Annual Report (Form 10-K), fiscal year 1994

ITEM 1. BUSINESS
Kaman Corporation, incorporated in 1945, and its subsidiaries (collectively, the "Corporation") serve government, industrial and commercial markets through two industry segments: Diversified Technologies and Distribution. The Diversified Technologies group provides design and manufacture of advanced technology products and systems, advanced technology services and aircraft manufacturing. The Distribution segment distributes industrial products, distributes and manufactures music products and provides support services to its customers and provides aviation services.
DIVERSIFIED TECHNOLOGIES
The Diversified Technologies segment consists of several wholly-owned subsidiaries, including Kaman Diversified Technologies Corporation, Kaman Aerospace Corporation, Kaman Sciences Corporation, Kamatics Corporation, Kaman Electromagnetics Corporation, and Kaman Instrumentation Corporation, as well as a 50% interest in Advanced Energetic Materials Corporation of America. A former Diversified Technologies subsidiary, Raymond Engineering Inc., was merged into Kaman Aerospace Corporation on January 31, 1995.
The Diversified Technologies segment develops and manufactures various advanced technology products and systems which are used in markets that the Corporation serves. Among the products manufactured are self lubricating bearings used on aircraft and in other systems, flexible couplings for helicopters, precision measuring instruments, composite flyer bows, RF transmission and delay lines, telecommunication products, photonic and optical systems, ruggedized tape and disk memory systems used primarily in aircraft, and safing and fuzing systems for use in missiles. The Corporation also develops and produces various motors, generators, alternators, launchers and electric drive systems using electromagnetic technology. In addition, the Corporation has contracts with the U.S. government for a number of advanced technology programs relating to some of the systems described above and to other proprietary systems developed by the Corporation. The Corporation's merger of its Raymond Engineering Inc. subsidiary into Kaman Aerospace Corporation was undertaken in order to downsize Raymond Engineering's operations and to focus on advanced technology product areas which, in the opinion of the Corporation, demonstrate the most potential for future success.
As a second category of its business, the Diversified Technologies segment also provides advanced technology services to a number of customers, including all branches of the armed forces, various Government agencies, the Department of Energy, Department of Transportation, various defense contractors, utilities and industrial organizations. The services offered include software engineering and maintenance, operation of Government information analysis centers, field and laboratory testing services, communication system design and analysis, specialized sensor design, electromagnetic interference and compatibility evaluations, analysis and simulation of electronic signals, various types of artificial intelligence systems and weapon system evaluation.
A third category of this segment's business is aircraft manufacturing, including the development and manufacture of helicopters and the integration of systems related to helicopters. The Corporation is the prime contractor for the SH-2 series helicopter, a multi-mission aircraft presently serving the U.S. Navy with two squadrons of the SH-2G configuration of such helicopter in the Navy's Reserve fleet. Reductions in defense spending resulted in the phasing out of the SH-2 series helicopter from the Navy's Active (non-Reserve) fleet in 1994 and the Corporation's contract with the Navy for retrofitting certain model SH-2F helicopters to the SH-2G configuration was completed in 1994. The Corporation is exploring long term foreign military sales potential for retrofitting SH-2G helicopters, as maritime helicopters operating off FF-1052 class frigates being leased to foreign governments by the U.S. Navy. In 1994 the Arab Republic of Egypt signed a letter of agreement for the foreign military sale of ten retrofitted SH-2G helicopters having dipping sonar capability. The Corporation is in the process of negotiating its contract with the U.S. Navy to perform such retrofit work for such helicopters which is expected to have a value of $100 million over a three year period. The Corporation also produces a new commercial helicopter, known as the K-MAX (registered trademark) "aerial truck" incorporating intermeshing rotor technology developed by the Corporation. The K-MAX is a medium lift helicopter designed to provide superior operational capabilities. The Corporation has devoted a substantial portion of its research and development activities to this product during the past several years and continues to do so. In 1994 the Corporation received Federal Aviation Administration (FAA) type certification and a total of five (5) K-MAX helicopters were delivered to customers under a special lease program in order to maintain active involvement in the product's introduction to the marketplace.
Kaman manufactures subcontract aircraft products for government and commercial customers on programs such as the McDonnell Douglas C-17 and the Boeing 767 and 777, and is involved in various programs requiring development of new technologies such as composite structural components for the and V-22 aircraft. It also manufactures composite rotor blades for helicopters, and airborne laser-based electro-optical imaging and detection systems for military and commercial operations. Such electro-optical systems include imaging LIDAR systems and the Corporation's proprietary Magic Lantern (registered trademark) system which allows underwater objects to be detected from an airborne platform.
DISTRIBUTION
The Distribution segment consists of several wholly-owned subsidiaries including the following: Kaman Industrial Technologies Corporation, Kaman Music Corporation, and AirKaman of Jacksonville, Inc. This segment distributes industrial products, manufactures and distributes music products, and provides aviation services.
