UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(Mark One)
[X] Quarterly Report under Section 13 or 15 (d) of the Securities Exchange Act
of 1934
For the quarterly period ended SEPTEMBER 30, 1998
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[ ] Transition Report under Section 13 or 15 (d) of the Exchange Act
For the transition period from to
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Commission File Number: 0-4036
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KREISLER MANUFACTURING CORPORATION
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(Exact name of small business issuer 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 No.)
5960 CENTRAL AVENUE, SUITE H., ST. PETERSBURG, FLORIDA 33707
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(Address of principal executive offices)
(813) 347-1144
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(Issuer's telephone number)
NOT APPLICABLE
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(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 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 number of shares outstanding of issuer's Common Stock, par value $.125 per
share, as of September 30,1998 was 1,942,048 shares.
Transitional small business disclosure format (check one): Yes [ ] No [X]
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KREISLER MANUFACTURING CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
PART I Financial Information
Item 2 Management Discussion and Analysis of Financial Condition
and Results of Operations
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The Year 2000 discussion has been added to Management Discussion and Analysis.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
KREISLER MANUFACTURING CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
THREE MONTHS ENDED SEPTEMBER 30, 1998
Description of 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") which was incorporated in New Jersey July 3, 1956 manufacture
precision metal components and assemblies at Elmwood Park, New Jersey for use in
military and commercial aircraft engines.
Forward Looking Statements
This Quarterly Report on Form 10QSB contains forward looking statements,
particularly with respect to the Liquidity and Capital Resources section of
Management's Discussion and Analysis of Financial Condition and Results of
Operations. Additional written or oral forward-looking statements may be made by
the Company from time to time, in filings with the SEC or otherwise. Such
forward-looking statements are within the meaning of that term in Section 27A of
the Securities Act of 1933 and Section 21 E of the Securities Exchange Act of
1934. Such statements may include, but not be limited to, projections of
revenue, income, losses, cash flows, capital expenditures, plans for future
operation, financing needs or plans, plans relating to products or services of
the Company, estimates concerning the effects of litigation or other disputes,
as well as assumptions to any of the foregoing.
Forward looking statements are inherently subject to risks and uncertainties,
some of which can not be predicted. Future events and actual results could
differ materially from those set forth in or underlying the forward looking
statements.
Products
The Company fabricates precision metal components and assemblies primarily for
aircraft engines with both military and commercial applications. The primary
function of the Company's products is to transport fluids (including air) to
various parts of the aircraft or aircraft engine. The redirection of air is a
major element in reducing high temperatures generated by aerospace propulsion.
High temperatures are a limiting factor in increasing thrust in jet engines.
Tube assemblies may be made of various materials and configurations. Materials
include titanium, inconel and stainless steel. Configurations include quality
controlled and highly engineered manifold assemblies to transfer fuel for
combustion, oil for lubrication, hydraulic fluid to activate thrust reversers
and impingement tubes or baffles to cool vanes in the combustion section of the
engine.
For the three months ended September 30, 1998, sales activity was approximately
thirty-five percent military aircraft engines and sixty-five percent commercial
aircraft engines.
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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 are
received through competitive proposals which are made in response to requests
for bids from contractors who are frequently supplying engines for commercial
businesses or various branches of the United States Government.
Results of Operations
Kreisler Manufacturing Corporation revenues and earnings continue to improve
compared to the same period in the prior year. The Company's goal is to build
shareholder value via expanded marketing and sales growth and increased
productivity and competitiveness. Revenues increased $1,046,000 or 44% compared
to the first quarter of the prior year. Our customer base was expanded with the
addition of four new accounts.
Income before taxes was $669,000 or 19.5% for the three months ended September
30, 1998 compared with $244,000 or 10% for the three months ended September 30,
1997. An increase of $425,000 or 174%.
Earnings before taxes improved primarily with a productivity increase of 21%. An
improved production control system was implemented during the quarter which
improved productivity by making material available when needed. Factory expenses
increased 3% on a revenue increase of 44%. Net earnings were impacted by a
provision for taxes of $268,000 for the period ended September 30, 1998 compared
to a tax benefit of $94,000 for the same period in the prior year. Net earnings
were $402,400 in the current year compared with $344,000 for the comparable
period in the prior year. Earnings per share increased 11% for the three months
on an adjusted shares basis: $.20 this year compared to $.18 for the same period
in the prior year.
Selling, general and administrative expenses increased $10,000 or 10% for the
three months ended September 30, 1998 compared to September 30, 1997. Salaries
and audit expenses were the primary increases.
Income tax expense for the first quarter was $268,000 compared to a tax benefit
of $94,000 in the first quarter of the prior year or a change of $362,000. All
tax allowances against deferred tax benefits have been used and the first
quarter provision is at the combined federal and state income tax rate of 40%.
Deferred tax benefits for income tax purposes is $126,000.
Cash and cash equivalents since June 30, 1998 increased $933,000 or 49% to
$2,843,000: including the $587,600 certificate of deposit redemption. The cash
flow for the quarter was $345,000. Accounts receivables decreased 367,000 or
15%. The balance sheet has no long term debt and a current ratio of 7.5:1.
Management believes there are sufficient funds available to take care of both
its short term and long term requirements by internally generated funds or
reserves.
Capital equipment will be purchased on an as needed basis. Current backlog
remains the same as that of June 30, 1998.
Stockholder equity since June 30, 1998 increased 6.8% from $3.10 per share to
$3.31. For the year ended September 30, 1998 from September 30, 1997 stockholder
equity increased 34% or $.82 per share.
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Year 2000
Many computer systems in use today were designed and developed using two digits,
rather than four, to specify years. As a result, such systems will recognize the
year 2000 as 00 or 1900. This could cause many computer applications to fail
completely or to create erroneous results unless corrective measures are taken.
During FY 1999, the Company developed a plan to evaluate and address the impact
of the Year 2000 problem on its internal systems. In addition, the Company is
now seeking to evaluate the potential impact of the Year 2000 problem at key
customers and suppliers of the Company. The Company has divided the plan into
three areas of evaluation: 1) administrative/manufacturing hardware and
software, 2) customers and 3) suppliers. The Company is approximately 40%
complete in the evaluation of hardware and software and expects to be
substantially complete with this portion of the evaluation by 28 February 1999.
Final compliance for administrative/manufacturing hardware and software is
expected by 30 June 1999. The Company is assessing its Year 2000 risks related
to relationships with significant customers and suppliers. The primary focus of
this portion of the evaluation is through written responses to a
Company-sponsored request for information to significant customers and
suppliers. The responses to this request for information are currently being
gathered for review.
Despite these efforts, the Company can provide no assurances that supplier and
customer Year 2000 compliance plans will be successfully completed in a timely
manner and there can be no assurances that the Company will not experience
material Year 2000 related problems or expenses.
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PART II OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
None
ITEM 2 CHANGES IN SECURITIES
None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8K
None
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SIGNATURE
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Pursuant to the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
KREISLER MANUFACTURING CORPORATION
(Registrant)
BY /s/ EDWARD L. STERN
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Edward L. Stern
President, Treasurer
January 12, 1999
