UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED MARCH 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-5005
SELAS CORPORATION OF AMERICA
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PENNSYLVANIA 23-1069060
STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
DRESHER, PENNSYLVANIA 19025
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(215) 646-6600
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD
THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN
SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
(X) YES ( ) NO
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES
OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.
CLASS OUTSTANDING AT MAY 6, 1998
COMMON SHARES, $1.00 PAR VALUE 5,226,960 (exclusive of 363,564
treasury shares)
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SELAS CORPORATION OF AMERICA
I N D E X
Page
Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
March 31, 1998 and December 31, 1997. . . . . . . . 3, 4
Consolidated Statements of Operations for
the Three Months Ended March 31, 1998
and 1997. . . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1998 and 1997 . . . . 6
Consolidated Statement of Shareholders' Equity
for the Three Months Ended March 31, 1998 . . . . . 7
Notes to Consolidated Financial Statements . . . . 8,9,10,11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . 12,13,14,15
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . 16
-3-
SELAS CORPORATION OF AMERICA
Consolidated Balance Sheets
Assets
March 31, December 31,
1998 1997
(Unaudited) (Audited)
Current assets
Cash, including cash equivalents of
$2,255,000 in 1998 and
$2,579,000 in 1997 $ 3,468,425 $ 3,034,903
Accounts receivable (including unbilled
receivables of $4,258,000 in 1998 and
$6,574,000 in 1997, less allowance for
doubtful accounts of $915,000 in 1998
and $681,000 in 1997) 32,042,782 30,931,625
Inventories 11,592,253 9,999,140
Deferred income taxes 2,761,969 2,840,423
Other current assets 1,113,787 919,608
Total current assets 50,979,216 47,725,699
Investment in unconsolidated affiliate 472,944 472,689
Property, plant and equipment
Land 1,027,710 1,041,869
Buildings 10,821,031 10,839,950
Machinery and equipment 23,947,122 22,720,633
35,795,863 34,602,452
Less: Accumulated depreciation 17,951,751 17,284,665
Net property, plant and equipment 17,844,112 17,317,787
Deferred pension cost 43,194 56,973
Excess of cost over net assets of acquired
subsidiaries, less accumulated amortiza-
tion of $1,844,000 in 1998 and
$1,696,000 in 1997 16,105,962 15,502,201
Other assets including patents, less
amortization 597,315 719,715
$86,042,743 $81,795,064
=========== ===========
(See accompanying notes to the consolidated financial statements)
-4-
SELAS CORPORATION OF AMERICA
Consolidated Balance Sheets
Liabilities and Shareholders' Equity
March 31, December 31,
1998 1997
(Unaudited) (Audited)
Current liabilities
Notes payable $ 3,282,741 $ 975,804
Current maturities of long-term debt 2,999,266 2,618,463
Accounts payable 13,449,377 14,336,607
Federal, state and foreign income taxes 700,748 693,240
Customers' advance payments on contracts 1,385,016 902,592
Guarantee obligations and estimated
costs of service 3,075,041 2,705,293
Other accrued liabilities 7,048,911 6,851,846
Total current liabilities 31,941,100 29,083,845
Long-term debt 8,355,347 7,015,080
Pension plan obligation 43,194 56,973
Other postretirement benefit obligations 3,965,161 4,024,217
Deferred income taxes 1,208,741 1,215,436
Contingencies and commitments
Shareholders' equity
Common shares, $1 par; 10,000,000 shares
authorized; 5,590,524 and 5,589,324
shares issued, respectively 5,590,524 5,589,324
Additional paid-in capital 11,798,103 11,792,878
Retained earnings 23,454,305 23,130,255
Accumulated other comprehensive income 68,205 268,993
Less: 363,564 common shares held in
treasury, at cost (381,937) (381,937)
Total shareholders' equity 40,529,200 40,399,513
$86,042,743 $81,795,064
=========== ===========
(See accompanying notes to the consolidated financial statements)
-5-
SELAS CORPORATION OF AMERICA
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
March 31, March 31,
1998 1997
Sales, net $21,866,723 $30,905,010
Operating costs and expenses
Cost of sales 16,610,917 24,460,250
Selling, general and
administrative expenses 4,234,012 4,041,959
Operating income 1,021,794 2,402,801
Interest (expense) (237,510) (231,122)
Interest income 35,281 58,391
Other income (expense), net 70,967 (349,977)