Kaman Industrial Technologies Corporation is a national distributor of industrial products operating through more than 150 service centers located in 29 states and British Columbia, Canada. The Corporation supplies a broad range of industries with original equipment, repair and replacement products needed to maintain traditional manufacturing processes and, increasingly, with products of higher technological content that are required to support automated production processes. The Corporation serves nearly every sector of heavy and light industry, including automobile manufacturing, agriculture, food processing, pulp and paper manufacturing, mining, chemicals, electronics and general manufacturing. Products available include various types of standard and precision mounted and unmounted bearings; mechanical power transmission equipment such as V-belts, couplings, and gear reducers; electrical power transmission products, motors, AC/DC controls, sensors and motion control devices; materials handling equipment, belts, conveyor idlers and pulleys; hydraulic drive systems and parts; and accessory products such as lubricants and seals. Although the vast majority of the company's business consists of resale of products, operations include some design, fabrication, and assembly work in connection with products sold.
The Corporation continues to develop certain support service capabilities in order to meet the maintenance needs of its customers' manufacturing operations. These services include electrical panel and systems fabrication centers capabilities and similar capabilities for hydraulic and pneumatic control panels, linear positioning systems, and material handling systems. In 1994 the Corporation, on a limited basis, continued to act as a supplier of capital equipment to various systems engineering and manufacturing customers by acting as a sales agent for certain equipment manufacturers. As the Corporation has entered new market areas, it has invested in new product inventory and in some instances it has established inventory on consignment in customer locations. The Corporation maintains a management information system, consisting of an on-line computer network linking all of its mainland U.S. and Canadian industrial distribution facilities, which enhances its ability to provide more efficient nationwide service and to improve inventory management. In addition, the Corporation has undertaken initiatives to address the needs of certain national account customers that desire to reduce their vendor base by entering into "partnering" relationships to broaden geographical coverage.
Kaman Music Corporation distributes more than 13,000 different music instruments and accessories to independent retailers in the United States, Canada, and Great Britain and to international distributors throughout the world. Products include acoustic, acoustic-electric and electric guitars and basses, music strings for all fretted instruments, drums, percussion products and related accessories, instrument and P.A. amplification systems, electronic tuners and metronomes, educational percussion and brass instruments and a full range of accessories for all musical instruments. The Corporation manufactures and distributes certain guitars under the Corporation's various brand names including Ovation and Hamer guitars, fretted musical instrument strings of various brands, and the Trace Elliot range of stringed instrument amplification equipment. In 1994 the Corporation acquired B & J Music Ltd., a Canadian distributor of musical instruments. Operations of Kaman Music Corporation are conducted through three (3) manufacturing facilities and seven (7) distribution centers in the United States and Canada, an international sales division based in the United States and a manufacturing and distribution facility in Great Britain.
The segment also distributes aviation fuel and provides aviation services at Jacksonville International Airport, Jacksonville, Florida where the Corporation conducts fixed base operations for general and commercial aviation under a contract with the Port Authority of the City of Jacksonville which extends through the year 2008.
FINANCIAL INFORMATION
Information concerning each segment's performance for the last three fiscal years appears in the Corporation's 1994 Annual Report to Shareholders and is included in Exhibit 13 to this Form 10-K, and is incorporated by reference.
PRINCIPAL PRODUCTS AND SERVICES
Following is information for the three preceding fiscal years concerning the percentage contribution of the Corporation's classes of products and services to the Corporation's consolidated net sales:
RESEARCH AND DEVELOPMENT EXPENDITURES
Government sponsored research expenditures by the Diversified Technologies segment were $123.7 million in 1994, $142.3 million in 1993, and $124.5 million in 1992. Independent research and development expenditures were $21.1 million in 1994, $18.4 million in 1993, and $17.8 million in 1992.
BACKLOG
Program backlog of the Diversified Technologies segment was approximately $228.9 million at December 31, 1994, $240.8 million at December 31, 1993, and $361.4 million at December 31, 1992. The Corporation anticipates that approximately 88.9% of its backlog at the end of 1994 will be performed in 1995. Approximately 69.1% of the backlog at the end of 1994 is related to government contracts or subcontracts which are included in backlog to the extent that funding has been appropriated by Congress and allocated to the particular contract by the relevant procurement agency. Certain of these government contracts, less than 1% of the backlog, have been funded but not signed.
GOVERNMENT CONTRACTS
During 1994, approximately 50% of the work performed by the Corporation directly or indirectly for the United States government was performed on a fixed-price basis and the balance was performed on a cost-reimbursement basis. Under a fixed-price contract, the price paid to the contractor is negotiated at the outset of the contract and is not generally subject to adjustment to reflect the actual costs incurred by the contractor in the performance of the contract. Cost reimbursement contracts provide for the reimbursement of allowable costs and an additional negotiated fee.
The Corporation's United States government contracts and subcontracts contain the usual required provisions permitting termination at any time for the convenience of the government with payment for work completed and associated profit at the time of termination.
