<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-1093
KAMAN CORPORATION
(Exact Name of Registrant)
Connecticut 06-0613548
(State of Incorporation) (I.R.S. Employer Identification No.)
1332 Blue Hills Avenue, Bloomfield, Connecticut 06002
(Address of principal executive offices)
Registrant's telephone number, including area code-(860) 243-7100
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
-Class A Common Stock, Par Value $1.00
-6% Convertible Subordinated Debentures Due 2012
-Series 2 Preferred Stock, Par Value $1.00
-Depositary Shares, each representing one quarter of a
share of Series 2 Preferred Stock
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ X ].
State the aggregate market value of the voting stock held by
non-affiliates of the registrant. The aggregate market value
shall be computed by reference to the price at which the stock
was sold, or the average bid and asked prices of such stock, as
of a specified date within 60 days prior to the date of filing.
$1,582,872 as of February 3, 1997.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock as of the latest practicable
date.
Class A Common 18,088,015 shares
Class B Common 667,814 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Corporation's 1996 Annual Report to Shareholders
are incorporated by reference and filed as Exhibit 13 to this
Report. No other documents except those previously filed with
the Commission are incorporated herein by reference.
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PART I
ITEM 1. BUSINESS
Kaman Corporation, incorporated in 1945, and its
subsidiaries (collectively, the "Corporation") serve government
and commercial markets through two industry segments:
Diversified Technologies and Distribution. The Diversified
Technologies segment provides aircraft manufacturing, design and
manufacture of advanced technology products and systems, and
advanced technology services. The Distribution segment distributes
industrial products, distributes and manufactures music products
and provides support services to its customers.
DIVERSIFIED TECHNOLOGIES
The Diversified Technologies segment consists of several
wholly-owned subsidiaries, including Kaman Diversified
Technologies Corporation, Kaman Aerospace Corporation, Kaman
Aerospace International Corporation, Kaman Sciences Corporation,
Kamatics Corporation, Kaman Electromagnetics Corporation, and
Kaman Instrumentation Corporation.
An important element of the Diversified Technologies
segment's business is aircraft manufacturing, including the
development and manufacture of helicopters and the integration of
systems related to helicopters, such as advanced electronic systems
and certain of the Corporation's own proprietary systems. The
Corporation has been the prime contractor for the U.S. Navy for the
SH-2 series helicopter, a multi-mission aircraft. Although the
Corporation is not presently manufacturing further aircraft for the
U.S. Navy, sixteen (16) aircraft of the SH-2G configuration are in
the U.S. Navy's Reserve fleet and the Corporation expects to
continue to provide logistics and spare parts support for these
aircraft. The Corporation continues to explore the potential for
use of the SH-2G helicopters by foreign military services that are
buying or building the smaller ships for which this aircraft is
well-suited. In 1996, the Corporation performed work pursuant to a
letter agreement between the Republic of Egypt and the U.S. Navy
for the retrofit into the SH-2G configuration of ten (10) SH-2F
helicopters previously manufactured for the U.S. Navy. The contract
between the Corporation and the U.S. Navy for this work was
finalized in December 1996 and has a value of approximately $150
million, with deliveries scheduled to begin in the fourth quarter
of 1997 and to be completed by the end of 1998. In January 1997
the Corporation was notified by the Australian government that it
had been selected as the "preferred tenderer" in a competition to
supply eleven (11) SH-2G multi-mission helicopters for deployment
aboard Royal Australian Navy ANZAC frigates with deliveries
expected to begin not earlier than 2001. Contract negotiations are
expected to begin in the first quarter of 1997 and take several
months to complete. The aircraft will incorporate an Integrated
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Tactical Avionics System (ITAS) "glass cockpit," new sensors and
advanced systems; therefore while the contract value is presently
undetermined it is expected to be significantly higher in dollar
value than the program for Egypt. In March 1997 the Corporation
was notified by the New Zealand government that it was also
selected as the "preferred tenderer" in a competition to supply
four (4) SH-2G multi-mission helicopters for deployment aboard New
Zealand's ANZAC and Leander class frigates. The total contract
value and deliveries are to be determined during formal contract
negotiations which are expected to begin shortly. In addition, the
Corporation continues to pursue anticipated competitions in
Malaysia, the Philippines, Taiwan, Thailand and elsewhere.
The Corporation also produces a commercial helicopter, known as
the K-MAX (Registered Trademark) "aerial truck" incorporating
intermeshing rotor technology developed by the Corporation. The
K-MAX is an FAA type certificated medium-to-heavy lift helicopter
with operating characteristics that distinguish it from other
helicopters for use in logging, fire fighting, reforestation,
utility power line work, and other applications. The aircraft is
now certified in the United States, Canada, Germany, Switzerland
and Japan. The K-MAX program completed its second full year of
commercial operation in 1996. The production lot of K-MAX
helicopters for 1996 consisted of six (6) aircraft and a similar
number are scheduled for production in 1997. In April 1996, the
U.S. Navy Military Sealift Command ("MSC") awarded the Corporation
a contract to provide an extended demonstration of the K-MAX
helicopter's vertical replenishment ("VERTREP") capability. This
was the second such award which the Corporation received. That
demonstration began in May, with two (2) K-MAX helicopters
supporting MSC airborne cargo movement for a period of seven (7)
months. The value of the contract was $5.7 million. The
demonstration was conducted under a charter/lease arrangement
whereby the Corporation provided the aircraft, crew, and all
maintenance and logistics support. Late in 1996, the MSC announced
a third VERTREP competition for a seven-month deployment with the
Atlantic Fleet in the Mediterranean Sea. The Corporation bid for
this third demonstration, as well, but in February 1997, MSC
announced it had decided to evaluate the services of another
provider. The Corporation has been the only commercial
organization to carry out such VERTREP demonstrations to date, so
the Corporation does not consider it unusual that the government
would choose to award the latest project to another provider in
order to obtain comparative performance data.
Kaman manufactures subcontract aircraft products for
government and commercial customers on programs such as the
McDonnell Douglas C-17 and the Boeing 767 and 777, and is
involved in various programs requiring development of new
technologies such as composite structural components for the F-22
aircraft. It also manufactures ruggedized tape and disk memory
systems used primarily in aircraft, and airborne laser-based
electro-optical imaging and detection systems for military and
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commercial operations. Such electro-optical systems include
imaging LIDAR systems and the Corporation's proprietary Magic
Lantern (Registered Trademark) system which allows underwater
objects to be detected from an airborne platform. In 1996 the
Corporation delivered the first Magic Lantern (registered
trademark) laser-based mine detection system to the U.S. Navy
Reserve forces for deployment on the Corporation's SH-2G
helicopters.
As a second category of its business, the Diversified
Technologies segment also provides advanced technology services
to a number of customers, including all branches of the armed
forces, various Government agencies, the Department of Energy,
Department of Transportation, various defense contractors,
utilities and industrial organizations. The services offered
include software engineering and maintenance, operation of
Government information analysis centers, field and laboratory
testing services, communication system design and analysis,
specialized sensor design, electromagnetic interference and
compatibility evaluations, analysis and simulation of electronic
signals, various types of artificial intelligence systems,
intrusion detection systems, and weapon system evaluation. During
1996 the Corporation was awarded a contract from the U.S. Air Force
for software support services to the Cheyenne Mountain Air Station,
Colorado Springs, Colorado. The contract represents the third
consecutive five year award to the Corporation for this work,
dating back to 1987. The estimated value of the contract is $150
million, inclusive of options, over the next five years.
A third category of this segment's business is developing
and manufacturing various advanced technology products and
systems which are used in markets that the Corporation serves.
Among the products manufactured are self lubricating bearings for
use on aircraft, marine vessels and hydropower plants; flexible
couplings for helicopters; precision measuring instruments used
in a variety of industries; composite flyer bows used in wire
making machinery; RF transmission and delay lines;
telecommunication products; photonic and optical systems; and
safing and fuzing systems for use in missiles. The Corporation
also develops and produces various motors, generators,
alternators, launchers and electric drive systems using
electromagnetic technology. In addition, the Corporation has
contracts with the U.S. government for a number of advanced
technology programs relating to some of the systems described
above and to other proprietary systems developed by the
Corporation.
DISTRIBUTION
The Distribution segment consists of several wholly-owned
subsidiaries including Kaman Industrial Technologies Corporation,
and Kaman Music Corporation. This segment distributes industrial
products, and manufactures and distributes music products.
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Kaman Industrial Technologies Corporation is a national
distributor of industrial products operating through more than
175 locations in 35 states and British Columbia, Canada. The
Corporation supplies a broad range of industries with original
equipment, repair and replacement products needed to maintain
traditional manufacturing processes and, increasingly, with
products of higher technological content that are required to
support automated production processes. The Corporation serves
nearly every sector of heavy and light industry, including
automobile manufacturing, agriculture, food processing, pulp and
paper manufacturing, mining, chemicals, electronics and general
manufacturing. Products available include various types of
standard and precision mounted and unmounted bearings; mechanical
power transmission equipment such as V-belts, couplings, and gear
reducers; electrical power transmission products, motors, AC/DC
controls, sensors and motion control devices; materials handling
equipment, belts, conveyor idlers and pulleys; linear motion
products; hydraulic drive systems and parts; and accessory products
such as lubricants and seals. Although the vast majority of the
Corporation's business consists of resale of products, operations
include some design, fabrication, and assembly work in connection
with products sold.
The Corporation continues to develop certain support service
capabilities in order to meet the maintenance needs of its
customers' manufacturing operations. These services include
electrical panel and systems fabrication centers capabilities and
similar capabilities for hydraulic and pneumatic control panels,
linear positioning systems, and material handling systems. In
1996 the Corporation, on a limited basis, continued to act as a
supplier of capital equipment to various systems engineering and
manufacturing customers by acting as a sales agent for certain
equipment manufacturers. As the Corporation has entered new
market areas, it has invested in new product inventory and in
some instances it has established inventory on consignment in
customer locations. The Corporation maintains a management
information system, consisting of an on-line computer network
linking all of its mainland U.S. and Canadian industrial
distribution facilities, which enhances its ability to provide
more efficient nationwide service and to improve inventory
management. In addition, the Corporation has undertaken
initiatives to address the needs of certain national account
customers that desire to consolidate their vendor base by
entering into "partnering" relationships to broaden geographical
coverage. For larger customers, the Corporation has also
been given the opportunity to provide an "integrated supply"
function involving management of parts inventories and associated
personnel as well as selection of suppliers for the customer's
facility. In 1996 the Corporation opened new branches in the South
and Midwest regions of the United States to service new customers
and develop additional business.
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Kaman Music Corporation distributes more than 10,000
different music instruments and accessories to independent
retailers in the United States and Canada and to
international distributors in over 65 countries. Products
include acoustic, acoustic-electric and electric guitars and
basses, music strings for all fretted instruments, drums,
percussion products and related accessories, instrument and P.A.
amplification systems, electronic tuners and metronomes,
educational percussion and brass instruments and a full range of
accessories for all musical instruments. The Corporation
manufactures and distributes certain guitars under the
Corporation's various brand names including Ovation and Hamer
guitars, and the Trace Elliot range of stringed instrument
amplification equipment. In 1996 the Corporation discontinued its
manufacture of musical instrument strings. Operations of Kaman
Music Corporation are conducted through seven (7)distribution
centers in the United States and Canada, an international sales
division based in the United States, one (1) manufacturing facility
in the United States and one (1) manufacturing facility in Great
Britain.
In 1996 the segment also distributed aviation fuel and
provided aviation services for general and commercial aviation at
Jacksonville International Airport, Jacksonville, Florida where the
Corporation conducted fixed base operations under a contract
with the Port Authority of the City of Jacksonville. This
operation, which was the last of several such operations previously
owned by the Corporation, was sold in February, 1997. See Item 13.
FINANCIAL INFORMATION
Information concerning each segment's performance for the
last three fiscal years appears in the Corporation's 1996 Annual
Report to Shareholders and is included in Exhibit 13 to this Form
10-K, and is incorporated by reference.
PRINCIPAL PRODUCTS AND SERVICES
Following is information for the three preceding fiscal
years concerning the percentage contribution of the Corporation's
classes of products and services to the Corporation's
consolidated net sales:
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<TABLE>
Years Ended December 31
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Diversified Technologies:
Advanced Technology Products
and Systems 6.2%* 5.3% 5.5%
Advanced Technology Services 13.5 12.7 13.2
Aircraft Manufacturing 18.2* 18.0 18.3
---- ---- ----
Segment Total 37.9 36.0 37.0
Distribution:
Industrial Products 46.7 48.0 47.2
Music Products and Other Services 15.4 16.0 15.8
---- ---- ----
Segment Total 62.1 64.0 63.0
Total 100.0% 100.0% 100.0%
===== ===== =====
*Reflects re-configuration of certain business lines.
</TABLE>
RESEARCH AND DEVELOPMENT EXPENDITURES
Government sponsored research expenditures by the
Diversified Technologies segment were $68.8 million in 1996,
$70.2 million in 1995, and $82.2 million in 1994. Amounts
shown for 1994 reflect reconfiguration of certain government
sponsored contracts. Independent research and development
expenditures were $8.0 million in 1996, $13.7 million in 1995, and
$21.1 million in 1994.
BACKLOG
Program backlog of the Diversified Technologies segment was
approximately $267 million at December 31, 1996, $218.7 million at
December 31, 1995, and $228.9 million at December 31, 1994.
The Corporation anticipates that approximately 82.6% of its
backlog at the end of 1996 will be performed in 1997.
Approximately 65.5% of the backlog at the end of 1996 is related
to government contracts or subcontracts which are included in
backlog to the extent that funding has been appropriated by
Congress and allocated to the particular contract by the relevant
procurement agency. Certain of these government contracts, less
than 1% of the backlog, have been funded but not signed.
GOVERNMENT CONTRACTS
During 1996, approximately 50.5% of the work performed by
the Corporation directly or indirectly for the United States
government was performed on a fixed-price basis and the balance
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was performed on a cost-reimbursement basis. Under a fixed-price
contract, the price paid to the contractor is negotiated at the
outset of the contract and is not generally subject to adjustment
to reflect the actual costs incurred by the contractor in the
performance of the contract. Cost reimbursement contracts
provide for the reimbursement of allowable costs and an
additional negotiated fee.
The Corporation's United States government contracts and
subcontracts contain the usual required provisions permitting
termination at any time for the convenience of the government
with payment for work completed and associated profit at the time
of termination.
COMPETITION
The Diversified Technologies segment operates in a highly
competitive environment with many other organizations which are
substantially larger and have greater financial and other
resources. For sales of advanced technology products and
systems, the Corporation competes with a wide range of
manufacturers primarily on the basis of price and the quality,
endurance, reliability and special performance characteristics of
those products. Operations also depend in part on the ability to
develop new technologies which have effective commercial and
military applications. Examples of proprietary or patented
products developed by the Corporation include the Magic Lantern
(Registered Trademark) system for detecting underwater objects
from a helicopter, the Kamatics line of specialty bearings and
the Corporation's line of electromagnetic motors and drives,
among others. In providing scientific services and systems
development, the Corporation competes primarily on the basis of
the technical capabilities and experience of its personnel in
specific fields. When bidding for aerospace contracts and
subcontracts, the Corporation competes on the basis of price and
quality of its products and services as well as the availability of
its facilities, equipment and personnel to perform the contract. In
providing spare parts, the Corporation competes with other
helicopter manufacturers on the basis of price, performance and
product capabilities and also on the basis of its experience as a
manufacturer of helicopters. The Corporation's FAA certificated
K-MAX helicopters compete with military surplus helicopters and
other helicopters used for lifting, as well as with alternative
methods of meeting lifting requirements. During 1996 the Department
of Defense continued to pursue its implementation of defense
acquisition reform by emphasizing the use of commercially developed
state-of-the-art technology products and performance-based
procurement standards rather than traditional military
specification standards. The change in defense program
emphasis and greater constraints in the federal budget have
increased the level of competition for defense programs. In
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pursuing opportunities for foreign sales, the Corporation's
competitive position is affected by the political circumstances of
its foreign customers, in addition to budgetary considerations and
other matters.
Distribution operations are subject to a high degree of
competition from several other national distributors and many
regional and local firms both in the U.S. and elsewhere in the
world. Certain musical instrument products of the Corporation
are subject to competition from U.S. and foreign manufacturers
also. The Corporation competes in these markets on the basis of
service, price, performance, and inventory variety and
availability.
The Corporation also competes on the basis of quality and
market recognition of its music products and has established
certain trademarks and trade names under which certain of its
music products are produced both in the United States and Great
Britain, as well as under private label manufacturing in a number
of foreign countries.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking information relating to
the Corporation's business prospects, including future contract
awards and negotiations, the SH-2G and K-MAX helicopter programs,
and other matters that involve a number of uncertainties that may
cause actual results to differ materially from expectations. Those
uncertainties include, but are not limited to: 1) the successful
conclusion of contract negotiations with government authorities,
including foreign governments; 2) political developments in
countries where the Corporation intends to do business; 3) standard
government contract provisions permitting termination for the
convenience of the government; 4) competitive conditions in markets
served by the Corporation; 5) the degree of acceptance of new
products in the marketplace; 6) currency exchange rates, taxes,
laws and regulations, inflation rates, general business conditions
and other factors. Any forward-looking information should be
considered with these factors in mind.
EMPLOYEES
As of December 31, 1996, the Corporation employed 5,476
individuals throughout its industry segments as follows:
<TABLE>
<S> <C>
Diversified Technologies 3,058
Distribution 2,347
Corporate Headquarters 71
-----
5,476
</TABLE>
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PATENTS AND TRADEMARKS
The Corporation holds patents reflecting scientific and
technical accomplishments in a wide range of areas covering both
basic production of certain products, including aerospace
products and musical instruments, as well as highly specialized
devices and advanced technology products in such areas as nuclear
sciences, strategic defense and other commercial, scientific and
defense related fields.
Although the Corporation's patents enhance its competitive
position, management believes that none of such patents or patent
applications is singularly or as a group essential to its
business as a whole. The Corporation holds or has applied for
U.S. and foreign patents with expiration dates that range through
the year 2016.
These patents are allocated among the Corporation's industry
segments as follows:
<TABLE>
U.S. PATENTS FOREIGN PATENTS
Segment Issued Pending Issued Pending
<S> <C> <C> <C> <C>
Diversified Technologies 96 12 59 32
Distribution 22 7 14 4
</TABLE>
Trademarks of Kaman Corporation include Adamas, Applause,
Hamer, KAflex, KAron, K-MAX, Magic Lantern, and Ovation. In all,
the Corporation maintains 214 U.S. and foreign trademarks with 34
applications pending, most of which relate to music products in
the Distribution segment.
COMPLIANCE WITH ENVIRONMENTAL PROTECTION LAWS
In the opinion of management, based on the Corporation's
knowledge and analysis of relevant facts and circumstances,
compliance with any environmental protection laws is not likely to
have a material adverse effect upon the capital expenditures,
earnings or competitive position of the Corporation or any of its
subsidiaries.
The Corporation is subject to the usual reviews and
inspections by various federal and state environmental agencies and
has entered into agreements and consent decrees at various times in
connection with such reviews. Also on occasion the Corporation
has been identified as a potentially responsible party ("PRP") by
the U.S. Environmental Protection Agency ("EPA") in connection with
the EPA's investigation of certain third party facilities. In each
instance, the Corporation has provided appropriate responses to all
requests for information that it has received, and the matters have
been resolved either through de minimis settlements, consent
agreements, or through no further action being taken by the EPA or
the applicable state agency with respect to the Corporation. With
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respect to such matters, the Corporation has been able to
determine, based on its current knowledge, that resolution of such
matters is not likely to have a material adverse effect on the
future financial condition of the Corporation.
