Back to GetFilings.com
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-1093
KAMAN CORPORATION
(Exact Name of Registrant)
Connecticut 06-0613548
(State of Incorporation) (I.R.S. Employer Identification No.)
1332 Blue Hills Avenue, Bloomfield, Connecticut 06002
(Address of principal executive offices)
Registrant's telephone number, including area code-
(860) 243-7100
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
-Class A Common Stock, Par Value $1.00
-6% Convertible Subordinated Debentures Due 2012
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or
information statements incorporated herein by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [ X ].
State the aggregate market value of the voting and non-voting
stock held by non-affiliates of the registrant. The
aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and asked
prices of such stock, as of a specified date within 60 days prior
to the date of filing.
$313,942,293 as of February 1, 2002.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock as of the latest practicable
date (February 1, 2002).
Class A Common 21,625,432 shares
Class B Common 667,814 shares
DOCUMENTS INCORPORATED HEREIN BY REFERENCE
Portions of the Corporation's 2001 Annual Report to Shareholders
are incorporated herein by reference and filed as Exhibit 13 to
this Report.
PART I
ITEM 1. BUSINESS
Kaman Corporation, incorporated in 1945, reports information for
itself and its subsidiaries (collectively, the "corporation") in
the following business segments: Aerospace, Industrial
Distribution, and Music Distribution.
The Aerospace segment serves commercial, U.S. defense and foreign
government markets. Its principal programs consist of the SH-2G
maritime helicopter, K-MAX (Registered Trademark) medium-to-heavy
lift helicopter, subcontract work involving aerostructures and
helicopter airframes as well as the manufacture of components such
as self-lubricating bearings and advanced technology products. The
Industrial Distribution segment serves nearly every sector of U.S.
industry with industrial repair and OEM products as well as support
services. The Music Distribution segment serves domestic and
foreign markets with a wide variety of musical instruments and
accessories and manufactures guitars and other music products for
musicians of all capabilities and skill levels.
AEROSPACE
The Aerospace segment consists of several operating subsidiaries
of Kaman Aerospace Group, Inc., including Kaman Aerospace
Corporation, Kaman Aerospace International Corporation, K-MAX
Corporation, and Kamatics Corporation. In December 2001, Kaman
Aerospace Group, Inc. acquired H.I.G. Aerospace Group, Inc.(now
known as Kaman PlasticFab Group, Inc.) and its subsidiary, Plastic
Fabricating Company, Inc.
The segment's largest program is the SH-2G Super Seasprite
helicopter, an advanced, intermediate-weight, multi-mission,
maritime aircraft designed to meet the needs of navies around the
world that operate smaller ships for which the SH-2G is ideally
sized. The helicopter is configured for rapid deployment and multi-
mission flexibility, including anti-submarine warfare, surface
surveillance, attack and search and rescue. The SH-2, including its
F and G configurations, was originally manufactured for the U.S.
Navy. At the present time the corporation's work generally consists
of retrofit of the SH-2F helicopters to the SH-2G configuration or
refurbishment of existing SH-2G helicopters.
Page 1
The SH-2G is currently operational with the Egyptian Air Force and
the corporation is performing retrofit work under commercial
contracts with the governments of Australia and New Zealand.
The program for New Zealand involves five (5) aircraft, and
support, for the Royal New Zealand Navy. The contract has an
anticipated value of about $186 million (US). The corporation has
delivered three SH-2G(NZ) helicopters and a fourth will be shipped
pending completion of testing at the corporation's
facilities in Bloomfield, CT, with final acceptance of all four
aircraft expected to follow thereafter. The fifth aircraft, which
represents the exercise of an option under the contract, is
currently scheduled for delivery before the end of 2002.
The program for Australia involves eleven (11) helicopters with
support, including a support services facility, for the Royal
Australian Navy. The total contract has an anticipated value of
about $700 million (US) and the helicopter production portion of
the work is valued at $580 million. The Australian SH-2G(A) will
contain an integrated tactical avionics system ("ITAS") that will
provide the most sophisticated, integrated cockpit and weapons
system available in an intermediate-weight helicopter.
In the second quarter of 2001, the corporation recorded a sales and
pre-tax earnings adjustment of $31.2 million attributable to the
Aerospace segment, substantially all of which was associated with a
change in the estimated cost to complete the Australia SH-2G
program. This adjustment has had the effect of lowering the profit
rate on the Australia program. The cost growth for that program is
related to a contract dispute settlement with Litton Guidance and
Control Systems (now part of Northrop Grumman) which had been the
subcontractor responsible for ITAS hardware and software
development as well as integration testing. As a result of the
settlement arrived at in early 2001, the balance of ITAS software
development is being completed by other subcontractors. One result
of the process of negotiating new subcontracts for this development
has been that the corporation will have responsibility for aircraft
integration testing, a task previously subcontracted to Litton.
This new responsibility along with the estimated time frame for the
subcontractors' development of the full ITAS software suggests that
there will be a longer delay than previously anticipated in
delivery of the full ITAS software to Australia. The corporation is
working with the Royal Australian Navy to develop a process that
will allow for phased acceptance and delivery of the aircraft
without the full ITAS, and subsequent installation of the full
Page 2
software. Six aircraft are currently in Australia, all without
the full ITAS software; two are operational and the others are in
the final stages of assembly.
The corporation is actively pursuing opportunities for the SH-2G
helicopter in the international defense market, enhancing
familiarization with the SH-2G's capabilities among various
governments around the world. The corporation is currently in
discussions with the Egyptian government concerning a requirement
for up to six search and rescue helicopters and with the United
States government about a program for refurbishment of four
existing SH-2G aircraft for the Polish Navy, along with future
training and support. Management believes that the aircraft is
in a good competitive position, while also recognizing that this
market is highly competitive and influenced by economic and
political conditions.
The corporation also maintains a consignment of the U.S. Navy's
inventory of SH-2 spare parts under a multi-year agreement that
provides the ability to utilize certain inventory for support of
the corporation's SH-2 programs.
During 2001, the corporation continued to provide on-site support
in the Republic of Egypt for ten (10) SH-2G helicopters that were
delivered in 1998 under that country's foreign military sale
agreement with the U.S. Navy.
The corporation also manufactures the K-MAX medium-to-heavy lift
helicopter that can be used for fire fighting and commercial
applications such as logging and construction of power lines and
oil rigs. The K-MAX program, which began in late 1994, is based on
the corporation's intermeshing rotor technology with servo-flap
control and the corporation has been conservative in its production
of this aircraft since inception. The program, for which the
corporation maintains a significant inventory, has experienced
significant market difficulties in the past several years, due
partly to conditions in the commercial logging industry, the
aircraft's principal application to date. While the corporation
continues to pursue a strategy of refocusing K-MAX sales
development on global market opportunities in industry and
government, those efforts have met with limited success. There were
no sales of the K-MAX helicopter during 2001, other than the three
aircraft that were part of the five aircraft order received
Page 3
from the U.S. State Department in late 2000, a transaction that
represented the first sale of the K-MAX to the U.S. government and
its first application in a law enforcement role. Management is in
the process of evaluating the amount of time and further investment
that could be required to achieve successful sales development and
profitability for the program.
The Aerospace segment also performs aerostructure and helicopter
subcontract work for a variety of aerospace manufacturing programs.
Aerostructure subcontract work focuses on commercial and military
aircraft programs, including wing structures and components for
commercial airliners, major structural assemblies for military
transports, aircraft thrust reversers, business jet subassembly
components; and the manufacture of proprietary self-lubricating
bearings for use in aircraft flight controls, turbine engines and
landing gear, as well as driveline couplings for helicopters.
Helicopter subcontract work includes helicopter airframes,
composite rotor blades, and component work. Current aerostructure
and helicopter subcontract programs include production of wing
structures and various components for virtually all Boeing
commercial aircraft, fuselages and rotor blades for MD Helicopters,
and components for military aircraft such as the C-17 military
transport, the F-22 fighter and the Comanche helicopter. As Boeing
is the largest customer of the segment's subcontract business,
management is monitoring the drop off in commercial aircraft orders
and the impact this may have on production in the next two years.
Management is in the process of identifying opportunities to
leverage the strengths of the aerospace business and is also
focused on building upon its well recognized expertise in aerospace
subcontracting and advanced technology products. For example, in
December 2001 the corporation acquired Plastic Fabricating Company,
Inc., a Wichita, Kansas manufacturer of composite parts and
assemblies for aerospace applications. This acquisition provides
the segment with a presence in one of the largest aerospace
manufacturing areas in the United States and complements its
existing composites and metal bonding operations.
