UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act Of 1934
Date of Report (Date of earliest event reported) November 11, 2003
SELAS CORPORATION OF AMERICA
(Exact name of registrant as specified in its charter)
Pennsylvania 1-5005 23-1069060
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1260 Red Fox Road, Arden Hills, MN 55112
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (651) 636-9770
Not Applicable
(Former name or former address, if changed since last report)
Item 9. Other Events and Regulation FD Disclosure and
Item 12. Results of Operations and Financial Condition
On November 11, 2003, Selas Corporation of America announced
earnings for the three and nine months ended September 30,2003 and
discussed recent developments. A copy of the press release is attached
as Exhibit 99.1 and is incorporated herein by reference.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Selas Corporation of America
By: /s/ Robert F. Gallagher
------------------------------
Robert F. Gallagher
Chief Financial Officer
Date: November 12, 2003
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
THIRD-QUARTER RESULTS
Precision Miniature Medical and Electronic Products Business
Continues Strong Growth
ST. PAUL, Minn. -November 11, 2003 - Selas Corporation of America
(AMEX: SLS) today reported results for the third quarter and nine
months ended September 30, 2003.
For the third quarter, the Company had sales of $11.8 million, up
13 percent from $10.4 million for the 2002 third quarter. The gain was
chiefly due to stronger sales in Selas' Precision Miniature Medical and
Electronic Products business. The Company's net loss narrowed
significantly to $810,000, or $.16 per share, from a net loss of
$6,504,000, or $1.27 per share, for the prior-year period.
Selas recognized income of $907,000, or $.18 per share, from
discontinued operations for the third quarter, compared with a loss
from discontinued operations in the year-earlier period of $5,935,000,
or $1.16 per share. Third-quarter 2003 discontinued operations include
a gain of $1,247,000, or $.24 per share, from the sale of the Company's
wholly owned subsidiary, Deuer Manufacturing. This was partially
offset by a net charge of $340,000, or $.06 per share, due to the
insolvency filing by Selas SAS, the Company's French Heat Technology
subsidiary.
For the third quarter, the Company recorded a loss of $1,716,000,
or $.34 per share, from continuing operations, which includes a
deferred tax asset valuation reserve of approximately $1,215,000, or
$.24 per share. This compares to a net loss of $568,000, or $.11 per
share, in the year-ago period.
For the nine-month period, the Company reported sales of $34.6
million, versus $33.5 million for the year-earlier nine months. Selas'
loss improved to $2,377,000, or $.46 per share, from $16,963,000, or
$3.31 per share, for the prior-year period. The year-earlier loss of
$16,963,000 included $10,552,000 or $2.06 per share, of goodwill that
was written off.
Mark S. Gorder, president and chief executive officer of Selas,
stated "We are pleased to report a sales increase for the third
quarter. Our gross margins rose 32 percent and we narrowed the
Company's operating loss considerably. As previously announced, Selas'
French Heat Technology business filed for insolvency during the second
quarter. This process is moving forward as expected, and while its
outcome is unknown, we're working cooperatively with the French
courts. Concurrently, we're focusing on areas of our business with
stronger growth and future potential."
Growth Strategy
Gorder reiterated that the Company's long-term strategy is to
continue to accelerate growth for its Precision Miniature Medical and
Electronic Products business. Management believes that Selas' core
competencies position it well to expand its line of medical products to
capture significantly more business.
For the third quarter, Precision Miniature Medical and Electronic
Products sales increased 7 percent to $9.2 million from $8.6 million
for the 2002 third quarter. For the nine months ended September 30,
2003, Precision Miniature Medical and Electronic Products sales were
also up 7 percent to $27.9 million, from $26.1 million in the
comparable 2002 period. Net income rose to $594,000 from $461,000 in
the prior year.
Results for Selas' Precision Miniature Medical and Electronic
Products business continue to be buoyed by Selas' small but growing
medical component business that saw year-over-year revenue growth of 52
percent. This gain was primarily due to higher sales of components
within third-party medical products to detect air bubbles in IV lines
and for safety needles that are part of implanted drug delivery
systems. However, income from this segment was more than offset by
losses in the Company's Heat Technology segment and by general
corporate expenses.
Gorder concluded, "Our Precision Miniature Medical and
Electronic Products business delivered strong performance again in the
third quarter. We're building the Company around these core product
lines and divesting our non-core assets. With Selas' expertise in the
robotic manufacture of miniature and micro-miniature electronic
products, we believe we're well suited to compete in the medical device
market and strongly positioned for the future."
About Selas
Headquartered in St. Paul, Minn., Selas Corporation of America designs,
develops, engineers and manufactures microminiaturized medical and
electronic products. The company's core business segment, 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
market and a medical device market that increasingly demands products
with increased miniaturization, better cost containment, more
reliability and high customer satisfaction. The Company has facilities
throughout the United States, Asia and Europe. 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 thereon 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, 2002. 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.
