Exhibit 99.1
| FROM: | | SELAS CORPORATION OF AMERICA | | SCA-444 |
| CONTACT: | | Robert F. Gallagher 651-604-9638 | |
FOR IMMEDIATE RELEASE
SELAS CORPORATION OF AMERICA REPORTS
SECOND-QUARTER RESULTS
ST. PAUL, Minn. —August 12, 2004 — Selas Corporation of America (AMEX: SLS) today reported results for the second quarter and six months ended June 30, 2004.
For the second quarter, the Company had net income from continuing operations of $1,388,000, or $.27 per share, on sales of $8.4 million. This compares with a continuing operations net loss of $142,000, or $.03 per share, on sales of $9.7 million for the second quarter of 2003. For the six-month period, Selas reported net income from continuing operations of $664,000, or $.13 per share, on sales of $17.7 million, versus a continuing operations net loss of $203,000, or $.04 per share, on sales of $18.7 million for the year-ago six months. Results for the three- and six-month periods ended June 30, 2004, include a pre-tax gain of $3.1 million from the sale of the Company’s Dresher, Pa., property. Excluding this gain, Selas would have reported a net loss, net of income tax expense, of approximately $804,000, or $.16 per share, for the 2004 second quarter.
“Selas experienced some end-market sluggishness in the second quarter. This was primarily due to two factors: a decline in the hearing-health market and lower sales to our two largest medical customers,” said Mark S. Gorder, president and chief executive officer of Selas. “We believe these events are temporary and we are optimistic about the opportunities in the Precision Miniature Medical and Electronic Products business, given the increasing demand for smaller, high-quality products.”
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Selas Corporation Second-Quarter 2004 Results
August 12, 2004
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In December 2003, the Company announced it is seeking a strategic buyer for its remaining Heat Technology business, which it currently classifies as a discontinued operation. In the second quarter, Selas recognized net income from discontinued operations of $609,000, or $.12 per share, compared with a net loss of $1,189,000, or $.23 per share, in the year-earlier period. Besides the remaining Heat Technology business, 2003 second-quarter discontinued operations include: Selas’ large furnace operation, which filed for insolvency in August 2003; and Deuer Manufacturing, which was sold in July 2003.
Total 2004 second-quarter net income (which includes both continuing and discontinued operations) totaled $1,997,000, or $.39 per share, compared with a net loss of $1,331,000, or $.26 per share, in 2003. For the six months, total net income was $1,194,000, or $.23 per share, compared with a net loss of $1,567,000, or $.31 per share, for the year-ago period.
Gorder reiterated that Selas’ long-term strategy is to accelerate growth for its Precision Miniature Medical and Electronic Products business. Selas believes its core competencies in the robotic manufacture of miniature and micro-miniature electronic products position it to expand its line of medical products to capture significantly more business.
“With the bulk of our industrial divestitures behind us, we can now devote full attention to building our customer base in the growing medical device market—an industry we’re ideally suited to compete in,” said Gorder.
For the six months ended June 30, 2004, Precision Miniature Medical and Electronic Products sales decreased 5 percent to $17.7 million, from $18.7 million in the comparable 2003 period.
Said Gorder, “The global hearing-health market appears to be stagnant from a unit perspective and continues to be extremely price competitive. We are leveraging the latest digital signal processing technology in our product platform as the engine for several new customer products launching now and later in 2004. We believe these efforts will increase our hearing-health market share. Additionally, while our medical business also suffered in the second quarter due to low-order rates from two customers, we believe this is a timing issue and does not impact long-term prospects.”