The Aerospace segment's advanced technology products include safe,
arm and fuzing devices for several missile programs; high
reliability memory systems for airborne, shipboard, and ground-
based programs; precision non-contact measuring systems for
industrial and scientific use; high-performance microwave cable
assemblies for aircraft electronic warfare devices and other
Page 4
applications; and high-power permanent magnet motors used
commercially in the oil service and transportation industries and
for military uses.
In late 2001, Kaman Aerospace Corporation, the subsidiary that
accounted for 80% of Aerospace segment net sales in 2001, undertook
a realignment of its product line management structure in an effort
to increase market development of its core capabilities while
improving efficiency, enhancing customer service and reducing
costs. During 2001, the Aerospace segment also continued
implementation of `Lean-Thinking' strategies throughout the
organization in order to further enhance efficiency and reduce
costs.
INDUSTRIAL DISTRIBUTION
The Industrial Distribution segment consists of Kaman Industrial
Technologies Corporation and its Canadian subsidiary, Kaman
Industrial Technologies, Ltd. In March, 2002, Kaman Industrial
Technologies Corporation acquired a majority ownership interest
in Delamac de Mexico S.A. de C.V., a Mexican corporation.
This segment is one of the nation's larger industrial distributors,
supplying OEM and replacement parts to more than 50,000 customers
representing nearly every industry sector. The segment's catalog of
more than one million individual items includes an extensive array
of power transmission, motion control, materials handling and
electrical components, and a wide range of bearings. The segment
maintains a sophisticated warehouse management system, a network of
over 170 branches across the U.S. and British Columbia, Canada and
strategically located distribution centers, all of which helps the
segment to provide same-day or next-day delivery for most of its
offerings. The products that the segment purchases for
distribution are for the most part derived from traditional
technologies, although the segment is increasingly selling products
with the higher technological content required to support automated
production processes.
In addition to providing products, the segment uses its know-how to
help its customers solve problems, drive out inefficiencies and
become more profitable and competitive in their own markets. The
segment continues to move forward with its e-commerce initiatives
to provide customers the convenience of ordering products online
and accessing real-time account information on the Internet.
Page 5
This channel represents a small portion of total sales today,
however it is expected to become an increasingly important method
of doing business.
At the end of the third quarter of 2001, the segment acquired the
industrial distribution business of A-C Supply, Inc. of Milwaukee,
Wisconsin. This acquisition strengthens the segment's presence in
key industrial markets in the upper Midwest, where it has had
limited presence, and will facilitate service to national account
customers with operating plants in that region. This acquisition is
in keeping with management's intention to build value for the
segment through both acquisitions and internal growth.
In March, 2002, the segment acquired a majority ownership interest
in Delamac de Mexico S.A. de C.V., a Mexican distributor of
industrial products headquartered in Mexico City. This
acquisition provides the segment with access to Mexico's
industrial markets and enhances its ability to service
the Mexico-based operations of its North American customers.
Since the segment's customers include many sectors of U.S.
industry, this business is influenced by industrial production
levels and was adversely affected in 2001 by a weakened
manufacturing sector that brought the industrial production index
(the key economic indicator for this business) to levels not seen
since the early 1980s. The segment was also impacted by specific
events affecting particular customer industries, such as the effect
that the energy crisis in the West had on the aluminum industry.
The segment had taken steps to implement workforce adjustments and
control costs in late 2000 and as economic conditions worsened in
2001, the corporation implemented further reductions and
efficiencies. These efforts, along with good results with business
retention efforts and certain new national account awards, helped
the segment to remain profitable in 2001 despite lower sales.
MUSIC DISTRIBUTION
The Music Distribution segment consists of Kaman Music
Corporation, KMI Europe, Inc., and a Canadian subsidiary,
B & J Music Ltd.
This segment is the largest independent distributor of musical
instruments and accessories, offering more than 10,000
products that reach musicians of all capabilities and skill
levels. Products include the segment's proprietary Ovation
(Registered Trademark) and Hamer (Registered Trademark) guitars,
as well as the Takamine (Registered Trademark) guitar line, Toca
percussion instruments, Gibraltar drum hardware, and an extensive
Page 6
offering of other musical instruments and accessories. In 2001,
the segment also completed the first year of its exclusive
distribution and sales license with Fred Gretsch Enterprises,
successfully launching its high quality Gretsch drum kit lines in
domestic and foreign markets.
Segment results for 2001 were affected by weakened consumer
markets both domestically and abroad, although a better than
expected Christmas season helped to mitigate some of the year's
sales shortfall.
During 2001, the segment continued its focus on `Lean-Thinking'
strategies and was able to enhance operating efficiencies and
improve customer service as a result. During the year, the segment
completed the consolidation of two warehouses into one state-of-
the-art facility. The segment also implemented an electronic data
exchange program that allows the sharing of data and information
directly with customers, providing a value-added tool that
customers use to place orders, verify order status, and check
inventory availability at any time.
FINANCIAL INFORMATION
Information concerning each segment's performance for the
last three fiscal years is included in the corporation's 2001
Annual Report to Shareholders (Exhibit 13 to this Form 10-K)
and is incorporated herein by reference.
PRINCIPAL PRODUCTS AND SERVICES
Following is information for the three preceding fiscal
years concerning the percentage contribution of each business
segment's products and services to the corporation's
consolidated net sales:
Years Ended December 31
1999 2000 2001
------ ------ ------
Aerospace 37.3% 37.0% 34.4%
Industrial Distribution 50.8% 50.5% 51.8%
Music Distribution 11.9% 12.5% 13.8%
------ ------ ------
Total 100.0% 100.0% 100.0%
Page 7
RESEARCH AND DEVELOPMENT EXPENDITURES
Government sponsored research expenditures by the
Aerospace segment were $6.7 million in 2001, $10.2 million in
2000, and $11.3 million in 1999. Independent research and
development expenditures were $4.7 million in 2001, $5.5 million
in 2000, and $4.9 million in 1999.
BACKLOG
Program backlog of the Aerospace segment was approximately
$364.9 million at December 31, 2001, $439.9 million at
December 31, 2000, and $580.1 million at December 31, 1999. As the
Aerospace segment completes its work on the commercial contracts
with the governments of Australia and New Zealand, the segment's
backlog is decreasing and returning to more historic levels.
The corporation anticipates that approximately 57.7% of its
backlog at the end of 2001 will be performed in 2002.
Approximately 16.6% of the backlog at the end of 2001 is related
to U.S. government contracts or subcontracts which are included
in backlog to the extent that funding has been appropriated by
Congress and allocated to the particular contract by the relevant
procurement agency. Virtually all of these funded government
contracts have been signed.
GOVERNMENT CONTRACTS
During 2001, approximately 91.8% of the work performed by
the corporation directly or indirectly for the U.S. government
was performed on a fixed-price basis and the balance was
performed on a cost-reimbursement basis. Under a fixed-price
contract, the price paid to the contractor is negotiated at the
Page 8
outset of the contract and is not generally subject to
adjustment to reflect the actual costs incurred by the
contractor in the performance of the contract. Cost
reimbursement contracts provide for the reimbursement of
allowable costs and an additional negotiated fee.
The corporation's United States government contracts and
subcontracts contain the usual required provisions permitting
termination at any time for the convenience of the government
with payment for work completed and associated profit at the
time of termination.
COMPETITION
The Aerospace segment operates in a highly competitive
environment with many other organizations which are
substantially larger and have greater financial and other
resources. The corporation competes with other helicopter
manufacturers on the basis of price, performance, and mission
capabilities; and also on the basis of its experience as a
manufacturer of helicopters, the quality of its products and
services, and the availability of facilities, equipment and
personnel to perform contracts. Consolidation in the industry
has increased the level of international competition for
helicopter programs. The corporation is also affected by the
political and economic circumstances of its potential foreign
customers. The corporation's FAA certified K-MAX helicopters
compete with military surplus helicopters and other used
commercial helicopters employed for lifting, as well as with
alternative methods of meeting lifting requirements. The
corporation competes for its subcontract aerostructures,
helicopter structures and components business on the basis of
price and quality; product endurance and special performance
characteristics; proprietary knowledge; and the reputation of the
corporation.
Industrial distribution operations are subject to a high
degree of competition from several other national distributors,
two of which are substantially larger than the corporation;
and from many regional and local firms. Competitive forces
have intensified as a result of weakness in the U.S. manufacturing
sector during 2001 and as major competitors grow through
consolidation.
