Exhibit 99.1
FROM: SELAS CORPORATION OF AMERICA SCA-444
CONTACT:
Robert F. Gallagher
Chief Financial Officer
651-604-9638
FOR IMMEDIATE RELEASE
Selas Corporation of America Reports 2002 Results
Company Is Focusing on Its Precision Miniature Medical Products Business
ST. PAUL, Minn. - March 19, 2003 - Selas Corporation of America (AMEX: SLS)
today reported financial results for the fourth quarter of 2002 and year
ended Dec. 31, 2002.
For the fourth quarter, Selas experienced a net loss from continuing
operations of $2.75 million, or $.54 per diluted share, on sales of $14.9
million. This compares with a net loss from continuing operations of
$208,000, or $.04 per diluted share, on sales of $15.2 million a year ago.
The total net loss for the fourth quarter of 2002 was $4.6 million, or $.90
per diluted share, compared with a loss of $3.7 million, or $.72 per diluted
share, in the year-earlier period.
For the fiscal year, Selas had a net loss from continuing operations of
$4.2 million, or $.81 per diluted share, on sales of $64.6 million, compared
with a 2001 loss from continuing operations of $22,000, or $.00 per diluted
share, on sales of $71.3 million. Total net loss, including a loss from
discontinued operations and the cumulative effect of a change in accounting
principle, was $21.6 million, or $4.21 per diluted share in 2002, versus a
loss of $4.6 million, or $ .90 per diluted share, in 2001.
Recent Developments
Selas announced it is seeking a strategic buyer for its wholly owned
subsidiary, automotive parts supplier Deuer Manufacturing Inc. The decision
to find a buyer for Deuer was made because Selas now plans to focus its full
management time, resources and industry expertise on the company's Precision
Miniature Medical and Electronic Products segment.
As a result, Selas now includes Deuer as part of its discontinued
operations. Selas' large, custom-engineered furnace business, which was sold
in 2002, is also reflected as a discontinued operation in the company's
financial statements.
Discontinued operations in the fourth quarter of 2002 recognized a loss
of $1.8 million, or $.36 per diluted share, compared with a loss from
discontinued operations in the fourth quarter of 2001 of $3.5 million, or
$.68 per diluted share.
Selas has adopted the new financial accounting standard pertaining to
the carrying value of intangible assets and goodwill. This accounting
standard requires that goodwill no longer be amortized, but tested for
impairment periodically. As of the date of adoption, the company had
unamortized goodwill in the amount of $15.6 million.
Selas determined the goodwill associated with its Heat Technology
operations had been impaired, and wrote off the remaining net goodwill of
$1.1 million. The company also recognized an impairment of $9.4 million
associated with its Precision Miniature Medical and Electronic Products
Business. The net charge, totaling $10.5 million, or $2.06 per diluted share,
was recognized as a cumulative effect of a change in accounting principle in
the 2002 consolidated statement of operations.
Strategy for Growth
Mark S. Gorder, president and CEO of Selas, said: "Financial results for
2002 were poor, reflecting a global economic downturn that has affected many
of our markets. But we believe we will be able to take advantage of new and
growing markets by repositioning and restructuring the company."
The future of Selas will be built around the core product lines of the
Precision Miniature Medical and Electronic Products business segment.
"Because of our expertise in the robotic manufacture of miniature and
micro-miniature electronic products, we believe we are well suited to compete
in a medical device market that is increasingly demanding products with
greater portability, improved infection control, better cost containment,
more reliability and high customer satisfaction," Gorder said.
Leveraging its expertise as a leading supplier to the global hearing
health market, Selas plans to expand its advanced line of hearing aid
assemblies and systems, which are based on Digital Signal Processing (DSP)
technology.
