kaman's son and a director and Vice Chairman of the Board of the corporation, Steven W. Kaman, Mr. Kaman's son, and Cathleen H. Kaman-Wood, Mr. Kaman's daughter.

(3)

All shares of Class B common stock beneficially owned by Newgate Associates and 96,601 shares of Class B common stock beneficially owned by Mr. Kaman are subject to a voting trust agreement dated August 14, 2000 (the "Voting Trust"), as described in note (4) below. Newgate and Mr. Kaman share beneficial ownership of such shares with the voting trustees of such trust, as described in note (4) below.

(4)

The power to vote the shares of Class B common stock referred to in the preceding note (3) is currently vested in ten voting trustees (the "Voting Trustees") under the Voting Trust, which has a term of ten (10) years, subject to renewal. The Voting Trustees consist of the six (6) individuals identified in footnote (2) above and the following four (4) individuals: T. Jack Cahill, President of Kaman Industrial Technologies Corporation, a subsidiary of the corporation, Paul R. Kuhn, Chairman, President, and Chief Executive Officer of the corporation, Wanda L. Rogers, director of the corporation, and John C. Yavis, Jr., of counsel to Murtha Cullina LLP, counsel to the corporation.

(5)	Excludes 4,800 shares held as trustee for the benefit of certain family members.

(6)	Includes 39,696 shares held by a partnership controlled by Mr. Moses.

Page 21

(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.

Name	Class of Common Stock	Number of Shares Beneficially Owned as of February 1, 2005	Percentage of Class
Brian E. Barents	Class A	4,500	*
T. Jack Cahill	Class A	114,156 ⁽¹⁾	*
E. Reeves Callaway III	Class A	4,500	*
John A. DiBiaggio	Class A	4,500	*
Robert M. Garneau	Class A	130,005 ⁽²⁾	*
	Class B	24,404	3.48%
Edwin A. Huston	Class A	2,500	*
C. William Kaman II	Class A	61,888 ⁽³⁾	*
	Class B	64,446 ⁽⁴⁾	9.65%
John C. Kornegay	Class A	76,588⁽⁵⁾	*
Paul R. Kuhn	Class A	293,883 ⁽⁶⁾	1.3%
	Class B	3,288	*
Eileen S. Kraus	Class A	5,769	*
Walter H. Monteith, Jr.	Class A	4,700	*
Wanda L. Rogers	Class A	4,500	*
Robert H. Saunders, Jr.	Class A	59,851 ⁽⁷⁾	*
	Class B	720	*
Richard J. Swift	Class A	2,500	*
All Directors and Executive
Officers as a group **	Class A	841,765 ⁽⁸⁾	3.79%
	Class B	94,020	14.08%

* Less than one percent.

** Excludes 20,691 Class A shares held by spouses of certain Directors and executive officers.

⁽¹⁾	Includes 57,900 shares subject to stock options exercisable or which will become exercisable within 60 days. Includes 1,225 shares held jointly with spouse.

⁽²⁾	Includes 53,700 shares subject to stock options exercisable or which will become exercisable within 60 days.

⁽³⁾	Excludes 89,891 shares held by Mr. Kaman as Trustee, in which shares Mr. Kaman disclaims any beneficial ownership.

⁽⁴⁾	Excludes 4,800 shares held by Mr. Kaman as Trustee in which shares Mr. Kaman disclaims any beneficial ownership.

⁽⁵⁾	Includes 26,400 shares subject to stock options exercisable or which will become exercisable within 60 days. Includes 1,800 shares held in IRA.

⁽⁶⁾	Includes 152,600 shares subject to stock options exercisable or which will become exercisable within 60 days. Includes 19,466 shares held jointly with spouse.

⁽⁷⁾	Includes 29,000 shares subject to stock options exercisable or which will become exercisable within 60 days.

⁽⁸⁾	Includes 419,800 shares subject to stock options exercisable or which will become exercisable within 60 days.

Page 22

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION

PLANS:

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)	(c)
Equity compensation plans approved by security holders:

2003 Stock Incentive Plan*	1,327,805	$ 13.82	2,070,509

Employees Stock Purchase Plan	----	----	623,818

Equity compensation plans not approved by security holders	----	----	----
Total	1,327,805	$ 13.82	2,694,327

*Includes securities to be issued upon exercise of outstanding options granted under a predecessor plan.

Page 23

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During 2004, the corporation obtained legal services in the amount of approximately $365,000 from the Hartford, Connecticut law firm of Murtha Cullina LLP of which Mr. John S. Murtha and Mr. John C. Yavis, Jr. are of counsel. Mr. Murtha, a director emeritus of the corporation, is currently one of six holders of a power of attorney described in footnote (2) to the table entitled "Security Ownership of Certain Beneficial Owners", and a voting trustee of the Voting Trust described in footnote (4) of such table. Mr. Yavis currently serves as a voting trustee of the Voting Trust.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Following is a summary of KPMG LLP fees for professional services in fiscal years ended December 31, 2004 and 2003:

Fee Category		2004 Fees		2003 Fees
Audit Fees	$	979.6	$	562.8
Audit-Related Fees		41.0		21.0
Tax Fees		288.5		218.2
All Other Fees		201.7		9.8
Total Fee	$	1,510.8	$	811.8

Audit Fees relate to services rendered for the audit of the corporation's consolidated financial statements and audit of management’s assessment regarding internal controls and financial reporting and the effectiveness of internal controls and financial reporting as of December 31, 2004 and review of the interim consolidated financial statements included in quarterly reports and services normally provided by KPMG in connection with statutory and regulatory filings or engagements.

Audit-Related Fees relate to assurance and related services that are reasonably related to performance of the audit or review of the corporation's consolidated financial statements and which are not reported under "Audit Fees". These services have included employee benefit plan audits and consultations in connection with acquisitions.

Tax Fees relate to tax compliance, tax advice, and tax planning services, including assistance with federal, state and international tax compliance, tax audit defense, acquisitions and international tax planning.

All Other Fees relate to products and services other than those described above. For 2004, these amounts represent Sarbanes-Oxley Act Section 404 consulting and software fees.

The Audit Committee's policy is to pre-approve all audit, non-audit, tax and other fees to be paid to its independent auditor. The Chairman of the Committee has been authorized by the Committee to pre-approve KPMG proposals up to twenty thousand dollars per service item, subject to the full Committee's approval at a subsequent meeting. Pre-approvals are specific as to the particular service that is proposed and each service is generally subject to a budget.

Page 24

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(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.

Page 25

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Bloomfield, State of Connecticut, on this 16th day of March, 2005.

		KAMAN CORPORATION (Registrant)
	By:	/s/ Paul R. Kuhn
		Paul R. Kuhn
		Chairman, President and
		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title:	Date:
/s/ Paul R. Kuhn
Paul R. Kuhn	Chairman, President and Chief Executive Officer	March 16, 2005


/s/ Robert M. Garneau
Robert M. Garneau	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	March 16, 2005


/s/ Paul R. Kuhn
Paul R. Kuhn		March 16, 2005
Attorney-in-Fact for:

Brian E. Barents	Director
E. Reeves Callaway III	Director
John A. DiBiaggio	Director
Edwin A. Huston	Director
C. William Kaman II	Director
Eileen S. Kraus	Director
Walter H. Monteith, Jr.	Director
Wanda L. Rogers	Director
Richard J. Swift	Director

Page 26

KAMAN CORPORATION AND SUBSIDIARIES

Index to Financial Statement Schedules

Report of Independent Registered Public Accounting Firm

Financial Statement Schedules:

Schedule V - Valuation and Qualifying Accounts

Page 27

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Kaman Corporation:

Under date of March 15, 2005, we reported on the consolidated balance sheets of Kaman Corporation and subsidiaries as of December 31, 2004 and 2003, 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, 2004, as contained in the 2004 annual report on Form 10-K. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedules as listed in the accompanying index. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.

In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

/s/ KPMG LLP

Hartford, Connecticut

March 15, 2005

Page 28

KAMAN CORPORATION AND SUBSIDIARIES

SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS

(Dollars in Thousands)

YEAR ENDED DECEMBER 31, 2004
Additions
DESCRIPTION	BALANCE JANUARY 1, 2004	CHARGED TO COSTS AND EXPENSES	OTHERS	DEDUCTIONS	BALANCE DECEMBER 31, 2004
Allowance for doubtful accounts	$ 3,340	$ 3,768	-	$ 1,588 (A)	$ 5,520

YEAR ENDED DECEMBER 31, 2003
Additions
DESCRIPTION	BALANCE JANUARY 1, 2003	CHARGED TO COSTS AND EXPENSES	OTHERS	DEDUCTIONS	BALANCE DECEMBER 31, 2003
Allowance for doubtful accounts	$ 2,853	$ 1,507	$ 150 (B)	$ 1,170 (A)	$ 3,340

YEAR ENDED DECEMBER 31, 2002
Additions
DESCRIPTION	BALANCE JANUARY 1, 2002	CHARGED TO COSTS AND EXPENSES	OTHERS	DEDUCTIONS	BALANCE DECEMBER 31, 2002
Allowance for doubtful accounts	$ 3,939	$ 1,024	$ 110 (B)	$ 2,220 (A)	$ 2,853

(A) Write-off of bad debts, net of recoveries.

(B) Additions to allowance for doubtful accounts attributable to acquisitions.

Page 29

KAMAN CORPORATION AND SUBSIDIARIES

SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS (CONTINUED)

(Dollars in Thousands)

YEAR ENDED DECEMBER 31, 2004
Additions
DESCRIPTION	BALANCE JANUARY 1, 2004	CURRENT YEAR PROVISION (BENEFIT)	OTHERS	BALANCE DECEMBER 31, 2004
Valuation allowance on deferred tax assets	$ 2,005	$ 109	$49	$ 2,163

YEAR ENDED DECEMBER 31, 2003
Additions
DESCRIPTION	BALANCE JANUARY 1, 2003	CURRENT YEAR PROVISION (BENEFIT)	OTHERS	BALANCE DECEMBER 31, 2003
Valuation allowance on deferred tax assets	$ 1,082	$ 799	$ 124	$ 2,005

YEAR ENDED DECEMBER 31, 2002
Additions
DESCRIPTION	BALANCE JANUARY 1, 2002	CURRENT YEAR PROVISION (BENEFIT)	OTHERS	BALANCE DECEMBER 31, 2002
Valuation allowance on deferred tax assets	$ 637	$ 445	$ -	$ 1,082

Page 30

KAMAN CORPORATION

INDEX TO EXHIBITS

Exhibit 3a	The Amended and Restated Certificate of Incorporation of the corporation, as amended, was filed with the Securities and Exchange Commission on form S-8POS on May 11, 1994, as Document No. 94-20.	by reference

Exhibit 3b	The Bylaws of the Corporation as amended on November 9, 2004 were filed as Exhibit 99.1 to the Corporation’s Form 8-K filed with the Securities and Exchange Commission on November 10, 2004, Document No. 0000054381-04-000081.	by reference

Exhibit 4a	Indenture between the corporation and Manufacturers Hanover Trust Company, as Indenture Trustee, with respect to the Corporation's 6% Convertible Subordinated Debentures was 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.	by reference

Exhibit 4b	Revolving Credit Agreement between the corporation and The Bank of Nova Scotia and Fleet National Bank as Co-Administrative Agents and Bank One, N.A. as the Documentation Agent and The Bank of Nova Scotia and Fleet Securities, Inc. as the Co-Lead Arrangers and Various Financial Institutions dated as of November 13, 2000 filed as Exhibit 4 to Form 10-Q filed with the Securities and Exchange Commission on November 14, 2000, Document No. 0000054381-00-500006. Amendments to the Agreement were filed as Exhibit 10 to Form 10-Q, Document No. 0000054381-02-000022 filed on August 14, 2002, Exhibit 4.1 to Form 10-Q, Document No. 0000054381-03-000124, filed on November 5, 2003, and Exhibit 4a to Form 8-K, Document No. 0000054381-04-000070 filed on October 21, 2004.	by reference

Exhibit 4c	Credit Agreement between the corporation, RWG Frankenjura-Industrie Flugwerklager GmbH, and Wachovia Bank, N.A., dated July 29, 2002 was filed as Exhibit 4c to Form 10-K filed with the Securities and Exchange Commission on March 26, 2003, Document No. 0000054381-03-000079. Amendments to the Agreement were filed as Exhibit 4.2 to Form 10-Q, Document No. 0000054381-03-000124, filed on November 5, 2003, Exhibit 4b to Form 8-K, Document No. 0000054381-04-000070, filed on October 21, 2004. Schedules and Exhibits to the Credit Agreement, which are listed in its Table of Contents, are omitted but will be provided to the Commission upon request.	by reference

Exhibit 10a	The Kaman Corporation 2003 Stock Incentive Plan effective November 1, 2003, as amended effective February 17, 2004, was filed as Exhibit 10a to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 10b	The Kaman Corporation Employees Stock Purchase Plan as amended effective November 18, 1997 was filed as a Exhibit 10b to the Corporation's Form 10-K Document No. 0000054381-98-09 filed with the Securities and Exchange Commission on March 16, 1998.	by reference

Exhibit 10c	The Kaman Corporation Supplemental Employees' Retirement Plan was filed as a Exhibit 10c to the Corporation's Form 10-K, Document No. 0000054381-02-000005 filed with the Securities and Exchange Commission on March 14, 2002, and the Plan as amended was filed as Exhibit 10c to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 10d	The Kaman Corporation Amended and Restated Deferred Compensation Plan (Effective as of November 12, 2002, except where otherwise indicated) was filed as a Exhibit 10d to the Corporation's Form 10-K Document No. 0000054381-03-000079 filed with the Securities and Exchange Commission on March 26, 2003. Amendments to the Plan were filed as Exhibit 10d to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004, and Exhibit 10d to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004, and Exhibit 10(a) on the Corporation’s Form 10-Q, Document No. 0000054381-04-000059 filed with the Securities and Exchange Commission on August 3, 2004.	by reference

Exhibit 10e(i)	Kaman Corporation Cash Bonus Plan (Amended and Restated Effective as of January 1, 2002) and First Amendment thereto were filed as Exhibit 10e to the Corporation's Form 10-K Document No. 0000054381-02-000005, filed with the Securities and Exchange Commission on March 14, 2002. Amendments to the Plan were filed as Exhibit 10e(ii) to the corporation's Form 10-K Document No. 0000054381-03-000079 filed with the Securities and Exchange Commission on March 26, 2003 and Exhibit 10(b) on the Corporation’s Form 10-Q, Document No. 0000054381-04-000059 filed with the Securities and Exchange Commission on August 3, 2004.	by reference

Exhibit 10g	Employment Agreements and Change in 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; Form 10-Q (Document No. 54381-00-500006) Filed November 14, 2000; and Form 10-Q (Document No. 54381-01-500016) filed November 14, 2001.	by reference

Exhibit 10g (i)	Amendment No. 1 to Amended and Restated Employment Agreement between Paul R. Kuhn and Kaman Corporation, dated as of September 11, 2001, was filed as an exhibit to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 10g(ii)	Amendment No. 2 to Amended and Restated Employment Agreement between Paul R. Kuhn and Kaman Corporation, dated as of February 17, 2004, was filed as an exhibit to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 10g(iii)	Second Amended and Restated Change in Control Agreement between Paul R. Kuhn and Kaman Corporation, dated as of November 11, 2003, was filed as an exhibit to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 10g(iv)	Amendment No. 1 to Amended and Restated Employment Agreement between Candace A. Clark and Kaman Corporation, dated as of February 17, 2004, was filed as an exhibit to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 10g (v)	Amendment No. 1 to Amended and Restated Employment Agreement between Ronald M. Galla and Kaman Corporation, dated as of February 17, 2004, was filed as an exhibit to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 10g (vi)	Amendment No. 1 to Amended and Restated Employment Agreement between Robert M. Garneau and Kaman Corporation, dated as of February 17, 2004, was filed as an exhibit to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 10g (vii)	Amendment No. 1 to Amended and Restated Employment Agreement between T. Jack Cahill and Kaman Industrial Technologies Corporation, dated as of February 17, 2004, was filed as an exhibit to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 10g (viii)	Amendment No. 2 to Amended and Restated Employment Agreement between Joseph H. Lubenstein and Kaman Aerospace Corporation, dated as of February 17, 2004, was filed as an exhibit to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 10g (ix)	Amendment No. 1 to Amended and Restated Employment Agreement between Robert H. Saunders, Jr. and Kaman Music Corporation, dated as of February 17, 2004, was filed as an exhibit to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 10g (x)	Second Addendum to Change in Control Agreement between Candace A. Clark and Kaman Corporation, dated as of November 11, 2003, was filed as an exhibit to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 10g (xi)	Second Addendum to Change in Control Agreement between Ronald M. Galla and Kaman Corporation, dated as of November 11, 2003, was filed as an exhibit to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 10g (xii)	Second Addendum to Change in Control Agreement between Robert M. Garneau and Kaman Corporation, dated as of November 11, 2003, was filed as an exhibit to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 10g (xiii)	Second Addendum to Change in Control Agreement between T. Jack Cahill and Kaman Industrial Technologies Corporation, dated as of November 11, 2003, was filed as an exhibit to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 10g (xiv)	Second Addendum to Change in Control Agreement between Joseph H. Lubenstein and Kaman Aerospace Corporation, dated as of November 11, 2003, was filed as an exhibit to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 10g (xv)	Second Addendum to Change in Control Agreement between Robert H. Saunders, Jr. and Kaman Music Corporation, dated as of November 11, 2003, was filed as an exhibit to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 10g (xvi)	Employment Agreement between Russell H. Jones and Kaman Corporation, dated as of February 17, 2004, was filed as an exhibit to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 10g (xvii)	Change in Control Agreement between Russell H. Jones and Kaman Corporation, dated as of November 11, 2003, was filed as an exhibit to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 10h (i)	Form of Incentive Stock Option Agreement under the Kaman Corporation 2003 Stock Incentive Plan	attached

Exhibit 10h (ii)	Form of Non-Statutory Stock Option Agreement under the Kaman Corporation 2003 Stock Incentive Plan	attached

Exhibit 10h (iii)	Form of Stock Appreciation Right Agreement under the Kaman Corporation 2003 Stock Incentive Plan	attached

Exhibit 10h (iv)	Form of Restricted Stock Agreement under the Kaman Corporation 2003 Stock Incentive Plan	attached

Exhibit 11	Statement regarding computation of per share earnings.	attached

Exhibit 13	Portions of the Corporation's 2004 Annual Report to Shareholders as required by Item 8.	attached

Exhibit 14	Kaman Corporation Code of Business Conduct was filed as Exhibit 14 to the Corporation’s Form 10-K, Document No. 0000054381-04-000032 filed with the Securities and Exchange Commission on March 5, 2004.	by reference

Exhibit 21	Subsidiaries	attached

Exhibit 23	Consent of Independent Registered Public Accounting Firm	attached

Exhibit 24	Power of attorney under which this report was signed on behalf of certain directors.	attached

Exhibit 31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14 under the Securities and Exchange Act of 1934.	attached

Exhibit 31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14 under the Securities and Exchange Act of 1934.	attached

Exhibit 32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	attached

Exhibit 32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	attached

Exhibit 10h(i) Incentive Stock Option Agreement

Exhibit 10h (i)

INCENTIVE STOCK OPTION AGREEMENT

(Under the Kaman Corporation

2003 Stock Incentive Plan)

THIS AGREEMENT, made and entered into as of the ___ day of _________, 20___ by and between KAMAN CORPORATION, a Connecticut corporation, with its principal office in Bloomfield, Connecticut (the "Corporation"), and ___________ (the "Optionee");

W I T N E S S E T H :

WHEREAS, the Optionee is now a full-time salaried employee of the Corporation or a subsidiary thereof, the term "subsidiary" being used herein as defined in the Corporation's 2003 Stock Incentive Plan (the "Plan"); and

WHEREAS, the Corporation desires to give the Optionee an opportunity to acquire shares of the Class A Common Stock of the Corporation (the "Stock" or "shares") pursuant to the Plan in consideration of and on the terms and conditions stated in this Agreement;

NOW, THEREFORE, in consideration of the premises, and of the mutual covenants and agreements contained in this Agreement, the parties agree as follows:

1. GRANT OF OPTION. Subject to the terms and conditions set forth in this Agreement, the Corporation grants to the Optionee, effective the day and year first above written (hereinafter called the "date of grant"), the right and option (hereinafter called the "option"), exercisable during the period commencing on the date of grant and ending ten (10) years after the date of grant, to purchase from the Corporation from time to time, up to but not exceeding in the aggregate _______ shares of the Stock to be issued upon the exercise hereof, fully paid and non-assessable; provided that the exercise of the option is restricted as set forth in Section 2 of this Agreement.

2. TERMS AND CONDITIONS OF OPTION. The following terms and

conditions shall apply to the option:

(a) Option Price. The purchase price of each share subject to the option shall be $_____ being 100% of the fair market value of the shares subject to the option on the date of grant.

(b) Type of Option. The option is an incentive stock option meeting the requirements of such options as defined in Section 422 of the Internal Revenue Code of 1986, as amended.

(c) Period of Option. The option granted under the Plan shall have a term of ten (10) years from the date on which it is granted; provided that the option or the unexercised portion thereof (to the extent exercisable on the date 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 the option shall have already expired by its terms, except as provided under subsection (f) of this section in the event of the death or disability of the Optionee.

(d) Exercise of Option. The option granted under the Plan shall be exercisable with respect to not more than ______ percent (___%) of the shares subject thereto after the expiration of one (1) year following the date of grant, and shall be exercisable as to an additional _______ percent (___%) of such shares after the expiration of each of the succeeding ________ (___) years, on a cumulative basis, so that the option, or any unexercised portion thereof, shall be fully exercisable after a period of ________ (___) years from the date of grant, provided that any portion of the option which remains unexercisable shall become exercisable in the event of a Change in Control, as defined and subject to the conditions set forth in the Plan. Except as provided in subsection (f) of this section, the Optionee may not exercise the option or any part thereof unless at the time of such exercise the Optionee shall be employed by the Corporation or a subsidiary and shall have been so employed continuously since the date of grant, excepting leaves of absence approved by the Committee, as defined in the Plan; provided, however, that an Optionee may exercise the option during the three (3) month period following such continuous employment unless such option shall have already expired by its terms. The option shall be exercised in the manner set forth in Section 3 of this Agreement by serving written notice of exercise on the Corporation accompanied by full payment of the purchase price in cash. Any obligation of the Corporation to accept such payment and issue the shares as to which such option is being exercised shall be conditioned upon 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 Corporation may secure from the Optionee any assurances or agreements that 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.

