##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549


FORM 10-Q


[X]  Quarterly Report Pursuant to Section 13 or
15(d) of the

Securities Exchange Act of 1934


[   ]  Transition Report Pursuant to
Section 13 or 15(d) of the

Securities Exchange Act of 1934


|                                  |  |                            
|--------------------------------- |  | ---------------------------
|For Quarter Ended October 2, 1999 |  | Commission File No. 0-12640

KAYDON CORPORATION


|                       |  |                               
|---------------------- |  | ------------------------------
|                      
|                      
|                      
|                      
|A Delaware Corporation |  | IRS Employer ID No. 13-3186040

315 E. Eisenhower Pkwy.,







Kaydon Corporation:



|    |                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------
|(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.

Yes X No

(2)  has been subject to such filing requirements for the
past 90 days.

Yes X No

Common Stock Outstanding at November 10, 1999 
30,786,687 shares, $.10 par value.









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TABLE OF CONTENTS



|                                                                                      |  |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|FOR THE QUARTER ENDED OCTOBER 2, 1999                                                
|INDEX                                                                                
|KAYDON CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS                             
|KAYDON CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited)           
|KAYDON CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)       
|KAYDON CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS              
|MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|KAYDON CORPORATION EXHIBITS AND REPORTS                                              
|SIGNATURES                                                                           



---



KAYDON CORPORATION FORM 10-Q






FOR THE QUARTER ENDED OCTOBER 2, 1999







INDEX


|                                |                                                                                                                            |          |  |         | 
|------------------------------- | -------------------------------------------------------------------------------------------------------------------------- | -------- |  | ------- | 
|                                |                                                                                                                            | Page No.
|                                |                                                                                                                            |         
|Part I  Financial Information: |                                                                                                                            |          |  |        
|                               
|                               
|                               
|                               
|                                | Consolidated Condensed Balance Sheets  October 2, 1999
	 and December 31, 1998                                            |          |  | 1       | 
|                               
|                               
|                               
|                               
|                                | Consolidated Condensed Statements of Income  Quarter and
	First Three Quarters Ended October 2, 1999 and
	October 3, 1998 |          |  | 2       | 
|                               
|                               
|                               
|                               
|                                | Consolidated Condensed Statements of Cash Flows  First
	Three Quarters Ended October 2, 1999 and October 3,
	1998         |          |  | 3       | 
|                               
|                               
|                               
|                               
|                                | Notes to Consolidated Condensed Financial Statements                                                                       |          |  | 4 - 10  | 
|                               
|                               
|                               
|                               
|                                | Managements Discussion and Analysis of Financial Condition
	and Results of Operations                                     |          |  | 11 - 14 | 
|                               
|                               
|                               
|                               
|Part II  Other Information:    |                                                                                                                            |          |  |        
|                               
|                               
|                               
|                               
|                                | Item 6.  Exhibits and Reports on Form 8-K                                                                                 |          |  | 15      | 
|                               
|                               
|                               
|                               
|                                | Signatures                                                                                                                 |          |  | 16      | 



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KAYDON CORPORATION


CONSOLIDATED CONDENSED BALANCE SHEETS

|                                                                    |  |              |              |              |  |   |             |  
|------------------------------------------------------------------- |  | ------------ | ------------ | ------------ |  | - | ----------- | -
|                                                                    |  | Oct. 2, 1999 |              | Dec. 31,1998
|                                                                    |  |              |              |             
|                                                                    |  | (Unaudited)  |              |             
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Assets:                                                             |  |              |              |              |  |   |             |  
|Cash and cash equivalents                                           |  | $            | 100,405,000  |              |  | $ | 96,203,000  |  
|Accounts receivable, net                                            |  |              | 48,055,000   |              |  |   | 48,957,000  |  
|Inventories, net                                                    |  |              | 64,494,000   |              |  |   | 68,176,000  |  
|Other current assets                                                |  |              | 17,635,000   |              |  |   | 16,464,000  |  
|                                                                    |  |              |              |              |  |   |             |  
|Total current assets                                                |  |              | 230,589,000  |              |  |   | 229,800,000 |  
|                                                                   
|Plant and equipment, net                                            |  |              | 98,534,000   |              |  |   | 99,259,000  |  
|Cost in excess of net tangible assets of purchased businesses,
	net |  |              | 62,957,000   |              |  |   | 64,717,000  |  
|Other assets                                                        |  |              | 23,266,000   |              |  |   | 20,032,000  |  
|                                                                    |  |              |              |              |  |   |             |  
|                                                                   
|Total assets                                                        |  | $            | 415,346,000  |              |  | $ | 413,808,000 |  
|                                                                    |  |              |              |              |  |   |             |  
|Liabilities and Shareholders Equity:                               |  |              |              |              |  |   |             |  
|Accounts payable                                                    |  | $            | 14,943,000   |              |  | $ | 14,853,000  |  
|Accrued expenses                                                    |  |              | 47,548,000   |              |  |   | 56,347,000  |  
|                                                                    |  |              |              |              |  |   |             |  
|Total current liabilities                                           |  |              | 62,491,000   |              |  |   | 71,200,000  |  
|                                                                   
|Long-term liabilities                                               |  |              | 34,471,000   |              |  |   | 30,952,000  |  
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Shareholders equity:                                               |  |              |              |              |  |   |             |  
|Common stock                                                        |  |              | 3,662,000    |              |  |   | 3,646,000   |  
|Paid-in capital                                                     |  |              | 38,551,000   |              |  |   | 35,969,000  |  
|Retained earnings                                                   |  |              | 390,729,000  |              |  |   | 355,233,000 |  
|Less  treasury stock, at cost                                      |  |              | (112,320,000 | )            |  |   | (80,711,000 | )
|Accumulated other comprehensive loss                                |  |              | (2,238,000   | )            |  |   | (2,481,000  | )
|                                                                    |  |              |              |              |  |   |             |  
|                                                                    |  |              | 318,384,000  |              |  |   | 311,656,000 |  
|                                                                    |  |              |              |              |  |   |             |  
|                                                                   
|Total liabilities and shareholders equity                          |  | $            | 415,346,000  |              |  | $ | 413,808,000 |  
|                                                                    |  |              |              |              |  |   |             |  

