<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
----------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
---------------- -----------------------
Commission file number 0-12640
--------------------------------------
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
KAYDON CORPORATION EMPLOYEE STOCK
OWNERSHIP AND THRIFT PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
KAYDON CORPORATION
ARBOR SHORELINE OFFICE PARK
19345 U.S. 19 NORTH
CLEARWATER, FL 34624
<PAGE> 2
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
The following documents are attached hereto as exhibits:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants A
Statement of Net Assets Available for Plan Benefits as of
December 31, 1996 1
Statement of Net Assets Available for Plan Benefits as of
December 31, 1995 2
Statement of Changes in Net Assets Available for Plan Benefits
for the Year Ended December 31, 1996 3-4
Statement of Changes in Net Assets Available for Plan Benefits
for the Year Ended December 31, 1995 5
Notes to Financial Statements 6-11
Schedule I - Item 27a - Schedule of Assets Held for
Investment Purposes as of December 31, 1996 12
Schedule II - Item 27d - Schedule of Reportable Transactions
for the Year Ended December 31, 1996 13
Consent of Independent Public Accountants 14
</TABLE>
In accordance with the instruction to this Form 11-K, "plans subject to the
Employee Retirement Income Security Act of 1974 ("ERISA") may file plan
financial statements and schedules prepared in accordance with the financial
reporting requirements of ERISA." As the Plan is subject to the filing
requirements of ERISA, the aforementioned financial statements and schedules of
the Plan have been prepared in accordance with such requirements.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
members of the Administrative Committee of this plan have duly caused this
annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
Kaydon Corporation Employee Stock
Ownership and Thrift Plan
Date: June 27, 1997
By: The Plan Administrative Committee
-------------------------------------
By: /s/ Lawrence J. Cawley
-------------------------------------
Lawrence J. Cawley
Chairman and Chief Financial Officer
Plan Administrative Committee
<PAGE> 4
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND 1995
TOGETHER WITH AUDITORS' REPORT
<PAGE> 5
Report of Independent Public Accountants
To the Administrative Committee of
the Kaydon Corporation Employee
Stock Ownership and Thrift Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the KAYDON CORPORATION EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN as
of December 31, 1996 and 1995, and the related statements of changes in net
assets available for plan benefits for the years then ended. These financial
statements and the schedules referred to below are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements and schedules 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 financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits as of
December 31, 1996 and 1995, and the changes in net assets available for plan
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The fund information in
the statements of net assets available for benefits and the statements of
changes in net assets available for benefits is presented for purposes of
additional analysis rather than to present the net assets available for plan
benefits and changes in net assets available for plan benefits of each fund.
The supplemental schedules and fund information have been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, are fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Grand Rapids, Michigan
June 11, 1997
<PAGE> 6
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
<TABLE>
<CAPTION>
Page
----
<S> <C>
Statement of Net Assets Available for Plan Benefits as of
December 31, 1996 1
Statement of Net Assets Available for Plan Benefits as of
December 31, 1995 2
Statement of Changes in Net Assets Available for Plan Benefits
for the Year Ended December 31, 1996 3-4
Statement of Changes in Net Assets Available for Plan Benefits
for the Year Ended December 31, 1995 5
Notes to Financial Statements 6-11
Schedule I - Item 27a - Schedule of Assets Held for Investment
Purposes as of December 31, 1996 12
Schedule II - Item 27d - Schedule of Reportable Transactions
for the Year Ended December 31, 1996 13
</TABLE>
-(i)-
<PAGE> 7
