* Record quarterly sales of $391.7 million (28% sales growth)

* Record quarterly net income of $22.0 million (23% net income growth)

* Record quarterly diluted earnings per share of $0.52

* $44 million of cash flow from operations

WOOD DALE, Ill., July 9 /PRNewswire-FirstCall/ -- AAR (NYSE: AIR) today reported fiscal 2008 fourth quarter net sales of $391.7 million and net income of $22.0 million, or $0.52 diluted earnings per share. Sales increased 28% from $305.7 million in the fourth quarter of last year, and net income increased 23%. Organic sales growth was 13% in the fourth quarter despite no aircraft sales.

For the Company's fiscal year 2008, sales were a record $1,384.9 million, an increase of 31% over the prior fiscal year and net income increased 28% to $75.1 million, or $1.76 per diluted share. Organic sales growth was 20% for fiscal 2008.

'We achieved superior sales and earnings growth powered by market share gains through solid execution across our business and broad market acceptance of the Company's value proposition,' said David P. Storch, Chairman and Chief Executive Officer of AAR CORP. 'We also increased our liquidity, diversified our business and expanded our customer base.'

During fiscal 2008, each segment achieved double digit sales growth driven by a 28% increase in sales to commercial customers and a 37% increase in sales to defense customers. Sales to Defense customers have increased 24% on a compounded annual basis over the past three fiscal years and represent 37% of consolidated revenues. The strong sales growth across each of the Company's markets reflects increased market share in MRO and parts support, solid execution, geographic expansion and the impact of acquisitions. At May 31, 2008, total backlog increased to $465 million from $315 million at May 31, 2007. Backlog excludes expected sales of A400M cargo systems.

Consolidated gross profit margin was 19.6% for the fourth quarter compared to 18.2% last year. For fiscal 2008, the consolidated gross profit margin was 19.1% compared to 17.4% last year. Improving gross margins has been a key focus at the Company the past few years and the year-over-year improvement was driven by increased volumes, higher margin product mix and operational performance. For the fourth quarter, operating income increased $10.1 million to $38.3 million or 9.8% of sales and for fiscal 2008, operating income increased $39.2 million to $134.5 million or 9.7% of sales compared to 9.0% last year.

    Following are the highlights for each segment:
      Aviation Supply Chain - Sales grew 14% to $167.8 million for the fourth
      quarter and gross profit increased 29% to $41.8 million, resulting in a
      gross profit margin of 24.9%.  For fiscal 2008, sales increased 12% to
      $606.5 million and gross profit increased 27% to $145.1 million,
      resulting in a gross profit margin for the year of 23.9%. Growth in this
      segment was fueled by the Company's industry leading position and value
      proposition offering airline and maintenance providers cost-effective
      supply solutions. The Company also increased its international business
      and benefited from strength in the Company's performance-based logistics
      programs for defense customers.
      Maintenance, Repair and Overhaul - Sales increased 45% to $94.8 million
      for the fourth quarter and gross profit increased 59% to $14.9 million,
      resulting in a gross profit margin of 15.7%. For fiscal 2008, sales
      increased 42% to $300.9 million and gross profit increased 47% to
      $44.0 million, resulting in a gross profit margin for the year of 14.6%.
      The sales growth reflects strong performance at the Company's aircraft
      maintenance center in Indianapolis, which expanded its relationship with
      Southwest Airlines to provide heavy maintenance for its fleet of 737
      aircraft, and the inclusion of Avborne Heavy Maintenance, which was
      acquired in early March 2008. Avborne adds 226,000 square feet of modern
      hanger space at Miami International Airport and brings Airbus experience
      and wide-body capabilities. The Company's landing gear business
      experienced record fourth quarter and fiscal 2008 sales.
      Structures and Systems - Sales grew 53% to $122.7 million for the
      quarter and gross profit increased 69% to $18.4 million, resulting in a
      gross profit margin of 15.0%. For fiscal 2008, sales increased 47% to
      $389.4 million and gross profit increased 52% to $54.7 million,
      resulting in a gross profit margin for the year of 14.0%. Organic sales
      growth was 14% and 13% for the fourth quarter and fiscal 2008,
      respectively. The sales growth reflects the Company's leading position
      in specialized mobility products for defense and humanitarian customers
      and steady demand for cargo systems and composite structures. In
      December 2007, the Company acquired SUMMA Technology, Inc. adding to our
      precision-machining and fabrication capabilities. The Company also
      announced a significant expansion to its composites manufacturing
      capability by opening a 90,000-square-foot facility located at McClellan
      Business Park in Sacramento, California, and which should be operational
      by August.
      Aircraft Sales and Leasing - During the fourth quarter, the Company's
      aircraft position remained unchanged at 37, with 29 aircraft held in
      joint ventures and eight held in the Company's wholly-owned portfolio.
      For the quarter, sales declined $7.3 million and gross profit and
      earnings from aircraft joint ventures decreased $0.9 million compared to
      the prior year as the Company had no aircraft sales.