COMPETITION
The Diversified Technologies segment operates in a highly competitive environment with many other organizations which are substantially larger and have greater financial and other resources. For sales of advanced technology products and systems, the Corporation competes with a wide range of manufacturers primarily on the basis of price and the quality, endurance, reliability and special performance characteristics of those products. Operations also depend in part on the ability to develop new technologies which have effective commercial and
military applications. Examples of proprietary or patented products developed by the Corporation include the Magic Lantern (Registered Trademark) system for detecting underwater objects from a helicopter, the Kamatics line of specialty bearings and the Corporation's line of electromagnetic motors and drives, among others. In providing scientific services and systems development, the Corporation competes primarily on the basis of the technical capabilities and experience of its personnel in specific fields. When bidding for aerospace contracts and subcontracts, the Corporation competes on the basis of price and quality of its products and services as well as the availability of its facilities, equipment and personnel to perform the contract. Defense market conditions have been significantly affected by an ongoing slowdown in defense spending; continued decreases in federal government expenditures are anticipated in future periods as well. During 1994 the Department of Defense actively pursued its implementation of defense acquisition reform by emphasizing the use of commercially developed state-of-the-art technology products and performance-based procurement standards rather than traditional military specification standards. The change in defense program emphasis and greater constraints in the federal budget have increased the level of competition for defense programs. The Corporation's contract to retrofit certain of its SH-2 series helicopters to the SH-2G configuration for the U.S. Navy was completed in 1994 and, as the U.S. Navy reduces the size of its fleet, the Corporation expects a corresponding reduction in the level of logistics and spare parts required. In providing spare parts, the Corporation competes with other helicopter manufacturers on the basis of price, performance and product capabilities and also on the basis of its experience as a manufacturer of helicopters. The Corporation's FAA certificated K-MAX helicopters will compete with other helicopters suitable for lifting, with surplus U.S. military helicopters, and with alternative methods of meeting lifting requirements.
Distribution operations are subject to a high degree of competition from several other national distributors and many regional and local firms both in the U.S. and elsewhere in the world. Certain musical instrument products of the Corporation are subject to competition from U.S. and foreign manufacturers also. The Corporation competes in these markets on the basis of service, price, performance, and inventory variety and availability.
The Corporation also competes on the basis of quality and market recognition of its music products and has established certain trademarks and trade names under which certain of its music products are produced both in the United States and under private label manufacturing in foreign countries.
EMPLOYEES
As of December 31, 1994, the Corporation employed 5,239 individuals throughout its industry segments as follows:
PATENTS AND TRADEMARKS
The Corporation holds patents reflecting scientific and technical accomplishments in a wide range of areas covering both basic production of certain products, including aerospace products and musical instruments, as well as highly specialized devices and advanced technology products in such areas as nuclear sciences, strategic defense and other commercial, scientific and defense related fields.
Although the Corporation's patents enhance its competitive position, management believes that none of such patents or patent applications is singularly or as a group essential to its business as a whole. The Corporation holds or has applied for U.S. and foreign patents with expiration dates that range through the year 2011.
These patents are allocated among the Corporation's industry segments as follows:
Trademarks of Kaman Corporation include Adamas, Applause, Hamer, KAflex, KAron, K-Max, Magic Lantern, and Ovation. In all, the Corporation maintains 208 U.S. and foreign trademarks with 51 applications pending, most of which relate to music products in the Distribution segment.
COMPLIANCE WITH ENVIRONMENTAL PROTECTION LAWS
In the opinion of management, based on the Corporation's knowledge and analysis of relevant facts and circumstances, there will be no material adverse effect upon the capital expenditures, earnings or competitive position of the Corporation or any of its subsidiaries occasioned by compliance with any environmental protection laws.
The Corporation is subject to the usual reviews and inspections by environmental agencies of the various states in which the Corporation has facilities, and the Corporation has entered into agreements and consent decrees at various times in connection with such reviews. On occasion the Corporation also has been identified as a potentially responsible party ("PRP") by the U.S. Environmental Protection Agency in connection with its investigation of certain waste disposal sites. In each such instance to date, the Corporation's involvement, if any, has been either of a de minimis nature or the Corporation has been able to determine, based on its current knowledge, that resolution of such matters is not likely to have a material adverse effect on the future financial condition of the Corporation.
In arriving at this conclusion, the Corporation has taken into consideration site-specific information available regarding total costs of any work to be performed, and the extent of work previously performed. Where the Corporation has been identified as a PRP at a particular site, the Corporation, using information available to it, also has reviewed and considered (i) the financial resources of other PRP's involved in each site, and their proportionate share of the total volume of waste at the site; (ii) the existence of insurance, if any, and the financial viability of the insurers; and (iii) the success others have had in receiving reimbursement for similar costs under similar policies issued during the periods applicable to each site.
