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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 0-12640
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A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
ELECTRO-TEC CORPORATION
EMPLOYEE RETIREMENT BENEFIT PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
KAYDON CORPORATION
315 E. EISENHOWER PARKWAY
SUITE 300
ANN ARBOR, MI 48108
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ELECTRO-TEC CORPORATION
EMPLOYEE RETIREMENT BENEFIT PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
The following documents are attached hereto as exhibits:
<TABLE>
Page
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Report of Independent Public Accountants A
Statements of Net Assets Available for Benefits as of
December 31, 1999 and 1998 1
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 1999 and 1998 2
Notes to Financial Statements 3-6
Schedule I - Item 4i - Schedule of Assets Held for
Investment Purposes at End of Year as of December 31, 1999 7
Consent of Independent Public Accountants 8
</TABLE>
In accordance with the instructions 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.
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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.
Electro-Tec Corporation Employee Retirement
Benefit Plan
Date: June 28, 2000
By: The Plan Administrative Committee
---------------------------------
By: /s/ John F. Brocci
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John F. Brocci
Chairman
Plan Administrative Committee
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ELECTRO-TEC CORPORATION
EMPLOYEE RETIREMENT BENEFIT PLAN
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999 AND 1998
TOGETHER WITH AUDITORS' REPORT
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Report of Independent Public Accountants
To the Administrative Committee of the
Electro-Tec Corporation Employee Retirement Benefit Plan:
We have audited the accompanying statements of net assets available for benefits
of the ELECTRO-TEC CORPORATION EMPLOYEE RETIREMENT BENEFIT PLAN (the "Plan") as
of December 31, 1999 and 1998, and the related statements of changes in net
assets available for benefits for the years then ended. These financial
statements and the schedule referred to below are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements and the schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1999 and 1998, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes at end of year is presented for the purpose
of additional analysis and is not a required part of the basic financial
statements but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedule has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Detroit, Michigan,
May 26, 2000.
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ELECTRO-TEC CORPORATION
EMPLOYEE RETIREMENT BENEFIT PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Page
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Statements of Net Assets Available for Benefits
as of December 31, 1999 and 1998 1
Statements of Changes in Net Assets Available for Benefits
for the Years Ended December 31, 1999 and 1998 2
Notes to Financial Statements 3-6
Schedule I - Item 4i - Schedule of Assets Held for Investment
Purposes at End of Year as of December 31, 1999 7
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ELECTRO-TEC CORPORATION
EMPLOYEE RETIREMENT BENEFIT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
ASSETS
Investments:
Mutual funds-
CIGNA Charter Guaranteed Short-Term Securities Fund $1,588,909 $1,756,228
CIGNA Charter Actively Managed Fixed Income Fund 467,165 457,651
INVESCO Total Return Account 529,182 532,329
Warburg Pincus Advisor Emerging Growth Account 1,543,186 1,065,208
Fidelity Advisor Growth Opportunities Account 433,337 369,926
Templeton Foreign Account 134,202 44,288
AIM Value Account 233,064 82,126
Lazard Small Cap Account 55,824 20,182
Janus Worldwide Account 181,434 76,423
CIGNA Charter Large Company Stock-Growth Fund 2,830,509 2,341,889
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Total Mutual funds 7,996,812 6,746,250
Kaydon Corporation Common Stock 770,690 1,183,873
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Total investments 8,767,502 7,930,123
Dividend receivable 3,144 2,948
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Total assets 8,770,646 7,933,071
LIABILITY- Excess Contribution Payable (2,316) -
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NET ASSETS AVAILABLE FOR BENEFITS $8,768,330 $7,933,071
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</TABLE>
The accompanying notes are an integral part of these statements.
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ELECTRO-TEC CORPORATION
EMPLOYEE RETIREMENT BENEFIT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
CONTRIBUTIONS:
Employer $ 268,286 $ 258,323
Participants 381,090 385,489
Rollover 4,019 -
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Total contributions 653,395 643,812
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INVESTMENT EARNINGS:
Interest and dividends 64,436 11,641
Net appreciation in current value of investments 752,013 1,149,092
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Total investment earnings 816,449 1,160,733
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OTHER CHANGES:
Benefit payments (633,675) (1,053,001)
Administrative expenses (910) (980)
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Total other changes (634,585) (1,053,981)
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Change in net assets available for benefits 835,259 750,564
NET ASSETS AVAILABLE FOR BENEFITS, beginning of year 7,933,071 7,182,507
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NET ASSETS AVAILABLE FOR BENEFITS, end of year $ 8,768,330 $7,933,071
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</TABLE>
The accompanying notes are an integral part of these statements.
