<PAGE> 1
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
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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:
FLUID POWER COMPANIES' PENSION
AND RETIREMENT SAVINGS 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
<PAGE> 2
FLUID POWER COMPANIES'
PENSION AND RETIREMENT SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
The following documents are attached hereto as exhibits:
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 3-8
Schedule I - Item 4i - Schedule of Assets Held for
Investment Purposes at End of Year as of December 31, 1999 9
Consent of Independent Public Accountants 10
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.
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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.
Fluid Power Companies' Pension and Retirement Savings Plan
Date: June 28, 2000
By: The Plan Administrative Committee
By: /s/ John F. Brocci
--------------------------
John F. Brocci
Chairman
Plan Administrative Committee
<PAGE> 4
FLUID POWER COMPANIES'
PENSION AND RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999 AND 1998
TOGETHER WITH AUDITORS' REPORT
<PAGE> 5
Report of Independent Public Accountants
To the Administrative Committee of the
Fluid Power Companies' Pension and Retirement Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the FLUID POWER COMPANIES' PENSION AND RETIREMENT SAVINGS 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.
<PAGE> 6
FLUID POWER COMPANIES'
PENSION AND RETIREMENT SAVINGS 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 3-8
Schedule I - Item 4i - Schedule of Assets Held for Investment
Purposes at End of Year as of December 31, 1999 9
<PAGE> 7
FLUID POWER COMPANIES'
PENSION AND RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
--------------- ---------------
<S> <C> <C>
ASSETS
Investments:
Mutual funds-
CIGNA Charter Guaranteed Short-Term Securities Fund $ 2,566,881 $ 1,771,611
CIGNA Charter Actively Managed Fixed Income Fund 1,529,252 1,589,178
INVESCO Total Return Account 1,172,024 1,248,926
Warburg Pincus Advisor Emerging Growth Account 826,544 588,513
Fidelity Advisor Growth Opportunities Account 672,730 569,321
Templeton Foreign Account 562,549 322,182
AIM Value Account 1,113,833 732,051
Lazard Small Cap Account 53,403 20,538
Janus Worldwide Account 337,367 15,268
CIGNA Charter Large Company Stock-Growth Fund 3,516,681 2,721,940
--------------- ---------------
Total Mutual funds 12,351,264 9,579,528
Kaydon Corporation Common Stock 909,933 2,362,430
--------------- ---------------
Total investments 13,261,197 11,941,958
Cash - 103,964
Dividend receivable 4,277 5,635
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Total assets 13,265,474 12,051,557
LIABILITY- Excess Contribution Payable (4,702) -
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NET ASSETS AVAILABLE FOR BENEFITS $ 13,260,772 $ 12,051,557
=============== ===============
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 8
FLUID POWER COMPANIES'
PENSION AND RETIREMENT SAVINGS 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 $ 123,748 $ 1,124,717
Participants 905,840 1,195,244
Rollover 11,652 -
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Total contributions 1,041,240 2,319,961
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INVESTMENT EARNINGS:
Interest and dividends 83,701 19,129
Net appreciation in current value of investments 754,936 1,494,321
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Total investment earnings 838,637 1,513,450
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OTHER CHANGES:
Benefit payments (668,729) (477,631)
Administrative expenses (3,325) (2,381)
Net transfer from related plan 1,392 -
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Total other changes (670,662) (480,012)
--------------- ---------------
Change in net assets available for benefits 1,209,215 3,353,399
NET ASSETS AVAILABLE FOR BENEFITS, beginning of year 12,051,557 8,698,158
--------------- ---------------
NET ASSETS AVAILABLE FOR BENEFITS, end of year $ 13,260,772 $ 12,051,557
=============== ===============
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 9
FLUID POWER COMPANIES'
PENSION AND RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
The accompanying financial statements of the Fluid Power Companies'
Pension and Retirement Savings 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 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
Seabee Corporation, Gold Star Manufacturing, Great Bend Industries,
Inc. and salaried employees of Victor Fluid Power, Inc., collectively
the Fluid Power Companies (the "Company" or "Employer"), and which
are wholly-owned subsidiaries of Kaydon Corporation ("Kaydon"),
sponsor 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 18
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.
