SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549



---



FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT of 1934

|                               |                            
|------------------------------ | ---------------------------
|For Quarter Ended July 1, 2000 | Commission File No. 0-12640
|

KAYDON CORPORATION
(Exact name of registrant as specified in its charter)

|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization) |  | 13-3186040
(I.R.S. Employer Identification No.)

|                                                                                                             |  |                 
|------------------------------------------------------------------------------------------------------------ |  | ----------------
|315 E. Eisenhower Parkway, Suite 300, Ann Arbor, Michigan
          (Address of principal executive offices) |  | 48108
(Zip Code)

Registrants telephone number, including area code (734) 747-7025

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 [    ]

Common Stock Outstanding at August 4, 2000  29,947,770 shares, $.10 par value.





---



---

KAYDON CORPORATION FORM 10-Q

FOR THE QUARTER ENDED July 1, 2000

INDEX

|                                |                                                                                               |  |          |         |  |  | 
|------------------------------- | --------------------------------------------------------------------------------------------- |  | -------- | ------- |  |  | 
|                                |                                                                                               |  | Page
No. |        
|Part I  Financial Information:
|                               
|                               
|                               
|                               
|                                |                                                                                              
|                                | Item 1. Financial Statements                                                                 
|                               
|                               
|                               
|                               
|                               
|                                | Consolidated Condensed Balance Sheets -                                                      
|                               
|                               
|                               
|                               
|                                | July 1, 2000 and December 31, 1999                                                            |  |          | 1       | 
|                               
|                               
|                               
|                               
|                               
|                                | Consolidated Condensed Statements of Income -                                                
|                               
|                               
|                               
|                               
|                                | Quarter and First Half Ended July 1, 2000 and July
3, 1999                                    |  |          | 2       | 
|                               
|                               
|                               
|                               
|                               
|                                | Consolidated Condensed Statements of Cash Flows -                                            
|                               
|                               
|                               
|                               
|                                | First Half Ended July 1, 2000 and July 3, 1999                                                |  |          | 3       | 
|                               
|                               
|                               
|                               
|                                | Notes to Consolidated Condensed Financial Statements                                          |  |          | 4 - 10  | 
|                               
|                                | Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations |  |          | 11 - 13 | 
|                                | Item 3. Quantitative and Qualitative
Disclosures about Market Risk                            |  |          | 13     
|                               
|Part II  Other Information:   
|                               
|                               
|                               
|                               
|                                | Item 1.  Legal Proceedings                                                                   |  |          | 14      | 
|                               
|                               
|                               
|                               
|                                | Item 6.  Exhibits and Reports on Form 8-K                                                    |  |          | 14      | 
|                               
|                               
|                               
|                               
|                                | Signatures                                                                                    |  |          | 15      | 





---



---

ITEM 1. FINANCIAL STATEMENTS KAYDON CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