(e) Nontransferability. The option shall not be transferable by the Optionee otherwise than by will or by the laws of descent and distribution, and the option shall be exercisable, during the Optionee’s lifetime, only by the Optionee.

(f) Death or Disability of Optionee. In the event of the death or disability of the Optionee while in the employ of the Corporation or a subsidiary, the option may be exercised within the period of one (1) year succeeding death or disability to the extent otherwise exercisable at the time of exercise, but in no event later than ten (10) years from the date the option was granted. In the event of the death of the Optionee, the option may be so exercised by the person or persons designated in the Optionee's will for that purpose. If no such person or persons are so designated or if the Optionee dies intestate, then the option may be exercised within said period by the legal representative or representatives of the Optionee's estate. In the event that the Optionee is disabled, the term "disabled", meaning permanent and total disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended, while in the employ of the Corporation or a subsidiary, the option may be exercised within said period either by the Optionee or by his representative, as the case may be.

(g) Stockholder Rights. The Optionee shall not be entitled to any rights as a stockholder with respect to any shares subject to the option prior to the date of issuance to the Optionee of a stock certificate representing such shares.

3. MANNER OF EXERCISE OF OPTION. The option shall be exercised by delivering to the Chief Financial Officer of the Corporation from time to time a signed statement of exercise specifying the number of shares to be purchased, together with cash or a check to the order of the Corporation for an amount equal to the purchase price of such shares. In the discretion of the Committee, 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 con-stitutes 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 (which will constitute a disqualifying disposition of such shares for federal tax purposes). The issuance of optioned shares shall be conditioned on the Optionee having either (i) paid, or (ii) made provisions satisfactory to the Committee for the payment of, all applicable tax withholding obligations, if any.

Within twenty (20) days after such exercise of the option in whole or in part, the Corporation shall deliver to the Optionee, at the principal office of the Corporation, certificates for the number of shares with respect to which the option shall be so exercised, issued in the Optionee's name, provided that, if the stock transfer books of the Corporation are closed for the whole or any part of said twenty (20) day period, then such period shall be extended accordingly. Each purchase of Stock hereunder shall be a separate and divisible transaction and a completed contract in and of itself.

4. STOCK RESERVATIONS. The Corporation shall at all times during the term of this Agreement reserve and keep available such number of shares of its Stock as will be sufficient to satisfy the requirements of this Agreement, and shall pay all original issue taxes, if any, on the exercise of the option, and all other fees and expenses necessarily incurred by the Corporation in connection therewith.

5. TERMINATION OF OPTION. If the Optionee shall no longer be a full-time salaried employee of the Corporation or a subsidiary, Optionee’s employment being terminated for any reason whatsoever other than death or disability, any unexercised portion of the option shall terminate at the close of business on the day three (3) months following the date of the termination of Optionee’s employment, unless such option shall have already expired by its terms. This option shall be exercisable, if at all, during such three (3) month period only to the extent exercisable on the date of termination of employment. For purposes of this option, a transfer of the employment of Optionee from the Corporation to a subsidiary, or vice versa, or from one subsidiary to another subsidiary, shall not be deemed a termination of employment.

6. EFFECT ON CHANGES IN CAPITAL STRUCTURE. The existence of the option shall not affect in any way the right or power of the Corporation or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Corporation's capital structure or its business, or any merger or consolidation of the Corporation, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting the Stock or the rights thereof, or the dissolution or liquidation of the Corporation, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceedings, whether of a similar character or otherwise.

7. DILUTION OR OTHER ADJUSTMENTS. In the event that prior to delivery by the Corporation of all the shares of Stock subject to the option, the Corporation shall have effected one or more stock splits, stock dividends, mergers, reorganizations, consolidations, combinations or exchanges of shares, recapitalizations or similar capital adjustments, the Board of Directors of the Corporation shall equitably adjust the number, kind and option price of the shares remaining subject to the option in order to avoid dilution or enlargement of option rights.

8. COMPLIANCE WITH LAWS. Notwithstanding any of the provisions hereof, the Optionee agrees for himself/herself and his/her legal representatives, legatees and distributees that the option shall not be exercisable, and that the Corporation shall not be obligated to issue any shares hereunder, if the exercise of said option or the issuance of such shares shall constitute a violation by the option holder or the Corporation of any provision of any law or regulation of any governmental authority.

9. NOTICES. Every notice or other communication relating to this Agreement shall be in writing, and shall be mailed or delivered to the party for whom it is intended at such address as may from time to time be designated by such party in a notice mailed or delivered to the other party as herein provided; provided that, unless and until some other address be so designated, all notices or communications to the Corporation shall be mailed to or delivered to the Chief Financial Officer at the principal office of the Corporation, and all notices by the Corporation to the Optionee may be given to the Optionee personally or by mail, facsimile or electronic mail to the Optionee at the Optionee’s place of employment with the Corporation or a subsidiary or the last designated address for the Optionee on the employment records of the Corporation.

10. ADMINISTRATION AND INTERPRETATION. The administration of the option shall be subject to such rules and regulations as the Committee deems necessary or advisable for the administration of the Plan. The determination or the interpretation and construction of any provision of the option by the Committee shall be final and conclusive upon all concerned, unless otherwise determined by the Board of Directors of the Corporation. The option shall at all times be interpreted and applied in a manner consistent with the provisions of the Plan, and in the event of any inconsistency between the terms of the option and the terms of the Plan, the terms of the Plan shall control, the terms of the Plan being incorporated herein by reference.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above.

		KAMAN CORPORATION
	By:	__________________________________
		Its

		__________________________________
		, Optionee

Exhibit 10h(ii) Non-Statutory Stock Option Agreement

Exhibit 10h (ii)

NON-STATUTORY STOCK OPTION AGREEMENT

(Under the Kaman Corporation

2003 Stock Incentive Plan)

THIS AGREEMENT, made and entered into as of the ___ day of _______, 20___, by and between KAMAN CORPORATION, a Connecticut corporation, with its principal office in Bloomfield, Connecticut (called the "Corporation"), and _______________ (called the "Optionee");

W I T N E S S E T H :

WHEREAS, the Optionee is now a full-time salaried employee of the Corporation or a subsidiary thereof, the term "Subsidiary" being used herein as defined in the Corporation's 2003 Stock Incentive Plan (the "Plan"); and

NOW, THEREFORE, in consideration of the premises, and of the mutual covenants and agreements contained in this Agreement, the parties agree as follows:

1. GRANT OF OPTION. Subject to the terms and conditions set forth in this Agreement, the Corporation grants to the Optionee, effective the day and year first above written (the "date of grant"), the right and option (the "option"), exercisable during the period commencing on the date of grant and ending ten (10) years and one (1) day after the date of grant, to purchase from the Corporation from time to time, up to but not exceeding in the aggregate ________ shares of the Stock to be issued upon the exercise hereof, fully paid and non-assessable; provided that the exercise of the option is restricted as set forth in Section 2 of this Agreement.

2. TERMS AND CONDITIONS OF OPTION. The following terms and conditions shall apply to the option:

(a) Option Price. The purchase price of each share subject to the option shall be $______ being 100% of the fair market value of the shares subject to the option on the date of grant.

(b) Type of Option. The option is a non-statutory stock option which shall not be deemed to meet the requirements of an incentive stock option as defined in Section 422 of the Internal Revenue Code of 1986, as amended.

(c) Period of Option. The option shall have a term of ten (10) years and one (1) day from the date on which it is granted; provided however that unless the option shall have already expired by its terms, the option or the unexercised portion thereof (to the extent exercisable on the date 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 a longer period is provided under subsection (f) of this Section in the case of death, Disability or Retirement.

(d) Exercise of Option. The option shall be exercisable with respect to not more than ______ percent (___%) of the shares subject thereto after the expiration of one (1) year following the date of grant, and shall be exercisable as to an additional ______ percent (____%) of such shares after the expiration of each of the succeeding _______ (__) years, on a cumulative basis, so that the option, or any unexercised portion thereof, shall be fully exercisable after a period of _______ (___) years from the date of grant, provided that any portion of the option which remains unexercisable shall become exercisable in the event of a Change in Control as defined and subject to the conditions set forth in the Plan. Except as provided in subsection (f) of this section, the Optionee may not exercise the option or any part thereof unless at the time of such exercise the Optionee shall be employed by the Corporation or a Subsidiary and shall have been so employed continuously since the date of grant, excepting leaves of absence approved by the Committee, as defined in the Plan; provided, however, that an Optionee may exercise the option during the period described in subsections (c) and (f) of this Section following such continuous employment unless the option shall have already expired by its terms. The option shall be exercised in the manner set forth in Section 3 of this Agreement by serving written notice of exercise on the Corporation accompanied by full payment of the purchase price in cash. Any obligation of the Corporation to accept such payment and issue the shares as to which such option is being exercised shall be conditioned upon 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 Corporation may secure from the Optionee any assurances or agreements that 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) (i) In the event of the death, Disability or Retirement of the Optionee while in the employ of the Corporation or a Subsidiary, the option may be exercised within the period of five (5) years succeeding such Optionee’s death, Disability or Retirement, but in no event later than ten (10) years and one (1) day from the date the option was granted, 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 the Optionee’s estate, or by the Optionee or the Optionee’s legal representative, as the case may be.

(ii) During any period following termination of employment by reason of death, Disability or Retirement, during which the option may be exercisable as provided in subsection (f) (i) above, such option shall continue to vest in accordance with its terms and be and become exercisable as if employment had not ceased.

(iii) As used in this Agreement, the term “Retirement” means retirement in accordance with the terms of the Corporation's tax-qualified Employees' Pension Plan, the term "Disability" or "Disabled" means permanent and total disability as defined by Code Section 22(e)(3), and the term "Code" means the Internal Revenue Code of 1986, as amended from time to time, and any successor Code, and related rules, regulations and interpretations.

3. MANNER OF EXERCISE OF OPTION.

(a) The option shall be exercised by delivering to the Chief Financial Officer of the Corporation from time to time a signed statement of exercise specifying the number of shares to be purchased, together with cash or a check to the order of the Corporation for an amount equal to the purchase price of such shares. In the discretion of the Committee, 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 Section 3, 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.

(b) The issuance of optioned shares shall be conditioned on the Optionee having either (i) paid, or (ii) made provisions satisfactory to the Committee for the payment of, all applicable tax withholding obligations. 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 Optionee. The Committee in its discretion, but only upon the written request of the Optionee, may permit the Optionee 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 option. 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) Within twenty (20) days after such exercise of the option in whole or in part, the Corporation shall deliver to the Optionee, at the principal office of the Corporation, certificates for the number of shares with respect to which the option shall be so exercised, issued in the Optionee's name, provided that, if the stock transfer books of the Corporation are closed for the whole or any part of said twenty (20) day period, then such period shall be extended accordingly. Each purchase of Stock hereunder shall be a separate and divisible transaction and a completed contract in and of itself.

5. TERMINATION OF OPTION. If the Optionee shall no longer be a full-time salaried employee of the Corporation or a Subsidiary, Optionee's employment being terminated for any reason whatsoever other than death, Disability or Retirement, any unexercised portion of the option shall terminate at the close of business on the day three (3) months following the date of the termination of Optionee's employment, unless such option shall have already expired by its terms. This option shall be exercisable, if at all, during such three (3) month period only to the extent exercisable on the date of termination of employment. For purposes of this option, a transfer of the employment of Optionee from the Corporation to a Subsidiary, or vice versa, or from one Subsidiary to another Subsidiary, shall not be deemed a termination of employment.

9. NOTICES. Every notice or other communication relating to this Agreement shall be in writing, and shall be mailed or delivered to the party for whom it is intended at such address as may from time to time be designated by such party in a notice mailed or delivered to the other party as herein provided; provided that, unless and until some other address be so designated, all notices or communications to the Corporation shall be mailed to or delivered to the Chief Financial Officer at the principal office of the Corporation, and all notices by the Corporation to the Optionee may be given to the Optionee personally or by mail, facsimile or electronic mail to the Optionee at the Optionee’s place of employment with the Corporation or a Subsidiary or at the last designated address for the Optionee on the employment records of the Corporation.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above.

		KAMAN CORPORATION
	By:	_______________________________
		Its

		________________________________
		, Optionee

Exhibit 10h(iii) Stock Appreciation Right Agreement

Exhibit 10h (iii)

STOCK APPRECIATION RIGHT AGREEMENT

(Under the Kaman Corporation 2003 Stock Incentive Plan)

STOCK APPRECIATION RIGHT

[Name]

Expires on _____________

Exercisable for Cash

THIS AGREEMENT, made and entered into as of the ___ day of _____________, ____, by and between KAMAN CORPORATION, a Connecticut corporation, with its principal office in Bloomfield, Connecticut (the "Corporation"), and _______________ (the "Participant");

W I T N E S S E T H:

WHEREAS, the Participant is a full-time salaried employee of the Corporation or a subsidiary thereof, the term "subsidiary" being used herein as defined in the Corporation's 2003 Stock Incentive Plan (the "Plan"); and

WHEREAS, the Corporation desires to give the Participant an opportunity to receive stock appreciation rights pursuant to the Plan in consideration of and on the terms and conditions stated in this Agreement;

NOW, THEREFORE, in consideration of the premises, and of the mutual covenants and agreements contained in this Agreement, the parties agree as follows:

1. DEFINITIONS. Capitalized terms not otherwise defined in this Agreement shall have the meanings ascribed to them in the Plan.

2. GRANT OF STOCK APPRECIATION RIGHTS. Subject to the terms and conditions set forth in this Agreement, the Corporation grants to the Participant, effective the day and year indicated above (the "Date of Grant"), stock appreciation rights with respect to ________ shares of Class A common stock of the Corporation (the "Stock" or "shares"), exercisable during the period commencing on the Date of Grant and ending ten (10) years after the Date of Grant. Such right, which is referred to as a "Stock Appreciation Right" shall entitle the Participant to receive an amount in cash having a value equal to 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 Base Price multiplied by the number of shares with respect to which the Stock Appreciation Right shall have been exercised; provided that the exercise of the Stock Appreciation Right is restricted as set forth in Section 3 of this Agreement.

3. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHT. The following terms and conditions shall apply to the Stock Appreciation Right:

(a) Base Price. For purposes of this Stock Appreciation Right, the Fair Market Value of a share of Stock on the Date of Grant, determined in accordance with the Plan was $ ________ (the "Base Price").

(b) Period of Stock Appreciation Right. The Stock Appreciation Right granted hereunder shall have a term of ten (10) years and one (1) day from the Date of Grant; provided that this Stock Appreciation Right or the unexercised portion thereof (to the extent exercisable on the date of termination of employment) shall terminate, except as provided in subsection (e), at the close of business on the day three (3) months following the date on which the Participant ceases to be employed by the Corporation or a subsidiary, unless this Stock Appreciation Right shall have already expired by its terms.

(c) Exercise of Stock Appreciation Right. This Stock Appreciation Right shall be exercisable with respect to _______ percent (___%) of such shares with respect to which it is granted after the expiration of one (1) year following the Date of Grant, and shall be exercisable as to an additional _______ percent (___%) of such shares after the expiration of each of these succeeding _______ (___) years, on a cumulative basis, so that such right, or any unexercised portion thereof, shall be fully exercisable after a period of ______ (___) years following the Date of Grant, provided that any portion of the Stock Appreciation Right that remains unexercisable shall become exercisable in the event of a Change in Control, as defined and subject to the conditions set forth in the Plan. Except as provided in subsection (e) of this section, the Participant may not exercise this Stock Appreciation Right or any part thereof unless at the time of such exercise the Participant shall be employed by the Corporation or a subsidiary, and shall have been so employed continuously since the Date of Grant, except in leaves of absence approved by the Committee, as defined in the Plan; provided, however, that the Participant may exercise this Stock Appreciation Right to the extent exercisable on the date of termination of such continuous employment during the three (3) months following such termination unless this Stock Appreciation Right shall have already expired by its terms. This Stock Appreciation Right shall be exercised in the manner set forth in Section 4 of this Agreement by serving written notice of exercise on the Corporation. Any obligation of the Corporation to pay the cash award as to which this Stock Appreciation Right is being exercised shall be conditioned upon the Corporation's ability at nominal expense to make such award in compliance with all applicable statutes, rules or regulations of any governmental authority. The Corporation may secure from the Participant any assurances or agreements which the Committee, in its sole discretion, shall deem necessary or advisable in order to comply with any such statutes, rules or regulations.

(d) Nontransferability. This Stock Appreciation Right shall not be transferable by the Participant otherwise than by will or the laws of descent and distribution, and this Stock Appreciation Right shall be exercisable, during the Participant's lifetime, only by the Participant.

(e) Death, Disability or Retirement of Participant. In the event of the death, disability or Retirement of the Participant while in the employ of the Corporation or a subsidiary, this Stock Appreciation Right may be exercised within the period of five (5) years succeeding the Participant's death, disability or Retirement to the extent otherwise exercisable at the time of exercise, unless this Stock Appreciation Right shall have already expired by its terms. In the event of the death of the Participant, this Stock Appreciation Right may be so exercised by the person or persons designated in the Participant's will for that purpose. If no such person or persons are so designated or if the Participant dies intestate, then this Stock Appreciation Right may be exercised within said period by the legal representative or representatives of the Participant's estate. In the event the Participant is disabled, the term "disabled" meaning permanent or total disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended, while in the employ of the Corporation or a subsidiary, this Stock Appreciation Right may be exercised within such period either by the Participant or by the Participant's legal representative, as the case may be. As used in this Agreement, the term “Retirement” means retirement in accordance with the terms of the Corporation’s tax-qualified Employees’ Pension Plan.

(f) Stockholder Rights. This Stock Appreciation Right shall not entitle the Participant to any rights as a stockholder of the Corporation with respect to any of the shares to which it relates.

4. MANNER OF EXERCISE. This Stock Appreciation Right shall be exercised by delivering to the Chief Financial Officer of the Corporation from time to time a signed statement of exercise setting forth the number of shares with respect to which the Participant wishes to exercise. The Corporation may at its discretion satisfy federal income tax withholding requirements by withholding a portion of the award otherwise to be received as a result of the exercise of this Stock Appreciation Right.

Within thirty (30) days of any such exercise of this Stock Appreciation Right in whole or in part, the Corporation shall deliver to the Participant at the principal office of the Corporation a check made payable to the Participant in the amount of the excess of the closing price of the Stock on the NASDAQ National Market System on the most recent trading day preceding the date this Stock Appreciation Right is exercised on which sales of the Stock occurred over the Base Price multiplied by the number of shares with respect to which this Stock Appreciation Right is being exercised. Each exercise of this Stock Appreciation Right shall be a separate and divisible transaction and a completed contract in and of itself.

5. TERMINATION. If the Participant shall no longer be a full-time salaried employee of the Corporation or a subsidiary, the Participant's employment being terminated for any reason whatsoever other than death, disability or Retirement, any unexercised portion of this Stock Appreciation Right shall terminate at the close of business on the day three (3) months following the date on which the Participant ceases to be employed by the Corporation or a subsidiary, unless the Stock Appreciation Right shall have already expired by its terms. This Stock Appreciation Right shall be exercisable, if at all, during such three (3) month period only to the extent exercisable on the date of termination of employment. For purposes of this Stock Appreciation Right, a transfer of the Participant's employment from the Corporation to a subsidiary, or vice versa, or from one subsidiary to another subsidiary, shall not be deemed a termination of employment.

6. EFFECT OF CHANGES IN CAPITAL STRUCTURE. The existence of this Stock Appreciation Right shall not affect in any way the right or power of the Corporation or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Corporation's capital structure or its business, or any merger or consolidation of the Corporation, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting the Stock or the rights thereof, or the dissolution or liquidation of the Corporation, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceedings, whether of a similar character or otherwise.

7. DILUTION OR OTHER ADJUSTMENTS. In the event that prior to the payment by the Corporation of the full award payable under this Stock Appreciation Right the Corporation shall have effected one or more stock splits, stock dividends, mergers, reorgani-zations, consolidations, combinations or exchanges of shares, recapitalizations or similar capital adjustments, the Board of Directors of the Corporation shall equitably adjust the Base Price and the number of shares remaining subject to the Stock Appreciation Right in order to avoid dilution or enlargement thereof.

8. COMPLIANCE WITH LAWS. Notwithstanding any of the provisions hereof, the Participant agrees for himself/herself and his/her legal representatives, legatees and distributees that this Stock Appreciation Right shall not be exercisable and that the Corporation shall not be obligated to make any awards hereunder, if the exercise of this Stock Appreciation Right or the payment of such award would constitute a violation by the Participant or the Corporation of any provision of any law or regulation of any governmental authority.

9. NOTICES. Every notice or other communication relating to this Agreement shall be in writing, and shall be mailed or delivered to the party for whom it is intended at such address as may from time to time be designated by such party in a notice mailed or delivered to the other party as provided in this Agreement; provided that, unless and until some other address be so designated, all notices or communications to the Corporation shall be mailed to or delivered to the Chief Financial Officer at the principal office of the Corporation, and all notices by the Corporation to the Participant may be given to the Participant personally or by mail, facsimile or electronic mail to the Participant at the Participant's place of employment with the Corporation or a subsidiary or at the last designated address for the Participant on the employment records of the Corporation.

10. ADMINISTRATION AND INTERPRETATION. The administration of this Stock Appreciation Right shall be subject to such rules and regulations as the Committee deems necessary or advisable for the administration of the Plan. The determination or the interpretation and construction of any provision of this Stock Appreciation Right by the Committee shall be final and conclusive upon all concerned, unless otherwise determined by the Board of Directors of the Corporation. This Stock Appreciation Right shall at all times be interpreted and applied in a manner consistent with the provisions of the Plan, and in the event of any inconsistency between the terms of this Stock Appreciation Right and the terms of the Plan, the terms of the Plan shall control, the terms of the Plan being incorporated herein by reference.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above.

		KAMAN CORPORATION
	By:	________________________________
		Its

		_________________________________
		, Participant

Exhibit 10h(iv) Restricted Stock Agreement

Exhibit 10h (iv)

RESTRICTED STOCK AGREEMENT

(Under the Kaman Corporation

2003 Stock Incentive Plan)

THIS AGREEMENT, made and entered into as of the ___ day of _______, 20___, by and between KAMAN CORPORATION, a Connecticut corporation, with its principal office in Bloomfield, Connecticut (the "Corporation"), and _________________, (the "Participant");

W I T N E S S E T H :

WHEREAS, it has been determined that the Participant, who currently serves as a _______________ of the Corporation, is an Eligible Person under the Corporation's 2003 Stock Incentive Plan (the "Plan"); and

WHEREAS, effective _________, the Corporation has granted a Restricted Stock Award to the Participant pursuant to the Plan and subject to the terms and conditions set forth in this Agreement;

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements herein contained, the parties agree as follows:

1. Restricted Stock Award.

(a) Subject to the terms and conditions of this Agreement, _________________ (_____) shares of the Class A Common Stock of the Corporation (the "Restricted Shares") shall be transferred to the Participant as additional compensation for services as a ____________ of the Corporation.

