<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Mark One)
[X] Anual Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 (Fee Required)
For the fiscal year ended June 30, 1996
OR
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 (No Fee Required)
For the transition period from to
----------------- -------------------
Commission File Number: 0-4036
Kreisler Manufacturing Corporation
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-1044792
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(State of other jurisdiction of I.R.S. employer
incorporation or organization) Identification Number)
5960 Central Avenue, Suite H., St. Petersburg, Florida 33707
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(Address of principal executive offices)
Registrant's telephone number, including area code:
813-347-1144
Securities registered pursuant to Section 12(b) of the Act:
Not applicable
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.50 par value per share
- ------------------------------------------------------------------------------
(Title of Class)
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.
[X] Yes [ ] No
The aggregate market value of the voting stock held by non-affiliates of the
registrant is approximately $775,316 (1).
Number of shares of Common Stock outstanding as of June 30, 1996 was
485,512 shares.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Company's Annual Report to Shareholders for the fiscal
year ended June 30, 1996 are incorporated by reference in Parts II and IV of
this Report.
With the exception of the information incorporated by reference in Parts II and
IV of this Report, the Company's Annual Report to Shareholders for the fiscal
year ended June 30, 1996 is not to be deemed "filed" with the Securities and
Exchange Commission for any purpose.
Certain portions of the Company's Proxy Statement to be filed in connection
with its 1996 Annual Meeting of Shareholders are incorporated by reference in
Part III of this Report.
Other documents incorporated by reference are listed in the Exhibit Index.
- ------------------------------------------------------------
(1)The aggregate dollar amount of the voting stock set forth equals the number
of shares of Common Stock outstanding, reduced by the number of shares of
Common Stock held by executive officers, directors and stockholders owning in
excess of 10% of the registrant's common stock multiplied by the average of the
closing high and low price for the Common Stock as quoted on the National
Association of Securities Dealers Automated Quotation System on June 28, 1996.
The information provided shall in no way be construed as an admission that any
person whose holdings are excluded from this figure is an affiliate of the
registrant or that any person whose holdings are included in this figure is not
an affiliate of the registrant and any such admission is hereby disclaimed. The
information provided herein is included solely for record keeping purposes of
the Securities and Exchange Commission.
<PAGE>
TABLE OF CONTENTS
FORM 10-K ANNUAL REPORT 1996
KREISLER MANUFACTURING CORPORATION
PAGE NO.
PART I
ITEM 1. BUSINESS 1
ITEM 2. PROPERTIES 3
ITEM 3. LEGAL PROCEEDINGS 4
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITIES HOLDERS 4
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK
RELATED SECURITY HOLDER MATTERS 4
ITEM 6. SELECTED FINANCIAL DATA 5
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 5
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA 5
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE 5
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF
REGISTRANT 6
ITEM 11. EXECUTIVE COMPENSATION 6
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT 6
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS 6
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 6
SIGNATURES 9
<PAGE>
PART I
Item 1. Business
Kreisler Manufacturing Corporation is a Delaware business corporation which was
incorporated on December 13, 1968. Kreisler Manufacturing Corporation and its
wholly-owned subsidiary, Kreisler Industrial Corporation (collectively the
"Company") manufacture precision metal components and assemblies at Elmwood
Park, New Jersey for use in military and commercial aircraft engines. There are
no material changes in the nature of the business done by the Company during
the fiscal year ended June 30, 1996.
Products
The Company fabricates precision metal components and assemblies primarily for
aircraft engines with both military and commercial application. These products
fall into three categories. The primary category is manifold assemblies
consisting of fuel manifolds, air lines, oil lines and de-icer lines. Fuel
manifolds supply fuel to the combustion section of the engine. Air lines carry
air to cool sections of the engine. Oil lines transfer oil to lubricate various
bearings in the engine. De-icer lines transmit hot air to the engine to prevent
icing.
The second category is blade locks, small metal stampings used at the base of
turbine blades to lock the blades to the hub.
The third category is baffles or impingement tubes which are inserted into
vanes located in the combustion section of the engine for cooling purposes.
These are sheet metal parts formed generally in the shape of an airfoil with
orifices to achieve this cooling.
Sales in these three categories exceeded 90% of the Company's total sales
during each of the company's past three fiscal years. For the fiscal year ended
June 30, 1996, the sales activity was approximately 40% for military aircraft
engines and 60% for commercial aircraft engines.
Substantially all sales of products are made through an in-house sales staff
supported by a government sales representative. All products are manufactured
to the blueprints and specifications of the particular customer. Orders for
these are received through competitive proposals, which are made in response to
requests for bids from contractors who are frequently supplying engines to
various branches of the United States Government or commercial business.
1
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Customers
Three customers of the Company accounted for 10% or more of the consolidated
net sales in the fiscal year ended June 30, 1996. The sales to two industrial
customers accounted for 38% and 16% of sales; sales to various branches of the
United States Government amounted to 10%. For fiscal 1997, it is anticipated
that sales to each of these customers will continue to be in excess of 10% of
the Company's consolidated net sales.
Competition
The fields in which the company operates are highly competitive and among its
competitors are enterprises which are substantially larger than it and possess
greater financial, production and marketing resources, as well as numerous
smaller concerns. The Company is not a significant factor in its fields. The
principal methods of competition are price, quality and delivery. In today's
market flexibility, quality, cost and speed are required elements. The Company
is competitive on all the above elements.
Backlog
At both June 30, 1996 and 1995, the Company had a consolidated order backlog of
approximately $6,000,000 and $3,000,000 respectively. The backlog with one
industrial customer amounts to $2,200,000, and another industrial customer
$1,381,000 at June 30, 1996 of which $3,381,000 is expected to be shipped
during the 1997 fiscal year. The backlog with the United States Government
amounts to $850,000 of which all is expected to be shipped during the fiscal
year ended in 1997. In addition there will be new orders received from all
three customers for current fiscal year shipments.
Sources of Supply
The Company does not have any long-term or fixed requirement agreements with
its suppliers.
Materials for the products within the Company are purchased, as required, from
various suppliers. At times, approved vendors are designated by the Company's
customers. The Company believes alternative sources of supply for materials are
available at reasonable prices.
2
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Production
Fabricated precision metal components or assemblies are manufactured and
assembled by the Company to customer specifications. To meet the exacting
requirements of its customers, the Company must exercise rigid quality control.
Employees
At June 30, 1996, the Company employed approximately 75 persons. Approximately
45 are subject to collective bargaining agreement with the United Service
Employees Union.
Government Regulations
The Company is subject to various Federal and State regulations concerning the
conduct of its business including regulations under the Occupational Health and
Safety Act and various acts dealing with the environment. By letter dated June
22, 1993 from the Environmental Protection Agency, the Agency notified Kreisler
that it had evaluated information relating to the transportation of waste in
1962-1963-1964 to the Caldwell Trucking Company Superfund Site and based upon
this information EPA believes that Kreisler is a Potentially Responsible Party
pursuant to Section 107(a) of the Comprehensive Environmental Response
compensation and Liability Act, 42 U.S.C. Section 9607(a). The letter from EPA
notified Kreisler of its potential liability for all costs incurred and to be
incurred by the government relating to the Site. According to the letter, under
CERCLA, and other laws, potentially liable parties, such as Kreisler, may be
ordered to perform response actions deemed necessary by EPA to protect the
public health, welfare or the environment, and may be liable for all costs
incurred by the government in responding to any release or threatened release
at the Site.