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
CIGNA Twentieth Warburg Pincus
CIGNA Actively Fidelity Fidelity Century Advisor
Guaranteed Managed INVESCO Growth and Advisor Heritage Emerging
Short-Term Fixed Income Total Return Income Equity Growth Investors Growth
Fund Fund Fund Fund Fund Fund Fund
---------- ------------ ------------ ---------- ------------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Cash $ 52 $ 1,454 $ 1,428 $ 714 $ 714 $ 714 $ 1,428
---------- ---------- -------- ---------- -------- -------- ----------
Investments:
Mutual funds 2,854,071 1,375,151 827,628 3,861,882 432,813 181,357 3,787,717
Kaydon Corporation common stock - - - - - - -
---------- ---------- -------- ---------- -------- -------- ----------
Total Investments 2,854,071 1,375,151 827,628 3,861,882 432,813 181,357 3,787,717
---------- ---------- -------- ---------- -------- -------- ----------
Dividend receivable - - - - - - -
---------- ---------- -------- ---------- -------- -------- ----------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $2,854,123 $1,376,605 $829,056 $3,862,596 $433,527 $182,071 $3,789,145
========== ========== ======== ========== ======== ======== ==========
<CAPTION>
Fidelity
CIGNA Advisor
International Growth Fidelity
Equity Opportunities Magellan
Fund Fund Fund Stock Fund Total
------------- ------------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Cash $ 714 $ - $ - $ 52 $ 7,270
-------- -------- ------- ----------- -----------
Investments:
Mutual funds 247,274 208,150 69,785 - 13,845,828
Kaydon Corporation common stock - - - 16,468,720 16,768,720
-------- -------- ------- ----------- -----------
Total Investments 247,274 208,150 69,785 16,468,720 30,314,548
-------- -------- ------- ----------- -----------
Dividend receivable - - - 48,875 48,875
-------- -------- ------- ----------- -----------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $247,988 $208,150 $69,785 $16,517,647 $30,370,693
======== ======== ======= =========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
-1-
<PAGE> 8
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
High Intermediate
Small Income Government Prime Income
Capitalization Equity Bond Obligations Obligations Balanced Advantage
Fund Fund Fund Fund Fund Fund Fund
-------------- ---------- -------- ------------ ----------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Cash $ - $ - $ - $ - $ - $ - $ -
---------- ---------- -------- -------- ---------- -------- --------
Investments:
Mutual funds 3,064,107 2,575,644 989,318 231,077 1,787,573 525,660 -
Common collective fund - - - - - - 466,225
Kaydon Corporation common stock - - - - - - -
---------- ---------- -------- -------- ---------- -------- --------
Total Investments 3,064,107 2,575,644 989,318 231,077 1,787,573 525,660 466,225
---------- ---------- -------- -------- ---------- -------- --------
Dividend receivable - - - - - - -
---------- ---------- -------- -------- ---------- -------- --------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $3,064,107 $2,575,644 $989,318 $231,077 $1,787,573 $525,660 $466,225
========== ========== ======== ======== ========== ======== ========
<CAPTION>
Common
Stock
Fund Total
----------- -----------
<S> <C> <C>
ASSETS:
Cash $ 384 $ 384
----------- -----------
Investments:
Mutual funds - 9,173,379
Common collective fund - 466,225
Kaydon Corporation common stock 12,162,965 12,162,965
----------- -----------
Total Investments 12,162,965 21,802,569
----------- -----------
Dividend receivable 48,993 48,993
----------- -----------
NET ASSETS AVAILABLE FOR
PLAN BENEFITS $12,212,342 $21,851,946
=========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
-2-
<PAGE> 9
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
CIGNA Twentieth Warburg Pincus
CIGNA Actively Fidelity Fidelity Century Advisor
Guaranteed Managed INVESCO Growth and Advisor Heritage Emerging
Short-Term Fixed Income Total Return Income Equity Growth Investors Growth
Fund Fund Fund Fund Fund Fund Fund
----------- ------------ ------------ ----------- ------------- --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 202,212 $ 115,724 $105,387 $ 342,084 $ 31,217 $ 9,114 $ 436,034
---------- ---------- -------- ---------- -------- -------- ----------
Investment earnings:
Dividends - - - - - - -
Net appreciation in current
value of investments 101,266 33,828 79,859 544,934 22,860 14,103 253,275
---------- ---------- -------- ---------- -------- -------- ----------