Income before income taxes 890,532 1,880,093
Income taxes 331,322 717,800
Net income $ 559,210 $ 1,162,293
=========== ===========
Earnings per share
Basic
Income per common and common
equivalent share $.11 $.22
=========== ===========
Weighted average common shares
outstanding 5,226,000 5,211,000
Diluted
Income per common and common
equivalent share $.10 $.22
=========== ===========
Weighted average common shares
outstanding 5,340,000 5,359,000
Comprehensive income $ 358,422 $ 641,277
=========== ===========
(See accompanying notes to the consolidated financial statements)
-6-
SELAS CORPORATION OF AMERICA
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31, March 31,
1998 1997
Cash flows from operating activities:
Net income $ 559,210 $ 1,162,293
Adjustments to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization 898,587 788,801
Equity in (income) loss of
unconsolidated affiliate (255) 2,675
Loss on sale of property and equipment -- 7,760
Deferred taxes 87,095 (128,642)
Changes in operating assets and liabilities:
Decrease in accounts receivable 2,833,813 4,156,243
(Increase) in inventories (699,721) (519,733)
(Increase) decrease in other assets 141,206 (459,140)
Increase (decrease) in accounts payable (4,828,516) 4,938,842
(Decrease) in accrued expenses (349,811) (1,536,435)
(Decrease) in customer advances (475,206) (2,519,249)
Increase in other liabilities 618 26,449
Net cash provided (used) by operating
activities (1,832,980) 5,919,864
Cash flows from investing activities:
Purchases of property, plant and equipment (747,453) (989,053)
Proceeds from sale of property, plant
and equipment -- 4,300
Acquisition of subsidiary company, net of
cash acquired (842,790) (4,959,003)
Net cash (used) by investing
activities (1,590,243) (5,943,756)
Cash flows from financing activities:
Proceeds from short-term bank borrowings 2,351,141 --
Proceeds from borrowings to acquire
subsidiary company 2,459,016 3,500,000
Repayments of short-term bank borrowings -- (31,329)
Repayments of long-term debt (653,557) (526,680)
Proceeds from exercise of stock options 6,425 84,843
Payment of dividends (235,160) (225,877)
Net cash provided by
financing activities 3,927,865 2,800,957
Effect of exchange rate changes on cash (71,120) (452,364)
Net increase in cash and cash equivalents 433,522 2,324,701
Cash and cash equivalents, beginning of
period 3,034,903 8,343,820
Cash and cash equivalents, end of period $3,468,425 $10,668,521
=========== ===========
(See accompanying notes to the consolidated financial statements)
-7-
SELAS CORPORATION OF AMERICA
Consolidated Statement of Shareholders' Equity
Three Months Ended March 31, 1998
(Unaudited)
Common Stock
Additional
Number of Paid-In
Shares Amount Capital
Balance, January 1, 1998 5,589,324 $ 5,589,324 $11,792,878
Net income
Exercise of stock options 1,200 1,200 5,225
Cash dividends paid
($.045 per share)
Foreign currency translation
(loss)
Comprehensive income
Balance, March 31, 1998 5,590,524 $ 5,590,524 $11,798,103
============ =========== ===========
Accumulated
Other
Retained Comprehensive Comprehensive
Earnings Income Income
Balance, January 1, 1998 $23,130,255 $ 268,993 $
Net income 559,210 559,210
Exercise of stock options
Cash dividends paid
($.045 per share) (235,160)
Foreign currency translation
(loss) (200,788) (200,788)
Comprehensive income $ 358,422
==========
Balance, March 31, 1998 $23,454,305 $ 68,205
=========== ===========
Total
Treasury Shareholders'
Stock Equity
Balance, January 1, 1998 $ (381,937) $40,399,513
Net income 559,210
Exercise of stock options 6,425
Cash dividends paid
($.045 per share) (235,160)
Foreign currency
translation (loss) (200,788)
Comprehensive income --
Balance, March 31, 1998 $ (381,937) $40,529,200
=========== ===========
(See accompanying notes to the consolidated financial statements)
-8-
SELAS CORPORATION OF AMERICA
PART I - FINANCIAL INFORMATION
ITEM 1. Notes to Consolidated Financial Statements (Unaudited)
1. In the opinion of management, the accompanying consolidated condensed
financial statements contain all adjustments (consisting of normal
recurring adjustments) necessary to present fairly Selas Corporation
of America's consolidated financial position as of March 31, 1998 and
December 31, 1997, and the consolidated results of its operations for
the three months ended March 31, 1998 and 1997 and consolidated
statements of shareholders' equity and cash flows for the three
months then ended.