---

|                                                                   |  |              |              |                   |  |   |              |  
|------------------------------------------------------------------ |  | ------------ | ------------ | ----------------- |  | - | ------------ | -
|                                                                   |  | July 1, 2000 |              | December
31, 1999
|                                                                   |  |              |              |                  
|                                                                   |  | (Unaudited) 
|Assets:                                                           
|                                                                   |  |              |              |                   |  |   |              |  
|Cash and cash equivalents                                          |  | $            | 97,689,000   |                   |  | $ | 89,749,000   |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Accounts receivable, net                                           |  |              | 54,538,000   |                   |  |   | 48,776,000   |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Inventories, net                                                   |  |              | 61,385,000   |                   |  |   | 61,008,000   |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Other current assets                                               |  |              | 12,027,000   |                   |  |   | 12,020,000   |  
|                                                                   |  |              |              |                   |  |   |              |  
|Total current assets                                               |  |              | 225,639,000  |                   |  |   | 211,553,000  |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Plant and equipment, net                                           |  |              | 97,668,000   |                   |  |   | 98,844,000   |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Cost in excess of net tangible
assets of purchased businesses, net |  |              | 73,499,000   |                   |  |   | 75,081,000   |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Other assets                                                       |  |              | 24,387,000   |                   |  |   | 21,271,000   |  
|                                                                   |  |              |              |                   |  |   |              |  
|Total assets                                                       |  | $            | 421,193,000  |                   |  | $ | 406,749,000  |  
|                                                                   |  |              |              |                   |  |   |              |  
|Liabilities and Shareholders Equity:                             
|Accounts payable                                                   |  | $            | 15,735,000   |                   |  | $ | 11,360,000   |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Accrued expenses                                                   |  |              | 43,386,000   |                   |  |   | 42,823,000   |  
|                                                                   |  |              |              |                   |  |   |              |  
|Total current liabilities                                          |  |              | 59,121,000   |                   |  |   | 54,183,000   |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Long-term liabilities                                              |  |              | 48,765,000   |                   |  |   | 35,616,000   |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Shareholders equity:                                             
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Common stock                                                       |  |              | 3,671,000    |                   |  |   | 3,667,000    |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Paid-in capital                                                    |  |              | 40,301,000   |                   |  |   | 40,942,000   |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Retained earnings                                                  |  |              | 413,204,000  |                   |  |   | 401,024,000  |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Less  treasury stock, at cost                                     |  |              | (128,757,000 | )                 |  |   | (114,794,000 | )
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Less  restricted stock awards                                     |  |              | (9,850,000   | )                 |  |   | (10,833,000  | )
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Accumulated other comprehensive loss                               |  |              | (5,262,000   | )                 |  |   | (3,056,000   | )
|                                                                   |  |              |              |                   |  |   |              |  
|                                                                   |  |              | 313,307,000  |                   |  |   | 316,950,000  |  
|                                                                   |  |              |              |                   |  |   |              |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Total liabilities and
shareholders equity                         |  | $            | 421,193,000  |                   |  | $ | 406,749,000  |  
|                                                                   |  |              |              |                   |  |   |              |  

See accompanying notes to consolidated condensed financial statements.

1



---



KAYDON CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)

---

|                                |         |   |               |            |                  |   |              |            |              |   |             |            |  |   |             |            | 
|------------------------------- | ------- | - | ------------- | ---------- | ---------------- | - | ------------ | ---------- | ------------ | - | ----------- | ---------- |  | - | ----------- | ---------- | 
|                                |         |   | Quarter Ended |            | First Half Ended
|                                |         |   |               |            |                 
|                                |         |   | July 1, 2000  |            | July 3, 1999     |   | July 1, 2000 |            | July 3, 1999
|                                |         |   |               |            |                  |   |              |            |             
|Net sales                       |         | $ | 86,068,000    |            |                  | $ | 85,524,000   |            |              | $ | 170,988,000 |            |  | $ | 173,644,000 |           
|                                |         |   |               |            |                  |   |              |            |              |   |             |            |  |   |             |           
|Gross profit                    |         | $ | 32,173,000    |            |                  | $ | 33,573,000   |            |              | $ | 64,285,000  |            |  | $ | 68,029,000  |           
|                                |         |   |               |            |                  |   |              |            |              |   |             |            |  |   |             |           
|Operating income                |         | $ | 7,522,000     |            |                  | $ | 24,334,000   |            |              | $ | 27,081,000  |            |  | $ | 49,082,000  |           
|                               
|                               
|                               
|                               
|Interest income, net            |         |   | 1,375,000     |            |                  |   | 1,175,000    |            |              |   | 2,922,000   |            |  |   | 2,225,000   |           
|                                |         |   |               |            |                  |   |              |            |              |   |             |            |  |   |             |           
|Income before income taxes      |         |   | 8,897,000     |            |                  |   | 25,509,000   |            |              |   | 30,003,000  |            |  |   | 51,307,000  |           
|                               
|                               
|                               
|                               
|Provision for income taxes      |         |   | 3,292,000     |            |                  |   | 9,566,000    |            |              |   | 11,102,000  |            |  |   | 19,240,000  |           
|                                |         |   |               |            |                  |   |              |            |              |   |             |            |  |   |             |           
|Net income                      |         | $ | 5,605,000     |            |                  | $ | 15,943,000   |            |              | $ | 18,901,000  |            |  | $ | 32,067,000  |           
|                                |         |   |               |            |                  |   |              |            |              |   |             |            |  |   |             |           
|Weighted Average Common Shares:
|                               
|                               
|                               
|                               
|                                | Basic   |   |               | 30,111,000 |                  |   |              | 31,855,000 |              |   |             | 30,286,000 |  |   |             | 31,954,000 | 
|                               
|                               
|                               
|                               
|                                | Diluted |   |               | 30,157,000 |                  |   |              | 32,047,000 |              |   |             | 30,339,000 |  |   |             | 32,157,000 | 
|                               
|                               
|                               
|                               
|Earnings Per Share:            
|                               
|                               
|                               
|                               
|                                | Basic   |   | $             | .19        |                  |   | $            | .50        |              |   | $           | .62        |  |   | $           | 1.00       | 
|                               
|                               
|                               
|                               
|                                | Diluted |   | $             | .19        |                  |   | $            | .50        |              |   | $           | .62        |  |   | $           | 1.00       | 