(b) In order for the transfer of Restricted Shares to occur, the Participant must execute and deliver a copy of this Agreement to the President of the Corporation at the Corporation's offices in Bloomfield, Connecticut within sixty (60) days of the date of this Agreement. Promptly thereafter, certificates representing the Restricted Shares shall be issued and delivered over to the Participant by the Corporation.

(c) Effective upon the date of delivery to the Participant of certificates for the Restricted Shares registered in the Participant's name, the Participant will be a holder of record of the Restricted Shares and will have, subject to the terms and conditions of this Agreement, all rights of a shareholder with respect to such shares including the right to vote such shares at any meeting of shareholders of the Corporation at which such shares are entitled to vote and the right to receive all distributions of any kind paid with respect to such shares.

2. Restrictions. [As defined by the Committee pursuant to the Plan.] To the extent that the Restricted Shares remain subject to restrictions set forth in this Section 2, such restrictions shall lapse in the event of a Change in Control, as defined and subject to the conditions set forth in the Plan.

3. No Other Contractual Rights. No provision of this Agreement shall affect the Corporation's right to terminate or modify any contractual relationship with a Participant.

4. Changes in Capitalization. This Agreement and the issuance of the Restricted Shares shall not affect in any way the right or power of the Corporation or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Corporation's capital structure or its business, or any merger or consolidation of the Corporation, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting the Class A Common Stock or the rights therefor, or the dissolution or liquidation of the Corporation, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceedings, whether of a similar character or otherwise.

5. Capitalized Terms. All capitalized terms not defined herein shall have the meaning ascribed to them in the Plan.

6. Interpretation. This Agreement shall at all times be interpreted, administered and applied in a manner consistent with the provisions of the Plan. In the event of any inconsistency between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control and the Plan is incorporated herein by reference.

7. Amendment; Modification; Waiver. No provision of this Agreement may be amended, modified or waived unless such amendment, modification or waiver shall be authorized by the Committee and shall be agreed to in writing by the Participant.

8. Complete Agreement. This Agreement contains the entire Agreement of the parties relating to the subject matter of this Agreement and supersedes any prior agreements or understandings with respect thereto.

9. Agreement Binding. This Agreement shall be binding upon and inure to the benefit of the Corporation, its successors and assigns and the Participant, his or her heirs, devisees and legal representatives.

10. Legal Representative. In the event of the Participant's death or a judicial determination of his or her incompetence, reference in this Agreement to the Participant shall be deemed to refer to his or her legal representative, heirs or devisees, as the case may be.

11. Business Day. If any event provided for in this Agreement is scheduled to take place on a day on which the Corporation's corporate offices are not open for business, such event shall take place on the next succeeding day on which the Corporation's corporate offices are open for business.

12. Titles. The titles to sections or paragraphs of this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the title of any section or paragraph.

13. Notices.

(a) Any notice to the Corporation pursuant to any provision of this Agreement will be deemed to have been delivered when delivered in person to the Corporation or when deposited in the United States mail, addressed to the Secretary of the Corporation at the Corporation's corporate offices, or such other address as the Corporation may from time to time designate in writing.

(b) Any notice to the Participant pursuant to any provision of this Agreement will be deemed to have been delivered when delivered to the Participant in person or when deposited in the United States mail, addressed to the Participant at the address on the shareholder records of the Corporation or such other address as he or she may from time to time designate in writing.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above.

Participant		KAMAN CORPORATION
	By:
__________________________________ Its		________________________________ Its

Dated: _________________________________

Exhibit 11 Statement regarding computation of per share earnings

Exhibit 11

KAMAN CORPORATION AND SUBSIDIARIES

EARNINGS (LOSS) PER SHARE COMPUTATION

The computations and information required to be furnished in this Exhibit appear in the Computation of Earnings (Loss) per Share section of the Corporation’s 2004 Annual Report to Shareholders, which is filed herein as Exhibit 13 to this report, and such section is incorporated herein by reference.

Exhibit 13 Portions of the Corporation's 2004 Annual Report to Shareholders

Exhibit 13

FIVE—YEAR SELECTED FINANCIAL DATA

KAMAN CORPORATION AND SUBSIDIARIES

(IN THOUSANDS EXCEPT PER SHARE AMOUNTS, SHAREHOLDERS AND EMPLOYEES)

		2004¹			2003^2,3			2002^2,3			2001³			2000
OPERATIONS
Net sales	$	995,192		$	894,499		$	880,776		$	875,869⁵		$	1,031,234
Cost of sales		770,285			671,591			723,176⁴			673,004			773,562
Selling, general and administrative expense		239,368			206,416			199,520			189,530			203,021
Net gain on sale of product lines and other assets		(199	)		(18,163	)		(2,299	)		(2,637	)		—
Restructuring costs		—			—			8,290			—			(1,680	)
Other operating income		(1,731	)		(1,448	)		(1,302	)		(1,076	)		(1,092	)
Operating income (loss)		(12,531	)		36,103			(46,609	)		17,048			57,423
Interest expense (income), net		3,580			3,008			2,486			623			(1,660	)
Other expense, net		1,053			1,265			1,831			761			1,363
Earnings (loss) before income taxes		(17,164	)		31,830			(50,926	)		15,664			57,720
Income tax benefit (expense)		5,342			(12,425	)		17,325			(3,950	)		(20,800	)
Net earnings (loss)		(11,822	)		19,405			(33,601	)		11,714			36,920
FINANCIAL POSITION
Current assets	$	450,335		$	418,851		$	414,245		$	442,651		$	482,000
Current liabilities		226,105			160,555			157,094			141,260			173,342
Working capital		224,230			258,296			257,151			301,391			308,658
Property, plant and equipment, net		48,958			51,049			61,635			60,769			63,705
Total assets		562,331			528,311			535,540			521,946			553,830
Long-term debt		18,522			36,624			60,132			23,226			24,886
Shareholders’ equity		284,170			303,183			291,947			333,581			332,046
PER SHARE AMOUNTS
Net earnings (loss) per share - basic	$	(.52	)	$	.86		$	(1.50	)	$	.52		$	1.61
Net earnings (loss) per share - diluted		(.52	)		.86			(1.50	)		.52			1.57
Dividends declared		.44			.44			.44			.44			.44
Shareholders’ equity		12.48			13.40			13.00			14.97			14.92
Market price range		15.49			14.91			18.81			19.50			17.75
		10.71			9.40			9.42			10.90			8.77
AVERAGE SHARES OUTSTANDING
Basic		22,700			22,561			22,408			22,364			22,936
Diluted		22,700			23,542			22,408			23,649			24,168
GENERAL STATISTICS
Registered shareholders		5,192			5,509			5,634			5,869			6,136
Employees		3,581			3,499			3,615			3,780			3,825

The 2004 results net of non-cash adjustments, of approximately $41,600 for certain programs with MD Helicopters, Inc., Royal Australian Navy, Boeing Harbour Pointe and the University of Arizona, are further described in the Accrued Contract Losses and Accounts Receivable, Net Note in the Financial Statements.

2:	The corporation sold its Electromagnetics Development Center during first quarter 2003 and its microwave product lines during second quarter 2002 as further described in the Divestitures Note in the Financial Statements.

Includes the activity of certain significant entities from date of acquisition as further described in the Acquisitions Note in the Financial Statements including: Industrial Supplies, Inc-2003; Latin Percussion, Inc., RWG Frankenjura-Industrie Flugwerklager GmbH, Dayron, equity interest in Delamac de Mexico S.A. de C.V.-2002; Plastic Fabricating Company, Inc. and A-C Supply, Inc.-2001.

4:	Costs of sales for 2002 includes the write-off of K-MAX inventories and fixed assets and Moosup facility assets of $50,000 and $2,679, respectively and $18,495 of accrued contract loss for the Australia SH-2G(A) helicopter program, all of which are associated with the Aerospace segment.

5:	Results for 2001 were adversely impacted by a second quarter sales and pre-tax earnings adjustment of $31,181 attributable to the Aerospace segment and the Australia SH-2G(A) helicopter program.

Page 1

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

KAMAN CORPORATION AND SUBSIDIARIES

Results of Operations

OVERVIEW

Kaman Corporation is composed of three business segments: Aerospace, Industrial Distribution, and Music.

During 2004, the Aerospace segment’s programs were conducted through three principal businesses, consisting of Aircraft Structures and Components, Advanced Technology Products, and Helicopter Programs.

The Aircraft Structures and Components business involves commercial and military aircraft programs, including proprietary aircraft bearings, the production of aircraft subassemblies and other parts for commercial airliners as well as the C-17 military transport, and helicopter subcontract work. For the year 2004, this business constituted about 46 percent of Aerospace segment sales, compared to about 48 percent in 2003. Sales for this business in 2004 were adversely affected by an $18.2 million negative sales adjustment associated with a non-cash sales and pre-tax earnings charge recorded in connection with the MD Helicopters, Inc. (“MDHI”) program, which is discussed below.

The Advanced Technology Products business manufactures products for military and commercial markets, including safe, arm and fuzing devices for a number of major missile and bomb programs; and precision measuring systems, mass memory systems and electro-optic systems. For the year 2004, this business constituted approximately 25 percent of segment sales compared to about 22 percent in 2003.

Helicopter Programs include the SH-2G Super Seasprite multi-mission maritime helicopter and the K-MAX medium-to-heavy external lift helicopter along with spare parts and support. For the year 2004, this business constituted about 29 percent of segment sales compared to about 30 percent in 2003.

The Industrial Distribution segment is the third largest North American industrial distributor servicing the bearings, electrical/mechanical power transmission, fluid power, motion control and materials handling markets. This segment offers more than 1.5 million items as well as value-added services to a base of more than 50,000 customers spanning nearly every sector of industry from its geographically broad-based footprint of nearly 200 locations in the United States, Canada, and Mexico.

The Music segment is the largest independent distributor of musical instruments and accessories in the United States, offering more than 15,000 products for amateurs and professionals. While the vast majority of segment sales are to North American customers, the segment has been building its presence in European, Asian and Australian markets as well.

For the year ended December 31, 2004, the corporation’s Industrial Distribution and Music segments and the Kamatics subsidiary within the Aerospace segment each reported record sales. Record earnings for the year were also recorded in the Music segment and at Kamatics. This positive performance was overshadowed by actions taken in the Aerospace segment during the year that resulted in an overall net loss of $11.8 million, or $0.52 loss per share diluted, for the year. Results for 2004 include $41.6 million of adjustments, $10.8 million of which were taken in the fourth quarter to address issues related to Aerospace segment programs and contracts. Aerospace segment performance for 2004 reflects difficulties experienced in various operations, including principally the MDHI program, the Australia SH-2G(A) program, the Boeing Harbour Pointe program, the Electro-Optics Development Center (“EODC”) contract dispute with the University of Arizona, and two product warranty-related issues at the Dayron operation. In each case, necessary actions have been taken, or are in the process of being taken, to resolve the issues. Early in the year, a reconfiguration of the segment’s management structure was undertaken to better focus management activities on the segment’s differing operations by developing separate operating divisions within the Aerospace subsidiary.

For 2003, the corporation experienced net earnings of $19.4 million, or $0.86 per share diluted, including an after-tax gain of $10.6 million, or $0.48 per share, from the sale that year of the corporation’s Electromagnetics Development Center business in the Aerospace segment.

For discussion of the operations of, and factors affecting, each of these business segments, please refer to the specific discussions below.

RESTATEMENT OF QUARTERLY EARNINGS

In conjunction with the year end financial reporting process, the corporation has restated its statement of operations beginning with the first quarter of 2004 to correct its accounting by recording a cumulative catch-up pre-tax adjustment of approximately $0.7 million in rent expense and related deferred rent liability pertaining to lease accounting as well as a negative sales adjustment of $0.5 million for the University of Arizona contract in the Aerospace segment. The adjustment of $0.7 million modifies the corporation’s historical accounting for rent holidays, escalating rent and tenant allowances to amortize such items on a straight line basis over the term of the lease arrangement, specifically when the corporation takes possession of the leased space, in accordance with Statement of Financial Accounting Standards No. 13 and FASB Technical Bulletin No. 85-3. The corporation historically had accounted for such escalating rent and rent holidays as rental payments became due. In addition, in accordance with FASB Technical Bulletin No. 88-1 “Issues Relating to Accounting for Leases” the adjustment establishes a related deferred liability for tenant allowances for a small number of leases. The corporation has and will continue to present such allowances as a component of cash flow from operating activities on the consolidated statement of cash flows. The adjustment has been included in income from continuing operations. The adjustment of $0.5 million was made to reverse net sales recorded in excess of costs incurred on the claim element of the University of Arizona contract as further described in the Accounts Receivable, Net and Commitments and Contingencies notes. The corporation further recorded net pre-tax adjustments of $1.0 million as a reduction to selling, general and administrative expenses. The net adjustments relate to prior periods and consist of recognition of $0.8 million of adjustments related to group insurance, $0.4 million to reverse a product liability reserve established by the Industrial Distribution segment and other offsetting adjustments primarily related to establishing a reserve for sales allowances in the Music segment of $0.3 million. Additional adjustments of which the majority relates to the lease accounting and University of Arizona contract were recorded during the second and third quarters of 2004 as presented in the Selected Quarterly Financial Data. The impact of the above items was immaterial to prior year financial statements.

Page 2

TABULAR PRESENTATION OF FINANCIAL RESULTS

The following table summarizes certain financial results of the corporation and its business segments for calendar years 2004, 2003, and 2002:

SEGMENT INFORMATION (IN MILLIONS)

Year Ended December 31,		2004			2003			2002
Net sales:
Aerospace	$	252.4		$	251.2		$	275.9
Industrial Distribution		581.8			497.9			477.2
Music		161.0			145.4			127.7
	$	995.2		$	894.5		$	880.8
Operating income (loss):
Aerospace	$	(14.3	)	$	14.8		$	(55.2	)
Industrial Distribution		19.3			12.7			12.3
Music		11.1			9.5			7.2
Net gain on sale of product lines and other assets		.2			18.2			2.3
Corporate expense		(28.8	)		(19.1	)		(13.2	)
Operating income (loss)		(12.5	)		36.1			(46.6	)
Interest expense, net		(3.6	)		(3.0	)		(2.5	)
Other expense, net		(1.1	)		(1.3	)		(1.8	)
Earnings (loss) before income taxes		(17.2	)		31.8			(50.9	)
Income tax benefit (expense)		5.4			(12.4	)		17.3
Net earnings (loss)	$	(11.8	)	$	19.4		$	(33.6	)

DISCUSSION AND ANALYSIS OF FINANCIAL RESULTS — CONSOLIDATED

The corporation’s consolidated net sales were up 11.3 percent for 2004 compared to 2003 due to increased sales in the Industrial Distribution and Music segments and the Kamatics subsidiary in the Aerospace segment. For the Industrial Distribution segment, the increase reflects the combined effects of an improved industrial economic environment, a full year of the benefit from the fourth quarter 2003 acquisition of Industrial Supplies, Inc. (“ISI”), and market share gains. For the Music segment, the increase reflects a good holiday season and demand for the segment’s lines of branded musical instruments and accessories. At Kamatics, the increase reflects improving conditions in commercial and military aviation markets.

Consolidated net sales for 2003 increased compared to 2002 due to increased sales in the Industrial Distribution and Music segments. For 2003, the increase in Music was primarily derived from the acquisition of Latin Percussion, Inc. Sales and operating profits for 2003 were adversely affected, however, by performance in the Aerospace segment.

Results for 2002 included pre-tax charges of $86.0 million (of which $52.7 million was non-cash) taken in that year to cover the write down of K-MAX helicopter assets, principally inventories; for cost growth associated with the Australian SH-2G(A) helicopter program; and to phase out operations at the corporation’s Moosup, Conn. plant, all items in the Aerospace segment. Net sales for 2002 included $61.7 million from acquisitions made during 2002 and 2001, and $16.2 million from two divested Aerospace segment business lines. Net sales for 2002 were also reduced by $6.5 million as a result of the adjustment for the Australia helicopter program. Results for 2002 were also adversely affected by weak economic conditions in the commercial aviation and industrial markets served by the Aerospace and Industrial Distribution segments.

DISCUSSION AND ANALYSIS OF NET SALES BY BUSINESS SEGMENT

AEROSPACE SEGMENT

Aerospace segment net sales were basically level for 2004 compared to 2003, while 2003 net sales decreased 9.0 percent and 2002 sales decreased 8.5 percent compared to each of their immediately preceding years. A variety of factors contributed to the continued weakness in 2004, including principally, lack of new helicopter orders, the $18.2 million negative sales adjustment associated with the elimination of the corporation’s investment in the MDHI program in the third quarter, lack of sufficient work at the Jacksonville facility (to which Moosup, Conn. aircraft structures and components manufacturing operations were moved in 2003) and the delay experienced in achieving final qualification for the joint programmable fuze program. Results for 2003 were adversely affected by a variety of factors, including the weak market for commercial airliners, which had caused order stretch-outs and a lower volume of deliveries than anticipated for certain Boeing programs, a lack of new helicopter orders, and the stop-work mode of the MDHI program. The decrease in 2002 was due to the charges described above, declining revenues from both the New Zealand SH-2G(NZ) program (which was completed in early 2003) and the Australia SH-2G(A) program, and a lack of new helicopter sales.

Page 3

As mentioned above, corporate senior management undertook a realignment of existing Aerospace subsidiary operations in 2004, creating three new operating divisions within that subsidiary. The purpose of the realignment was to address differences among the segment’s various businesses and the changing markets they serve with the expectation that each division will be in a position to effectively control expenses for the services and functions that they require and achieve optimal customer service. The three new operating divisions are: Aerostructures, responsible for the Aerospace subsidiary’s Jacksonville facility and the PlasticFab operation in Wichita; Fuzing, responsible for the Aerospace subsidiary’s Middletown, Conn. facility and Dayron Orlando operations; and Helicopters, responsible for the Aerospace subsidiary’s Bloomfield, Conn. operation. These divisions, together with Kamatics (including RWG Frankenjura-Industrie Flugwerklager GmbH, the corporation’s German aircraft bearing manufacturer) constitute the four principal operating elements of the Aerospace segment. For the year 2004, results for the segment have been reported in the traditional format. Beginning with results for the first quarter of 2005, the corporation will separately report sales and discuss business developments for each of the Aerospace subsidiary’s divisions and Kamatics.

Aircraft Structures and Components - Aircraft Structures and Components business involves commercial and military aircraft programs, including proprietary aircraft bearings produced and sold by Kamatics, the production of aircraft subassemblies and other parts for commercial airliners as well as the C-17 military transport, and helicopter subcontract work. Operations are generally conducted at the Jacksonville and Wichita facilities, and at Kamatics located in Bloomfield. Sales for 2004 were $116.6 million, net of the $18.2 million negative sales adjustment associated with the MDHI program, compared to sales of $121.2 million in 2003.

Since the move from Moosup to the expanded Jacksonville aircraft subassemblies and parts facility was completed in 2003, sales volume at Jacksonville has not been sufficient to achieve profitability at that location. Improving performance metrics and reestablishing levels of customer satisfaction continue to be a focus at the Jacksonville facility and management believes that progress was made during 2004. For example, during 2004, Sikorsky Aircraft Corporation awarded the corporation a multi-year contract with an initial two-year value of $27.7 million under which the corporation will manufacture the pilot cockpit for four models of the Sikorsky BLACK HAWK helicopter. The initial work covers approximately 84 units and includes installation of all wiring harnesses, hydraulic assemblies, control pedals and sticks, seat tracks, pneumatic lines, and the composite structure that holds the windscreen. The contract includes follow-on options that, if fully exercised, would include the fabrication of approximately 349 units, and bring the total potential value of the contract to approximately $100.0 million over five years.

In January 2005, the U.S. government selected an international team that includes Lockheed Martin, Bell Helicopter, and AgustaWestland to provide the next “Marine One” presidential helicopter. As a member of the winning team, the corporation anticipates that it will have the opportunity to share in the work being sourced into the United States.

As previously reported, the corporation has multi-year contracts with MDHI for production of fuselages for the MDHI 500 and 600 series helicopters and composite rotor blades for the MD Explorer helicopter. The corporation stopped work on the program in 2003 due to payment issues with this customer. It had been the corporation’s expectation that MDHI would be successful in executing its strategy to improve its then current financial and operational circumstances, however, in the third quarter of 2004 MDHI management indicated that it had not thus far been able to resolve the situation. As a result, the corporation recorded a sales and non-cash pre-tax earnings charge of $20.1 million, consisting of an $18.2 million negative sales adjustment and a $1.9 million addition to the corporation’s bad debt reserve, to eliminate its investment in the program. The charge is not expected to result in any future cash expenditures. The corporation intends to maintain a business relationship with MDHI should it be successful in improving its financial and operational situation.

Also, as previously reported, the corporation’s Boeing Harbour Pointe contract, relating to parts and subassemblies for various Boeing aircraft, has generated a lower than expected order flow and an unprofitable mix of work. As a result of the corporation’s determination in the second quarter of 2004 that future demand for these parts, many of which are associated with programs that Boeing is either cutting back or eliminating, would be lower than previously anticipated, it recorded a $7.1 million non-cash adjustment, consisting of an estimated accrued contract loss of $4.3 million and a valuation adjustment of $2.8 million associated with portions of the program inventory.

Kamatics manufactures proprietary self-lubricating bearings used in aircraft flight controls, turbine engines and landing gear and produces driveline couplings for helicopters. Market conditions improved during 2004 and the company experienced increased order activity from Boeing, Airbus and other customers in both the commercial and military sectors. The company also increased production levels to manage an increasing backlog during the year. Kamatics parts are currently in use in almost all military and commercial aircraft in production.

Advanced Technology Products - This business involves manufacture of products for military and commercial markets, including safe, arm and fuzing devices for a number of major missile and bomb programs, and precision measuring systems, mass memory systems and electro-optic systems. Principal operations are conducted at the Middletown, Conn. and Dayron Orlando facilities. Sales for 2004 were $63.0 million, compared to $54.0 million in 2003. In conjunction with the realignment of the Aerospace segment during the year, management has been working to identify and correct certain internal operational issues that have adversely affected the Dayron Orlando facility.