See accompanying notes to consolidated condensed financial
statements.

1



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KAYDON CORPORATION


CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Unaudited)


|                                |         |               |            |                            |  |              |            |              |  |   |             |            |  |   |             |            | 
|------------------------------- | ------- | ------------- | ---------- | -------------------------- |  | ------------ | ---------- | ------------ |  | - | ----------- | ---------- |  | - | ----------- | ---------- | 
|                                |         |               |            |                           
|                                |         | Quarter Ended |            | First Three Quarters Ended
|                                |         |               |            |                           
|                                |         | Oct. 2, 1999  |            | Oct. 3, 1998               |  | Oct. 2, 1999 |            | Oct. 3, 1998
|                                |         |               |            |                            |  |              |            |             
|Net sales                       |         | $             | 73,725,000 |                            |  | $            | 92,801,000 |              |  | $ | 247,369,000 |            |  | $ | 291,458,000 |           
|Cost of sales                   |         |               | 45,893,000 |                            |  |              | 55,636,000 |              |  |   | 151,508,000 |            |  |   | 173,211,000 |           
|                                |         |               |            |                            |  |              |            |              |  |   |             |            |  |   |             |           
|Gross profit                    |         |               | 27,832,000 |                            |  |              | 37,165,000 |              |  |   | 95,861,000  |            |  |   | 118,247,000 |           
|Operating expenses              |         |               | 8,452,000  |                            |  |              | 9,837,000  |              |  |   | 27,399,000  |            |  |   | 33,469,000  |           
|                                |         |               |            |                            |  |              |            |              |  |   |             |            |  |   |             |           
|Operating income                |         |               | 19,380,000 |                            |  |              | 27,328,000 |              |  |   | 68,462,000  |            |  |   | 84,778,000  |           
|Interest income, net            |         |               | 1,404,000  |                            |  |              | 996,000    |              |  |   | 3,629,000   |            |  |   | 3,443,000   |           
|                                |         |               |            |                            |  |              |            |              |  |   |             |            |  |   |             |           
|Income before income taxes      |         |               | 20,784,000 |                            |  |              | 28,324,000 |              |  |   | 72,091,000  |            |  |   | 88,221,000  |           
|Provision for income taxes      |         |               | 7,794,000  |                            |  |              | 10,764,000 |              |  |   | 27,034,000  |            |  |   | 33,525,000  |           
|                                |         |               |            |                            |  |              |            |              |  |   |             |            |  |   |             |           
|Net income                      |         | $             | 12,990,000 |                            |  | $            | 17,560,000 |              |  | $ | 45,057,000  |            |  | $ | 54,696,000  |           
|                                |         |               |            |                            |  |              |            |              |  |   |             |            |  |   |             |           
|Weighted Average Common Shares: |         |               |            |                            |  |              |            |              |  |   |             |            |  |   |             |           
|                                | Basic   |               |            | 31,776,000                 |  |              |            | 32,466,000   |  |   |             | 31,877,000 |  |   |             | 32,736,000 | 
|                                | Diluted |               |            | 31,934,000                 |  |              |            | 32,694,000   |  |   |             | 32,063,000 |  |   |             | 32,979,000 | 
|                               
|                               
|                               
|                               
|Earnings Per Share:             |         |               |            |                            |  |              |            |              |  |   |             |            |  |   |             |           
|                                | Basic   |               | $          | .41                        |  |              | $          | .54          |  |   | $           | 1.41       |  |   | $           | 1.67       | 
|                                | Diluted |               | $          | .41                        |  |              | $          | .54          |  |   | $           | 1.41       |  |   | $           | 1.66       | 

See accompanying notes to consolidated condensed financial
statements.

2



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KAYDON CORPORATION


CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)