A material portion of the business of the Company is subject to provisions
which permit the termination of contracts at the election of the U.S.
Government or its prime contractors. Contracts with the U.S. Government and
with suppliers to the U.S. Government generally provide for termination at any
time for the convenience of the U.S. Government and its prime contractors, and
upon such termination a contractor is entitled to receive payment for the work
performed plus a pro rata portion of the profit it would have earned but for
the termination.
Item 2. Properties
The Company's industrial plant is located at Elmwood Park, New Jersey and
consists of 52,000 square feet of leased space. The facility is approximately 40
3
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years old and the average age of the equipment is 15 years. The lease
expires October 1, 2000. The annual lease expense on the plant facilities is
$79,992.
During fiscal 1996, $38,000 of capital expenditures were made. Management
believes that the Company's present industrial plant facilities are suitable
for the Company's current and near term operations.
Item 3. Legal Proceedings
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
PART II
Item 5. Market for the registrant's Common Stock and Related Security Holder
Matters
The Company's Common Stock is traded in the over the counter market and is
quoted on the National Association of Securities Dealers, Inc. Automated
Quotation System (NASDAQ). There is not established public trading market for
the Company's Common Stock. The following table sets forth the market prices
for the Common Stock for each quarter in the two year period ended June 30,
1996.
Quarter 1996 1995
- ------- ---- ----
High Low High Low
---- --- ---- ---
Fourth 4 1/2 2 3/4 8 6 1/4
Third 5 1/4 2 3/4 6 1/4 6 1/4
Second 5 1/2 4 1/4 6 3/4 6 1/4
First 6 1/4 5 1/2 6 3/4 6 3/4
The Company has not paid any dividends during the last three fiscal years. The
holder of the Company's Common Stock are entitled to receive dividends when, as
and if declared by the Board of Directors out of funds legally available
therefore. It is the Company's current policy not to pay dividends and to
retain earnings for future growth of the Company.
4
<PAGE>
At June 30, 1996, the Company had approximately 400 Stockholders of record.
Item 6. Selected Financial Data
"Corporate Financial Statement" on page 11 of the Annual Report to Stockholders
is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
"Management's Discussion and Analysis" on page 9 of the Annual Report to
Stockholders is incorporated herein by reference.
Item 8. Financial Statements and Supplemental Data
The following consolidated financial statements of the Registrant and its
subsidiaries and the Auditor's Report included on pages 1 through 8 of the
Annual Report to Stockholders for the year ended June 30, 1996 are incorporated
herein by reference:
Consolidated Balance Sheets - June 30, 1996 and 1995
Consolidated Statements of Operations - Years Ended June 30, 1996,
1995, and 1994
Consolidated Statements of Cash Flows - Years Ended June 30, 1996,
1995, and 1994
Notes to Consolidated Financial Statements
Report of Independent Certified Public Accountants
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not Applicable.
5
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
Incorporated by reference from the Company's Proxy Statement relating to the
1996 Annual Meeting of Stockholders to be filed pursuant to General Instruction
G(3) to Form 10-K.
Item 11. Executive Compensation
Incorporated by reference from the Company's Proxy Statement relating to the
1996 Annual Meeting of Stockholders to be filed pursuant to General Instruction
G(3) to Form 10-K.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Incorporated by reference from the Company's Proxy Statement relating to the
1996 Annual Meeting of Stockholders to be filed pursuant to General Instruction
G(3) to Form 10-K.
Item 13. Certain Relationships and Related Transactions
Incorporated by reference from the Company's Proxy Statement relating to the
1996 Annual Meeting of Stockholders to be filed pursuant to General Instruction
G(3) to Form 10-K.
PART IV
Item 14. Exhibits and Financial Statement Schedules
(a) List of Documents filed as part of this Report.
1. Financial Statements. The consolidated financial statement set forth
under Item 8 of this Report.
2. Financial Statement Schedules Included in Part IV of this Report. None.
6
<PAGE>
Schedules are omitted because of the absence of conditions under which
they are required or because the required information is given in the
financial statements or notes thereto.
3. Exhibits Filed Pursuant to Item 601 of Regulation S-K.
11. Statement re computation of per share earnings.
13. Annual Report to Stockholders for the fiscal year ended June 30,
1996 (such report, except for those portions expressly incorporated by
reference to this Annual Report on Form 10-K, is furnished for the
information of the Commission and is not to be deemed filed as part of
this Report).
22. Subsidiaries of the Registrant: The only significant subsidiary of
the Registrant is Kreisler Industrial Corporation, a New Jersey
corporation, all of whose outstanding stock is owned by the
Registrant.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the Company's fiscal year
ending June 30, 1996.
7
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly casued this report to be signed on its
behalf by the undersigned thereunto duly authorized.
KREISLER MANUFACTURING CORPORATION
By /s/ Edward L. Stern
-------------------------------
Edward L. Stern, President
Date: September 16, 1996
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.
NAME TITLE DATE
- ---- ----- ----
/s/ Edward L. Stern Director, President and Chief September 16, 1996
- ------------------------ Financial Officer (Principal
Executive Officer, Principal
Financial Officer and Principal
Accounting Officer)
/s/ Robert S. Krupp Director September 16, 1996
- ------------------------
/s/ Harry Brill-Edwards Director September 16, 1996
- ------------------------
/s/ Edward A. Stern Director, Vice-President September 16, 1996
- ------------------------
/s/ Michael D. Stern Director, Vice-President September 16, 1996
- ------------------------
9
<PAGE>
EXHIBIT 11.
Statement re computation of per share earnings
SHARES
-------
Shares outstanding at June 30, 1996 485,512
-------
(Loss) after tax $ ( 922,919) = $(1.90) per share
------------------ ----------
Shares outstanding 485,512
<PAGE>
1996 ANNUAL REPORT
KREISLER MANUFACTURING CORPORATION
<PAGE>
1996 ANNUAL REPORT
KREISLER MANUFACTURING CORPORATION
<PAGE>
TO OUR STOCKHOLDERS
Sales for fiscal year 1995-1996 were $5,704,000 as compared to
$5,252,000 in the prior year, or an increase of $452,000 or 8.6%. Net loss for
the fiscal year 1995-1996, was $923,000 or $1.90 per share compared to
$1,280,000 or $2.55 per share in the prior year, a reduction in loss of
$357,000 or 28%. The company incurred a loss during the first six months of
fiscal year 1995-1996, while we were profitable in the second six months of the
year.
With increased demand in the airline industry, our backlog has more
than doubled during the year. Between 1990-1994, the U.S. airline industry lost
a combined $13 billion. Partial reasons included too many planes, a sluggish
economy, and costlier fuel. This year, net income for the airlines should reach
$2.7 billion and the outlook is for continued growth.
Although difficult to forecast, U.S. defense spending will continue to
be unstable. While downsizing continues and fewer new aircraft are purchased,
it would seem that spare parts should increase in importance. In 1995-96, 10%
of our direct sales were to the U.S. Government. In our current backlog, the
government represents 13% of that backlog.
Many positive things have happened to Kreisler over the past year. We
have reached the top level in our field; we have new customers, our margins are
higher, our backlog is at more than break-even, the market has improved, our
quality is under control, and our machine shop has expanded capability.