Page 9
Music distribution operations compete with domestic and
foreign distributors. Certain musical instrument products
manufactured by the corporation are subject to competition from
U.S. and foreign manufacturers as well. The corporation competes
in these markets on the basis of service, price, performance, and
inventory variety and availability. The corporation also competes
on the basis of quality and market recognition of its music
products and has established certain trademarks and trade names
under which certain of its music products are produced, as well as
under private label manufacturing in a number of foreign
countries.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking information relating to the
corporation's business and prospects, including the SH-2G and
K-MAX helicopter programs, aerostructures, helicopter structures,
and components, the industrial and music distribution businesses,
operating cash flow, and other matters that involve a number of
uncertainties that may cause actual results to differ materially
from expectations. Those uncertainties include, but are not
limited to: 1) the successful conclusion of competitions and
thereafter contract negotiations with government authorities,
including foreign governments; 2) political developments in
countries where the corporation intends to do business; 3)
standard government contract provisions permitting renegotiation
of terms and termination for the convenience of the government; 4)
economic and competitive conditions in markets served by the
corporation, including industry consolidation in the United States
and global economic conditions; 5) timing of satisfactory
completion of the Australian SH-2G(A) program; 6) timing, degree
and scope of market acceptance for products such as a repetitive
lift helicopter; 7) U.S. industrial production levels; 8) changes
in supplier sales policies; 9) the effect of price increases or
decreases; 10) currency exchange rates, taxes, laws and
regulations, inflation rates, general business conditions and
other factors; 11) effects of the September 11, 2001 attacks on
the World Trade Center in New York and the Pentagon in Washington,
D.C. Any forward-looking information should be considered with
these factors in mind.
Page 10
EMPLOYEES
As of December 31, 2001, the Corporation employed 3,780
individuals throughout its business segments and corporate
headquarters as follows:
Aerospace 1,900
Industrial Distribution 1,457
Music Distribution 361
Corporate Headquarters 62
-----
3,780
PATENTS AND TRADEMARKS
The corporation holds patents reflecting scientific and
technical accomplishments in a wide range of areas covering both
basic production of certain products, including aerospace
products and musical instruments, as well as highly specialized
devices and advanced technology products in defense related
and commercial fields.
Although the corporation's patents enhance its competitive
position, management believes that none of such patents or patent
applications is singularly or as a group essential to its
business as a whole. The corporation holds or has applied for
U.S. and foreign patents with expiration dates that range through
the year 2021.
These patents are allocated among the corporation's business
segments as follows:
U.S. PATENTS FOREIGN PATENTS
Segment Issued Pending Issued Pending
Aerospace 59 4 28 6
Industrial Distribution 0 0 0 0
Music Distribution 6 1 2 12
-- -- -- --
65 5 30 18
Page 11
Trademarks of Kaman Corporation include Adamas, Applause,
Hamer, KAflex, KAron, K-MAX, Magic Lantern, and Ovation. In all,
the corporation maintains 205 U.S. and foreign trademarks with 16
applications pending, most of which relate to music products in
the Music Distribution segment.
COMPLIANCE WITH ENVIRONMENTAL PROTECTION LAWS
In the opinion of management, based on the corporation's
knowledge and analysis of relevant facts and circumstances,
compliance with any environmental protection laws is not likely
to have a material adverse effect upon the capital expenditures,
earnings or competitive position of the corporation or any of
its subsidiaries.
The corporation is subject to the usual reviews, inspections
and enforcement actions by various federal and state
environmental and enforcement agencies and has entered into
agreements and consent decrees at various times in connection with
such reviews. One such matter, Rocque vs. Kaman, is discussed in
Item 3 (Legal Proceedings). Also on occasion the corporation has
been identified as a potentially responsible party ("PRP") by the
U.S. Environmental Protection Agency ("EPA") in connection with
the EPA's investigation of certain third party facilities. In
each instance, the corporation has provided appropriate responses
to all requests for information that it has received, and the
matters have been resolved either through de minimis settlements,
consent agreements, or through no further action being taken by
the EPA or the applicable state agency with respect to the
corporation. With respect to any such matters which may
currently be pending, the corporation has been able to determine,
based on its current knowledge, that resolution of such matters
is not likely to have a material adverse effect on the future
financial condition of the corporation.
In arriving at this conclusion, the corporation has taken
into consideration site-specific information available regarding
total costs of any work to be performed, and the extent of work
previously performed. Where the corporation has been identified
as a PRP at a particular site, the corporation, using information
available to it, also has reviewed and considered a number of
other factors, including: (i) the financial resources of other
PRPs involved in each site, and their proportionate share of the
total volume of waste at the site; (ii) the existence of
Page 12
insurance, if any, and the financial viability of the insurers;
and (iii) the success others have had in receiving reimbursement
for similar costs under similar policies issued during the
periods applicable to each site.
FOREIGN SALES
Seventeen percent (17%) of the sales of the corporation made
in 2001 were to customers located outside the United States. In
2001, the corporation continued its efforts to develop
international markets for its products and foreign sales
(including sales for export); and during 2001 the corporation
continued to perform work under contracts with the Commonwealth
of Australia and the Government of New Zealand for the supply of
retrofit SH-2G helicopters. Additional information required by
this item is included in the corporation's 2001 Annual Report to
Shareholders (Exhibit 13 to this Form 10-K)and is incorporated
herein by reference.
ITEM 2. PROPERTIES
The corporation occupies approximately 3.393 million square
feet of space throughout the United States and in Canada and
Australia, distributed as follows:
SEGMENT SQUARE FEET
(in thousands as of 12/31/01)
Aerospace 1,755
Industrial Distribution 1,194
Music Distribution 404
Corporate Headquarters 40
-----
Total 3,393
The Aerospace segment's principal facilities are located in
Arizona, Connecticut, Florida, Kansas and Massachusetts; other
facilities including offices and smaller manufacturing and
assembly operations are located in several other states. These
facilities are used for manufacturing, research and development,
engineering and office purposes. The U.S. Government owns
154 thousand square feet of the space occupied by Kaman
Page 13
Aerospace Corporation in Bloomfield, Connecticut in accordance
with a Facilities Lease Agreement with a five (5) year term
expiring in March 2003. The corporation also occupies a
facility in Nowra, New South Wales, Australia under a contract
providing for a ten (10) year term expiring in June, 2010.
The Industrial Distribution segment's facilities are located
throughout the United States with principal facilities located in
California, Connecticut, New York, Kentucky and Utah. Additional
Industrial Distribution segment facilities are located in British
Columbia, Canada. These facilities consist principally of regional
distribution centers, branches and office space with a portion
used for fabrication and assembly work.
The Music Distribution segment's facilities in the United
States are located in Connecticut, California, and Tennessee.
An additional Music Distribution facility is located in Ontario,
Canada. These facilities consist principally of regional
distribution centers, source centers and office space. Also
included are facilities used for manufacturing musical
instruments.
The corporation occupies a 40 thousand square foot Corporate
headquarters building in Bloomfield, Connecticut.
The corporation's facilities are suitable and adequate to
serve its purposes and substantially all of such properties
are currently fully utilized. Many of the properties, especially
within the Industrial Distribution segment, are leased.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the
corporation or any of its subsidiaries is a party or to which any
of their property is subject. Legal proceedings or enforcement
actions relating to environmental matters are discussed in the
section entitled Compliance with Environmental Protection Laws.
The corporation is presently in settlement discussions with the
Connecticut Department of Environmental Protection regarding the
matter referred to as Rocque vs. Kaman previously reported by the
corporation in its report on Form 10-K for fiscal year ended
December 31, 2000, Document No. 0000054381-01-500002 filed with the
Securities and Exchange Commission on March 15, 2001. The
complaint in this matter alleges certain regulatory violations (the
majority of which are administrative in nature) at facilities
located in Connecticut related to routine inspections which took
place between 1988 and 1998. The complaint seeks civil penalties
and injunctive relief. Management believes that in all cases where
corrective action was required at the time of such inspections,
such action was promptly taken. Management does not anticipate
that the resolution of this matter will be material to the business
or financial condition of the corporation.
Page 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security
holders during the fourth quarter of 2001.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
CAPITAL STOCK AND PAID-IN CAPITAL
Information required by this item is included in the
corporation's 2001 Annual Report to Shareholders (Exhibit 13
to this Form 10-K) and is incorporated herein by reference.
INVESTOR SERVICES PROGRAM
Shareholders of Kaman Class A common stock are eligible to
participate in the Mellon Investor Services Program
administered by Mellon Bank, N.A. which offers a variety of
services including dividend reinvestment. A booklet describing
the program may be obtained by writing to the program's
Administrator, Mellon Bank, N.A., P. O. Box 3338, South
Hackensack, NJ 07606-1938.