|                                                             |  |                            |             |              |  |   |             |  
|------------------------------------------------------------ |  | -------------------------- | ----------- | ------------ |  | - | ----------- | -
|                                                             |  |                           
|                                                             |  | First Three Quarters Ended
|                                                             |  |                           
|                                                             |  | Oct. 2, 1999               |             | Oct. 3, 1998
|                                                             |  |                            |             |             
|Cash flows from operating activities                         |  | $                          | 52,199,000  |              |  | $ | 42,214,000  |  
|                                                            
|                                                            
|                                                            
|                                                            
|Cash flows from (used in) investing activities:              |  |                            |             |              |  |   |             |  
|Purchases of marketable securities                           |  |                            |             |              |  |   | (44,956,000 | )
|Maturities of marketable securities                          |  |                            |             |              |  |   | 67,023,000  |  
|Capital expenditures, net                                    |  |                            | (9,248,000  | )            |  |   | (21,438,000 | )
|Other                                                        |  |                            |             |              |  |   | 82,000      |  
|                                                             |  |                            |             |              |  |   |             |  
|Cash from (used in) investing activities                     |  |                            | (9,248,000  | )            |  |   | 711,000     |  
|                                                             |  |                            |             |              |  |   |             |  
|Cash flows from (used in) financing activities:              |  |                            |             |              |  |   |             |  
|Proceeds from issuance of common stock                       |  |                            | 2,598,000   |              |  |   | 4,148,000   |  
|Dividends paid                                               |  |                            | (9,591,000  | )            |  |   | (8,916,000  | )
|Purchase of treasury stock                                   |  |                            | (31,609,000 | )            |  |   | (38,601,000 | )
|                                                             |  |                            |             |              |  |   |             |  
|Cash used in financing activities                            |  |                            | (38,602,000 | )            |  |   | (43,369,000 | )
|                                                             |  |                            |             |              |  |   |             |  
|Effect of exchange rate changes on cash and cash equivalents |  |                            | (147,000    | )            |  |   | 1,023,000   |  
|                                                             |  |                            |             |              |  |   |             |  
|Net increase in cash and cash equivalents                    |  |                            | 4,202,000   |              |  |   | 579,000     |  
|Cash and cash equivalents  Beginning of period              |  |                            | 96,203,000  |              |  |   | 74,735,000  |  
|                                                             |  |                            |             |              |  |   |             |  
|Cash and cash equivalents  End of period                    |  | $                          | 100,405,000 |              |  | $ | 75,314,000  |  
|                                                             |  |                            |             |              |  |   |             |  
|Cash expended for income taxes                               |  | $                          | 25,115,000  |              |  | $ | 35,016,000  |  
|                                                             |  |                            |             |              |  |   |             |  

See accompanying notes to consolidated condensed financial
statements.

3



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KAYDON CORPORATION


NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The accompanying unaudited consolidated condensed financial
	statements of Kaydon Corporation and subsidiaries (the
	Company) have been prepared in accordance with
	generally accepted accounting principles for interim financial
	information and with the instructions to Form 10-Q and
	Rule 10-01 of Regulation  S-X. Accordingly, they do not
	 include all of the information and footnotes required by
	generally accepted accounting principles for complete financial
	statements. In the opinion of management, all adjustments
	considered necessary for a fair presentation have been included,
	and such adjustments are of a normal recurring nature. The year-
	end condensed balance sheet data was derived from audited
	financial statements, but does not include all disclosures
	required by generally accepted accounting principles. For further
	 information, refer to the consolidated financial statements and
	footnotes thereto included in the Companys annual report on
	 Form 10-K for the year ended December 31, 1998.
|   
|(2) | Inventories are summarized as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|                |  |              |            |               |  |   |            | 
|--------------- |  | ------------ | ---------- | ------------- |  | - | ---------- | 
|                |  | Oct. 2, 1999 |            | Dec. 31, 1998
|                |  |              |            |              
|Raw Material    |  | $            | 29,046,000 |               |  | $ | 26,570,000 | 
|Work in Process |  |              | 15,355,000 |               |  |   | 20,352,000 | 
|Finished Goods  |  |              | 20,093,000 |               |  |   | 21,254,000 | 
|                |  |              |            |               |  |   |            | 
|                |  | $            | 64,494,000 |               |  | $ | 68,176,000 | 
|                |  |              |            |               |  |   |            | 



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | In 1998, the Company adopted Statement of Financial Accounting
	Standards No.  130, Reporting Comprehensive
	Income. This statement establishes standards for reporting
	and display of comprehensive income and its components.
	Comprehensive income reflects the change in equity of a business
	enterprise during a period from transactions and other events,
	and from circumstances involving nonowner sources. For the
	Company, comprehensive income consists of net income, minimum
	pension liability adjustments and foreign currency translation
	adjustments. Other comprehensive income, net of tax, was
	approximately $3,215,000 and $1,026,000 resulting in
	comprehensive income of $16,205,000 and $18,586,000 for the
	quarters ended October 2, 1999 and October 3, 1998. For
	 the first three quarters, other comprehensive income, net of
	tax, was approximately $243,000 and $2,118,000 resulting in year
	to date comprehensive income of $45,300,000 and $56,814,000 for
	the first three quarters ended October 2, 1999 and
	October 3, 1998.

4



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|    |                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | The following table reconciles the numerators and denominators
	used in the calculation of basic and diluted earnings per share
	for the periods presented.