2. The accounting policies followed by the Company are set forth in note
1 to the Company's financial statements in the 1997 Selas Corporation
of America Annual Report.
During the first quarter of 1998, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income". SFAS No. 130 requires the components of
comprehensive income be disclosed in the interim financial
statements. As permitted under SFAS No. 130, the Company has
disclosed the components of comrehensive income in the consolidated
statement of shareholders' equity. The components of comprehensive
income as of December 31, 1997 have been restated to be consistent
with the March 31, 1998 presentation. Adoption of this accounting
standard did not impact consolidated results, financial condition or
long-term liquidity.
3. Acquisition
In February, 1998, the Company acquired the stock of CFR, a Paris,
France firm in the engineered industrial furnace business. The
principal market served by CFR is engineered batch and continuous
furnaces for heat treating both ferrous and non-ferrous metals, along
with supplying furnaces for the hardening and etching of glass and
ceramic tableware. CFR had sales for the year ended December 31,
1997 of 107.5 million French francs (FF) or approximately $18.3
million. The purchase price was 15 million FF or approximately $2.5
million which was paid for by additional bank borrowings of 15
million FF at a fixed rate of 5.65% which requires quarterly payments
of FF 750,000 for 5 years.
The acquisition has been accounted for as a purchase and the results
of CFR have been included in the accompanying consolidated financial
statements since the date of the acquisition. The purchase price was
allocated to assets and liabilities based on the estimated fair value
as of the date of the acquisition. Such allocations have been based
on preliminary estimates of fair value which may be revised at a
later date.
-9-
SELAS CORPORATION OF AMERICA
PART I - FINANCIAL INFORMATION
ITEM 1. Notes to Consolidated Financial Statements (Unaudited) -
(Continued)
4. Inventories consist of the following:
March 31, December 31,
1998 1997
Raw material $ 3,191,229 $ 3,054,544
Work-in-process 3,904,299 2,721,964
Finished products and components 4,496,725 4,222,632
$11,592,253 $ 9,999,140
=========== ===========
5. Income Taxes
Consolidated income taxes for the three month periods ended March 31,
1998 and 1997 are $331,000 and $718,000 which result in effective tax
rates of 37.2% and 38.2% respectively. The rate of tax in relation
to pre-tax income in 1998 is lower because certain foreign net
operating loss carryback benefits have been utilized as of March 31,
1998.
6. Legal Proceedings
The Company is a defendant along with a number of other parties in
approximately 215 lawsuits as of December 31, 1997 (155 as of
December 31, 1996) alleging that plaintiffs have or may have
contracted asbestos-related diseases as a result of exposure to
asbestos products or equipment containing asbestos sold by one or
more named defendants. Due to the noninformative nature of the
complaints, the Company does not know whether any of the complaints
state valid claims against the Company. The Company is also one of
approximately 500 defendants in a class action on behalf of
approximately 2,700 present or former employees of a Texas steel mill
alleging that products supplied by the defendants created a poisonous
atmosphere that caused unspecified physical harm. These cases are
being defended by one or more of the Company's insurance carriers
presently known to be "at risk." The lead carrier has settled
approximately 11 and 17 claims in 1997 and 1996, respectively, with
no request for the Company to participate in any settlement. The
lead carrier has informed the Company that the primary policy for the
period July 1, 1972 - July 1, 1975 has been exhausted and that the
lead carrier will no longer provide a defense under that policy. The
Company has requested that the lead carrier substantiate this
situation. The Company has contacted representatives of the
Company's excess insurance carrier for some or all of this period.
The Company does not believe that the asserted exhaustion of the
primary insurance coverage for this period will have a material
adverse effect on the financial condition, liquidity, or results of
operations of the Company. Management is of the opinion that the
number of insurance carriers involved in the defense of the suits and
the significant number of policy years and policy limits to which
-10-
SELAS CORPORATION OF AMERICA
PART I - FINANCIAL INFORMATION
ITEM 1. Notes to Consolidated Financial Statements (Unaudited) -
(Continued)
6. Legal Proceedings - Continued
these insurance carriers are insuring the Company make the ultimate
disposition of these lawsuits not material to the Company's
consolidated financial position or results of operations.