In arriving at this conclusion, the Corporation has taken
into consideration site-specific information available regarding
total costs of any work to be performed, and the extent of work
previously performed. Where the Corporation has been identified
as a PRP at a particular site, the Corporation, using information
available to it, also has reviewed and considered a number of
other factors, including: (i) the financial resources of other
PRPs involved in each site, and their proportionate share of the
total volume of waste at the site; (ii) the existence of
insurance, if any, and the financial viability of the insurers;
and (iii) the success others have had in receiving reimbursement
for similar costs under similar policies issued during the
periods applicable to each site.
FOREIGN SALES
Ninety one and five tenths percent (91.5%) of the sales of
the Corporation are made to customers located in the United
States. Certain retrofit work on SH-2 series helicopters for
delivery to the Republic of Egypt is presently being performed by
the Corporation under an agreement between it and the U.S. Navy
and, because such work is a "foreign military sale" with the U.S.
Government, it is not included in the calculation of foreign
sales. In 1996, the Corporation continued its efforts to develop
international markets for its products and foreign sales
(including sales for export).
ITEM 2. PROPERTIES
The Corporation occupies approximately 3.9 million square
feet of space throughout the United States, Canada, and Great
Britain, distributed as follows:
<TABLE>
SEGMENT SQUARE FEET (in thousands)
<S> <C>
Diversified Technologies 1,953
Distribution 1,908
Corporate Headquarters 40
</TABLE>
Diversified Technologies principal facilities are located in
Arizona, Colorado, Connecticut, Massachusetts, Pennsylvania and
Virginia; other facilities including offices and smaller
manufacturing and assembly operations are located in several other
states, and in 1996 the Corporation opened an office in Turner,
Australia. These facilities are used for manufacturing, scientific
research and development, engineering and office purposes. The
U.S. Government owns 154 thousand square feet of the space occupied
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by Kaman Aerospace Corporation in Bloomfield, Connecticut in
accordance with a facility contract. In 1996 the Corporation sold
approximately 26 acres of land previously owned by it in Colorado
Springs, Colorado to an unrelated third party.
The Distribution segment's facilities are located throughout
the United States with principal facilities located in California,
Connecticut, New York, Texas and Utah with smaller facilities
located in several other states. Additional Distribution segment
facilities are located in British Columbia, and Ontario, Canada;
and in Essex, England. These facilities consist principally of
regional distribution centers, service centers and office space
with a portion used for fabrication and assembly work. Also
included are facilities used for manufacturing musical instruments.
Kaman Corporation occupies a 40 thousand square foot
Corporate headquarters building in Bloomfield, Connecticut.
The Corporation's facilities are suitable and adequate to
serve its purposes and substantially all of such properties
are currently fully utilized. Many of the properties, especially
within the Distribution segment, are leased and certain of the
Corporation's properties are subject to mortgages.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the
Corporation or any of its subsidiaries is a party or to which any
of their property is subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security
holders during the fourth quarter of 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
CAPITAL STOCK AND PAID-IN CAPITAL
Information required by this item appears in the
Corporation's 1996 Annual Report to Shareholders and is included
in Exhibit 13 to this Form 10-K, and is incorporated herein by
reference.
DIVIDEND REINVESTMENT PLAN
Registered shareholders of Kaman Class A common stock are
eligible to participate in the Automatic Dividend Reinvestment
Program. A booklet describing the plan may be obtained by
writing to the Corporation's transfer agent, ChaseMellon
Shareholder Services, L.L.C., P. O. Box 590, Ridgefield Park, NJ
07660.
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<TABLE>
QUARTERLY CLASS A COMMON STOCK INFORMATION
- -----------------------------------------------------------------
High Low Close Dividend
- -----------------------------------------------------------------
<S> <C> <C> <C> <C>
1996
First $11 1/8 $10 $10 7/8 $.11
Second 13 3/8 10 10 1/8 $.11
Third 11 1/4 9 3/8 10 5/8 $.11
Fourth 13 10 13 $.11
- -----------------------------------------------------------------
1995
First $11 1/2 $10 $ 11 1/8 $.11
Second 13 3/8 10 7/8 12 3/4 $.11
Third 13 11 1/2 11 7/8 $.11
Fourth 12 1/8 10 1/2 11 1/8 $.11
- -----------------------------------------------------------------
QUARTERLY DEBENTURE INFORMATION (6% Conv. Subordinated)
- -----------------------------------------------------------------
High Low Close
- -----------------------------------------------------------------
<S> <C> <C> <C>
1996
First $87 $82 $84
Second 86 81 82
Third 85 1/8 80 82
Fourth 87 1/2 82 87
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1995
First $77 $72 1/2 $74
Second 82 1/2 74 79 1/4
Third 86 80 86
Fourth 87 82 82
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QUARTERLY DEPOSITARY SHARES INFORMATION
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High Low Close Dividend
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<S> <C> <C> <C> <C>
1996
First $50 3/4 $47 $48 5/8 $.81 1/4
Second 56 1/2 49 52 $.81 1/4
Third 51 1/2 47 1/2 48 1/2 $.81 1/4
Fourth 54 48 1/2 53 $.81 1/4
- -----------------------------------------------------------------
1995
First $50 $44 3/16 $45 $.81 1/4
Second 56 46 54 1/4 $.81 1/4
Third 54 50 3/4 52 $.81 1/4
Fourth 53 47 47 $.81 1/4
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</TABLE>
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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ANNUAL MEETING
The Annual Meeting of Shareholders will be held on Tuesday,
April 15, 1997 at 11:00 a.m. in the offices of the Corporation,
1332 Blue Hills Avenue, Bloomfield, Connecticut 06002.
ITEM 6. SELECTED FINANCIAL DATA
Information required by this item appears in the
Corporation's 1996 Annual Report to Shareholders and is included
in Exhibit 13 to this Form 10-K, and is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Information required by this item appears in the
Corporation's 1996 Annual Report to Shareholders and is included
in Exhibit 13 to this Form 10-K, and is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item appears in the
Corporation's 1996 Annual Report to Shareholders and is included
in Exhibit 13 to this Form 10-K, and is incorporated herein by
reference. Additional financial information is contained in the
Financial Data Schedule included as Exhibit 27 to this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Following is information concerning each Director and
Executive Officer of Kaman Corporation including name, age,
position with the Corporation, and business experience during the
last five years:
Brian E. Barents Mr. Barents, 53, was elected a Director
in November 1996. He is President and
Chief Executive Officer of Galaxy
Aerospace Corp. Prior to that he was
President and Chief Executive Officer of
Lear Jet Inc., a subsidiary of Bombardier,
Inc. He is a director of Intrust Bank of
Wichita and Interactive Flight
Technologies, Inc.
Page 13
<PAGE>
<PAGE>
T. Jack Cahill Mr. Cahill, 48, has held various
positions with Kaman Industrial
Technologies Corporation, a subsidiary
of the Corporation, since 1975, and has
been President of Kaman Industrial
Technologies since 1993.
E. Reeves Callaway, III Mr. Callaway, 49, has been a Director
since 1995. He is President of The
Callaway Companies, Inc.
Frank C. Carlucci Mr. Carlucci, 66, has been a Director
since 1989. He is Chairman of The
Carlyle Group, merchant bankers. Prior to
that he served as U.S. Secretary of
Defense. Mr. Carlucci is also a director
of Ashland, Inc., Bell Atlantic
Corporation, BDM International,
General Dynamics Corporation, Neurogen
Corporation, Northern Telecom, Ltd.,
Pharmacia & Upjohn, Inc., Quaker Oats
Company, Sun Resorts, Ltd., N.V., Texas
Biotechnology Corporation, and
Westinghouse Electric Corporation.
Laney J. Chouest, M.D. Mr. Chouest, 43, was appointed a Director
at the Corporation's 1996 Annual Meeting
of Shareholders. He is owner-manager of
Edison Chouest Offshore, Inc. and Galliano
Marine. Dr. Chouest is also a director of
Deeptech International, Inc.
Candace A. Clark Ms. Clark, 42, was appointed Senior Vice
President and Chief Legal Officer in
April 1996. Prior to that she served as
Vice President and Counsel. Ms. Clark has
held various positions with the
Corporation since 1985.
John A. DiBiaggio Dr. DiBiaggio, 64, has been a Director
since 1984. He is President and Chief
Executive Officer of Tufts University.
Prior to that he was President and Chief
Executive Officer of Michigan State
University.
Edythe J. Gaines Dr. Gaines, 74, has been a Director
since 1982. She is a retired
Commissioner of the Public Utility
Control Authority of the State of
Connecticut.
Page 14
<PAGE>
<PAGE>
Ronald M. Galla Mr. Galla, 46, has been Senior Vice
President and Chief Information Officer
since 1995. Prior to that he served as
Vice President and director of the
Corporation's Management Information
Systems, a position which he held since
1990. Mr. Galla has been Director of the
Corporation's Management Information
Systems since 1984.
Robert M. Garneau Mr. Garneau, 52, has been Executive Vice
President and Chief Financial Officer
since 1995. Previously he served as
Senior Vice President, Chief Financial
Officer and Controller. Mr. Garneau has
held various positions with the
Corporation since 1981.
Huntington Hardisty Admiral Hardisty (USN-Ret.), 67, has
been President of Kaman Aerospace
International Corporation, a
subsidiary of the Corporation, since 1995
and he has been a Director since 1991.
He retired from the U.S. Navy in 1991
having served as Commander-in-Chief for
the U.S. Navy Pacific Command since
1988. He is also a director of
Contraves, Inc., MPR Inc., and
CNA Corporation.
Charles H. Kaman Mr. Kaman, 77, has been Chief Executive
Officer and Chairman of the Board of
Directors since 1945. He was also
appointed President in December, 1995,
a position he previously held from 1945
to 1990.
C. William Kaman II Mr. Kaman, 45, has been a Director
since 1992 and has been Executive
Vice President since 1995. He
has held various positions with Kaman
Music Corporation, a subsidiary of the
Corporation, since 1974, and continues
to serve as President of that
subsidiary. Mr. Kaman is the son
of Charles H. Kaman, Chairman, President
and Chief Executive Officer of the
Corporation.
Walter R. Kozlow Mr. Kozlow, 61, has held various
positions with Kaman Aerospace
Corporation, a subsidiary of the
Corporation, since 1960. He has been
President of Kaman Aerospace since 1986.
Page 15
<PAGE>
<PAGE>
Eileen S. Kraus Ms. Kraus, 58, has been a Director since
1995. She is Chairman of Fleet Bank,
N.A. Since 1979 she has held various
positions at Shawmut Bank Connecticut
and Shawmut National Corporation,
predecessors of Fleet Bank, N.A. and
its holding company, Fleet Financial
Group. She is a director of Yankee
Energy System, Inc., The Stanley Works,
and CPC International, Inc.
Hartzel Z. Lebed Mr. Lebed, 69, has been a Director since
1982. He is the retired President of
CIGNA Corporation and is a director of
Shawmut National Trust Co., a subsidiary
of Fleet Financial Corporation.
Harvey S. Levenson Mr. Levenson, 56, has been a Director
since 1989. He is a managing member
of Hamleg Enterprises, LLC, a private
investment company, having previously
served as President and Chief Operating
Officer of the Corporation from 1990
until his retirement in December, 1995.
Mr. Levenson is also a director of
Connecticut Natural Gas Corporation
and Security-Connecticut Corporation.
Walter H. Monteith, Jr. Mr. Monteith, 66, has been a Director
since 1987. He is the retired Chairman
of Southern New England Telecommuni-
cations Corporation. Mr. Monteith is
also a director of Fleet Bank.
John S. Murtha Mr. Murtha, 83, has been a Director
since 1948. He is counsel to and a
former senior partner of the law firm of
Murtha, Cullina, Richter and Pinney.
Patrick L. Renehan Mr. Renehan, 63, was appointed Senior
Vice President of Kaman Diversified
Technologies Corporation, a subsidiary
of the Corporation, in April 1996. Prior
to that he served as Vice President.
Mr. Renehan has held various positions
with the Corporation since 1983.
Wanda L. Rogers Mrs. Rogers, 64, has been a Director
since 1991. She is President and Chief
Executive Officer of Rogers Helicopters,
Inc. She is also Chairman of the Board of
Clovis Community Bank.
Page 16
<PAGE>
<PAGE>
Robert H. Saunders, Jr. Mr. Saunders, 56, has been Senior
Vice President since 1995.
Previously he was Vice President and
Chief Financial Officer of the
University of Hartford from 1993 to
1995. Prior to that he was President
of J. M. Ney Corporation.
Each Director and Executive Officer has been elected for a
term of one year and until his or her successor is elected. The
terms of all such Directors and Executive Officers are expected
to expire as of the Annual Meeting of the Shareholders and
Directors of the Corporation to be held on April 15, 1997.
No Section 16(a) Reporting delinquencies occurred in 1996.
ITEM 11. EXECUTIVE COMPENSATION
A) GENERAL. The following tables provide certain information
relating to the compensation of the Corporation's Chief Executive
Officer, its four other most highly compensated executive
officers and its directors.
Page 17
<PAGE>
<PAGE>
B) SUMMARY COMPENSATION TABLE.
<TABLE>
Annual Compensation Long Term Compensation
------------------- ----------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
All
Name and Other AWARDS Other
Principal Salary Bonus Annual RSA Options LTIP Comp.
Position Year ($) ($) Comp. ($)(1)(#Shares)Payments ($)(2)
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C. H. Kaman 1996 725,000 340,000 56,252(3) ------ ------ --- 58,412
Chairman and 1995 660,000 275,000 ------ ------ ------ --- 56,145
Chief 1994 660,000 ------- ------ ------ ------ --- 55,261
Executive
Officer
R.M.Garneau 1996 240,000 82,000 ------ 77,813 10,000 --- 7,935
Executive 1995 216,000 80,000 ------ 56,875 7,500 --- 6,485
Vice Pres- 1994 200,000 60,000 ------ ------ ------ --- 4,845
ident and
Chief
Financial
Officer
W.R.Kozlow 1996 233,000 65,000 ------ 62,250 9,000 --- 10,881
President, 1995 226,000 60,000 ------ 56,875 7,500 --- 9,515
Kaman 1994 216,000 60,000 ------ ------ ------ --- 8,636
Aerospace
Corporation
C. W. Kaman 1996 224,000 61,000 ------ 77,813 10,000 --- 3,163
Executive 1995 200,000 25,000 ------ 56,875 7,500 --- 4,398
Vice Presi- 1994 190,000 55,000 ------ ------ ------ --- 3,714
dent and
President,
Kaman Music
Corporation
T. J. Cahill 1996 210,000 70,000 ------ 62,250 9,000 --- 7,952
President, 1995 190,000 55,000 ------ 56,875 7,500 --- 6,530
Kaman 1994 172,000 40,000 ------ ------ ------ --- 5,126
Industrial
Technologies
Corporation
</TABLE>
Page 18
<PAGE>
<PAGE>
1. As of December 31, 1996, aggregate restricted stock holdings and
their year end value were: C.H.Kaman, none; R.M.Garneau, 13,300
shares valued at $172,900; W.R.Kozlow, 11,800 shares valued at
$153,400; C.W. Kaman II, 13,200 shares values at $171,600; and T.
J. Cahill, 12,500 shares valued at $162,500. Restrictions lapse at
the rate of 20% per year for all awards, beginning one year after
the grant date. Awards reported in this column are as follows:
R.M.Garneau, 7,500 shares in 1996 and 5,000 shares in 1995;
W.R.Kozlow, 6,000 shares in 1996 and 5,000 shares in 1995; C.W.
Kaman II, 7,500 shares in 1996 and 5,000 shares in 1995; and T.J.
Cahill, 6,000 shares in 1996 and 5,000 shares in 1995. Dividends
are paid on the restricted stock.
2. Amounts reported in this column consist of: C.H. Kaman,
$53,000 - Officer 162 Insurance Program, $ 5,412 - medical expense
reimbursement program ("MERP"); R.M. Garneau, $2,164 - Senior
executive life insurance program ("Executive Life"), $851 - Officer
162 Insurance Program, $1,875 - employer matching contributions to
the Kaman Corporation Thrift and Retirement Plan (the "Thrift Plan
employer match"), $895 - MERP, $2,150 - all supplemental employer
contributions under the Kaman Corporation Deferred Compensation
Plan ("supplemental employer contributions"); W.R. Kozlow, $5,212 -
Executive Life, $1,875 - Thrift Plan employer match, $1,944 - MERP,
$1,850 - supplemental employer contributions; C.W. Kaman II, $1,126
- - Executive Life, $1,875 - Thrift Plan employer match, $162 - MERP;
T. J. Cahill, $1,340 - Executive Life, $1,875 - Thrift Plan
employer match, $3,112 - MERP, $1,625 - supplemental employer
contributions.
3. The Corporation maintains a program pursuant to which it pays
for tax and estate planning services provided to executive officers
by third parties, up to certain limits. $45,314 of the figure
reported in this column relates to payments for such services on
behalf of Mr. Kaman.
Page 19
<PAGE>
<PAGE>
C) OPTION/SAR GRANTS IN THE LAST FISCAL YEAR:
<TABLE>
- ---------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term*
- ---------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options/
SARs
Options/ Granted to
SARs Employees Exercise or
Granted in Fiscal Base Price Expiration
Name (#) Year ($/Sh) Date 5%($) 10%($)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
C. H. Kaman none ---- --- --- --- ---
R. M. Garneau 10,000 5.9 10.375 2/13/06 16.90 26.91
W. R. Kozlow 9,000 5.3 10.375 2/13/06 16.90 26.91
C. W. Kaman II 10,000 5.9 10.375 2/13/06 16.90 26.91
T. J. Cahill 9,000 5.3 10.375 2/13/06 16.90 26.91
*The information provided herein is required by Securities and Exchange
Commission rules and is not intended to be a projection of future common
stock prices.
</TABLE>
D) AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR, AND
FISCAL YEAR-END OPTION/SAR VALUES.
<TABLE>
- -------------------------------------------------------------------
Value of
Number of Unexercised
Unexercised in-the-money
options/SARs options/SARs
Shares at FY-end (#) at FY-end ($)
acquired on Value exercisable/ exercisable/
Name Exercise(#) realized unexercisable unexercisable
(a) (b) (c) (d) (e)
- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
C. H. Kaman None ------ 45,000/-0- 233,125/-0-
R. M. Garneau None ------ 14,900/19,600 63,087/48,600
W. R. Kozlow 1,600 5,000 18,900/18,600 83,587/45,975
C. W. Kaman II 3,200 13,200 14,900/19,600 62,837/48,600
T. J. Cahill 1,600 5,000 10,000/18,000 38,937/43,875
</TABLE>
Page 20
<PAGE>
<PAGE>
E) LONG TERM INCENTIVE PLAN AWARDS: No long term incentive plan
awards were made to any named executive officer in the last
fiscal year.