|                                             |                                                                                        |               |            |              |  |   |            |            | 
|-------------------------------------------- | -------------------------------------------------------------------------------------- | ------------- | ---------- | ------------ |  | - | ---------- | ---------- | 
|                                             |                                                                                        |              
|                                             |                                                                                        | Quarter Ended
|                                             |                                                                                        |              
|                                             |                                                                                        | Oct. 2, 1999  |            | Oct. 3, 1998
|                                             |                                                                                        |               |            |             
|Numerators:                                  |                                                                                        |               |            |              |  |   |            |           
|                                             | Numerators for both basic and diluted earnings per share, net
	income                  |               | $          | 12,990,000   |  |   | $          | 17,560,000 | 
|                                             |                                                                                        |               |            |              |  |   |            |           
|Denominators:                                |                                                                                        |               |            |              |  |   |            |           
|                                             | Denominators for basic earnings per share, weighted average
	common shares outstanding |               |            | 31,776,000   |  |   |            | 32,466,000 | 
|                                             | Potential dilutive shares resulting from stock option plans                            |               |            | 158,000      |  |   |            | 228,000    | 
|                                             |                                                                                        |               |            |              |  |   |            |           
|Denominators for dilutive earnings per share |                                                                                        |               | 31,934,000 |              |  |   | 32,694,000 |           
|                                             |                                                                                        |               |            |              |  |   |            |           
|Earnings per share:                          |                                                                                        |               |            |              |  |   |            |           
|Basic                                        |                                                                                        | $             | .41        |              |  | $ | .54        |           
|                                             |                                                                                        |               |            |              |  |   |            |           
|Diluted                                      |                                                                                        | $             | .41        |              |  | $ | .54        |           
|                                             |                                                                                        |               |            |              |  |   |            |           

|                                             |                                                                                        |                |            |              |  |   |            |            | 
|-------------------------------------------- | -------------------------------------------------------------------------------------- | -------------- | ---------- | ------------ |  | - | ---------- | ---------- | 
|                                             |                                                                                        |               
|                                             |                                                                                        | First Three   
|                                             |                                                                                        | Quarters Ended
|                                             |                                                                                        |               
|                                             |                                                                                        | Oct. 2, 1999   |            | Oct. 3, 1998
|                                             |                                                                                        |                |            |             
|Numerators:                                  |                                                                                        |                |            |              |  |   |            |           
|                                             | Numerators for both basic and diluted earnings per share, net
	income                  |                | $          | 45,057,000   |  |   | $          | 54,696,000 | 
|                                             |                                                                                        |                |            |              |  |   |            |           
|Denominators:                                |                                                                                        |                |            |              |  |   |            |           
|                                             | Denominators for basic earnings per share, weighted average
	common shares outstanding |                |            | 31,877,000   |  |   |            | 32,736,000 | 
|                                             | Potential dilutive shares resulting from stock option plans                            |                |            | 186,000      |  |   |            | 243,000    | 
|                                             |                                                                                        |                |            |              |  |   |            |           
|Denominators for dilutive earnings per share |                                                                                        |                | 32,063,000 |              |  |   | 32,979,000 |           
|                                             |                                                                                        |                |            |              |  |   |            |           
|Earnings per share:                          |                                                                                        |                |            |              |  |   |            |           
|Basic                                        |                                                                                        | $              | 1.41       |              |  | $ | 1.67       |           
|                                             |                                                                                        |                |            |              |  |   |            |           
|Diluted                                      |                                                                                        | $              | 1.41       |              |  | $ | 1.66       |           
|                                             |                                                                                        |                |            |              |  |   |            |           

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Options to purchase 169,350 shares of common stock at prices
	ranging from $31.4375 to $33.3125 per share were outstanding
	during the third quarter of 1999, but were not included in the
	computation of diluted earnings per share because the
	options exercise price was greater than the average market
	price of the common shares during that period. Options to
	purchase 156,650 shares of common stock at a price of
	$33.00 per share were outstanding during the third quarter
	of 1998, but were not included in the computation of third
	quarter 1998 diluted earnings per share because the options
	 exercise price was greater than the average market price of the
	common shares during that period.
|   
|    | In accordance with the provisions of Statement of Financial
	Accounting Standards No. 128, Earnings Per
	Share, potential dilutive shares resulting from stock
	option plans used in the calculation of dilutive earnings per
	share are based on an average of the potential dilutive shares
	resulting from stock option plans for the periods presented.                                                                                                                                                                                                                                                                                                                                                              
|   
|(5) | In 1998, the Company adopted the provisions of Statement of
	Financial Accounting Standards No. 131, Disclosures
	about Segments of an Enterprise and Related Information.
	This statement establishes new standards for reporting
	information about operating segments and related disclosures. All
	 prior period information has been restated to conform to this
	statement.                                                                                                                                                                                                                                                                                                                                        
|   
|    | The Company operates through individual operating units which
	serve four key market sectors. The market sectors served by the
	Company have several related economic characteristics and
	attributes, including similar products, distribution patterns and
	 classes of customers. As a result, the Company aggregates its
	operating units into a single segment of Custom-Engineered
	Products.                                                                                                                                                                                                                                                                                                                        
|   
|    | The corporate component of income before taxes includes interest
	income, goodwill amortization, depreciation and unallocated
	corporate administrative expenses. The Company maintains an
	asymmetrical allocation between its corporate office and its
	plants with regards to goodwill. The goodwill associated with an
	operating unit is on the balance sheet of the respective
	operating unit while the amortization expense associated with the
	 goodwill is charged to the corporate office.                                                                                                                                                                                                                     