Page 15
QUARTERLY CLASS A COMMON STOCK INFORMATION
- -----------------------------------------------------------------
High Low Close Dividend
2001
First $19.50 $13.31 $16.38 $.11
Second 18.18 14.70 17.70 .11
Third 17.95 12.26 13.24 .11
Fourth 16.38 10.90 15.60 .11
- -----------------------------------------------------------------
2000
First $12.81 $8.77 $9.75 $.11
Second 11.69 9.44 10.69 .11
Third 15.25 10.50 12.63 .11
Fourth 17.75 11.00 16.88 .11
- -----------------------------------------------------------------
QUARTERLY DEBENTURE INFORMATION (6% Conv. Subordinated)
- -----------------------------------------------------------------
High Low Close
2001
First $ 92.00 $82.00 $ 92.00
Second 98.00 90.00 98.00
Third 99.00 98.00 99.00
Fourth 96.00 90.00 96.00
- -----------------------------------------------------------------
2000
First $ 94.00 $86.00 $88.00
Second 93.00 82.00 82.00
Third 90.00 82.00 84.00
Fourth 92.00 84.00 87.00
- -----------------------------------------------------------------
NASDAQ market quotations reflect inter-dealer prices,
without retail mark-up, mark-down, or commission and may not
necessarily represent actual transactions.
Page 16
ANNUAL MEETING
The Annual Meeting of Shareholders of the corporation will
be held on Tuesday, April 16, 2002 at 11:00 a.m. in the offices
of the corporation, 1332 Blue Hills Avenue, Bloomfield,
Connecticut 06002. Holders of all classes of Kaman securities
are invited to attend, however it is expected that matters on
the agenda for the meeting will require the vote of Class B
shareholders only.
ITEM 6. SELECTED FINANCIAL DATA
Information required by this item is included in the
corporation's 2001 Annual Report to Shareholders (Exhibit 13
to this Form 10-K) and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Information required by this item is included in the
corporation's 2001 Annual Report to Shareholders (Exhibit 13
to this Form 10-K) and is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
The corporation has various market risk exposures that arise
from its normal business operations, including currency
exchange rates, supplier price changes, and interest rates as well
as other factors described in the Forward-Looking Statements
section of this report.
The corporation's exposure to currency exchange rates is
managed at the corporate and subsidiary operations levels as
an integral part of the business.
The corporation's exposure to supplier sales policies and
price changes relates primarily to its distribution businesses and
the corporation seeks to manage this risk through its procurement
policies and maintenance of favorable relationships with suppliers.
The corporation's exposure to interest rate risk relates
primarily to its financial instruments, which include short-term
Page 17
investments with market interest rates and debt obligations with
fixed interest rates. Currently the corporation has limited
exposure in this area due to the level of its fixed rate debt
obligation and borrowings under its financing arrangements, however
this exposure is expected to increase during 2002. Interest rate
risk is managed through the use of a combination of fixed rate
long-term debt and variable rate borrowings under its financing
arrangements. Letters of credit are generally considered borrowings
for purposes of the corporation's revolving credit agreement; they
are not subject to interest rate risk, however, fees are charged
based upon the corporation's usage and credit rating.
There has been no significant change in the corporation's
exposure to these market risk factors during the year 2001.
Management believes that any near-term change in the market risk
factors described above should not materially affect the
consolidated financial position, results of operations or cash
flows of the corporation.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item is included in the
corporation's 2001 Annual Report to Shareholders (Exhibit 13
to this Form 10-K) and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Page 18
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Following is information concerning each Director, Director
Nominee and Executive Officer of Kaman Corporation including name,
age, position with the corporation, and business experience during
the last five years:
Brian E. Barents Mr. Barents, 58, has been a Director
since 1996. He is the retired President
and Chief Executive Officer of Galaxy
Aerospace Company L.P. Prior to that
he was President and Chief Executive
Officer of Learjet, Inc.
T. Jack Cahill Mr. Cahill, 53, has held various
positions with Kaman Industrial
Technologies Corporation, a subsidiary
of the corporation, since 1975, and has
been President of that subsidiary since
1993.
E. Reeves Callaway, III Mr. Callaway, 54, has been a Director
since 1995. He is the Founder of The
Callaway Companies, an engineering
services firm.
Frank C. Carlucci Mr. Carlucci, 71, has been a Director
since 1989. Prior to that he served as
U.S. Secretary of Defense. He is
Chairman of The Carlyle Group, merchant
bankers, and Chairman of Nortel Networks
Corporation. Mr. Carlucci is also a
director of Ashland, Inc., Neurogen
Corporation, Pharmacia Corp., Sun
Resorts, Ltd., N.V., United Defense, LP,
and Texas Biotechnology Corporation.
Laney J. Chouest, M.D. Dr. Chouest, 48, has been a Director
since 1996. He is Owner-Manager
of Edison Chouest Offshore, Inc.
Page 19
Candace A. Clark Ms. Clark, 47, has been Senior Vice
President, Chief Legal Officer and
Secretary since 1996. Prior to that
she served as Vice President and
Counsel. Ms. Clark has held various
positions with the corporation since
1985.
John A. DiBiaggio Dr. DiBiaggio, 69, has been a Director
since 1984. He is now President
Emeritus of Tufts University, having
served as President until the fall of
2001. Prior to that he was President
and Chief Executive Officer of Michigan
State University.
Ronald M. Galla Mr. Galla, 50, has been Senior Vice
President and Chief Information Officer
since 1995. Prior to that he served as
Vice President and director of the
corporation's Management Information
Systems, a position which he held since
1990. Mr. Galla has been director of
the corporation's Management
Information Systems since 1984.
Robert M. Garneau Mr. Garneau, 57, has been Executive
Vice President and Chief Financial
Officer since 1995. Previously he
served as Senior Vice President,
Chief Financial Officer and
Controller. Mr. Garneau has
held various positions with the
corporation since 1981.
Huntington Hardisty Admiral Hardisty (USN-Ret.), 73,
is the retired President of Kaman
Aerospace International Corporation,
a subsidiary of the corporation.
He has been a Director since 1991
and serves as a consultant
to the corporation. He retired from
the U.S. Navy in 1991 having served
as Commander-in-Chief for the U.S.
Navy Pacific Command since 1988.
Page 20
Edwin A. Huston Mr. Huston, 63, is a nominee for
election as a director at the 2002
Annual Meeting of Shareholders. Mr.
Huston is the retired Vice Chairman
of Ryder System, Incorporated,
an international logistics and
transportation solutions company. He
also served as Senior Executive Vice
President Finance and Chief
Financial Officer of that company and
had held various positions with that
company since 1973. Mr. Huston is a
director of Unisys Corporation,
Answerthink, Inc. and Enterasys
Networks, Inc.
C. William Kaman II Mr. Kaman, 50, has been a Director
since 1992 and is Vice Chairman of the
board of directors of the corporation.
He is Chairman and CEO of AirKaman of
Jacksonville, Inc., an entity
unaffiliated with the corporation.
Previously he was Executive Vice
President of the corporation and was
President of Kaman Music Corporation,
a subsidiary of the corporation.
John C. Kornegay Mr. Kornegay, 52, has been President of
Kamatics Corporation, a subsidiary of
the corporation, since 1999, and has
held various positions with Kamatics
Corporation since 1988.
Eileen S. Kraus Ms. Kraus, 63, has been a Director
since 1995. She is the retired
Chairman of Fleet Bank Connecticut.
She is a director of The Stanley Works
and Rogers Corporation.
Paul R. Kuhn Mr. Kuhn, 60, has been a Director since
1999. He has been President and Chief
Executive Officer of the corporation
since August 1999 and was appointed to
the additional position of Chairman in
April, 2001. From 1998 to 1999 he was
Senior Vice President, Operations,
Aerospace Engine Business, for Coltec
Industries, Inc. Prior to that
he was Group Vice President, Coltec
Industries, Inc. and President of its
Chandler Evans division. He is a
director of the Connecticut Business
and Industry Association.
Page 21
Joseph H. Lubenstein Mr. Lubenstein, 54, was appointed
President of Kaman Aerospace
Corporation, a subsidiary of the
corporation, in July, 2001. Prior to
that, he served for many years in a
variety of senior management positions
at Pratt & Whitney, a subsidiary of
United Technologies Corporation, most
recently as Vice President - Quality and
Vice President - Materials.
Walter H. Monteith, Jr. Mr. Monteith, 71, has been a Director
since 1987. He is the retired Chairman
of Southern New England Telecommuni-
cations Corporation.
Wanda L. Rogers Mrs. Rogers, 69, has been a Director
since 1991. She is President and Chief
Executive Officer of Rogers
Helicopters, Inc. She is also a
director of Clovis Community Bank.