See accompanying notes to consolidated condensed financial statements.

2



---



---

KAYDON CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

---

|                                                             |                                        |   |                  |             |              |   |             |             |  
|------------------------------------------------------------ | -------------------------------------- | - | ---------------- | ----------- | ------------ | - | ----------- | ----------- | -
|                                                             |                                        |   | First Half Ended
|                                                             |                                        |   |                 
|                                                             |                                        |   | July 1, 2000     |             | July 3, 1999
|                                                             |                                        |   |                  |             |             
|Cash flows from operating activities                         |                                        | $ | 36,510,000       |             |              | $ | 32,318,000  |            
|                                                             |                                        |   |                  |             |              |   |             |            
|Cash flows from (used in) investing activities:             
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Capital expenditures, net              |   |                  | (6,343,000  | )            |   |             | (5,585,000  | )
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Acquisition of business                |   |                  | (1,248,000  | )           
|                                                             |                                        |   |                  |             |              |   |             |            
|Cash used in investing activities                            |                                        |   | (7,591,000       | )           |              |   | (5,585,000  | )          
|                                                             |                                        |   |                  |             |              |   |             |            
|                                                            
|                                                            
|                                                            
|                                                            
|Cash flows from (used in) financing activities:             
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Proceeds from issuance of common stock |   |                  | 597,000     |              |   |             | 760,000     |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Dividends paid                         |   |                  | (6,788,000  | )            |   |             | (6,405,000  | )
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Net payments on debt                   |   |                  | (46,000     | )           
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Purchase of treasury stock             |   |                  | (14,414,000 | )            |   |             | (10,517,000 | )
|                                                             |                                        |   |                  |             |              |   |             |            
|Cash used in financing activities                            |                                        |   | (20,651,000      | )           |              |   | (16,162,000 | )          
|                                                             |                                        |   |                  |             |              |   |             |            
|Effect of exchange rate changes on cash
and cash equivalents |                                        |   | (328,000         | )           |              |   | (316,000    | )          
|                                                             |                                        |   |                  |             |              |   |             |            
|Net increase (decrease) in cash and cash equivalents         |                                        |   | 7,940,000        |             |              |   | 10,255,000  |            
|                                                            
|                                                            
|                                                            
|                                                            
|Cash and cash equivalents  Beginning of period              |                                        |   | 89,749,000       |             |              |   | 96,203,000  |            
|                                                             |                                        |   |                  |             |              |   |             |            
|Cash and cash equivalents  End of period                    |                                        | $ | 97,689,000       |             |              | $ | 106,458,000 |            
|                                                             |                                        |   |                  |             |              |   |             |            
|Cash expended for income taxes                               |                                        | $ | 13,424,000       |             |              | $ | 18,850,000  |            
|                                                             |                                        |   |                  |             |              |   |             |            

See accompanying notes to consolidated condensed financial statements.