A year ago, our concern was new orders. Today our backlog is
sufficient to shift our concern from the marketplace to our ability to ship on
time. If we meet this challenge and perform to expectations, our backlog should
continue to increase and profitability should return to Kreisler.
How long this window of opportunity will continue is uncertain, but it
is essential that we take full advantage of current conditions.
Our path is to continue strengthening our engineering capabilities to
allow us to develop and manufacture more sophisticated products, and permit us
to be in a less price sensitive market.
We continue to build our team to reach these goals. We are heading in
the right direction to meet the cultural changes in our industry. Now it is in
our hands to execute.
Our concentration will be on profitable growth, an organization of
good people, focus on being responsive to our customer needs, and keeping our
shareholders happy.
We will do all the above by communicating well, a real challenge,
shooting holes in traditional thinking, and continually searching to find a
particular spot to give irresistible value.
We thank you for your support through four difficult years. Hopefully,
the corner has been turned and Kreisler will justify the patience you have
shown in the investment you have made.
/s/ Edward L. Stern
Edward L. Stern
President and Chairman of the Board
September 16, 1996
<PAGE>
Kreisler Manufacturing Corporation and Subsidiaries
Consolidated Balance Sheets
June 30, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 587,063 $ 607,954
Certificates of deposit - current 300,000 306,990
Accounts receivable - trade 891,360 1,014,362
Inventories 1,573,614 1,168,838
Other current assets 21,833 38,034
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Total current assets 3,373,870 3,136,178
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Certificates of deposit 525,344 797,592
Available-for-sale securities -- 577,989
Property, plant and equipment, at cost less accumulated
depreciation of $2,677,734 for 1996 and $2,618,158 for 1995 204,093 225,393
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$ 4,103,307 $ 4,737,152
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Liabilities and Stockholders' Equity
Accounts payable - trade $ 401,896 $ 143,818
Accrued expenses 199,930 165,846
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Total Current Liabilities 601,826 309,664
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Stockholders' Equity
Common Stock, $.50 par value - 3,000,000 shares authorized
485,512 and 823,451 shares issued for 1996 and 1995,
respectively; 485,512 shares outstanding for 1996 and 1995 242,756 411,726
Additional paid-in capital 1,571,703 2,667,377
Retained earnings 1,687,022 5,021,979
Unrealized holding gains on available-for-sale securities -- 3,088
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3,501,481 8,104,170
Less - 337,939 shares of common stock in
treasury, at cost for 1995 -- (3,676,682)
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Total Stockholders' Equity 3,501,481 4,427,488
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$ 4,103,307 $ 4,737,152
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</TABLE>
See accompanying notes to Consolidated Financial Statements
1
<PAGE>
Kreisler Manufacturing Corporation and Subsidiaries
Consolidated Statements of Operations
Three years ended June 30, 1996
<TABLE>
<CAPTION>
1996 1995 1994
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<S> <C> <C> <C>
Sales $ 5,703,865 $ 5,252,361 $ 4,720,621
- -------------------------------------------------------------------------------------
Cost of goods sold 6,441,227 6,423,227 5,411,723
General and administrative expenses 282,962 305,579 409,041
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6,724,189 6,728,806 5,820,764
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Loss from operations (1,020,324) (1,476,445) (1,100,143)
Other income (expense):
Interest and other earnings 103,837 196,788 157,715
Loss on investments (6,432) -- (61,522)
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Loss before income taxes (922,919) (1,279,657) (1,003,950)
Income tax benefit -- -- 261,491
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Net loss $ (922,919) $(1,279,657) $ (742,459)
- -------------------------------------------------------------------------------------
Earnings per share:
Net loss $ (1.90) $ (2.55) $ (1.48)
- -------------------------------------------------------------------------------------
</TABLE>
Consolidated Statements of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
Unrealized
Additional Holding Gains
Common Paid-In Retained Treasury on Available-for
Stock Capital Earnings Stock Sale Securities
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance June 30, 1993 $ 411,726 $ 2,667,377 $ 7,044,095 $(3,554,422) $ --
Net loss -- -- (742,459) -- --
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Balance June 30, 1994 $ 411,726 $ 2,667,377 $ 6,301,636 $(3,554,422) $ --
Net loss -- -- (1,279,657) -- --
Purchase of treasury stock -- -- -- (122,260) --
Unrealized gain on available-
for-sale securities -- -- -- -- 3,088
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Balance June 30, 1995 411,726 2,667,377 5,021,979 (3,676,682) 3,088
Net loss -- -- (922,919) -- --
Retirement of treasury stock (168,970) (1,095,674) (2,412,038) 3,676,682 --
Recognition of gain upon sale
of available-for-sale securities -- -- -- -- (3,088)
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Balance June 30, 1996 $ 242,756 $ 1,571,703 $ 1,687,022 $ -- $ --
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to Consolidated Financial Statements
2
<PAGE>
Kreisler Manufacturing Corporation and Subsidiaries
Consolidated Statements of Cash Flows
Three years ended June 30, 1996
<TABLE>
<CAPTION>
1996 1995 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (922,919) $(1,279,657) $ (742,459)
Adjustments to reconcile net loss to cash (used)
provided by operating activities:
Depreciation and amortization 59,576 76,498 108,973
Unrealized loss on investments -- -- 61,522
Gain on sale of assets (8,269) (1,394) (4,000)
Decrease (increase) in accounts receivable - trade 123,002 (134,806) (24,469)
Decrease (increase) in inventories (404,776) (120,979) 452,539
Decrease (increase) in other current assets 16,201 373,259 (126,387)
Increase (decrease) in accounts payable - trade 258,078 (1,420) 41,008
Increase (decrease) in accrued expenses 34,084 41,872 10,002
- -------------------------------------------------------------------------------------------------------
Net adjustments 77,896 233,030 519,188
- -------------------------------------------------------------------------------------------------------
Net cash used by operating activities (845,023) (1,046,627) (223,271)
Cash flows from investing activities:
Purchase of investments and certificates of deposit (556,124) (22,543) (2,077,283)
Proceeds from sale of investments and redemption of
certificates of deposit 1,418,532 59,852 298,969
Purchase of property and equipment (38,276) (37,475) (45,441)
Proceeds from sale of equipment -- 4,500 4,000
- -------------------------------------------------------------------------------------------------------
Net cash provided (used) by
Investing activities 824,132 4,334 (1,819,755)
Cash flows from financing activities:
Purchase of treasury stock -- (122,260) --
- -------------------------------------------------------------------------------------------------------
Net cash used by financing activities -- (122,260) --
- -------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalent (20,891) (1,164,553) (2,043,026)
Cash and cash equivalents at beginning of year 607,954 1,772,507 3,815,533
- -------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 587,063 $ 607,954 $ 1,772,507
- -------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to Consolidated Financial Statements
3
<PAGE>
Kreisler Manufacturing Corporation and Subsidiaries
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies:
a. Operations
Kreisler Manufacturing Corporation (the Company) fabricates precision metal
components and assemblies primarily for aircraft engines with both military and
commercial application. These products include tube assemblies of multiple
sizes and configuration, vane inserts, and blade locks.
b. Consolidation
The consolidated financial statements include the accounts of Kreisler
Manufacturing Corporation and its subsidiaries, all of which are wholly owned.