A $3.5 million charge was recorded in the fourth quarter of 2004 to provide for two product warranty-related issues. The first involves a supplier’s recall of a switch embedded in certain of Dayron’s bomb fuzes. The other involves bomb fuzes manufactured according to procedures in place at the time that Dayron was acquired by the corporation (July 2002) that have been found to contain an incorrect part. Management is working with its customers and other parties to resolve these issues appropriately.

Dayron has a contract with the U.S. Air Force for production of the advanced FMU-152A/B joint programmable fuze (“JPF”). This contract, which was the principal motivation for the acquisition of Dayron, achieved final qualification in the second quarter of 2004, about a year later than originally anticipated. The JPF contract has a value of $13.6 million covering low rate initial production and production of Lot 1 that extends through 2005 and includes options for eight additional years of production, which, if fully exercised, would bring the total potential value of the contract to $168.7 million. In the past few months, the Air Force has released production for Lot 2 (including some additional production) for $11.4 million. These releases under the contract plus development and engineering activity along with special tool and test equipment, bring the total to approximately $36.4 million to date. During the fourth quarter, work continued on materials flow and manpower ramp-up to meet production requirements. Now that final qualification has been achieved, the fuze is ready to market to allied militaries.

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Since 2001, the EODC portion of this business (located in Tucson, Ariz.) had been teamed with the University of Arizona (“University”) to build a 6.5-meter aperture collimator that will be used for testing large optical systems in a vacuum environment. EODC had been working under a $12.8 million fixed-price contract to design and fabricate the structural, electrical, mechanical and software control systems for the collimator. EODC has experienced significant cost growth in its portion of the program which it believes is a result of changes in the scope of the project, and in April 2004 submitted a claim in the amount of $6.3 million to the University to recover these additional costs. Having been unable to satisfactorily resolve this matter, the company filed suit against the University on September 17, 2004 to recover these costs and stopped production on the program. The University has since filed a counterclaim and the litigation process is ongoing. Although additional efforts were made to resolve the matter out of court, it became clear during the fourth quarter that EODC is not likely to complete the project and therefore, a $3.5 million sales and pre-tax earnings adjustment was recorded in the fourth quarter to reflect the contract’s curtailed status.

Helicopter Programs - The segment’s helicopter products include the SH-2G Super Seasprite multi-mission maritime helicopter and the K-MAX medium-to-heavy external lift helicopter along with spare parts and support. Operations are conducted at the Bloomfield, Conn. facility. Sales for 2004 were $72.8 million, compared to $76.0 million in 2003. The vast majority of these sales were attributable to the SH-2G helicopter.

SH-2G programs have generally consisted of retrofit of the corporation’s SH-2F helicopters to the SH-2G configuration or refurbishment of existing SH-2G helicopters, however no retrofit orders have been awarded since 1997. The SH-2, including its F and G configurations, was originally manufactured for the U.S. Navy. The SH-2G aircraft is currently in service with the Egyptian Air Force and the New Zealand and Polish navies.

Work continues on the SH-2G(A) program for Australia which involves eleven helicopters with support, including a support services facility, for the Royal Australian Navy (“RAN”). The total contract has a current anticipated value of about $738 million. The helicopter production portion of the program is valued at approximately $605 million, essentially all of which has been recorded as sales through December 31, 2004. This contract has been in a loss position since 2002, due to increases in anticipated costs to complete the program. The in-service support center portion of the program has a current anticipated value of about $133 million of which about 31 percent has been recorded as sales through December 31, 2004.

Production of the eleven SH-2G(A) aircraft for the program is essentially complete. The aircraft lack the full Integrated Tactical Avionics System (“ITAS”) software and progress is continuing on this element of the program. The Australian government provisionally accepted three additional helicopters during the fourth quarter of 2004, bringing the number of aircraft now provisionally accepted to eight. The corporation currently expects to deliver the first fully operational aircraft by mid-year 2005, to be followed by the final acceptance process for all eleven aircraft. Due to the complexity of the software integration process and test results that indicate additional work to be done, the corporation added $5.5 million to its accrued contract loss during the year, $3.8 million of which was added in the fourth quarter, to reflect the current estimate of costs to complete the program.

The corporation maintains a consignment of the U.S. Navy’s inventory of SH-2 spare parts under a multi-year agreement that provides the corporation the ability to utilize certain inventory for support of its SH-2G programs.

The corporation continues to market the SH-2G helicopter on an international basis, however this market is highly competitive and heavily influenced by economic and political conditions.

The corporation continues to support K-MAX helicopters that are operating with customers, numbering less than thirty. At December 31, 2004, K-MAX inventories included approximately $20.1 million in K-MAX spare parts and $9.8 million in aircraft owned by the corporation. As previously reported, the corporation wrote down the value of existing aircraft, excess spare parts, and equipment inventories in 2002, following a market evaluation of the K-MAX helicopter program, which had experienced several years of market difficulties.

INDUSTRIAL DISTRIBUTION SEGMENT

Industrial Distribution segment net sales increased 16.9 percent for 2004, 4.3 percent for 2003 and 5.2 percent for 2002. Sales generated by ISI, which was acquired early in the fourth quarter of 2003, contributed $28.3 million in 2004 and $6.5 million in 2003. Net sales for 2002 included $38.0 million from acquisitions made during 2002 and 2001. The increase for 2004 also reflects an improved industrial economic environment and market share gains.

This segment is the third largest North American industrial distributor servicing the bearings, electrical/mechanical power transmission, fluid power, motion control and materials handling markets. Products and value-added services are offered to a customer base of more than 50,000 companies representing a highly diversified cross section of North American industry. Because of its diversified customer base, segment performance tends to track the U.S. Industrial Production Index and is affected to a large extent by the overall business climate for its customer industries, including plant capacity utilization levels and the effect of pricing spikes and/or interruptions for basic commodities such as steel and oil. A weaker U.S. dollar is currently stimulating customers’ export sales and the demand from China for raw materials continues to benefit the segment’s locations that participate in mining, steel and cement production markets.

Success in the segment’s markets requires a combination of competitive pricing (with pricing pressures more pronounced with respect to larger customers) and value-added services that save customers money while helping them become more efficient and productive. Management believes that this segment has the appropriate platforms, including technology, systems management and customer and supplier relationships to compete effectively in the evolving and highly fragmented industrial distribution industry. The segment’s size and scale of operations allow it to attract highly skilled personnel and realize internal operating efficiencies, and also to take advantage of vendor incentives in the form of rebates, which tend to favor the larger distributors. Management believes that the segment’s resources and product knowledge enable it to offer a comprehensive product line and invest in sophisticated inventory management and control systems while its position in the industry enhances its ability to rebound during economic recoveries and grow through acquisitions.

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Over the past several years, large companies have increasingly centralized their purchasing, focusing on suppliers that can service all of their plant locations across a wide geographic area. To meet these requirements, the segment has expanded its geographic presence through the selective opening of new branches and acquisitions in key markets of the upper midwest, the south, and Mexico. The segment’s footprint of nearly 200 locations now covers 70 of the top 100 industrial markets in the United States. Management’s goal is to grow the Industrial Distribution segment by expanding into additional areas that enhance its ability to compete for large regional and national customer accounts. In the third quarter of 2004, the company acquired Brivsa de Mexico, a small distributor located in Monterrey, thus expanding the company’s ability to serve its national account customers with operations in this important Mexican industrial center.

During 2004, the segment implemented new national account business with Tyco International (US), Inc., Phelps Dodge, James Hardie and Quad Graphics. In addition, the segment was named a national distributor for IMI Norgren, Inc., providing an additional major line to sell through the segment’s entire U.S. network. In the fourth quarter of the year, Procter & Gamble, already a customer of the segment in the U.S., selected the segment as its bearings and power transmission supplier in Canada, complementing the segment’s U.S. business with this large national account customer. The segment opened a new location in Toronto to serve several national accounts while providing a platform for expansion in the area.

MUSIC SEGMENT

Music segment net sales increased 10.7 percent in 2004, 13.9 percent in 2003 and 5.9 percent in 2002. Net sales for 2003 included $18.6 million generated by Latin Percussion, a leading distributor of hand percussion instruments that was acquired in October 2002, while net sales for 2002 included $3.7 million from Latin Percussion. There was good demand for the segment’s lines of branded musical instruments and accessories in 2004 and a reasonably good Christmas season for the retail sector. Sales for both the guitar and percussion lines were up for the year along with continued growth in sales to both large and small retailers with such products as Gretsch® drums and Sabian® cymbals. The Ovation LX series premier guitar was also introduced in 2004 and has received high acceptance ratings from players and positive reviews in the national music trade press.

The segment is the largest independent distributor of musical instruments and accessories in the United States, offering more than 15,000 products from several facilities in the United States and Canada to retailers of all sizes worldwide for professional and amateur musicians. The segment’s array of fretted instruments includes premier and proprietary products, such as the Ovation® and Hamer® guitars, and Takamine® guitars under an exclusive distribution agreement. The segment has also significantly extended its line of percussion products and accessories over the past few years, augmenting its CB, Toca® and Gibraltar® lines to include an exclusive distribution agreement with Gretsch drums and acquiring Latin Percussion and Genz Benz (an amplification equipment manufacturer).

While the vast majority of the segment’s sales are to North American customers, the segment has been building its presence in European, Asian and Australian markets as well. The business is affected by consumer sentiment as retailers gauge how aggressively to stock for the holiday selling season, and by actual consumer spending levels. It is also affected by changes in consumers’ musical tastes and interests. Consequently, a principal strategy of the segment over the past several years has been to add popular premier branded products that can be brought to market exclusively by the segment.

DISCUSSION AND ANALYSIS OF OPERATING PROFITS BY BUSINESS SEGMENT

Operating profit is a key indicator utilized by management in its evaluation of the performance of its business segments. Operating profits for the Industrial Distribution segment increased 52.6 percent in 2004 and 2.7 percent in 2003, and declined 6.6 percent in 2002. Operating profits for the Music segment increased 16.6 percent in 2004, 32.9 percent in 2003, and 8.8 percent in 2002. The Aerospace segment had operating losses of $14.3 million for 2004 and $55.2 million for 2002 and operating profits of $14.8 million for 2003.

Results for 2004 reflect the impact of good U.S. industrial production and consumer demand for the Industrial Distribution and Music segments and the charges taken in the Aerospace segment to address various program issues discussed earlier in this report.

Results for 2003 reflect the impact on the corporation’s businesses of weakness in the U.S. manufacturing sector and commercial aircraft markets and the increasingly competitive conditions resulting therefrom, in combination with the costs associated with the transition from the Aerospace segment’s Moosup facility to the Jacksonville facility and the stop-work status of the MDHI program. The 2002 results reflect difficult economic conditions in that year and include the second quarter pre-tax charge of $86.0 million described earlier.

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AEROSPACE SEGMENT

For 2004, the Aerospace segment had an operating loss of $14.3 million, which includes $0.4 million in relocation and recertification costs related to closure of the Moosup plant, $3.3 million in idle facility and related costs, primarily associated with the absence of new helicopter orders at the Bloomfield facility, $41.6 million in adjustments involving various aspects of the segment’s Aircraft Structures and Components, Advanced Technology Products and Helicopter Programs work (as discussed above in the Discussion and Analysis of Net Sales by Business Segment), as well as $2.0 million in severance costs associated with management realignment in the Aerospace subsidiary. This compares to an operating profit of $14.8 million in 2003. Results for 2003 include the effect of $3.6 million in relocation and recertification costs related to the Moosup plant closure and $1.4 million in idle facilities and related costs. Costs associated with ongoing maintenance of the Moosup facility were previously accrued as part of the charge taken in 2002.

Kamatics was an important contributor to Aerospace segment operating results for the year 2004, partially offsetting the Aerospace subsidiary’s operating loss for the period. Since the expanded Jacksonville facility began operations in mid-2003, sales volume has not been sufficient to achieve profitability at that location, resulting in overhead and general and administrative expenditures being absorbed at higher rates by active programs and generally lower profitability or losses for these programs. Improving performance metrics and reestablishing levels of customer satisfaction continue to be a focus at the Jacksonville facility, and management believes that progress has been made in this area. New orders, particularly the Sikorsky award described above, are now coming on line and that should help with the overhead absorption and profitability issue. Management continues to believe that operating conditions at the Jacksonville facility will improve and that the move from Moosup to Jacksonville will ultimately provide a lower cost structure from which to compete.

Having achieved final qualification for the JPF fuze in 2004, the fuze is now ready to market to allied militaries and management expects program profitability to improve as deliveries to the U.S. military ramp up and be further enhanced once orders are received from allied militaries.

Results for the year 2003 reflect the impact of several items, including costs associated with the move from the Moosup facility to Jacksonville, the weak market for commercial airliners, the absence of new helicopter orders, and the stop-work mode of the MDHI program and included $3.6 million in ongoing relocation and recertification costs related to the move from Moosup to Jacksonville and $1.4 million in idle facilities and related costs, most of which relate to the Moosup facility. The result was lower sales volume, which in turn resulted in overhead and general and administrative expenses being absorbed at higher rates by active segment programs, and thus generally lower profitability or losses for these programs. Management directed the move from Moosup, the corporation’s oldest facility, to Jacksonville, a modern, expanded facility, in order to provide a lower cost base from which to compete in the aerostructures subcontract arena. This move was essentially completed in 2003. However, the transition generated additional costs associated with the phase-out of Moosup, production man-hour performance in Jacksonville, which had not achieved the levels that had existed on an overall basis in Moosup, and FAA and customer requirements to requalify manufacturing and quality processes in Jacksonville. These factors resulted in lower profitability or losses in certain aerostructures programs.

For the year 2002, the Aerospace segment had an operating loss of $55.2 million, primarily due to the previously described $86.0 million charge. Included in the second quarter 2002 pre-tax charge was $11.0 million for the cost of phasing out the corporation’s Moosup manufacturing plant. The charge represented severance costs of about $3.3 million at the Moosup and Bloomfield, Connecticut locations which were expected to involve the separation from service of approximately 400 employees, which severance liability was fully settled as of December 31, 2004; asset write-offs of about $2.7 million; and $5.0 million for the cost of closing the facility (including costs associated with an ongoing voluntary environmental remediation program).

Management is currently in discussions with the U.S. Naval Air Systems Command (“NAVAIR”) regarding the potential purchase of a portion of the Bloomfield campus that the Aerospace subsidiary currently leases from NAVAIR and has operated for several decades for the principal purpose of performing U.S. government contracts. Management believes that ownership of the facility, which is currently utilized for flight and ground test operations and limited parts manufacturing, can be helpful to its ongoing operations. As part of its decision-making process, the company is discussing with NAVAIR and General Services Administration the method that would be used to calculate the purchase price of the facility, which could possibly include the company undertaking some level of the environmental remediation that may be legally required in the event of a sale of the property. In applying the guidance of Statement of Financial Accounting Standards No. 5 “Accounting for Contingencies”, the corporation’s management has concluded that, while not probable, it is reasonably possible that the corporation may agree to undertake some level of environmental remediation, should the facility be sold to the corporation. Based on the discussions so far, however, it is not possible to determine the magnitude, if any, of such a potential undertaking. Therefore, no liability for environmental remediation at the facility has been recorded to date.

The corporation is also working with government and environmental authorities to prepare the closed Moosup facility for eventual sale.

INDUSTRIAL DISTRIBUTION SEGMENT

Segment operating profits for 2004 were $19.3 million compared to $12.7 million in 2003. These results reflect the combined effects of an improved industrial economic environment, a full year of benefit from the ISI acquisition, and market share gains. The operating profits increase also reflects the impact of cost control, process improvement, and the company’s “lean-thinking” practices that were implemented during the difficult economic times of the past few years. Vendor incentives in the form of rebates (i.e., vendors provide inventory purchase rebates to distributors at specified volume-purchasing levels) were about the same for 2004 and 2003, and while still important, represented a smaller percentage of 2004 operating profits because of the increase in business for the year. Operating profits for the fourth quarter of 2004 were somewhat lower because the segment’s stronger than expected results triggered increased accruals for a ramp-curved incentive program that rewards a wide range of branch managers and sales personnel for their achievements.

Results for 2003 and 2002 reflect the weak economic performance in the U.S. manufacturing sector that had existed since the latter part of 2000. Because the segment’s customers include a broad spectrum of U.S. industry, this business is directly affected by national macroeconomic variables such as the percentage of plant capacity utilization within the U.S. industrial base and the business tends to track the U.S. Industrial Production Index. Particularly in that type of environment, vendor incentives were a major contributor to the segment’s operating profits in both 2003 and 2002. In addition, cost controls and focus on working capital investment helped performance.

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MUSIC SEGMENT

Music segment operating profits for 2004 were $11.1 million compared to $9.5 million a year ago. These results are attributable to increased sales and the competitive positioning of the segment’s brand name products. Music segment operating profits for 2003 and 2002 reflected continued consumer spending in the music retail market and the positive effects of the acquisition of Latin Percussion in late 2002.

NET EARNINGS AND CERTAIN EXPENSE ITEMS

For the 2004 year, the corporation reported a net loss of $11.8 million, or $0.52 net loss per share diluted, compared to net earnings of $19.4 million, or $0.86 earnings per share diluted, in 2003. The 2004 loss is primarily attributable to events in the Aerospace segment, including $41.6 million of adjustments for the year, $10.8 million of which were taken in the fourth quarter to address issues with certain of the segment’s programs and contracts. All of these actions have been discussed earlier in this report. Results for 2003 included an after-tax gain of $10.6 million or $0.48 per share from the sale of its Electromagnetics Development Center (“EDC”) in January 2003. For 2002, the corporation reported a net loss of $33.6 million, or $1.50 net loss per share diluted, including charges or adjustments previously described.

The corporation continued to pay quarterly dividends at the rate of $0.11 per share during 2004.

Selling, general and administrative expenses increased $33.0 million for the year 2004 compared to 2003. The Aerospace segment was responsible for approximately $8.1 million (or 24.5 percent of the total increase). During 2004, the corporation recorded various adjustments in order to address issues with certain of the segment’s programs and contracts of which a portion was charged to general and administrative expenses, specifically approximately $2.1 million to reserve for accounts receivable from MDHI and the University of Arizona. Additionally in conjunction with the segment’s realignment, severance costs of $2.0 million were incurred. Selling, general and administrative expenses increased $8.6 million (or 26.1 percent of the total increase) for the Industrial Distribution segment (excluding ISI) primarily related to the segment’s additional sales volume for 2004, which correlates to an increase in certain general and administrative expenses as well as commissions. With a full year of activity for the ISI acquisition, selling, general and administrative costs increased $4.0 million or 12.0 percent over prior year. The Music segment’s increase of $2.5 million (or 7.8 percent of the total increase) is also attributable to increased sales volume for the 2004 year. Corporate expense resulted in a $9.8 million (or 29.6 percent increase of the total increase) for 2004 compared to 2003. The significant increase in corporate selling, general and administrative costs relates to an increase in pension expense of $4.7 million primarily due to a decrease in the discount rate in 2004 compared to 2003. Additionally, the supplemental retirement plan expense increased $2.7 million due largely to the changes in the discount rate year over year and additional expense associated with vesting credit for additional years of service of one senior executive based upon the terms of his employment agreement. The corporation also recorded $2.9 million related to the long-term incentive program element of the corporation’s 2003 Stock Incentive Plan, and a $0.7 million increase in audit related services for new internal control reporting requirements, and $0.7 million of insurance expense for senior executive life insurance offset by a $1.6 million refund related to group insurance. The increase in corporate expenses was also offset by a $1.2 million reduction in consulting expense.

Selling, general and administrative expense for year 2003 was higher than for 2002, largely due to acquisitions and to increase in corporate expenses attributable to several items, including a reduction in group insurance liabilities for 2002 that did not occur in 2003, and growth in stock appreciation rights, pension and general insurance expense.

Net interest expense increased 19.0 percent for the year 2004, principally due to increases in short term interest rates. For each of the years ended December 31, 2003 and 2002, net interest expense increased, principally due to borrowings to fund acquisitions.

For the 2004 year, there was a tax benefit calculated at approximately 31 percent, representing the combined estimated federal and state tax effect attributable to the loss for the year. The consolidated effective income tax rate for the year 2003 was 39 percent. For 2002, there was also a tax benefit calculated at approximately 34 percent, representing the combined estimated federal and state tax effect attributable to the loss recorded in that year.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In November 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 151 “Inventory Costs - an amendment of ARB No. 43, Chapter 4” (“SFAS 151”). SFAS 151 clarifies the accounting for inventory when there are abnormal amounts of idle facility expense, freight, handling costs, and wasted materials. Under existing generally accepted accounting principles, items such as idle facility expense, excessive spoilage, double freight, and re-handling costs may be “so abnormal” as to require treatment as current period charges rather than recorded as adjustments to the value of the inventory. SFAS 151 requires that those items be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal.” In addition, this statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The provisions of this statement are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. However, application is permitted for inventory costs incurred during fiscal years beginning after the date this statement was issued. The corporation is currently evaluating the financial impact the adoption of this standard will have on the corporation’s financial position and results of operations. The effect of this adoption will be applied prospectively in accordance with the guidance and disclosures as required under Accounting Principles Board Opinion No. 20 will be included when the standard is adopted.

In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”). SFAS 123R requires entities to recognize the cost of employee services received in exchange for awards of equity instruments based on the grant-date fair value of those awards. That cost will be recognized over the period during which an employee is required to provide service in exchange for the award - the requisite service period (usually the vesting period). SFAS 123R is effective for financial statements as of the beginning of the first interim or annual periods ending after June 15, 2005. The corporation will adopt this statement in accordance with its terms and that adoption will have a negative impact on consolidated results of operations and financial position. The corporation anticipates that it will apply one of the prospective accounting methods for the application of SFAS 123R.

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CRITICAL ACCOUNTING ESTIMATES

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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. Significant accounting policies are disclosed in the Notes to Consolidated Financial Statements of Kaman Corporation and Subsidiaries for the year ended December 31, 2004. The most significant areas currently involving management judgments and estimates are described below. Actual results could differ from those estimates.

LONG-TERM CONTRACTS — REVENUE RECOGNITION

Sales and estimated profits under long-term contracts are principally recognized on the percentage-of-completion method of accounting, generally using as a measurement basis either (1) a ratio that costs incurred bear to estimated total costs, after giving effect to estimates of cost to complete based upon most recent information for each contract, or (2) units-of-delivery. Reviews of contracts are performed routinely 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.

The percentage-of-completion method requires estimates of future revenues and costs over the life of a contract. Revenues are estimated based upon the original contract price, modifications by contract options, change orders and in some cases projected customer requirements. Contract costs may be incurred over a period of several years, and the estimation of these costs requires management’s judgment. Estimated costs are based primarily on anticipated purchase contract terms, historical performance trends, business base and other economic projections. The complexity of certain programs related to technical risks, internal labor requirements and performance expectations could affect the corporation’s ability to precisely estimate future contract costs.