3



---



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,
1999.
|   
|   
|   
|   
|   
|   
|   
|   
|(2) |  | Inventories are summarized as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

|                |  |              |            |                   |  |   |            | 
|--------------- |  | ------------ | ---------- | ----------------- |  | - | ---------- | 
|                |  | July 1, 2000 |            | December 31, 1999
|                |  |              |            |                  
|Raw Material    |  | $            | 22,948,000 |                   |  | $ | 22,970,000 | 
|               
|               
|               
|               
|Work in Process |  |              | 15,549,000 |                   |  |   | 15,372,000 | 
|               
|               
|               
|               
|Finished Goods  |  |              | 22,888,000 |                   |  |   | 22,666,000 | 
|                |  |              |            |                   |  |   |            | 
|                |  | $            | 61,385,000 |                   |  | $ | 61,008,000 | 
|                |  |              |            |                   |  |   |            | 

|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) |  | 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 $(1,731,000) and $(2,049,000), resulting in
comprehensive income of $3,874,000 and $13,894,000 for the quarters ended
July 1, 2000 and July 3, 1999. On a first half basis, other
comprehensive income, net of tax, was approximately ($2,206,000) and
$(2,972,000), resulting in year to date comprehensive income of
$16,695,000 and $29,095,000 for the first halves ended July 1, 2000 and
July 3, 1999.

4



---



|    |  |                                                                                                                                                          
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|(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
|                                                                     |                                                                                       |   |              
|                                                                     |                                                                                       |   | July 1, 2000  |            | July 3, 1999
|                                                                     |                                                                                       |   |               |            |             
|Numerators:                                                         
|Numerators for both
basic and diluted earnings
per share, net income |                                                                                       | $ | 5,605,000     |            |              | $ | 15,943,000 |           
|                                                                     |                                                                                       |   |               |            |              |   |            |           
|Denominators:                                                       
|                                                                     | Denominators for basic earnings
per share, weighted average
common shares outstanding |   |               | 30,111,000 |              |   |            | 31,855,000 | 
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|                                                                     | Potential dilutive shares resulting
from stock options and
restricted stock awards    |   |               | 46,000     |              |   |            | 192,000    | 
|                                                                     |                                                                                       |   |               |            |              |   |            |           
|Denominators for dilutive
earnings per share                         |                                                                                       |   | 30,157,000    |            |              |   | 32,047,000 |           
|                                                                     |                                                                                       |   |               |            |              |   |            |           
|Earnings per share:                                                 
|Basic                                                                |                                                                                       | $ | .19           |            |              | $ | .50        |           
|                                                                     |                                                                                       |   |               |            |              |   |            |           
|Diluted                                                              |                                                                                       | $ | .19           |            |              | $ | .50        |           
|                                                                     |                                                                                       |   |               |            |              |   |            |           

|                                             |                                                                      |                                                                                       |            |            |                  |     |              |            |            |      | 
|-------------------------------------------- | -------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | ---------- | ---------- | ---------------- | --- | ------------ | ---------- | ---------- | ---- | 
|                                             |                                                                      |                                                                                       |            |            | First Half Ended
|                                             |                                                                      |                                                                                       |            |            |                 
|                                             |                                                                      |                                                                                       |            |            | July 1, 2000     |     | July 3, 1999
|                                             |                                                                      |                                                                                       |            |            |                  |     |             
|Numerators:                                 
|                                             | Numerators for both
basic and diluted earnings
per share, net income |                                                                                       | $          | 18,901,000 |                  |     | $            | 32,067,000 |           
|                                             |                                                                      |                                                                                       |            |            |                  |     |              |           
|Denominators:                               
|                                             |                                                                      | Denominators for basic earnings
per share, weighted average
common shares outstanding |            |            | 30,286,000       |     |              |            | 31,954,000 |     
|                                            
|                                            
|                                            
|                                            
|                                             |                                                                      | Potential dilutive shares resulting
from stock options and
restricted stock awards    |            |            | 53,000           |     |              |            | 203,000    |     
|                                             |                                                                      |                                                                                       |            |            |                  |     |              |           
|Denominators for dilutive
earnings per share |                                                                      |                                                                                       | 30,339,000 |            |                  |     | 32,157,000   |           
|                                             |                                                                      |                                                                                       |            |            |                  |     |              |           
|Earnings per share:                         
|                                             |                                                                      |                                                                                       | Basic      |            | $                | .62 |              |            | $          | 1.00 | 
|                                             |                                                                      |                                                                                       |            |            |                  |     |              |           
|                                             |                                                                      |                                                                                       | Diluted    |            | $                | .62 |              |            | $          | 1.00 | 
|                                             |                                                                      |                                                                                       |            |            |                  |     |              |           