F) PENSION AND OTHER DEFINED BENEFIT DISCLOSURE. The following
table shows estimated annual benefits payable at normal
retirement age to participants in the Corporation's Pension Plan
at various compensation and years of service levels using the
benefit formula applicable to Kaman Corporation. Pension
benefits are calculated based on 60 percent of the average of the
highest five consecutive years of "covered compensation" out of
the final ten years of employment less 50 percent of the primary
social security benefit, reduced proportionately for years of
service less than 30 years:
<TABLE>
PENSION PLAN TABLE
Years of Service
Remuneration* 15 20 25 30 35
- -----------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
125,000 33,750 45,225 56,025 67,500 67,500
150,000 41,250 55,275 68,475 82,500 82,500
175,000 48,750 65,325 80,925 97,500 97,500
200,000 56,250 75,375 93,375 112,500 112,500
225,000 63,750 85,425 105,825 127,500 127,500
250,000 71,250 95,475 118,275 142,500 142,500
300,000 86,250 115,575 143,175 172,500 172,500
350,000 101,250 135,675 168,075 202,500 202,500
400,000 116,250 155,775 192,975 232,500 232,500
450,000 131,250 175,875 217,875 262,500 262,500
500,000 146,250 195,975 242,775 292,500 292,500
750,000 221,250 296,475 367,275 442,500 442,500
1,000,000 296,250 396,975 491,775 592,500 592,500
1,250,000 371,250 497,475 616,275 742,500 742,500
1,500,000 446,250 597,975 740,775 892,500 892,500
*Remuneration: Average of the highest five consecutive years of
"Covered Compensation" out of the final ten years of service.
</TABLE>
"Covered Compensation" means "W-2 earnings" or "base
earnings", if greater, as defined in the Pension Plan. W-2
earnings for pension purposes consist of salary (including 401(k)
and Section 125 Plan contributions but not deferrals under a
non-qualified Deferred Compensation Plan), bonus and taxable
income attributable to restricted stock awards. Salary and bonus
amounts for the named Executive Officers for 1996 are as shown on
Page 21
<PAGE>
<PAGE>
the Summary Compensation Table. Compensation deferred under the
Corporation's non-qualified deferred compensation plan is
included in Covered Compensation here because it is covered by
the Corporation's unfunded supplemental employees' retirement
plan for the participants in that plan.
Current Compensation covered by the Pension Plan for any
named executive whose Covered Compensation differs by more than
10% from the compensation disclosed for that executive in the
Summary Compensation Table: Mr. C. H. Kaman, $1,000,000; Mr.
Garneau, $358,879; Mr. Kozlow, $331,384; Mr. C. W. Kaman, II,
$283,966; Mr. Cahill, $304,345.
Federal law imposes certain limitations on annual pension
benefits under the Pension Plan. For the named executive
officers, the excess will be paid under the Corporation's
unfunded supplemental employees' retirement plan.
The Executive Officers named in Item 11(b) are participants
in the plan and as of December 31, 1996, had the number of years of
credited service indicated: Mr. C. H. Kaman - 51.10 years; Mr.
Garneau - 15.48 years; Mr. Kozlow - 36.70 years; Mr. C. W. Kaman,
II - 22.20; Mr. Cahill - 21.70 years.
Benefits are computed generally in accordance with the
benefit formula described above.
G) COMPENSATION OF DIRECTORS. Effective January 1, 1997,
non-officer members of the Board of Directors of the Corporation
receive an annual retainer of $20,000 and a fee of $1,000 for
attending each meeting of the Board and each meeting of a Committee
of the Board, except that the Chairman of the Audit Committee
receives $1,250 for attending each meeting of that Committee.
These fees may be received on a deferred basis. In addition each
such person will receive a 500 share Restricted Stock Award (RSA)
providing for immediate vesting upon election as a director at the
Corporation's 1997 Annual Meeting of Shareholders.
H) EMPLOYMENT CONTRACTS AND TERMINATION, SEVERANCE AND CHANGE
OF CONTROL ARRANGEMENTS. Except as described in connection with
the Corporation's Pension Plan and the Corporation's non-
qualified Deferred Compensation Plan, the Corporation has no
employment contract, plan or arrangement with respect to any
named executive which relates to employment termination for any
reason, including resignation, retirement or otherwise, or a
change in control of the Corporation or a change in any such
executive officer's responsibilities following a change of
control, which exceeds or could exceed $100,000, except as
disclosed in Item 13.
Page 22
<PAGE>
<PAGE>
I) Not Applicable.
J) COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
IN COMPENSATION DECISIONS.
1) The following persons served as members of the Personnel
and Compensation Committee of the Corporation's Board of Directors
during the last fiscal year: Frank C. Carlucci, Laney J. Chouest,
Edythe J. Gaines, Walter H. Monteith, Jr. and John S. Murtha.
None of these individuals was an officer or employee of the
Corporation or any of its subsidiaries during either the last
fiscal year or any portion thereof in which he or she served as a
member of the Personnel and Compensation Committee. Mr. Murtha's
relationship with the Corporation is further disclosed in Item 13
of this report.
2) During the last fiscal year no executive officer of the
Corporation served as a director of or as a member of the
compensation committee (or other board committee performing
equivalent functions) of another entity, one of whose executive
officers served as a director of, or on the Personnel and
Compensation Committee of the Corporation.
K) Not Applicable.
L) Not Applicable.
Page 23
<PAGE>
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.
Following is information about persons known to the Corporation
to be beneficial owners of more than five percent (5%) of the
Corporation's voting securities. Ownership is direct unless
otherwise noted.
<TABLE>
- -----------------------------------------------------------------
Class of Number of Shares
Common Name and Address Owned as of Percentage
Stock Beneficial Owner February 1, 1997 of Class
- -----------------------------------------------------------------
<S> <C> <C> <C>
Class B Charles H. Kaman 258,375(1) 38.69%
Kaman Corporation
Blue Hills Avenue
Bloomfield, CT 06002
Class B Newgate Associates, Ltd. 199,802 29.91%
c/o Murtha, Cullina,
Richter & Pinney
CityPlace I
185 Asylum Street
Hartford, CT 06103
Class B C. William Kaman, II 55,206 8.27%
Kaman Corporation
Blue Hills Avenue
Bloomfield, CT 06002
Class B Robert D. Moses 48,729(2) 7.30%
Farmington Woods
Avon, CT 06001
(1) Excludes 1,471 shares held by Mrs. Kaman. Excludes
199,802 shares reported separately above and held by
Newgate Associates Limited Partnership, a limited
partnership in which Mr. Kaman serves as general
partner.
(2) Includes 15,192 shares held by Mr. Moses and
33,537 shares held by Paulson and Company as follows:
11,481 shares for the benefit of Mr. Moses, and
22,056 shares held for a partnership controlled by Mr.
Moses.
</TABLE>
Page 24
<PAGE>
<PAGE>
(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.
<TABLE>
Class of Number of Shares Owned Percentage
Name Common Stock as of February 1, 1997 of Class
- --------------------------------------------------------------------
<S> <C> <C> <C>
Brian E. Barents ------- ------- -----
T. Jack Cahill Class A 34,525(1) *
E. Reeves Callaway ------- ------- -----
Frank C. Carlucci Class A 3,000(2) *
Laney J. Chouest Class A 5,331 *
John A. DiBiaggio ------- ------- -----
Edythe J. Gaines Class A 2,136 *
Robert M. Garneau Class A 41,310(3) *
Class B 7,970 *
Huntington Hardisty Class A 6,000 *
Charles H. Kaman Class A 248,654(4) 1.13%
Class B 258,375(5) 38.69%
C. William Kaman, II Class A 74,844(6) *
Class B 55,206(7) 8.27%
Walter R. Kozlow Class A 65,439(8) *
Class B 296 *
Eileen S. Kraus Class A 514 *
Hartzel Z. Lebed Class A 13,544(9) *
Harvey S. Levenson Class A 12,120 *
Class B 19,500(10) 2.92%
Walter H. Monteith, Jr. Class A 200 *
John S. Murtha Class A 53,548(11) *
Class B 432 *
Wanda L. Rogers Class A 1,000 *
All Directors and
Executive Officers Class A 562,165(12) 3.03%
as a group ** Class B 341,779 51.18%
</TABLE>
Page 25
<PAGE>
<PAGE>
(1) Includes 10,000 shares subject to the exercisable portion of
stock options.
(2) Held jointly with Mrs. Carlucci.
(3) Includes 14,900 shares subject to the exercisable portion
of stock options.
(4) Excludes the following: 24,132 shares held by Mrs. Kaman;
7,871 shares held by Fidelco Guide Dog Foundation, Inc., a
charitable foundation of which Mr. Kaman is President and
Director, in which shares Mr. Kaman disclaims beneficial
ownership; 184,434 shares held by Newgate Associates
Limited Partnership, a limited partnership of which Mr.
Kaman is the general partner; 21,816 shares held by Oldgate
Associates ("Oldgate") a limited partnership of which Mr. Kaman
is the general partner; 125,034 shares held by Oldgate and as
to which shares Mr. Kaman disclaims beneficial interest, such
portion of Oldgate having been placed in an irrevocable trust;
and 72,500 shares held by the Charles H. Kaman Charitable
Foundation, a private charitable foundation. Included are
45,000 shares subject to exercisable portion of stock options.
(5) Excludes the following: 1,471 shares held by Mrs. Kaman and
199,802 shares held by Newgate Associates Limited Partnership,
a limited partnership of which Mr. Kaman is the general
partner.
(6) Includes 14,900 shares subject to exercisable portion of
stock options; and excludes 79,728 shares held by Mr. Kaman
as Trustee, in which shares Mr. Kaman disclaims any
beneficial ownership.
(7) Excludes 4,800 shares held by Mr. Kaman as Trustee in which
shares Mr. Kaman disclaims any beneficial ownership.
(8) Includes 18,900 shares subject to exercisable portion of
stock options.
(9) Includes 6,000 shares held in an Individual Retirement Account,
and shares held jointly with Mrs. Lebed; excludes 480 shares
held by Mrs. Lebed.
(10)Excludes 500 shares held by Mrs. Levenson.
(11)Held by Fleet National Bank pursuant to a revocable trust.
Excludes 7,980 shares held by Fleet National Bank pursuant
to a revocable trust for the benefit of Mrs. Murtha.
(12)Includes 103,100 shares subject to exercisable portion of
stock options.
* Less than one percent.
** Excludes 24,612 Class A shares and 1,971 Class B shares held
by spouses of certain Directors and Executive Officers.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1996, the Corporation obtained legal services from the
Hartford, Connecticut law firm of Murtha, Cullina, Richter and
Pinney of which Mr. Murtha, a Director of the Corporation, is
counsel. The Corporation also obtained video production services
in the amount of $109,370 from Polykonn Corporation, a Corporation
controlled by Mr. Steven Kaman, son of Charles H. Kaman, Chairman
Page 26
<PAGE>
<PAGE>
and Chief Executive Officer of the Corporation. In addition the
Corporation obtained consultant's services from Mr. Levenson, a
Director of the Corporation in connection with a consultant's
agreement entered into with Mr. Levenson for a term of one year
under which the Corporation paid Mr. Levenson a consultant's fee at
the rate of $10,000 per month. The Corporation also paid premiums
on Mr. Levenson's Group Universal Life Insurance policy for 1996,
in the amount of approximately $3,800, and retained Mr. Levenson as
a participant in a program pursuant to which it paid for tax and
estate planning services in the amount of approximately $5,700.
On February 20, 1997, the Corporation sold its interest in a
subsidiary company, AirKaman of Jacksonville, Inc., to a
Corporation controlled by C. William Kaman II for cash in the
amount of approximately $3,615,000. C. William Kaman II is a
director and Executive Vice President of the Corporation and is the
son of Charles H. Kaman. The purchase price received by the
Corporation was determined in accordance with an independent
appraisal.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a)(1) FINANCIAL STATEMENTS.
See Item 8 concerning financial statements appearing as
Exhibit 13 to this Report and concerning the Financial
Data Schedule appearing as Exhibit 27 to this Report.
(a)(2) FINANCIAL STATEMENT SCHEDULES.
An index to the financial statement schedules immediately
precedes such schedules.
(a)(3) EXHIBITS.
An index to the exhibits filed or incorporated by
reference immediately precedes such exhibits.
(b) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed during the last
quarter of the year ended December 31, 1996, which
year is covered by this report.
Page 27
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of Bloomfield, State of
Connecticut, on this 21st day of March, 1996.
KAMAN Corporation
(Registrant)
By Charles H. Kaman, Chairman, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Signature: Title: Date:
- -------------------------------------------------------------------
Charles H. Kaman Chairman, President, Chief March 21, 1997
Executive Officer and Director
(Chief Executive Officer)
Robert M. Garneau Executive Vice President March 21, 1997
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
Robert M. Garneau March 21, 1997
Attorney-in-Fact for:
Brian E. Barents Director
E. Reeves Callaway, III Director
Frank C. Carlucci Director
Laney J. Chouest Director
John A. DiBiaggio Director
Edythe J. Gaines Director
Huntington Hardisty Director
C. William Kaman, II Director
Eileen S. Kraus Director
Hartzel Z. Lebed Director
Harvey S. Levenson Director
Walter H. Monteith, Jr. Director
John S. Murtha Director
Wanda L. Rogers Director
Page 28
<PAGE>
<PAGE>
KAMAN Corporation AND SUBSIDIARIES
Index to Financial Statement Schedules
Report of Independent Auditors
Financial Statement Schedules:
Schedule II - Valuation and Qualifying Accounts
Page 29
<PAGE>
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REPORT OF INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
Certified Public Accountants
CityPlace II
Hartford, Connecticut 06103
The Board of Directors and Shareholders
Kaman Corporation:
Under date of January 27, 1997, we reported on the consolidated
balance sheets of Kaman Corporation and subsidiaries as of
December 31, 1996 and 1995 and the related consolidated
statements of operations, changes in shareholders' equity and cash
flows for each of the years in the three-year period ended
December 31, 1996, as contained in the 1996 annual report to
shareholders. These consolidated financial statements and our
report thereon are included in the annual report on Form 10-K for
1996. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related
financial statement schedule as listed in the accompanying
index. This financial statement schedule is the
responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule
based on our audits.
In our opinion, such schedule, when considered in relation to
the basic consolidated financial statements taken as a whole,
present fairly, in all material respects, the information set
forth therein.
/s/ KPMG Peat Marwick LLP
Hartford, Connecticut
January 27, 1997
Page 30
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<PAGE>
KAMAN Corporation AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in Thousands)
<TABLE>
YEAR ENDED DECEMBER 31, 1994
Additions
<S> <C> <C> <C> <C> <C>
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1994 EXPENSES OTHERS DEDUCTIONS 1994
Allowance for
doubtful
accounts $1,576 $1,198 $----- $1,109(A) $1,665
====== ====== ====== ====== ======
Accumulated
amortization
of goodwill $9,998 $1,318 $----- $7,772(B) $3,544
====== ====== ====== ====== ======
YEAR ENDED DECEMBER 31, 1995
Additions
<S> <C> <C> <C> <C> <C>
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1995 EXPENSES OTHERS DEDUCTIONS 1995
Allowance for
doubtful
accounts $1,665 $2,476 $----- $1,852(A) $2,289
====== ====== ====== ====== ======
Accumulated
amortization
of goodwill $3,544 $ 355 $----- $----- $3,899
====== ====== ====== ====== ======
YEAR ENDED DECEMBER 31, 1996
Additions
<S> <C> <C> <C> <C> <C>
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1996 EXPENSES OTHERS DEDUCTIONS 1996
Allowance for
doubtful
accounts $2,289 $1,288 $----- $1,003(A) $2,574
====== ====== ====== ====== ======
Accumulated
amortization
of goodwill $3,899 $ 365 $----- $ 397(C) $3,867
====== ====== ====== ====== ======
</TABLE>
(A) Write-off of bad debts, net of recoveries
(B) Write-off of accumulated amortization of goodwill related to
the write-down of goodwill in Raymond Engineering Inc.
(C) Write-off of accumulated amortization of goodwill related to
the sale of a division.
Page 31
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KAMAN Corporation
INDEX TO EXHIBITS
Exhibit 3a The Amended and Restated by reference
Certificate of InCorporation
of the Corporation, as amended,
including the form of amendment
designating the Corporation's
Series 2 Preferred Stock has been
filed as Exhibits 2.1 and 2.2 to the
Corporation's Form 8-A (Document
No. 0-1093 filed on September 27, 1993),
and is incorporated in this report
by reference.
Exhibit 3b The By-Laws of the Corporation by reference
were filed as Exhibit 3(b) to
the Corporation's Annual Report
on Form 10-K for 1990 (Document
No. 0-1093, filed with the
Securities and Exchange Commission
on March 14, 1991).
Exhibit 4a Indenture between the Corporation by reference
and Manufacturers Hanover Trust
Company, as Indenture Trustee,
with respect to the
Corporation's 6% Convertible
Subordinated Debentures, has
been filed as Exhibit 4.1 to
Registration Statement No. 33 -
11599 on Form S-2 of the
Corporation filed with the
Securities and Exchange
Commission on January 29, 1987
and is incorporated in this
report by reference.
Page 32
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Exhibit 4b The Revolving Credit Agreement by reference
between the Corporation and The
Bank of Nova Scotia and Fleet National
Bank of Connecticut, as
Co-Administrative Agents, dated
as of January 29, 1996. (Previously
filed as an Exhibit to the Corporation's
Annual Report on Form 10-K for the
year ended December 31, 1995
(Document No. 54381-96-2 filed with
the Securities and Exchange Commission
on March 22, 1996) and is incorporated
in this report by reference.
Exhibit 4c Deposit Agreement dated as of by reference
October 15, 1993 between the
Corporation and Chemical Bank as
Depositary and Holder of Depositary
Shares has been filed as
Exhibit (c)(1) to Schedule 13E-4
(Document No. 5-34114 filed with the
Securities and Exchange Commission
on September 15, 1993) and is
incorporated in this report by
reference.
Exhibit 4d The Corporation is party to certain by reference
long-term debt obligations, such
as real estate mortgages, copies
of which it agrees to furnish to
the Commission upon request.
Exhibit 10a The 1983 Stock Incentive Plan by reference
(formerly known as the 1983
Stock Option Plan) has been
filed as Exhibit 10b(iii) to the
Corporation's Annual Report on
Form 10-K for 1988 (Document No.
0-1093 filed with the Securities
and Exchange Commission on
March 22, 1989) and is incorporated
in this report by reference.
Page 33
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<PAGE>
Exhibit 10b The Kaman Corporation 1993 Stock Attached
Incentive Plan as amended effective
November 19, 1996.
Exhibit 10c The Kaman Corporation Employees Attached
Stock Purchase Plan as amended
effective November 19, 1996.
Exhibit 11 Statement regarding computation Attached
of per share earnings.
Exhibit 13 Portions of the Corporation's Attached
1996 Annual Report to
Shareholders as required by
Item 8.
Exhibit 21 Subsidiaries. Attached
Exhibit 23 Consent of Independent Auditors. Attached
Exhibit 24 Power of attorney under which Attached
this report has been signed on
behalf of certain directors.
Exhibit 27 Financial Data Schedule Attached
Page 34
<PAGE>
<PAGE>
<PAGE>
KAMAN CORPORATION
1993 STOCK INCENTIVE PLAN
1. PURPOSE. This Plan includes a continuation and extension
of the incentive stock program of the Corporation set forth in the
First Predecessor Plan and the Second Predecessor Plan and is
designed to give directors, officers and key employees of the
Corporation and other persons an expanded opportunity to acquire
stock in the Corporation or receive other long-term incentive
remuneration in order that they may better participate in the
Corporation's growth and be motivated to remain with the Corporation
and promote its further development and success.
2. DEFINITIONS. The following terms shall have the meanings
given below unless the context otherwise requires:
(a) "Act" means the Securities Exchange Act of 1934, as
amended.
(b) "Award" or "Awards" except where referring to a
particular category of grant under the Plan shall include Incentive
Stock Options, Non-Statutory Stock Options, Stock Appreciation
Rights and Restricted Stock Awards.
(c) "Board" means the Board of Directors of the
Corporation.
(d) "Code" means the Internal Revenue Code of 1986, as
amended, and any successor Code, and related rules, regulations and
interpretations.
(e) "Committee" means the committee of the Board
established under Section 9 hereof.
(f) "Corporation" means the committee of the Board
established as defined by the Code.