Specifically, the corporation is required to make significant estimates and assumptions related to its completion of a long-term contract with the RAN. The remaining estimates are generally associated with the continued progress to complete the ITAS software and its integration into the aircraft. While the corporation believes its accrued contract loss is sufficient to cover estimated costs to complete the program, final integration of the software is a complex task and is still in process. The first fully operational aircraft is expected to be delivered in mid-2005. Technical difficulties could increase costs and/or delay customer payments. Additional programs that require significant estimates are the Boeing Harbour Pointe contract and the recently awarded Sikorsky BLACK HAWK program.

ACCOUNTS RECEIVABLE, NET

Trade accounts receivable consist of amounts billed and currently due from customers. Billed amounts for U.S. Government, commercial, and other government contracts consist of amounts billed and currently due from customers. Costs and accrued profit - not billed for U.S. Government, commercial, and other government contracts primarily relate to costs incurred on contracts which will become billable upon future deliveries, achievement of specific contract milestones or completion of engineering and service type contracts.

The corporation had $87.2 million and $78.2 million of trade receivables at December 31, 2004 and 2003, respectively. The allowance for doubtful accounts for receivables was $5.5 million and $3.3 million at December 31, 2004 and 2003, respectively. Accounts receivable written off, net of recoveries, in years 2004 and 2003 were $1.6 million and $1.2 million, respectively. The allowance for doubtful accounts reflects management’s best estimate of probable losses inherent in the accounts receivable balance. Management determines the allowance for doubtful accounts based on known past due amounts and historical write-off experience, as well as trends and factors surrounding the credit risk of specific customers. In an effort to identify adverse trends, the corporation performs ongoing reviews of account balances and aging of receivables. Amounts are considered past due when payment has not been received within the time frame of the credit terms extended. Write-offs are charged directly against the allowance for doubtful accounts and occur only after all collection efforts have been exhausted. Actual write-offs and adjustments could differ from the allowance estimates due to unanticipated changes in the business environment as well as factors and risks surrounding specific customers.

In addition to trade receivables, the corporation had $108.5 million and $118.4 million of amounts due from government and commercial customers at December 31, 2004 and 2003, respectively. The corporation evaluates, on an ongoing basis, the recoverable costs associated with its government and commercial contracts. Specifically, the corporation had an investment of billed receivables and costs not billed of $20.8 million as of December 31, 2003 with its customer, MDHI. Due to unresolved payment issues and the inability of MDHI to successfully execute a strategy to improve its financial and operational circumstances, the corporation recorded a non-cash sales and pre-tax earnings charge of $20.1 million (includes an $18.2 million negative sales adjustment for costs not billed and a $1.9 million addition to the corporation’s bad debt reserve for billed receivables) in the third quarter 2004 that eliminates the corporation’s investment in contracts with MDHI in the Aerospace segment.

Additionally, during the fourth quarter 2004, the corporation recorded a sales and pre-tax earnings adjustment of $3.5 million (includes a $3.2 million negative sales adjustment for costs not billed and a $0.3 million addition to the corporation’s bad debt reserve for billed receivables) that was previously recognized for a contract with the University of Arizona due to the curtailment of the contract as a result of changes in the scope of the corporation’s participation in the contract. This matter is further discussed in the corporation’s Commitments and Contingencies note in the financial statements.

As of December 31, 2004, the corporation had $61.0 million of costs not billed which will be due and payable as the segment satisfactorily completes the Australian SH-2G(A) program. When these costs are ultimately billed to the RAN, they will be offset by $12.0 million of advances on contracts previously paid to the corporation by the RAN. The corporation anticipates that approximately $25.4 million will be required to fund completion of the program, which amount is reported as an accrued contract loss as of December 31, 2004.

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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.

The corporation had $196.7 million and $179.0 million of inventory net of progress payments for certain U.S. government contracts in process of $11.3 million and $12.9 million as of December 31, 2004 and 2003, respectively. Inventory valuation at the Industrial Distribution and Music segments generally requires less subjective management judgment than valuation of certain Aerospace segment inventory, including the K-MAX inventory. Based upon a market evaluation in 2002, the corporation wrote down its K-MAX inventory in the amount of $46.7 million in that year. The corporation believes its K-MAX inventory consisting of work in process and finished goods of $29.9 million and $33.4 million at December 31, 2004 and 2003, respectively is stated at net realizable value, although lack of demand for this product in the future could result in additional write-downs of the inventory value. The process for evaluating the value of excess and obsolete inventory often requires the corporation to make subjective judgments and estimates concerning future sales levels, quantities and prices at which such inventory will be sold in the normal course of business. Accelerating the disposal process or changes in estimates of future sales potential may necessitate future write-downs of inventory value.

VENDOR INCENTIVES

The corporation’s Industrial Distribution segment enters into agreements with certain vendors providing for inventory purchase incentives that are generally earned upon achieving specified volume-purchasing levels. To the extent that the corporation has inventory on hand that qualifies for specific rebate programs, the recognition of the rebate is generally deferred until the inventory is sold. The segment recognizes these incentives as a reduction in cost of sales. While management believes that vendors will continue to offer incentives, there can be no assurance that the Industrial Distribution segment will continue to receive comparable amounts in the future nor can management estimate whether the corporation will continue to utilize the vendor programs at the same level as for prior periods.

GOODWILL AND OTHER INTANGIBLE ASSETS ACCOUNTING

Goodwill and certain other intangible assets deemed to have indefinite lives are evaluated at least annually for impairment, which is performed during the fourth quarter, after the annual forecasting process. The corporation determines fair value of its reporting units, as defined by Statement of Financial Accounting Standards No. 142 (“SFAS 142”), by utilizing discounted cash flow models to evaluate goodwill and other intangible asset impairment. Management’s estimates of fair value are based upon factors such as projected sales and cash flows and other elements requiring significant judgments. The corporation utilizes the best available information to prepare its estimates and performs impairment evaluations; however, actual results could differ significantly, resulting in the future impairment of recorded goodwill and other intangible asset balances. The goodwill and other intangible assets are also reviewed for possible impairment whenever changes in conditions indicate that carrying value may not be recoverable.

The corporation has made a number of acquisitions during the last three years, which have involved goodwill and other intangible assets. Assets and liabilities acquired in the acquisitions are recorded at their estimated fair values at the acquisition date. As of December 31, 2004 and 2003, the corporation had $54.8 million and $52.5 million, respectively of goodwill and other intangibles, representing the costs of acquisitions in excess of fair values assigned to the underlying net assets of the acquired companies. Based upon the corporation’s analysis, management believes these assets are not impaired as of December 31, 2004.

DEPRECIATION AND AMORTIZATION

The corporation depreciates property, plant and equipment using the straight-line method over the estimated useful life of the asset. These periods range as follows:


Leasehold improvements	5 - 20 years
Buildings and additions	15 - 30 years
Machinery and equipment	3 - 10 years

Patents and other amortizable intangible assets are amortized over their estimated useful lives. The straight-line method of amortization is used. These periods generally range from 10-20 years. In the event that facts and circumstances indicate that the carrying value of long-lived assets or other assets may be impaired, a specific evaluation of the assets or groups of assets is performed to determine whether any impairment exists.

PENSION PLAN ACTUARIAL ASSUMPTIONS

The corporation’s pension benefit obligations and related costs are calculated using actuarial concepts within the framework of Statement of Financial Accounting Standards No. 87, “Employers’ Accounting for Pensions” (“SFAS 87”). Two critical assumptions, the discount rate and the expected return on plan assets, are important elements of expense and/or liability measurement. These critical assumptions are evaluated periodically and adjusted annually. Other assumptions involve demographic factors such as retirement, mortality, turnover and rate of compensation increases.

The discount rate enables management to state expected future cash flow as a present value on the measurement date. The guideline for setting this rate is a high-quality long-term corporate bond rate. A lower discount rate increases the present value of benefit obligations and increases pension expense. The Kaman Corporation Employees’ Pension Plan used a discount rate of 6.5 percent in 2004 and 7.0 percent in 2003 for purposes of calculating net periodic benefit cost. A one percentage point decrease in the assumed discount rate would have increased annual pension expense in 2004 by $4.0 million. A one percentage point increase in the assumed discount rate would have decreased annual pension expense in 2004 by $1.3 million.

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To determine the expected return on plan assets, management considers the current and expected asset allocation, as well as historical and expected returns on each plan asset class. A lower expected rate of return on pension plan assets will increase pension expense. The expected return on plan assets was 8.0 percent and 8.5 percent at December 31, 2004 and 2003, respectively. A one percentage point increase/decrease in the return on pension plan asset assumption would have decreased/increased annual pension expense in 2004 by $3.6 million.

The corporation determined these assumptions based upon consultation with outside actuaries. Any variance between actual developments and the above assumptions could have a significant impact on future recognized pension costs, assets and liabilities.

STOCK-BASED COMPENSATION

The corporation currently accounts for stock option awards under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. No stock-based employee compensation cost pertaining to employee stock options is reflected in net income, as all options granted under the corporation’s plans have exercise prices equal to the market value of the underlying common stock on the date of grant. Restricted share grants awarded to employees are included in earnings as an expense over the vesting period of the award. Stock appreciation rights awarded to employees are included in earnings based upon the fluctuation in the market price of the shares over the term of the award. As a result of the issuance of SFAS 123R in November 2004, the corporation will adopt one of the prospective accounting methods as described by the standard during 2005.

INCOME TAXES

As of December 31, 2004 the corporation had recognized $39.9 million of net deferred tax assets, net of valuation allowances. The realization of these benefits is dependent in part on future taxable income. For those jurisdictions, primarily foreign locations, where the expiration date of tax loss carry forwards or the projected operating results indicate that realization is not likely, a valuation allowance is provided. Management believes that sufficient income will be earned in the future to realize deferred income tax assets, net of valuation allowances recorded. The recognized net deferred tax asset is based on the corporation’s estimates of future taxable income. The realization of these deferred tax assets can be impacted by changes to tax laws, statutory tax rates and future taxable income levels.

Liquidity and Capital Resources

DISCUSSION AND ANALYSIS OF CASH FLOWS — CALENDAR YEAR 2004

Management assesses the corporation’s liquidity in terms of its ability to generate cash to fund operating, investing and financing activities. Cash flow generation is another key performance indicator reviewed by management in evaluating business segment performance. Significant factors affecting the management of liquidity include earnings, cash flows generated from or used by operating activities, capital expenditures, investments in the business segments and their programs, acquisitions, dividends, adequacy of available bank lines of credit, and factors which might otherwise affect the corporation’s business and operations generally, as described below under the heading “Forward-Looking Statements”. During 2004, the corporation relied to a significant extent upon borrowings under its revolving credit agreement in order to satisfy working capital requirements because cash flows from operations were insufficient for this purpose. While it is anticipated that cash flows from operations will improve in 2005, and debt levels should be reduced upon successful completion of the Australia SH-2G program, management also expects that bank borrowings will continue to provide an important source of support for the corporation’s activities. The corporation’s current revolving credit agreement will expire in November 2005 and management expects that it will be replaced with an equally appropriate facility in order to support the corporation’s future cash requirements.

The corporation as a whole operated at a loss for the year 2004 due to the performance of the Aerospace company which has been adversely affected by operational issues discussed above. The management realignment undertaken in the Aerospace segment during 2004 is expected to result in actions to address these issues with the goal of improving operating profits and cash flow generation.

Net cash provided by operating activities in 2004 was $25.5 million. Activities that provided cash included an increase in accounts payable of $15.1 million consisting of $3.1 million at Dayron, $3.6 million in the Industrial Distribution segment and $6.5 million in the Music segment. The increase in accounts payable is principally due to increased purchase activity during the fourth quarter in order to accommodate the growing sales volume as reported. There was an increase in accrued contract loss of $14.2 million primarily due to adjustments recorded during 2004 including Harbour Pointe and the Australian SH-2G(A) program of $6.1 million and $5.5 million, respectively. Further increases in accrued contract loss of approximately $3.6 million were primarily attributable to the Boeing 767 program and the Boeing offload program. The increases were offset primarily by uses of the accrued contract loss for the Australian SH-2G(A) program of approximately $0.9 million. Additionally, accrued expenses and payables increased $21.2 million. This is comprised of an increase in accrued pension, senior executive life insurance and workers compensation of $4.8 million, $1.6 million and $1.1 million, respectively, a $2.9 million increase for the long-term incentive program and an increase in accrued audit fees of $0.5 million. There was also an increase in certain reserves at Dayron of $3.5 million for product warranty-related issues as previously discussed and an increase of $2.8 million in deposits received in advance for the Aerospace segment. In addition, there was an increase in incentive compensation programs for the Industrial Distribution segment of $2.3 million related to increased sales volume.

Uses of cash included accounts receivable of $20.2 million, due to an increase in accounts receivable of $7.1 million at the Aerospace subsidiary, of which $4.1 million is related to the Australian SH-2G(A) program. Additionally, Dayron had an increase in accounts receivable of approximately $2.6 million principally due to slower collections from certain customers. Accounts receivable in the Industrial Distribution segment also increased $7.4 million as a result of higher sales volume in the fourth quarter 2004 compared to 2003. Another use of cash during 2004 related to an increase in inventory of $20.0 million. This was primarily due to an increase of $5.3 million at Dayron, $2.4 million increase at Kamatics and a $9.2 million increase in the Music segment. Dayron inventory has increased primarily due to delays in deliveries under certain programs. The increase in Kamatics inventory is overall due to continued growth in sales volume. Additionally, inventory for Music increased as a result of the segment expanding its product line during 2004 along with earlier than anticipated receipt of inventory from certain foreign locations.

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Investing activities used cash in the amount of $10.2 million for 2004. The use of cash in investing activity is due to $7.5 million in capital expenditures for property, plant and equipment primarily for the Industrial Distribution segment and the Aerospace segment. Additionally, the corporation used $1.0 million in cash for the payment of the 2003 earn-out related to the 2002 acquisition of Dayron. The corporation also has accrued for a $1.6 million earn-out as of the end of 2004, which will be paid during 2005.

Financing activities used cash in the amount of $10.0 million for 2004. The use of cash included $10.0 million for the payment of dividends to shareholders, and $2.1 million was made in payments on long-term debt. These uses were offset by proceeds from the exercise of employee stock options of $1.2 million and proceeds from notes payable of $1.2 million.

CONTRACTUAL OBLIGATIONS

The following table summarizes certain of the corporation’s contractual obligations as of December 31, 2004:

	PAYMENTS DUE BY PERIOD (IN MILLIONS)
CONTRACTUAL OBLIGATIONS		TOTAL		WITHIN 1 YEAR		1-3 YEARS		3-5 YEARS		MORE THAN 5 YEARS
Long-term debt	$	36.2	$	17.6	$	3.6	$	3.4	$	11.6
Interest payments on debt ¹		7.5		2.8		1.9		1.5		1.3
Operating leases		42.0		14.4		17.3		5.1		5.2
Purchase obligations ²		115.7		62.3		15.8		14.8		22.8
Other long-term liabilities ³		36.2		4.0		7.4		3.4		21.4
Planned funding of pension benefit obligations ⁴		4.9		4.9		—		—		—
Total	$	242.5	$	106.0	$	46.0	$	28.2	$	62.3

The following assumptions have been used to derive the disclosed amounts: Interest payments on debt within one year are based upon the long-term debt that existed at December 31, 2004. After one year interest payments are based upon the balance outstanding each year of the convertible subordinated debentures until their expiration in 2012.

2:	This category includes purchase commitments with suppliers for materials and supplies as part of the ordinary course of business, consulting arrangements and support services. Only obligations in the amount of at least fifty thousand dollars are included.

3:	This category consists primarily of obligations under the corporation’s supplemental employees’ retirement plan and deferred compensation plan and a supplemental disability income arrangement for one former company officer.

The following assumptions have been used to derive the disclosed amounts: The $4.9 million represents the planned funding for the corporation’s qualified defined benefit pension plan. This amount is projected using an assumed investment return of 7.58%. Projected funding beyond one year has not been included as there are several significant factors, such as the future market value of plan assets and projected investment return rates, which could cause actual funding requirements to differ materially from projected funding.

OFF-BALANCE SHEET ARRANGEMENTS

The following table summarizes the corporation’s off-balance sheet arrangements, which consist principally of letters of credit and obligations to pay earn outs with respect to certain acquisitions:

	PAYMENTS DUE BY PERIOD (IN MILLIONS)
OFF-BALANCE SHEET ARRANGEMENTS		TOTAL		WITHIN 1 YEAR		1-3 YEARS		3-5 YEARS		MORE THAN 5 YEARS
Outstanding letters of credit under the Revolving Credit Agreement	$	29.2	$	29.2	$	—	$	—	$	—
Other outstanding letters of credit		8.5		8.5		—		—		—
Acquisition earn outs ¹		22.4		—		—		—		—
Total	$	60.1	$	37.7	$	—	$	—	$	—

The obligation to pay earn out amounts depends upon the attainment of specific milestones for Dayron, an operation acquired in 2002. Since it is not feasible to estimate exactly when such payments may become due, they are stated in the aggregate only. However, $1.6 million was accrued for such earn out payments in 2004.

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DISCUSSION AND ANALYSIS OF CASH FLOWS — CALENDAR YEARS 2003 AND 2002

Operating activities provided cash in the amount of $26.6 million for 2003. These results reflect reductions in accounts receivable in the Aerospace segment and in inventories in both the Industrial Distribution and Music segments, and increases in accounts payable in the Industrial Distribution segment, offset by increases in inventories in the Aerospace segment, largely related to the K-MAX program. The K-MAX inventory increase relates primarily to production of rotor blades in anticipation of their use for replacement purposes and investment in anticipated overhauls, neither of which circumstances occurred to the extent expected during 2003.

The largest element of cash flows provided from investing activities for 2003 consisted of the proceeds from the sale of the EDC operation. Approximately $8.0 million was used for acquisitions during the year. Cash used in financing activities for 2003 consisted of reductions in long-term debt and payments of dividends to shareholders.

For calendar year 2002, operating activities used a net of $11.2 million of cash. The Industrial Distribution segment was the largest user of working capital during 2002, mostly due to growth in receivables and inventories and reductions in accounts payables. Cash flow for the year was generally not affected by the $86.0 million second quarter Aerospace charges previously described because $52.7 million of the charges were non-cash in nature, $26.8 million was expected to be paid in future years and $6.5 million consisted of a write-down of receivables.

During 2002, cash was used by investing activities principally due to the acquisitions of Delamac in the Industrial Distribution segment, Dayron and RWG in the Aerospace segment, and Latin Percussion in the Music segment and by the purchase of items such as machinery and computer equipment; cash in the amount of approximately $51.2 million was used for the acquisitions. This was offset to some degree by the sale of the microwave products line. Cash provided by financing activities was primarily attributable to bank borrowings to fund the acquisitions. This was partially offset by the payment of dividends to shareholders.

OTHER SOURCES/USES OF CAPITAL

In 2003 and 2002, the corporation sold two non-core portions of the Aerospace segment in order to free capital for other uses. Specifically, in January 2003, the corporation sold EDC, its electric motor and drive business for $27.5 million. In the second quarter of 2002, the corporation sold its small microwave products line, which was associated with the former Kaman Sciences Corp. subsidiary which was sold in 1997.

At December 31, 2004, the corporation had $19.9 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 November 2000, the corporation’s board of directors approved a replenishment of the corporation’s stock repurchase program, providing for repurchase of an aggregate of 1.4 million Class A common shares for use in administration of the corporation’s stock plans and for general corporate purposes. As of December 31, 2004, a total of 269,607 shares (unchanged from September 30, 2004) had been repurchased since inception of this replenishment program. For a discussion of share repurchase activity during the three months ended December 31, 2004, please refer to Part II, Item 5(c) of the corporation’s annual report on Form 10-K for the year ended December 31, 2004.

FINANCING ARRANGEMENTS

Total average bank borrowings for the year 2004 were $51.6 million compared to $43.0 million for 2003 and $23.8 million for 2002.

The corporation maintains a revolving credit agreement, as amended (the “Revolving Credit Agreement”) with several banks that provides a $150 million five-year commitment scheduled to expire in November 2005. Interest is charged at current market rates. Effective September 30, 2004, the Revolving Credit Agreement was amended to permit the corporation to exclude the MDHI non-cash sales and pre-tax earnings charge from the calculations that are made to determine compliance with the agreement’s financial covenants. As a result of the amendment, the corporation remains in compliance with those financial covenants at December 31, 2004.

The amendment also incorporates a new financial covenant which provides that if the corporation’s EBITDA to net interest expense ratio is less than 6 to 1, the ratio of i) accounts receivable and inventory for certain Kaman subsidiaries to ii) the corporation’s consolidated total indebtedness cannot be less than 1.6 to 1. The already existing financial covenants include a requirement that the corporation have i) EBITDA, at least equal to 300 percent of net interest expense, on the basis of a rolling four quarters and ii) a ratio of consolidated total indebtedness to total capitalization of not more than 55 percent. Please refer to the Revolving Credit Agreement and the amendment for specific definitions of the terms used in this paragraph. The Revolving Credit Agreement, as amended, has been filed with the Securities and Exchange Commission as exhibit 4 to Form 10-Q filed on November 14, 2000, Document No. 0000054381-00-500006, as amended by Document No. 0000054381-02-000022 filed on August 14, 2002, and amended by Document No. 0000054381-03-000124 filed on November 5, 2003, as amended by Document No. 0000054381-04-000070 (the amendment described above) filed on October 21, 2004.

Facility fees under the Revolving Credit Agreement are charged on the basis of the corporation’s credit rating from Standard & Poor’s, which is a BBB investment grade rating. Management believes that this is a favorable rating for a corporation of its size and the rating was reaffirmed by Standard & Poor’s in April 2004. The rating continues to be accompanied by a “negative outlook” which was assigned to the corporation and several other aerospace companies in the wake of the events of September 11, 2001 and the subsequent weakness in aerospace markets. Under the terms of the current Revolving Credit Agreement, if this rating should decrease, the effect would be to increase facility fees as well as the interest rates charged.

At December 31, 2004, borrowings under the Revolving Credit Agreement are included in the current portion of long-term debt. As of December 31, 2004, there was $115.8 million available for borrowing under the Revolving Credit Agreement.