101,266 33,828 79,859 544,934 22,860 14,103 253,275
---------- ---------- -------- ---------- -------- -------- ----------
303,478 149,552 185,246 887,018 54,077 23,217 689,309
Benefit payments (221,156) (71,866) (10,454) (76,943) (1,663) (585) (63,887)
Administrative expenses (4,090) (2,364) (110) (806) (222) - (3,129)
Fund transfers 2,775,891 1,301,283 654,374 3,053,327 381,335 159,439 3,166,852
---------- ---------- -------- ---------- -------- -------- ----------
Change in net assets
available for plan
benefits 2,854,123 1,376,605 829,056 3,862,596 433,527 182,071 3,789,145
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, beginning of year - - - - - - -
---------- ---------- -------- ---------- -------- -------- ----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, end of year $2,854,123 $1,376,605 $829,056 $3,862,596 $433,527 $182,071 $3,789,145
========== ========== ======== ========== ======== ======== ==========
<CAPTION>
Fidelity
CIGNA Advisor
International Growth Fidelity
Equity Opportunities Magellan
Fund Fund Fund
------------- ------------- --------
<S> <C> <C> <C>
Contributions:
Participants $ 19,959 $ 11,781 $14,852
-------- -------- -------
Investment earnings:
Dividends - - -
Net appreciation in current
value of investments 6,702 6,470 4,832
-------- -------- -------
6,702 6,470 4,832
-------- -------- -------
26,661 18,251 19,684
Benefit payments (185) - (310)
Administrative expenses (203) (30) (205)
Fund transfers 221,715 189,929 50,616
-------- -------- -------
Change in net assets
available for plan
benefits 247,988 208,150 69,785
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, beginning of year - - -
-------- -------- -------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, end of year $247,988 $208,150 $69,785
======== ======== =======
</TABLE>
The accompanying notes are an integral part of this statement.
-3-
<PAGE> 10
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
(Continued)
<TABLE>
<CAPTION>
Intermediate
Small High Income Government Prime
Stock Capitalization Equity Bond Obligations Obligations Balanced
Fund Fund Fund Fund Fund Fund Fund
------------ -------------- ------------ ---------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 622,059 $ - $ - $ - $ - $ - $ -
----------- ----------- ----------- --------- --------- ----------- ---------
Investment earnings:
Dividends 188,266 - - - - - -
Net appreciation in current
value of investments 6,619,300 - - - - 7,703 56
----------- ----------- ----------- --------- --------- ----------- ---------
6,807,566 - - - - 7,703 56
----------- ----------- ----------- --------- --------- ----------- ---------
7,429,625 - - - - 7,703 56
Benefit payments (814,685) - - - - - -
Administrative expenses (4,384) - - - - - -
Fund transfers 9,907,091 (3,064,107) (2,575,644) (989,318) (231,077) (1,795,276) (525,716)
----------- ----------- ----------- --------- --------- ----------- ---------
Change in net assets
available for plan benefits 16,517,647 (3,064,107) (2,575,644) (989,318) (231,077) (1,787,573) (525,660)
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, beginning of year - 3,064,107 2,575,644 989,318 231,077 1,787,573 525,660
----------- ----------- ----------- --------- --------- ----------- ---------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, end of year $16,517,647 $ - $ - $ - $ - $ - $ -
=========== =========== =========== ========= ========= =========== =========
<CAPTION>
Income Common
Advantage Stock
Fund Fund Total
---------- ------------- ------------
<S> <C> <C> <C>
Contributions:
Participants $ - $ - $ 1,910,423
--------- ------------ -----------
Investment earnings:
Dividends - - 198,172
Net appreciation in current
value of investments 2,147 - 7,687,429
--------- ------------ -----------
2,147 - 7,885,601
--------- ------------ -----------
2,147 - 9,796,024
Benefit payments - - (1,261,734)
Administrative expenses - - (15,543)
Fund transfers (468,372) (12,212,342) -
--------- ------------ -----------
Change in net assets
available for plan benefits (466,225) (12,212,342) 8,518,747
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, beginning of year 466,225 12,212,342 21,851,946
--------- ------------ -----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, end of year $ - $ - $30,370,693
========= ============ ===========
</TABLE>
The accompanying notes are an integral part of this statement.
