UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended June 30, 2000
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ______________ to ______________
Commission File Number: 0-4036
Kreisler Manufacturing Corporation
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(Name of small business issuer 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) (zip code)
Issuer's telephone number: 727-347-1144
Securities registered pursuant to Section 12(b) of the Exchange Act:
Not applicable
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $.125 par value per share
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(Title of Class)
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
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [x]
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The Issuer's revenues for its most recent fiscal year was $14,318,000.
The aggregate market value of the voting and non voting common equity held by
non-affiliates of the issuer is approximately $3,983,310.66(1).
The number of shares of Common Stock outstanding as of September 1, 2000 was
1,955,379 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Company's Annual Report to Shareholders for the fiscal
year ended June 30, 2000 are incorporated by reference in Parts I and II of this
Report. With the exception of the information incorporated by reference in Parts
I and II of this Report, the Company's Annual Report to Shareholders for the
fiscal year ended June 30, 2000 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 2000 Annual Meeting of Shareholders are incorporated by reference in Part
III of this Report.
Transitional Small Business Disclosure Format (check one)
[ ] Yes [X] No
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(1)The aggregate dollar amount of the voting and non-voting common equity 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 last closing price for the Common Stock as quoted on the National
Association of Securities Dealers Automated Quotation System on September 1,
2000. 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 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.
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TABLE OF CONTENTS
FORM 10-KSB ANNUAL REPORT 2000
KREISLER MANUFACTURING CORPORATION
PAGE NO.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.......................................1
ITEM 2. DESCRIPTION OF PROPERTY.......................................2
ITEM 3. LEGAL PROCEEDINGS.............................................3
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...........3
PART II
ITEM 5. MARKET FOR THE COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS...........................................3
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.....................................................4
ITEM 7. FINANCIAL STATEMENTS..........................................4
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE...........................5
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
ACT..........................................................5
ITEM 10. EXECUTIVE COMPENSATION.......................................5
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT...................................................5
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...............5
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.............................5
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PART I
Item 1. Description of Business
Kreisler Manufacturing Corporation is a Delaware business corporation which was
incorporated on December 13, 1968, which succeeded a New Jersey business
corporation which was incorporated in New Jersey in 1940, which succeeded a New
York corporation which was incorporated in 1930. Kreisler Manufacturing
Corporation and its only wholly-owned subsidiary, Kreisler Industrial
Corporation (collectively the "Company") which was incorporated in New Jersey on
July 3, 1956 manufacture precision metal components and assemblies at Elmwood
Park, New Jersey for use in military and commercial aircraft engines.
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 tubular products is to transport fluids, including
air, oil and gas to various parts of the aircraft or aircraft engine.
Tube assemblies may be made of various materials and configurations, including
titanium, inconel and stainless steel. These quality controlled and highly
engineered manifold assemblies 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.
Over the past three years, ninety percent of the Company's products were tubular
assemblies. For the fiscal year ended June 30, 2000, the sales activity was
approximately thirty percent for military aircraft engines and seventy percent
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 Untied States Government or to commercial businesses.
Customers
Four customers of the Company accounted for 72% of the consolidated net sales of
the Company in the fiscal year ended June 30, 2000.
Competition
The fields in which the Company operates are highly competitive and among the
Company's competitors are enterprises which are substantially larger than the
Company and possess greater
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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 of delivery are required elements. The
Company believes that it is competitive on all the above elements.
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 material are
available at reasonable prices.
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, 2000, the Company employed approximately 124 persons, all of whom
are full-time employees. Approximately 73 are subject to a collective bargaining
agreement with the United Service Employees Union which terminates on December
4, 2000.
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.
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.
Merger Termination
On July 1, 1999, the Company signed a non-binding letter of intent for the
merger of the Company with and into Wood Group Gas Turbine Holdings, Inc., a
wholly owned subsidiary of the John Wood Group PLC, for approximately $25.5
million. As previously disclosed, environmental tests at Kreisler's Elmwood
Park, New Jersey facility, performed in connection
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with the proposed transaction, revealed that both the soil and groundwater at
the facility, and possibly offsite, are contaminated with tetrachlorethylene
("PCE").
Both Kreisler and the Wood Group obtained additional information and advices
regarding the nature, scope and expense of the necessary remediation and
attempted to reach agreement on appropriate adjustments to the terms of the
proposed transaction. Unfortunately, fundamental disagreements between the two
parties remain and Kreisler believed that additional negotiations would not
result in an acceptable agreement. On November 4, 1999 the Company terminated
the letter of intent with the Wood Group.
Compliance with Environmental Laws
The Company has recently become aware of historical releases of hazardous
substances at the facility located at 180 Van Riper Avenue, Elmwood Park, New
Jersey (hereinafter the "Facility"). Based on the results of tests conducted at
the Facility, the Company has discovered that both the soil and groundwater at
the Facility, and possibly offsite, are contaminated with tetrachloroethylene
("PCE"). While the Company cannot be absolutely certain about the source of this
condition, the Company used PCE for degreasing and other similar purposes from
about 1959, when it commenced operation at the Facility, until approximately
1985, when it replaced PCE with another solvent.
Promptly after learning of this condition, the Company notified the New Jersey
Department of Environmental Protection ("Department") as required by the New
Jersey Spill Compensation and Control Act ("Spill Act"), N.J.S.A. 58:10-23.11,
and retained the services of Pleasant Hill Consultants and The Whitman Companies
to perform a full site characterization in accordance with the Department's
Technical Requirements for Site Remediation, N.J.A.C. 7:26E-1.1. While the site
characterization is still underway, the preliminary cost estimate for
remediation of the contamination is approximately $2.2 million, to be incurred
over the next six years. The site characterization has been completed .