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Selas Corporation Second-Quarter 2004 Results
August 12, 2004
Page 3
About Selas
Headquartered in Arden Hills, Minn., Selas Corporation of America designs, develops, engineers and manufactures microminiaturized medical and electronic products. The Company’s core business, Precision Miniature Medical and Electronic Products, supplies microminiaturized components, systems and molded plastic parts, primarily to the hearing instrument manufacturing industry, as well as the computer, electronics, telecommunications and medical equipment industries. Through its core competencies and robotic manufacturing expertise, Selas believes it is well-positioned to compete in the hearing-health and medical device markets that increasingly demands products with increased miniaturization, better cost containment, more reliability and high customer satisfaction. The Company has facilities in Minnesota, California, Singapore and Germany. Selas’ common stock is traded on the American Stock Exchange under the symbol “SLS.”
Forward-Looking Statements
Statements as to the Company’s long-term strategy and other statements herein that are not historical facts or that include forward-looking terminology such as “may”, “will”, “believe”, “expect”, “optimistic” or “continue” or the negative thereof or other variations thereof are “forward-looking statements” within the meaning of the Securities Exchange Act of 1934 as amended. These forward-looking statements are affected by known and unknown risks, uncertainties and other factors that may cause Selas’ actual results, performance or achievements to differ materially from the results, performance and achievements expressed or implied in the forward-looking statements. These risks, uncertainties and factors include the risk that the Company may not be able to achieve its long-term strategy, risks arising in connection with the insolvency of Selas SAS, competition by competitors with more resources than the Company, foreign currency risks arising from the Company’s foreign operations, the cyclical nature of the market for large custom engineered contracts, weakening demand for products of the Company’s other business segments due to general economic conditions, possible non- performance of developing technological products and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year ended December 31, 2003. The Company disclaims any intent or obligation to publicly update or revise any forward-looking statements, regardless of whether new information becomes available, future developments occur or otherwise.
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Selas Corporation Second-Quarter 2004 Results
August 12, 2004
Page 4
SELAS CORPORATION OF AMERICA
Assets
(Unaudited)
| June 30,
2004
| | December 31,
2003
|
|---|
| Current assets: | | | | | | | | |
Cash, including cash equivalents of | | |
| $428,000 in 2004 and $431,000 in 2003 (all | | | $ | 369,577 | | $ | 294,168 | |
| cash equivalents are restricted) | | |
Accounts receivable (less allowance for | | |
| doubtful accounts of $254,000 in 2004 | | |
| and 2003) | | | | 5,033,795 | | | 4,537,830 | |
Inventories | | | | 4,783,253 | | | 5,709,642 | |
Refundable income tax | | | | 686,020 | | | 728,351 | |
Deferred income taxes | | | | — | | | 890,230 | |
Asset held for sale | | | | — | | | 540,175 | |
Other current assets | | | | 444,903 | | | 480,305 | |
Assets of discontinued operations | | | | 4,734,321 | | | 5,729,410 | |
|
| |
| |
Total current assets | | | | 16,051,869 | | | 18,910,111 | |
Property, plant and equipment: | | |