-4-
<PAGE> 11
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
High Intermediate
Common Small Income Government Prime
Stock Capitalization Equity Bond Obligations Obligations Balanced
Fund Fund Fund Fund Fund Fund Fund
------------ -------------- ---------- ---------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Contributions:
Participants $ 564,634 $ 453,464 $ 356,760 $ 143,958 $ 25,671 $ 156,752 $106,690
----------- ---------- ---------- --------- --------- ---------- --------
Investment earnings:
Interest and dividends 243,115 340,003 120,283 58,956 21,331 74,546 33,984
Net appreciation in current value
of investments 2,582,139 487,845 402,709 91,965 27,650 - 44,394
----------- ---------- ---------- --------- --------- ---------- --------
2,825,254 827,848 522,992 150,921 48,981 74,546 78,378
----------- ---------- ---------- --------- --------- ---------- --------
3,389,888 1,281,312 879,752 294,879 74,652 231,298 185,068
Benefit payments (699,695) (178,879) (187,276) (141,969) (108,096) (355,299) (27,751)
Administrative expenses (21,117) (3,033) (3,563) (1,385) (842) (4,273) (1,068)
Fund transfers (328,621) (194,016) 4,769 10,298 (231,973) 602,818 90,115
----------- ---------- ---------- --------- --------- ---------- --------
Change in net assets
available for plan
benefits 2,340,455 905,384 693,682 161,823 (266,259) 474,544 246,364
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, beginning of year 9,871,887 2,158,723 1,881,962 827,495 497,336 1,313,029 279,296
----------- ---------- ---------- --------- --------- ---------- --------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, end of year $12,212,342 $3,064,107 $2,575,644 $ 989,318 $ 231,077 $1,787,573 $525,660
=========== ========== ========== ========= ========= ========== ========
<CAPTION>
Income
Advantage
Fund Total
--------- -----------
<S> <C> <C>
Contributions:
Participants $ 74,447 $ 1,882,376
-------- -----------
Investment earnings:
Interest and dividends 24,872 917,090
Net appreciation in current value
of investments - 3,636,702
-------- -----------
24,872 4,553,792
-------- -----------
99,319 6,436,168
Benefit payments (38,080) (1,737,045)
Administrative expenses (829) (36,110)
Fund transfers 46,610 -
-------- -----------
Change in net assets
available for plan
benefits 107,020 4,663,013
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, beginning of year 359,205 17,188,933
------- - -----------
NET ASSETS AVAILABLE FOR PLAN
BENEFITS, end of year $466,225 $21,851,946
======== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
-5-
<PAGE> 12
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
The financial statements of the Kaydon Corporation Employee
Stock Ownership and Thrift Plan (the "Plan") are presented on
the accrual basis of accounting. The Plan is subject to the applicable
provisions of the Employee Retirement Income Security Act of 1974, as
amended. Investments are stated at current value, which is based on
the quoted market price.
Effective January 1, 1996, the Company changed trustees from First of
America Investment Corporation to CG Trust Company (a CIGNA
company). As a result, the Plan assets were transferred into funds
with comparable investment options administered by Connecticut General
Life Insurance Company (a CIGNA company).
In order to provide a variety of investment options, CIGNA has
developed alliances with other companies, including Fidelity
Investments, Warburg Pincus Funds, INVESCO Funds Group, Inc. and
Twentieth Century Investors, Inc. Plan assets are invested in a CIGNA
Separate Account (measured in units) which holds investments in funds
offered by these alliance companies.
The investment funds offered by CIGNA through the CIGNA
Separate Account do not pay dividends or interest, nor do they
produce realized or unrealized gains. Rather, the plan participates in
investment earnings through an increase or decrease in the unit values
of each fund. As a result, the funds' investment earnings are reported
as net appreciation in the Statement of Changes in Net Assets Available
for Plan Benefits, except for the Stock Fund in which the participants
have a direct interest in the underlying stock.
Conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts in the Plan's financial statements. Actual results
may differ from those estimates.
(2) DESCRIPTION OF THE PLAN
The following description of the major provisions of the Plan,
a defined contribution plan, is provided for general information
purposes only. Reference should be made to the Plan document, as
amended, for more complete information.