5



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | Options to purchase 414,225 shares of common stock at prices ranging from
$24.8125 to $33.3125 per share were outstanding during the second quarter
of 2000, 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
12,000 shares of common stock at $33.3125 per share were outstanding during the second 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.
|   
|   
|   
|   
|    |  | 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) |  | 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.                                                                                                                                                                                      

6



---



Segment financial data (in thousands):

|                                         |  |               |        |              |  |        |         |              |  |            |         |         |  |   |        |              |  |   |     |  |  |   |        |  
|---------------------------------------- |  | ------------- | ------ | ------------ |  | ------ | ------- | ------------ |  | ---------- | ------- | ------- |  | - | ------ | ------------ |  | - | --- |  |  | - | ------ | -
|                                         |  | Quarter Ended
|                                         |  |              
|                                         |  | July 1, 2000  |        | July 3, 1999
|                                         |  |               |        |             
|                                         |  | Custom-       |        |              |  |        |         |              |  |            |         | Custom-
|                                         |  | Engineered    |        |              |  |        |         | Consolidated |  | Engineered |         |         |  |   |        | Consolidated
|                                         |  | Products      |        | Corporate    |  | Totals |         | Products     |  | Corporate  |         | Totals 
|                                         |  |               |        |              |  |        |         |              |  |            |         |        
|Sales                                    |  | $             | 86,424 |              |  |        |         |              |  | $          | 86,424  |         |  | $ | 86,843 |              |  |   |     |  |  | $ | 86,843 |  
|                                        
|                                        
|                                        
|                                        
|Elimination of
intercompany sales        |  |               | (356   | )            |  |        |         |              |  |            | (356    | )       |  |   | (1,319 | )            |  |   |     |  |  |   | (1,319 | )
|                                         |  |               |        |              |  |        |         |              |  |            |         |         |  |   |        |              |  |   |     |  |  |   |        |  
|Total net sales                          |  | $             | 86,068 |              |  |        |         |              |  | $          | 86,068  |         |  | $ | 85,524 |              |  |   |     |  |  | $ | 85,524 |  
|                                         |  |               |        |              |  |        |         |              |  |            |         |         |  |   |        |              |  |   |     |  |  |   |        |  
|Segment earnings
before interest
and tax |  | $             | 20,192 |              |  |        |         |              |  | $          | 20,192  |         |  | $ | 24,768 |              |  |   |     |  |  | $ | 24,768 |  
|                                        
|                                        
|                                        
|                                        
|Unallocated
amounts                      |  |               | 0      |              |  | $      | (11,295 | )            |  |            | (11,295 | )       |  |   | 0      |              |  | $ | 741 |  |  |   | 741    |  
|                                         |  |               |        |              |  |        |         |              |  |            |         |         |  |   |        |              |  |   |     |  |  |   |        |  
|Income before
income taxes               |  | $             | 20,192 |              |  | $      | (11,295 | )            |  | $          | 8,897   |         |  | $ | 24,768 |              |  | $ | 741 |  |  | $ | 25,509 |  
|                                         |  |               |        |              |  |        |         |              |  |            |         |         |  |   |        |              |  |   |     |  |  |   |        |  