Intercompany transactions and accounts have been eliminated.
c. Investments
During the year ended June 30, 1995, the Company adopted FASB Statement No. 115
(FAS 115), "Accounting for Certain Investments in Debt and Equity Securities".
Under FAS 115, debt investments that the Company has a positive intent to hold
to maturity are classified as "held-to-maturity securities", and reported at
amortized cost. Debt and equity securities that are bought and held principally
for the purpose of selling them in the near term are classified as trading
securities and reported at fair value, with unrealized gains and losses
included in earnings. Debt and equity securities not classified as either
held-to-maturity securities or trading securities are classified as
"available-for-sale" securities and reported at fair value, with unrealized
gains and losses excluded from earnings and reported in a separate component of
stockholders' equity. The Company accounts for investment activity using the
specific identification method.
d. Accounts Receivable
The accounts receivable is net of an allowance for uncollectible accounts of
$8,600 for 1996 and 1995.
e. Property, Plant and Equipment
Property, plant and equipment are recorded at cost less accumulated
depreciation. Maintenance and repairs, which do not improve efficiency or
extend the useful life, are charged to operations as incurred. Asset and
related accumulated depreciation amounts are relieved from the accounts for
retirements or dispositions. Resulting gains or losses are reflected in
earnings. Depreciation is computed using accelerated methods over the estimated
useful lives of three to ten years for machinery and equipment while the
straight line method is used over the term of leases for building improvements.
f. Inventories
Inventories are stated at the lower of cost or market, cost being determined on
a first-in, first-out basis.
g. Income taxes
The Company accounts for its income taxes using FASB Statement No. 109,
"Accounting for Income Taxes" (FAS No. 109), which requires the establishment
of a deferred tax asset or liability for the recognition of future deductible
or taxable amounts and operating loss and tax credit carryforwards. Deferred
tax expense or benefit is recognized as a result of the changes in the assets
and liabilities during the year.
h. Earnings per share
Earnings per share of common stock are based on the weighted average number of
shares outstanding during each year.
i. Cash and Cash Equivalents
For purposes of the statement of cash flows, certificates of deposit and U.S.
Treasury Bills purchased with a maturity of one year or less, and other short
term securities with a maturity of less than 90 days, are considered cash
equivalents. Certificates of deposit regarded as cash equivalents totaled $0
and $300,000 at June 30, 1996 and 1995. U.S. Treasury Bills considered cash
equivalents totaled $0 at June 30, 1996 and 1995.
j. Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
2. Certificates of Deposit
The Company holds certificates of deposit at various financial institutions
throughout the United States. The value at June 30, 1996 by year of maturity is
as follows:
Fiscal year ended June 30
- -----------------------------------------------------------------------------
1997 $ 300,000
1998 -
1999 525,344
- -----------------------------------------------------------------------------
Total $ 825,344
- -----------------------------------------------------------------------------
4
<PAGE>
Kreisler Manufacturing Corporation and Subsidiaries
Notes to Consolidated Financial Statements
3. Investments - Available-for-Sale Securities
During the year ended June 30, 1996, the Company sold its interest in debt and
equity securities. Sales proceeds and realized gains and losses on these
transactions were as follows:
Net Realized
Sales Proceeds Gains(Losses)
- ------------------------------------------------------------------------------
Mortgage backed securities $ 372,238 $ (6,759)
T-bills 562,681 339
Obligations of other U.S.
Government agencies 204,375 (12)
- ------------------------------------------------------------------------------
$ 1,139,294 $ (6,432)
- ------------------------------------------------------------------------------
Since all investments were sold, the $3,088 of previously unrelized holding
gains on available-for-sale securities were reduced to $0 and included in
earnings for the year ended June 30, 1996.
At June 30,1995, the Company's investments were comprised of securities
classified as available-for-sale, in accordance with FAS 115.
The individual issue, number of units, cost, fair value, and amount carried on
the consolidated balance sheet at June 30, 1995 were as follows:
Amount
Carried On
Original Consolidated
Number of Amortized Amortized Fair Balance
Issue Units Quantity Cost Value Sheet
- ------------------------------------------------------------------------------
FHLMC
GR 8.75%
Due 1/3/01 450,000 108,947 $109,967 $108,947 $108,947
FHLMC
GR 8.25%
Due 5/17/01 600,000 139,146 138,746 142,799 142,799
FNMA
POOL 9.25%
Due 7/16/01 980,968 114,347 119,438 120,493 120,493
TVA Bond
Ser 1989
8.25%
Due 11/16/96 200,000 200,000 206,750 205,750 205,750
- ------------------------------------------------------------------------------
Available for
Sale Securities
June 30, 1995 $574,901 $577,989 $577,989
- ------------------------------------------------------------------------------
Amortized cost and fair values of available-for-sale securities by majority
security type at June 30, 1995 were as follows:
Gross
Amortized Unrealized Fair
Cost Gains (Losses) Value
- ------------------------------------------------------------------------------
Obligations of other
U.S. Gov't agencies $ 206,750 $ (1,000) $ 205,750
Mortgage backed securities 368,151 4,088 372,239
- ------------------------------------------------------------------------------
$ 574,901 $ 3,088 $ 577,989
- ------------------------------------------------------------------------------
4. Concentration of Credit Risk
The Company maintains cash balances and certificates of deposit at several
financial institutions. Accounts at each institution are insured by the Federal
Deposit Insurance Corporation up to $100,000. Uninsured balances at one
institution totaled $272,650 at June 30, 1996. The Company has not experienced
any losses in such accounts and believes it is not exposed to any significant
credit risk on cash and cash equivalents.
5. Inventories
Inventories consist of the following at June 30:
1996 1995
- ------------------------------------------------------------------------------
Raw materials $ 984,269 $ 782,781
Work in process 549,802 325,157
Finished goods 30,943 60,900
- ------------------------------------------------------------------------------
$1,565,014 $1,168,838
- ------------------------------------------------------------------------------
6. Property, Plant and Equipment
Property, Plant and Equipment consists of the following at June 30:
1996 1995
- ------------------------------------------------------------------------------
Buildings and improvements $ 127,833 $ 127,833
Machinery and equipment 2,753,994 2,715,718
- ------------------------------------------------------------------------------
2,881,827 2,843,551
Less accumulated depreciation (2,677,734) (2,618,158)
- ------------------------------------------------------------------------------
$ 204,093 $ 225,393
- ------------------------------------------------------------------------------
Depreciation expense was $59,576, $66,225, and $108,965 for 1996, 1995, and
1994, respectively.
5
<PAGE>
Kreisler Manufacturing Corporation and Subsidiaries
Notes to Consolidated Financial Statements
7. Income Taxes
The Company and its subsidiaries file a consolidated federal income tax return.