FOREIGN SALES
Ninety-three percent (93%) of the sales of the Corporation are made to customers located in the United States. In 1994, the Corporation continued its efforts to develop international markets for its products and foreign sales (including sales for export).
ITEM 2.



ITEM 2. PROPERTIES
The Corporation occupies approximately 4.6 million square feet of space throughout the United States, Canada, and Great Britain, distributed as follows:
Diversified Technologies principal facilities are located in Arizona, Colorado, Connecticut, Florida, Massachusetts, Pennsylvania and Virginia; other facilities including offices and smaller manufacturing and assembly operations are located in several other states. These facilities are used for manufacturing, scientific research and development, engineering and office purposes. The U.S. Government owns 154 thousand square feet of the space occupied by Kaman Aerospace Corporation in Bloomfield, Connecticut in accordance with a facility contract. In 1994 the Corporation purchased an 80 thousand square foot office building in Colorado Springs, Colorado, for use by its subsidiary, Kaman Sciences Corporation.
The Distribution segment occupies approximately 2.1 million square feet of space throughout the United States with principal facilities located in California, Connecticut, New York, Texas and Utah; approximately 100 thousand square feet of space in British Columbia, Canada; approximately 40 thousand square feet of space in Ontario, Canada; and approximately 150 thousand square feet of space in Essex, England. These facilities consist principally of regional distribution centers, service centers and office space with a portion used for fabrication and assembly work. Also included are facilities used for manufacturing musical instruments, and facilities leased in Florida for aviation services operations.
Kaman Corporation occupies a 40 thousand square foot Corporate headquarters building in Bloomfield, Connecticut.
The Corporation's facilities are suitable and adequate to serve its purposes. While substantially all of such properties are currently fully utilized, the Corporation consolidated some of its properties in the Diversified Technologies segment during 1994 and expects to consolidate further in the next few years. Many of the properties, especially within the Distribution segment, are leased and certain of the Corporation's properties are subject to mortgages.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Corporation or any of its subsidiaries is a party or to which any of their property is subject.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the fourth quarter of 1994.
PART II
ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
CAPITAL STOCK AND PAID-IN CAPITAL
Information required by this item appears in the Corporation's 1994 Annual Report to Shareholders and is included in Exhibit 13 to this Form 10-K, and is incorporated herein by reference.
DIVIDEND REINVESTMENT PLAN
Registered shareholders of Kaman Class A common stock are eligible to participate in the Automatic Dividend Reinvestment Program. A booklet describing the plan may be obtained by writing to the Corporation's transfer agent, Chemical Bank, Securityholder Relations, J.A.F. Building, P. O. Box 3068, New York, NY 10116-3068.
Kaman's Depositary Shares (each representing a one-quarter interest in a share of its Series 2 preferred stock, $200 liquidation preference) were issued in October 1993, and traded in a range between 48 and 51 1/2, closing 1993 at 51 1/2.
NASDAQ market quotations reflect inter-dealer prices, without retail mark-up, mark-down, or commission and may not necessarily represent actual transactions.
ANNUAL MEETING
The Annual Meeting of Shareholders will be held on Tuesday, April 18, 1995 at 11:00 a.m. in the offices of the Corporation, 1332 Blue Hills Avenue, Bloomfield, Connecticut 06002.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
Information required by this item appears in the Corporation's 1994 Annual Report to Shareholders and is included in Exhibit 13 to this Form 10-K, and is incorporated herein by reference.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Information required by this item appears in the Corporation's 1994 Annual Report to Shareholders and is included in Exhibit 13 to this Form 10-K, and is incorporated herein by reference.
ITEM 8.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item appears in the Corporation's 1994 Annual Report to Shareholders and is included in Exhibit 13 to this Form 10-K, and is incorporated herein by reference. Additional financial information is contained in the Financial Data Schedule included as Exhibit 27 to this Form 10-K.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Following is information concerning each Director and Executive Officer of Kaman Corporation including name, age, position with the Corporation, and business experience during the last five years:
T. Jack Cahill Mr. Cahill, 46, has held various positions with Kaman Industrial Technologies Corporation, a subsidiary of the Corporation, since 1975. He was appointed President of Kaman Industrial Technologies in 1993.
E. Reeves Callaway, II Mr. Callaway, 47, is a Director Nominee for election at the Corporation's 1995 Annual Meeting of Shareholders. He is President of The Callaway Companies, Inc.
Frank C. Carlucci Mr. Carlucci, 64, has been a Director since 1989. He is Chairman of The Carlyle Group, merchant bankers, having formerly served as Vice Chairman since 1989. Prior to that he served as U.S. Secretary of Defense. Mr. Carlucci is also a Director of Westinghouse Electric Corporation, Ashland Oil, Inc., Bell Atlantic Corporation, General Dynamics Corporation, Neurogen Corporation, Northern Telecom Limited, Quaker Oats Company, The Upjohn Company, Sun Resorts, Inc., and Texas Biotechnology Corporation.