"Using DSP technology, we have the ability to create hearing aids and
similar amplifier devices that have better clarity, stronger pricing points
and an improved ability to filter out background noise, compared to most
products currently on the market," Gorder said. "Low- to moderately-priced
DSP hearing aids, like our newly introduced line of ClariD Digital ONE DSP
hearing aid amplifier products, represent the fastest-growing segment in the
hearing-aid market. We expect to launch additional products throughout 2003."
At the same time, Selas is de-emphasizing its role in the Heat
Technology and Automotive businesses. As noted above, the company plans to
find a strategic buyer for Deuer Manufacturing and has already started
transitioning out of several Heat Technology markets.
"We look forward to taking significant steps toward completing our
transition in 2003," Gorder said. "Once this is accomplished, we believe a
Selas that is focused on the Precision Miniature Medical and Electronic
Products market will have excellent opportunities for growth. We anticipate
it will give us entry to markets that offer a sustained cycle of
profitability and are less volatile, enabling Selas to grow consistently over
the long term."
Forward Looking Statements
Certain statements in this press release are forward-looking statements (as
such term is defined in the Securities Exchange Act of 1934, and the
regulations thereunder), which are intended to be covered by the safe harbors
created thereby. These statements include, but are not limited to statements
as to the company's expected future results of operations and growth, the
company's business strategy, the planned sale of the company's automotive
parts supplier segment, anticipated trends in the hearing health market
related to the company's Precision Miniature Medical and Electronic Products
segment, the effects of changes in accounting pronouncements, statements as
to trends or the company's or management's beliefs, expectations and opinions
and other statements herein that include forward-looking terminology such as
"may", "will", "believe", "expect", "optimistic" or "continue" or the
negative thereof or other variations thereon. 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 company's forward-looking statements. These risks,
uncertainties and factors include the risk that the Company will not be able
to sell the automotive parts segment, the risk that the Company's loss with
respect to such sale and write-down may be greater than estimated, the risk
that the Company may not be able to achieve its long-term strategy,
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, and possible non- performance of developing technological
products. These and other risks, uncertainties and factors are described in
the Company's filings with the Securities and Exchange Commission, which may
be accessed at the website maintained by the SEC at www.sec.gov. The Company
does not undertake to update any forward-looking statement that may be made
from time to time by or on behalf of the Company.
- more -
Selas Corporation of America
Consolidated Statements of Operations (unaudited)
Quarters ended December 31 2002* 2001
Sales, net $ 14,944,557 $ 15,248,394
Operating costs and expenses:
Costs of sales 12,853,789 11,165,673
Selling, general and
administrative expense 4,903,120 3,688,216
Operating income (loss) (2,812,352) 394,505
Interest expense 63,348 117,513
Interest income (39,610) (63,450)
Other (income) expense, net 250,269 46,921
Income (loss) from continuing
operations Before income taxes
and discontinued Operations (3,086,359) 293,521
Income taxes (benefit) ( 334,856) 501,577
(Loss)from continuing operations
before discontinued operations (2,751,503) (208,056)
(Loss) from discontinued
operations, net of income
taxes (1,840,233) (3,466,116)
Net (loss) $(4,591,736) $(3,674,172)
Basic (loss) per share:
Continuing operations $(.54) $(.04)
Discontinued operations (.36) (.68)
Net (loss) $(.90) $(.72)
Diluted (loss) per share:
Continuing operations $(.54) $(.04)
Discontinued operations (.36) (.68)
Net (loss) $(.90) $(.72)
* The company adopted Statement of Financial Accounting Standard No.142,
"Goodwill and Other Intangible Assets". The company took a net charge totaling
$10.5 million, or $2.06 per diluted share. This was a cumulative change in
accounting principle and is reflected in the first quarter of 2002 and the
2002 consolidated statement of operations.