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The corporation also maintains a 9.5 million Euro term loan and revolving credit facility (the “Euro Credit Agreement”) with Wachovia Bank National Association, one of its Revolving Credit Agreement lenders. In general, the Euro Credit Agreement contains the same financial covenants as the Revolving Credit Agreement described previously and the term of the Euro Credit Agreement expires at the same time as the Revolving Credit Agreement. It is currently anticipated that the Euro Credit Agreement will be replaced with an equally appropriate facility. The Euro Credit Agreement was amended effective September 30, 2004 to incorporate the terms of the amendment to the Revolving Credit Agreement described above. In 2003, the Euro Credit Agreement was amended to conform with the 2003 amendment to the Revolving Credit Agreement and the corporation entered into an arrangement with Wachovia that permits the corporation to lock in a fixed rate of interest for the RWG financing.

Letters of credit are generally considered borrowings for purposes of the Revolving Credit Agreement. A total of $29.2 million in letters of credit were outstanding at December 31, 2004, a significant portion of which is related to the Australia SH-2G(A) program. The letter of credit for the production portion of the Australia program has a balance of $20 million, the majority of which is expected to remain in place until this portion of the program is completed.

Prior to November 2003, the corporation also maintained a $75 million “364-day” annually renewable facility as part of the Revolving Credit Agreement. In view of the longer term attractiveness of fixed rates at the time the determination was made and the fact that the “364-day” facility had never been used, the corporation permitted it to expire in November 2003. In the third quarter of 2003, the Revolving Credit Agreement was amended to give lenders under a potential new fixed rate financing of up to $75 million the same covenant and guarantee protections that the Revolving Credit Agreement lenders currently possess. As the corporation elected not to pursue fixed rate financing, the provisions of the amendment were allowed to expire on June 30, 2004.

Forward-Looking Statements

This report may contain forward-looking information relating to the corporation’s business and prospects, including aerostructures and helicopter subcontract programs and components, advanced technology products, the SH-2G and K-MAX helicopter programs, the industrial distribution and music 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) the successful conclusion of competitions for government programs and thereafter contract negotiations with government authorities, both foreign and domestic; 2) political conditions in countries where the corporation does, or intends to do, business; 3) standard government contract provisions permitting renegotiation of terms and termination for the convenience of the government; 4) economic and competitive conditions in markets served by the corporation, particularly defense, commercial aviation, industrial production and consumer market for music products, as well as global economic conditions; 5) satisfactory completion of the Australian SH-2G(A)program, including successful completion and integration of the full ITAS software; 6) receipt and successful execution of production orders for the JPF U.S. government contract (including the exercise of all contract options as such exercise has been assumed in connection with goodwill impairment evaluations) and receipt of orders from allied militaries; 7) satisfactory resolution of the EODC/University of Arizona litigation; 8) achievement of enhanced business base in the Aerospace segment in order to better absorb overhead and general and administrative expenses; 9) satisfactory results of negotiations with NAVAIR concerning the corporation’s leased facility in Bloomfield, Conn.; 10) profitable integration of acquired businesses into the corporation’s operations; 11) changes in supplier sales or vendor incentive policies; 12) the effect of price increases or decreases; 13) pension plan assumptions and future contributions; 14) continued availability of raw materials in adequate supplies; 15) satisfactory resolution of the supplier switch and incorrect part issues attributable to Dayron suppliers and others; 16) cost growth in connection with potential environmental remediation activities related to the Bloomfield and Moosup facilities; 17) successful replacement of the corporation’s revolving credit facility upon its expiration; and 18) currency exchange rates, taxes, changes in laws and regulations, interest rates, inflation rates, general business conditions and other factors. Any forward-looking information provided in this report should be considered with these factors in mind. The corporation assumes no obligation to update any forward-looking statements contained in this report.

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SELECTED QUARTERLY FINANCIAL DATA

KAMAN CORPORATION AND SUBSIDIARIES

(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

		FIRST QUARTER		SECOND QUARTER¹			THIRD QUARTER²			FOURTH QUARTER³		TOTAL YEAR⁴
NET SALES
2004 (as reported)	$	245,678	$	247,171		$	246,017		$	—**	$	—**
2004 (as adjusted)		245,151		247,509			246,306			256,226		995,192
2003		216,010		216,311			223,324			238,854		894,499

GROSS PROFIT 2004 (as reported)	$	62,266	$	55,079		$	50,073		$	—**	$	—**
2004 (as adjusted)		61,739		55,417			50,362			57,389		224,907
2003		57,887		57,824			54,360			52,837		222,908

NET EARNINGS (LOSS)
2004 (as reported)	$	1,292	$	(1,836	)	$	(11,889	)	$	—**	$	—**
2004 (as adjusted)		1,173		(1,702	)		(11,786	)		493		(11,822	)
2003		13,966		3,284			1,188			967		19,405

PER SHARE - BASIC 2004 (as reported)	$	.06	$	(.08	)	$	(.52	)	$	—**	$	—**
2004 (as adjusted)		.05		(.07	)		(.52	)		.02		(.52	)
2003		.62		.15			.05			.04		.86

PER SHARE - DILUTED 2004 (as reported)	$	.06	$	(.08	)	$	(.52	)	$	—**	$	—**
2004 (as adjusted)		.05		(.07	)		(.52	)		.02		(.52	)
2003		.60		.15			.05			.04		.86

The corporation has restated its statement of operations beginning with the first quarter 2004 to record cumulative catch-up adjustments, and subsequent period adjustments thereafter, to modify the corporation’s historical accounting for leases and timing of revenue recognition relative to the University of Arizona contract in the Aerospace segment. The restatement is further described in the “Restatement of Quarterly Earnings” Footnote in the Financial Statements.

**	Fourth Quarter 2004 and Total Year 2004 are presented in the “as adjusted” line because “as reported” amounts were not previously reported.

1:	Second quarter 2004 includes a non-cash adjustment for the Boeing Harbour Pointe contract in the amount of $7,086.

2:	Third quarter 2004 includes a non-cash sales and pre-tax earnings charge of $20,083 related to the MD Helicopters, Inc. program.

3:	Fourth quarter 2004 results include a $3,471 non-cash sales and pre-tax earnings adjustment for the curtailment of the University of Arizona contract.

4:	2004 selected quarterly financial data contains a full year of net sales and gross profit for Industrial Supplies, Inc. which was acquired in fourth quarter 2003.

The calculated per share-diluted amounts for each quarter ended 2004 and the year ended December 31, 2004 are anti-dilutive, therefore, amount shown are equal to the basic per share calculation.

The quarterly per share-diluted amounts for 2003 do not equal the “Total Year” figure due to the calculation being anti-dilutive in the third and fourth quarters.

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MANAGEMENT’S REPORT ON INTERNAL CONTROL

OVER FINANCIAL REPORTING

KAMAN CORPORATION AND SUBSIDIARIES

The management of Kaman Corporation and subsidiaries is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Securities Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the corporation’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that the corporation’s receipts and expenditures are being made only in accordance with authorizations of the corporation’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the corporation’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting and procedures may not prevent or detect misstatements. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

Under the supervision of and with the participation of management, including the undersigned, the corporation has assessed its internal controls over financial reporting as of December 31, 2004, based on criteria for effective internal control over financial reporting described in “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, the corporation concluded that the corporation maintained effective internal control over financial reporting as of December 31, 2004, based on the specified criteria. Management’s assessment of the effectiveness of internal control over financial reporting has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report, which is included herein.

March 15, 2005

/s/ Paul R. Kuhn		/s/ Robert M. Garneau
Paul R. Kuhn		Robert M. Garneau
Chairman, President and		Executive Vice President and
Chief Executive Officer		Chief Financial Officer

Page 16

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

KAMAN CORPORATION AND SUBSIDIARIES

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, 2004 and 2003, 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, 2004. These consolidated financial statements are the responsibility of the corporation’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 the standards of the Public Company Accounting Oversight Board (United States). 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 as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Kaman Corporation’s internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 15, 2005 expressed an unqualified opinion of management’s assessment of, and the effective operation of, internal control over financial reporting.

KPMG LLP

Hartford, Connecticut

March 15, 2005

Page 17

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

KAMAN CORPORATION AND SUBSIDIARIES

THE BOARD OF DIRECTORS AND SHAREHOLDERS

KAMAN CORPORATION

We have audited management’s assessment, included in the accompanying Management's Report on Internal Control Over Financial Reporting, that Kaman Corporation maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Kaman Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the corporation’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A corporation’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A corporation’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the corporation; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the corporation are being made only in accordance with authorizations of management and directors of the corporation; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the corporation’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that Kaman Corporation maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, Kaman Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Kaman Corporation and subsidiaries as of December 31, 2004 and 2003, 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, 2004, and our report dated March 15, 2005 expressed an unqualified opinion on those consolidated financial statements.

KPMG LLP

Hartford, Connecticut

March 15, 2005

Page 18

CONSOLIDATED BALANCE SHEETS

KAMAN CORPORATION AND SUBSIDIARIES

(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)

December 31		2004			2003
ASSETS CURRENT ASSETS Cash and cash equivalents	$	12,369		$	7,130
Accounts receivable, net		190,141			193,243
Inventories		196,718			178,952
Income taxes receivable		—			1,043
Deferred income taxes		35,837			26,026
Other current assets		15,270			12,457
Total current assets		450,335			418,851
PROPERTY, PLANT AND EQUIPMENT, NET		48,958			51,049
GOODWILL		40,933			38,638
OTHER INTANGIBLE ASSETS, NET		14,605			14,709
DEFERRED INCOME TAXES		4,086			2,480
OTHER ASSETS		3,414			2,584
TOTAL ASSETS	$	562,331		$	528,311
LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Notes payable	$	7,255		$	6,013
Current portion of long-term debt		17,628			1,660
Accounts payable - trade		74,809			59,600
Accrued salaries and wages		14,668			8,698
Accrued vacations		5,596			5,885
Accrued contract losses		37,852			23,611
Accrued restructuring costs		3,762			6,109
Advances on contracts		16,721			19,693
Other accruals and payables		45,002			29,286
Income taxes payable		2,812			—
Total current liabilities		226,105			160,555
LONG-TERM DEBT, EXCLUDING CURRENT PORTION		18,522			36,624
OTHER LONG-TERM LIABILITIES		33,534			27,949
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 2004 and 2003		23,066			23,066
Class B, authorized 1,500,000 shares, voting; issued 667,814 shares in 2004 and 2003		668			668
Additional paid-in capital		76,468			76,744
Retained earnings		197,586			219,401
Unamortized restricted stock awards		(893	)		(1,727	)
Accumulated other comprehensive loss		(684	)		(1,311	)
		296,211			316,841
Less 971,653 shares and 1,103,636 shares of Class A common stock in 2004 and 2003, respectively, held in treasury, at cost		(12,041	)		(13,658	)
Total shareholders’ equity		284,170			303,183
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	562,331		$	528,311

See accompanying notes to consolidated financial statements.

Page 19

CONSOLIDATED STATEMENTS OF OPERATIONS

KAMAN CORPORATION AND SUBSIDIARIES

(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

Year ended December 31		2004^1,⁴			2003²			2002³
NET SALES	$	995,192		$	894,499		$	880,776
COSTS AND EXPENSES Cost of sales ⁵		770,285			671,591			723,176
Selling, general and administrative expense		239,368			206,416			199,520
Net gain on sale of product lines and other assets		(199	)		(18,163	)		(2,299	)
Restructuring costs ⁶		—			—			8,290
Other operating income		(1,731	)		(1,448	)		(1,302	)
Interest expense, net		3,580			3,008			2,486
Other expense, net		1,053			1,265			1,831
		1,012,356			862,669			931,702
EARNINGS (LOSS) BEFORE INCOME TAXES		(17,164	)		31,830			(50,926	)
INCOME TAX BENEFIT (EXPENSE)		5,342			(12,425	)		17,325
NET EARNINGS (LOSS)	$	(11,822	)	$	19,405		$	(33,601	)
PER SHARE Net earnings (loss) per share: Basic	$	(.52	)	$	.86		$	(1.50	)
Diluted ⁷		(.52	)		.86			(1.50	)
Dividends declared		.44			.44			.44

The 2004 results include a full year of activity of the Industrial Supplies, Inc. acquisition in fourth quarter 2003.

The 2003 results include a full year of activity from the acquisitions of Latin Percussion, Inc., RWG, Dayron and Delamac de Mexico which were acquired during 2002.

The 2002 results include a full year of activity from the acquisitions of Plastic Fabricating Company, Inc. and A-C Supply, Inc. during 2001.

The 2004 results net of non-cash adjustments, of approximately $41,600 for certain programs with MD Helicopters, Inc., Royal Australian Navy, Boeing Harbour Pointe and the University of Arizona, are further described in the Accrued Contract Loss and Accounts Receivable, Net Note in the Financial Statements.

Cost of sales for 2002 includes the write-off of K-MAX and Moosup facility assets of $50,000 and $2,679, respectively and $18,495 of accrued contract loss for the Australia SH-2G(A) program, all of which are associated with the Aerospace segment.

Restructuring costs for the year ended December 31, 2002 relate to the closure of the Moosup, Connecticut facility in 2003 and are associated with the charge taken in the Aerospace segment.

The calculated diluted per share amounts for the year ended December 31, 2004 and 2002 are anti-dilutive, therefore, amounts shown are equal to the basic per share calculation.

See accompanying notes to consolidated financial statements.

Page 20

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

KAMAN CORPORATION AND SUBSIDIARIES

(IN THOUSANDS EXCEPT SHARE AMOUNTS)

Year ended December 31		2004			2003			2002
SERIES 2 PREFERRED STOCK	$	—		$	—		$	—
CLASS A COMMON STOCK		23,066			23,066			23,066
CLASS B COMMON STOCK		668			668			668
ADDITIONAL PAID-IN CAPITAL Balance - beginning of year Employee stock plans Restricted stock awards		76,744 (298) 22			77,267 (398 (125	) )		77,389 (304) 182
Balance - end of year		76,468			76,744			77,267
RETAINED EARNINGS Balance - beginning of year Net earnings (loss)¹ Dividends declared		219,401 (11,822 (9,993	) )		209,932 19,405 (9,936	)		253,403 (33,601 (9,870	) )
Balance - end of year		197,586			219,401			209,932
UNAMORTIZED RESTRICTED STOCK AWARDS Balance - beginning of year Stock awards issued Amortization of stock awards		(1,727) (133) 967			(2,094) (529) 896			(2,206) (832) 944
Balance - end of year		(893	)		(1,727	)		(2,094	)
ACCUMULATED OTHER COMPREHENSIVE LOSS Balance - beginning of year Foreign currency translation adjustment ¹		(1,311) 627			(1,099 (212	) )		(919 (180	) )
Balance - end of year		(684	)		(1,311	)		(1,099	)
TREASURY STOCK Balance - beginning of year Shares acquired in 2004 - 757; 2003 - 20,000; 2002 - 37,300 Shares reissued under various stock plans in 2004 - 132,740; 2003 - 190,455; 2002 - 218,423		(13,658) (9) 1,626			(15,793) (205) 2,340			(17,820) (412) 2,439
Balance - end of year		(12,041	)		(13,658	)		(15,793	)
TOTAL SHAREHOLDERS’ EQUITY	$	284,170		$	303,183		$	291,947

1: Comprehensive income (loss) is $(11,195), $19,193, and $(33,781) for 2004, 2003 and 2002, respectively.

See accompanying notes to consolidated financial statements.

Page 21

CONSOLIDATED STATEMENTS OF CASH FLOWS

KAMAN CORPORATION AND SUBSIDIARIES

(IN THOUSANDS)

Year ended December 31		2004			2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES Net earnings (loss)	$	(11,822	)	$	19,405		$	(33,601	)
Adjustments to reconcile net earnings (loss) to cash provided by (used in) operating activities: Depreciation and amortization		8,969			10,019			11,620
Provision for losses on accounts receivable		2,180			487			(1,086	)
Net gain on sale of product lines and other assets		(199	)		(18,163	)		(2,299	)
Restructuring costs		—			—			8,290
Non-cash write-down of assets		962			—			52,679
Non-cash sales adjustment for costs - not billed		21,332			—			—
Deferred income taxes		(11,421	)		5,994			(16,715	)
Other, net		7,418			2,376			3,403
Changes in current assets and liabilities, excluding effects of acquisitions/divestitures: Accounts receivable		(20,179	)		2,744			(3,539	)
Inventories		(18,175	)		(9,806	)		(12,751	)
Income taxes receivable		1,043			4,149			(4,888	)
Other current assets		(2,695	)		2,267			(2,691	)
Accounts payable - trade		15,149			10,106			(8,813	)
Accrued contract losses		14,241			(3,063	)		26,674
Accrued restructuring costs		(2,347	)		(1,485	)		(696	)
Advances on contracts		(2,972	)		(1,846	)		(9,286	)
Accrued expenses and payables		21,179			3,459			(17,470	)
Income taxes payable		2,807			—			—
Cash provided by (used in) operating activities		25,470			26,643			(11,169	)
CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of product lines and other assets		376			28,339			8,034
Expenditures for property, plant and equipment		(7,539	)		(9,069	)		(7,601	)
Acquisition of businesses, less cash acquired		(2,435	)		(7,748	)		(51,227	)
Other, net		(621	)		(1,599	)		1,854
Cash provided by (used in) investing activities		(10,219	)		9,923			(48,940	)
CASH FLOWS FROM FINANCING ACTIVITIES Changes in notes payable		1,197			(2,664	)		5,985
Changes in debt		(2,134	)		(23,508	)		36,906
Proceeds from exercise of employee stock plans		1,218			1,287			1,485
Purchases of treasury stock		(9	)		(205	)		(412	)
Dividends paid		(9,979	)		(9,917	)		(9,850	)
Other		(305	)		—			732
Cash provided by (used in) financing activities		(10,012	)		(35,007	)		34,846
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		5,239			1,559			(25,263	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		7,130			5,571			30,834
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	12,369		$	7,130		$	5,571

See accompanying notes to consolidated financial statements.

Page 22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2004, 2003 AND 2002

KAMAN CORPORATION AND SUBSIDIARIES

(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)

RESTATEMENT OF QUARTERLY EARNINGS (UNAUDITED)

In conjunction with the year end financial reporting process, the corporation has restated its statement of operations beginning with the first quarter of 2004 to correct its accounting by recording a cumulative catch-up pre-tax adjustment of approximately $660 in rent expense and related deferred rent liability pertaining to lease accounting as well as a negative sales adjustment of $527 for the University of Arizona contract in the Aerospace segment. The adjustment of $660 modifies the corporation’s historical accounting for rent holidays, escalating rent and tenant allowances to amortize such items on a straight line basis over the term of the lease arrangement, specifically when the corporation takes possession of the leased space, in accordance with Statement of Financial Accounting Standard No. 13 and FASB Technical Bulletin No. 85-3. The corporation historically had accounted for such escalating rent and rent holidays as rental payments became due. In addition, in accordance with FASB Technical Bulletin No. 88-1 “Issues Relating to Accounting for Leases” the adjustment establishes a related deferred liability for tenant allowances for a small number of leases. The corporation has and will continue to present such allowances as a component of cash flow from operating activities on the consolidated statement of cash flows. The adjustment has been included in income from continuing operations. The adjustment of $527 was made to reverse net sales recorded in excess of costs incurred on the claim element of the University of Arizona contract as further described in the Accounts Receivable, Net and Commitments and Contingencies Footnotes. The corporation further recorded net pre-tax adjustments of $978 as a reduction to selling, general and administrative expenses. The net adjustments relate to prior periods and consist of recognition of $813 of adjustments related to group insurance, $430 to reverse a product liability reserve established by the Industrial Distribution segment and other offsetting adjustments primarily related to establishing a reserve for sales allowances in the Music segment of $265. Additional adjustments of which the majority relates to the lease accounting and University of Arizona contract were recorded during the second and third quarters of 2004 as presented in the Selected Quarterly Financial Data. The impact of the above items was immaterial to prior year financial statements.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation - The accompanying consolidated financial statements include the accounts of the parent corporation and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Certain amounts in prior year financial statements and notes thereto have been reclassified to conform to current year presentation.

Use of Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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.

Foreign Currency Translation - Generally the balance sheets of foreign operations are translated into U.S. dollars using current exchange rates, while statements of operations are translated at average rates. Adjustments resulting from foreign currency translations are included as cumulative translation adjustments in accumulated other comprehensive income (loss).

Concentration of Credit Risk - Financial instruments that potentially subject the corporation to concentrations of credit risk consist principally of cash, cash equivalents and trade accounts receivable. The Aerospace segment had one customer with an accounts receivable balance that accounted for 34.5% and 31.5% as of December 31, 2004 and 2003, respectively. No individual customer accounted for more than 10% of net sales. Foreign sales were approximately 13.6%, 15.0% and 13.9% of the corporation’s net sales in 2004, 2003 and 2002, respectively and are concentrated primarily in Australia, Canada, Europe, Mexico, and Asia.

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.

Revenue Recognition - Sales and estimated profits under long-term contracts are principally recognized on the percentage-of-completion method of accounting, generally using as a measurement basis either a 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) or units-of-delivery. Reviews of contracts are made routinely 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.

Sales and related cost of sales for products and programs not accounted for under the percentage-of-completion method are recognized when products are shipped to customers and title has passed.

The corporation has classified its freight costs charged to customers in net sales and the correlating expense as a cost of sales for the years ended December 31, 2004, 2003 and 2002.

Costs of Sales and Operating Expenses - The cost of sales line item includes costs of products and services sold (i.e., purchased product, raw material, direct labor, engineering labor, outbound freight charges and indirect and overhead charges). Selling expenses primarily consist of advertising, promotion, bid and proposal, employee payroll and corresponding benefits and commissions paid to sales and marketing personnel. General and administrative expenses primarily consist of employee payroll including executive, administrative and financial personnel and corresponding benefits, incentive compensation, independent research and development, consulting expenses, warehousing costs, depreciation and amortization.

Page 23

Certain costs including purchasing costs, receiving costs and inspection costs for certain reporting segments are not included in the costs of sales line item. For the years ended December 31, 2004, 2003 and 2002, these balances of $2,992, $2,659 and $2,508, respectively, are included in general and administrative costs.

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 raw 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. The estimated useful lives for buildings range from 15 to 30 years and leasehold improvements range from 5 to 20 years, whereas machinery, office furniture and equipment generally range from 3 to 10 years. At the time of retirement or disposal, the acquisition cost of the asset and related accumulated depreciation are eliminated and any gain or loss is credited or charged against income.

In the event that facts and circumstances indicate that the carrying value of long-lived assets or other assets may be impaired, a specific evaluation of the assets or groups of assets is performed to determine whether any impairment exists.

Maintenance and repair items are charged against income as incurred, whereas renewals and betterments are capitalized and depreciated.