In 1995, a dispute which was submitted to arbitration, arose under a
contract between a customer and a subsidiary of the Company.
Substantial claims were asserted against the subsidiary Company under
the terms of the contract. The Company recorded revenue of
approximately $1,400,000 in 1994 and has an uncollected receivable of
$140,000. The Company believes that the disposition of this claim
will not materially affect the Company's consolidated financial
position or results of operations.
7. Statements of Cash Flows
Supplemental disclosures of cash flow information:
Three Months Ended
March 31, March 31,
1998 1997
Interest received . . . . . . . $108,088 $ 53,040
Interest paid . . . . . . . . . $188,253 $175,876
Income taxes paid . . . . . . . $349,406 $ 79,534
8. Accounts Receivable
At March 31, 1998, the Company had $2,193,809 of trade accounts
receivable due from the major U.S. automotive manufacturers and
$2,778,395 of trade accounts receivable due from hearing aid
manufacturers. The Company also had $13,501,902 in receivables from
long-term contracts for customers in the steel industry in North
America, Europe and Asia.
-11-
SELAS CORPORATION OF AMERICA
PART I - FINANCIAL INFORMATION
ITEM 1. Notes to Consolidated Financial Statements (Unaudited) -
(Continued)
9. Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share:
For the Three Months
Ended March 31, 1998
Income Shares Per Share
Numerator Denominator Amount
Basic Earnings Per Share
Income available to
common shareholders $ 559,210 5,225,840 $ .11
=========
Effect Of Dilutive Securities
Stock options 113,879
Diluted Earnings Per Share
Income available to common
shareholders plus assumed
conversions $ 559,210 5,339,719 $ .10
=====================================
For the Three Months
Ended March 31, 1997
Income Shares Per Share
Numerator Denominator Amount
Basic Earnings Per Share
Income available to
common shareholders $1,162,293 5,210,575 $ .22
=========
Effect Of Dilutive Securities
Stock options 148,698
Diluted Earnings Per Share
Income available to common
shareholders plus assumed
conversions $1,162,293 5,359,273 $ .22
=====================================
-12-
SELAS CORPORATION OF AMERICA
PART I - FINANCIAL INFORMATION
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Consolidated net sales for the three months ended March 31, 1998
decreased to $21.9 million from $30.9 million for the same period in
1997. Net sales for the heat processing segment decreased to $8.8
million for the three months ended March 31, 1998 compared to $19.6
million for the same period last year. The sharp decline in sales is due
to lower sales volume and delays in obtaining and then starting new large
engineered contracts. The segment's first quarter sales for 1997 were
significantly above the previous and current years due to a very strong
backlog which generated strong sales for this segment through the first
half of 1997. The February, 1998 acquisition of CFR, a French Company,
generated sales of $1.8 million for the quarter for the Company's heat
processing segment which partially offset some of the sharp decline in
sales for the quarter. Sales and earnings of large engineered contracts
are recognized on the percentage-of-
completion method and generally require more than twelve months to
complete. Consolidated backlog for the heat processing segment was down
to $26.9 million at March 31, 1998 compared to $41.7 million for the same
period in 1997. Sales for the Company's precision electromechanical and
plastics components segment increased to $8.7 million for the three
months ended March 31, 1998 compared to $7.5 million for the same period
in 1997. The increase in sales is partially attributed to the February
1997 acquisition of RTI Electronics which had sales for the three months
ended March 31, 1998 of $1.6 million compared to $.7 million for the
period ended March 31, 1997. This segment also had higher sales of
plastic components for the current quarter. Net sales of tire holders,
lifts and related products segment for the three months ended March 31,
1998 increased to $4.4 million compared to $3.8 million for the same
period in 1997. The increase in sales is due to higher tire lift unit
sales sold to the Company's automotive customers.
The Company's gross profit margin as a percentage-of-sales increased to
24.1% for the three months ended March 31, 1998 compared to 21% for the
same period last year. Gross profit margins for the heat processing
segment increased to 21.4% for the three months ended March 31, 1998
compared to 15.5% for the same period in 1997. Heat processing gross
profit margins vary markedly from contract to contract, depending on
customer specifications and other conditions relating to the contract.