|                                         |  |                  |         |              |  |        |         |              |  |            |         |         |  |   |         |              |  |   |       |  |  |   |         |  
|---------------------------------------- |  | ---------------- | ------- | ------------ |  | ------ | ------- | ------------ |  | ---------- | ------- | ------- |  | - | ------- | ------------ |  | - | ----- |  |  | - | ------- | -
|                                         |  | First Half Ended
|                                         |  |                 
|                                         |  | July 1, 2000     |         | July 3, 1999
|                                         |  |                  |         |             
|                                         |  | Custom-          |         |              |  |        |         |              |  |            |         | Custom-
|                                         |  | Engineered       |         |              |  |        |         | Consolidated |  | Engineered |         |         |  |   |         | Consolidated
|                                         |  | Products         |         | Corporate    |  | Totals |         | Products     |  | Corporate  |         | Totals 
|                                         |  |                  |         |              |  |        |         |              |  |            |         |        
|Sales                                    |  | $                | 171,849 |              |  |        |         |              |  | $          | 171,849 |         |  | $ | 176,592 |              |  |   |       |  |  | $ | 176,592 |  
|                                        
|                                        
|                                        
|                                        
|Elimination of
intercompany
sales        |  |                  | (861    | )            |  |        |         |              |  |            | (861    | )       |  |   | (2,948  | )            |  |   |       |  |  |   | (2,948  | )
|                                         |  |                  |         |              |  |        |         |              |  |            |         |         |  |   |         |              |  |   |       |  |  |   |         |  
|Total net sales                          |  | $                | 170,988 |              |  |        |         |              |  | $          | 170,988 |         |  | $ | 173,644 |              |  |   |       |  |  | $ | 173,644 |  
|                                         |  |                  |         |              |  |        |         |              |  |            |         |         |  |   |         |              |  |   |       |  |  |   |         |  
|Segment earnings
before interest
and tax |  | $                | 40,441  |              |  |        |         |              |  | $          | 40,441  |         |  | $ | 49,875  |              |  |   |       |  |  | $ | 49,875  |  
|                                        
|                                        
|                                        
|                                        
|Unallocated
amounts                      |  |                  | 0       |              |  | $      | (10,438 | )            |  |            | (10,438 | )       |  |   | 0       |              |  | $ | 1,432 |  |  |   | 1,432   |  
|                                         |  |                  |         |              |  |        |         |              |  |            |         |         |  |   |         |              |  |   |       |  |  |   |         |  
|Income before
income taxes               |  | $                | 40,441  |              |  | $      | (10,438 | )            |  | $          | 30,003  |         |  | $ | 49,875  |              |  | $ | 1,432 |  |  | $ | 51,307  |  
|                                         |  |                  |         |              |  |        |         |              |  |            |         |         |  |   |         |              |  |   |       |  |  |   |         |  

|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | There has been no change in the basis or measurement of segmentation
since the last annual report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|   
|   
|   
|(6) |  | 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

7



---



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 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
Corporation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

8



---



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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 the discovery phase is well underway.

|                                                                                                                                                                                                                                                                                                         
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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.
A provision is recorded in the consolidated financial statements equal to
the Companys most current and best estimates to litigate these
legal actions.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Since June 1996, the Company and certain employees have received
subpoenas 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, and Kaydon employee
testimony 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

9



---



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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. A supplemental review dated
November 30, 1999 with a First Endorsement dated December 10, 1999 further
reviewed the JAG investigation and the Sikorsky Mishap Board investigation.
The Supplemental Review and related First Endorsement contradict certain
findings contained in the earlier JAG Report and related First
Endorsement. Management believes that none of the findings contained in
these reviews are conclusive, and management further believes it has
meritorious defenses against any claims relating to alleged quality
problems or deficiencies in its products. Accordingly, no provision has
been reflected in the consolidated financial statements for any alleged
damages. A provision is recorded in the consolidated financial
statements equal to the Companys most current and best estimates to
litigate these legal actions.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|During the second quarter of 2000, a $12,637,000 provision was recorded
in order to support the Companys most current and best estimates to
litigate the Transactions Lawsuit and the Sikorsky matter discussed
above. The change in the estimates during the second quarter resulted
from current spending levels and substantial new information regarding
forecasted spending levels to complete the discovery stages of these cases,
and to try the cases by the end of 2002. The Company now estimates
that annual spending of as much as $5,250,000 to $6,250,000 related
to these two legal matters will continue through 2002.

|                                                                                                                                                                                                                                                                                           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Various other claims, lawsuits and environmental matters arising in the
normal course of business are pending against the Company. A provision is
recorded in the consolidated financial statements equal to the Companys
most current and best estimates to litigate these legal actions.

10



---



---

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

---

Results of Operations

During the second quarter of 2000, Kaydon Corporation and subsidiaries (the
Company) achieved sales of $86,068,000, up 0.6 percent from $85,524,000 in
the second quarter of 1999. Results for the quarter reflect recent
acquisitions and modest recoveries in certain markets served by Kaydon
including sales of specialty bearings to the semiconductor equipment market,
industrial sealing products and repairs, as well as the specialty ball market.
However, these improvements were offset by the absence of recoveries in certain
other key markets including the heavy construction equipment and offshore oil
markets.