William P. Desautelle Mr. Desautelle, 55, has been Senior Vice President and Treasurer since 1990 and was also designated Chief Investment Officer in April 1992. Prior to that he had served as Vice President and Treasurer.
John A. DiBiaggio Dr. DiBiaggio, 62, has been a Director since 1984. He is President and Chief Executive Officer of Tufts University. Prior to that he was President and Chief Executive Officer of Michigan State University.
Edythe J. Gaines Dr. Gaines, 72, has been a Director since 1982. She is a retired Commissioner of the Public Utility Control Authority of the State of Connecticut.
Robert M. Garneau Mr. Garneau, 50, has been Senior Vice President and Controller since 1990 and was also designated Chief Financial Officer in April, 1992. Prior to that he had served as Vice President and Controller.
Huntington Hardisty Admiral Hardisty (USN-Ret.), 65, has been a Director since 1991. He retired from the U.S. Navy in 1991 having served as Commander-in-Chief for the U.S. Navy Pacific Command since 1988, and presently acts as a consultant to private industry.
Charles H. Kaman Mr. Kaman, 75, has been Chief Executive Officer and Chairman of the Board of Directors since 1945. He was also President from 1945 to 1990.
C. William Kaman II Mr. Kaman, 43, has been a Director since 1992. He has held various positions with Kaman Music Corporation, a subsidiary of the Corporation, since 1974, serving as President of Kaman Music since 1986. Mr. Kaman is the son of Charles H. Kaman, Chairman and Chief Executive Officer of the Corporation.
Walter R. Kozlow Mr. Kozlow, 59, has held various positions with Kaman Aerospace Corporation, a subsidiary of the Corporation, since 1960. He has been President of Kaman Aerospace since 1986.
Hartzel Z. Lebed Mr. Lebed, 67, has been a Director since 1982. He is the retired President of CIGNA Corporation and is a Director of Shawmut National Trust Company.
Harvey S. Levenson Mr. Levenson, 54, has been a Director since 1989. He has been President and Chief Operating Officer since April, 1990. Prior to that he had served as Senior Vice President and Chief Financial Officer. He is also a director of Connecticut Natural Gas Corporation and Security-Connecticut Corporation.
Walter H. Monteith, Jr. Mr. Monteith, 64, has been a Director since 1987. He is the retired Chairman of Southern New England Telecommuni- cations Corporation. Mr. Monteith is also a director of Shawmut Bank.
John S. Murtha Mr. Murtha, 81, has been a Director since 1948. He is counsel to and a former senior partner of the law firm of Murtha, Cullina, Richter and Pinney.
Robert L. Newell Mr. Newell, 72, has been a Director since 1976. He is the retired Chairman of Hartford National Corporation, now a part of Shawmut Bank.
Patrick L. Renehan Mr. Renehan, 61, has been a Vice President of Kaman Diversified Technologies Corporation, a subsidiary of the Corporation, since 1987. Prior to that he served as a Vice President of Kaman Aerospace Corporation.
Wanda L. Rogers Mrs. Rogers, 62, has been a Director since 1991. She is Chief Executive Officer of Rogers Helicopters, Inc. She is also Chairman of the Board of Clovis Community Bank.
Richard E.W. Smith Mr. Smith, 60, was appointed a Vice President of the Corporation in 1989. He has been President of Kaman Diversified Technologies Corporation, a subsidiary of the Corporation, since 1990 and prior to that he served as Vice President of Kaman Sciences Corporation, a subsidiary of the Corporation.
Each Director and Executive Officer has been elected for a term of one year and until his or her successor is elected. The terms of all such Directors and Executive Officers are expected to expire as of the Annual Meeting of the Shareholders and Directors of the Corporation to be held on April 18, 1995.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
A) GENERAL. The following tables provide certain information relating to the compensation of the Corporation's Chief Executive Officer, its four other most highly compensated executive officers and its directors.
B) SUMMARY COMPENSATION TABLE.
1. As of December 31, 1994, aggregate restricted stock holdings and their year end values were: C.H. Kaman, none; H.S. Levenson, 18,200 shares valued at $200,200; W.R. Kozlow, 6,000 shares valued at $66,000; R.M.Garneau, 6,000 shares valued at $66,000; P.L. Renehan, 5,400 shares valued at $59,400. Restrictions lapse at the rate of 20% per year for all awards, beginning one year after the grant date. Awards reported in this column are as follows: H.S. Levenson, 4,000 shares in 1993 and 5,000 shares in 1992; W.R. Kozlow, 3,000 shares each in 1993, and 1992; R. M. Garneau, 3,000 shares each in 1993 and 1992; P. L. Renehan, 3,000 shares in 1993, and 2,500 shares in 1992. Dividends are paid on the restricted stock.