Robert H. Saunders, Jr. Mr. Saunders, 60, became President of
Kaman Music Corporation, a subsidiary
of the corporation, in 1998. Prior to
that, he served as Senior Vice
President of the corporation from 1995
and also held the position of Senior
Executive Vice President of Kaman Music
Corporation during a portion of that
period.
Richard J. Swift Mr. Swift, 57, is a nominee for election
as a director at the 2002 Annual Meeting
of Shareholders. Mr. Swift is currently
Chairman of the Financial Accounting
Standards Advisory Council. In 2001, he
retired as Chairman, President and Chief
Executive Officer of Foster Wheeler
Corporation, a provider of design,
engineering, construction,
manufacturing, research, plant
operations and environmental services, a
position he held since 1994. Prior to
that, Mr. Swift held various positions
at Foster Wheeler, having joined the
company in 1972. Mr. Swift is a
director of Ingersoll-Rand Company and
Public Service Enterprise Group
Incorporated.
Page 22
Each Director and Executive Officer has been elected for a
term of one year and until his or her successor is elected.
The terms of all Directors and Executive Officers are expected
to expire as of the Annual Meeting of the Shareholders and
Directors of the corporation to be held on April 16, 2002.
Section 16(a) Beneficial Ownership Reporting Compliance.
Based upon information provided to the corporation by
persons required to file reports under Section 16(a) of the
Securities Exchange Act of 1934, no Section 16(a) reporting
delinquencies occurred in 2001.
ITEM 11. EXECUTIVE COMPENSATION
A) GENERAL. The following tables provide certain information
relating to the compensation of the corporation's Chief
Executive Officer, its four other most highly compensated
executive officers, and one retired executive officer who would
have been included in these tables but for the fact that he was
not serving as an executive officer at December 31, 2001.
B) SUMMARY COMPENSATION TABLE.
Annual Compensation Long Term Compensation
------------------- ----------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
All
Name and Other AWARDS Other
Principal Salary Bonus Annual RSA Options/SARs LTIP Comp.
Position Year ($) ($) Comp.(1)($)(2) (#Shares) Payments ($)(3)
- ---------------------------------------------------------------------------
P. R. Kuhn 2001 762,500 300,000 ------- 261,000 25,000/ --- 15,630
Chairman, 65,000
President and
Chief 2000 650,000 570,000 ------- 154,688 20,000/ --- 11,924
Executive 50,000
Officer 1999 250,000(4) 360,000 ------- 706,250 100,000/--- 3,661
180,000
R.M.Garneau 2001 450,000 150,000 ------- 163,125 12,500/ --- 25,056
Executive 40,000
Vice Pres- 2000 425,000 310,000 ------- 77,344 10,000/ --- 25,181
ident and 30,000
Chief 1999 400,000 175,000 ------- 43,500 9,000/ --- 12,329
Financial 30,000
Officer
Page 23
Annual Compensation Long Term Compensation
------------------- ----------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
All
Name and Other AWARDS Other
Principal Salary Bonus Annual RSA Options/SARs LTIP Comp.
Position Year ($) ($) Comp.(1)($)(2) (#Shares) Payments ($)(3)
- ---------------------------------------------------------------------------
T.J.Cahill 2001 280,000 90,000 ------- 97,875 9,000/ --- 15,077
President, 20,000
Kaman 2000 260,000 160,000 ------- 41,250 6,000/ --- 15,670
Industrial 15,000
Technologies 1999 255,000 51,000 ------- 36,250 7,500/ --- 7,449
Corporation 15,000
C.A. Clark 2001 255,000 68,000 ------- 138,656 10,500/ --- 11,339
Sr. Vice 0
President 2000 240,000 140,000 ------- 51,563 7,500/ --- 12,590
and Chief 0
Legal 1999 225,000 75,000 ------- 58,000 6,000/ --- 5,666
Officer 0
R.H.Saunders Jr.
President, 2001 235,000 85,000 ------- 81,563 8,000/ --- 15,681
Kaman Music 15,000
Corporation 2000 210,000 110,000 ------- 41,250 6,000/ --- 13,832
10,000
1999 200,000 61,000 ------- 58,000 6,000/ --- 6,536
5,000
W.R. Kozlow 2001 325,000 ------- 66,196 114,188 10,500/ --- 21,866
President, 20,000
Kaman 2000 300,000 160,000 ------- 61,875 9,000/ --- 26,341
Aerospace 25,000
Corporation 1999 275,000 140,000 ------- 36,250 7,500/ --- 18,150
(retired) 20,000
1. The corporation maintains a program pursuant to which it
provides a company vehicle to designated executives and reimburses
such executives for the maintenance of the vehicle. Amounts
reported in this column include $52,346 attributable to W.R.
Kozlow.
Page 24
2. As of December 31, 2001, aggregate restricted stock holdings
and their year end value were: P.R. Kuhn, 58,000 shares valued at
$904,800; R.M. Garneau, 22,300 shares valued at $347,880; T.J.
Cahill, 13,900 shares valued at $216,840; C.A. Clark, 16,500 shares
valued at $257,400; R.H. Saunders, Jr., 11,800 shares valued at
$184,080; and W.R. Kozlow, no shares. Restrictions lapse at the
rate of 20% per year for all awards, beginning one year after the
grant date provided recipient remains an employee of the
corporation or a subsidiary. Awards reported in this column are
as follows: P. R. Kuhn, 16,000 shares in 2001, 15,000 shares in
2000 and 50,000 shares in 1999; R. M. Garneau, 10,000 shares in
2001, 7,500 shares in 2000, and 3,000 shares in 1999;
T. J. Cahill, 6,000 shares in 2001, 4,000 shares in 2000, and
2,500 shares in 1999; C.A. Clark, 8,500 shares in 2001, 5,000
shares in 2000, and 4,000 shares in 1999; R. H. Saunders, Jr.,
5,000 shares in 2001, 4,000 shares in 2000, and 4,000 in 1999;
W.R. Kozlow, 7,000 shares in 2001, 6,000 shares in 2000, and 2,500
shares in 1999. Dividends are paid on the restricted stock.
3. Amounts reported in this column consist of: P.R. Kuhn, $9,271
- - Senior executive life insurance program ("Executive
Life"), $4,250 - employer matching contributions to the Kaman
Corporation Thrift and Retirement Plan (the "Thrift Plan
employer match"); $2,109 - medical expense reimbursement program
(MERP); R.M. Garneau, $7,340 - Executive Life, $851 - Officer 162
Insurance Program, $4,250 - Thrift Plan employer match, $1,865 -
MERP, $10,750 - all supplemental employer contributions under the
Kaman Corporation Deferred Compensation Plan ("supplemental
employer contributions"); T. J. Cahill, $4,218 - Executive Life,
$4,250 - Thrift Plan employer match, $1,610 - MERP, $5,000
supplemental employer contributions; C.A. Clark, $1,912 - Executive
Life, $4,250 - Thrift Plan employer match, $1,352 -
MERP, $3,825 - supplemental employer contributions; R.H. Saunders,
Jr., $6,146 - Executive Life, $4,250 - Thrift Plan employer
match, $2,885 - MERP, $2,400 - supplemental employer
contributions; W.R. Kozlow, $13,444 - Executive Life, $4,250 -
Thrift Plan employer match, $4,171 - MERP.
4. P.R. Kuhn joined the corporation on August 2, 1999 as
President and Chief Executive Officer.
Page 25
C) OPTION/SAR GRANTS IN THE LAST FISCAL YEAR:
- ----------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term*
- ----------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options/
SARs**
Options/ Granted to
SARs** Employees Exercise or
Granted in Fiscal Base Price Expiration
Name (#) Year ($/Sh) Date 5%($) 10%($)
- ----------------------------------------------------------------------------
P. R. Kuhn 25,000/ 7.46/ 16.3125 2/13/11 923,295.92 2,339,813.15
65,000 31.71
R. M. Garneau 12,500/ 3.73/ 16.3125 2/13/11 538,589.29 1,364,891.00
40,000 19.51
T. J. Cahill 9,000/ 2.69/ 16.3125 2/13/11 297,506.46 753,939.79
20,000 9.76
C. A. Clark 10,500/ 3.13/ 16.3125 2/13/11 107,717.86 272,978.20
0 0.00
R. H. Saunders 8,000/ 2.39/ 16.3125 2/13/11 235,953.40 597,952.25
15,000 7.32
W. R. Kozlow 10,500/ 3.13/ 16.3125 2/13/11 312,894.73 792,936.68
20,000 9.76
*The information provided herein is required by Securities and
Exchange Commission rules and is not intended to be a projection
of future common stock prices.
**Stock Appreciation Rights (SARs) are payable in cash only,
not in shares of common stock.