Effective July 1, 1993, the Company adopted Statement of Financial Standards
No. 109, "Accounting for Income Taxes". There was no cumulative effect of the
change in accounting for income taxes for prior years which would have been
included in the Consolidated Statement of Operations for June 30, 1994. A
reconciliation of the 1996, 1995, and 1994 income tax benefit computed at the
statutory rates follows:
1996 1995 1994
- ------------------------------------------------------------------------------
Benefit computed $(314,700) $(437,185) $(316,068)
Unrealized tax benefit 309,000 432,068 40,938
Nondeductible expenses 5,700 5,117 13,639
- ------------------------------------------------------------------------------
Reported benefit for
income taxes $ - $ - $(261,491)
- ------------------------------------------------------------------------------
Temporary differences related primarily to differences in depreciation methods
for book purposes and tax purposes and differences from unrealized gains and
losses on investments. Nondeductible expenses relate primarily to life
insurance payments and meals and entertainment that are not deductible for tax
purposes. Unrealized tax benefits relate to remaining loss carryforwards from
current year operations after applying the applicable year loss to prior year
income.
The Company has a net operating loss carryforward of $3,022,000 for New Jersey
State income tax purposes expiring over a period of years through 2003, a net
operating loss carryforward for Florida State income tax purposes of $988,000
expiring over a period of years through 2011, and a net operating loss
carryforward for federal income tax purposes of $2,314,000 expiring over a
period of years through 2011.
Deferred tax assets at June 30, 1996 and 1995 consist of the following:
1996 1995
- ------------------------------------------------------------------------------
Deferred tax assets
Unrealized losses $ - $ 21,000
Net operating loss carryforward 787,000 482,000
Other 1,000 2,000
- ------------------------------------------------------------------------------
788,000 505,000
Less valuation allowance (788,000) 505,000
- ------------------------------------------------------------------------------
Amount reported on balance sheet $ - $ -
- ------------------------------------------------------------------------------
8. Interest and Other Earnings
The components of interest and other earnings are as follows:
1996 1995 1994
- ------------------------------------------------------------------------------
Interest income $ 103,837 $ 187,705 $ 152,372
Gain on sale of equipment - 1,394 4,000
Miscellaneous income - 7,689 1,343
- ------------------------------------------------------------------------------
Total $ 103,837 $ 196,788 $ 157,715
- ------------------------------------------------------------------------------
9. Significant Customers
The Company sells a substantial portion of its inventory to the U.S. Government
and to two industrial customers in 1996 and one industrial customer in 1995 and
1994. Sales to and accounts receivable from these customers for the past three
years were as follows:
U.S. Government Industrial Customer
Sales A/R Sales A/R
- ------------------------------------------------------------------------------
1996 $ 592,000 $ 104,000 $ 3,179,000 $ 450,000
1995 1,726,000 4,000 1,704,000 517,000
1994 $ 1,237,000 $ 81,000 $ 2,006,000 $ 534,000
10. Commitments and Contingencies
a. Leases
The Company conducts its operations from leased facilities, which include a
manufacturing plant and office. Total rental expense for 1996, 1995 and 1994
amounted to $89,511, $83,240 and $83,181, respectively. A schedule of the
Company's minimum non-cancelable rental commitments as of June 30, 1996
follows:
Year Ending June 30,
- ------------------------------------------------------------------------------
1997 $ 79,992
- ------------------------------------------------------------------------------
b. Contingencies
Certain federal and state laws authorize the United States Environmental
Protection Agency (EPA) to issue orders and bring enforcement actions to compel
responsible parties to take investigative and remedial actions at any site that
is determined to present an imminent and substantial danger to the public or
the environment because of an actual or threatened release of one or more
hazardous substances. These statutory provisions impose joint and several
responsibility without regard to fault on all responsible parties, including
the generators of the hazardous substances, for certain investigative and
remedial costs at sites where these substances were disposed of or processed.
Because of the nature of the Company's business, various products and
substances are or were produced or handled which contain constituents
classified as hazardous. The Company generally provides for the disposal or
processing of such substances through licensed independent contractors.
As of June 22, 1993, Kreisler Industrial Corporation (KIC), a wholly owned
subsidiary of Kreisler Manufacturing Corporation, was notified by the EPA that
the EPA considers KIC to be a Potentially Responsible Party (PRP) pursuant to
Section 107(a) of the Comprehensive Environmental Response Compensation and
Liability Act relating to the cleanup of a superfund site in Fairfield, New
Jersey (Site).
6
<PAGE>
Kreisler Manufacturing Corporation and Subsidiaries
Notes to Consolidated Financial Statements
b. Contingencies (continued)
Currently, management is unable to ascertain the amount of liability or the
time frame over which payments will be made. As of June 11, 1993, the United
States had incurred at least $6,441,998 for response actions taken in regard to
the Site, of which, $4.5 million was not reimbursed. Generally, actions
directed at funding such site investigations and remediation include all
suspected or known responsible parties.
Additionally, a PRP group has advised KIC that it intends to file suit against
KIC for its costs with regard to the Site. KIC does not currently know the
amount which will be sought in the case. KIC has been advised that there will
be several additional defendants named in the suit.
11. Related Party Transactions
In June 1995, the Company repurchased from its President 15,897 shares of
common stock at an average price of $7.69 per share. The purchase price was
within the range of the stock bid and ask amounts for the days purchased.
Consulting fees paid to a board member totaled $67,450, $100,225, and $90,000
in 1996, 1995, and 1994, respectively.
12. Current liabilities in Excess of 5%
At June 30, 1996, there were no liabilities other than trade payables, which
exceeded 5% of current liabilities. Liabilities at June 30, 1995 which exceed
5% of current liabilities include accruals for payroll of $35,510 and vacation
pay of $31,075.
7
<PAGE>
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANT
To the Board of Directors and Stockholders
Kreisler Manufacturing Corporation
We have audited the accompanying consolidated balance sheets of Kreisler
Manufacturing Corporation and its subsidiaries as of June 30, 1996 and 1995,
and the related consolidated statements of operations, changes in stockholders'
equity, and cash flows for each of the three years in the period ended June 30,
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Kreisler
Manufacturing Corporation and its subsidiaries as of June 30, 1996 and 1995,
and the results of their operations and their cash flows for each of the three
years in the period ended June 30, 1996 in conformity with generally accepted
accounting principles.
GREGORY, SHARER & STUART
/S/ Gregory, Sharer & Stuart
St. Petersburg, Florida
August 20, 1996
8
<PAGE>
Kreisler Manufacturing Corporation and Subsidiaries
Management's Discussion and Analysis
Description of Business
Kreisler Manufacturing Corporation fabricates precision metal components and
assemblies primarily for aircraft engines with both military and commercial
application. These products fall into three categories. The primary category
representing the majority of its business is manifold assemblies consisting of
fuel manifolds, air lines, oil lines and de-icer lines. Fuel manifolds supply
fuel to the combustion section of the engine. Air lines carry air to cool
sections of the engine. Oil lines transfer oil to lubricate various bearings in
the engine. De-icer lines transmit hot air to the engine to prevent icing.
The second category is blade locks, small metal stampings used at the base
of turbine blades to lock the blades to the hub.
The third category is baffles which are inserted into vanes located in the
combustion section of the engine for cooling purposes. These are sheet metal
parts formed generally in the shape of an airfoil with orifices to achieve this
cooling.
1996 Compared to 1995
Net sales increased from $5,252,000 in 1995 to $5,704,000 in 1996. The
sales increase of $452,000 or 8.6% primarily reflects an increase of $1,475,000
or 87% from two industrial customers, and a decline of $1,134,000 or 66% from
the U.S. Government. Our backlog has increased to over $6 million as of June
30, 1996, as compared to $3 million as of June 30, 1995.