The Company has notified its liability insurance carriers which issued liability
policies to the Company during the period from 1959 to 1985 and is waiting for a
determination from the various insurance carriers regarding the available
insurance for coverage of the expected remediation costs and other potential
liabilities arising out of the contamination.
At this time, the Company believes, based upon the facts as currently known,
that its liability policies will cover at least some of the remediation expenses
and other liabilities.
Item 2. Description of Property
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 50
years old and the average age of the equipment is 15 years. The lease expires
October 1, 2000. The remaining balance on the lease facility is $19,998. At the
present time lease negotiations are in progress.
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The Company's principal executive office is located at St. Petersburg, Florida
and consists of approximately 1,000 square feet of leased space. The lease is
currently on a month to month basis. The annual rental expense is approximately
$11,862. The Company does not intend on making any renovations or capital
improvements to the leased space. This location is adequately covered by
insurance.
During fiscal 2000, $227,000 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 and that these properties are
adequately covered by insurance.
Item 3. Legal Proceedings.
By letter dated June 22, 1993 from the Environmental Protection Agency (the
"EPA"), the EPA notified the Company that it had evaluated information relating
to the transportation of waste in 1962-1963-1964 to the Caldwell Trucking
Company Superfund Site (the "Site") and based upon this information EPA believes
that the Company is a Potentially Responsible Party ("PRP") pursuant to Section
107(a) of the Comprehensive Environmental Response compensation and Liability
Act ("CERCLA"), 42 U.S.C. Section 9607(a). The letter from the EPA notified the
Company 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 the Company, may be ordered to
perform response actions deemed necessary by the 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.
Both cases have been settled in principle and await finalization documents for
approximately $53,690.55. Several insurance companies will cover this cost.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
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PART II
Item 5. Market for the Common Equity and Related Stockholder Matters
The Company's Common Stock is traded in over the counter market and is quoted on
the National Association of Securities Dealers Automated Quotation System
(NASDAQ). The following table sets forth the sales prices for the Common Stock
for each quarter in the two year period June 30, 2000.
Quarter Fiscal Year 2000 Fiscal Year 1999
High Low High Low
First Quarter - September 30 12.00 4.56 11.75 4.88
Second Quarter -December 31 8.25 4.19 6.87 3.63
Third Quarter - March 31 4.84 3.50 4.50 3.50
Fourth Quarter -June 30 4.50 3.84 4.84 3.13
The Company has not paid any dividends during the last two fiscal years. The
holders 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.
At June 30, 2000, the Company had approximately 1000 stockholders of record.
Item 6. Management's Discussion and Analysis or Plan of Operation
"Management's Discussion and Analysis" on page 10 of the Annual Report to
Stockholders is incorporated herein by reference.
Item 7. Financial Statements
The following consolidated financial statements of the Company and its
subsidiaries and the Auditor's Report included on pages 1 through 9 of the
Annual Report to Stockholders for the year ended June 30,2000 are incorporated
herein by reference:
Consolidated Balance Sheets - June 30, 2000 and 1999
Consolidated Statements of Operations - Years Ended June 30, 2000, 1999
and 1998
Consolidated Statements of Changes in Stockholders' Equity - June 30, 2000,
1999 and 1998
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Consolidated Statements of Cash Flows - Years Ended June 30, 2000 and 1999
Notes to Consolidated Financial Statements
Report of Independent Certified Public Accountants
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act
Incorporated by reference to the Company's Proxy Statement relating to the 2000
Annual Meeting of Stockholders.
Item 10. Executive Compensation
Incorporated by reference to the Company's Proxy Statement relating to the 2000
Annual Meeting of Stockholders.
Item 11. Security Ownership of Certain Beneficial Owners and Management
Incorporated by reference to the Company's Proxy Statement relating to the 2000
Annual Meeting of Stockholders.
Item 12. Certain Relationships and Related Transactions
Incorporated by reference to the Company's Proxy Statement relating to the 1999
Annual Meeting of Stockholders.
Item 13. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed with this Report.
11 Statement Regarding Computation of Per Share Earnings.
13 Annual Report to Stockholders for the fiscal year ended June 30,
2000 (such report, except for those portions expressly incorporated by reference
to this Annual Report on Form 10-KSB, is furnished for the information of the
Commission and is not to be deemed filed as part of this Report).
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21 Subsidiaries of the Registrant.
27 Financial Data Schedule
(b) Reports on 8-K
No reports on Form 8-K were filed during the last period covered by
this report.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
KREISLER MANUFACTURING CORPORATION
By: /s/ Edward L. Stern
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Edward L. Stern, President
Date: September 27, 2000
In accordance with the Securities Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ Edward L. Stern Director, President and Chief Financial September 27, 2000
--------------------------- Officer (Principal Executive Officer,
Edward L. Stern Principal Financial Officer and Principal
Accounting Officer)
/s/ Robert S. Krupp Director September 27, 2000
---------------------------
Robert S. Krupp
/s/ Harry Brill-Edwards Director September 27, 2000
---------------------------
Harry Brill-Edwards
/s/ Wallace N. Kelly Director-Executive Vice President September 27, 2000
---------------------------
Wallace N. Kelly
/s/ Edward A. Stern Director, Vice President September 27, 2000
---------------------------
Edward A. Stern
/s/ Michael D. Stern Director, Vice President September 27, 2000
---------------------------
Michael D. Stern
</TABLE>
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EXHIBIT INDEX
11 Statement re computation of per share earnings.
13 Annual Report to Stockholders for the fiscal year ended June 30,
1999 (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).
21 Subsidiaries of the Registrant.
27 Financial Data Schedule
9