Gross profit during the second quarter of 2000 of $32,173,000 was 37.4 percent
of sales, compared with $33,573,000 or 39.3 percent of sales in the second
quarter of 1999. While below the 1999 second quarter levels, the gross profit
percentage achieved in the second quarter of 2000 was relatively consistent
with gross profit percentages achieved during the last two quarters of 1999 and
the first quarter of 2000. Operating income during the second quarter of 2000
was $7,522,000 or 8.7 percent of sales as compared to $24,334,000 or 28.5
percent of sales in the 1999 second quarter.

The operating income results were negatively impacted by a pre-tax $12,637,000
provision recorded during the second quarter of 2000 to support the Companys
most current and best estimates of expenses to litigate various legal actions.
The after tax effect of this litigation charge was $7,961,000 or $.26 per
share. These legal actions relate to the so-called Transactions Lawsuit, as
well as the so-called Sikorsky Matter further discussed in detail in the Notes
to Consolidated Condensed Financial Statements. The change in the estimates
during the second quarter resulted from current spending levels and substantial
new information regarding forecasted spending levels to complete the discovery
stages of these cases, and to try the cases by the end of 2002.  The Company now estimates
that annual spending of as much as $5,250,000 to $6,250,000 related
to these two legal matters will continue through 2002. Kaydon is
prepared to continue vigorous defenses based on the merits of these matters.

Second quarter sales and operating income results continue to
reflect the effects of softness in many of the heavy industrial
equipment markets that Kaydon products serve, including construction,
mining, forestry and power generation equipment.  Particularly
effected by the lack of demand from these markets are Kaydon's Cooper
Roller Bearings subsidiary in the United Kingdom and its Fluid Power
Products division.

Certain charges for headcount reductions and fixed asset write-offs were recorded
during the first quarter of 2000 at Cooper Roller Bearings related
to the discontinuance of their power transmission parts business and
during the second quarter the Company began a restructuring of its
Fluid Power Products division. The restructuring involves the closing of one of the
divisions four facilities with its operations integrated into the other three
divisional locations. The restructuring of the Fluid Power Products division,
involving total estimated expenditures of approximately $2.0 million during
2000, is expected to result in future annualized cost savings in excess of $2.0
million.

Amortization expense related to goodwill generated as a result of the two
strategic

11



---



---

acquisitions completed by the Company in late 1999 also negatively
affected the second quarter compared to the same period last year. The 1999
acquisitions on a
whole, while currently adding sales volume have yet to have a comparable
operating income impact as the Company is in the process of fully integrating
the new businesses.

Net interest income of $1,375,000 during the second quarter of 2000 was up
$200,000 from $1,175,000 over last years comparable period as higher
prevailing investment rates offset slightly lower cash balances.

Second quarter 2000 net income, including the after tax effect of the
litigation charge of $7,961,000, was $5,605,000, or 6.5 percent of sales.
Earnings per share on a diluted basis, including the after tax effect of the
litigation charge of $.26, equaled $.19. Second quarter 1999 net income and
diluted earnings per share were $15,943,000 and $.50.

The effective tax rate during the 2000 second quarter was 37.0 percent compared
to 37.5 percent in the second quarter 1999. The lower rate is due to more
state tax planning efforts.

Sales for the first half of 2000 were $170,988,000, a decrease of 1.5 percent
over last years $173,644,000 reflecting the softness in certain major markets
served by Kaydon. As a result of the lower sales volume and mix of products
sold, gross profit for the first half of 2000 decreased to $64,285,000 or 37.6
percent of sales as compared to $68,029,000 or 39.2 percent of sales during the
first half of 1999. Operating income during the first half of 2000, including
the previously mentioned litigation charge in the second quarter, was
$27,081,000 or 15.8 percent of sales as compared to $49,082,000 or 28.3 percent
of sales in the 1999 first half.

Net income for the first half of 2000, including the previously mentioned
litigation charge, was $18,901,000 or 11.1 percent of sales, while earnings per
share on a diluted basis equaled $.62. First half 1999 net income was
$32,067,000 or 18.5 percent of sales, while earnings per share on a diluted
basis equaled $1.00.