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| |                                       
| | --------------------------------------
| | Segment financial data (in thousands):

|                                          |  |               |        |              |  |              |       |            |  |           |        |              |  |   |        |   |  |   |     |  |  |   |        |  
|----------------------------------------- |  | ------------- | ------ | ------------ |  | ------------ | ----- | ---------- |  | --------- | ------ | ------------ |  | - | ------ | - |  | - | --- |  |  | - | ------ | -
|                                          |  |              
|                                          |  | Quarter Ended
|                                          |  |              
|                                          |  |               |        |             
|                                          |  | Oct. 2, 1999  |        | Oct. 3, 1998
|                                          |  |               |        |             
|                                          |  | Custom-       |        |              |  | Custom-      |       |           
|                                          |  | Engineered    |        |              |  | Consolidated |       | Engineered |  |           |        | Consolidated
|                                          |  | Products      |        | Corporate    |  | Totals       |       | Products   |  | Corporate |        | Totals      
|                                          |  |               |        |              |  |              |       |            |  |           |        |             
|Sales                                     |  | $             | 76,040 |              |  | $            | 0     |            |  | $         | 76,040 |              |  | $ | 93,886 |   |  | $ | 0   |  |  | $ | 93,886 |  
|                                         
|                                         
|                                         
|                                         
|Elimination of
	intercompany sales        |  |               | (2,315 | )            |  |              | 0     |            |  |           | (2,315 | )            |  |   | (1,085 | ) |  |   | 0   |  |  |   | (1,085 | )
|                                          |  |               |        |              |  |              |       |            |  |           |        |              |  |   |        |   |  |   |     |  |  |   |        |  
|Total net sales                           |  | $             | 73,725 |              |  | $            | 0     |            |  | $         | 73,725 |              |  | $ | 92,801 |   |  | $ | 0   |  |  | $ | 92,801 |  
|                                          |  |               |        |              |  |              |       |            |  |           |        |              |  |   |        |   |  |   |     |  |  |   |        |  
|Segment earnings
	before interest and tax |  | $             | 19,655 |              |  | $            | 0     |            |  | $         | 19,655 |              |  | $ | 27,913 |   |  | $ | 0   |  |  | $ | 27,913 |  
|                                         
|                                         
|                                         
|                                         
|Unallocated amounts                       |  |               | 0      |              |  |              | 1,129 |            |  |           | 1,129  |              |  |   | 0      |   |  |   | 411 |  |  |   | 411    |  
|                                          |  |               |        |              |  |              |       |            |  |           |        |              |  |   |        |   |  |   |     |  |  |   |        |  
|Income before income taxes                |  | $             | 19,655 |              |  | $            | 1,129 |            |  | $         | 20,784 |              |  | $ | 27,913 |   |  | $ | 411 |  |  | $ | 28,324 |  
|                                          |  |               |        |              |  |              |       |            |  |           |        |              |  |   |        |   |  |   |     |  |  |   |        |  

|                                          |  |                            |         |              |  |              |       |            |  |           |         |              |  |   |         |   |  |   |       |  |  |   |         |  
|----------------------------------------- |  | -------------------------- | ------- | ------------ |  | ------------ | ----- | ---------- |  | --------- | ------- | ------------ |  | - | ------- | - |  | - | ----- |  |  | - | ------- | -
|                                          |  |                           
|                                          |  | First Three Quarters Ended
|                                          |  |                           
|                                          |  |                            |         |             
|                                          |  | Oct. 2, 1999               |         | Oct. 3, 1998
|                                          |  |                            |         |             
|                                          |  | Custom-                    |         |              |  | Custom-      |       |           
|                                          |  | Engineered                 |         |              |  | Consolidated |       | Engineered |  |           |         | Consolidated
|                                          |  | Products                   |         | Corporate    |  | Totals       |       | Products   |  | Corporate |         | Totals      
|                                          |  |                            |         |              |  |              |       |            |  |           |         |             
|Sales                                     |  | $                          | 252,632 |              |  | $            | 0     |            |  | $         | 252,632 |              |  | $ | 294,314 |   |  | $ | 0     |  |  | $ | 294,314 |  
|                                         
|                                         
|                                         
|                                         
|Elimination of
	intercompany sales        |  |                            | (5,263  | )            |  |              | 0     |            |  |           | (5,263  | )            |  |   | (2,856  | ) |  |   | 0     |  |  |   | (2,856  | )
|                                          |  |                            |         |              |  |              |       |            |  |           |         |              |  |   |         |   |  |   |       |  |  |   |         |  
|Total net sales                           |  | $                          | 247,369 |              |  | $            | 0     |            |  | $         | 247,369 |              |  | $ | 291,458 |   |  | $ | 0     |  |  | $ | 291,458 |  
|                                          |  |                            |         |              |  |              |       |            |  |           |         |              |  |   |         |   |  |   |       |  |  |   |         |  
|Segment earnings
	before interest and tax |  | $                          | 69,530  |              |  | $            | 0     |            |  | $         | 69,530  |              |  | $ | 86,277  |   |  | $ | 0     |  |  | $ | 86,277  |  
|                                         
|                                         
|                                         
|                                         
|Unallocated amounts                       |  |                            | 0       |              |  |              | 2,561 |            |  |           | 2,561   |              |  |   | 0       |   |  |   | 1,944 |  |  |   | 1,944   |  
|                                          |  |                            |         |              |  |              |       |            |  |           |         |              |  |   |         |   |  |   |       |  |  |   |         |  
|Income before income taxes                |  | $                          | 69,530  |              |  | $            | 2,561 |            |  | $         | 72,091  |              |  | $ | 86,277  |   |  | $ | 1,944 |  |  | $ | 88,221  |  
|                                          |  |                            |         |              |  |              |       |            |  |           |         |              |  |   |         |   |  |   |       |  |  |   |         |  