Land | | | | 170,500 | | | 170,500 | |
| Buildings | | | | 1,732,914 | | | 1,732,914 | |
| Machinery and equipment | | | | 26,409,885 | | | 26,353,715 | |
|
| |
| |
| | | | 28,313,299 | | | 28,257,129 | |
Less: Accumulated depreciation | | | | 19,345,101 | | | 18,621,161 | |
|
| |
| |
Net property, plant and equipment | | | | 8,968,198 | | | 9,635,968 | |
Goodwill | | | | 5,264,585 | | | 5,264,585 | |
Other assets, net | | | | 1,178,336 | | | 1,253,186 | |
|
| |
| |
| | | $ | 31,462,988 | | $ | 35,063,850 | |
|
| |
| |
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Selas Corporation Second-Quarter 2004 Results
August 12, 2004
Page 5
SELAS CORPORATION OF AMERICA
Consolidated Condensed Balance Sheets
Liabilities and Shareholders’ Equity
(Unaudited)
| June 30,
2004
| | December 31,
2003
|
|---|
| Current liabilities: | | | | | | | | |
Bank debt | | | $ | 5,397,991 | | $ | 8,237,463 | |
Accounts payable | | | | 2,010,211 | | | 2,757,942 | |
Customers’ advance payments on contracts | | | | 161,546 | | | 172,279 | |
Accrued salaries, wages, and commissions | | | | 1,671,843 | | | 1,522,231 | |
Other accrued liabilities | | | | 1,279,498 | | | 1,930,855 | |
Liabilities of discontinued operations | | | | 1,508,556 | | | 2,341,493 | |
|
| |
| |
Total current liabilities | | | | 12,029,645 | | | 16,962,263 | |
Accrued pension liability | | | | 2,893,681 | | | 2,714,763 | |
Other postretirement benefit obligations | | | | 2,827,417 | | | 2,827,417 | |
Deferred income taxes | | | | 122,093 | | | 123,529 | |
Contingencies and commitments | | |
Shareholders’ equity: | | |
Common shares, $1 par; 10,000,000 shares | | |
| authorized; 5,644,968 shares issued | | | | 5,644,968 | | | 5,644,968 | |
Additional paid-in capital | | | | 12,025,790 | | | 12,025,790 | |
Accumulated deficit | | | | (2,037,367 | ) | | (3,231,009 | ) |
Accumulated other comprehensive loss | | | | (778,161 | ) | | (738,793 | ) |
Less: 515,754 common shares held | | |
| in treasury, at cost | | | | (1,265,078 | ) | | (1,265,078 | ) |
|
| |
| |
Total shareholders’ equity | | | | 13,590,152 | | | 12,435,878 | |
|
| |
| |
| | | $ | 31,462,988 | | $ | 35,063,850 | |
|
| |
| |
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Selas Corporation Second-Quarter 2004 Results
August 12, 2004
Page 6
SELAS CORPORATION OF AMERICA
Consolidated Condensed Statements of Operations
(Unaudited)
| Three Months Ended |
|---|
| June 30,
2004
| | June 30,
2003
|
|---|
| Sales, net | | | $ | 8,354,419 | | $ | 9,674,858 | |
Cost of sales | | | | 6,337,573 | | | 7,031,872 | |
|
| |
| |
| Gross margin | | | | 2,016,846 | | | 2,642,986 | |
Operating expenses: | | |
| Selling expense | | | | 937,488 | | | 934,049 | |
| General and administrative expense | | | | 1,323,397 | | | 1,377,616 | |
| Research and development expense | | | | 340,468 | | | 381,570 | |
|
| |
| |
Total operating expenses | | | | 2,601,353 | | | 2,693,235 | |
Gain on sale of asset held for sale | | | | 3,109,627 | | | — | |
|
| |
| |
Operating income (loss) | | | | 2,525,120 | | | (50,249 | ) |
Interest expense | | | | (151,825 | ) | | (176,234 | ) |
| Interest income | | | | 504 | | | 2,171 | |
| Other income | | | | 4,388 | | | 12,216 | |
|
| |
| |
Income (loss) from continuing operations | | |
| before income taxes | | | | 2,378,187 | | | (212,096 | ) |
Income tax expense (benefit) | | | | 989,905 | | | (70,118 | ) |
|
| |
| |
Income (loss) from continuing operations | | | | 1,388,282 | | | (141,978 | ) |
| Income (loss) from discontinued operations, | | |
| net of income tax expense (benefit) | | | | 608,778 | | | (1,189,201 | ) |
Net income (loss) | | | $ | 1,997,060 | | $ | (1,331,179 | ) |
