Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to provide readers of our consolidated financial statements with the perspectives of management in the form of a narrative regarding our financial condition, results of operations, liquidity and certain other factors that may affect our future results. The MD&A is presented in seven sections:

I. Overview of Business

II. Recent Business and Financial Highlights

III. Results of Operations

IV. Critical Accounting Estimates

V. Liquidity and Capital Resources

VI. Contractual Obligations and Off-Balance Sheet Arrangements

VII. Recent Accounting Standards

Our MD&A should be read in conjunction with our Form 10-K for the year ended December 31, 2007.

I. OVERVIEW OF BUSINESS

Kaman Corporation is composed of five business segments:
· Aerostructures, a provider of subassemblies for commercial and military aircraft;

· Precision Products (formerly called "Fuzing"), a producer of fuzing devices and memory and measuring systems for a variety of applications;

· Helicopters, a provider of upgrades and support for its existing fleet as well as a subcontractor for other aerospace manufacturers;

· Specialty Bearings, a manufacturer of high-performance mechanical products used primarily in aviation applications as well as marine, hydropower, and other industrial applications; and

· Industrial Distribution, the third largest power transmission/motion control industrial distributor in North America.

There are specific long-term strategies for each segment. For our aerospace businesses, we seek to maintain leadership in product technical performance, take advantage of opportunities arising from the prime and Tier 1 producers as they outsource aircraft production tasks, and build on our strengths in areas targeted for growth through internal product development and acquisitions. For our industrial distribution business, our long-term strategy involves acquisitions and internal means to expand our geographical footprint in major industrial markets and broaden our product lines to enhance our competitive position for national accounts.

II. RECENT BUSINESS AND FINANCIAL HIGHLIGHTS

The following is a summary of key events that recently occurred:

? Our net sales from continuing operations increased 21.9 percent in the third quarter of 2008 compared to the third quarter of 2007.

? Our net earnings from continuing operations increased 43.4 percent in the third quarter of 2008 compared to the third quarter of 2007.

? Earnings per share diluted from continuing operations rose to $0.53 per share diluted in the third quarter of 2008, an increase of 39.5 percent compared to the third quarter of 2007.

? The Industrial Distribution and Specialty Bearings segments experienced strong growth in sales and operating profit.

? Our Precision Products segment continued to ramp up on the JPF program and produced and shipped above its planned level for the quarter.

? In August 2008, the company completed its purchase of the portion of the Bloomfield campus that Kaman Aerospace Corporation (of which the Helicopters segment forms a part) had leased from NAVAIR for many years. ? On October 29, 2008, the company entered into a 4-year Term Loan Credit Agreement with various banks for $50 million.

? In early October, our Industrial Distribution segment acquired Industrial Rubber and Mechanics, Incorporated (INRUMEC) of Puerto Rico.

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