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | There has been no change in the basis or measurement of
	segmentation since the last annual report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   
|(6) | In June of 1999, the Company entered into a five-year
	$300.0 million revolving credit facility with a group of
	seven banks. The new facility permits the Company to borrow under
	 several different interest rate options. The new credit facility
	 replaces the Companys former $100.0 million revolving
	 credit facility. There were no borrowings associated with the
	new credit facility as of October  2, 1999.                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(7) | In June of 1995, the Company, along with certain former officers
	and directors of the Company and certain other companies and
	organizations, was named as a defendant in a lawsuit commenced in
	 Bankruptcy Court in the Southern District of New York. The
	plaintiff was the Creditors Committee formed in connection with
	the Chapter 11 Bankruptcy Proceeding of Keene Corporation
	(Keene). That action, identified as the
	Transactions Lawsuit, asserted claims against the
	Company arising from the Companys 1983 acquisition of
	certain assets of Keene, and Bairnco Corporations 1984
	spin-off of the Companys common stock. As originally filed,
	 the Transactions Lawsuit alleged claims against the Company
	under state fraudulent conveyance laws, tort claims under
	successor liability law, and civil RICO claims. The Transactions

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Lawsuit seeks damages alleged by plaintiffs to be an amount of
	$700 million, plus interest and punitive damages against the
	 defendants collectively. The RICO claims sought trebling of
	those damages. The claims asserted in the Transactions Lawsuit
	are similar to, and supplant, claims previously asserted in
	certain class actions brought against the Company in 1993,
	purportedly on behalf of certain persons with asbestos-related
	claims against Keene.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| | In 1997, in connection with the Bankruptcy Courts
	confirmation of Keenes Plan of Reorganization, the Keene
	Creditors Trust was created to, among other things, prosecute
	this lawsuit, and the Trustees of that Trust were substituted as
	the plaintiffs in place of the Keene Creditors Committee. In
	addition, the case was transferred from the Bankruptcy Court to
	the United States District Court for the Southern District of New
	 York. Subsequently, the Company and certain other defendants
	filed motions to dismiss the complaint for failure to state a
	claim, and for summary judgment on the grounds that the
	fraudulent conveyance claims and certain related causes of action
	 were barred by the statute of limitations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | On October 13, 1998, the Court granted in part and denied in
	 part the Companys motion to dismiss the complaint, and
	denied the Companys motion for summary judgment. With
	respect to the motion for summary judgment, the Court found that
	certain groups of asbestos claimants had claims that were not
	time-barred, and therefore the plaintiffs could assert claims
	against the Company for both actual fraudulent conveyance and
	constructive fraudulent conveyance. With respect to the motion to
	 dismiss, the Court granted the Companys motion to dismiss
	the fraudulent conveyance claim against it in connection with
	Bairncos 1984 spin-off of the Companys common stock,
	and dismissed all the RICO claims asserted against the Company.
	The Court denied the Companys motion to dismiss the
	successor liability claim, but noted the plaintiffs ability
	 to pursue such a claim was subject to their ability to pursue a
	fraudulent conveyance claim.                                                                                                                                                                                                                                                   
|
| | On October 29, 1998, the Company filed a motion for
	reargument of the Courts ruling that the plaintiffs
	claims for actual and constructive fraudulent conveyance against
	the Company are not barred by the applicable statute of
	limitations. On January 5, 1999, the Court issued a decision
	 on the Companys motion for reargument, which granted the
	Companys motion for reargument with regard to the
	plaintiffs claims for constructive fraudulent conveyance,
	and, with one minor exception, held those claims were barred by
	the applicable statute of limitations and dismissed them.
	However, the Court denied the Companys motion to dismiss
	the actual fraudulent conveyance claims. Accordingly, as a result
	 of the Companys motions, the only claims remaining against
	 the Company are plaintiffs claims for actual fraudulent
	conveyance and for successor liability. In addition, there is, on
	 behalf of certain individual judgment creditors, a limited claim
	 for constructive fraudulent conveyance. The Company does not
	believe any recovery on this limited claim will be material. The
	discovery stay previously in place has been lifted, and discovery
	 is in its preliminary stages.