Options and SARs relate to the corporation's Class A common
stock and vest at the rate of 20% per year, beginning one
year after the grant date.
Page 26
D) AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR, AND
FISCAL YEAR-END OPTION/SAR VALUES.
Number of
Shares under- Value of
lying Unexercised
Unexercised in-the-money
options options*
Shares at FY-end (#) at FY-end ($)
acquired on Value exercisable/ exercisable/
Name Exercise(#) realized unexercisable unexercisable
(a) (b) (c) (d) (e)
- -------------------------------------------------------------------
P. R. Kuhn none - 44,000/101,000 80,150/173,100.00
R. M. Garneau 3,000 26,625 44,600/30,900 172,172.50/52,940.00
T. J. Cahill 8,500 85,850 32,400/23,100 105,277.50/34,560.00
C. A. Clark 500 4,531 16,900/23,100 53,790.00/38,035.00
R. H. Saunders none - 12,000/19,000 30,300.00/30,750.00
W. R. Kozlow 3,000 22,140 69,000/0 210,600.00/0
Page 27
Value of
Number of Unexercised
Unexercised in-the-money
SARs SARs*
SARs at FY-end (#) at FY-end ($)
acquired on Value exercisable/ exercisable/
Name Exercise(#) realized unexercisable unexercisable
(a) (b) (c) (d) (e)
- ------------------------------------------------------------------
P. R. Kuhn none none 82,000/213,000 159,075/370,800
R. M. Garneau " " 105,500/107,000 232,925/193,700
T. J. Cahill " " 53,500/54,000 116,452.50/96,850
C. A. Clark " " 0/0 0/0
R. H. Saunders " " 4,000/26,000 12,775/45,600
W. R. Kozlow 55,000 271,487.50 70,000/0 69,000/0
*Difference between the 12/31/01 Fair Market Value ($15.60 per share)
and the exercise price(s).
Page 28
E) LONG TERM INCENTIVE PLAN AWARDS: Except as described above,
no long term incentive plan awards were made to any named
executive officer in the last fiscal year.
F) PENSION AND OTHER DEFINED BENEFIT DISCLOSURE. The
following table shows estimated annual benefits payable at
normal retirement age to participants in the corporation's
Pension Plan at various compensation and years of service
levels using the benefit formula applicable to Kaman
Corporation. Pension benefits are calculated based on
60 percent of the average of the highest five consecutive
years of "covered compensation" out of the final ten years
of employment less 50 percent of the primary social security
benefit, reduced proportionately for years of service less than 30
years:
PENSION PLAN TABLE
Years of Service
Remuneration* 15 20 25 30 35
- ---------------------------------------------------------------
125,000 32,889 44,071 54,596 65,778 65,778
150,000 40,389 54,121 67,046 80,778 80,778
175,000 47,889 64,171 79,496 95,778 95,778
200,000 55,389 74,221 91,946 110,778 110,778
225,000 62,889 84,271 104,396 125,778 125,778
250,000 70,389 94,321 116,846 140,778 140,778
300,000 85,389 114,421 141,746 170,778 170,778
350,000 100,389 134,521 166,646 200,778 200,778
400,000 115,389 154,621 191,546 230,778 230,778
450,000 130,389 174,721 216,446 260,778 260,778
500,000 145,389 194,821 241,346 290,778 290,778
750,000 220,389 295,321 365,846 440,778 440,778
1,000,000 295,389 395,821 490,346 590,778 590,778
1,250,000 370,389 496,321 614,846 740,778 740,778
1,500,000 445,389 596,821 739,346 890,778 890,778
1,750,000 520,389 697,321 863,846 1,040,778 1,040,778
2,000,000 595,389 797,821 988,346 1,190,778 1,190,778
*Remuneration: Average of the highest five consecutive years of
"Covered Compensation" out of the final ten years of service.
Page 29
"Covered Compensation" means "W-2 earnings" or "base
earnings", if greater, as defined in the Pension Plan. W-2
earnings for pension purposes consist of salary (including 401(k)
and Section 125/129 Plan contributions but not deferrals under a
non-qualified Deferred Compensation Plan), bonus and taxable income
attributable to restricted stock awards, stock appreciation
rights, and the cash out of employee stock options. Salary and
bonus amounts for the named Executive Officers for 2001 are as
shown on the Summary Compensation Table. Compensation deferred
under the corporation's non-qualified deferred compensation plan
is included in Covered Compensation here because it is covered by
the corporation's unfunded supplemental employees' retirement
plan for the participants in that plan.
Current Compensation covered by the Pension Plan for any
named executive whose Covered Compensation differs by more than
10% from the compensation disclosed for that executive in the
Summary Compensation Table: Mr. Kuhn, $1,571,390; Mr. Garneau,
$874,543; Mr. Cahill, $520,994; Ms. Clark, $442,863; Mr. Saunders,
$384,848; Mr. Kozlow, $839,582.
Federal law imposes certain limitations on annual pension
benefits under the Pension Plan. For the named executive
officers who are participants, the excess will be paid under the
Corporation's unfunded supplemental employees' retirement plan.
The Executive Officers named in Item 11(b) are participants
in the plan and as of December 31, 2001, had the number of
years of credited service indicated: Mr. Kuhn - 6.0; Mr. Garneau -
20.48 years; Mr. Cahill - 26.7 years; Ms. Clark - 17.0; Mr.
Saunders - 7.0; Mr. Kozlow - 41.7.
Benefits are computed generally in accordance with the
benefit formula described above.
G) COMPENSATION OF DIRECTORS. In general, effective January 1,
2002, non-employee members of the Board of Directors of the
corporation receive an annual retainer of $25,000 and a fee of
$1,200 for attending each meeting of the Board and each meeting of
a Committee of the Board, except that the Chairman of each
committee receives a fee of $1,600 for attending each meeting of
that Committee. The Vice Chairman is entitled to a fee of $2,500
per meeting when serving as the Chairman. Such fees may be received
on a deferred basis. In addition, each non-employee
director will receive a Restricted Stock Award for 500 shares
(issued pursuant to the corporation's Stock Incentive Plan),
providing for immediate vesting upon election as a director at the
corporation's 2002 Annual Meeting of Shareholders.
Page 30
H) EMPLOYMENT CONTRACTS AND TERMINATION, SEVERANCE AND CHANGE
OF CONTROL ARRANGEMENTS. The corporation has an arrangement
with Mr. C. H. Kaman that provides for him to receive an amount
equal to his then current annual base salary for the remainder of
his life as a result of his becoming disabled during active
employment. Mr. Kaman became so disabled effective December 31,
2000.
In addition, the corporation has entered into Employment
Agreements and Change in Control Agreements with certain
executive officers, copies of which were filed as exhibits to the
following filings made by the corporation with the Securities and
Exchange Commission: Form 10-Q (Document 54381-99-14) filed on
November 12, 1999; Form 10-K (Document No. 54381-00-03 filed on
March 21, 2000; and Form 10-Q (Document 54381-00-500006) filed on
November 14, 2000. Form 10-Q filed August 14, 2001 (Document No.
0000054381-01-500011 and Form 10-Q filed November 14, 2001
(Document No. 0000054381-01-500016. The employment agreements do
not have a fixed term and generally provide for a severance payment
to be made to any such officer if he or she is terminated
from employment (other than for willful failure to perform proper
job responsibilities or violations of law) or if he or she leaves
employment for good reason (e.g., due to a diminution in job
responsibilities). The change in control agreements generally
provide that, for a three year period following a change in control
of Kaman Corporation or, in certain cases, a subsidiary
thereof, a severance payment will be made to any such officer if
his or her employment ends following the change in control (unless
the termination was for cause, the officer dies or becomes
disabled or if he or she leaves employment without good reason).
The change in control agreements do not have a fixed term.
Admiral Hardisty's consulting agreement with the Corporation has
been renewed for a period of one year effective March 1, 2002 at a
per diem rate of $1,000.00. A copy of such agreement is attached
as Exhibit 10(f)(I).
The corporation has also entered into an agreement with
Walter Kozlow retaining him as a consultant for a
period of two years following his retirement from regular
employment effective December 31, 2001 at an annual rate of
$242,500. A copy of such agreement was attached to the
corporation's Form 10-Q filed with the Securities and Exchange
Commission on August 14, 2001.
Page 31
Except as disclosed in Item 13, and except as described above
and in connection with the corporation's Pension Plan and the
corporation's non-qualified Deferred Compensation Plan, the
corporation has no other employment contract, plan or arrangement
with respect to any named executive which relates to employment
termination for any reason, including resignation, retirement or
otherwise, or a change in control of the corporation or a change
in any such executive officer's responsibilities following a
change of control, which exceeds or could exceed $100,000.