Liquidity and Capital Resources

Working capital was $166,518,000 at July 1, 2000 reflecting a current ratio of
3.8 to 1 compared to $157,370,000 and a current ratio of 3.9 to 1 at year-end
1999. Cash flow from operations was a record $36,510,000 during the first
half, up from $32,318,000 for the same period in 1999.

Depreciation and amortization for the first half of 2000 totaled $8,978,000
compared to $8,266,000 in the first half of 1999. Increases are primarily due
to the previously mentioned acquisitions completed in late 1999.

12



---



---

Cash and cash equivalents equaled $97,689,000 at July 1, 2000, up $7,940,000
over the balance at year-end 1999 of $89,749,000. This increase reflects
strong operating cash flow offset by capital expenditures of $6,343,000,
dividend payments of $6,788,000, the repurchase of 609,472 shares of common
stock for $14,414,000, and acquisition costs of $1,248,000 primarily associated
with the purchase of the assets of a small manufacturer of fuel cleansing systems.

Management expects that the Companys planned capital requirements for the
remainder of 2000, which consists of capital expenditures, dividend payments
and its stock repurchase program will be financed by operations and existing
cash balances.

Outlook

The Companys backlog at July 1, 2000 was $118,348,000 compared to $117,621,000
at the end of 1999. Based upon current business indications, including quoting
activity and future business forecasts for Kaydon customers end-markets, we
believe orders will increase only slightly for the third quarter of 2000 with a
more significant increase not expected until the fourth quarter of 2000 and in
to 2001. Specifically, it is expected that we will benefit from a rebound of
capital spending in the offshore oil market and growth in the construction
equipment market. Expected operating cash flows coupled with the Companys
current cash reserves and the Companys $300,000,000 credit facility will
provide substantial resources to fund the Companys 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, litigation expenses and
business development activity. The Company may not update these expectations to
reflect subsequent events. Such forward-looking information involves risks and
uncertainties that could significantly affect expected results. These risks
and uncertainties include, but are not limited to, uncertainties as to economic
conditions, market acceptance of new or enhanced versions of the
Companys
products, the pricing of raw materials, changes in the competitive environments
in which the Companys businesses operate and the outcome of pending and future
litigation and governmental proceedings. Readers are cautioned to consider
these factors when relying on such forward-looking information.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to certain market risks which exist as part of its
ongoing business operations including interest rates and foreign currency
exchange rates. The Company believes that the potential effect of these risks
in the near term should not materially affect the Companys financial position.

13



---



---

|         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|PART II. |  | OTHER INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        
|        
|        
|        
|        
|        
|        
|        
|Item 1.  |  | Legal Proceedings. See the
discussion in the Notes to Consolidated Condensed Financial
Statements.                                                                                                                                                                                                                                                                                                                                                                                                  
|        
|        
|        
|        
|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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|        
|        
|        
|        
|        
|        
|        
|        
|         |  | On May 24, 2000, the Company
filed a Form 8-K under Item 5 reporting the adoption of a new preferred share
purchase rights plan.  This new plan replaces the former shareholders
rights plan which was to expire as of July 7, 2000.  The rights will
be exercisable only if a person or group acquires 15 percent or more of
Kaydon's common stock or announces a tender offer, the consummation
of which would result in ownership by a person or group of 15 percent
or more of the common stock.

14



---



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                     
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|August 11, 2000 |  | /s/ Brian P. Campbell                  
|                |  |                                        
|                |  | Brian P. Campbell                      
|               
|               
|               
|               
|                |  | Chairman, President, Chief Executive   
|               
|               
|               
|               
|                |  | Officer and Chief Financial Officer    
|               
|               
|               
|               
|                |  | (Principal Executive Officer and       
|               
|               
|               
|               
|                |  | Principal Financial Officer)           
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|               
|August 11, 2000 |  | /s/ Kenneth W. Crawford                
|                |  |                                        
|                |  | Kenneth W. Crawford                    
|               
|               
|               
|               
|                |  | Vice President and Corporate Controller
|               
|               
|               
|               
|                |  | (Principal Accounting Officer)         

15



---



Exhibit Index

|            |  |                        
|----------- |  | -----------------------
|Exhibit No. |  | Description            
|            |  |                        
|27          |  | Financial Data Schedule