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In other decisions, the Court also dismissed the claims against
	all the individual defendants except one, and against the
	professional organizations that had been named as defendants in
	the case. However, Bairnco and its other subsidiaries and former
	subsidiaries remain as defendants in the case.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | Management believes it has meritorious defenses to the claims
	pending against it in this litigation. Accordingly, no provision
	has been reflected in the consolidated financial statements for
	any alleged damages. Management further believes that the outcome
	 of this litigation will not have a material adverse effect on
	the Companys financial position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| | In June 1996, the Company received a subpoena issued by the
	U.S. District Court in Bridgeport, Connecticut on behalf of a
	grand jury investigating a May 9, 1996 accident involving a
	Sikorsky helicopter (CH-53E) in which four persons died. The
	grand jury requested and received documents and records relating
	to bearings manufactured by Kaydon and used in the Sikorsky
	helicopter. In addition, a Mishap Board led by
	Sikorsky Aircraft Corporation personnel alleged that product
	quality problems or deficiencies existed with respect to the
	Kaydon bearing used in the Sikorsky helicopter described above.
	Kaydon personnel were excluded from participation on this
	Mishap Board. However, Kaydon has independently
	evaluated the available evidence and refuted the Mishap
	Board findings in reports submitted to the Navy. Subsequent
	 incidents have occurred in the helicopter fleet even though the
	bearings used were newly manufactured, inspected and approved by
	Sikorsky and Navy personnel, reinforcing the Companys
	position that the bearing quality was not the causative action in
	 the May 9, 1996 accident. During the first half of 1997,
	the estates of the four deceased individuals filed civil suits
	against the Company. On July 6, 1998, Sikorsky filed a claim
	 against the Company in those same civil cases claiming damages
	which they are alleged to have incurred following the May 9,
	 1996 accident. In October 1998, Kaydons insurance company
	reached settlement agreements with the estates of each plaintiff
	in the four civil suits. All settlement amounts were fully
	covered under Company insurance. In September 1998, Kaydon
	received the Judge Advocate Generals Report (the JAG
	Report) and the Naval Air Systems Command First
	Endorsement to the JAG Report dated July 28, 1998
	wherein the U.S. Navy reviewed the crash of the Sikorsky CH-53E
	on May 9, 1996. The findings contained in the JAG Report,
	management believes, reaffirm the position that the bearing was
	not the causative action in the May 9, 1996 accident. The
	JAG Report states, ...the Sikorsky investigation process
	was flawed. It goes on to say that, NADEP
	(Naval Aviation Depot) Cherry Point personnel were not
	fully utilized in the investigative process, nor did they
	contribute to the conclusion reached. Furthermore, the
	report states, ...the Sikorsky investigative process erred
	in failing to fully exploit the expertise of Kaydon engineers in
	developing causal factors for the mishap. The JAG Report
	also states ...future investigations of this kind are much
	less likely to produce a conclusion that is self-serving to the
	contractor if the investigation agenda and investigative
	participants are not controlled by the contractor...
	Management believes it has meritorious defenses against any
	claims.

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| |                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Management further believes the outcome of this matter will not
	have a material adverse effect on the Companys financial
	position or results of operations.                                                                                                                                     
|
| | Various other claims, lawsuits and environmental matters arising
	in the normal course of business are pending against the Company.
	 Management believes that the outcome of these matters will not
	have a material adverse effect on the Companys financial
	position or results of operations.

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MANAGEMENTS DISCUSSION AND ANALYSIS


OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Results of Operations

During the third quarter of 1999, Kaydon Corporation and
subsidiaries (the Company) achieved sales of
$73,725,000, down 20.6 percent from $92,801,000 in the third
 quarter of 1998. The Company continues to be negatively impacted
 by lower sales levels in most of Kaydons key industrial
markets including heavy construction equipment, mining, offshore
oil equipment, government spare parts, military, railroad, and
aerospace markets, as well as lower sales levels of specialty
bearing products in the United Kingdom.

As a result of the lower sales volume, both gross profit and
operating income were negatively affected. Gross profit during
the 1999 third quarter of $27,832,000 was 37.8 percent of
sales, compared with $37,165,000 or 40.0 percent of sales in
 the 1998 third quarter. Operating income during the third
quarter of 1999 was $19,380,000 or 26.3 percent of sales as
compared to $27,328,000 or 29.4 percent of sales in the 1998
 third quarter.

Total operating costs, including cost of sales and selling,
general and administrative expenses were $54,345,000 during the
third quarter of 1999. This is a decrease of $11,128,000 from the
 comparable third quarter 1998 figure of $65,473,000.
Approximately $2,450,000 of this decrease is attributable to
managements continued emphasis on cost reduction
initiatives during the third quarter of 1999, with the remainder
of the decrease in total operating costs attributable to the
reduction in sales volumes.

Net interest income in the third quarter of 1999 of $1,404,000
increased $408,000 from $996,000 in last years comparable
period due to higher average cash balances.

Third quarter 1999 net income was $12,990,000, or
17.6 percent of sales. Earnings per share on a diluted basis
 equaled $.41. Third quarter 1998 net income was $17,560,000, or
18.9 percent of sales, while earnings per share on a diluted
 basis equaled $.54.

The effective tax rate during the 1999 third quarter was
37.5 percent compared to 38.0 percent in the third
quarter 1998. The lower rate is due to a combination of lower
foreign rates and higher export sales.

Sales for the first three quarters of 1999 were $247,369,000, a
decrease of 15.1 percent over last years $291,458,000
reflecting the continued softness in major markets served by
Kaydon.

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Lower sales volume caused gross profit for the first three
quarters of 1999 to decrease to $95,861,000 or 38.8 percent
of sales as compared to $118,247,000 or 40.6 percent of
sales during the first three quarters of 1998.

Selling, general and administrative expenses during the first
three quarters of 1999 decreased by $6,070,000 to $27,399,000 or
11.1 percent of sales as compared to $33,469,000 or
11.5 percent of sales during the first three quarters of
1998.

Net income for the first three quarters of 1999 was $45,057,000
or 18.2 percent of sales, while earnings per share on a
diluted basis equaled $1.41. Net income for the first three
quarters of 1998 was $54,696,000 or 18.8 percent of sales,
while earnings per share on a diluted basis equaled $1.66.

Liquidity and Capital Resources

Working capital was $168,098,000 as of October 2, 1999,
reflecting a current ratio of 3.7 to 1 compared to $158,600,000
and a current ratio of 3.2 to 1 at year-end 1998. Cash flow from
operations was a record $52,199,000 during the first three
quarters, up from $42,214,000 for the same period in 1998. The
record cash flow is greatly attributable to managements
ability to focus on controlling working capital during this
period of lower sales.