2. Amounts reported in this column consist of: C. H. Kaman, $53,000 - Officer 162 Insurance Program, $2,261 - medical expense reimbursement program ("MERP"); H.S. Levenson, $3,322 - Senior executive life insurance program ("Executive Life"), $4,524 - Officer 162 Insurance Program, $1,875 - employer matching contributions to the Kaman Corporation Thrift and Retirement Plan (the "Thrift Plan employer match"), $1,022 - MERP; W. R. Kozlow, $4,131 - Executive Life, $1,875 - Thrift Plan employer match, $1,238 - MERP; $1,392 - Discretionary cash-out of certain stock options under Stock Incentive Plan; R. M. Garneau, $1,654 - Executive Life, $851 - Officer 162 Insurance Program, $1,875 - Thrift Plan employer match, $465 - MERP; P. L. Renehan, $5,219 - Executive Life, $1,875 - Thrift Plan employer match, $1,120 - MERP.
3. The Corporation maintains a program pursuant to which it pays for tax and estate planning services provided to executive officers by third parties, up to certain limits. $62,164 of the figure reported in this column relates to payments for such services on behalf of Mr. Kaman.
C) OPTION/SAR GRANTS IN THE LAST FISCAL YEAR:
D) AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR, AND FISCAL YEAR-END OPTION/SAR VALUES.
E) LONG TERM INCENTIVE PLAN AWARDS: No long term incentive plan awards were made to any named executive officer in the last fiscal year.
F) PENSION AND OTHER DEFINED BENEFIT DISCLOSURE. The following table shows estimated annual benefits payable at normal retirement age to participants in the Corporation's Pension Plan at various compensation and years of service levels using the benefit formula applicable to Kaman Corporation. Pension benefits are calculated based on 60 percent of the average of the highest five consecutive years of "covered compensation" out of the final ten years of employment less 50 percent of the primary social security benefit, reduced proportionately for years of service less than 30 years:
"Covered Compensation" means "W-2 earnings" or "base earnings", if greater, as defined in the Pension Plan. W-2 earnings for pension purposes consist of salary (including 401(k) and Section 125 Plan contributions but not deferrals under a non-qualified Deferred Compensation Plan), bonus and taxable income attributable to restricted stock awards. Salary and bonus amounts for the named Executive Officers for 1994 are as shown on
the Summary Compensation Table. Compensation deferred under the Corporation's non-qualified deferred compensation plan is included in Covered Compensation here because it is covered by the Corporation's unfunded supplemental employees' retirement plan for the participants in that plan.
Current Compensation covered by the Pension Plan for any named executive whose Covered Compensation differs by more than 10% from the compensation disclosed for that executive in the Summary Compensation Table: Mr. Levenson, $543,618; Mr. Kozlow, $250,185; Mr. Garneau, $230,034; Mr. Renehan, $238,682.
Federal law imposes certain limitations on annual pension benefits under the Pension Plan. For the named executive officers, the excess will be paid under the Corporation's unfunded supplemental employees' retirement plan.
The Executive Officers named in Item 11(b) are participants in the plan and as of January 1, 1995, had the number of years of credited service indicated: Mr. Kaman - 49 years; Mr. Levenson - 12 years; Mr. Kozlow - 35 years; Mr. Garneau - 13 years; and Mr. Renehan - 11 years.
Benefits are computed generally in accordance with the benefit formula described above.
G) COMPENSATION OF DIRECTORS. Non-officer members of the Board of Directors of the Corporation receive an annual retainer of $14,000 and a fee of $750 for attending each meeting of the Board and each meeting of a Committee of the Board, except that the Chairman of the Audit Committee receives $850 for attending each meeting of that Committee. These fees may be received on a deferred basis.
H) EMPLOYMENT CONTRACTS AND TERMINATION, SEVERANCE AND CHANGE OF CONTROL ARRANGEMENTS. Except as described in connection with the Corporation's Pension Plan and the Corporation's non- qualified Deferred Compensation Plan, the Corporation has no employment contract, plan or arrangement with respect to any named executive which relates to employment termination for any reason, including resignation, retirement or otherwise, or a change in control of the Corporation or a change in any such executive officer's responsibilities following a change of control, which exceeds or could exceed $100,000.
I) Not Applicable.
J) COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION DECISIONS.
1) The following persons served as members of the Personnel and Compensation Committee of the Corporation's Board of Directors during the last fiscal year: Dr. Gaines, Mr. Carlucci, Mr. Murtha, Mr. Newell and Mr. Monteith. None of these individuals was an officer or employee of the Corporation or any of its subsidiaries during the last fiscal year. Mr. Murtha was Secretary of the Corporation in years prior to April 1989 and his relationship with the Corporation is further disclosed in Item 13 of this report.
2) During the last fiscal year no executive officer of the Corporation served as a director of or as a member of the compensation committee (or other board committee performing equivalent functions) of another entity, one of whose executive officers served as a director of, or on the Personnel and Compensation Committee of the Corporation.
K) Not Applicable.
L) Not Applicable.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.