|
| |
| |
Income (loss) per share: | | |
| Basic: | | |
| Continuing operations | | | $ | .27 | | $ | (.03 | ) |
| Discontinued operations | | | | .12 | | | (.23 | ) |
|
| |
| |
| | | | $ | .39 | | $ | (.26 | ) |
|
| |
| |
| Diluted: | | |
| Continuing operations | | | $ | .27 | | $ | (.03 | ) |
| Discontinued operations | | | | .12 | | | (.23 | ) |
|
| |
| |
| | | | $ | .39 | | $ | (.26 | ) |
|
| |
| |
| Average shares outstanding: | | |
| Basic | | | | 5,129,214 | | | 5,124,214 | |
| Diluted | | | | 5,151,436 | | | 5,124,214 | |
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Selas Corporation Second-Quarter 2004 Results
August 12, 2004
Page 7
SELAS CORPORATION OF AMERICA
Consolidated Condensed Statements of Operations
(Unaudited)
| Six Months Ended |
|---|
| June 30,
2004
| | June 30,
2003
|
|---|
| Sales, net | | | $ | 17,692,497 | | $ | 18,667,896 | |
Cost of sales | | | | 13,352,155 | | | 13,419,310 | |
|
| |
| |
| Gross margin | | | | 4,340,342 | | | 5,248,586 | |
Operating expenses: | | |
| Selling expense | | | | 1,928,296 | | | 1,799,945 | |
| General and administrative expense | | | | 2,880,869 | | | 2,725,089 | |
| Research and development expense | | | | 721,845 | | | 706,058 | |
Total operating expenses | | | | 5,531,010 | | | 5,231,092 | |
Gain on sale of asset held for sale | | | | 3,109,627 | | | -- | |
|
| |
| |
Operating income | | | | 1,918,959 | | | 17,494 | |
Interest expense | | | | (247,901 | ) | | (315,847 | ) |
| Interest income | | | | 1,345 | | | 4,537 | |
| Other income | | | | 99,251 | | | 45,668 | |
|
| |
| |
Income (loss) from continuing operations | | |
| before income taxes | | | | 1,771,654 | | | (248,148 | ) |
Income tax expense (benefit) | | | | 1,107,904 | | | (45,566 | ) |
|
| |
| |
Income (loss) from continuing operations | | | | 663,750 | | | (202,582 | ) |
Income (loss) from discontinued operations, | | |
| net of income tax expense (benefit) | | | | 529,891 | | | (1,364,859 | ) |
|
| |
| |
Net income (loss) | | | $ | 1,193,641 | | $ | (1,567,441 | ) |
|
| |
| |
Income (loss) per share: | | |
| Basic: | | |
| Continuing operations | | | $ | .13 | | $ | (.04 | ) |
| Discontinued operations | | | | .10 | | | (.27 | ) |
|
| |
| |
| | | | $ | .23 | | $ | (.31 | ) |
|
| |
| |
| Diluted: | | |
| Continuing operations | | | $ | .13 | | $ | (.04 | ) |
| Discontinued operations | | | | .10 | | | (.27 | ) |
|
| |
| |
| | | | $ | .23 | | $ | (.31 | ) |
|
| |
| |
| Average shares outstanding: | | |
| Basic | | | | 5,129,214 | | | 5,124,214 | |
| Diluted | | | | 5,149,467 | | | 5,124,214 | |
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Selas Corporation Second-Quarter 2004 Results
August 12, 2004
Page 8
SELAS CORPORATION OF AMERICA
Supplemental Disclosure
Net Income From Continuing Operations
Excluding Gain on Sale of Asset Held for Sale
(Unaudited)
June 30, 2004
| Three Months Ended
June 30, 2004
|
|---|
| Income from continuing operations | | | | | |
| before income taxes | | | $ | 2,378,187 | |
| Less: Gain on sale of asset held for sale | | | | 3,109,627 | |
|
| |
Loss from continuing operations | | |
| before income taxes excluding gain on sale of asset | | | | (731,440 | ) |
Estimated income tax expense, excluding | | |
| gain on sale of asset held for sale | | | | 72,993 | |
|
| |
Loss from continuing operations excluding gain on | | |
| sale of asset, net of income tax expense | | | | (804,433 | ) |
|
| |
Loss per share from continuing operations excluding | | |
| gain on sales of asset, net of income tax expense | | | $ | (.16 | ) |
|
| |
Average shares outstanding | | | | 5,151,436 | |
