EX-99.A4 3 a8krpt032003.txt 8K EXHIBIT 99 03/21/03 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 # # #