(g) "Disability" or "disabled" means disability or
disabled as defined by the Code.
(h) "Eligible Person" means any person, including a
person who is not an employee of the Corporation or a Subsidiary,
or entity who satisfies all the eligibility requirements set forth
in either Section 3(a) or 3(b) hereof, excluding, however, any
member of the Committee and any alternate member of the Committee.
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<PAGE>
(i) "Fair Market Value" of the Stock on any given date
shall be the closing price of the Stock in the NASDAQ National
Market System on such date, or, if no sales of the Stock occurred
on that day, the then most recent prior day on which sales were
reported.
(j) "First Predecessor Plan" means the Kaman Corporation
1973 Stock Option Plan.
(k) "Incentive Stock Option" means a stock option
qualifying under the provisions of Section 422A of the Code.
(l) "Non-Employee Director" shall have the meaning set
forth in Rule 16b-3(b)(3)(i) promulgated under the Act, and any
successor to such rule.
(m) "Non-Employee Director Participant" means an
Eligible Person, who at the time of grant of an Award is a director
of the Corporation but not an employee of the Corporation or a
Subsidiary.
(n) "Non-Statutory Option" means a stock option not
qualifying for incentive stock option treatment under the pro-
visions of Section 422A of the Code.
(o) "Optionee" means the holder of any option granted
under the Plan.
(p) "Participant" means the holder of any Award granted
under the Plan.
(q) "Plan" means the Kaman Corporation 1993 Stock
Incentive Plan.
(r) "Principal Shareholder" means any individual owning
stock possessing more than ten percent (10%) of the total combined
voting power of all classes of capital stock of the Corporation.
(s) "Restricted Stock" means Stock received pursuant to
a Restricted Stock Award.
(t) "Restricted Stock Award" is defined in Section 8(a).
(u) "Second Predecessor Plan" means the Kaman
Corporation 1983 Stock Incentive Plan.
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(v) "Stock" or "shares" means shares of Class A Common
Stock of the Corporation.
(w) "Stock Appreciation Right" or "Right" means a right
described in Section 7.
(x) "Subsidiary" means any corporation in which the
Corporation owns, directly or indirectly, a majority of the out-
standing voting stock.
3. ELIGIBILITY.
(a) Incentive Stock Options. Incentive Stock Options
may be granted to any Eligible Persons who are full-time, salaried
employees of the Corporation or a Subsidiary and who in the sole
opinion of the Committee are, from time to time, responsible for
the management and/or growth of all or part of the business of the
Corporation.
(b) Awards Other than Incentive Stock Options. Awards,
other than Incentive Stock Options, may be granted to any Eligible
Persons who in the sole opinion of the Committee are, from time to
time, responsible for the growth and/or the management of all or a
part of the business of the Corporation.
(c) Substitute Awards. The Committee, in its dis-
cretion, may also grant Awards in substitution for any stock
incentive awards previously granted by companies acquired by the
Corporation or one of its Subsidiaries. Such substitute awards may
be granted on such terms and conditions as the Committee deems
appropriate in the circumstances, provided, however, that
substitute Incentive Stock Options shall be granted only in
accordance with the Code.
4. TERM OF PLAN. The Plan shall take effect on November 1,
1993 and shall remain effective for ten (10) years thereafter,
expiring on October 31, 2003.
5. STOCK SUBJECT TO THE PLAN. The aggregate number of
shares of Stock which may be issued pursuant to all Awards granted
under the Plan shall not exceed 960,000 shares of Stock, subject to
adjustment as hereinafter provided in Section 10, which shall be in
addition to all shares of Stock issued or reserved for issuance
pursuant to options granted under the First Predecessor Plan and
the Second Predecessor Plan, and which may be treasury shares or
authorized but unissued shares. In the event that any Award under
<PAGE>
<PAGE>
the Plan for any reason expires, is terminated, forfeited,
reacquired by the Corporation, or satisfied without the issuance of
Stock (except in the cases of (i) the Stock otherwise issuable
under an Award but retained by the Corporation for payment of
withholding taxes under Section 14(b) hereof; and (ii) stock
otherwise issuable under a stock option but for which the
Corporation has made a discretionary payment under Section 7(d)
hereof) the shares allocable to the unexercised portion of such
Award may again be made subject to an Award under the Plan. Any
award of a Stock Appreciation Right, to the extent that such Stock
Appreciation Right may be settled only for cash, shall not be
deemed to reduce the aggregate number of shares of Stock authorized
to be issued pursuant to Awards granted under the Plan.
6. STOCK OPTIONS. The following terms and conditions shall
apply to each option granted under the Plan and shall be set forth
in a stock option agreement between the Corporation and the
Optionee together with such other term and conditions not
inconsistent herewith as the Committee may deem appropriate in the
case of each Optionee:
(a) Option Price. The purchase price under each
Incentive Stock Option shall be as determined by the Committee but
not less than 100% of the Fair Market Value of the shares subject
to such option on the date of grant, provided that such option
price shall not be less than 110% of such Fair Market Value in the
case of any Incentive Stock Option granted to a Principal
Shareholder. The purchase price per share of Stock deliverable
upon the exercise of a Non-Statutory Option shall be determined by
the Committee, but shall not be less than 85% of the Fair Market
Value of such Stock on the date of grant and in no event less than
the par value per share of such Stock.
(b) Type of Option. All options granted under the Plan
shall be either Incentive Stock Options or Non-Statutory Options.
All provisions of the Plan applicable to Incentive Stock Options
shall be interpreted in a manner consistent with the provisions of,
and regulations under, Section 422A of the Internal Revenue Code.
(c) Period of Incentive Stock Option. Each Incentive
Stock Option shall have a term not in excess of ten (10) years from
the date on which it is granted, except in the case of any
Incentive Stock Option granted to a Principal Shareholder which
shall have a term not in excess of five (5) years from the date on
which it is granted; provided that any Incentive Stock Option
granted or the unexercised portion thereof, to the extent
<PAGE>
<PAGE>
exercisable at the time of termination of employment, shall
terminate at the close of business on the day three (3) months
following the date on which the Optionee ceases to be employed by
the Corporation or a Subsidiary unless sooner expired or unless a
longer period is provided under Subsection (g) of this Section in
the event of the death or disability of such an Optionee.
(d) Period of Non-Statutory Option. Each Non-Statutory
Option granted under the Plan shall have a term not in excess of
ten (10) years and one (1) day from the date on which it is
granted; provided that any Non-Statutory Option granted to an
employee of the Corporation or a Subsidiary or to a Non-Employee
Director Participant, or the unexercised portion thereof shall
terminate not later than the close of business on the day three (3)
months following the date on which such employee ceases to be
employed by the Corporation or a Subsidiary or the date on which
such Non-Employee Director ceases to be a director of the
Corporation, as the case may be, unless a longer period is provided
under Subsection (g) of this Section in the event of the death or
disability of such an Optionee. Such an Optionee's Non-Statutory
Option shall be exercisable, if at all, during such three (3) month
period only to the extent exercisable on the date such Optionee's
employment terminates or the date on which such Optionee ceases to
be a director, as the case may be.
(e) Exercise of Option.
(i) Each option granted under the Plan shall become
exercisable on such date or dates and in such amount or
amounts as the Committee shall determine. In the absence of
any other provision by the Committee, each option granted
under the Plan shall be exercisable with respect to not more
than twenty percent (20%) of such shares subject thereto after
the expiration of one (1) year following the date of its
grant, and shall be exercisable as to an additional twenty
percent (20%) of such shares after the expiration of each of
the succeeding four (4) years, on a cumulative basis, so that
such option, or any unexercised portion thereof, shall be
fully exercisable after a period of five (5) years following
the date of its grant; provided, however, that in the absence
of any other provision by the Committee, each Incentive Stock
Option granted to a Principal Shareholder shall be exercisable
with respect to not more than twenty-five percent (25%) of the
shares subject thereto after the expiration of one (1) year
following the date of its grant, and shall be exercisable as
to an additional twenty-five percent (25%) after the
expiration of each of the succeeding three (3) years, on a
cumulative basis, so that such option, or any unexercised
portion thereof, shall be fully exercisable after a period of
four (4) years following the date of its grant.
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(ii) The Committee, in its sole discretion, may,
from time to time and at any time, accelerate the vesting
provisions of any outstanding option, subject, in the case of
Incentive Stock Options, to the provisions of Subsection (6)(i)
relating to "Limit on Incentive Options".
(iii) Notwithstanding anything herein to the
contrary, except as provided in subsection (g) of this
Section, no Optionee who was, at the time of the grant of
an option, an employee of the Corporation or a
Subsidiary, may exercise such option or any part thereof
unless at the time of such exercise he shall be employed
by the Corporation or a Subsidiary and shall have been so
employed continuously since the date of grant of such
option, excepting leaves of absence approved by the
Committee; provided that the option agreement may provide
that such an Optionee may exercise his option, to the
extent exercisable on the date of termination of such
continuous employment, during the three (3) month period,
ending at the close of business on the day three (3)
months following the termination of such continuous
employment unless such option shall have already expired
by its term.
(iv) An option shall be exercised in accordance
with the related stock option agreement by serving
written notice of exercise on the Corporation accompanied
by full payment of the purchase price in cash. As
determined by the Committee, in its discretion, at (or,
in the case of Non-Statutory Options, at or after) the
time of grant, payment in full or in part may also be
made by delivery of (i) irrevocable instructions to a
broker to deliver promptly to the Corporation the amount
of sale or loan proceeds to pay the exercise price, or
(ii) previously owned shares of Stock not then subject to
restrictions under any Corporation plan (but which may
include shares the disposition of which constitutes a
disqualifying disposition for purposes of obtaining
incentive stock option treatment for federal tax
purposes), or (iii) shares of Stock otherwise receivable
upon the exercise of such option; provided, however, that
in the event the Committee shall determine in any given
instance that the exercise of such option by withholding
shares otherwise receivable would be unlawful, unduly
burdensome or otherwise inappropriate, the Committee may
require that such exercise be accomplished in another
acceptable manner. For purposes of subsections (ii) and
(iii) above, such surrendered shares shall be valued at
Fair Market Value on the date of exercise.
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(f) Nontransferability. No option granted under the
Plan shall be transferable by the Optionee otherwise than by
will or by the laws of descent and distribution, and such
option shall be exercisable, during his lifetime, only by him.
(g) Death or Disability of Optionee. In the event of
the death or disability of an Optionee while in the employ of
the Corporation or a Subsidiary or while serving as a director
of the Corporation, his stock option or the unexercised
portion thereof may be exercised within the period of one (1)
year succeeding his death or disability, but in no event later
than (i) ten (10) years (five (5) years in the case of a
Principal Shareholder) from the date the option was granted in
the case of an Incentive Stock Option, and (ii) ten (10) years
and one (1) day in the case of a Non-Statutory Option, by the
person or persons designated in the Optionee's will for that
purpose or in the absence of any such designation, by the
legal representative of his estate, or by the legal
representative of the Optionee, as the case may be.
Notwithstanding anything herein to the contrary and in the
absence of any contrary provision by the Committee, during the
one-year period following termination of employment or
cessation as a director by reason of death or disability, an
Optionee's stock option shall continue to vest in accordance
with its terms and be and become exercisable as if employment
or service as a director had not ceased.
(h) Shareholder Rights. No Optionee shall be entitled
to any rights as a shareholder with respect to any shares
subject to his option prior to the date of issuance to him of
a stock certificate representing such shares.
(i) Limit on Incentive Stock Options. The aggregate
Fair Market Value (determined at the time an option is
granted) of shares with respect to which Incentive Stock
Options granted to an employee are exercisable for the first
time by such employee during any calendar year (under all
incentive stock option plans of the Corporation and its
Subsidiaries to the extent required under the Code) shall not
exceed $100,000.
(j) Notification of Disqualifying Disposition. Partici-
pants granted Incentive Stock Options shall undertake, in the
Incentive Stock Option agreements, as a precondition to the
granting of such option by the Corporation, to promptly notify
the Corporation in the event of a disqualifying disposition
(within the meaning of the Code) of any shares acquired
pursuant to such Incentive Stock Option agreement and provide
the Corporation with all relevant information related thereto.
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7. STOCK APPRECIATION RIGHTS; DISCRETIONARY PAYMENTS.
(a) Nature of Stock Appreciation Right. A Stock
Appreciation Right is an Award entitling the Participant to receive
an amount in cash or shares of Stock (or forms of payment permitted
under Section 7(d) hereof) or a combination thereof, as determined
by the Committee at the time of grant, having a value equal to (or
if the Committee shall so determine at time of grant, less than)
the excess of the Fair Market Value of a share of Stock on the date
of exercise over the Fair Market Value of a share of Stock on the
date of grant (or over the option exercise price, if the Stock
Appreciation Right was granted in tandem with a stock option)
multiplied by the number of shares with respect to which the Stock
Appreciation Right shall have been exercised.
(b) Grant and Exercise of Stock Appreciation Rights.
(i) Stock Appreciation Rights may be granted in
tandem with, or independently of, any stock option granted
under the Plan. In the case of a Stock Appreciation Right
granted in tandem with a Non-Statutory Option, such Right may
be granted either at or after the time of grant of such
option. In the case of a Stock Appreciation Right granted in
tandem with an Incentive Stock Option such Right may be
granted only at the time of the grant of such option. A Stock
Appreciation Right or applicable portion thereof granted in
tandem with a given stock option shall terminate and no longer
be exercisable upon the termination or exercise of the related
stock option, except that a Stock Appreciation Right granted
with respect to less than the full number of shares covered by
a related stock option shall not be reduced until the exercise
or termination of the related stock option exceeds the number
of shares not covered by the Stock Appreciation Right.
(ii) Each Stock Appreciation Right granted under
the Plan shall become exercisable on such date or dates and in
such amount or amounts as the Committee shall determine;
provided, however, that any Stock Appreciation Right granted
in tandem with a stock option shall be exercisable in relative
proportion to and to the extent that such related stock option
is exercisable; provided further, however, that, not-
withstanding anything herein to the contrary, any Stock
Appreciation Right granted in tandem with a Non-Statutory
Option which has a purchase price at the date of grant of less
than Fair Market Value shall not be exercisable at all until
at least one (1) year after the date of grant of such option.
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Except as provided in the immediately preceding sentence, in
the absence of any other provision by the Committee, each
Stock Appreciation Right granted under the Plan shall be exer-
cisable with respect to not more than twenty percent (20%) of
such shares subject thereto after the expiration of one (1)
year following the date of its grant, and shall be exercisable
as to an additional twenty percent (20%) of such shares after
the expiration of each of the succeeding four (4) years, on a
cumulative basis, so that such Right, or any unexercised
portion thereof, shall be fully exercisable after a period of
five (5) years following the date of its grant. The
Committee, in its sole discretion, may, from time to time and
at any time, accelerate the vesting provisions of any
outstanding Stock Appreciation Right.
(iii) Notwithstanding anything herein to the con-
trary, except as provided in subsections (c)(v) and (c)(vi) of
this Section, no Participant who was, at the time of the grant
of a Stock Appreciation Right, an employee of the Corporation
or a Subsidiary, may exercise such Right or any part thereof
unless at the time of such exercise, he shall be employed by
the Corporation or a Subsidiary and shall have been so
employed continuously since the date of grant of such Right,
excepting leaves of absence approved by the Committee;
provided that the Stock Appreciation Right agreement may
provide that such a Participant may exercise his Stock
Appreciation Right, to the extent exercisable on the date of
termination of such continuous employment unless such Right
shall have already expired by its terms.
(iv) Notwithstanding anything herein to the con-
trary, except as provided in subsections (c)(v) and (c)(vi) of
this Section, no Non-Employee Director Participant may
exercise a Stock Appreciation Right or part thereof unless at
the time of such exercise he shall be a director of the
Corporation and shall have been a director of the Corporation
continuously since the date of grant of such Right excepting
leaves of absence approved by the Committee; provided that the
Stock Appreciation Right agreement may provide that such
Participant may exercise his Stock Appreciation Right, to the
extent exercisable on the date he ceased to be a director of
the Corporation, during the three (3) month period ending at
the close of business on the day three (3) months following
the cessation of such continuous service as a director unless
such Right shall already have expired by its terms.
(v) A Stock Appreciation Right shall be exercised
in accordance with the related Stock Appreciation Right
Agreement by serving written notice of exercise on the
Corporation.
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(c) Terms and Conditions of Stock Appreciation Rights.
Stock Appreciation Rights shall be subject to such terms and
conditions as shall be determined from time to time by the
Committee, subject to the following:
(i) Stock Appreciation Rights granted in tandem
with stock options shall be exercisable only at such time or
times and to the extent that the related stock options shall
be exercisable;
(ii) Upon the exercise of a Stock Appreciation
Right, the applicable portion of any related stock option
shall be surrendered.
(iii) Stock Appreciation Rights granted in tandem
with a stock option shall be transferable only with such
option. Stock Appreciation Rights shall not be transferable
otherwise than by will or the laws of descent and distribu-
tion. All Stock Appreciation Rights shall be exercisable
during the Participant's lifetime only by the Participant or
the Participant's legal representative.
(iv) A Stock Appreciation Right granted in tandem
with a stock option may be exercised only when the then Fair
Market Value of the Stock subject to the stock option exceeds
the exercise price of such option. A Stock Appreciation Right
not granted in tandem with a stock option may be exercised
only when the then Fair Market Value of the Stock exceeds the
Fair Market Value of the Stock on the date of grant of such
Right.
(v) Each Stock Appreciation Right shall have a term
not in excess of ten (10) years from the date on which it is
granted (ten (10) years and one (1) day in the case of a Stock
Appreciation Right granted in tandem with a Non-Statutory
Option); provided that any Stock Appreciation Right granted to
(aa) an employee of the Corporation or a Subsidiary shall
terminate not later than the close of business on the day
three (3) months following the date such Participant ceases to
be employed by the Corporation or a Subsidiary, excepting
leaves of absences approved by the Committee, and (bb) a
Non-Employee Director Participant shall terminate not later
than the close of business on the day three (3) months following
the date such Participant ceases to be a director of the
Corporation, unless a longer period is provided under
subsection (c)(vi) below in the event of death or disability
of a Participant. Such a Participant's Stock Appreciation
Right shall be exercisable, if at all, during such three (3)
month period only to the extent exercisable on the date his
employment terminates or the date he ceases to be a director,
as the case may be.
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(vi) In the event of the death or disability of a
Participant while in the employ of the Corporation or a Sub-
sidiary or while serving as a director of the Corporation, his
Stock Appreciation Right or the unexercised portion thereof
may be exercised within the period of one (1) year succeeding
his death or disability, but in no event later than (i) ten
(10) years from the date on which it was granted (ten (10)
years and one (1) day in the case of a Non-Statutory Option),
by the person or persons designated in the Participant's will
for that purpose or in the absence of any such designation, by
the legal representative of his estate, or by the legal
representative of the Participant, as the case may be.
Notwithstanding anything herein to the contrary and in the
absence of any contrary provision by the Committee, during the
one-year period following termination of employment or
cessation as a director by reason of death or disability, a
Participant's Stock Appreciation Right shall continue to vest
in accordance with its terms and be and become exercisable as
if employment or service as a director had not ceased.
(d) Discretionary Payments. Upon the written request of
an Optionee whose stock option is not accompanied by a Stock
Appreciation Right, the Committee may, in its discretion, cancel
such option if the Fair Market Value of the shares subject to the
option at the exercise date exceeds the exercise price thereof; in
that event, the Corporation shall pay to the Optionee an amount
equal to the difference between the Fair Market Value of the shares
subject to the cancelled option (determined as of the date the
option is cancelled) and the exercise price. Such payment shall be
by check or in Stock having a Fair Market Value (determined on the
date the payment is to be made) equal to the amount of such
payments or any combination thereof, as determined by the
Committee.