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<PAGE> 10
FLUID POWER COMPANIES'
PENSION AND RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
Contributions - Participants may elect to make, through payroll
deductions, tax-deferred contributions which may not exceed 15% of
compensation. The maximum contributions for the year, which includes
pre-tax, employer matching and discretionary profit sharing
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 25% of the contribution by each participant. The
maximum matching contribution is equal to 25% of the maximum salary
deferral contribution allowed participants for the year ($1,600 prior
to January 1, 1998). In addition, the Company may, with the approval
of the Board of Directors of Kaydon, make discretionary contributions
to the Plan. Discretionary contributions were $0 and $767,000 in
1999 and 1998, respectively.
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.
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<PAGE> 11
FLUID POWER COMPANIES'
PENSION AND RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
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.
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.
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<PAGE> 12
FLUID POWER COMPANIES'
PENSION AND RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
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.
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 the Plan assets by
CG Trust Company.
Voting rights - Each participant is entitled to exercise voting rights
attributable to the Kaydon 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 April 7,
1997, 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
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<PAGE> 13
FLUID POWER COMPANIES'
PENSION AND RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
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
----------- -----------
<S> <C> <C>
CIGNA Charter Guaranteed Short-Term Securities Fund $ 2,566,881 $ 1,771,611
CIGNA Charter Actively Managed Fixed Income Fund 1,529,252 1,589,178
INVESCO Total Return Account 1,172,024 1,248,926
Fidelity Advisor Growth Opportunities Account 672,730 -
Warburg Pincus Advisor Emerging Growth Account 826,544 -
AIM Value Account 1,113,833 732,051
CIGNA Charter Large Company Stock-Growth Fund 3,516,681 2,721,940
Stock Fund 909,933 2,362,430
</TABLE>
(7) RECONCILIATION TO FORM 5500
The accompanying statements of net assets available for benefits do not
include the amount of benefit distributions payable to persons who
had requested withdrawals from the Plan. The statements of
participants' equity per the Plan's Form 5500 have included the
aforementioned amount. The following is a reconciliation of net
assets available for benefits per the financial statements to the
Form 5500 at December 31:
<TABLE>
<CAPTION>
1999
-----------
<S> <C>
Net assets available for benefits per the
financial statements $13,260,772
Benefits currently payable at December 31, 1999 (2,602)
-----------
Net assets available for benefits per the Form 5500 $13,258,170
===========
</TABLE>
-7-
<PAGE> 14
FLUID POWER COMPANIES'
PENSION AND RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(Continued)
The following is a reconciliation of benefit payments per the financial
statements to the Form 5500 for the year ended December 31:
<TABLE>
<CAPTION>
1999
-----------
<S> <C>
Benefit payments per the financial statements $ 668,729
Add: Benefits payable at December 31, 1999 2,602
-----------
Benefit payments per the Form 5500 $ 671,331
===========
</TABLE>
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<PAGE> 15
SCHEDULE I
FLUID POWER COMPANIES'
PENSION AND RETIREMENT SAVINGS PLAN
EIN: 59-3339512 PLAN NUMBER: 009
ITEM 4i - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AT END OF YEAR
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
Identity of Issuer Description of Investment Current Value
------------------ ------------------------- -------------
<S> <C> <C>
Mutual Funds-
*Connecticut General Life CIGNA Charter Guaranteed Short-Term Securities Fund,
Insurance Company 55,617 units $ 2,566,881
*Connecticut General Life CIGNA Charter Actively Managed Fixed Income Fund,
Insurance Company 12,256 units 1,529,252
*Connecticut General Life INVESCO Total Return Account, 32,223 units
Insurance Company 1,172,024
*Connecticut General Life Warburg Pincus Advisor Emerging Growth Account,
Insurance Company 12,919 units 826,544
*Connecticut General Life Fidelity Advisor Growth Opportunities Account,
Insurance Company 8,968 units 672,730
*Connecticut General Life AIM Value Account 17,615 units
Insurance Company 1,113,833
*Connecticut General Life Templeton Foreign Account, 38,186 units
Insurance Company 562,549
*Connecticut General Life Lazard Small Cap Account, 2,637 units
Insurance Company 53,403
*Connecticut General Life Janus Worldwide Account, 3,915 units
Insurance Company 337,367
*Connecticut General Life CIGNA Charter Large Company Stock-Growth Fund,
Insurance Company 202,535 units 3,516,681
---------------
Total mutual funds 12,351,264
Common Stock-
*Kaydon Corporation Stock Fund, 33,937 shares 909,933
---------------
$ 13,261,197
===============
</TABLE>
* Represents a party-in-interest
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<PAGE> 16
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C>
23 Consent of Independent Public Accountants
</TABLE>