The gross profit margins for the first quarter of 1998 were favorably
impacted by a product mix of higher sales of proprietary component parts
(which generally have higher profit margins) than were sold in the same
period in 1997. Gross profit margins for the precision electromechanical
and plastics components segment decreased to 31% for the three months
ended March 31, 1998 compared to 38% for the same period in 1997. The
lower gross profit margins in the current quarter are partially
attributable to the acquisition of RTI Electronics in February, 1997 as
its products, while profitable, do not achieve the historical
-13-
SELAS CORPORATION OF AMERICA
PART I - FINANCIAL INFORMATION
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
gross profit margins of this business segment. Also impacting the lower
gross profit margins in the current quarter, but to a lesser degree, is
the mix of product sales between the periods as microminiature
components, microminiature systems and plastic components have varying
profit margins. Gross profit margins for the tire holders, lifts and
related products improved to 16.2% for the quarter ended March 31, 1998
compared to 15.4% for the same period in 1997. The improvement in the
current quarter is due to efficiencies from higher production through the
increased sales of tire lifts.
Selling, general and administrative expenses (SG&A) increased 4.8% to
$4,234,000 for the first quarter ended March 31, 1998 compared to
$4,032,000 for the same period in 1997. The higher SG&A costs are due
primarily to the February, 1997 acquisition of RTI Electronics.
Interest expense for the three months ended March 31, 1998 was $237,000
which is comparable to last year's expense of $231,000 for the quarter.
Interest income for the quarter decreased to $35,000 from $58,000 for the
same period in 1997 due to fewer funds available for investment.
Other income (expense) includes gain on foreign exchange of $56,000 for
the first quarter of 1998 compared to a loss of $173,000 for the same
period in 1997.
Consolidated income taxes for the three month periods ended March 31,
1998 and 1997 are $331,000 and $718,000 which result in effective tax
rates of 37.2% and 38.2% respectively. The rate of tax in relation to
pre-tax income in 1998 is lower because certain foreign net operating
loss carryback benefits have been utilized as of March 31, 1998.
The Company's net deferred tax assets include a substantial amount of
foreign net operating loss, postretirement benefit obligations and
employee pension plan liabilities. The Company continually reviews the
adequacy of the valuation allowance and recognizes benefits only as
reassessment indicates that it is more likely than not that the benefits
will be realized. Realization of future tax benefits related to deferred
tax assets is dependent on many factors, including the company's ability
to generate taxable income within the foreign subsidiary's net operating
loss period and the timing of the turnaround of the postretirement
benefit and pension plan obligations in the future. Management has
considered these factors in reaching its conclusion as to the adequacy of
the valuation allowance for financial reporting purposes.
-14-
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Consolidated net income is down to $559,000 for the quarter ended March
31, 1998 from $1,162,000 for the same period in 1997. The sharp decline
in net income is primarily attributed to the lower level of sales in the
current quarter compared to last year.
Liquidity and Capital Resources
Consolidated net working capital increased to $19 million at March 31,
1998 from $18.6 million at December 31, 1997. The increase is due
primarily to the net earnings for the quarter and the acquisition of CFR.
The major changes in components of working capital for the quarter were
an increase in current liabilities of $2.9 million, higher inventories of
$1.6 million, increase in receivables of $1.1 million and higher cash
equivalents of $.4 million.
In February, 1998, the Company acquired the stock of CFR, a Paris, France
firm in the engineered industrial furnace business. The principal market
served by CFR is engineered batch and continuous furnaces for heat
treating both ferrous and non-ferrous metals, glass and ceramic
tableware. CFR had sales for the year ended December 31, 1997 of 107.5
million French francs (FF) or approximately $18.3 million. The purchase
price was 15 million FF or approximately $2.5 million and the assumption
of certain liabilities which was paid for by additional bank borrowings
of 15 million FF which will be paid off over five years at a fixed annual
interest rate of 5.65%.
The Company is in the process of conducting a comprehensive review of its
computer systems to identify the systems that could be affected by the
"Year 2000" issue and is developing an implementation plan to resolve the
issue. The Company presently believes that, with modifications to
existing software and converting to new software, the Year 2000 problem
will not pose significant operational problems for the Company's computer
systems as so modified and converted. However, if such modifications and
conversations are not completed timely, the Year 2000 issue may have a
material impact on the operations of the Company. The costs of the
modifications are not expected to have a material effect on the results
of operations of the Company.
A significant portion of the heat processing segment sales are
denominated in foreign currencies, primarily the French franc.
Generally, the income statement effect of changes in foreign currencies
is partially or wholly offset by the European subsidiaries' ability to
make corresponding price changes in the local currency.