Goodwill and Other Intangible Assets - Goodwill and intangible assets with indefinite lives are evaluated for impairment at least annually in the fourth quarter, after the annual forecasting process. Intangible assets with finite lives (presently consisting of patents) are amortized using the straight-line method over their estimated period of benefit. The goodwill and other intangible assets are reviewed for possible impairment whenever changes in conditions indicate carrying value may not be recoverable.

Vendor Incentives - The corporation’s Industrial Distribution segment enters into agreements with certain vendors providing for inventory purchase incentives that are generally earned and recognized upon achieving specified volume-purchasing levels. To the extent that the corporation has inventory on hand that qualify for specific rebate programs, the recognition of the rebate is deferred until the inventory is sold. The segment recognizes these incentives as a reduction in cost of sales. As of December 31, 2004 and 2003, total vendor incentive receivables are $8,807 and $5,648, respectively.

Research and Development - Research and development costs not specifically covered by contracts are charged against income as incurred through selling, general and administrative expense. Such costs amounted to $4,040, $4,318 and $5,363 in 2004, 2003 and 2002, respectively.

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.

Stock-based Compensation - As permitted by Statement of Financial Accounting Standards No. 123 “Accounting for Stock-Based Compensation” (“SFAS 123”), 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. As required by SFAS 123, the pro forma net earnings and earnings per 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.

		2004			2003			2002
Net earnings (loss): As reported	$	(11,822	)	$	19,405		$	(33,601	)
Stock compensation expense reported in net earnings (loss), net of tax effect		1,330			918			312
Less stock compensation expense, net of tax effect		(2,069	)		(1,685	)		(1,228	)
Pro forma net earnings (loss)	$	(12,561	)	$	18,638		$	(34,517	)
Earnings (loss) per share - basic: As reported		(.52	)		.86			(1.50	)
Pro forma		(.55	)		.83			(1.54	)
Earnings (loss) per share - diluted: As reported		(.52	)		86			(1.50	)
Pro forma		(.55	)		.83			(1.54	)

Page 24

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 2004, 2003 and 2002:

		2004			2003			2002
Expected dividend yield		3.1	%		4.4	%		3.0	%
Expected volatility		45	%		47	%		45	%
Risk-free interest rate		4.1	%		3.9	%		4.9	%
Expected option lives		8 years			8 years			8 years
Per share fair value of options granted	$	5.36		$	3.33		$	5.86

Recent Accounting Standards - In December 2003, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits” (“SFAS 132R”). SFAS 132R revises employers’ disclosures about pension plans and other postretirement benefit plans to include information describing the types of plan assets, investment strategy, measurement dates, plan obligations, cash flows, and components of net periodic benefit cost recognized during interim periods. SFAS 132R is effective for financial statements for interim or annual periods ending after December 15, 2003. The corporation has provided the disclosures required in accordance with its terms.

In November 2004, the FASB issued Statement of Financial Accounting Standards No. 151 “Inventory Costs - an amendment of ARB No. 43, Chapter 4” (“SFAS 151”). SFAS 151 clarifies the accounting for inventory when there are abnormal amounts of idle facility expense, freight, handling costs, and wasted materials. Under existing generally accepted accounting principles, items such as idle facility expense, excessive spoilage, double freight, and re-handling costs may be “so abnormal” as to require treatment as current period charges rather than recorded as adjustments to the value of the inventory. SFAS 151 requires that those items be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal.” In addition, SFAS 151 requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The provisions are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. However, earlier application is permitted for inventory costs incurred during fiscal years beginning after the date this statement was issued. The corporation is currently evaluating the financial impact the adoption of this standard will have on the corporation’s financial position and results of operations. The changes will be applied prospectively and disclosures, if any, will be included upon the adoption of this standard.

ACQUISITION OF BUSINESSES

In the aggregate, the corporation incurred $2,435, $7,748 and $51,227 for the acquisition of businesses and contingency payments at Dayron in 2004, 2003 and 2002, respectively. There is potential for contingency payments at Dayron of up to an additional $22,369 over time if certain milestones are reached. Any such contingency payments would be treated as additional goodwill. An accrual and additional goodwill of $1,631 was recorded as of December 31, 2004 associated with these additional payments for which milestones were met, which will be paid during the first quarter 2005. Total contingency payments accrued or paid through 2004 are $2,631.

During 2004 the corporation issued a note for $405 to acquire certain assets, primarily consisting of inventory, of Brivsa de Mexico, a small Monterrey, Mexico distributor, expanding the corporation’s ability to serve customers with operations in Mexico.

During the fourth quarter of 2003, the corporation purchased a majority of the assets and business of Industrial Supplies, Inc. (“ISI”), located in Birmingham, Alabama. ISI was a distributor of a wide variety of bearing, conveyor, electrical, fluid power and power transmission components used by manufacturing, mining, steel, lumber, pulp and paper, food and other industries. The assets acquired, liabilities assumed and results of operations of ISI since the acquisition have been included in the Industrial Distribution segment.

In October 2002, the corporation purchased the stock of Latin Percussion, Inc., a leading global distributor of a wide range of latin hand percussion instruments. The assets acquired, liabilities assumed and results of operations of Latin Percussion, Inc. since the acquisition have been included in the Music segment.

In July 2002, the corporation purchased the stock of RWG Frankenjura-Industrie Flugwerklager GmbH (“RWG”), a German aerospace bearing manufacturer that complements the corporation’s proprietary line of bearings and provides a presence in European aerospace markets. The assets acquired, liabilities assumed and results of operations of RWG since the acquisition have been included in the Aerospace segment.

In July 2002, the corporation purchased the assets and certain liabilities of Dayron (a division of DSE, Inc.), a weapons fuze manufacturer, located in Orlando, Florida. Dayron manufactures bomb fuzes for a variety of munitions programs, including the U.S. Air Force Joint Programmable Fuze (JPF) program. The assets acquired, liabilities assumed and results of operations of Dayron since the acquisition have been included in the Aerospace segment.

Page 25

During 2002, the corporation acquired a 60% equity interest in Delamac de Mexico S.A. de C.V. (“Delamac”), a leading distributor of industrial products headquartered in Mexico City. Delamac supplies power transmission, bearings and fluid power products. The assets acquired, liabilities assumed and results of operations of Delamac since the acquisition have been included in the Industrial Distribution segment. During 2004, the corporation purchased an additional equity interest in Delamac and as of the end of 2004, the corporation had a 72.5% equity interest in Delamac.

DIVESTITURES

In January 2003, the corporation sold its electric motor and drive business, operating as the Electromagnetics Development Center (“EDC”) within the Kaman Aerospace subsidiary, to DRS Technologies, Inc. for $27,500. The sale resulted in a pre-tax gain of $17,415. The EDC contributed sales of approximately $14,000 in 2002.

In April 2002, the corporation sold its microwave products line to Meggitt Safety Systems, Inc. That product line was associated with the former Kaman Sciences Corp., a subsidiary which was sold in 1997, being no longer core to the segment’s advanced technology business.

RESTRUCTURING COSTS

The Aerospace segment recorded pre-tax restructuring costs of $8,290 in the second quarter of 2002 for the cost of phasing out the company’s aircraft manufacturing plant in Moosup, Connecticut. The charges represented severance costs of $3,290 at the Moosup and Bloomfield, Connecticut locations for approximately 400 employees and costs of $5,000 for closing the facility (including costs of an ongoing voluntary environmental remediation program and ultimate disposal).

The following table displays the activity and balances of the pre-tax charges relating to the Moosup plant closure as of and for the year ended December 31, 2004:

		2003		CASH PAYMENTS, NET			NON-CASH CHARGES		2004
Restructuring costs: Employee termination benefits	$	1,109	$	(1,109	)	$	—	$	—
Facility closings		5,000		(1,238	)		—		3,762
	$	6,109	$	(2,347	)	$	—	$	3,762

During 2004 and 2003, the corporation incurred an additional $412 and $3,550, respectively of period costs for moving machinery to other company facilities and recertifying certain products and processes.

ASSET WRITE-DOWNS/WRITE-OFFS

During the second quarter of 2002, as a result of management’s evaluation of the K-MAX program, the Aerospace segment wrote-down its K-MAX helicopter program assets, including $46,665 for inventories and $3,335 for capital equipment. In addition, the segment wrote-off Moosup facility assets of $2,679, as a result of the previously described facility closure. These charges are included in cost of sales for 2002. In 2004, the Aerospace segment wrote-down inventories of $962 for its Boeing Harbour Pointe contract, as further described in the Accrued Contract Losses note.

ACCRUED CONTRACT LOSSES

During the second quarter of 2002, the Aerospace segment recorded a pre-tax charge of $25,000 for estimated cost growth on the Australia SH-2G(A) helicopter program, which put the contract in a loss position. Accordingly, the corporation eliminated the $6,505 profit element of previously recorded sales and recognized pre-tax loss accruals of $18,495 for anticipated cost growth associated with completion of the aircraft, and final integration and testing of the aircraft’s advanced Integrated Tactical Avionic System (“ITAS”) software.

During the fourth quarter of 2002, the Aerospace segment recorded an additional loss accrual of $2,413 for the Australia SH-2G(A) helicopter program. This loss accrual reflected the impact of higher overhead rates, which were attributable to lower production activity in the corporation’s aerospace subsidiary.

Production of the eleven SH-2G(A) aircraft for the program is essentially complete. As previously reported, the aircraft lack the full ITAS software and progress is continuing on this element of the program. Due to the complexity of the integration process and testing results that indicate additional work to be done, the corporation added $5,474 to its accrued contract loss during 2004 to reflect the current estimate of costs to complete the program.

During the second quarter of 2004, the corporation recorded a $7,086 non-cash adjustment for the Boeing Harbour Pointe contract in the Aerospace segment. The adjustment consisted of an accrued contract loss of $4,280 and a valuation adjustment of $2,806 associated with portions of the program inventory. Subsequent to the second quarter, the corporation received additional program orders that will utilize certain existing inventory. While the total non-cash adjustment remained the same for the year, the amount of accrued contract loss increased to $6,124 and the inventory valuation adjustment decreased to $962 as a result of these additional orders.

Page 26

ACCOUNTS RECEIVABLE, NET

Accounts receivable consist of the following:

December 31		2004			2003
Trade receivables	$	87,158		$	78,156
U.S. Government contracts: Billed		15,360			9,355
Costs and accrued profit - not billed		5,062			10,014
Commercial and other government contracts: Billed		25,057			19,711
Costs and accrued profit - not billed		63,024			79,347
Less allowance for doubtful accounts		(5,520	)		(3,340	)
Total	$	190,141		$	193,243

The allowance for doubtful accounts reflects management’s best estimate of probable losses inherent in the trade accounts receivable and billed contracts balance. Management determines the allowance based on known troubled accounts, historical experience, and other currently available evidence.

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 $6,435 of such costs and accrued profits at December 31, 2004 will be collected after one year. The costs included in this estimate are for the corporation’s program with the Royal Australian Navy.

The corporation’s Aerospace segment also had a program with MD Helicopters, Inc. (“MDHI”) that involved multi-year contracts for production of fuselages for the MDHI 500 and 600 series helicopters and composite rotor blades for the MD Explorer helicopter. Because of unresolved payment issues, the company had stopped work on the program in 2003.

It had been the corporation’s expectation that MDHI would be successful in executing its strategy to improve its financial and operational circumstances. MDHI management had indicated that, although it continued to work on this strategy, it had not been able to resolve the situation; therefore, due to unresolved payment issues and the inability of MDHI to successfully execute its strategy to improve its financial and operational circumstances, the corporation recorded a non-cash sales and pre-tax earnings charge of $20,083 (including an $18,211 negative sales adjustment for costs not billed and a $1,872 addition to the corporation’s bad debt reserve for billed receivables) in the third quarter 2004 that eliminated the corporation’s investment in contracts with MDHI. The charge is not expected to result in any future cash expenditures. The corporation intends to maintain a business relationship with MDHI should it be successful in improving its financial and operational situation.

Additionally, during the fourth quarter 2004, the corporation recorded a non-cash sales and pre-tax earnings adjustment of $3,471 (includes a $3,221 negative sales adjustment for costs not billed and a $250 addition to the corporation’s bad debt reserve for billed receivables) that was previously recognized for a contract with the University of Arizona due to the curtailment of the contract. This matter is further discussed in the corporation’s commitments and contingencies footnote.

INVENTORIES

Inventories are comprised as follows:

December 31		2004		2003
Merchandise for resale	$	103,117	$	94,042

Contracts in process: U.S. Government, net of progress payments of $11,325 and $12,876 for 2004 and 2003, respectively		29,600		21,127


Commercial		21,173		15,895
Other work in process (including certain general stock materials)		21,284		23,103

Finished goods		21,544		24,785
Total	$	196,718	$	178,952

Included above in other work in process and finished goods at December 31, 2004 and 2003 is K-MAX inventory of $29,944 and $33,437, respectively.

The corporation had inventory of $3,743 and $3,532 as of December 31, 2004 and 2003, respectively on consignment at customer locations, specifically related to the Industrial Distribution segment.

Page 27

The aggregate amounts of general and administrative costs incurred in the Aerospace segment during 2004, 2003 and 2002 were $24,523, $34,793, and $51,845 respectively.

The estimated amounts of general and administrative costs remaining in contracts in process at December 31, 2004 and 2003 amount to $6,254 and $4,118, respectively, and are based on the ratio of such allocated costs to total costs incurred.

PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment are recorded at cost and summarized as follows:

December 31		2004		2003
Land	$	4,251	$	4,236
Buildings		29,423		29,070
Leasehold improvements		13,800		13,486
Machinery, office furniture and equipment		111,125		107,239
Total		158,599		154,031
Less accumulated depreciation and amortization		109,641		102,982
Property, plant and equipment, net	$	48,958	$	51,049

Idle facilities and related costs for the Aerospace segment of $3,330 and $1,386 for 2004 and 2003, respectively were included in cost of sales. There were no idle facility and related costs during 2002.

Depreciation expense was $8,835, $9,884 and $11,486 for 2004, 2003 and 2002, respectively.

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill and other intangible assets, net are as follows:

December 31		2004		2003
Goodwill:

Aerospace	$	34,010	$	31,690
Industrial Distribution		4,252		4,277
Music		2,671		2,671
	$	40,933	$	38,638

December 31		2004		2003

Other intangible assets, net: Trade name - not subject to amortization	$	13,819	$	13,819
Patents, net - subject to amortization		786		890
	$	14,605	$	14,709

Intangible amortization expense was $104 in 2004 compared to $107 in 2003 and 2002.

Amortization expense for each of the next five years is expected to approximate $105 per year.

CREDIT ARRANGEMENTS — SHORT-TERM BORROWINGS AND LONG-TERM DEBT

Revolving Credit Agreement - The corporation maintains a revolving credit agreement, as amended, (the “Revolving Credit Agreement”) with several banks that provides a $150,000 five-year commitment scheduled to expire in November 2005. Prior to November 2003, the corporation also maintained a $75,000 “364-day” annually renewable facility as part of the Revolving Credit Agreement. Both portions of the Revolving Credit Agreement provide for interest at current market rates. In view of the longer term attractiveness of fixed rates in the current environment and the fact that the “364-day” facility had never been used, the corporation permitted the facility to expire in November 2003.

Effective September 30, 2004, the Revolving Credit Agreement was amended to permit the corporation to exclude the MDHI non-cash sales and pre-tax earnings charge, up to $21,000, from the calculations that are made to determine compliance with the agreement’s financial covenants.

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In the third quarter of 2003, the Revolving Credit Agreement was amended to give lenders under a potential new fixed rate financing of up to $75,000 the same covenant and guarantee protections that the Revolving Credit Agreement lenders currently possess. As the corporation elected not to pursue fixed rate financing, the provisions of the amendment were allowed to expire on June 30, 2004.

In the second quarter of 2002, the Revolving Credit Agreement was amended to exclude the non-cash portion of the 2002 second quarter charges, up to $52,500, from the financial covenant calculations under the agreement.

In general, outstanding letters of credit are considered indebtedness under the Revolving Credit Agreement. As of December 31, 2004, there was $115,818 available for borrowing under the Revolving Credit Agreement.

SHORT-TERM BORROWINGS

Under the Revolving Credit Agreement, the corporation has the ability to borrow funds on both a short-term and long-term basis. The corporation also has certain other credit arrangements with these banks to borrow funds on a short-term basis with interest at current market rates.

Short-term borrowings outstanding are as follows:

December 31		2004		2003
Revolving credit agreement	$	—	$	—
Other credit arrangements		7,255		6,013
Total	$	7,255	$	6,013

The weighted average interest rates on short-term borrowings outstanding as of December 31, 2004 and 2003 were 2.72% and 2.46%, respectively.

Long-term Debt - The corporation has long-term debt as follows:

December 31		2004		2003
Revolving credit agreement	$	5,000	$	7,000
Other credit arrangements		276		—
Euro credit agreement		10,968		9,718
Convertible subordinated debentures		19,906		21,566
Total		36,150		38,284
Less current portion		17,628		1,660
Total excluding current portion	$	18,522	$	36,624

In the third quarter of 2002, the corporation entered into a 9,500 Euro credit agreement (the “Euro Credit Agreement”) with one of the Revolving Credit Agreement lenders. In general, the Euro Credit Agreement contains the same financial covenants as the Revolving Credit Agreement described previously and the term of the Euro Credit Agreement expires at the same time as the Revolving Credit Agreement, November 2005. During the third quarter of 2003 and 2004, the Euro Credit Agreement was amended to conform with the previously described amendment to the Revolving Credit Agreement.

The corporation plans to replace the expiring Revolving Credit Agreement and the Euro Credit Agreement with another arrangement that meets its financing requirements. Consequently, at December 31, 2004, borrowings under the Revolving Credit Agreement and the Euro Credit Agreement are included in the current portion of long-term debt.

Restrictive Covenants - The most restrictive of the covenants contained in the Revolving Credit Agreement require the corporation to have i) EBITDA, as defined, at least equal to 300% of net interest expense on the basis of a rolling four quarters, ii) a ratio of accounts receivable and inventory for certain Kaman subsidiaries to the corporation’s consolidated total indebtedness of not less than 1.6 to 1 at any time that the ratio of EBITDA to net interest expense is less than 6 to 1, and iii) a ratio of consolidated total indebtedness to total capitalization of not more than 55%. As permitted under the Revolving Credit Agreement, the MDHI non-cash sales and pre-tax earnings charge, up to $21,000, was excluded from the financial covenant calculations. The non-cash portion of the 2002 second quarter charges, up to $52,500, were excluded from the financial covenant calculations during the four quarters ended March 31, 2003. The corporation remains in compliance with the required financial covenants in each period presented.

Certain Letters of Credit - The face amounts of irrevocable letters of credit issued under the Revolving Credit Agreement totaled $29,182 and $29,769 at December 31, 2004 and 2003, respectively. Of those amounts, $23,000 is attributable to the Australia SH-2G(A) helicopter program.

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 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 book value of $19,906 at December 31, 2004, which is estimated to be at fair value. Deferred charges associated with the issuance of the debenture are being amortized over the terms of the debentures.

Page 29

Long-term Debt Annual Maturities - The aggregate amounts of annual maturities of long-term debt for each of the next five years and thereafter are approximately as follows:


2005	$	17,628
2006		1,798
2007		1,798
2008		1,660
2009		1,660
Thereafter		11,606

Interest Payments - Cash payments for interest were $3,676, $3,174 and $2,668 for 2004, 2003 and 2002, 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, primarily for the Australia SH-2G(A) helicopter contract. The customer advances for that contract are fully secured by letters of credit. It is anticipated that the advances on contracts along with the majority of these letters of credit will remain in place until final acceptance of the aircraft by the Royal Australian Navy, which is expected in 2005.

WARRANTY RESERVE

During the fourth quarter 2004, the corporation established a $3,507 warranty reserve to provide for two product warranty-related issues. The first involved a supplier recall of a switch embedded in certain of Dayron’s bomb fuzes. The other involved bomb fuzes manufactured according to procedures in place at the time that Dayron was acquired by the corporation that now have been found to contain an incorrect part. The corporation is working with its customers and other parties to resolve the issues appropriately. No payments related to this warranty reserve were paid in 2004.

INCOME TAXES

The components of income tax expense (benefit) are as follows:

		2004			2003		2002

Current: Federal	$	3,203		$	5,205	$	(1,447	)
State		1,770			429		698
Foreign		1,102			797		273
		6,075			6,431		(476	)

Deferred:
Federal		(9,359	)		5,772		(17,111	)
State		(1,918	)		222		262
Foreign		(140	)		—		—
		(11,417	)		5,994		(16,849	)
Total	$	(5,342	)	$	12,425	$	(17,325	)

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The components of the deferred tax assets and deferred tax liabilities are presented below:

December 31		2004			2003
Deferred tax assets: Long-term contracts	$	15,012		$	9,284
Deferred employee benefits		21,396			15,559
Inventory		7,712			6,970
Restructuring costs		1,317			2,065
Accrued liabilities and other items		7,415			6,164
Total deferred tax assets		52,852			40,042
Deferred tax liabilities: Depreciation and amortization		(7,033	)		(7,124	)
Intangibles		(2,413	)		(1,509	)
Other items		(1,320	)		(898	)
Total deferred tax liabilities		(10,766	)		(9,531	)
Net deferred tax asset before valuation allowance		42,086			30,511
Valuation allowance		(2,163	)		(2,005	)
Net deferred tax asset after valuation allowance	$	39,923		$	28,506

Valuation allowances of $2,163 and $2,005 at December 31, 2004 and 2003 reduced the deferred tax asset attributable to foreign loss and state loss and credit carryforwards to an amount that, based upon all available information, is more likely than not to be realized. Reversal of the valuation allowance is contingent upon the recognition of future taxable income in the respective jurisdiction or changes in circumstances which cause the recognition of the benefits of the loss carryforwards to become more likely than not. The net increase in the valuation allowance of $158 is due to the generation of $301 state loss and tax credit carryforwards, offset by $143 of current and anticipated utilization of Canadian tax loss carryforwards. Canadian tax loss carryforwards are approximately $3,148, and could expire between 2005 and 2010. State carryforwards are in numerous jurisdictions with varying lives.

No valuation allowance has been recorded against other deferred tax assets 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 anticipated future income, 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.

Pre-tax income from foreign operations amounted to $3,227, $1,736 and $69 in 2004, 2003 and 2002 respectively. Income taxes have not been provided on undistributed earnings of $4,944 from foreign subsidiaries since it is the corporation’s intention to permanently reinvest such earnings or to distribute them only when it is tax efficient to do so. It is impracticable to estimate the total tax liability, if any, which would be caused by the future distribution of these earnings. It is anticipated that the corporation’s repatriation policy will not be impacted by the recently enacted provisions of the American Jobs Creation Act of 2004.