-6-
<PAGE> 13
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) DESCRIPTION OF THE PLAN, continued
Eligibility requirements - All employees of Kaydon Corporation and
subsidiaries (the "Company" or "Employer"), excluding employees
of its Electro-Tec Corporation, Seabee Corporation, Victor Fluid Power
Company and foreign subsidiaries, who are 21 years of age and have
completed at least 500 hours of service during a six-month period are
eligible to participate in the Plan on the January 1st, April 1st, July
1st, and October 1st coincident with or immediately following such
six-month period.
Contributions - Participants may authorize the Employer to make salary
deferral contributions on their behalf of not less than 1% nor
more than 15% of their compensation, not to exceed the limitations
established by the Internal Revenue Code (the "Code"). In addition,
the Employer may contribute to the Plan for each plan year an amount
approved by the Board of Directors. There were no discretionary
employer contributions in 1996 or 1995.
Allocation of investment earnings - Individual accounts are maintained
for each participant to reflect the participant's contributions,
the Company's contributions, forfeitures, investment earnings and
administrative expenses. Investment earnings are allocated based on
each participant's relative account balance within the respective fund.
Vesting - Participants have a nonforfeitable right to their
contributions and any earnings thereon. Discretionary employer
contributions vest over a seven year period in annual increments
ranging from ten to twenty percent.
A participant who terminates employment due to death,
disability or normal retirement shall be 100% vested in their
entire discretionary employer contributions.
Forfeitures - A participant forfeits the unvested portion of their
discretionary employer contributions upon five consecutive
breaks in service (a single break in service defined as a plan year
during which a participant fails to complete 500 hours of service).
Forfeited amounts are applied to reduce employer discretionary
contributions.
-7-
<PAGE> 14
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) DESCRIPTION OF THE PLAN, continued
Investment of participant accounts - During 1996, plan participants
directed the investment of their account balances in the
following 11 investment options:
The CIGNA Guaranteed Short-Term Fund invests in a portfolio
of high quality money market instruments with a guarantee of
principal and interest, including U.S. Treasury securities, U.S.
Government securities, certificates of deposit, time deposits,
repurchase agreements, and commercial paper issued by major domestic
and foreign corporations.
The CIGNA Actively Managed Fixed Income Fund invests in a
portfolio of predominately high quality corporate and Government
fixed income securities including issues of the U.S. Government and
its Agencies, U.S. corporate bonds, Yankee bonds, mortgage-backed
securities and asset-backed securities.
The INVESCO Total Return Fund invests in combination of
equity nd fixed income securities including common stock and
securities that are convertible into common stock, issues of the U.S.
Government and its Agencies, and investment-grade corporate debt
obligations.
The Fidelity Growth and Income Fund invests in equity
securities of domestic and foreign companies including preferred
stocks and investment-grade debt instruments, and all types of
foreign securities.
The Fidelity Advisor Equity Growth Fund invests primarily
in the common and preferred stock and securities convertible
into the common stock of companies of all sizes with above-average
growth characteristics. The Fund may also invest in foreign
securities.
The Twentieth Century Heritage Investors Fund invests
primarily in common stocks of small to medium-sized companies.
The Fund may also invest in the securities of foreign companies,
primarily in developed markets.
The Warburg Pincus Advisor Emerging Growth Fund invests in
equity securities of small to medium-sized domestic companies
with emerging or renewed growth potential. The Fund may also invest
in foreign securities, investment-grade debt securities and domestic
and foreign short-term or medium-term money market obligations.
-8-
<PAGE> 15
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) DESCRIPTION OF THE PLAN, continued
The CIGNA International Equity Fund invest primarily in
non-U.S. stocks in European, Australian and Far East stock
markets. The Fund may also invest in U.S. and non-U.S. cash
equivalents.
The Fidelity Advisor Growth Opportunities Fund invests
primarily in common stocks and securities convertible into
common stock. The Fund may also invest in other securities such as
preferred stocks and bonds that may produce capital growth, and
securities of foreign companies.