-15-
SELAS CORPORATION OF AMERICA
PART I - FINANCIAL,INFORMATION
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
In June, 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." This statement establishes
standards for reporting information about operating segments in annual
financial statements and requires selected information about operating
segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and
services, geographic areas and major customers.
In February, 1998, the FASB issued SFAS No. 132 "Employers' Disclosure
about Pensions and Other Postretirement Benefits." This Statement
revises employers' disclosures about pension and other postretirement
benefit plans. It does not change the measurement or recognition of
those plans.
The Company plans to adopt these accounting standards in connection with
the preparation of the December 31, 1998 consolidated financial
statements as permitted by SFAS No. 131 and No. 132. The adoption of
these standards will not impact consolidated results, financial
condition, or long-term liquidity.
The Company believes that its present working capital position, combined
with funds expected to be generated from operations and the available
borrowing capacity through its revolving credit loan facilities, will be
sufficient to meet its anticipated cash requirements for operating needs
and capital expenditures for 1998.
Forward-Looking and Cautionary Statements
The Company and its representatives may from time to time make written or
oral forward-looking statements, including those contained in the
foregoing Management's Discussion and Analysis. In order to take
advantage of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company has identified in its Annual
Report on Form 10-K for the year ending December 31, 1997, certain
important factors which could cause the Company's actual results,
performance or achievement to differ materially from those that may be
contained in or implied by any forward-looking statement made by or on
behalf of the Company. All such forward-looking statements are qualified
by reference to the cautionary statements herein and in such Report on
Form 10-K.
-16-
SELAS CORPORATION OF AMERICA
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Reports on Form 8-K
On March 3, 1998, the Company filed a report on Form 8-K reporting
that the Company and NII, Incorporated ("NII"), the parent of MRL
Industries, Inc., had entered into a Termination Agreement pursuant
to which the Company and NII had mutually agreed to terminate the
Agreement and Plan of Acquisition, dated as of September 25, 1997
among the Company, Selas Acquisition Corporation, NII, Incorporated,
Widmar, Inc. and certain shareholders of NII and Widmar.
-17-
SELAS CORPORATION OF AMERICA
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
(Registrant)
Date: May 7, 1998 /s/ Robert W. Ross
Robert W. Ross
Vice President and Chief
Financial Officer<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Selas Corporation of America for the three months
ended March 31, 1998 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,468,425
<SECURITIES> 0
<RECEIVABLES> 32,957,681
<ALLOWANCES> 914,899
<INVENTORY> 11,592,253
<CURRENT-ASSETS> 50,979,216
<PP&E> 35,795,863
<DEPRECIATION> 17,951,751
<TOTAL-ASSETS> 86,042,743
<CURRENT-LIABILITIES> 31,941,100
<BONDS> 8,355,347
0
0
<COMMON> 5,590,524
<OTHER-SE> 34,938,676
<TOTAL-LIABILITY-AND-EQUITY> 86,042,743
<SALES> 21,866,723
<TOTAL-REVENUES> 21,866,723
<CGS> 16,610,917
<TOTAL-COSTS> 16,610,917
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5,838
<INTEREST-EXPENSE> 237,510
<INCOME-PRETAX> 890,532
<INCOME-TAX> 331,322
<INCOME-CONTINUING> 559,210
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 559,210
<EPS-PRIMARY> 0.11
<EPS-DILUTED> 0.10
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SELAS CORPORATION OF AMERICA FOR THE THREE
MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 10,668,521
<SECURITIES> 0
<RECEIVABLES> 36,127,889
<ALLOWANCES> 725,476
<INVENTORY> 9,176,014
<CURRENT-ASSETS> 58,167,897
<PP&E> 32,812,222
<DEPRECIATION> 15,661,828
<TOTAL-ASSETS> 92,463,356
<CURRENT-LIABILITIES> 39,994,523
<BONDS> 8,953,115
0
0
<COMMON> 3,717,426
<OTHER-SE> 34,436,545
<TOTAL-LIABILITY-AND-EQUITY> 92,463,356
<SALES> 30,905,010
<TOTAL-REVENUES> 30,905,010
<CGS> 24,460,250
<TOTAL-COSTS> 24,460,250
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 8,208
<INTEREST-EXPENSE> 231,122
<INCOME-PRETAX> 1,880,093
<INCOME-TAX> 717,800
<INCOME-CONTINUING> 1,162,293
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,162,293
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
</TABLE>