The provision for income taxes differs from that computed at the federal statutory corporate tax rate as follows:

		2004			2003			2002
Federal tax (benefit) at 35% statutory rate	$	(6,007	)	$	11,141		$	(17,824	)
State income taxes, net of federal benefit		(127	)		810			682
Tax effect of: Prior years’ overaccruals		—			(329	)		(1,156	)
Compensation		617			95			502
Meals and entertainment		413			398			392
Other, net		(238	)		310			79
Income taxes (benefit)	$	(5,342	)	$	12,425		$	(17,325	)

Cash payments for income taxes, net of refunds, were $2,198, $2,062, and $3,562 in 2004, 2003 and 2002, respectively.

Page 31

PENSION PLAN

The corporation has a non-contributory defined benefit pension plan covering the full-time U.S. employees of all U.S. subsidiaries (with the exception of certain acquired companies that have not adopted the plan). Employees become participants of the plan 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. Plan assets are invested in a diversified portfolio consisting of equity and fixed income securities (including $9,646 of Class A common stock of Kaman Corporation at December 31, 2004). The corporation uses a December 31 measurement date for its pension plan.

The pension plan costs were computed using the projected unit credit actuarial cost method and include the following components:

		2004			2003			2002
Service cost for benefits earned during the year	$	10,233		$	10,000		$	10,061
Interest cost on projected benefit obligation		24,653			24,348			24,045
Expected return on plan assets		(28,675	)		(31,445	)		(32,761	)
Net amortization and deferral		6			6			(1,382	)
Net pension cost (income)	$	6,217		$	2,909		$	(37	)

The change in actuarial present value of the projected benefit obligation is as follows:

December 31		2004			2003
Projected benefit obligation at beginning of year	$	389,892		$	361,213
Service cost		10,233			10,000
Interest cost		24,653			24,348
Actuarial liability loss		27,166			12,902
Benefit payments		(19,590	)		(18,571	)
Projected benefit obligation at end of year	$	432,354		$	389,892

The actuarial liability losses for 2004 and 2003 are principally due to effect of the changes in the discount rate.

The change in fair value of plan assets is as follows:

December 31		2004			2003
Fair value of plan assets at beginning of year	$	386,848		$	337,813
Actual return on plan assets		39,924			66,200
Employer contribution		—			1,406
Benefit payments		(19,590	)		(18,571	)
Fair value of plan assets at end of year	$	407,182		$	386,848


December 31		2004			2003
Excess (deficiency) of assets over projected benefit obligation	$	(25,171	)	$	(3,044	)
Unrecognized prior service cost		564			570
Unrecognized net (gain) loss		19,488			3,572
Accrued (prepaid) pension cost	$	5,119		$	(1,098	)

The accumulated benefit obligation for the pension plan was $389,471 and $350,635 at December 31, 2004 and 2003, respectively.

Page 32

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:


2005	$	21,137
2006		21,695
2007		22,101
2008		22,834
2009		23,955
2010 - 2014		136,513

The actuarial assumptions used in determining both benefit obligations of the pension plan are as follows:

December 31	2004		2003
Discount rate	6.0	%	6.5	%
Average rate of increase in compensation levels	3.5	%	3.5	%

The actuarial assumptions used in determining the net periodic benefit cost of the pension plan are as follows:

December 31	2004		2003
Discount rate	6.5	%	7.0	%
Expected return on plan assets	8.0	%	8.5	%
Average rate of increase in compensation levels	3.5	%	4.0	%

The expected return on plan assets rate was determined based upon historical returns adjusted for estimated future market fluctuations.

The weighted-average asset allocations by asset category are as follows:

December 31	2004		2003
Equity securities	64	%	58	%
Fixed income securities	36	%	42	%
Total	100	%	100	%

The investment policies and goals for pension plan assets are a) to place assets with investment managers approved by the Finance Committee of the Board of Directors b) to diversify across traditional equity and fixed income asset classes to minimize the risk of large losses and c) to seek the highest total return (through a combination of income and asset appreciation) consistent with prudent investment practice, and on a five-year moving basis, not less than the actuarial earnings assumption.

The target equity/fixed asset allocation ratio is 60%/40% over the long term. If the ratio for any asset class moves outside permitted ranges, the pension plan’s Administrative Committee (the management committee that is responsible for plan administration) will act through an immediate or gradual process, as appropriate, to reallocate assets.

Under the current investment policy no investment is made in commodities, nor are short sales, margin buying hedges, covered or uncovered call options, puts, straddles or other speculative trading devices permitted. No manager may invest in international securities, inflation linked treasuries, real estate, private equities, or securities of Kaman Corporation without authorization from the corporation. In addition, with the exception of U.S. Government securities, managers’ holdings in the securities of any issuer, at the time of purchase, may not exceed 7.5% of the total market value of that manager’s account.

Investment manager performance is evaluated over various time periods in relation to peers and the following indexes: Domestic Equity Investments, S&P 500; International Equity Investments, Morgan Stanley EAFE; Fixed Income Investments, Lehman Brothers’ Aggregate.

The corporation expects to contribute $4,900 to the pension plan in 2005.

The corporation also maintains a defined contribution plan which has been adopted by certain of its U.S. subsidiaries. All employees of adopting employers who meet the eligibility requirements of the plan may participate. Employer matching contributions are currently made to the plan with respect to a percentage of each participant’s pre-tax contribution. For each dollar that a participant contributes, up to 5% of compensation, participating subsidiaries make employer contributions of fifty cents ($.50). Employer contributions to the plan totaled $2,917, $2,900 and $3,019 in 2004, 2003 and 2002, respectively.

Certain acquired U.S. subsidiaries maintain their own defined contribution plans for their eligible employees. Employer matching contributions are made on a discretionary basis.

Page 33

OTHER LONG-TERM LIABILITIES

Other long-term liabilities consist of the following:

December 31		2004		2003
Supplemental employees’ retirement plan	$	19,455	$	15,199
Deferred compensation		9,050		8,521
Minority Interest		1,046		1,254
Other		3,983		2,975
Total	$	33,534	$	27,949

The corporation has a non-qualified Supplemental Employees’ Retirement Plan (“SERP”). The SERP provides certain key executives, whose compensation is in excess of the limitations imposed by federal law on the qualified defined benefit pension plan with supplemental benefits based upon eligible earnings, years of services and age at retirement.

Major assumptions used in the accounting for SERP liability include a discount rate of 6.0% and 6.5% for 2004 and 2003, respectively, rate of increase in employee compensation levels, assumed retirement date and mortality rate.

COMMITMENTS AND CONTINGENCIES

Rent commitments under various leases for office space, warehouses, land and buildings expire at varying dates from January 2005 to December 2013. The standard term for most leases ranges from 3 to 5 years. Some of the corporation’s leases have rent escalations, rent holidays or contingent rent that, if significant, are recognized on a straight-lined basis over the entire lease term. Material leasehold improvements and other landlord incentives are amortized over the shorter of its economic life or the lease term, including renewal periods, if reasonably assured. Certain annual rentals are subject to renegotiation, with certain leases renewable for varying periods. The corporation recognizes rent expense for leases on a straight-line basis over the entire lease term.

Lease periods for machinery and equipment range 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 non-cancelable lease terms in excess of one year as of December 31, 2004:


2005	$	14,390
2006		10,648
2007		6,682
2008		2,852
2009		2,224
Thereafter		5,191
Total	$	41,987

Lease expense for all operating leases, including leases with terms of less than one year, amounted to $16,585, $15,878 and $15,172 for 2004, 2003 and 2002, respectively.

The corporation is in discussions with U.S. Naval Air Systems Command (NAVAIR) regarding the potential purchase by the company of a portion of the Bloomfield complex that Aerospace currently leases from NAVAIR and has operated for several decades for the principal purpose of performing U.S. government contracts. As of the end of 2004, there has been no finalization as to the method that would be used to calculate the purchase price of that portion of the Bloomfield complex. In conjunction with the purchase of the property, there is a possibility that the corporation may agree to undertake some level of environmental remediation as part of the sale of the property. Management has considered the liability based upon the guidance set forth in Statement of Financial Accounting Standards No. 5 (“SFAS 5”) and has not been able to determine a range or magnitude of the potential environmental liability for disclosure purposes as of December 31, 2004.

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.

The corporation’s Electro-Optics Development Center (“EODC”) submitted a claim for $6,300 to the University of Arizona in April 2004 to recover additional costs that the corporation believes are a result of changes in the scope of the project being performed under a $12,800 fixed-price contract with the University. The corporation was unable to resolve the matter and filed suit in September 2004 to recover these costs. Work on the project was also discontinued at that time. As discussed in the Accounts Receivable note, the corporation recorded a fourth quarter 2004 non-cash sales and pre-tax earnings adjustment of $3,471 due to the change in the corporation’s expectation about the likelihood of performing further work under the contract. The University filed a counterclaim and the litigation process is ongoing. Management has not been able to make a determination as to the outcome of the litigation as of December 31, 2004.

Page 34

COMPUTATION OF EARNINGS (LOSS) PER SHARE

The earnings (loss) per share - basic computation is based on the net earnings (loss) divided by the weighted average number of shares of common stock outstanding for each year.

The earnings (loss) per share - diluted computation 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. The earnings (loss) per share - diluted computation also includes the common stock equivalency of dilutive options granted to employees under the Stock Incentive Plan. Excluded from the earnings (loss) per share - diluted calculation are options granted to employees that are anti-dilutive based on the average stock price of 184,571, 315,884 and 110,622 for the years ended December 31, 2004, 2003 and 2002, respectively.

		2004			2003		2002
Earnings (loss) per share - basic Net earnings (loss)	$	(11,822	)	$	19,405	$	(33,601	)
Weighted average shares outstanding (000)		22,700			22,561		22,408
Earnings (loss) per share - basic	$	(.52	)	$	.86	$	(1.50	)
Earnings (loss)
per share - diluted
Net earnings (loss)	$	(11,822	)	$	$19,405	$	(33,601	)
Plus:
After-tax interest savings on convertible debentures		—			806		—
Net earnings (loss) assuming conversion	$	(11,822	)	$	20,211	$	(33,601	)
Weighted average shares outstanding (000)		22,700			22,561		22,408
Plus shares issuable on: Conversion of 6% convertible debentures		—			938		—
Exercise of dilutive options		—			43		—

Weighted shares outstanding assuming conversion (000)		22,700			23,542		22,408
Earnings (loss) per share - diluted ¹	$	(.52	)	$	.86	$	(1.50	)

The calculated diluted earnings (loss) per share amounts for 2004 and 2002 are anti-dilutive, therefore, amounts shown are equal to the basic earnings (loss) per share calculation. Potentially diluted average shares outstanding of 942,000 and 1,145,000 from the conversion of the debentures and the exercise of dilutive stock options for the years ended December 31, 2004 and 2002, respectively, have been excluded from the average diluted shares outstanding due to the loss from operations in those years. Additionally, after-tax interest savings on convertible debentures of $807 and $918 for the years ended December 31, 2004 and 2002, respectively, have been excluded from net earnings (loss) due to the loss in operations in those years.

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 2004, 111,669 shares were issued to employees at prices ranging from $9.45 to $12.61. During 2003, 129,787 shares were issued to employees at prices ranging from $8.02 to $11.90 per share. During 2002, 115,316 shares were issued to employees at prices ranging from $8.59 to $15.33 per share. At December 31, 2004, there were approximately 623,818 shares available for offering under the plan.

Stock Incentive Plan - The 2003 Stock Incentive Plan (the “2003 Plan”) which was effective November 1, 2003, was approved by shareholders at the 2004 annual meeting. In general, the 2003 Plan provides for the issuance of 2,000,000 shares of Class A common stock and includes a continuation and extension of the stock incentive program embodied in the 1993 Stock Incentive Plan (the “1993 Plan”), which expired on October 31, 2003. As with the 1993 Plan, the 2003 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 1993 and 2003 plans also include a long-term incentive award feature under which senior executives specifically designated for participation are given the opportunity to receive award payments in a combination of cash and stock at the end of a three-year performance cycle, including a transition period of a two-year performance cycle. For the performance cycle, the corporation’s financial results are compared to the Russell 2000 indices using the following specific measures: average return on total capital, earnings per share growth and total return to shareholders. Full award payments under this long-term incentive feature are not made unless the corporation’s performance is at least in the 50th percentile of the designated indices. In addition, the 2003 Plan contains provisions intended to qualify the plan under Section 162(m) of the Internal Revenue Code of 1986, as amended. As of December 31, 2004, the corporation had accrued $2,890 for the long-term incentive award feature.

Page 35

At December 31, 2004, there were 2,070,509 shares available for the granting of stock options.

Stock options are 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 through equity 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.

Stock option activity is as follows:

Stock options outstanding:		OPTIONS			WEIGHTED- AVERAGE EXERCISE PRICE
Balance at January 1, 2002		1,259,130		$	13.71
Options granted		211,500			14.50
Options exercised		(172,010	)		11.60
Options cancelled		(79,820	)		14.76
Balance at December 31, 2002		1,218,800			14.08
Options granted		171,500			9.90
Options exercised		(31,310	)		9.65
Options cancelled		(83,320	)		13.47
Balance at December 31, 2003		1,275,670			13.67
Options granted		176,565			14.03
Options exercised		(48,350	)		10.13
Options cancelled		(76,080	)		14.07
Balance at December 31, 2004		1,327,805		$	13.82
Weighted average contractual life remaining at December 31, 2004					5.7 years
Range of exercise prices for options	$	9.90-		$	13.46-
outstanding at December 31, 2004	$	13.45		$	17.00
Options outstanding		407,530			920,275
Options exercisable		254,130			560,110
Weighted average contractual remaining life of options outstanding		5.2 years			5.9 years
Weighted average exercise price: Options outstanding	$	10.78		$	15.17
Options exercisable	$	11.20		$	15.40

As of December 31, 2003 and 2002 there were 680,170 and 553,870 options exercisable, respectively.

Restricted stock awards were made for 9,000 shares at $14.68 per share in 2004, 53,500 shares at prices ranging from $9.90 to $9.91 per share in 2003 and 56,000 shares at prices ranging from $14.50 to $17.74 per share in 2002. At December 31, 2004, there were 96,740 shares remaining subject to restrictions pursuant to these awards.

Stock appreciation rights were issued for 314,300 shares at $9.90 per share in 2003 and 136,000 shares at $14.50 per share in 2002, to be settled only for cash. There were no stock appreciation rights issued in 2004. The corporation recorded expense for stock appreciation rights of $212 in 2004 and $585 in 2003, and income of $440 in 2002 due to fluctuations in the market price of the shares.

SEGMENT INFORMATION

The corporation reports results in three business segments - Aerospace, Industrial Distribution and Music.

The Aerospace segment produces aircraft structures and components for military and commercial aircraft, including specialized aircraft bearings, markets and supports the SH-2G Super Seasprite naval helicopter and the K-MAX medium-to-heavy lift helicopter, and provides various advanced technology products serving critical specialized markets including missile and bomb fuzing.

Page 36

The Industrial Distribution segment is the nation’s third largest distributor of power transmission, motion control, material handling and electrical components and a wide range of bearings. Products and value-added services are offered to a customer base of more than 50,000 companies representing a highly diversified cross-section of North American industry.

The Music segment is the largest independent distributor of musical instruments and accessories, offering more than 15,000 products for amateurs and professionals. Proprietary products include Ovation®, Takamine®, and Hamer® guitars, Latin Percussion® and Toca® instruments, Gibraltar® percussion hardware and Gretsch® professional drum sets.

Summarized financial information by business segment is as follows:

		2004			2003			2002
Net sales:
Aerospace	$	252,348		$	251,161		$	275,942
Industrial Distribution		581,843			497,895			477,156
Music		161,001			145,443			127,678
	$	995,192		$	894,499		$	880,776
Operating income (loss):
Aerospace	$	(14,303	)	$	14,848		$	(55,208	)
Industrial Distribution		19,338			12,672			12,344
Music		11,085			9,510			7,157
Net gain on sale of product lines and other assets		199			18,163			2,299
Corporate expense		(28,850	)		(19,090	)		(13, 201	)
Operating income (loss)		(12,531	)		36,103			(46,609	)
Interest expense, net		(3,580	)		(3,008	)		(2,486	)
Other expense, net		(1,053	)		(1,265	)		(1,831	)
Earnings (loss) before income taxes	$	(17,164	)	$	31,830		$	(50,926	)
Identifiable assets:
Aerospace	$	289,343		$	294,345		$	308,275
Industrial Distribution		164,711			150,115			144,585
Music		76,764			65,704			68,448
Corporate		31,513			18,147			14,232
	$	562,331		$	528,311		$	535,540
Capital expenditures:
Aerospace	$	3,615		$	7,321		$	5,255
Industrial Distribution		2,709			1,079			1,494
Music		1,074			522			515
Corporate		141			147			337
	$	7,539		$	9,069		$	7,601
Depreciation and amortization:
Aerospace	$	5,468		$	6,138		$	6,773
Industrial Distribution		1,972			1,989			2,457
Music		963			1,143			1,278
Corporate		566			749			1,112
	$	8,969		$	10,019		$	11,620

		2004		2003		2002
Geographic information - net sales: United States	$	859,539	$	760,444	$	758,240
Australia/New Zealand		44,278		52,453		64,071
Canada		37,205		31,469		28,049
Europe		29,857		27,400		14,933
Mexico		13,462		13,652		8,046
Japan		4,272		4,774		4,492
Other		6,579		4,307		2,945
	$	995,192	$	894,499	$	880,776

Page 37

Operating income is total revenues less cost of sales and selling, general and administrative expense including corporate expense. Operating income includes net gain on sale of product lines and other assets of which $17,415 related to the sale of the EDC operation in 2003 and $1,928 related to the sale of the microwave product line in 2002.

During 2004, the Aerospace segment recorded adjustments of approximately $41,600 primarily consisting of non-cash sales adjustments for MD Helicopters, Inc., University of Arizona and Boeing Harbour Point. Further adjustments relate to additional accrued contract loss for the Australian SH-2G(A) program and product warranty related issue for Dayron. During the second quarter of 2002, the segment recorded a pre-tax charge of $85,969 to cover the write-down of K-MAX helicopter assets, principally inventories; for cost growth associated with the Australian SH-2G(A) helicopter program; and to phase out operations at the company’s Moosup, Connecticut plant by the end of 2003. The SH-2G(A) contract has been in a loss position since 2002.

Identifiable assets are year-end assets at their respective net carrying value segregated as to segment and corporate use.

For the periods presented, the corporate assets are principally comprised of cash, short-term and long-term deferred income tax assets, cash surrender value for life insurance policies and fixed assets. The increase in corporate assets are principally due to a significant increase in the net deferred income taxes of $10,995 and an increase in prepaid insurance of $2,039.

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 $112,540, $91,618 and $102,241 in 2004, 2003 and 2002, respectively.

Sales made by the Aerospace segment under a contract with one customer were $39,634, $46,322 and $52,029 in 2004, 2003 and 2002, respectively.

Page 38

Exhibit 21 Subsidiaries

Exhibit 21

KAMAN CORPORATION

SUBSIDIARIES

Following is a list of the Corporation's subsidiaries, each of which, unless otherwise indicated, 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 PlasticFab Group, Inc.		Delaware
Plastic Fabricating Company, Inc.		Delaware
Kaman Dayron, Inc.		Florida
RWG Frankenjura-Industrie Flugwerklager GmbH		Germany

Kaman Industrial Technologies Corporation		Connecticut

Kaman Industrial Technologies, Ltd.		Canada
Delamac de Mexico, S.A. de C.V. (72.45%)		Mexico

Kaman Music Corporation		Connecticut

KMI Europe, Inc.		Delaware
B & J Music Ltd.		Canada
Genz Benz Enclosures, Inc.		Arizona

Kaman Foreign Sales Corporation (dissolved 12/20/04)		Barbados

Exhibit 23 Consent of Independent Registered Public Accounting Firm

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

KPMG LLP

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. 333-116371 and 333-66183) on Form S-8 of Kaman Corporation of our report dated March 15, 2005, relating to the consolidated balance sheets of Kaman Corporation and subsidiaries as of December 31, 2004 and 2003 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, 2004, and the related financial statement schedules, Management’s Assessment of the Effectiveness of Internal Control over Financial Reporting and the Effectiveness of Internal Control over Financial Reporting as of December 31, 2004 and Effectiveness of Internal Control over Financial Reporting as of December 31, 2004, which reports appear or are incorporated by reference in the December 31, 2004 Annual Report on Form 10-K of Kaman Corporation.

/s/ KPMG LLP

Hartford, Connecticut

March 15, 2005

Exhibit 24 Power of Attorney

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, 2004 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 22nd day of February, 2005.

Brian E. Barents	Eileen S. Kraus
E. Reeves Callaway III	Paul R. Kuhn
John A. DiBiaggio	Walter H. Monteith, Jr.
Edwin A. Huston	Wanda L. Rogers
C. William Kaman II	Richard J. Swift

Exhibit 31.1 Certification of Chief Executive Officer

Exhibit 31.1

Certification Pursuant to Rule

13a-14 under the Securities and

Exchange Act of 1934

I, Paul R. Kuhn, certify that:

1. I have reviewed this annual report on Form 10-K of Kaman Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: March 16, 2005	By:	/s/ Paul R. Kuhn
		Paul R. Kuhn
		Chairman, President and
		Chief Executive Officer

Exhibit 31.2 Certification of Chief Financial Officer

Exhibit 31.2

Certification Pursuant to Rule

13a-14 under the Securities and

Exchange Act of 1934

I, Robert M. Garneau, certify that:

1. I have reviewed this annual report on Form 10-K of Kaman Corporation;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: March 16, 2005	By:	/s/ Robert M. Garneau
		Robert M. Garneau
		Executive Vice President and
		Chief Financial Officer

Exhibit 32.1 Certification of Chief Executive Officer

Exhibit 32.1

Certification Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Kaman Corporation (the "Corporation") on Form 10-K for the fiscal year ended December 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Paul R. Kuhn, Chairman, President and Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.


	By:	/s/ Paul R. Kuhn
		Paul R. Kuhn
		Chairman, President and
		Chief Executive Officer
		March 16, 2005

Exhibit 32.2 Certification of Chief Financial Officer

Exhibit 32.2

Certification Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Kaman Corporation (the "Corporation") on Form 10-K for the fiscal year ended December 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert M. Garneau, Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.


	By:	/s/ Robert M. Garneau
		Robert M. Garneau
		Executive Vice President and
		Chief Financial Officer
		March 16, 2005