8. RESTRICTED STOCK.
(a) Nature of Restricted Stock Award. A Restricted
Stock Award is an Award entitling the Participant to receive shares
of Stock, subject to such conditions, including a Corporation right
during a specified period or periods to require forfeiture of such
shares upon the Participant's termination of employment with the
Corporation or a Subsidiary or cessation as a director of the
Corporation, as the case may be, as the Committee may determine at
the time of grant. The Committee, in its sole discretion, may,
from time to time and at any time, waive any or all restrictions
and/or conditions contained in the Restricted Stock Award
agreement. Notwithstanding anything herein to the contrary, the
Committee, in its discretion, may grant Restricted Stock without
any restrictions or conditions whatsoever. Restricted Stock shall
be granted in respect of past services or other valid
consideration.
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<PAGE>
(b) Award Agreement. A Participant who is granted a
Restricted Stock Award shall have no rights with respect to such
Award unless the Participant shall have accepted the Award within
60 days (or such shorter date as the Committee may specify)
following the Award date by executing and delivering to the
Corporation a Restricted Stock Award Agreement in such form as the
Committee shall determine.
(c) Rights as a Shareholder. Upon complying with para-
graph (b) above, a Participant shall have all the rights of a
shareholder with respect to the Restricted Stock including voting
and dividend rights, subject to nontransferability and Corporation
forfeiture rights described in this Section 8 and subject to any
other conditions contained in the Award agreement. Unless the
Committee shall otherwise determine, certificates evidencing shares
of Restricted Stock shall remain in the possession of the
Corporation until such shares are free of any restrictions under
the Plan. The Committee in its discretion may, as a precondition
of the Corporation's obligation to issue a Restricted Stock Award,
require the Participant to execute a stock power or powers or other
agreement or instruments necessary or advisable in connection with
the Corporation's forfeiture rights with respect to such shares.
(d) Restrictions. Shares of Restricted Stock may not be
sold, assigned, transferred or otherwise disposed of or pledged or
otherwise encumbered. In the event of termination of employment of
the Participant with the Corporation or a Subsidiary for any
reason, or cessation as a director of the Corporation in the case
of a Non-Employee Director Participant, such shares shall be
forfeited to the Corporation, except as set forth below:
(i) The Committee at the time of grant shall
specify the date or dates (which may depend upon or be related
to the attainment of performance goals and other conditions)
on which the nontransferability of the Restricted Stock and
the Corporation's forfeiture rights with respect thereto shall
lapse. The Committee at any time may accelerate such date or
dates and otherwise waive or, subject to Section 13, amend any
conditions of the Award.
(ii) Except as may otherwise be provided in the
Award agreement, in the event of termination of a Participant
with the Corporation or a Subsidiary for any reason or
cessation as a director of the Corporation for any reason, all
of the Participant's Restricted Stock shall be forfeited to
the Corporation without the necessity of any further act by
the Corporation, the Participant or the Participant's legal
representative; provided, however, that in the event of
<PAGE>
<PAGE>
termination of employment or cessation of service as a
director of the Corporation by reason of death or disability,
all conditions and restrictions relating to a Restricted Stock
Award held by such a Participant shall thereupon be waived and
shall lapse.
(iii) In the absence of any other provision by the
Committee, each Restricted Stock Award granted to (A) an
employee of the Corporation or a Subsidiary shall be subject
to forfeiture to the Corporation conditioned on the
Participant's continued employment and (B) Non-Employee
Director Participants shall be subject to forfeiture to the
Corporation conditioned on the Participant's continued service
as a director of the Corporation, and in the case of clause
(A) or (B), such forfeiture rights shall lapse as follows:
with respect to twenty percent (20%) of the shares subject to
the Restricted Stock Award on the date one year following the
date of grant, and with respect to an additional twenty
percent (20%) of such shares after the expiration of each of
the succeeding four (4) years thereafter, on a cumulative
basis, so that such Restricted Stock shall be free of such
risk of forfeiture on the date five (5) years following the
date of its grant.
(e) Waiver, Deferral, and Investment of Dividends. The
Restricted Stock Award agreement may require or permit the
immediate payment, waiver, deferral or investment of dividends paid
with respect to the Restricted Stock.
9. THE COMMITTEE.
(a) Administration. The Committee shall be a committee
of not less than three (3) members of the Board who are Non-Employee
Directors, appointed by the Board. Vacancies occurring in
membership of the Committee shall be filled by the Board. The
Committee shall keep minutes of its meetings. One or more members
of the Committee may participate in a meeting of the Committee by
means of conference telephone or similar communications equipment
provided all persons participating in the meeting can hear one
another. A majority of the entire Committee shall constitute a
quorum, and the acts of a majority of the members present at or so
participating in any meeting at which a quorum is constituted shall
be the acts of the Committee. The Committee may act without
meeting by unanimous written consent. Absent some other provision
by the Board, the power and responsibilities of the Committee shall
be vested in and assumed by the Personnel and Compensation
Committee of the Board.
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<PAGE>
(b) Authority of Committee. Subject to the provisions
of the Plan, the Committee shall have full and final authority to
determine the persons to whom Awards shall be granted, the number
of shares to be subject to each Award, the term of the Award, the
vesting provisions of the Award, if any, restrictions on the Award,
if any, and the price at which the shares subject thereto may be
purchased. The Committee is empowered, in its discretion, to
modify, extend or renew any Award theretofore granted and adopt
such rules and regulations and take such other action as it shall
deem necessary or proper for the administration of the Plan. The
Committee shall have full power and authority to construe, inter-
pret and administer the Plan, and the decisions of the Committee
shall be final and binding upon all interested parties.
10. ADJUSTMENTS. Any limitations, restrictions or other
provisions of this Plan to the contrary notwithstanding, each Award
agreement shall make such provision, if any, as the Committee may
deem appropriate for the adjustment of the terms and provisions
thereof (including, without limitation, terms and provisions
relating to the exercise price and the number and class of shares
subject to the Award) in the event of any merger, consolidation,
reorganization, recapitalization, stock dividend, divisive
reorganization, issuance of rights, combination or split-up or
exchange of shares, or the like. In the event of any merger,
consolidation, reorganization, recapitalization, stock dividend,
divisive reorganization, issuance of rights, combination or split-up
or exchange of shares, or the like, the Committee shall make an
appropriate adjustment in the number of shares authorized to be
issued pursuant to the Plan.
11. OPTIONS UNDER FIRST PREDECESSOR PLAN AND SECOND
PREDECESSOR PLAN. Options presently outstanding which have been
granted under either the First Predecessor Plan or the Second
Predecessor Plan shall continue to be governed and interpreted
under the terms of such plans, respectively, and not by the terms
hereof.
12. AMENDMENT TO AND TERMINATION OF THE PLAN. The Board may
from time to time amend the Plan in such way as it shall deem
advisable provided the Board may not extend the expiration date of
the Plan, change the class of Eligible Persons, increase the
maximum Award term, decrease the minimum exercise price or increase
the total number of authorized shares (except in accordance with
Section 10 hereof) for which Awards may be granted. The Board, in
its discretion, may at any time terminate the Plan prior to its
expiration in accordance with Section 4 hereof. No amendment to or
termination of the Plan shall in any way adversely affect Awards
then outstanding hereunder.
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<PAGE>
13. STATUS OF PLAN. Until shares pursuant to an Award or
exercise thereof are actually delivered to a Participant, a Par-
ticipant shall have no rights to or with respect to such shares
greater than those of a general creditor of the Corporation unless
the Committee shall otherwise expressly determine in connection
with any Award or Awards.
14. GENERAL PROVISIONS.
(a) Other Compensation Arrangements; No Right to Receive
Awards; No Employment or Other Rights. Nothing contained in this
Plan shall prevent the Board from adopting other or additional
capital stock based compensation arrangements, subject to
stockholder approval if such approval is required, and such
arrangements may be either generally applicable or applicable only
in specific cases. No Eligible Person shall have any right to
receive Awards except as the Committee may determine. The Plan
does not confer upon any employee any right to continued employment
with the Corporation or a Subsidiary or upon any director or
officer of the Corporation any right to continued service as a
director or officer of the Corporation, nor does it interfere in
any way with the right of the Corporation or a Subsidiary to
terminate the employment of any of its employees or for the
Corporation to remove a director or officer with or without cause
at any time.
(b) Tax Withholding, Etc. Any obligation of the
Corporation to issue shares pursuant to the grant or exercise of
any Award shall be conditioned on the Participant having paid or
made provision for payment of all applicable tax withholding
obligations, if any, satisfactory to the Committee. The
Corporation and its Subsidiaries shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the Participant. In the case of
Non-Statutory Options, and Stock Appreciation Rights exercisable only
for Stock, the Committee in its discretion, but only upon the
written request of a Participant exercising such an Award, may
permit such Participant to satisfy federal income tax withholding
requirements occasioned by the exercise thereof by the surrender of
shares otherwise to be received on the exercise of such Award.
Such shares shall be valued at the Fair Market Value thereof on the
date of exercise.
(c) Section 83(b) of the Code. Participants may not
make, and each Award agreement shall prohibit, an election under
Section 83(b) of the Code, with respect to any Award.
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<PAGE>
(d) Restrictions on Transfers of Shares. Although the
Corporation presently intends to register under applicable securi-
ties laws all shares acquired or received by Participants under the
Plan, the Corporation is not required to cause such shares to be
registered under the Securities Act of 1933 or the securities laws
of any State. Accordingly, the shares acquired or received may be
"restricted securities" as defined in Rule 144 under said
Securities Act of 1933 or other rule or regulation of the
Securities and Exchange Commission. Any certificate evidencing any
such shares may bear a legend restricting the transfer of such
shares, and the recipient may be required to assert that the shares
are being acquired for his own account and not with a view to the
distribution thereof as a condition to the granting or exercise of
an Award.
(e) Issuance of Shares. Any obligation of the
Corporation to issue shares pursuant to the grant or exercise of
any Award shall be conditioned on the Corporation's ability at
nominal expense to issue such shares in compliance with all
applicable statutes, rules or regulations of any governmental
authority. The Participant shall provide the Corporation with any
assurances or agreements which the Committee, in its sole
discretion, shall deem necessary or advisable in order that the
issuance of such shares shall comply with any such statutes, rules
or regulations.
(f) Date of Grant. The date on which each Award under
the Plan shall be considered as having been granted shall be the
date on which the award is authorized by the Committee, unless a
later date is specified by the Committee; provided, however, in the
case of options intended to qualify as Incentive Stock Options, the
date of grant shall be determined in accordance with the Code.
<PAGE>
<PAGE>
<PAGE>
KAMAN CORPORATION
EMPLOYEES STOCK PURCHASE PLAN
As Amended effective November 19, 1996
1. PURPOSE; AUTHORIZED SHARES. The Kaman Corporation Employees
Stock Purchase Plan (the "Plan") was adopted by the Board of
Directors (the "Board") of Kaman Corporation (the "Corporation") on
February 28, 1989 for the purpose of providing employees of the
Corporation and its subsidiaries an opportunity to purchase Kaman
Corporation Class A common stock through payroll deductions during
consecutive offerings commencing July 1, 1989. One Million Five
Hundred Thousand (1,500,000) shares of the Corporation's Class A
common stock in the aggregate have been approved for purposes of
the Plan by the Board.
2. OFFERING PERIODS. Each offering shall be made over a period
of one or more whole or partial Plan Years as determined by the
Committee (as defined in paragraph 3), provided that in no event
shall an offering period be greater than five (5) Plan Years.
3. ADMINISTRATION. The Plan will be administered by a committee
(the "Committee") appointed by the Board, consisting of at least
three of its members. Members of the Committee shall not be
eligible to participate in the Plan. The Committee will have
authority to make rules and regulations for the administration of
the Plan, and its interpretations and decisions with respect to the
Plan shall be final and conclusive. Absent some other provision by
the Board, the power and responsibilities of the Committee shall be
vested in and assumed by the Personnel and Compensation Committee
of the Board.
4. ELIGIBILITY. All full-time regular employees of the
Corporation and its subsidiaries, with at least three (3) months of
service as of the effective date of each offering hereunder, will
be eligible to participate in the Plan, subject to such rules as
may be prescribed from time to time by the Committee. Such rules,
however, shall neither permit nor deny participation in the Plan
contrary to the requirements of the Internal Revenue Code of 1986,
as amended (the "Code"), including, but not limited to, Section 423
thereof, and regulations promulgated thereunder. To the extent
<PAGE>
<PAGE>
consistent with Code Section 423, and regulations promulgated
thereunder, the Committee may permit persons who are not full-time
regular employees of the Corporation or one of its subsidiaries at
the commencement of an offering period, or who have not satisfied
the aforementioned three (3) month service requirement at the com-
mencement of an offering period, to participate in such offering
beginning on the date or at a specified date after such person has
been a full-time, regular employee of the Corporation or one of its
subsidiaries for at least three (3) months. No employee may be
granted a right under the Plan if such employee, immediately after
the right is granted, would own five percent (5%) or more of the
total combined voting power or value of the stock of the Cor-
poration or any subsidiary. For purposes of the preceding
sentence, the rules of Section 425(d) of the Code shall apply in
determining stock ownership of an employee, and stock which the
employee may purchase under outstanding rights shall be treated as
stock owned by the employee.
5. PARTICIPATION. An eligible employee may begin participation
in an offering at any time by completing and forwarding a payroll
deduction authorization form to the employee's appropriate payroll
location. The form will authorize a regular payroll deduction from
the employee's compensation, and must specify the date on which
such deduction is to commence. The authorization may not be
retroactive.
6. DEDUCTIONS. Payroll deduction accounts will be maintained for
all participating employees. An employee may authorize a payroll
deduction in terms of dollars and cents per payroll period of not
less than $1.00 or more than ten (10%) percent of the compensation
of the employee during any such payroll period.
7. DEDUCTION CHANGES. An employee may at any time increase or
decrease the employee's payroll deduction by filing a new payroll
deduction authorization form. The change may not become effective
sooner than the next pay period after receipt of the form. A
payroll deduction may be increased only twice and may be reduced
only twice during any Plan Year of an offering period, unless any
such additional change is required to permit the purchase of the
whole number of shares for which rights have been granted to the
employee under the provisions of paragraph 10.
8. INTEREST. Since the amount of time that the Corporation will
be holding funds withheld from employees' compensation is minimal,
no interest will be credited to employees' accounts.
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<PAGE>
9. WITHDRAWAL OF FUNDS. An employee may at any time and for any
reason permanently withdraw the balance of funds accumulated in the
employee's payroll deduction account, and thereby withdraw from
participation in an offering. Upon any such withdrawal, the
employee shall be entitled to receive in cash the value of any
fractional share (rounded to four decimal places) allocated to such
employee's account determined on the basis of the market value
thereof as of the date of withdrawal. The employee may thereafter
begin participation again only once during each Plan Year of an
offering period. Partial withdrawals will not be permitted.
10. PURCHASE OF SHARES. Subject to the payroll deduction
limitation set forth in paragraph 6 and the limitation below, each
employee participating in an offering under this Plan will be
granted a right to purchase shares of the Corporation's Class A
common stock which have an aggregate purchase price (determined
under paragraph 11) equal to the sum of (a) up to ten percent (10%)
of his or her compensation during each pay period of each offering
period in which he or she participates and (b) any cash dividends
reinvested in accordance with paragraph 12. In no event may an
employee be granted a right which permits such employee's rights to
purchase stock under this Plan, and any other stock purchase plan
of the Corporation and its subsidiaries, to accrue at a rate which
exceeds $25,000 of fair market value of stock (determined at the
date of grant of the right) for each calendar year in which the
right is outstanding at any time. No right may be exercised in any
manner other than by payroll deduction as specified in paragraph 6
or dividend reinvestment as specified in paragraph 12.
11. PURCHASE PRICE AND PAYMENT. The purchase price to
participating employees for each share of Class A common stock
purchased under the Plan will be 85% of its market value at the
time of purchase. Purchases of shares pursuant to the Plan shall
be made on the fifteenth (15th) day of each month. The number of
whole and fractional shares allocated to each employee's account as
of each date of purchase shall be based upon the balance of funds
in an employee's account available for the purchase of shares as of
the close of the immediately preceding month. A participating
employee's payroll deduction account shall be charged with the
purchase price of each whole and fractional share allocated to the
employee as of the date of purchase and the employee shall be
deemed to have exercised a right to acquire such whole and
fractional share as of such date. Additional shares covered by the
participating employee's rights under the Plan will be purchased in
the same manner, provided funds have again accrued in his account.
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<PAGE>
12. DIVIDENDS. Any cash dividends paid with respect to the shares
held under the Plan shall be paid in cash to the participating
employees for whom shares are so held on the basis of the number of
whole and fractional shares so held or, if a participating employee
so elects, such dividends shall be combined with payroll
deductions, added to the funds held under the Plan, and applied to
the purchase of additional shares of stock purchased pursuant to
the Plan. A participating employee choosing to have dividends
reinvested under this paragraph may terminate such election during
an offering period by filing a written form at the appropriate
payroll location, but may thereafter resume his election to
reinvest such cash dividends only once during each Plan Year of an
offering period. An election to either stop or resume dividend
reinvestment will be effective with respect to the dividend payment
next following receipt of the form; provided that if the form is
filed within thirty (30) days before a dividend record date
declared by the Board, then such election will not be effective
with respect to that particular dividend declaration.
13. STOCK CERTIFICATES. Stock certificates will only be issued to
participating employees promptly after their request or promptly
after the participating employee's withdrawal from the Plan for any
reason.
14. REGISTRATION OF CERTIFICATES. Certificates may be registered
only in the name of the employee, or if the employee so indicates
on the employee's payroll deduction authorization form, in the
employee's name jointly with a member of the employee's family,
with right of survivorship. An employee who is a resident of a
jurisdiction which does not recognize such a joint tenancy may have
certificates registered in the employee's name as tenant in common
with a member of the employee's family, without right of
survivorship.
15. DEFINITIONS. The following terms when used herein shall have
the meanings set forth below:
(a) The phrase "market value" or "fair market value"
means the closing price of the Corporation's Class A
common stock in the Over-the-Counter NASDAQ National
Market System, as reported in the Hartford, Connecticut
local issue of The Wall Street Journal, on the business
day immediately preceding the day of purchase or the
effective date of the offering as the context requires.
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(b) The term "subsidiary" means a subsidiary of the
Corporation within the meaning of Section 425(f) of the
Internal Revenue Code and the regulations thereunder,
provided, however, that each consecutive offering under
this Plan shall not be deemed to cover the employees of
any subsidiary acquired or established after the
effective date of such offering, unless so authorized by
the Committee.
(c) a "Plan Year" means the calendar year.
16. RIGHTS AS A SHAREHOLDER. None of the rights or privileges of
a shareholder of the Corporation shall exist with respect to (a)
rights granted to a participating employee under the Plan or, (b)
except as provided in paragraph 12, any fractional shares credited
to the participating employee's account.
17. RIGHTS ON RETIREMENT, DEATH OR TERMINATION OF EMPLOYMENT. In
the event of a participating employee's retirement, death or
termination of employment, no payroll deduction shall be taken from
any pay due and owing to an employee at such time, and the balance
in the employee's account (including the value of any fractional
shares calculated in the manner described in paragraph 9) shall be
paid to the employee or, in the event of the employee's death, to
the employee's estate; provided, however, that in the event shares
credited to the account of a deceased employee would have been
issued to the employee and a joint tenant with right of
survivorship as permitted in paragraph 14 if issued immediately
prior to such employee's death, then such shares shall be issued to
such joint tenant, if living at the time such shares are issued.