I) Not Applicable.
J) COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
IN COMPENSATION DECISIONS.
1) The following persons served as members of the Personnel
and Compensation Committee of the Corporation's Board of Directors
during the last fiscal year: Frank C. Carlucci, Brian E. Barents,
Eileen S. Kraus, and Walter H. Monteith, Jr.
None of these individuals was an officer or employee of the
corporation or any of its subsidiaries during either the last
fiscal year or any portion thereof in which he or she served as a
member of the Personnel and Compensation Committee.
2) During the last fiscal year no executive officer of the
corporation served as a director of or as a member of the
compensation committee (or other board committee performing
equivalent functions) of another entity, one of whose executive
officers served as a director of, or on the Personnel and
Compensation Committee of the corporation.
K) Not Applicable.
L) Not Applicable.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.
Following is information about persons known to the
corporation to be beneficial owners of more than five percent
(5%) of the Corporation's voting securities. Ownership is
direct unless otherwise noted.
Page 32
- -----------------------------------------------------------------
Number of Shares
Class of Beneficially Owned
Common Name and Address as of February 1, Percentage
Stock Beneficial Owner 2002 of Class
- -----------------------------------------------------------------
Class B Charles H. Kaman 258,375(1),(2) 38.69%
Kaman Corporation
1332 Blue Hills Avenue
Bloomfield, CT 06002
Holders of Mr. Kaman's see above
Power of Attorney
c/o John C. Yavis, Jr.
Murtha Cullina LLP
CityPlace I
185 Asylum Street
Hartford, CT 06105
Class B Newgate Associates 199,802(3),(4) 29.91%
Limited Partnership
c/o Murtha Cullina, LLP
CityPlace I
185 Asylum Street
Hartford, CT 06103
Voting Trustees pursuant see above
to a Voting Trust
Agreement, dated as of
August 14, 2000
c/o John C. Yavis, Jr.
Murtha Cullina LLP
CityPlace I
185 Asylum Street
Hartford, CT 06105
Class B C. William Kaman, II 64,446(5) 9.65%
c/o AirKaman of
Jacksonville, Inc.
Jacksonville International Airport
14700 Yonge Drive
Jacksonville, FL 32218
Page 33
Class B Robert D. Moses 51,177(6) 7.66%
Farmington Woods
Avon, CT 06001
(1) Excludes 1,471 shares held by Mrs. Kaman. Mr. Kaman shares
beneficial ownership of these shares with the holders of a
Power of Attorney, as described in note (2) below.
(2) The power to vote Mr. Kaman's shares of Class B common stock
is shared through a durable power of attorney (the "Power of
Attorney") with certain individuals who have the authority to
vote Mr. Kaman's shares by majority vote. These individuals
are: John S. Murtha, a director emeritus of the corporation
and of counsel to Murtha Cullina LLP, counsel to the
corporation, Robert M. Garneau, Executive Vice President and
Chief Financial Officer of the corporation, Roberta C. Kaman,
Mr. Kaman's wife, C. William Kaman II, Mr. Kaman's son and a
director and Vice Chairman of the Board of the corporation,
Steven W. Kaman, Mr. Kaman's son, and Cathleen H. Kaman-Wood,
Mr. Kaman's daughter.
(3) These shares are subject to a voting trust agreement dated
August 14, 2000 (the "Voting trust"), as described in note
(4) below. Newgate shares beneficial ownership of such
shares with the voting trustees of such trust, as described
in note (4) below.
(4) The power to vote the shares of Newgate Associates Limited
Partnership is vested in eleven voting trustees (the "Voting
Trustees") under the Voting Trust, which has a term of ten
(10) years, subject to renewal. The Voting Trustees
consist of the six (6) individuals identified in footnote
(2) above and the following five (5) individuals: T. Jack
Cahill, President of Kaman Industrial Technologies
Corporation, a subsidiary of the corporation, Paul R. Kuhn,
Chairman, President, and Chief Executive Officer of the
corporation, Huntington Hardisty and Eileen S. Kraus,
directors of the corporation, and John C. Yavis, Jr., a
partner in the Hartford, Connecticut law firm, Murtha
Cullina LLP, counsel to the corporation.
(5) Excludes 4,800 shares held as trustee for the benefit of
certain family members.
(6) Includes 39,696 shares held by a partnership controlled by
Mr. Moses.
Page 34
(b) SECURITY OWNERSHIP OF MANAGEMENT. The following is
information concerning beneficial ownership of the corporation's
stock by each Director and Director Nominee of the corporation,
each Executive Officer of the corporation named in the Summary
Compensation Table, and all Directors and Executive Officers of
the corporation as a group. Ownership is direct unless otherwise
noted.
Number of Shares
Class of Beneficially Owned Percentage
Name Common Stock as of February 1, 2002 of Class
- --------------------------------------------------------------------
Brian E. Barents Class A 2,500 *
T. Jack Cahill Class A 90,456(1) *
E. Reeves Callaway Class A 2,500 *
Frank C. Carlucci Class A 5,500(2) *
Laney J. Chouest Class A 4,423 *
Candace A. Clark Class A 46,700(3) *
Class B 1,042 *
John A. DiBiaggio Class A 2,500 *
Robert M. Garneau Class A 105,150(4) *
Class B 23,236 3.48%
Huntington Hardisty Class A ------(5) *
Edwin A. Huston TBD
C. William Kaman, II Class A 59,888(6) *
Class B 64,446(7) 9.65%
Walter R. Kozlow Class A 116,500(8) *
Class B 296 *
Paul R. Kuhn Class A 154,163(9) *
Class B 3,288 *
Eileen S. Kraus Class A 3,304 *
Joseph H. Lubenstein Class A 31,144(10) *
Walter H. Monteith, Jr. Class A 2,700 *
Wanda L. Rogers Class A 2,500 *
Robert H. Saunders, Jr. Class A 36,359(11) *
Class B 720 *
Richard J. Swift TBD
All Directors and
Executive Officers Class A 673,759(12) 3.12%
as a group ** Class B 93,148 13.90%
* Less than one percent.
** Excludes 21,900 Class A shares held by spouses of certain
Directors and Executive Officers.
Page 35
(1) Includes 40,200 shares subject to stock options exercisable
or which will become exercisable within 60 days.
(2) Includes 5,000 shares held jointly with Mrs. Carlucci.
(3) Includes 23,700 shares subject to stock options exercisable
or which will become exercisable within 60 days.
(4) Includes 54,400 shares subject to stock options exercisable
or which will become exercisable within 60 days.
(5) Excludes 21,900 shares held by Mrs. Hardisty.
(6) Excludes 89,891 shares held by Mr. Kaman as Trustee, in
which shares Mr. Kaman disclaims any beneficial ownership.
(7) Excludes 4,800 shares held by Mr. Kaman as Trustee in which
shares Mr. Kaman disclaims any beneficial ownership.
(8) Includes 69,000 shares subject to stock options exercisable
or which will become exercisable within 60 days.
(9) Includes 73,000 shares subject to stock options exercisable
or which will become exercisable within 60 days.
(10) Includes 6,144 shares subject to stock options exercisable
or which will become exercisable within 60 days.
(11) Includes 18,200 shares subject to stock options which will
become exercisable within 60 days.
(12) Includes 284,644 shares subject to stock options which will
become exercisable within 60 days.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 2001, the corporation obtained legal services from
the Hartford, Connecticut law firm of Murtha Cullina LLP of
which Mr. John S. Murtha, is of counsel and Mr. John C. Yavis, Jr.
is a partner. Mr. Murtha, a director emeritus of the corporation,
is currently one of six holders of a power of attorney described
in footnote (2) to the table entitled
Page 36
"Security Ownership of Certain Beneficial Owners", and a voting
trustee of the Voting Trust described in footnote (4) of such
table. Mr. Yavis currently serves as a voting trustee of the
Voting Trust and as the general partner of Newgate Associates
Limited Partnership.
Also in 2000, the corporation utilized the services of K-Power,
S.A., a company controlled by Mr. Ivan Humberto Iraola Pellane as
a sales representative in connection with the sale of the
corporation's K-MAX and SH-2 helicopters for use in Peru. Mr.
Iraola Pellane is the son-in-law of Mr. Walter Kozlow, a
consultant to the corporation and formerly an Executive Officer of
the corporation. The corporation's agreement with K-Power, S.A.
with respect to the SH-2 helicopter provided for a fee
of $3,000 per month for in-country support and marketing
services and also provided for a commission of 2 1/2% on any
sale of the SH-2 helicopter which may ensue. To date no such
sales have occurred and in 2001 such agreement was terminated. The
corporation's agreement with K-Power, S.A. with respect to the
K-MAX helicopter provides for a commission arrangement of 5% on
such sales with an additional 1% as compensation for after market
support services. In December, 2000, the corporation was awarded a
contract valued at $21 million with the U.S. State Department for
the sale of five K-MAX helicopters for use in Peru. As of
December 31, 2001, a total of $1,208,152.31 has been paid to
K-Power, S.A.
