<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, 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:
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
315 E. EISENHOWER PARKWAY
SUITE 300
ANN ARBOR, MI 48108
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KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
The following documents are attached hereto as exhibits:
Page
----
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.
<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 28, 2000
By: The Plan Administrative Committee
-----------------------------------
By: /s/ John F. Brocci
---------------------------
John F. Brocci
Chairman
Plan Administrative Committee
<PAGE> 4
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT 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
Kaydon Corporation Employee Stock Ownership and Thrift Plan:
We have audited the accompanying statements of net assets available for benefits
of the KAYDON CORPORATION EMPLOYEE STOCK OWNERSHIP AND THRIFT 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
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Page
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
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KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT 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 $ 2,373,593 $ 2,114,877
CIGNA Charter Actively Managed Fixed Income Fund 1,178,364 2,128,610
INVESCO Total Return Account 1,504,814 1,856,778
Warburg Pincus Advisor Emerging Growth Account 4,941,561 3,649,408
Fidelity Advisor Growth Opportunities Account 873,463 893,094
Templeton Foreign Account 422,548 245,175
AIM Value Account 2,070,604 671,767
Lazard Small Cap Account 318,930 64,711
Janus Worldwide Account 1,346,362 9,898
CIGNA Charter Large Company Stock-Growth Fund 8,522,244 7,720,577
--------------- ---------------
Total Mutual funds 23,552,483 19,354,895
Kaydon Corporation Common Stock 16,436,332 25,888,274
--------------- ---------------
Total investments 39,988,815 45,243,169
Dividend receivable 67,411 64,613
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Total assets 40,056,226 45,307,782
LIABILITY- Excess Contribution Payable (20,608) -
--------------- ---------------
NET ASSETS AVAILABLE FOR BENEFITS $ 40,035,618 $ 45,307,782
=============== ===============
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 8
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT 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:
Participants $ 2,338,243 $ 2,638,781
Rollover 52,962 -
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Total contributions 2,391,205 2,638,781
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INVESTMENT EARNINGS (LOSS):
Interest and dividends 321,095 242,916
Net appreciation (depreciation) in current value of investments (4,048,624) 8,206,355
---------------- ----------------
Total investment earnings (loss) (3,727,529) 8,449,271
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OTHER CHANGES:
Benefit payments (3,907,518) (5,175,041)
Administrative expenses (26,930) (22,824)
Net transfer to a related plan (1,392) -
---------------- ----------------
Total other changes (3,935,840) (5,197,865)
---------------- ----------------
Change in net assets available for benefits (5,272,164) 5,890,187
NET ASSETS AVAILABLE FOR BENEFITS, beginning of year 45,307,782 39,417,595
---------------- ----------------
NET ASSETS AVAILABLE FOR BENEFITS, end of year $ 40,035,618 $ 45,307,782
================ ================
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 9
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.
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.
Generally accepted accounting principles require 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
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.
Eligibility requirements - All employees of Kaydon Corporation and
subsidiaries and affiliates (the "Company" or "Employer"), excluding
employees of its Electro-Tec Corp., Seabee Corporation, Gold Star
Manufacturing, salaried employees of Victor Fluid Power, Inc.,
employees of Great Bend Industries, Inc. and foreign subsidiaries,
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 authorize the Company 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. In addition, the Company
may contribute to the Plan for each plan year an amount approved by
the Board of Directors. There were no discretionary employer
contributions in 1999 or 1998.
-3-
<PAGE> 10
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
Allocation of investment earnings - Individual accounts are maintained
for each participant to reflect the participant's contributions, the
discretionary employer 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.
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
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT 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.
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.
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<PAGE> 12
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
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 - 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. 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 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.
(3) TRUST FUND
A trust fund is maintained by the trustee for all purposes of the Plan.
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.
-6-
<PAGE> 13
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
(5) TAX STATUS
The Internal Revenue Service issued a determination letter dated April
4, 1996, 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
---- ----
<S> <C> <C>
CIGNA Charter Guaranteed Short-Term Securities Fund $ 2,373,593 $ -
Warburg Pincus Advisor Emerging Growth Account 4,941,561 3,649,408
AIM Value Account 2,070,604 -
CIGNA Charter Large Company Stock-Growth Fund 8,522,244 7,720,577
Stock Fund 16,436,332 25,888,274
</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 $ 40,035,618
Benefits currently payable at December 31, 1999 87,792
--------------
Net assets available for benefits per the Form 5500 39,947,826
==============
</TABLE>
-7-
<PAGE> 14
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT 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 $ 3,907,518
Add: Benefits payable at December 31, 1999 87,792
--------------
Benefit payments per the Form 5500 3,995,310
==============
</TABLE>
-8-
<PAGE> 15
SCHEDULE I
KAYDON CORPORATION
EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN
EIN: 13-3186040 PLAN NUMBER: 002
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
------------------ ------------------------- ---------------
<S> <C> <C>
Mutual Funds-
*Connecticut General Life CIGNA Charter Guaranteed Short-Term
Insurance Company Securities Fund, 51,429 units $ 2,373,593
*Connecticut General Life CIGNA Charter Actively Managed Fixed Income
Insurance Company Fund, 9,444 units 1,178,364
*Connecticut General Life
Insurance Company INVESCO Total Return Account, 41,372 units 1,504,814
*Connecticut General Life Warburg Pincus Advisor Emerging Growth
Insurance Company Account, 77,234 units 4,941,561
*Connecticut General Life Fidelity Advisor Growth Opportunities Account,
Insurance Company 11,644 units 873,463
*Connecticut General Life
Insurance Company AIM Value Account, 32,746 units 2,070,604
*Connecticut General Life
Insurance Company Templeton Foreign Account, 28,683 units 422,548
*Connecticut General Life
Insurance Company Lazard Small Cap Account, 15,747 units 318,930
*Connecticut General Life
Insurance Company Janus Worldwide Account, 15,623 units 1,346,362
*Connecticut General Life CIGNA Charter Large Company Stock Growth
Insurance Company Fund, 490,819 units 8,522,244
---------------
Total Mutual funds 23,552,483
Common Stock-
*Kaydon Corporation Stock Fund, 613,010 shares 16,436,332
---------------
$ 39,988,815
===============
</TABLE>
* Represents a party-in-interest
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<PAGE> 16
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
23 Consent of Independent Public Accountants
</TABLE>