Selas Corporation of America
Consolidated Statements of Operations (unaudited)
Years ended December 31 2002 2001
Sales, net $ 64,591,800 $ 71,301,842
Operating costs and expenses:
Costs of sales 52,451,768 54,403,039
Selling, general and
administrative expense 16,828,247 15,748,961
Operating income (loss) (4,688,215) 1,149,842
Interest expense 464,615 515,347
Interest income (72,206) (97,401)
Other (income) expense, net (158,580) 156,509
Income (loss) from continuing
operations before income taxes,
discontinued operations and change
in accounting principle (4,922,044) 575,387
Income taxes (benefit) ( 753,037) 597,226
(Loss)from continuing operations
before discontinued operations and
change in accounting principle (4,169,007) (21,839)
(Loss) from discontinued
operations, net of income taxes (6,833,558) (4,595,476)
(Loss) before change in
accounting principle (11,002,565) (4,617,315)
Cumulative effect of change
in accounting principle (10,551,926) ---
Net (loss) $(21,554,491) $(4,617,315)
Basic (loss) per share:
Continuing operations $(.81) $ ---
Discontinued operations (1.34) (.90)
Accounting principle change (2.06) ---
Net (loss) $(4.21) $(.90)
Diluted (loss) per share:
Continuing operations $(.81) $ ---
Discontinued operations (1.34) (.90)
Accounting principle change (2.06) ---
Net (loss) $(4.21) $(.90)
- - more -
Selas Corporation of America
Consolidated Balance Sheets (unaudited)
December 31, 2002 and 2001
Assets 2002 2001
Current assets
Cash, including cash equivalents of
$418,000 in 2002 and $391,000 in 2001 $2,039,044 $3,636,173
Accounts and notes receivable
(including unbilled receivables of
$1,447,000 in 2002 and $1,857,000 in
2001), less allowance for doubtful
accounts of $1,109,000 in 2002 and
$446,000 in 2001 15,627,684 15,584,690
Inventories 9,393,802 11,124,397
Refundable Income Tax 336,758 ---
Deferred income taxes 1,818,384 1,461,756
Other current assets 1,064,829 926,771
Net assets of discontinued operations 13,610,601 23,305,372
Total current assets 43,891,282 56,039,159
Property, plant and equipment
Land 231,943 231,943
Buildings 5,149,415 5,116,948
Machinery and Equipment 29,903,795 28,174,322
35,285,153 33,523,213
Less: Accumulated depreciation 22,921,608 20,587,407
Net property, plant and 12,363,545 12,935,806
equipment
Goodwill, net 5,376,317 15,631,502
Deferred income taxes 348,712 471,569
Other assets, less amortization 1,575,539 1,523,320
$ 63,555,395 $ 86,601,356
- more -
Selas Corporation of America
Consolidated Balance Sheets (unaudited)
December 31, 2002 and 2001
Liabilities and Shareholders' Equity 2002 2001
Current liabilities
Notes payable $10,920,984 $ 9,422,202
Current maturities of long-term debt 1,573,716 1,496,033
Accounts payable 11,046,373 9,984,099
Federal, state and foreign income taxes --- 461,393
Customers' advance payments on contracts 2,457,499 2,778,276
Guarantee obligations and estimated future 1,188,361 878,952
costs of service
Liabilities of discontinued operations 6,955,654 10,980,113
Other accrued liabilities 6,194,679 4,901,789
Total current liabilities 40,337,266 40,902,857
Long-term debt 2,736,236 3,214,934
Other post-retirement benefit obligations 3,866,154 3,878,948
Contingencies and commitments
Shareholders' equity
Common shares,$1 par; 10,000,000 shares
authorized;
5,634,968 shares issued 5,634,968 5,634,968
Additional paid-in capital 12,012,541 12,012,541
Retained earnings 1,743,256 23,297,747
Accumulated other comprehensive loss (1,509,948) (1,075,561)
17,880,817 39,869,695
Less: 515,754 common shares, respectively,
held in treasury, at cost (1,265,078) (1,265,078)
Total shareholders' equity 16,615,739 38,604,617
$63,555,395 $86,601,356
# # #