Gross margins remain negative at 13% for the year. A loss was incurred
in the first six months of the year, while a slight profit was realized from
January through June of 1996. Our material purchases have returned to a more
normal range compared to the prior year which had an unacceptable material
percentage to sales.
Capital expenditures for the year were approximately the same as last
year; $38,000 in 1996 compared to $37,000 in 1995. Under present cash flow
constraints there is no capital budget for 1996-1997. Equipment will be
purchased only when absolutely necessary and when a quick return can be
realized.
Selling and general and administrative expenses declined with less
commissions on lower sales to the government. Other income declined $100,000
with lower cash balances.
Short term liquidity, management believes, will be adequately provided
by internally generated funds or cash reserves to meet the needs of the
business. Our current cash reserves are $1,400,000, which ,as we grow, will put
pressure on our cash flow. At June 30, 1996, working capital was $2,772,000
with a current ratio of 5.6:1 with no long term debt. Stockholder equity is
$7.21 per share. While our balance sheet remains strong, and our backlog
continues to grow, our liquidity will be determined by our ability to ship the
product. Continued losses and cash decline are unacceptable.
1995 Compared to 1994
Net sales increased from $4,721,000 in 1994 to $5,252,000 in 1995. The
$531,000 or 11% increase in sales primarily reflects a 70% increase in
government shipments over the prior year. If termination charges of $247,000 in
1994 are deducted from 1994 sales, 1995 showed an increase of $778,000 or 17%
over the prior year. We have maintained approximately the same sales to Pratt
and Whitney as compared to 1994. Although our backlog has increased to over $3
million compared to June 30, 1994, government orders represent only 9% of that
backlog compared to 33% in the prior year. Pratt has remained constant as a
percentage of our backlog. The increase of $400,000 in backlog to offset the
decline of $600,000 in government orders reflects a $1,000,000 increase in new
orders from both old and new customers.
Gross margins were negative as material became an unacceptable
percentage of our sales, increasing 22% over the prior year, represented by two
orders which were 40% of our sales. We are addressing this issue and comparing
actual to quote weekly on outside purchases. Unfortunately, in the third and
fourth quarters as we built our infrastructure, sales declined $400,000 as
compared to the first half of the fiscal year, affecting our operating loss.
Also, as we increased our engineering and machine shop capabilities, factory
supplies increased 74%.
At the present time, we probably have, overall, the most capable
personnel in many years.
We are no longer solely a make-to-print organization. As the industry
starts to turn around and we are able to reach our critical mass in sales,
Kreisler should become the pre-eminent tubing facility in the country. We face
many obstacles but we believe they will be overcome.
Capital expenditures were $37,000 in 1995 as compared to $45,000 in
1994. At the present time, the Company has not budgeted for any capital
expenditures in 1995-96.
9
<PAGE>
Kreisler Manufacturing Corporation and Subsidiaries
Management's Discussion and Analysis
General and Administrative expenses declined over $100,000 or 25% with
the reduction of legal expenses and sales commissions. Other income increased
with investments in government securities.
Short term liquidity, management believes, will be adequately provided
by internally generated funds or cash reserves to meet the needs of the
business. While cash, cash equivalents and investments declined $1,200,000 from
June 30, 1994, the Company has a current ratio of 10:1 and a quick ratio of
6:1. Our balance sheet remains strong with high current ratios and no long term
debt.
1994 Compared to 1993
Net sales declined from $5,270,000 in 1993 to $4,721,000 in 1994. The
$549,000 or 10% decline reflects the impact of Pratt and Whitney bringing work
into their own facility and economic conditions. The sales of $4,721,000
includes $247,000 in termination charges to Pratt.
The survival of this Company will depend on its ability to generate sales
in a downturned economy. During the past year, we have opened three new major
accounts. We have expanded into the industrial turbine industry. Government
sales increased from 12% to 26% of total sales. We recently received new orders
from Pratt and the Government over $1.6 million to be shipped in early 1994-95.
Gross profit declined to a negative 15% or $691,000. Outside consulting
fees represented $311,000 of this loss. Turn around time for shipments has
improved from three to four months to three to four weeks. Inventory has been
reduced $453,000 or 30%. We have installed and improved process documentation,
corrective action for product non-conformance, gage and equipment calibration
and safety and hazardous waste control. Our organization has improved
communications, worker ownership, accountability and responsibility. It has
been a complete cultural change which must continue. Overall the response has
been outstanding.
General and Administrative expenses increased $80,000 in legal fees
and $33,000 in government sales commission.
Capital expenditures were $45,000 in 1994 as compared to $96,000 in 1993.
At the present time, the Company has not budgeted for any expenditures in
1994-95.
Backlog declined from $5.5 million as of June 30, 1993 to $2.6 million or
53%. as of June 30, 1994. The decline includes the removal of one $985,000
order, Pratt termination of $435,000 in orders, and a Government unreleased
order of $300,000. The removal of these orders from the backlog resulted in a
decline of $1,720,000 or 31%. The time has changed. Orders are received with
shorter lead times - from six months to six weeks.
Short term liquidity, management believes, will be adequately provided by
internally generated funds or cash reserves to meet the needs of the business.
Last year's cash and cash equivalents compared to the combination this year of
investments and cash and cash equivalents declined $326,234 or 9%. The
investment loss of $62,000 reflects market value decline. Our goal in this
downturned economy is to reach a cash flow break-even. Our balance sheet
remains strong with high current ratios and no long term debt.
10
<PAGE>
Kreisler Manufacturing Corporation
Corporate Financial Statements
Five years ended June 30, 1996
<TABLE>
<CAPTION>
(In thousands except share amounts) 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 5,704 $ 5,252 $ 4,721 $ 5,270 $ 6,028
Cost of goods sold 6,441 6,423 5,412 5,276 6,434
- ---------------------------------------------------------------------------------------------------
Gross (loss) profit (737) (1,171) (691) (6) (406)
General and administrative expenses 283 306 409 291 275
- ---------------------------------------------------------------------------------------------------
Operating (loss) earnings (1,020) (1,477) (1,100) (297) (681)
Other income (expense):
Interest and other income 104 197 158 181 156
Loss on investments (7) -- (62) -- --
- ---------------------------------------------------------------------------------------------------
(Loss) earnings before taxes (923) (1,280) (1,004) (116) (525)
Income tax (benefit) expense -- -- (262) (33) (165)
- ---------------------------------------------------------------------------------------------------
Net (loss) earnings $ (923) $(1,280) $ (742) $ (83) $ (360)
- ---------------------------------------------------------------------------------------------------
Net (loss) earning per share $ (1.90) $ (2.55) $ (1.48) $ (.17) $ (.72)
- ---------------------------------------------------------------------------------------------------
At year end:
Total Assets $ 4,103 $ 4,737 $ 6,096 $ 6,787 $ 6,878
- ---------------------------------------------------------------------------------------------------
</TABLE>
Quarterly Common Stock Data
The Company's stock is traded over-the-counter. There are approximately 400
shareholders. The Company does not anticipate the payment of cash dividends
this year. The table below presents a summary of the market prices for years
ended June 30. (Asterisk (*) indicates issue did not trade during the quarter;
therefore, high/low bid information is presented.)