18. OBLIGATION OF CORPORATION TO PURCHASE. In the event of
personal or family circumstances of an emergency nature, for a
period of one year after the exercise of a right to purchase a
share or shares as described in paragraphs 10 and 11, a
participating employee shall have the right to offer such shares
back to the Corporation at the price at which such shares were pur-
chased, and the Corporation shall have the obligation to make such
repurchase.
19. RIGHTS NOT TRANSFERABLE. Rights under this Plan are not
transferable by a participating employee and are exercisable during
an employee's lifetime only by the employee.
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<PAGE>
20. APPLICATION OF FUNDS. All funds received or held by the
Corporation under this Plan may be used for any corporate purpose.
21. ADJUSTMENT IN CASES OF CHANGES AFFECTING CLASS A STOCK. In
the event of any merger, consolidation, reorganization,
recapitalization, stock dividend, combination, issuance of rights,
split-up or spin-off of the Corporation, or the like, the number of
shares approved for this Plan shall be increased appropriately and
such other adjustments to the terms of this Plan shall be made as
may be deemed equitable by the Board. In the event of any other
change affecting such stock, such adjustments shall be made as may
be deemed equitable by the Board to give proper effect to such
event.
22. AMENDMENT OF THE PLAN. The Board may at any time, or from
time to time, amend this Plan in any respect, except that, without
the approval of each class of stock of the Corporation then issued
and outstanding and entitled to vote on the matter by applicable
law, no amendment shall be made (i) increasing the number of shares
approved for this Plan (other than as provided in paragraph 21);
(ii) decreasing the purchase price per share; (iii) withdrawing the
administration of this Plan from the Committee; or (iv) changing
the designation of subsidiaries eligible to participate in the
Plan, except adding a subsidiary as provided in paragraph 15(b).
23. TERMINATION OF PLAN. This Plan and all rights of employees
under an offering hereunder shall terminate:
(a) on the date that participating employees'
accumulated payroll deductions pursuant to paragraph 6
and amounts reinvested pursuant to paragraph 12 are
sufficient to purchase a number of shares equal to or
greater than the number of shares remaining available for
purchase. If the number of shares so purchasable is
greater than the shares remaining available, the
available shares shall be allocated by the Committee
among such participating employees in such manner as it
deems equitable, or
(b) at any time at the discretion of the Board.
Upon termination of the Plan all amounts in the accounts of
participating employees not applied to the purchase of shares
hereunder, together with the value of any fractional shares
calculated in the manner described in paragraph 9, shall be
promptly refunded.
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24. GOVERNMENT REGULATIONS. The Corporation's obligation to sell
and deliver shares of its Class A common stock under this Plan is
subject to the approval of any governmental authority required in
connection with the authorization, issuance or sale of such stock.
25. SHARES USED TO FUND PLAN. The Corporation may utilize
unissued or treasury shares to fund the Plan. Purchases of
outstanding shares may also be made pursuant to and on behalf of
the Plan, upon such terms as the Corporation may approve, for
delivery under the Plan.
26. QUALIFIED PLAN. This Plan is intended to qualify as an
Employee Stock Purchase Plan as defined in Section 423 of the Code.
The term "right" as used herein shall mean "option" as used in
Section 423, and is used herein only to avoid confusion with
"options" granted under the Kaman Corporation 1983 Stock Incentive
Plan.
27. SUCCESSOR CORPORATION. The rights and obligations of the
Corporation under this Plan shall inure to and be binding upon any
successor to all or substantially all of the Corporation's assets
and business.
28. BUSINESS DAYS. If any event provided for in this Plan is
scheduled to take place on a day which is not a business day then
such event shall take place on the immediately preceding business
day.
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<PAGE>
EXHIBIT 11
KAMAN CORPORATION AND SUBSIDIARIES
EARNINGS PER COMMON SHARE COMPUTATION
(In Thousands Except Per Share Amounts)
<TABLE>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Primary:
Net earnings (loss) applicable
to common stock $ 19,861 $ 15,886 $(16,897)
======== ======= =======
Weighted average number of common
shares outstanding 18,607 18,330 18,175
Weighted average shares issuable on
exercise of dilutive stock options 129 182 *
------- ------- -------
Total 18,736 18,512 18,175
======= ======= =======
Net earnings (loss) per
common share-primary $ 1.06 $ .86 $ ( .93)
======= ======= =======
Fully diluted:
Net earnings(loss)applicable
to common stock $ 19,861 $ 15,886 $(16,897)
Elimination of interest expense on
6% subordinated convertible
debentures (net after taxes) 1,145 1,195 *
Elimination of preferred stock
dividend requirement 3,716 3,716 *
------- ------- ------
Net earnings(loss)(as adjusted) $ 24,722 $ 20,797 $(16,897)
======= ======= =======
Weighted average number of shares
outstanding including shares
issuable on stock option exercises 18,736 18,512 18,175
Shares issuable on conversion of 6%
subordinated convertible debentures 1,421 1,421 *
Shares issuable on conversion of
Series 2 preferred stock 4,551 4,551 *
Additional shares using ending market
price instead of average market on
treasury method use of stock
option proceeds 24 7 *
------- ------- -------
Total 24,732 24,491 18,175
======= ======= =======
Net earnings (loss) per
common share-fully diluted $ 1.00 $ .85 $ ( .93)
======= ======= =======
*Anti-dilutive and accordingly not included in the computation.
</TABLE>
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Revenues for 1996 were $953.7 million compared to $899.5 million in
1995 and $820.8 million in 1994. The increase for 1996 is equally
attributable to the corporation's Distribution and Diversified
Technologies segments. The increase for 1995 is primarily
attributable to the Distribution segment.
Distribution segment revenues increased by 4% in 1996, and by 13%
in 1995 and 1994. During 1996, Industrial Distribution revenues
(about 75% of this segment's revenues in 1996) continued to benefit
from domestic economic growth. Revenue increases have generally
been stronger than the rate of increase in industrial production
due in part to the company's efforts to expand partnering
relationships with suppliers, address the needs of customers who
want to consolidate their vendor base, and provide value added
services in areas such as electrical and electronic systems,
materials handling, and precision positioning systems. The company
in 1996 opened new branches in the south and midwest regions of the
United States to service new customers and develop additional
business. These are geographical regions where the company has not
traditionally had a strong presence. For its larger customers, the
company has been given the opportunity to perform an "integrated
supply" function, involving management of their parts inventories
and associated personnel as well as selection of suppliers for the
customer's facility. These initiatives, in combination with
enhanced operating efficiencies attained during the past few years,
have resulted in increased market share for the industrial
distribution business. Music Distribution sales also increased
during 1996, with the increases occurring largely in the U.S.
market.
Diversified Technologies segment revenues were up 9% in 1996 and 4%
in 1995, compared to a decrease of 9% in 1994. The results for 1996
are primarily due to sales of the K-MAX(R) helicopter, work on the
SH-2G helicopter retrofit program for Egypt, and increased demand
for the corporation's specialty self-lubricating bearings and
scientific services.
During 1996, the corporation continued efforts to adapt the defense
portion of this segment's business (72% in 1996) to market
conditions. With respect to its SH-2 helicopter, management
believes that there is potential for use of this aircraft by
Page 1
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
foreign military services, especially those using smaller ships
with landing platforms that are well-suited to this helicopter. In
1995, the corporation began work pursuant to a letter agreement
between the Republic of Egypt and the U.S. Navy for the acquisition
of ten (10) SH-2G helicopters. This work involves the retrofit of
SH-2F helicopters already manufactured for the U.S. Navy into the
SH-2G configuration. The contract between the corporation and
the U.S. Navy for this program was finalized in December 1996 and
is worth approximately $150 million. Deliveries are scheduled to
begin in the fourth quarter of 1997 and be completed by the end of
1998. As it pursues other opportunities for foreign sales, the
corporation has maintained an office in Australia to coordinate
work on competitions in Australia, New Zealand, and Malaysia.
During January 1997, the corporation was notified by the Australian
government that it had been selected as the "preferred tenderer" in
a competition to supply eleven (11) multi-mission helicopters to go
aboard Royal Australian Navy ANZAC frigates. Contract negotiations
should begin shortly and are expected to take several months to
complete. The retrofit aircraft for Australia will incorporate a
new cockpit and new weapons and sensors. Therefore, while the
contract value is presently undetermined, management expects that
it will be significantly larger in dollar value than the program
for Egypt. It is also anticipated that revenues and earnings will
phase in gradually, with deliveries expected to begin in 2001. As
to New Zealand, the corporation is one of only two competitors
involved in the final bid process for a program involving four (4)
to six (6) retrofitted aircraft. The New Zealand government
has delayed announcement of the contract award due to its general
elections in 1996; the corporation now anticipates that an award
announcement may be made during the first quarter of 1997. The
corporation continues to pursue other opportunities for foreign
sales as well, including Malaysia and other countries in Southeast
Asia and the Middle East. Although the corporation is not
manufacturing further aircraft for the U.S. Navy, sixteen aircraft
are currently in the Naval Reserves and the corporation expects to
continue to provide logistics and spare parts support for these
aircraft.
As to its advanced technology defense programs, management believes
that it is well-positioned to compete in a defense environment that
is increasingly emphasizing advanced technology "smart weapons"
programs in its strategic planning. The corporation has significant
expertise in the field of high-technology programs, having
Page 2
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
performed a multitude of government contracts over the years. These
contracts have involved products and systems, as well as services
such as computer software development, intelligence analysis, and
research and development. The corporation continues to be
successful in maintaining revenues from this type of business,
however competition in this area is increasing. During 1996 the
corporation was awarded a contract from the Air Force for software
support services to Cheyenne Mountain Air Station, Colorado. This
is the third consecutive award to the corporation to perform this
work, dating back to 1987. The estimated value of the contract is
$150 million, inclusive of options, for the next five years.
The corporation also performs aerospace subcontracting work for
several airframe manufacturing programs. This business showed
improvement during 1996 due to revitalization in the domestic
aviation market evidenced by the roll out of the Boeing 777 and the
government's announcement regarding longer term production of
the McDonnell Douglas C-17.
The K-MAX helicopter program, an important initiative for this
segment, completed its second full year in commercial operation
during 1996. K-MAX is a medium to heavy lift 'aerial truck' with
operating characteristics that distinguish it from other
helicopters for use in logging, fire fighting, reforestation,
utility power line work, and other applications. The aircraft is
now certified in the United States, Canada, Germany, Switzerland
and Japan. The special lease program for the first five (5)
helicopters has been substantially completed; the corporation
continues to lease certain of the aircraft, generally with initial
customers. For the most part, the aircraft is now being sold in the
United States and abroad. The production lot for 1996 consisted of
six (6) aircraft and a similar number are scheduled for production
in 1997. Management has taken a conservative approach to the
introduction of this aircraft, in part to give its markets time to
develop and also because the market has been affected by the
existence of military surplus aircraft that have been (and may
be in the future) released to the public at lower cost than new
aircraft. In any case, management expects that sales and
profitability will take some time to achieve.
Page 3
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
One of the potential applications for the K-MAX is the task of
vertical replenishment ("VERTREP"), a non-combat role in the
military. In April 1996, the U.S. Navy Military Sealift Command
("MSC") awarded the corporation a contract to provide an extended
demonstration of the K-MAX helicopter's VERTREP capability.
That demonstration began in May, with two (2) K-MAX helicopters
supporting MSC airborne cargo movement for a period of seven (7)
months. The value of the contract was $5.7 million. The
demonstration was conducted under a charter/lease arrangement
whereby the corporation provided the aircraft, crew, and all
maintenance and logistics support. This was the second MSC award
that the corporation has received for this type of work; the first
award was for a two-month VERTREP demonstration in the third
quarter of 1995. In October 1996, MSC issued a request for proposal
for a seven-month VERTREP project scheduled to begin in April 1997.
The corporation bid for this third demonstration, however, in
February 1997 MSC decided to evaluate the services of another
provider. The corporation has been the only commercial organization
to carry out these VERTREP demonstrations to date, so management
does not consider it unusual that the government would choose to
award the latest project to another provider in order to provide
comparative performance data. Management believes that the federal
government's continuing evaluation of the charter/lease concept
represents another significant step forward in the process of
defense acquisition reform.
The corporation had operating income of $51.4 million and net
earnings of $23.6 million for 1996 compared to an operating income
of $42.1 million and net earnings of $19.6 million in 1995. After
giving effect to the preferred stock dividend requirement, earnings
available to common shareholders for 1996 were $19.9 million
compared to $15.9 million a year ago. The Diversified Technologies
segment had operating profits of $39.8 million for 1996 compared to
$33.5 million in the previous year. Operating profits of the
segment for 1996 benefitted from reductions in research and
development expenditures and a gain of approximately $4.0 million
attributable to the sale of real estate, partially offset by costs
associated with our electromagnetics business which is having
some difficulty with a market-driven conversion from defense to
commercial products. Also included in 1995 operating profits was a
$1.8 million gain on the sale of real estate. Operating profits in
the Distribution segment increased in 1996 to $22.6 million from
$19.4 million in 1995. The Industrial Distribution business
Page 4
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
continues to benefit from relatively healthy domestic markets, but
these results were offset somewhat by a slowdown in foreign music
markets and continued efforts to improve efficiency in our European
amplifier manufacturing operations.
The corporation had operating income of $42.1 million and net
earnings of $19.6 million for 1995 compared to an operating loss of
$8.8 million and a net loss of $13.2 million for 1994. After giving
effect to the preferred stock dividend requirement, earnings
available to common shareholders for 1995 were $15.9 million
compared to a loss of $16.9 million in 1994. Results for 1994
reflect a pre-tax charge of $44.0 million taken in the fourth
quarter to write-down the corporation's investment in Raymond
Engineering, a subsidiary of the Diversified Technologies group.
The Diversified Technologies segment had operating profits
of $33.5 million for 1995, which benefitted from a reduction in
research and development expenditures and a $1.8 million gain on
sale of real estate as described above, compared to an operating
loss of $17.2 million for 1994. Operating profits in the
Distribution segment declined slightly in 1995 to $19.4 million
from $19.6 million in 1994. The reduction is attributable to higher
than expected costs associated with Music Distribution's
manufacturing and distribution in Europe and to softening Asian and
European markets during the year.
The fourth quarter 1994 charge of $44.0 million related to a
write-down of the corporation's investment in Raymond Engineering,
a Diversified Technologies subsidiary, in anticipation of a
reduction in the size of its operations and certain of its product
lines, as well as its merger into Kaman Aerospace, another Kaman
subsidiary. Approximately 70% of the charge represented the
write-down of impaired assets, including goodwill, facilities and
equipment, and inventories. The balance related to personnel
reductions, contract close-out costs and related items that would
not benefit the ongoing activities of the merged organization.
Implementation of the downsizing of Raymond's business and
completion of merging operations of the two companies was
substantially completed in 1996.
The fully diluted earnings per share figures for 1996 and 1995
include the potential conversion of the 6% convertible subordinated
debentures, potential conversion of the corporation's Series 2
preferred stock and the exercise of stock options, since they were
dilutive. The fully diluted earnings per share figure for 1994 does
not reflect these potential conversions and exercises since their
effect was anti-dilutive.
Page 5
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
Interest expense increased 13% in 1996 compared to 1995; for 1995,
interest expense increased 88% compared to 1994. The increases are
primarily attributable to substantially higher average borrowings
in 1996 and 1995 due to increased capital requirements.
The corporation's consolidated effective income tax rate was 42.0%
for 1996 and 40.1% in 1995. The corporation recorded an income tax
benefit on its loss before income taxes at an overall rate of 7.1%
for 1994, due primarily to a state income tax refund. The 1994
charge would probably have resulted in a higher income tax benefit,
except for the fact that a substantial portion of the goodwill
balance is non-deductible.
Effective January 1, 1996, the corporation adopted the disclosure
requirements of Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation. The accounting
provisions of the new Statement are not presented because the
effect on 1996 and 1995 net earnings would have been immaterial.
LIQUIDITY AND CAPITAL RESOURCES
The corporation's cash flow from operations has generally been
sufficient to finance a significant portion of its working capital
and other capital requirements. During the past few years, the
corporation's capital requirements have continued to increase,
however, and this resulted in financing more of its requirements
from bank borrowings.
During the past two years, operating activities have required
additional cash due principally to growth in accounts receivable
and inventories. Accounts receivable increased in 1995 primarily
due to the SH-2G helicopter programs for the U.S. Navy, and
increased in 1996 due to the SH-2G program for Egypt.
Increases in inventory levels for 1996 are largely due to
work-in-process for aerospace subcontracting work. Inventory
increases for 1995 and 1994 are primarly attributable to the K-MAX
helicopter program. K-MAX inventory growth has involved both the
method of introduction of the aircraft to the market and
the timing of aircraft production lots. Specifically, the first
group of five (5) aircraft were leased under a special introductory
lease program during 1994 and 1995, so these aircraft were added to
inventory along with 1995 production aircraft. Spare parts
production in order to fully support the program has also
added to inventory levels. Inventories at December 31, 1996 and
1995 include K-MAX aircraft that are principally being used in
various applications under shorter-term lease or charter/lease
Page 6
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
arrangements. Distribution segment inventory growth has been in
line with increased business.
Cash used in investing activities has traditionally been for the
acquisition of equipment used for manufacturing and distribution.
During 1994, capital expenditures increased due primarily to a real
estate acquisition in the Diversified Technologies segment.
Proceeds from the sale of property, plant and equipment increased
in 1996 and 1995 due primarily to the sale of other Diversified
Technologies segment real estate.
Cash provided by financing activities was primarily used to support
the previously discussed increase in working capital requirements.
For this purpose, the corporation maintains a revolving credit
agreement involving twelve domestic and foreign banks. This
facility was established in January 1996 and provides a
maximum unsecured line of credit of $250 million. It replaced two
previous revolving credit arrangements and involves many of the
same lenders that participated in those arrangements. The agreement
has a term of five years and contains various covenants, including
debt to capitalization, consolidated net worth requirements, and
limitations on other loan indebtedness that the corporation may
incur.
Cash used by financing activities was primarily attributable to the
payment of dividends.
Under its revolving credit agreement, the corporation has the
ability to borrow funds on both a short-term and long-term basis.
As of December 31, 1996, the corporation's aggregate bank
borrowings were $110.8 million, most of which was borrowed under
the revolving credit facility. Average bank borrowings were
$125.0 million for 1996, compared to $96.3 million for 1995.
The corporation has a stock repurchase program under which it may
repurchase slightly more than 700,000 Class A shares. As of
December 31, 1996, a total of 189,000 Class A shares had been
repurchased under the program. The primary purpose of the stock
repurchase program is to meet the needs of the Employees Stock
Purchase Plan and Stock Incentive Plan.
Management believes that the corporation's cash flow from
operations and available unused bank lines of credit under its
revolving credit agreement will be sufficient to finance its
working capital and other capital requirements for the foreseeable
future.
Page 7
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--CONTINUED
FORWARD-LOOKING STATEMENTS
This report contains forward-looking information relating to the
corporation's business prospects, including future contract awards
and negotiations, the SH-2G and K-MAX helicopter programs, and
other matters that involve a number of uncertainties that may cause
actual results to differ materially from expectations. Those
uncertainties include, but are not limited to: 1) the successful
conclusion of contract negotiations with government authorities,
including foreign governments; 2) political developments in
countries where the corporation intends to do business; 3) standard
government contract provisions permitting termination for the
convenience of the government; 4) competitive conditions in markets
served by the corporation; 5) the degree of acceptance of new
products in the marketplace; 6) currency exchange rates, taxes,
laws and regulations, inflation rates, general business conditions
and other factors. Any forward-looking information should be
considered with these factors in mind.
