Ladish (LDSH) reported 4th quarter results which, at first glance, seemed pretty good for an aerospace supplier, given the current turbulent environment: Sales were up by 3.9% to almost $112.6 million and EPS were down by only 6.3% to $0.60.

But a second glance revealed some interesting things. Interest & Other was a positive $558 thousand -- compared to a negative $386 thousand last year -- because of a transaction between the corporate office and the company's Polish subsidiary. Income Taxes were a positive $2.8 million versus a negative $4.0 million because of the lingering effects of the reinstatement of R&D tax credits in the third quarter.

Making some admittedly judgmental adjustments for these perhaps-non-recurring items suggests that the 4th quarter would have otherwise come in at around $0.22, down 65.6%...not so good!

Looking forward to 2009, the news doesn't get much better. Scrap prices for nickel, titanium and hi-carbon steel are so low that the Company is considering inventorying them until things get better ? instead of selling the scrap to offset Cost of Goods Sold ? which, in turn, could knock some $8 million off of Pre-Tax Income.

Shipments of product for jet engines ? the most profitable part of LDSH's business ? have dropped from 56% of revenues to 51% (the balance is made up of less-profitable Other Aerospace and Industrial). Both Depreciation and Interest Expense are each expected to rise by as much as $3 million. Pension Costs could be up by $7 to $ 8 million in order to make up for the stock market fiasco. The tax rate will be back to 37%. And, lest we forget, Sales will be down by 5% to 10%.

There is some good news.? Raw material costs -- which are passed through and consequently do not contribute to profitability, and are now almost 50% of sales -- will decline along with scrap prices. Energy prices (LDSH uses a lot of natural gas in its processes) are down.? Cash Flow is good and the company will pay off its Short-Term debt during '09.

So, quickly putting this quickly altogether in our super-fast Excel model, we figure Ladish's EPS in 2009 will be somewhere between $1.19 and $1.32 -- the mid-point of which is $1.25 (more or less) -- versus the $2.15 it just reported for 2008. With the start of 787 deliveries in 2010, that year should be better?but we just don't know by how much yet.

The Company did say that 2009 would be "challenging"?a masterpiece of understatement.