<TABLE>
<CAPTION>
1996 1995 1994
- ---------------------------------------------------------------------------------------------
Sales Price Range Sales Price Range Sales Price Range
Quarter High Low High Low High Low
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
June 30 4 1/2 2 3/4 8 6 1/4 6 3/4 6 3/4
March 31 5 1/4 2 3/4 6 1/4 6 1/4 7 1/2 7 1/2
December 31 5 1/2 4 1/4 *6 3/4 6 1/4 8 1/4 7 1/2
September 30 6 1/4 5 1/2 *6 3/4 6 3/4 8 1/2 7 1/2
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Kreisler Manufacturing Corporation and Subsidiaries
Directors and Officers
- ----------------------------------------------------------------------------------------------------------------
<S> <C>
DIRECTORS TRANSFER AGENT
EDWARD L. STERN, Chairman of the Board, President Common Stock
ROBERT S. KRUPP, Financial Consultant American Stock Transfer and Trust Company
HARRY BRILL-EDWARDS, President Gas Turbine Consulting 40 Wall Street
EDWARD A. STERN, Vice President New York, NY 10005
MICHAEL D. STERN, Vice President
OFFICERS REGISTRAR
EDWARD L. STERN, Chairman of the Board, President American Stock Transfer and Trust Company
EDWARD A. STERN, Vice President, Kreisler Industrial 40 Wall Street
Corporation New York, NY 10005
MICHAEL D. STERN, Vice President, Kreisler Industrial
Corporation
AUDITORS COUNSEL
GREGORY, SHARER & STUART BLANK, ROME, COMISKY & McCAULEY
Certified Public Accountants 4 Penn Central Plaza
100 Second Avenue South, Suite 606 Philadelphia, PA 19103
St. Petersburg, FL 33701
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
CORPORATE OFFICES: 5960 CENTRAL AVENUE, SUITE H, ST. PETERSBURG, FL 33707
This entire report printed on Recycled Paper
12
<PAGE>
KREISLER MANUFACTURING CORPORATION
----------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 26, 1996
----------------------------------------
TO OUR STOCKHOLDERS:
The annual meeting of stockholders of KREISLER MANUFACTURING
CORPORATION (the "Company") will be held on Tuesday, November 26, 1996 at 1:30
P.M. (prevailing time), at the office of the Company, 5960 Central Avenue,
Suite H, St. Petersburg, Florida 33707 for the following purposes:
1. To elect directors, as described in the accompanying Proxy
Statement.
2. To transact such other business as may properly come before the
meeting or any postponement or adjournment thereof.
The Board of Directors has fixed October 18, 1996 as the record date
(the "Record Date") for the determination of stockholders entitled to vote at
the meeting. Only stockholders of record at the close of business on that date
will be entitled to notice of, and to vote at, the meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO SIGN, DATE AND
PROMPTLY RETURN THE ENCLOSED PROXY. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR
YOUR CONVENIENCE; NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Board of Directors.
EDWARD L. STERN, Secretary
October 22, 1996
1
<PAGE>
KREISLER MANUFACTURING CORPORATION
5960 CENTRAL AVENUE, SUITE H
ST. PETERSBURG, FLORIDA 33707
PROXY STATEMENT
The enclosed proxy is solicited by and on behalf of Kreisler
Manufacturing Corporation (the "Company") for use at the annual meeting of
stockholders to be held on Tuesday, November 26, 1996 at 1:30 p.m. (prevailing
time) at the offices of the Company, 5960 Central Avenue, Suite H, St.
Petersburg, Florida 33707, and at any postponement or adjournment thereof. The
approximate date on which this Proxy Statement and the accompanying form of
proxy will first be sent or given to stockholders is October 25, 1996.
Sending in a signed proxy will not affect the stockholder's right to
attend the annual meeting and vote in person since the proxy is revocable. Any
stockholder giving a proxy has the power to revoke it by, among other methods,
giving written notice to the Secretary of the Company at any time before the
proxy is exercised.
The expense of the proxy solicitation will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited in person or by
telephone, telegraph, facsimile transmission or teletype by directors, officers
of employees of the Company without additional compensation. The Company is
required to pay the reasonable expenses incurred by record holders of the
Company's Common Stock who are brokers, dealers, banks or voting trustees, or
their nominees, for mailing proxy material and annual shareholder reports to
any beneficial owners of the Company's Common Stock they hold of record, upon
request of such recordholders.
A form of proxy is enclosed. If properly executed and received in time
for voting, and not revoked, the enclosed proxy will be voted as indicated in
accordance with the instructions thereon. If no directions to the contrary are
indicated, the persons named in the enclosed proxy will vote all shares of
Company Common Stock for the election of all nominees for directorships, as
described herein.
The enclosed proxy confers discretionary authority to vote with
respect to any and all of the following matters that may come before the
meeting: (i) matters which the Company does not know, a reasonable time before
the proxy solicitation, are to be presented at the meeting; (ii) approval of
the minutes of a prior meeting of stockholders, if such approval does not
amount to ratification of the action taken at the meeting; (iii) the election
of any person to any office for which a bona fide nominee is unable to serve or
for good cause will not serve; and (iv) matters incident to the conduct of the
meeting. In connection with such matters, the persons named in the enclosed
form of proxy will vote in accordance with their best judgment.
2
<PAGE>
The Company had 485,512 shares of Common Stock outstanding at the
close of business on October 18, 1996, the record date for the determination of
stockholders entitled to receive notice of and to vote at the annual meeting.
The presence, in person or by proxy, of stockholders entitled to cast at least
a majority of the votes which all stockholders are entitled to cast on a
particular matter constitutes a quorum for the purpose of considering such
matter. Each share of the Company's Common Stock outstanding is entitled to one
vote on each matter which may be brought before the annual meeting.
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of October 18, 1996 with
respect to the persons known by the Company to be the beneficial owners of more
than five percent of its Common Stock and with respect to the Company's Common
Stock beneficially owned by all directors and officers of the Company as a
group:
Name and Address Amount Beneficially Percent of
of Beneficial Owner Owned (1) Class
- ------------------- ------------------- ----------
Trust created u/w/o 170,817 (2) 35.2
Lucile Stern f/b/o
Edward L. Stern
Edward L. Stern 48,736 (3) 10.0
5960 Central Avenue, Suite H
St. Petersburg, Florida 33707
Heine Securities Corporation 72,130 (4) 14.9
51 John F. Kennedy Parkway
Short Hills, NJ 07078
All directors and officers of 73,991 (3) 50.4
the Company as a group (5 persons)
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in
the regulations of the Securities and Exchange Commission and,
accordingly, may include securities owned by or for, among others, the
wife and/or minor children of the individual and any other relative
who has the same home as such individual, as well as other securities
as to which the individual has or shares voting or investment power or
has the right to acquire within 60 days after October 18, 1996.
Beneficial ownership may be disclaimed as to certain of the
securities.
3
<PAGE>
(2) Edward L. Stern, Chairman of the Board and President of the Company,
is trustee of the Trust created under the Will of Lucile M. Stern for
the benefit of Edward L. Stern and in such position exercises sole
voting and investment power with respect to the shares of the Company
held of record by the Trust (see "Executive Compensation and other
information").
(3) This figure excludes the shares owned of record by the Trust created
under the Will of Lucile M. Stern for the benefit of Edward L. Stern.