<TABLE>
<CAPTION>
SELECTED QUARTERLY FINANCIAL DATA
(In thousands except First Second Third Fourth Total
per share amounts) Quarter Quarter Quarter Quarter Year
- ----------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET SALES:
1996 .................... $239,508 $246,148 $227,680 $234,770 $948,106
1995 .................... 207,982 221,509 225,629 241,278 896,398
GROSS PROFIT:
1996 .................... $ 62,044 $ 60,432 $ 57,319 $ 59,806 $239,601
1995 .................... 55,816 56,279 56,433 61,109 229,637
NET EARNINGS:
1996 .................... $ 5,202 $ 5,412 $ 5,834 $ 7,129 $ 23,577
1995 .................... 5,550 4,663 4,571 4,818 19,602
PER COMMON SHARE--PRIMARY:
1996 .................... $ .23 $ .24 $ .26 $ .33 $ 1.06
1995 .................... .25 .20 .20 .21 .86
PER COMMON SHARE--FULLY DILUTED:
1996 .................... $ .22 $ .23 $ .25 $ .30 $ 1.00
1995 .................... .24 .20 .20 .21 .85
</TABLE>
Page 8
<PAGE>
<PAGE>
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995 KAMAN CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
(In thousands except share and per share amounts) 1996 1995
- ------------------------------------------------- ---- ----
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash............................................ $ 5,445 $ 4,078
Accounts receivable............................. 185,516 177,878
Inventories..................................... 213,468 192,734
Deferred income taxes........................... 22,392 21,250
Other current assets ........................... 7,310 8,924
-------- --------
Total current assets ..................... 434,131 404,864
-------- --------
PROPERTY, PLANT AND EQUIPMENT, NET ................. 76,393 83,054
GOODWILL, NET ...................................... 7,639 8,131
OTHER ASSETS ....................................... 3,573 4,020
-------- --------
$521,736 $500,069
======== ========
Page 9
<PAGE>
<PAGE>
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995 KAMAN CORPORATION AND SUBSIDIARIES
LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1995
-------- --------
<S> <C> <C>
CURRENT LIABILITIES:
Notes payable...................................... $ 60,837 $ 62,851
Current portion of long-term debt.................. 2,165 647
Accounts payable -- trade.......................... 61,334 61,729
Accrued salaries and wages......................... 10,733 10,386
Accrued vacations.................................. 7,079 6,361
Accrued restructuring and other costs.............. 6,531 13,542
Other accruals and payables........................ 46,959 50,757
-------- --------
Total current liabilities.................... 195,638 206,273
-------- --------
DEFERRED CREDITS....................................... 14,028 13,127
LONG-TERM DEBT, EXCLUDING CURRENT PORTION.............. 83,940 66,386
SHAREHOLDERS' EQUITY:
Capital stock, $1 par value per share:
Preferred stock, authorized 700,000 shares:
Series 2 preferred stock, 6 1/2% cumulative
convertible (stated at liquidation preference
of $200 per share)authorized 500,000 shares,
issued 285,837 shares in 1996 and 1995 ........ 57,167 57,167
Common stock:
Class A, authorized 48,500,000 shares, nonvoting;
$.10 per common share dividend preference;
issued 18,075,247 shares in 1996 and
17,788,233 shares in 1995...................... 18,075 17,788
Class B, authorized 1,500,000 shares, voting;
issued 667,814 shares in 1996 and 1995......... 668 668
Additional paid-in capital .......................... 21,696 19,319
Retained earnings.................................... 132,058 120,399
Unamortized restricted stock awards.................. (818) (609)
Equity adjustment from foreign currency translation.. (612) (280)
-------- -------
228,234 214,452
Less 9,738 shares and 16,825 shares of Class A
common stock in 1996 and 1995, respectively,
held in treasury, at cost ......................... (104) (169)
-------- -------
Total shareholders' equity................... 228,130 214,283
-------- -------
$521,736 $500,069
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 10
<PAGE>
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
KAMAN CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
(In thousands except per share amounts)
- ---------------------------------------
1996 1995 1994
-------- -------- --------
REVENUES:
<S> <C> <C> <C>
Net sales ....................... $948,106 $896,398 $819,182
Other ........................... 5,548 3,078 1,592
-------- -------- --------
953,654 899,476 820,774
-------- -------- --------
COSTS AND EXPENSES:
Cost of sales ................... 708,505 666,761 611,762
Selling, general and
administrative expense ........ 193,747 190,604 173,853
Interest expense ................ 10,023 8,834 4,694
Restructuring, impairment
and other costs ............... -- -- 44,000
Other expense ................... 702 546 646
-------- -------- --------
912,977 866,745 834,955
-------- -------- --------
EARNINGS (LOSS) BEFORE INCOME TAXES . 40,677 32,731 (14,181)
INCOME TAXES (BENEFIT) .............. 17,100 13,129 (1,000)
-------- -------- --------
NET EARNINGS (LOSS) ................. $ 23,577 $ 19,602 $(13,181)
======== ======== ========
PREFERRED STOCK DIVIDEND REQUIREMENT $ (3,716) $ (3,716) $ (3,716)
======== ======== ========
EARNINGS(LOSS)APPLICABLE TO
COMMON STOCK ...................... $ 19,861 $ 15,886 $(16,897)
======== ======== ========
PER SHARE:
Net earnings(loss)per common share:
Primary ..................... $ 1.06 $ .86 $ (.93)
Fully diluted ............... 1.00 .85 (.93)
Dividends declared:
Series 2 preferred stock .... 13.00 13.00 13.00
Common stock ................ .44 .44 .44
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 11
<PAGE>
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
KAMAN CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
(In thousands except per share amounts)
- ---------------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
SERIES 2 PREFERRED STOCK ............ $ 57,167 $ 57,167 $ 57,167
-------- -------- --------
CLASS A COMMON STOCK:
Balance -- beginning of year .... 17,788 17,600 17,600
Shares issued ................... 287 188 --
-------- -------- --------
Balance -- end of year .......... 18,075 17,788 17,600
-------- -------- --------
CLASS B COMMON STOCK ................ 668 668 668
-------- -------- --------
ADDITIONAL PAID-IN CAPITAL:
Balance -- beginning of year .... 19,319 17,853 18,459
Employee stock plans ............ 1,871 1,427 (611)
Restricted stock awards ......... 506 39 5
-------- -------- --------
Balance -- end of year .......... 21,696 19,319 17,853
-------- -------- --------
RETAINED EARNINGS:
Balance -- beginning of year .... 120,399 112,592 137,490
Net earnings (loss) ............. 23,577 19,602 (13,181)
Dividends declared:
Preferred stock .............. (3,716) (3,716) (3,716)
Common stock ................. (8,202) (8,079) (8,001)
-------- -------- --------
Balance -- end of year .......... 132,058 120,399 112,592
-------- -------- --------
UNAMORTIZED RESTRICTED STOCK AWARDS:
Balance -- beginning of year .... (609) (744) (968)
Stock awards issued ............. (517) (179) (119)
Amortization of stock awards .... 308 314 343
-------- -------- --------
Balance -- end of year .......... (818) (609) (744)
-------- -------- --------
EQUITY ADJUSTMENT FROM FOREIGN
CURRENCY TRANSLATION:
Balance -- beginning of year .... (280) (444) (158)
Translation adjustment .......... (332) 164 (286)
-------- -------- --------
Balance -- end of year .......... (612) (280) (444)
-------- -------- --------
Page 12
<PAGE>
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
KAMAN CORPORATION AND SUBSIDIARIES
1996 1995 1994
-------- -------- --------
TREASURY STOCK:
<S> <C> <C> <C>
Balance -- beginning of year .... (169) (938) (1,945)
Shares acquired in 1996--501;
1995--38,685; 1994--193,399 ... (5) (430) (1,847)
Shares reissued under various
stock plans ................... 70 1,199 2,854
-------- -------- --------
Balance -- end of year .......... (104) (169) (938)
-------- -------- --------
TOTAL SHAREHOLDERS' EQUITY .......... $228,130 $214,283 $203,754
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 13
<PAGE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
KAMAN CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
(In thousands) 1996 1995 1994
- -------------- -------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net earnings (loss) ....................... $ 23,577 $ 19,602 $(13,181)
Adjustments to reconcile net earnings (loss)
to cash provided by (used in)
operating activities:
Depreciation and amortization ......... 12,358 12,687 13,053
Net gain on sale of assets ............ (4,094) (1,660) --
Restructuring, impairment and other costs -- -- 44,000
Deferred income taxes ................. (1,298) 10,171 (7,062)
Other, net ............................ 1,785 1,130 1,999
Changes in current assets and liabilities:
Accounts receivable ................ (7,638) (31,981) 19,204
Inventories ........................ (20,734) (33,583) (44,273)
Other current assets ............... 1,614 (1,299) (2,864)
Accounts payable -- trade .......... (395) 7,294 3,315
Accrued expenses and payables....... (9,744) (3,206) 892
Income taxes payable ............... -- (978) (2,361)
-------- -------- --------
Cash provided by (used in)
operating activities......... (4,569) (21,823) 12,722
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant
and equipment and other assets ........ 6,883 4,210 195
Expenditures for property, plant and
equipment ............................. (7,966) (11,503) (21,581)
Other, net ............................... (333) (99) (482)
-------- -------- --------
Cash provided by (used in)
investing activities......... (1,416) (7,392) (21,868)
-------- -------- --------
Page 14
<PAGE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
KAMAN CORPORATION AND SUBSIDIARIES
(In thousands) 1996 1995 1994
- -------------- -------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Changes in notes payable ................ (2,014) 10,192 21,498
Changes in current portion of
long-term debt......................... 1,518 (12) (45)
Additions to long-term debt ............. 20,000 30,000 --
Reduction of long-term debt ............. (2,446) (1,047) (834)
Proceeds from exercise of employee
stock plans............................ 2,217 2,674 2,128
Purchases of treasury stock ............. (5) (430) (1,847)
Dividends paid--Series 2 preferred stock (3,716) (3,716) (3,716)
Dividends paid--common stock ............ (8,202) (8,079) (8,001)
Other, net .............................. -- -- (171)
-------- -------- --------
Cash provided by (used in)
financing activities........ 7,352 29,582 9,012
-------- -------- --------
NET INCREASE (DECREASE) IN CASH ............. 1,367 367 (134)
CASH AT BEGINNING OF YEAR ................... 4,078 3,711 3,845
-------- -------- --------
CASH AT END OF YEAR .........................$ 5,445 $ 4,078 $ 3,711
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 15
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(In thousands except share and per share amounts)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial
statements include the accounts of the parent corporation and its
subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
USE OF ESTIMATES The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
LONG-TERM CONTRACTS -- REVENUE RECOGNITION Sales and estimated
profits under long-term contracts are principally recognized on the
percentage-of-completion method of accounting using the ratio that
costs incurred bear to estimated total costs after giving effect to
estimates of costs to complete based upon most recent information
for each contract. Sales and estimated profits on other contracts
are recorded as products are shipped or services are performed.
Reviews of contracts are made periodically throughout their lives
and revisions in profit estimates are recorded in the accounting
period in which the revisions are made. Any anticipated contract
losses are charged to operations when first indicated.
INVENTORIES Inventory of merchandise for resale is stated at cost
(using the average costing method) or market, whichever is lower.
Contracts and work in process and finished goods are valued at
production cost represented by material, labor and overhead,
including general and administrative expenses where applicable.
Contracts and work in process and finished goods are not recorded
in excess of net realizable values.
PROPERTY, PLANT AND EQUIPMENT Depreciation of property, plant and
equipment is computed primarily on a straight-line basis over the
estimated useful lives of the assets. At the time of retirement or
disposal, the acquisition cost of the asset and related accumulated
depreciation are eliminated and any gain or loss is credited or
charged against income.
Maintenance and repair items are charged against income as
incurred, whereas renewals and betterments are capitalized and
depreciated.
Page 16
<PAGE>
<PAGE>
GOODWILL Amortization of goodwill is calculated on a straight-line
method over its estimated useful life but not in excess of forty
years. Such amortization amounted to $365 in 1996, $355 in 1995 and
$1,318 in 1994.
At each balance sheet date, the corporation evaluates the carrying
value of goodwill based upon its assessment of the forecasted
future operations (including interest expense) and other factors
for each subsidiary having a material goodwill balance. Based upon
management's analysis, the corporation wrote-down goodwill relating
to its investment in Raymond Engineering in the amount of $20,500
during the fourth quarter of 1994.
RESEARCH AND DEVELOPMENT Research and development costs not
specifically covered by contracts are charged against income as
incurred. Such costs amounted to $8,036 in 1996, $13,664 in 1995
and $21,062 in 1994.
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.
RESTRUCTURING, IMPAIRMENT AND OTHER COSTS
The corporation recorded a 1994 fourth quarter pre-tax charge of
$44,000 ($32,100 after taxes or $1.76 per common share) reflecting
its strategy for addressing trends in U.S. defense planning and
spending priorities. The charge represented a write-down of the
corporation's investment in Raymond Engineering, a diversified
technologies subsidiary, in anticipation of a reduction in the size
of its operation and certain of its product lines, and its merger
into Kaman Aerospace, another Kaman subsidiary. Approximately
seventy percent (70%) of the charge represented the write-down of
impaired assets, including goodwill, facilities and equipment, and
inventories. The balance related to personnel reductions and
contract close-out costs and related expenses for items which would
not benefit the ongoing activities of the merged organization.
Implementation of the downsizing of Raymond's business and
completion of merging operations of the two companies was
substantially completed in 1996.
Page 17
<PAGE>
<PAGE>
ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
<TABLE>
<CAPTION>
December 31,
-----------------------
1996 1995
--------- ---------
<S> <C> <C>
Trade receivables, net of allowance
for doubtful accounts of $2,574
in 1996, $2,289 in 1995 ............ $ 74,402 $ 76,659
U.S. Government contracts:
Billed ............................. 33,911 43,380
Recoverable costs and accrued
profit -- not billed ............ 51,742 37,597
Commercial contracts:
Billed ............................. 10,332 7,866
Recoverable costs and accrued
profit -- not billed ............ 15,129 12,376
--------- ---------
Total ........................... $ 185,516 $ 177,878
========= =========
</TABLE>
Recoverable costs and accrued profit-not billed represent costs
incurred on contracts which will become billable upon future
deliveries or completion of engineering and service type contracts.
Management estimates that approximately $23,812 of such costs and
accrued profits at December 31, 1996 will be collected after one
year.
Page 18
<PAGE>
<PAGE>
INVENTORIES
Inventories are comprised as follows:
<TABLE>
<CAPTION>
December 31,
---------------------
1996 1995
--------- ---------
<S> <C> <C>
Merchandise for resale ................ $ 110,126 $ 107,407
Contracts in process:
U.S. Government .................... 12,637 9,397
Commercial ......................... 7,754 2,110
Other work in process (including
certain general stock materials
and spare parts) ................... 63,943 50,950
Finished goods ........................ 19,008 22,870
--------- ---------
Total .............................. $ 213,468 $ 192,734
========= =========
</TABLE>
Finished goods inventory consists of K-MAX(R) helicopters that are
principally being used in various applications under shorter-term
lease or charter/lease arrangements.
The aggregate amounts of general and administrative costs allocated
to contracts in process during 1996, 1995 and 1994 were $47,985,
$46,833 and $44,979, respectively.
The estimated amounts of general and administrative costs remaining
in contracts in process at December 31, 1996 and 1995 amount to
$3,872 and $2,134, respectively, and are based on the ratio of such
allocated costs to total costs incurred.
Page 19
<PAGE>
<PAGE>
PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment are recorded at cost and summarized
as follows:
<TABLE>
<CAPTION>
December 31,
---------------------
1996 1995
--------- ---------
<S> <C> <C>
Land .................................. $ 8,224 $ 8,382
Buildings ............................. 55,452 57,063
Leasehold improvements ................ 14,659 14,023
Machinery, office furniture and
equipment .......................... 112,988 109,849
--------- ---------
Total .............................. 191,323 189,317
Less accumulated depreciation
and amortization ................... 114,930 106,263
--------- ---------
Property, plant and equipment,
net ................................ $ 76,393 $ 83,054
========= =========
</TABLE>
CREDIT ARRANGEMENTS -- SHORT-TERM BORROWINGS AND LONG-TERM DEBT
REVOLVING CREDIT AGREEMENT On January 29, 1996, the corporation
replaced its then existing revolving credit agreements with one
revolving credit agreement involving several domestic and foreign
lenders. The agreement provides for an aggregate maximum commitment
of $250,000 and expires in 2001. Interest is payable at various
market rates.
SHORT-TERM BORROWINGS Under its revolving credit agreement, the
corporation has the ability to borrow funds on both a short-term
and long-term basis. The corporation also has arrangements with
several other banks to borrow funds on a short-term basis with
interest at current market rates.
Page 20
<PAGE>
<PAGE>
Short-term borrowings outstanding are as follows:
<TABLE>
<CAPTION>
December 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Revolving credit agreement ............ $ 52,000 $ --
Other credit arrangements ............. 8,837 62,851
-------- --------
Total .............................. $ 60,837 $ 62,851
======== ========
</TABLE>
LONG-TERM DEBT The corporation has long-term debt as follows:
<TABLE>
<CAPTION>
December 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Revolving credit agreement ............ $ 50,000 $ 30,000
Convertible subordinated
debentures ......................... 33,191 33,191
Other obligations ..................... 2,914 3,842
-------- --------
Total .............................. 86,105 67,033
Less current portion .................. 2,165 647
-------- --------
Total excluding current portion .... $ 83,940 $ 66,386
======== ========
</TABLE>
CONVERTIBLE SUBORDINATED DEBENTURES The corporation issued $95,000
of 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 beginning March 15, 1997, the corporation
will redeem $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. The corporation
exchanged $61,804 of these debentures for its Series 2 preferred
stock on October 22, 1993. The remaining debentures have a fair
value of $28,876 at December 31, 1996 based upon current market
prices.
Page 21
<PAGE>
<PAGE>
OTHER OBLIGATIONS These obligations consist primarily of notes
issued by the corporation to industrial and economic development
authorities in connection with the issuance of their bonds in
similar amounts. The proceeds were used by the corporation to
finance certain of its building construction within the
regions of the authorities. These obligations are secured by
mortgages and generally have interest rates and payment terms more
favorable than conventional financing.
LONG-TERM DEBT ANNUAL MATURITIES The aggregate amounts of annual
maturities of long-term debt for each of the next five years are
approximately as follows:
<TABLE>
<S> <C>
1997 ......................................... $ 2,165
1998 ......................................... 2,238
1999 ......................................... 2,165
2000 ......................................... 1,915
2001 ......................................... 51,915
</TABLE>
RESTRICTIVE COVENANTS The most restrictive of the covenants
contained in the revolving credit agreement requires the
corporation to have operating income, as defined, at least equal to
250% of interest expense through December 31, 1997 and 275%
thereafter; consolidated total indebtedness to total capitalization
of not more than 55%; and consolidated net worth at least equal to
$200,000.
INTEREST PAYMENTS Cash payments for interest were $9,682, $8,587
and $4,572 for 1996, 1995 and 1994, respectively.
