ELMWOOD PARK, N.J., Sept. 29 /PRNewswire-FirstCall/ -- Kreisler Manufacturing Corporation (Nasdaq: KRSL) today announced increased sales, operating income and total backlog for its fiscal year and fourth quarter ended June 30, 2008.



    Fiscal 2008 Highlights
    -- Net Sales
       23% increase to $29,279,000 compared with $23,852,000 June 30, 2007

    -- Operating income
       2% increase to $3,213,000 compared with $3,140,000 at June 30, 2007

    -- Net income
       5% decrease to $1,866,000 compared with $1,960,000 at June 30, 2007

    -- EPS

$0.99 fully diluted earnings per common share compared with $1.04 at June 30, 2007



    -- Backlog
       11% increase to $33,088,000 compared with $29,876,000 at June 30, 2007

Kreisler CEO Michael Stern commented that, "We are pleased with the Company's execution and fiscal 2008 results notwithstanding prevailing tough economic conditions. This includes the impact of higher fuel costs on commercial airlines and consumers, the slowing growth of U.S. gross domestic product and the unknown effects of the financial crisis and government bailout. We will respond as necessary to the financial and operational effects of these external market activities while maintaining our long-term focus on expanding Kreisler's global manufacturing capabilities, continuing to improve product quality while effectively managing our costs, and developing the expertise of our employees continues to position us strategically and operationally to leverage growth opportunities."

"Our additional investments in Kreisler Polska's tube and pipe facility are nearing completion and we expect to start positioning equipment within the facility in the next three months. We believe this will increase our capacity enabling Kreisler Polska to attract and supply new international customers. Additionally, our recent sales and marketing presence at the Farnborough Air Show during July 2008 created additional U.S. and European interest in our product capabilities."

Ned Stern, Kreisler's CFO remarked, "Our fiscal 2008 sales increased $5,427,000, or 23%, to $29,279,000 compared with $23,852,000 for fiscal 2007. While our overhead and selling, general and administrative expenses were equal to or lower as a percentage of sales compared with our fiscal 2007 financial results, year-over-year increases in our purchased material costs negatively impacted our growth in operating income. Accordingly, we continue to target organic sales opportunities while seeking to manage expenses. As in the past, we closely monitor continuing customer pricing pressure and intend to maintain our focus on controlling future costs."

Mr. Stern added, "During fiscal 2008, we experienced growth in all three of our industry market areas, with sales of military aircraft engine and industrial gas turbine products increasing 33% and 51%, respectively, compared with fiscal 2007. The rise in military product sales was driven by increased sales of aircraft engine components used on the F-22 Raptor and F-15 aircraft as well as increased sales of spare parts to the U.S. Government. Sales growth for industrial gas turbine products were primarily attributable to increased demand for components used in large industrial gas turbines such as the Siemens 501F. Also, sales of products for commercial aircraft engines during fiscal 2008 increased 4% compared with the prior year. Strength was seen in components used in the CF34 and V2500 aircraft engines as well as short-term increases in GP7000 components.

"Turning to our fiscal fourth quarter, while we realized a 16% increase in net sales to $7,570,000, compared with $6,507,000 for the comparable quarter a year ago, unfavorable market conditions and a difficult economic environment contributed to income levels falling below our expectations. Our decline in operating income and net income is primarily attributable to a combination of rising material costs and continued pressure on selling prices. We reported operating income of $575,000, a 45% decrease from the $1,052,000 reported in the fourth quarter a year ago, and net income of $231,000, or $0.12 per fully diluted common share, a 65% decrease compared with net income of $653,000, or $0.34 per fully diluted common share, recorded during the fiscal 2007 fourth quarter."

"In this environment, we are focused on the overall disciplined execution of our conservative business strategies including enhancing and expanding our strong customer relationships, minimizing expenses and maintaining a strong balance sheet. Our total backlog as of June 30, 2008 was $33,088,000, an increase of 11% compared with $29,876,000 at June 30, 2007. Up to approximately 75% of the current backlog is scheduled for delivery over the next fiscal year. Turning to our balance sheet, June 30, 2008 cash on hand and short-term investments of $7,244,000 increased $2,176,000, or 43%, compared with $5,068,000 at June 30, 2007. This was primarily attributable to our receipt of $449,000 by Kreisler Polska under a funding contract with the Polish Enterprise Development Agency and $1,000,000 in advance payments, out of $2,000,000, from a customer."

Mr. Stern added, "At June 30, 2008, we also continued to hold approximately $700,000 of AAA-rated auction rate securities as long-term investments. On August 11, 2008, our securities broker for these auction rate securities publicly announced its intent to purchase, at par, auction rate securities sold by this broker. We currently expect to sell these auction rate securities in the financial markets or to our broker by December 31, 2008."