The Fidelity Magellan Fund invests primarily in common
stocks and securities convertible into common stock. The Fund
may invest in securities of domestic, foreign and multinational
issuers.
The Stock Fund invests solely in Kaydon Corporation Common
Stock.
During 1995, plan participants directed the investment of their account
balances in eight investment options. All but the Common Stock
and Income Advantage Funds are part of the Parkstone group of mutual
funds.
The Common Stock Fund invests solely in Kaydon Corporation
Common Stock.
The Small Capitalization Fund invests primarily in a
diversified portfolio of common stocks and securities
convertible into common stocks of small and medium sized companies.
The High Income Equity Fund invests primarily in stocks and
securities with fixed maturity dates and interest rates.
The Bond Fund invests in a portfolio of medium and
high-grade debt securities with fixed maturity dates and
interest rates.
The Intermediate Government Obligations Fund invests
primarily in U.S. Government securities with remaining
maturities of twelve years or less.
The Prime Obligations Fund invests primarily in short-term
obligations issued by the U.S. Government, high quality money
market instruments and corporate promissory notes.
-9-
<PAGE> 16
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) DESCRIPTION OF THE PLAN, continued
The Balanced Fund invests in common stocks of U.S.
companies with market capitalization of $1 billion and greater,
bonds of U.S. government agencies, mortgage-related bonds and
corporate bonds.
The Income Advantage Fund invests primarily in guaranteed
investment contracts, bank investment contracts and commercial
paper.
Payment of benefits - Benefits are paid in the form of a lump-sum
payment via distribution of the Company's common stock, cash or
a combination thereof, as directed by the participant for those
participants who have investments in the stock fund. Benefits for
participants in other funds are paid in cash. The payment date
generally will not be later than the 60th day following the end of the
plan year in which the participant attains age 65, retires, terminates
or dies, as applicable.
Administrative expenses - Although not required to do so, the Employer
paid certain administrative expenses of the Plan during 1996 and
1995. The remaining expenses were paid for out of Plan assets by CG
Trust Company.
Voting rights - Each participant is entitled to exercise voting rights
attributable to the Kaydon Corporation common shares allocated
to his or her account and is notified by the trustee prior to the time
that such rights are to be exercised. The trustee is not permitted to
vote any share for which instructions have not been given by a
participant.
Plan termination - The Employer has the right under the
provisions of the Plan to terminate the Plan, although it has
not expressed an intent to do so. In the event of the termination of
the Plan or a complete discontinuance of contributions to the Plan,
each participant shall have a nonforfeitable interest in the entire
amount credited to his separate account in the trust fund; and, after
providing for the payment of all debts and administrative expenses, the
amounts standing to such participants' credit shall be distributed to
such participants in accordance with the Plan and the Internal Revenue
Code.
-10-
<PAGE> 17
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) TRUST FUND
A trust fund is maintained by the trustee for all purposes of
the Plan, and the monies and other assets thereof are held,
administered, invested and distributed in accordance with its terms, as
it may be amended from time to time, for the exclusive benefit of the
participants and their beneficiaries.
(4) RELATED PARTY TRANSACTIONS
Plan investments include interests in mutual funds managed by
Connecticut General Life Insurance Company (a CIGNA company).
CG Trust Company (a CIGNA company) is the trustee as defined by the
Plan.
(5) TAX STATUS
The Internal Revenue Service issued a determination letter
dated April 4, 1996, stating that the Plan was in accordance
with applicable plan design requirements as of that date. The Plan
administrator and the Plan's legal counsel believe that the Plan and
underlying trust are currently designed and being operated in
compliance with the applicable requirements of the Internal Revenue
Code. Therefore, they believe that the Plan was qualified and the
related trust was tax-exempt as of the financial statement date.