Page 22
<PAGE>
<PAGE>
INCOME TAXES
The components of income taxes are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- --------
<S> <C> <C> <C>
Current:
Federal .......... $ 13,734 $ 1,958 $ 6,362
State ............ 4,664 1,000 (300)
----- ----- ----
18,398 2,958 6,062
------ ----- -----
Deferred:
Federal .......... (434) 8,192 (5,762)
State ............ (864) 1,979 (1,300)
---- ----- ------
(1,298) 10,171 (7,062)
------ ------ ------
Total ............ $ 17,100 $ 13,129 $ (1,000)
========= ========= ========
</TABLE>
The components of the deferred tax assets and deferred tax
liabilities are presented below:
<TABLE>
<CAPTION>
December 31,
---------------------
1996 1995
-------- --------
<S> <C> <C>
Deferred tax assets:
Long-term contracts ................ $ 5,838 $ 2,531
Deferred employee benefits ......... 8,998 7,371
Restructuring, impairment and
other costs .................... 5,255 8,860
Inventory .......................... 1,205 1,238
Accrued liabilities and other
items .......................... 6,922 7,170
-------- --------
Total deferred tax assets ...... 28,218 27,170
-------- --------
Deferred tax liabilities:
Depreciation and amortization ...... (4,501) (4,715)
Other items ........................ (4,099) (4,135)
-------- --------
Total deferred tax liabilities . (8,600) (8,850)
-------- --------
Net deferred tax asset ......... $ 19,618 $ 18,320
======== ========
</TABLE>
Page 23
<PAGE>
<PAGE>
No valuation allowance has been recorded because the corporation
believes that these net deferred tax assets will, more likely than
not, be realized. This determination is based largely upon the
corporation's historical earnings trend as well as its ability to
carryback reversing items within three years to offset taxes paid.
In addition, the corporation has the ability to offset deferred tax
assets against deferred tax liabilities created for such items as
depreciation and amortization.
The provisions for federal income taxes approximate the amounts
computed by applying the U.S. federal income tax rate to earnings
(loss) before income taxes after giving effect to state income
taxes. The federal tax provision was reduced by $4,600 in 1994 as a
result of the non-deductible portion of the write-down of goodwill.
Cash payments for income taxes were $15,823, $3,953 and $8,255 in
1996, 1995 and 1994, respectively.
PENSION PLAN
The corporation has a non-contributory defined benefit pension plan
covering all of its full-time employees. Benefits under this plan
are based upon an employee's years of service and compensation
levels during employment and there is an offset provision for
social security benefits. It is the corporation's policy to fund
pension costs accrued. Plan assets are invested in a diversified
portfolio consisting of equity and fixed income securities
(including $9,913 of Class A common stock of Kaman Corporation at
December 31, 1996).
Page 24
<PAGE>
<PAGE>
The pension plan costs were computed using the projected unit
credit actuarial cost method and include the following components:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Service cost for
benefits earned
during the year ...... $ 9,888 $ 8,991 $ 9,636
Interest cost on
projected benefit
obligation ........... 18,756 18,065 16,558
Actual return on plan
assets ............... (35,855) (58,243) (1,848)
Net amortization and
deferral ............. 12,731 36,725 (17,543)
-------- -------- --------
Net pension cost ........ $ 5,520 $ 5,538 $ 6,803
======== ======== ========
</TABLE>
The funded status of the pension plan is as follows:
<TABLE>
<CAPTION>
December 31,
-----------------
1996 1995
--------- ---------
<S> <C> <C>
Actuarial present value of
accumulated benefit obligation:
Vested benefits ................... $ 238,097 $ 224,699
Non-vested benefits ............... 2,172 1,967
--------- ---------
Total ............................. $ 240,269 $ 226,666
========= =========
Actuarial present value of
projected benefit obligation ...... $ 273,196 $ 258,111
Plan assets at fair value ............ 307,796 279,173
--------- ---------
Excess of assets over
projected benefit obligation ...... 34,600 21,062
Unrecognized prior service cost ...... (511) (566)
Unrecognized net gain ................ (26,533) (10,896)
Unrecognized net transition asset .... (9,268) (11,122)
--------- ---------
Accrued pension cost ................. $ 1,712 $ 1,522
========= =========
</TABLE>
Page 25
<PAGE>
<PAGE>
The actuarial assumptions used in determining the funded status of
the pension plan are as follows:
<TABLE>
<CAPTION>
December 31,
-----------------
1996 1995
----- -----
<S> <C> <C>
Discount rate 7 1/2% 7 1/2%
Average rate of increase
in compensation levels 4 1/2% 4 1/2%
</TABLE>
The expected long-term rates of return on plan assets used to
compute the net periodic pension costs were 9% for 1996 and 1995.
COMMITMENTS AND CONTINGENCIES
Rent commitments under various leases for office space, warehouse,
land and buildings expire at varying dates from January 1997 to
December 2008. Certain annual rentals are subject to renegotiation,
with certain leases renewable for varying periods. Lease periods
for machinery and equipment vary from 1 to 7 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 noncancellable
lease terms in excess of one year as of December 31, 1996:
<TABLE>
<S> <C>
1997 .......................................... $ 13,128
1998 .......................................... 7,479
1999 .......................................... 6,068
2000 .......................................... 3,943
2001 .......................................... 1,295
Later years ................................... 778
----------
Total ......................................... $ 32,691
==========
</TABLE>
Page 26
<PAGE>
<PAGE>
Lease expense for all operating leases, including leases with terms
of less than one year, amounted to $14,889, $14,158 and $14,150 for
1996, 1995 and 1994, respectively.
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.
COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
The primary earnings (loss) per common share computation is based
on the weighted average number of shares of common stock
outstanding in 1996, 1995 and 1994 and includes the common stock
equivalency of options granted to employees under the stock
incentive plan. The fully diluted earnings per share computation
also assumes that the 6% convertible subordinated debentures are
converted at the beginning of each year with the resultant
reduction in interest costs net of tax and the additional dilutive
effect of the stock options.
Subsequent to the exchange of a majority of the debentures for
Series 2 preferred stock on October 22, 1993, the corporation added
the preferred stock dividend requirement to its net loss to arrive
at net loss applicable to common stock to calculate its loss per
common share -- primary for 1994. In 1996 and 1995, the preferred
stock dividend requirement was deducted to arrive at earnings
applicable to common stock to calculate its earnings per common
share -- primary. In addition, in order to determine the fully
diluted earnings (loss) per common share, it is assumed that the
Series 2 preferred stock would be converted into Class A common
stock from its date of issuance and the preferred stock dividend
requirement eliminated.
Due to the net loss during 1994, however, the dilutive effect from
conversion of the outstanding 6% convertible subordinated
debentures and the Series 2 preferred stock is anti-dilutive and
accordingly not included in the computation.
STOCK PLANS
Effective January 1, 1996, the corporation adopted the disclosure
requirements of Statement of Financial Accounting Standards No.
123, Accounting for Stock-Based Compensation. The accounting
provisions of the new Statement are not presented because the
effect on 1996 and 1995 net earnings would have been immaterial.
Page 27
<PAGE>
<PAGE>
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 of the corporation commencing
July 1, 1989. Effective November 1, 1993, the maximum number of
shares available for issuance under the plan was replenished to
1,500,000 shares. There are no charges or credits to income in
connection with the plan. During 1996, 228,148 shares were issued
to employees at prices ranging from $8.82 to $11.21 per share.
During 1995, 218,028 shares were issued to employees at prices
ranging from $9.03 to $10.94 per share. During 1994, 248,223 shares
were issued to employees at prices ranging from $7.54 to $8.61 per
share. At December 31, 1996, there were approximately 762,402
shares available for offering under the plan.
STOCK INCENTIVE PLAN The corporation maintains a Stock Incentive
Plan which includes a continuation and extension of a predecessor
stock incentive program. The Stock Incentive Plan provides for the
grant of non-statutory stock options, incentive stock options,
restricted stock awards and stock appreciation rights primarily to
officers and other key employees. The corporation has designated
962,199 shares of its Class A common stock for this plan, including
2,199 shares previously reserved under the predecessor plan.
Stock options are generally granted at prices not less than the
fair market value at the date of grant. Options granted under the
plan generally expire ten years from the date of grant and are
exercisable on a cumulative basis with respect to 20% of the
optioned shares on each of the five anniversaries from the
date of grant. Restricted stock awards are generally granted with
restrictions that lapse at the rate of 20% per year and are
amortized accordingly. These awards are subject to forfeiture if a
recipient separates from service with the corporation. 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.
Restricted stock awards were made for 54,000 shares at $10.38 per
share in 1996, 30,000 shares at $11.38 per share in 1995 and 12,000
shares at $9.94 per share in 1994. At December 31, 1996, there were
92,400 shares remaining subject to restrictions pursuant to these
awards. At December 31, 1996, no stock appreciation rights had been
issued under the plan.
Page 28
<PAGE>
<PAGE>
Stock option activity is as follows:
<TABLE>
<CAPTION>
Weighted-
average
exercise
Stock options outstanding: Options price
- -------------------------- ------- -----
<S> <C> <C>
Balance at January 1, 1994 .......... 807,893 $ 8.55
Options granted ................. 103,050 9.94
Options exercised ............... (12,104) 8.22
Options cancelled ............... (34,250) 9.18
-------- -------
Balance at December 31, 1994 ........ 864,589 8.69
Options granted ................. 45,000 11.38
Options exercised ............... (132,857) 7.93
Options cancelled ............... (99,685) 9.49
-------- -------
Balance at December 31, 1995 ........ 677,047 8.90
Options granted ................. 169,100 10.38
Options exercised ............... (55,102) 7.86
Options cancelled ............... (26,065) 9.00
-------- -------
Balance at December 31, 1996 ........ 764,980 $ 9.30
======== =======
Range of exercise prices
for options outstanding
at December 31, 1996 ............ $7.50 - $11.38
Options exercisable at:
December 31, 1994 ............... 522,519
December 31, 1995 ............... 424,807
December 31, 1996 ............... 437,000
Average contractual life remaining
at December 31, 1996 ............ 6.2 years
</TABLE>
SEGMENT INFORMATION
The corporation serves government, industrial and commercial
markets through two industry segments -- Diversified Technologies
and Distribution.
Through its diversified technologies operations, the corporation
provides a range of technical professional services involving
either advanced information technologies or high technology science
and engineering to Department of Defense and other government
customers; advanced technology products such as electromagnetic
motors, sliding bearings, and non-contact measuring systems for
Page 29
<PAGE>
<PAGE>
military and industrial customers; commercial airframe
subcontracting programs, safety and fusing systems, and
manufacturing work along with spare parts and logistics for the
SH-2 helicopter. The K-MAX(R) helicopter program, a significant
commercial effort for the corporation, is included in the
Diversified Technologies segment. The Diversified Technologies'
segment operating profits for 1996 and 1995 include gains of
approximately $4,000 and $1,800, respectively, on the sale of real
estate. The Diversified Technologies' segment operating loss for
1994 reflects the effect of the $44,000 fourth quarter charge
associated with the write-down of the investment in Raymond
Engineering, its merger into Kaman Aerospace, and the downsizing of
Raymond's business.
Through its distribution operations, the corporation supplies
nearly every sector of industry with industrial replacement parts
(including bearings, power transmission equipment, fluid power,
linear motion, and materials handling items) as well as industrial
engineering and systems services. Operations are conducted from
approximately 175 locations in 35 states and British Columbia,
Canada. Music operations manufacture and distribute musical
instruments and accessories in the United States and abroad through
domestic, Canadian and U.K. based offices.
Page 30
<PAGE>
<PAGE>
Summarized financial information by business segment is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Net sales:
Diversified
Technologies ..............$350,082 $322,614 $310,279
Distribution ................ 598,024 573,784 508,903
-------- -------- --------
$948,106 $896,398 $819,182
======== ======== ========
Operating profit (loss):
Diversified
Technologies ..............$ 39,826 $ 33,492 $(17,226)
Distribution ................ 22,555 19,355 19,558
-------- -------- --------
62,381 52,847 2,332
Interest, corporate
and other income/
expense, net ................ 21,704 20,116 16,513
-------- -------- --------
Earnings (loss) before
income taxes ................$ 40,677 $ 32,731 $(14,181)
======== ======== =========
Identifiable assets:
Diversified
Technologies ..............$287,501 $267,037 $236,239
Distribution ................ 221,485 223,495 198,145
Corporate ................... 12,750 9,537 8,565
-------- -------- --------
$521,736 $500,069 $442,949
======== ======== ========
Capital expenditures:
Diversified
Technologies ..............$ 3,718 $ 6,472 $ 17,396
Distribution ................ 3,796 4,440 3,732
Corporate ................... 452 591 453
-------- -------- --------
$ 7,966 $ 11,503 $ 21,581
======== ======== ========
Depreciation and amortization:
Diversified
Technologies ..............$ 7,953 $ 8,208 $ 9,307
Distribution ................ 3,555 3,568 2,946
Corporate ................... 850 911 800
-------- -------- --------
$ 12,358 $ 12,687 $ 13,053
======== ======== ========
</TABLE>
Page 31
<PAGE>
<PAGE>
Operating profit (loss) is total revenues less cost of sales and
selling, general and administrative expense (including
restructuring, impairment and other costs in 1994) other than
general corporate expense.
Identifiable assets are year-end assets at their respective net
carrying value segregated as to industry segment and corporate use.
Corporate assets are principally cash and net property, plant and
equipment.
Net sales by the Diversified Technologies 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 $253,260 in 1996, $228,658 in 1995
and $249,854 in 1994.
Page 32
<PAGE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
KPMG PEAT MARWICK LLP
Certified Public Accountants
CityPlace II
Hartford, Connecticut 06103
THE BOARD OF DIRECTORS AND SHAREHOLDERS
KAMAN CORPORATION:
We have audited the accompanying consolidated balance sheets of
Kaman Corporation and subsidiaries as of December 31, 1996 and
1995, and the related consolidated statements of operations,
changes in shareholders' equity and cash flows for each of the
years in the three year period ended December 31, 1996. These
consolidated financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Kaman Corporation and subsidiaries at December 31, 1996
and 1995 and the results of their operations and their cash flows
for each of the years in the three year period ended December 31,
1996 in conformity with generally accepted accounting principles.
/s/KPMG PEAT MARWICK LLP
---------------------
January 27, 1997
Page 33
<PAGE>
<PAGE>
FIVE-YEAR SELECTED FINANCIAL DATA KAMAN CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
(In thousands except per share amounts,
shareholders and employees)
- ---------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Revenues ................$953,654 $899,476 $820,774 $794,092 $784,732
Cost of sales ........... 708,505 666,761 611,762 588,237 583,638
Selling, general and
administrative expense.. 193,747 190,604 173,853 173,581 164,603
Restructuring, impairment
and other costs ....... -- -- 44,000 69,500 --
Operating income (loss) . 51,402 42,111 (8,841) (37,226) 36,491
Interest expense ........ 10,023 8,834 4,694 6,976 7,086
Other expense (income) .. 702 546 646 (3,728) 401
Earnings (loss) before
income taxes .......... 40,677 32,731 (14,181) (40,474) 29,004
Income taxes (benefit)... 17,100 13,129 (1,000) (11,679) 11,628
Net earnings (loss) ..... 23,577 19,602 (13,181) (28,795) 17,376
FINANCIAL POSITION:
Current assets ..........$434,131 $404,864 $339,012 $316,601 $334,581
Current liabilities ..... 195,638 206,273 192,882 166,765 122,015
Working capital ......... 238,493 198,591 146,130 149,836 212,566
Property, plant and
equipment, net ........ 76,393 83,054 84,621 81,711 73,262
Total assets ............ 521,736 500,069 442,949 440,196 443,445
Long-term debt .......... 83,940 66,386 37,433 37,977 100,889
Shareholders' equity .... 228,130 214,283 203,754 228,313 209,535
PER SHARE AMOUNTS:
Net earnings (loss) per
common share--primary .$ 1.06 $ .86 $ (.93)$ (1.63)$ .95
Net earnings (loss) per
common share--
fully diluted.......... 1.00 .85 (.93) (1.63) .93
Dividends declared--Series
2 preferred stock ..... 13.00 13.00 13.00 1.37 ---
Dividends declared --
common stock .......... .44 .44 .44 .44 .44
Shareholders' equity --
common stock .......... 9.13 8.52 8.07 9.46 11.58
Market price range ...... 13 3/8 13 3/8 11 1/8 12 1/8 10 3/4
9 3/8 10 8 1/2 8 5/8 7 7/8
GENERAL STATISTICS:
Shareholders ............ 7,632 7,646 7,198 6,920 6,994
Employees ............... 5,476 5,400 5,239 5,363 5,424
</TABLE>
Page 34
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EXHIBIT 21
KAMAN CORPORATION
SUBSIDIARIES
Following is a list of the Corporation's subsidiaries, each of
which is wholly owned by the Corporation either directly or through
another subsidiary. Second-tier subsidiaries are listed under the
name of the parent subsidiary.
Name State of Incorporation
- -----------------------------------------------------------------
Registrant: KAMAN CORPORATION Connecticut
Subsidiaries:
Kaman Diversified Technologies Corporation Connecticut
Kaman Aerospace Corporation Delaware
Kaman Aerospace International Corporation Connecticut
K-MAX Corporation Connecticut
Kaman X Corporation Connecticut
Kamatics Corporation Connecticut
Kaman Instrumentation Corporation Connecticut
Kaman Sciences Corporation Delaware
Kaman Electromagnetics Corporation Massachusetts
Kaman Technologie GmbH Germany
Kaman Industrial Technologies Corporation Connecticut
Kaman Industrial Technologies, Ltd. Canada
Kaman Music Corporation Connecticut
KMI Europe, Inc. Delaware
Kaman U.K. Limited Great Britain
Trace Elliot Limited Great Britain
B & J Music Ltd. Canada
<PAGE>
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<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
Certified Public Accountants
CityPlace II
Hartford, Connecticut 06103
The Board of Directors and Shareholders
Kaman Corporation:
We consent to incorporation by reference in the Registration
Statements (Nos. 33-51483 and 33-51485) on Form S-8 of Kaman
Corporation of our reports dated January 27, 1997, relating to the
consolidated balance sheets of Kaman Corporation and subsidiaries
as of December 31, 1996 and 1995 and the related consolidated
statements of operations, changes in shareholders' equity and cash
flows for each of the years in the three-year period ended
December 31, 1996, and the related schedule, which reports appear
or are incorporated by reference in the December 31, 1996 annual
report on Form 10-K of Kaman Corporation.
/s/ KPMG Peat Marwick LLP
Hartford, Connecticut
March 21, 1997
<PAGE>
<PAGE>
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned does
hereby appoint and constitute Charles H. Kaman 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,
1996 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 21st day of March, 1997.
Brian E. Barents C. William Kaman, II
E. Reeves Callaway, III Eileen S. Kraus
Frank C. Carlucci Hartzel Z. Lebed
Laney J. Chouest Harvey S. Levenson
John A. DiBiaggio Walter H. Monteith, Jr.
Edythe J. Gaines John S. Murtha
Huntington Hardisty Wanda L. Rogers
<PAGE>
<PAGE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE COMPANY'S 1996 ANNUAL REPORT TO
SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000054381
<NAME> KAMAN CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 5,445
<SECURITIES> 0
<RECEIVABLES> 188,090
<ALLOWANCES> (2,574)
<INVENTORY> 213,468
<CURRENT-ASSETS> 434,131
<PP&E> 191,323
<DEPRECIATION> (114,930)
<TOTAL-ASSETS> 521,736
<CURRENT-LIABILITIES> 195,638
<BONDS> 83,940
0
57,167
<COMMON> 18,743
<OTHER-SE> 152,220
<TOTAL-LIABILITY-AND-EQUITY> 521,736
<SALES> 948,106
<TOTAL-REVENUES> 953,654
<CGS> 708,505
<TOTAL-COSTS> 902,252
<OTHER-EXPENSES> 702
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,023
<INCOME-PRETAX> 40,677
<INCOME-TAX> 17,100
<INCOME-CONTINUING> 23,577
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,577
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.00
<PAGE>
<PAGE>
</TABLE>