Mr. Stern also noted that, "While remain optimistic in regards to the future financial performance of Kreisler Polska, we decided to take a conservative approach to Kreisler Polska's net operating loss (NOL) carryfowards. This valuation allowance resulted in a $74,000 increase in our income taxes for fiscal 2008."

Kreisler Manufacturing Corporation is a manufacturer of precision metal components and assemblies for use in military and commercial aircraft engines and industrial gas turbines. These products primarily include tube and manifold assemblies. The Company has two wholly owned subsidiaries: Kreisler Industrial Corporation located in Elmwood Park, New Jersey, and Kreisler Polska Sp. z o.o located in Krakow, Poland.





    Kreisler Manufacturing Corporation and Subsidiaries
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (Audited)

    Years ended June 30,                                2008            2007

    Net sales                                    $29,278,635     $23,852,200


    Cost of goods sold                            23,374,081      18,480,441
    Selling, general and
     administrative expenses                       2,691,215       2,231,941
      Total costs and expenses                    26,065,296      20,712,382

    Income from operations                         3,213,339       3,139,818

    Interest and other income                        239,777         199,941
    Interest and other expenses                      (56,579)        (57,143)
    Translation and exchange
     adjustments                                    (219,271)        (70,808)

    Income before income taxes                     3,177,266       3,211,808

    Income taxes                                                  (1,251,410)
                                                  (1,311,509)

    Net income                                    $1,865,757      $1,960,398

    Net Income per common share:
     Net income- basic                                 $1.00           $1.06
     Net income- diluted                               $0.99           $1.04
     Weighted average common shares
    - basic                                        1,867,948       1,842,031
     Weighted average common shares
    - diluted                                      1,891,138       1,876,781



    Kreisler Manufacturing Corporation and Subsidiaries
    CONDENSED CONSOLIDATED BALANCE SHEETS

    June 30,                                          2008             2007
                                                  (Audited)        (Audited)

    Assets

    Cash and cash equivalents                    $7,243,565       $5,068,325
    Short-term investments                                -          550,000
    Accounts receivable - trade (net of
     $20,000 allowance for uncollectible
     accounts at June 30, 2008 and 2007)          2,052,124        2,366,177
    Inventories                                   7,142,438        5,546,983
    Deferred tax asset                               31,271           96,312
    Other current assets                            620,614           66,200
       Total current assets                      17,090,012       13,693,997

     Property and equipment, net                  2,077,223        2,425,098
     Long-term investments                          700,000                -
     Deferred tax asset                                   -          123,942
    Deposits on property and equipment              456,989                -
       Total non-current assets                   3,234,212        2,549,040

     TOTAL ASSETS                               $20,324,224      $16,243,037

    Liabilities and Stockholders' Equity

    Liabilities
     Accounts payable - trade                    $1,812,515       $1,130,990
     Accrued expenses                               867,167          520,540
     Deferred revenue                             1,259,505          500,000
     Product warranties                                   -          148,185
     Income taxes payable                            39,018                -
     Obligation under capital leases,
      current portion                               127,731          115,731
       Total current liabilities                  4,105,936        2,415,446

     Obligation under capital leases,
      net of current portion                        128,296          258,343
     Deferred tax liability                          95,884                -
     Accrued environmental costs                    444,707          426,117
       Total long-term liabilities                  668,887          684,460

       Total stockholders' equity                15,549,401       13,143,131
     TOTAL LIABILITIES & STOCKHOLDERS'
      EQUITY                                    $20,324,224      $16,243,037

Forward-Looking Statements

Certain oral statements made by management of Kreisler Manufacturing Corporation (the "Company") from time to time and certain statements contained herein or in other periodic reports filed by the Company with the Securities and Exchange Commission are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to results of operations and the business of the Company. All such statements, other than statements of historical facts, including those regarding market trends, the Company's financial position and results of operations, business strategy, projected costs, and plans and objectives of management for future operations, are forward-looking statements. In general, such statements are identified by the use of forward-looking words or phrases including, but not limited to, "estimates," "intended," "will," "should," "may," "believes," "expects," "expected," "anticipates," and "anticipated" or the negative thereof or variations thereon or similar terminology. These forward-looking statements are based on the Company's current expectations. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. These forward-looking statements represent the Company's current judgment. The Company disclaims any intent or obligation to update its forward looking statements. Because forward-looking statements involve risks and uncertainties, the Company's actual results could differ materially from those set forth in or underlying the forward-looking statements.

SOURCE Kreisler Manufacturing Corporation