Depreciation and amortization for the first three quarters of
1999 totaled $11,931,000 compared to $11,030,000 in the first
three quarters of 1998.

Cash and cash equivalents equaled $100,405,000 as of
October 2, 1999, up $4,202,000 over the balance at year-end
1998 of $96,203,000. This increase reflects strong operating cash
 flow offset by capital expenditures of $9,248,000, dividend
payments of $9,591,000, and the repurchase of 1,167,606 shares of
 common stock for $31,609,000.

Management expects that the Companys planned capital
requirements for the remainder of 1999, which consists of capital
 expenditures, dividend payments and its stock repurchase program
 will be financed by operations and existing cash balances. In
June of 1999, the Company entered in to a five-year
$300.0 million revolving credit facility with a group of
seven banks. The new credit facility replaces the Companys
former $100.0 million revolving credit facility. The Company
 is currently debt free.

Year 2000

This year 2000 readiness disclosure is the most current
information available and replaces all previous disclosures made
by the Company in its filings on Form 10-Q and
Form 10-K, and in its Annual Report to shareholders.

The Company has a plan in place to manage the readiness of its
systems with respect to the requirements for transaction
processing in the year 2000. The proprietary Company internal
system was modified to be year 2000 compliant in 1997. Review and
 testing of the modifications was completed during 1998. The
costs for these

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modifications were expensed as routine internal programming costs
 during the period incurred and were not material. Any additional
 expenses will also be expensed as incurred and are not expected
to be material.

As part of the Companys long-term objectives for continued
operational improvements and cost management, investments in
information technology have already begun and are estimated to
total $2.5 to $3.0 million over the next 12-15 months.
As part of any investment in information systems, year 2000
compliance will be assured. The incremental costs associated with
 year 2000 modifications related to these investments, if any,
will be expensed as incurred and are not expected to be material.

Embedded technology in facilities systems and machinery and
equipment have been inventoried and assessed. No significant year
 2000 compliance issues are pending and completion of all
remaining minor remediation projects are expected to be completed
 by December 31, 1999.

Also, in accordance with the Companys year 2000 readiness
plan, the Company has assessed the year 2000 systems readiness of
 its customers, vendors and suppliers and has developed
contingency plans for those who are not expected to be year 2000
compliant. Any costs for remediation of third party system issues
 are expected to be borne by those third parties.

At this time, the Company would characterize as worst
case any scenario that involves potential disruptions in
which the Companys operations may rely on such third
parties whose systems may not work properly after
December 31, 1999. Possible consequences of year 2000
interruptions include, but are not limited to, a temporary
inability to manufacture or ship product; process transactions;
communicate with customers, suppliers, subsidiary locations and
employees; or conduct other similar corporate activities in a
normal business environment. While such failures could affect the
 Company either directly or indirectly, the Company cannot at the
 present time estimate either the likelihood or the potential
cost of such failures.

Outlook

The Companys backlog at October 2, 1999 was
$121,361,000 compared to $145,311,000 at the end of 1998. Based
upon current business indications, including quoting activity and
 future business forecasts for Kaydon customers
end-markets, we believe that orders will increase only slightly
for the remainder of 1999, but should rebound during the first
half of next year. Expected operating cash flows coupled with the
 Companys current cash reserves, and the new credit
facility will provide substantial resources to fund our ongoing
business development efforts which include internal and external
growth initiatives as well as selected stock repurchases.

Certain information in this Form 10-Q is forward looking,
such as the Companys expectations regarding future
financial performance, business development activity, and year
2000 readiness. The Company may not update these expectations to
reflect subsequent events. Such forward-looking information
involves risks and uncertainties that

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could significantly affect expected results. These risks and
uncertainties include, but are not limited to, uncertainties as
to economic conditions, market acceptance of new enhanced
versions of the Companys products, the pricing of raw
materials and changes in the competitive environments in which
the Companys businesses operate. Readers are cautioned to
consider these factors when relying on such forward-looking
information.

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KAYDON CORPORATION


EXHIBITS AND REPORTS


Item 6.  Exhibits and Reports on Form 8-K

|               |  |                                           
|-------------- |  | ------------------------------------------
|A. Exhibit No. |  | Description                               
|(27)           |  | Financial Data Schedule (for SEC use only)

B.  Reports on Form 8-K

No reports on Form 8-K were filed during the
quarter ended October 2, 1999.

15



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SIGNATURES


Pursuant to the requirements 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.



| |                   
| | ------------------
| | KAYDON CORPORATION

|                  |  |                                                                    
|----------------- |  | -------------------------------------------------------------------
|November 12, 1999 |  | /s/ BRIAN P. CAMPBELL                                              
|                  |  |                                                                    
|                  |  | Brian P. Campbell
	(Chairman, President & Chief Executive
	Officer)
|                 
|November 12, 1999 |  | /s/ KENNETH W. CRAWFORD                                            
|                  |  |                                                                    
|                  |  | Kenneth W. Crawford
	(Vice President & Corporate Controller)       

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EXHIBIT INDEX

|            |  |                        
|----------- |  | -----------------------
|EXHIBIT NO. |  | DESCRIPTION            
|27          |  | Financial Data Schedule