Selas Corporation of America
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
September 30 September 30,
2003 2002
Sales, net $11,754,452 $10,356,927
Cost of sales 8,723,953 8,055,843
Gross margin 3,030,499 2,301,084
Selling, general and administrative
expenses 3,355,020 2,999,530
Operating loss (324,521) (698,446)
Interest expense (128,370) (185,940)
Interest income 4,801 8,868
Other income (expense), net (46,647) 9,804
Loss from continuing operations
before income taxes (494,737) (865,714)
Income tax expense (benefit) 1,221,978 (297,336)
Loss from continuing operations (1,716,715) (568,378)
Income (loss) from discontinued
operations, net of
Income tax expense (benefit) 906,767 (5,935,268)
Net Loss $(809,948) $(6,503,646)
Income (loss) per share
Basic
Continuing operations $ (.34) $( .11)
Discontinued operations .18 (1.16)
$ (.16) $ (1.27)
Diluted
Continuing operations $ (.34) .11)
Discontinued operations .18 (1.16)
$ (.16) $ (1.27)
Selas Corporation of America
Consolidated Statements of Operations
(Unaudited)
Nine Months Ended
September,30 September,30
2003 2002
Sales, net $34,576,834 $33,544,367
Cost of sales 25,247,839 25,397,410
Gross margin 9,328,995 8,146,957
Selling, general and administrative
expenses 9,881,783 9,134,277
Operating loss (552,788) (987,320)
Interest expense (444,927) (525,629)
Interest income 12,778 29,329
Other income, net 115,034 72,869
Loss from continuing operations
before income taxes (869,903) (1,410,751)
Income tax expense (benefit) 1,131,004 (488,674)
Loss from continuing operations (2,000,907) (922,077)
Loss from discontinued operations, net
of income tax benefit (376,482) (5,488,752)
Net loss before change in (2,377,389) (6,410,829)
accounting principle
Cumulative effect of change in
accounting principle (10,551,926)
Net Loss $(2,377,389) $(16,962,755)
Loss per share
Basic
Continuing operations $ (.39) $ ( .18)
Discontinued operations (.07) (1.07)
Accounting principle change (2.06)
$ (.46) $ (3.31)
Diluted
Continuing operations $(.39) $( .18)
Discontinued operations (.07) (1.07)
Accounting principle change (2.06)
$ (.46) $ (3.31)
Selas Corporation of America
Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
2003 2002
Current assets
Cash, including cash equivalents of
$423,000 in 2003, and $418,000 in 2002, $ 438,910 $ 1,319,207
all cash equivalents are restricted.
Accounts receivable (less allowance for
doubtful accounts of $592,000 in 2003, and 7,589,646 6,996,896
$434,000 in 2002)
Inventories 9,130,356 8,783,153
Refundable income tax 669,275 344,633
Deferred income taxes 854,964 1,591,160
Asset held for sale 540,175 540,175
Other current assets 711,311 726,729
Assets of discontinued operations -- 25,140,325
Total current assets 19,934,637 45,442,278
Property, plant and equipment
Land 170,500 170,500
Buildings 1,614,518 1,614,518
Machinery and equipment 28,277,037 27,726,773
30,062,055 29,511,791
Less: Accumulated depreciation 20,158,800 18,684,119
Net property, plant and equipment 9,903,255 10,827,672
Goodwill 5,376,317 5,376,317
Deferred income taxes -- 466,164
Other assets, less amortization 1,820,563 1,568,291
$37,034,772 $63,680,722
Liabilities and Shareholders' Equity
September,30 December 31,
Current liabilities 2003 2002
(Unaudited) (Audited)
Notes payable $4,935,048 $10,920,984
Current maturities of long-term debt 2,150,049 1,573,716
Accounts payable 3,577,727 4,094,908
Customers' advance payments on contracts 863,680 907,811
Guarantee obligations and estimated costs
of service 498,300 544,735
Accrued salaries, wages and commissions 1,924,762 1,289,120
Other accrued liabilities 3,848,022 2,668,869
Liabilities of discontinued operations -- 18,757,587
Total current liabilities 17,797,588 40,757,730
Long-term debt -- 2,736,236
Other postretirement benefit obligations 3,603,870 3,571,017
Deferred income taxes 127,746 ---
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 (accumulated deficit) (634,133) 1,743,256
Accumulated other comprehensive loss (242,730) (1,509,948)
Less: 515,754 common shares held
in treasury, at cost (1,265,078) (1,265,078)
Total shareholders' equity 15,505,568 16,615,739
$37,034,772 $63,680,722
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