Following is information about persons known to the Corporation to be beneficial owners of more than five percent (5%) of the Corporation's voting securities. Ownership is direct unless otherwise noted.
(b) SECURITY OWNERSHIP OF MANAGEMENT. The following is information concerning beneficial ownership of the Corporation's stock by each Director of the Corporation, each Executive Officer of the Corporation named in the Summary Compensation Table, and all Directors and Executive Officers of the Corporation as a group. Ownership is direct unless otherwise noted.
(1) Held jointly with Mrs. Carlucci. (2) Includes 11,600 shares subject to exercisable portion of stock options. (3) Excludes the following: 24,132 shares held by Mrs. Kaman; 7,796 shares held by Fidelco Guide Dog Foundation, Inc., a charitable foundation of which Mr. Kaman is President and Director, in which shares Mr. Kaman disclaims beneficial ownership; 184,434 shares held by Newgate Associates Limited Partnership, a limited partnership of which Mr. Kaman is the general partner; and 60,000 shares held by the Charles H. Kaman Charitable Foundation, a private charitable foundation. Included are 45,000 shares subject to exercisable portion of stock options. (4) Excludes the following: 1,471 shares held by Mrs. Kaman and 199,802 shares held by Newgate Associates Limited Partnership, a limited partnership of which Mr. Kaman is the general partner. (5) Includes 13,000 shares subject to exercisable portion of stock options; and excludes 73,190 shares held by Mr. Kaman as Trustee, in which shares Mr. Kaman disclaims any beneficial ownership. (6) Excludes 4,800 shares held by Mr. Kaman as Trustee in which shares Mr. Kaman disclaims any beneficial ownership. (7) Includes 18,400 shares subject to exercisable portion of stock options. (8) Includes 7,330 shares held jointly with Mrs. Lebed, excludes 480 shares held by Mrs. Lebed. (9) Includes 2,400 shares subject to exercisable portion of stock options. (10)Excludes 500 shares held by Mrs. Levenson. (11)Held by Fleet National Bank pursuant to a revocable trust. Excludes 7,980 shares held by Fleet National Bank pursuant to a revocable trust for the benefit of Mrs. Murtha. (12)Includes 11,700 shares subject to exercisable portion of stock options; and includes 1,275 shares held jointly with Mrs. Renehan. (13)Includes 131,300 shares subject to exercisable portion of stock options.
* Less than one percent. ** Excludes 24,612 Class A shares and 1,971 Class B shares held by spouses of certain Directors and Executive Officers.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1994, the Corporation obtained legal services from the Hartford, Connecticut law firm of Murtha, Cullina, Richter and Pinney of which Mr. Murtha, a Director of the Corporation, is counsel. Also during 1994, the Corporation obtained design and promotional services in the amount of $78,344.50 from Steven W. Kaman and Polykonn Corporation, a corporation controlled by him. Steven W. Kaman is the son of Charles H. Kaman, Chairman and Chief Executive Officer of the Corporation.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) FINANCIAL STATEMENTS. See Item 8 concerning financial statements appearing as Exhibit 13 to this Report and concerning the Financial Data Schedule appearing as Exhibit 27 to this Report.
(a)(2) FINANCIAL STATEMENT SCHEDULES. An index to the financial statement schedules immediately precedes such schedules.
(a)(3) EXHIBITS. An index to the exhibits filed or incorporated by reference immediately precedes such exhibits.
(b) REPORTS ON FORM 8-K. No reports on Form 8-K were filed during the last quarter of the year ended December 31, 1994, which year is covered by this report.
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Bloomfield, State of Connecticut, on this 3rd day of March, 1995.
KAMAN CORPORATION (Registrant)
By Charles H. Kaman, Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature: Title: Date: - --------------------------------------------------------------------
Charles H. Kaman Chairman, Chief Executive March 8, 1995 Officer and Director (Chief Executive Officer)
Harvey S. Levenson President and Director March 8, 1995 (Chief Operating Officer)
Robert M. Garneau Senior Vice President March 8, 1995 and Chief Financial Officer (Principal Financial and Accounting Officer)
Harvey S. Levenson March 8, 1995
Attorney-in-Fact for:
Frank C. Carlucci Director John A. DiBiaggio Director Edythe J. Gaines Director Huntington Hardisty Director C. William Kaman, II Director Hartzel Z. Lebed Director Walter H. Monteith, Jr. Director John S. Murtha Director Robert L. Newell Director Wanda L. Rogers Director
KAMAN CORPORATION AND SUBSIDIARIES
Index to Financial Statement Schedules
Report of Independent Auditors
Financial Statement Schedules:
Schedule VIII - Valuation and Qualifying Accounts
Schedule IX - Short-Term Borrowings
Schedule X - Supplemental Income Statement Information
REPORT OF INDEPENDENT AUDITORS
KPMG Peat Marwick LLP Certified Public Accountants CityPlace II Hartford, Connecticut 06103
The Board of Directors and Shareholders Kaman Corporation:
Under date of January 25, 1995, we reported on the consolidated balance sheets of Kaman Corporation and subsidiaries as of December 31, 1994 and 1993 and the related consolidated statements of earnings, changes in shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 1994, as contained in the 1994 annual report to shareholders. These consolidated financial statements and our report thereon are included in the annual report on Form 10-K for 1994. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related financial statement schedules as listed in the accompanying index. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.