Page 37
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a)(1) FINANCIAL STATEMENTS.
See Item 8 concerning financial statements appearing
as Exhibit 13 to this Report.
(a)(2) FINANCIAL STATEMENT SCHEDULES.
An index to the financial statement schedules
immediately precedes such schedules.
(a)(3) EXHIBITS.
An index to the exhibits filed or incorporated by
reference immediately precedes such exhibits.
(b) REPORTS ON FORM 8-K: Form 8-K's filed with the
Securities and Exchange Commission on March 12, 2001
as Document No. 0000054381-01-500002; September 25,
2001 as Document No. 0000054381-01-500014; and
December 11, 2001 as Document No. 0000054381-01-500019.
Page 38
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of Bloomfield, State of
Connecticut, on this 14th day of March, 2002.
KAMAN CORPORATION
(Registrant)
By Paul R. Kuhn, Chairman, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Signature: Title: Date:
- ---------------------------------------------------------------
Paul R. Kuhn Chairman, President, and March 14, 2002
Chief Executive Officer
and Director
Robert M. Garneau Executive Vice President March 14, 2002
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
Paul R. Kuhn March 14, 2002
Attorney-in-Fact for:
Brian E. Barents Director
E. Reeves Callaway, III Director
Frank C. Carlucci Director
Laney J. Chouest Director
John A. DiBiaggio Director
Huntington Hardisty Director
C. William Kaman, II Director
Eileen S. Kraus Director
Walter H. Monteith, Jr. Director
Wanda L. Rogers Director
Page 39
KAMAN CORPORATION AND SUBSIDIARIES
Index to Financial Statement Schedules
Report of Independent Auditors
Financial Statement Schedules:
Schedule V - Valuation and Qualifying Accounts
Page 40
REPORT OF INDEPENDENT AUDITORS
KPMG LLP
Certified Public Accountants
One Financial Plaza
Hartford, Connecticut 06103
The Board of Directors and Shareholders
Kaman Corporation:
Under date of January 28, 2002, we reported on the consolidated
balance sheets of Kaman Corporation and subsidiaries as of
December 31, 2001 and 2000 and the related consolidated
statements of operations, changes in shareholders' equity and
cash flows for each of the years in the three-year period ended
December 31, 2001, as contained in the 2001 annual report to
shareholders. These consolidated financial statements and our
report thereon are included in the annual report on Form 10-K
for 2001. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related
consolidated financial statement schedule as listed in the
accompanying index. This financial statement schedule is the
responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule
based on our audits.
In our opinion, such schedule, when considered in relation to
the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set
forth therein.
/s/ KPMG LLP
Hartford, Connecticut
January 28, 2002
Page 41
KAMAN CORPORATION AND SUBSIDIARIES
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in Thousands)
YEAR ENDED DECEMBER 31, 1999
Additions
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 1999 EXPENSES OTHERS DEDUCTIONS 1999
Allowance for
doubtful accounts $4,047 $1,355 $----- $ 883(A) $4,519
====== ====== ====== ====== ======
Accumulated
amortization $1,488 $ 110 $----- $----- $1,598
of goodwill ====== ====== ====== ====== ======
YEAR ENDED DECEMBER 31, 2000
Additions
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 2000 EXPENSES OTHERS DEDUCTIONS 2000
Allowance for
doubtful accounts $4,519 $1,490 $----- $1,373(A) $4,636
====== ====== ====== ====== ======
Accumulated
amortization $1,598 $ 110 $----- $----- $1,708
of goodwill ====== ====== ====== ====== ======
YEAR ENDED DECEMBER 31, 2001
Additions
BALANCE CHARGED TO BALANCE
JANUARY 1, COSTS AND DECEMBER 31,
DESCRIPTION 2001 EXPENSES OTHERS DEDUCTIONS 2001
Allowance for
doubtful accounts $4,636 $ 868 $277(B) $1,842(A) $3,939
====== ====== ====== ====== ======
Accumulated
amortization $1,708 $ 109 $----- $----- $1,817
of goodwill ====== ====== ====== ====== ======
(A) Write-off of bad debts, net of recoveries.
(B) Additions to allowance for doubtful accounts attributable to
acquisitions.
Page 42
KAMAN CORPORATION
INDEX TO EXHIBITS
Exhibit 3a The Amended and Restated by reference
Certificate of Incorporation
of the corporation, as amended,
has been filed with the Securities
and Exchange Commission on form
S-8POS on May 11, 1994, as
Document No. 94-20.
Exhibit 3b The By-Laws of the corporation by reference
as amended on February 9, 1999
has been filed with the Securities
and Exchange Commission on Form
10-K on March 16, 1999, as
Document No. 99-03.
Exhibit 4a Indenture between the corporation by reference
and Manufacturers Hanover Trust
Company, as Indenture Trustee,
with respect to the Corporation's
6% Convertible Subordinated Debentures,
has been filed as Exhibit 4.1 to
Registration Statement No. 33 -
11599 on Form S-2 of the corporation
filed with the Securities and Exchange
Commission on January 29, 1987
and is incorporated in this
report by reference.
Exhibit 4b Revolving Credit Agreement by reference
between the corporation and The
Bank of Nova Scotia and Fleet
National Bank as Co-Administrative
Agents and Bank One, N.A. as the
Documentation Agent and The Bank of
Nova Scotia and Fleet Securities, Inc.
as the Co-Lead Arrangers and Various
Financial Institutions dated as of
November 13, 2000 filed as Exhibit 4
to form 10-Q filed with the Securities
and Exchange Commission on November 14,
2000, Document No. 54381-00-500006.
Page 43
Exhibit 4c The corporation is party to certain by reference
long-term debt obligations, such
as real estate mortgages, copies
of which it agrees to furnish to
the Commission upon request.
Exhibit 10a The Kaman Corporation 1993 Stock by reference
Incentive Plan as amended effective
November 18, 1997 has been filed
as an exhibit to the Corporation's
Form 10-K Document No. 0000054381-98-09
filed with the Securities and
Exchange Commission on March 16,
1998 as amended by Document
No. 0000054381-98-13 filed on March 27,
1998; by Document No. 0000054381-00-500006
filed on November, 14, 2000) and as
an exhibit to the Corporation's
Form 10-K Document No. 0000054381-00-500005
filed on March 15, 2001.
Exhibit 10b The Kaman Corporation Employees by reference
Stock Purchase Plan as amended
effective November 19, 1997 has been
filed as an exhibit to the Corporation's
Form 10-K Document No. 0000054381-98-09
filed with the Securities and
Exchange Commission on March 16, 1998
(as amended by Document No. 0000054381-98-13
on March 27, 1998) and is incorporated
in this report by reference.
Exhibit 10c Kaman Corporation Supplemental by reference
Employees' Retirement Plan,
as amended
Exhibit 10d Fifth Amendment to Kaman Corporation attached
Deferred Compensation Plan (As Amended
and Restated Effective as of
January 1, 1994).
Exhibit 10e Kaman Corporation Cash Bonus Plan attached
(Amended and Restated Effective as
of January 1, 2002) and First
Amendment thereto.
Page 44
Exhibit 10f Employment Agreements and Change in by reference
Control Agreements with certain
executive officers have been filed
as exhibits to the following
filings by the corporation with the
Securities and Exchange Commission:
Form 10-Q (Document No. 54381-99-14)
filed November 12, 1999; Form 10-K
(Document No. 54381-00-03) filed
March 21, 2000; Form 10-Q
(Document No. 54381-00-500006)
Filed November 14, 2000; and Form 10-Q
(Document No. 54381-01-500015) filed
November 14, 2001.
Exhibit 10f(I) Agreement between Kaman Aerospace attached
Corporation and Huntington
Hardisty effective March 1, 2002.
Exhibit 10g Notice of change of control by reference
filed as Exhibit 99 to the
corporation's Form 8-K dated
August 16, 2000 as Document
No. 54381-00-000010.
Exhibit 11 Statement regarding computation attached
of per share earnings.
Exhibit 13 Portions of the Corporation's attached
2001 Annual Report to
Shareholders as required by
Item 8.
Exhibit 21 Subsidiaries. attached
Exhibit 23 Consent of Independent Auditors. attached
Exhibit 24 Power of attorney under which attached
this report has been signed on
behalf of certain directors.
Page 45