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ELECTRO-TEC CORPORATION
EMPLOYEE RETIREMENT BENEFIT PLAN
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
The accompanying financial statements of the Electro-Tec Corporation
Employee Retirement Benefit Plan (the "Plan") have been prepared 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.
In order to provide a variety of investment options, CIGNA has developed
alliances with other companies, including Fidelity Management and
Research Company, Warburg Pincus Asset Management, Inc., INVESCO
Funds Group, Inc., AIM Advisor, Inc., Templeton Global Advisors
Limited, Lazard Asset Management and Janus Capital Corporation. 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 (depreciation) in the Statement of Changes in Net Assets
Available for 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.
The Accounting Standards Executive Committee issued Statement of
Position 99-3, "Accounting for and Reporting of Certain Defined
Contribution Plan Investments and Other Disclosure Matters" (SOP
99-3), which eliminates the requirement for a defined contribution
plan to disclose participant-directed investment programs. As
required by SOP 99-3, the Plan adopted SOP 99-3 for the 1999
financial statements and reclassified certain amounts in the 1998
financial statements to eliminate the participant-directed fund
investment program disclosures.
(2) DESCRIPTION OF THE PLAN
Electro-Tec Corporation (the "Company" or "Employer"), a wholly-owned
subsidiary of Kaydon Corporation ("Kaydon"), sponsors the Plan, a
defined contribution plan. The following description of the major
provisions of the Plan is provided for general information purposes
only. Reference should be made to the Plan document, as amended, for
more complete information.
Eligibility requirements - All employees of the Company who are 21 years
of age and have completed at least 1,000 hours of service during a
one-year period are eligible to participate in the Plan on the
January 1st, April 1st, July 1st and October 1st coincident with or
immediately following completion of the 1,000th hour of service.
Contributions - Participants may elect to make, through payroll
deductions, both tax-deferred contributions, which may not exceed 15%
of compensation, and after-tax voluntary contributions. The maximum
contributions for the year, which includes pre-tax, after-tax
voluntary and employer matching and discretionary contributions is
25% of compensation less tax-deferred contributions. Under the terms
of the Plan, the Company contributes to the Plan an amount equal to
the payroll deduction contribution by each participant up to 3% of
the participant's compensation, as defined by the Plan, and 75% of
each participant's contribution in excess of 3% of compensation, not
to exceed an additional 4% of each participant's compensation, as
defined. In addition, the Company may, with the approval of the Board
of Directors of Kaydon, make discretionary contributions to the Plan.
There were no discretionary Employer contributions in 1999 and 1998.
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ELECTRO-TEC CORPORATION
EMPLOYEE RETIREMENT BENEFIT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
Allocation of investment earnings - Individual accounts are maintained
for each participant to reflect the participant's contributions, the
employer'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 - All participant contributions are fully vested and
nonforfeitable. Company matching and discretionary contributions
become fully vested and nonforfeitable either upon attainment of age
65, upon the employee's death or disability or ratably over seven
years of service, as defined by the Plan. Forfeitures are used to
reduce Employer contributions.
Investment of participant accounts - Plan participants may direct the
investment of their account balances in the following investment
options:
The CIGNA Charter Guaranteed Short-Term Securities 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 Charter 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 Account invests in a combination of
equity and fixed and variable 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 Warburg Pincus Advisor Emerging Growth Account 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.
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ELECTRO-TEC CORPORATION
EMPLOYEE RETIREMENT BENEFIT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
The Fidelity Advisor Growth Opportunities Account invests
primarily in common stocks and securities convertible into
common stock of companies believed to have long-term growth
potential. 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 Templeton Foreign Account invests primarily in common and
preferred stock of non-U.S. companies, including American,
European and Global Depository Receipts. The Fund may invest in
debt securities of companies and governments located anywhere
in the world, emerging markets, U.S. Government securities,
bank time deposits in the currency of any major nation,
commercial paper and repurchase agreements.