(6) INVESTMENTS
The fair market value of investments that represent 5% or more
of the Plan's total net assets is as follows as of December 31,:
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Guaranteed Short-Term Fund $ 2,854,071 $ -
Fidelity Growth and Income Fund 3,861,882 -
Warburg Pincus Advisor Emerging
Growth Fund 3,787,717 -
Stock Fund 16,468,720 -
Small Capitalization Fund - 3,064,107
High Income Equity Fund - 2,575,644
Prime Obligations Fund - 1,787,573
Common Stock Fund - 12,162,965
</TABLE>
-11-
<PAGE> 18
SCHEDULE I
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
EIN: 13-3186040
PLAN NUMBER: 002
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
Current
Identity of Issuer Description of Investment Cost Value
------------------ ------------------------- ----------- -----------
<S> <C> <C> <C>
Mutual Funds:
*Connecticut General Life CIGNA Guaranteed Short-Term
Insurance Company Fund, 68,525 units $ 2,854,071 $ 2,854,071
*Connecticut General Life CIGNA Actively Managed
Insurance Company Fixed Income Fund,
12,373 units 1,337,554 1,375,151
*Connecticut General Life INVESCO Total Return Fund,
Insurance Company 30,893 units 748,113 827,628
*Connecticut General Life Fidelity Growth and Income
Insurance Company Fund, 108,206 units 3,324,842 3,861,882
*Connecticut General Life Fidelity Advisor Equity
Insurance Company Growth Fund, 9,221 units 405,704 432,813
*Connecticut General Life Twentieth Century Heritage
Insurance Company Investors Fund,
12,790 units 166,734 181,357
*Connecticut General Life Warburg Pincus Advisor
Insurance Company Emerging Growth Fund,
103,151 units 3,543,410 3,787,717
*Connecticut General Life CIGNA International Equity
Insurance Company Fund, 3,783 units 239,501 247,274
*Connecticut General Life Fidelity Advisor Growth
Insurance Company Opportunities Fund,
4,459 units 193,394 208,150
*Connecticut General Life Fidelity Magellan Fund,
Insurance Company 701 units 64,242 69,785
----------- -----------
12,877,565 13,845,828
Common Stock:
*Kaydon Corporation Stock Fund, 349,469 shares 10,797,161 16,468,720
----------- -----------
$23,674,726 $30,314,548
=========== ===========
</TABLE>
*Represents a party-in-interest
-13-
<PAGE> 19
SCHEDULE II
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
EIN: 13-3186040
PLAN NUMBER: 002
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Purchases Sales or Maturities
-------------------------- ---------------------------------------------------------------
Identity of Issuer and Number of Purchase Number of Cost of
Description of Investment Transactions Price Transactions Proceeds Asset Net Gain (Loss)
- ------------------------- ------------ ------------ -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
*Connecticut General Life
Insurance Company:
CIGNA Guaranteed Short-Term Fund 73 $ 3,592,704 39 $ 839,899 $ 839,899 $ -
CIGNA Actively Managed Fixed
Income Fund 74 1,762,555 32 421,232 421,385 (153)
Fidelity Growth and Income Fund 91 3,534,681 29 217,733 207,612 10,121
Warburg Pincus Advisor Emerging
Growth Fund 90 4,095,476 44 561,034 540,042 20,992
*First of America Investment
Corporation:
Parkstone Small Capitalization
Fund - - 1 3,064,107 2,564,187 499,920
Parkstone High Income Equity Fund - - 1 2,575,644 2,295,573 280,071
Parkstone Prime Obligations Fund - - 1 1,795,276 1,787,573 7,703
*Kaydon Corporation:
Stock Fund 76 13,179,764 99 3,330,344 2,359,817 970,527
Common Stock Fund - - 1 12,212,342 5,797,022 6,415,320
</TABLE>
* Represents a party-in-interest
NOTE: This schedule was prepared in accordance with the regulations of the
Employee Retirement Income Security Act of 1974 to report all
transactions involving securities of the same issue which, in aggregate,
exceed 5% of the net assets of the Plan at the beginning of the period.
-13-
<PAGE> 20
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Kaydon Corporation:
As independent public accountants, we hereby consent to the incorporation
of our report dated June 11, 1997, included in this Form 11-K, into the
Company's previously filed S-8 Registration Statement Numbers 2-89399 and
33-61646.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Grand Rapids, Michigan
June 27, 1997
-14-