In our opinion, such schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
/s/ KPMG Peat Marwick LLP
Hartford, Connecticut January 25, 1995
KAMAN CORPORATION AND SUBSIDIARIES SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS (Dollars in Thousands)
(A) Write-off of bad debts, net of recoveries (B) Write-off of accumulated amortization of goodwill related to the write-down of goodwill in Raymond Engineering Inc.
KAMAN CORPORATION AND SUBSIDIARIES SCHEDULE IX -- SHORT-TERM BORROWINGS (Dollars in Thousands)
KAMAN CORPORATION AND SUBSIDIARIES Schedule X -- Supplemental Income Statement Information (Dollars in Thousands)
Depreciation and amortization of intangible assets, preoperating costs and similar deferrals; taxes, other than payroll and income taxes; royalties and advertising costs were not included above since they were not of a significant amount.
KAMAN CORPORATION
INDEX TO EXHIBITS
Exhibit 3a The Amended and Restated by reference Certificate of Incorporation of the Corporation, as amended, including the form of amendment designating the Corporation's Series 2 Preferred Stock has been filed as Exhibits 2.1 and 2.2 to the Corporation's Form 8-A (Document No. 0-1093 filed on September 27, 1993), and is incorporated in this report by reference.
Exhibit 3b The By-Laws of the Corporation by reference were filed as Exhibit 3(b) to the Corporation's Annual Report on Form 10-K for 1990 (Document No. 0-1093, filed with the Securities and Exchange Commission on March 14, 1991).
Exhibit 4a Indenture between the Corporation by reference and Manufacturers Hanover Trust Company, as Indenture Trustee, with respect to the Corporation's 6% Convertible Subordinated Debentures, has been filed as Exhibit 4.1 to Registration Statement No. 33 - 11599 on Form S-2 of the Corporation filed with the Securities and Exchange Commission on January 29, 1987 and is incorporated in this report by reference.
Exhibit 4b The Revolving Credit Agreement by reference between the Corporation and The Shawmut Bank Connecticut, as agent, dated as of July 15, 1994 was previously filed as an Exhibit to the Corporation's Quarterly Report on Form 10-Q for the period ending June 30, 1994 (Document No. 0-1093 filed with the Securities and Exchange Commission on August 11, 1994) and is incorporated in this report by reference.
Exhibit 4c The Revolving Credit Agreement by reference between the Corporation and The Bank of Nova Scotia, as agent, dated as of July 15, 1994 has been filed as an Exhibit to Form 10-Q filed for the quarter ended June 30, 1994 (Document No. 0-1093 filed with the Securities and Exchange Commission on August 11, 1994)and is incorporated in this report by reference.
Exhibit 4d Deposit Agreement dated as of by reference October 15, 1993 between the Corporation and Chemical Bank as Depositary and Holder of Depositary Shares has been filed as Exhibit (c)(1) to Schedule 13E-4 (Document No. 5-34114 filed with the Securities and Exchange Commission on September 15, 1993) and is incorporated in this report by reference.
Exhibit 4e The Corporation is party to certain by reference long-term debt obligations, such as real estate mortgages, copies of which it agrees to furnish to the Commission upon request.
Exhibit 10a The 1983 Stock Incentive Plan by reference (formerly known as the 1983 Stock Option Plan) has been filed as Exhibit 10b(iii) to the Corporation's Annual Report on Form 10-K for 1988 (Document No. 0-1093 filed with the Securities and Exchange Commission on March 22, 1989) and is incorporated in this report by reference.
Exhibit 10b The Kaman Corporation 1993 Stock by reference Incentive Plan has been filed as Exhibit 10(b) to the Corporation's Annual Report on Form 10-K for 1993 (Document No. 0-1093 filed with the Securities and Exchange Commission on March 11, 1994) and is incorporated herein by reference.
Exhibit 10c The Kaman Corporation Employees by reference Stock Purchase Plan as amended has been filed as Exhibit 10(c) to the Corporation's Annual Report on Form 10-K for 1993 (Document No. 0-1093 filed with the Securities and Exchange Commission on March 11, 1994) and is incorporated herein by reference.
Exhibit 11 Statement regarding computation Attached of per share earnings.
Exhibit 13 Portions of the Corporation's Attached 1994 Annual Report to Shareholders as required by Item 8.
Exhibit 21 Subsidiaries. Attached
Exhibit 23 Consent of Independent Auditors. Attached
Exhibit 24 Power of attorney under which Attached this report has been signed on behalf of certain directors.
Exhibit 27 Financial Data Schedule Attached