The AIM Value Account invests primarily in common stocks,
convertible bonds and convertible preferred stocks of
undervalued companies.
The Lazard Small Cap Account invests in small-cap equity
securities including common stock, preferred stock, securities
convertible into or exchangeable for common stock, and rights
and warrants. The Fund may invest in equity securities of
large-cap U.S. companies and short-term money market
instruments.
The Janus Worldwide Account invests primarily in common stock of
foreign and domestic issuers. The Fund may invest in preferred
stock, warrants, convertible securities and debt securities,
high-grade commercial paper, certificates of deposit, money
market funds, repurchase agreements and other short-term debt
obligations.
The CIGNA Charter Large Company Stock-Growth Fund invests
primarily in domestic stocks of large companies. The Fund may
also invest in American Depository Receipts.
The Stock Fund invests solely in Kaydon Corporation Common Stock.
Payment of benefits - Amounts credited to an individual participant's
account are distributed at termination of employment, generally as a
lump sum or in installments. Distributions may be deferred until the
participant reaches the age of 65 if the value of the distribution
exceeds $5,000. As described in the Plan, in certain hardship
situations, participants may withdraw a portion of their account
balances while actively employed.
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ELECTRO-TEC CORPORATION
EMPLOYEE RETIREMENT BENEFIT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
Administrative expenses - Although not required to do so, the Employer
paid certain administrative expenses of the Plan during 1999 and
1998. 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 Company has the right to terminate the Plan at
any time, although it has not expressed an intent to do so. Upon
termination of the Plan, participants will become fully vested.
Expenses arising from the termination would be allocated to the
participants' accounts in accordance with the Plan and the Internal
Revenue Code.
(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 the terms of the Plan, as
it may be amended from time to time, for the exclusive benefit of the
participants and their beneficiaries. The trustee is a related party
as discussed in Note (4).
(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 dated October 12,
1995, stating that the Plan, as then designed, was in accordance with
applicable plan design requirements and was tax-exempt. The Plan has
been amended since receiving the determination letter. However, 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>
1999 1998
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<S> <C> <C>
CIGNA Charter Guaranteed Short-Term Securities Fund $ 1,588,909 $ 1,756,228
CIGNA Charter Actively Managed Fixed Income Fund 467,165 457,651
INVESCO Total Return Account 529,182 532,329
Warburg Pincus Advisor Emerging Growth Account 1,543,186 1,065,208
CIGNA Charter Large Company Stock-Growth Fund 2,830,509 2,341,889
Stock Fund 770,690 1,183,873
</TABLE>
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SCHEDULE I
ELECTRO-TEC CORPORATION
EMPLOYEE RETIREMENT BENEFIT PLAN
EIN: 59-1226757 PLAN NUMBER: 001
ITEM 4i - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Current
Identity of Issuer Description of Investment Value
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<S> <C> <C>
Mutual Funds-
*Connecticut General Life CIGNA Charter Guaranteed Short-Term
Insurance Company Securities Fund, 34,427 units $1,588,909
*Connecticut General Life CIGNA Charter Actively Managed Fixed Income
Insurance Company Fund, 3,744 units 467,165
*Connecticut General Life
Insurance Company INVESCO Total Return Account, 14,549 units 529,182
*Connecticut General Life Warburg Pincus Advisor Emerging Growth
Insurance Company Account, 24,119 units 1,543,186
*Connecticut General Life Fidelity Advisor Growth Opportunities Account,
Insurance Company 6,784 units 433,337
*Connecticut General Life
Insurance Company AIM Value Account, 3,686 units 233,064
*Connecticut General Life
Insurance Company Templeton Foreign Account, 9,110 units 134,202
*Connecticut General Life
Insurance Company Lazard Small Cap Account, 2,756 units 55,824
*Connecticut General Life
Insurance Company Janus Worldwide Account, 2,105 units 181,434
*Connecticut General Life CIGNA Charter Large Company Stock-Growth
Insurance Company Fund, 163,017 units 2,830,509
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Total mutual funds 7,996,812
Common Stock-
*Kaydon Corporation Stock Fund, 28,744 shares 770,690
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$8,767,502
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</TABLE>
* Represents a party-in-interest
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EXHIBIT INDEX
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<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
23 Consent of Independent Public Accountants
</TABLE>