Additionally, the figure does not include 32,383 shares of Common
Stock beneficially owned by four children of Mr. Stern, as to which
Mr. Stern disclaims beneficial ownership. Mr. Stern has sole voting
and investment power with respect to the 48,736 shares held in his own
name as well as the shares beneficially owned by the Trust. This
figure also includes 1,000 shares beneficially owned by Mr. Krupp and
12,128 shares and 12,127 shares owned respectively by Edward A. Stern
and Michael D. Stern.
(4) This information is based upon the information disclosed in Amendment
3 to Schedule 13G filed by Heine Securities Corporation ("HSC") with
the Securities and Exchange Commission on February 14, 1990. HSC is
the investment adviser to Mutual Series Fund, Inc. ("Mutual Series"),
a Maryland corporation which is an open-end investment company
registered under the Investment Company Act of 1940. Mutual Series is
the legal owner of the shares of common stock reflected above as being
beneficially owned by HSC. Pursuant to investment advising agreements
with Mutual Series, HSC has sole investment discretion and voting
authority with respect to such securities.
ELECTION OF DIRECTORS
(Proposal 1)
The By-laws of the Company provide that the Board of Directors shall
consist of not less than three directors and subject to this limitation, the
number of directors may be fixed from time to time by action of the
stockholders or the directors. The Board of Directors by resolution has set the
number of directors at five.
The following table sets forth information concerning the Company's
nominees for election to the Board of Directors. If any of the nominees become
unable or for good cause will not serve, the persons named in the enclosed
proxy will vote in accordance with their best judgment. The Company expects all
nominees to be willing and able to serve. Directors of the Company serve until
the next annual meeting of stockholders and until their successors have been
elected and qualified.
4
<PAGE>
Director
of the
Principal Company Age as of
Occupation Since October 18, 1996
---------- -------- ----------------
Edward L. Stern Chairman of the Board 1968 66
and President of the
Company
Robert S. Krupp Financial Consultant 1989 45
Harry Brill-Edwards President, Gas Turbine 1994 54
Consulting
Edward A. Stern Vice-President, Kreisler 1994 35
Industrial Corporation
Michael D. Stern Vice-President Kreisler 1994 30
Industrial Corporation
Except for Robert S. Krupp and Harry Brill-Edwards each of the
nominees is an executive officer of the Company or its wholly owned subsidiary
Kreisler Industrial Corporation and has had the same principal occupation or
employment over the past five years. Four of the nominees beneficially own
Common Stock. Edward L. Stern and Robert S. Krupp's ownership of Common Stock
is discussed under "Principal Stockholders". Edward A. Stern and Michael D.
Stern are owners of record and beneficial owners of 12,128 and 12,127 shares
respectively. Edward A. Stern and Michael D. Stern are the sons of Edward L.
Stern.
From May 1987 until October 1988, Mr. Krupp was a Partner/Consultant
with the Canaan Group, Ltd., a Venture Capital Consulting firm. Prior hereto,
from May 1985 until May 1987, Mr. Krupp was a self-employed financial
consultant and from December 1980 until May 1985, Mr. Krupp was Vice
President-Finance of Kinetics Technology International, Inc., an engineering
firm.
From 1966 to 1993 Harry Brill-Edwards worked for Chromalloy Gas
Turbine Corporation. He became President of the Chromalloy Research and
Technology Division in 1979. In 1987 he was promoted to Chief Operating Officer
of Chromalloy Gas Turbine Corporation with full responsibility for Chromalloy's
worldwide operations comprising 28 divisions. In 1993 Mr. Brill-Edwards founded
Gas Turbine Consultants, a technology, marketing and planning consulting
company.
5
<PAGE>
Edward A. Stern is Vice President of Administration, responsible for
sales, purchasing, production control and costing. Prior to joining Kreisler
his experience included five years with American Airlines in the Corporate
Finance area.
Michael D. Stern is Vice President of Operations, responsible for
sales, manufacturing, engineering quality and costing. Prior to joining
Kreisler he was a marketing representative for Aetna Life and Casualty and a
member of their Connections Executive Training program.
SUMMARY COMPENSATION TABLE
Name and
Principal
Position Year Salary ($)
- --------- ---- ----------
Edward L. Stern 1996 130,000
President-CEO 1995 130,000
1994 130,000
Each director of the Company who is not an officer receives a fee of
$10,000 per year, in addition to the reimbursement of expenses to attend each
meeting. Harry Brill-Edwards, director, received $67,450 compensation as a
consultant.
6
<PAGE>
KREISLER MANUFACTURING CORPORATION
ANNUAL MEETING OF STOCKHOLDERS, NOVEMBER 26, 1996
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Edward L. Stern, as
attorney-in-fact and proxy of the undersigned, with full power of substitution,
for and in the name, place and stead of the undersigned to appear at the annual
meeting of Stockholders of Kreisler Manufacturing Corporation (the "Company")
to be held on the 26th day of November, 1996 and at any postponement or
adjournment thereof, and to vote all of the shares of Common Stock of the
Company which the undersigned is entitled to vote, with all the powers and
authority the undersigned would possess if personally present. The undersigned
hereby directs that this proxy be voted as follows:
1. For the election of the nominees listed below to serve as
directors, as described in the accompanying Proxy Statement.
(To withhold authority to vote for the nominees listed below
check this box [ ].
Edward L. Stern Harry Brill-Edwards Michael D. Stern
Robert S. Krupp Edward A. Stern
INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.
_______________________________________________________________________________
2. To transact such other business as may properly come before this
meeting or any postponement or adjournment thereof.
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED. IF NO
DIRECTIONS TO THE CONTRARY ARE INDICATED IN THE BOXES PROVIDED, THE PERSONS
NAMED HEREIN INTEND TO VOTE FOR THE ELECTION OF THE NOMINEES FOR DIRECTORS
LISTED.
THIS PROXY CONFERS CERTAIN DISCRETIONARY AUTHORITY DESCRIBED IN THE
PROXY STATEMENT. THE ATTORNEY AND PROXY NAMED HEREIN MAY EXERCISE ALL OF THE
POWERS HEREUNDER.
The undersigned hereby acknowledges receipt of the Company's Proxy
Statement relating to the 1996 Annual Meeting of Stockholders and the Company's
Annual Report to Stockholders for 1996.
Dated ____________________________, 1996
(Please date)
_____________________________(SEAL)
(Stockholders Signature)
_____________________________(SEAL)
(Stockholders Signature)
It would be helpful if you signed your name or names exactly as it
appears hereon, indicating any official position representative capacity.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 887
<SECURITIES> 0
<RECEIVABLES> 891
<ALLOWANCES> 0
<INVENTORY> 1,574
<CURRENT-ASSETS> 3,899
<PP&E> 2,882
<DEPRECIATION> 2,678
<TOTAL-ASSETS> 4,103
<CURRENT-LIABILITIES> 602
<BONDS> 0
<COMMON> 243
0
0
<OTHER-SE> 3,259
<TOTAL-LIABILITY-AND-EQUITY> 4,103
<SALES> 5,704
<TOTAL-REVENUES> 5,704
<CGS> 6,441
<TOTAL-COSTS> 6,441
<OTHER-EXPENSES> 283
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (923)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (923)
<EPS-PRIMARY> (1.90)
<EPS-DILUTED> 0.00
</TABLE>
