30
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ TO ____________
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 office) (Zip Code)
Registrant's telephone number, including area code (215) 646-6600
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class__________ which registered_____
Common Shares, $1 par value per share American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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. Yes X No __
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)
The aggregate market value, as of April 12, 2002, of the voting
stock held by non-affiliates of the registrant was approximately
$12,798,035 (Aggregate market value is estimated solely for the
purposes of this report and shall not be construed as an
admission for the purposes of determining affiliate status.)
At April 12, 2002, there were 5,119,214 of the Company's common
shares outstanding (exclusive of treasury shares).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's 2001 annual report to shareholders are
incorporated by reference into Part II of this report. Portions
of the Company's proxy statement for the 2002 annual meeting of
shareholders are incorporated by reference into Part III of this
report. Except for the parts of such documents that have been
specifically incorporated herein by reference, such documents
shall not be deemed "filed" for the purposes of this report.
PART I
We are filing this amendment to our annual report on Form 10-K
for the year ended December 31, 2001 because we have learned that the
original report truncated the dollar amounts in certain financial
information. This was the result of a formatting error that occurred
when we prepared the report for filing in the EDGAR system. The changes
made by this amendment do not reflect any revision to the report as we
intended to file it, or to the financial information contained in the
paper versions, already distributed and otherwise made public, of our
annual report to shareholders and Form 10-K.
ITEM 1. Business
Selas Corporation of America (together with its subsidiaries,
unless the context otherwise requires, referred to herein as the
"Company",) was incorporated in Pennsylvania in 1930. The
Company is a diversified firm with international operations and
sales that engages in a range of products. The Company,
headquartered in Dresher, Pennsylvania with subsidiaries in
Minnesota, Ohio, California, England, France, Germany, Italy,
Japan, Portugal and Singapore, operates directly or through
subsidiaries in three business segments.
Under the Selas TM name, the Heat Technology segment designs and
manufactures specialized industrial heat technology systems and
equipment for steel, glass and other manufacturers worldwide.
The Company's Precision Miniature Medical and Electronic Products
segment designs and manufactures microminiature components,
systems and molded plastic parts primarily for the hearing
instrument manufacturing industry and also for the electronics,
telecommunications, computer and medical equipment industries.
The Company's Tire Holders, Lifts and Related Products segment
manufactures products, primarily based on cable winch designs,
for use as original equipment by the pick-up truck and minivan
segment of the automotive industry.
Financial data relating to industry segments, geographical
summary of assets and operations, export sales and major
customers are set forth in Note 5 of the Company's consolidated
financial statements.
In the fourth quarter of 2001, the Company initiated its plan to
dispose of the Companys primary large custom-engineered furnace
business, Selas SAS (Paris), along with two other closely related
subsidiaries, Selas Italiana, S.r.L. (Milan) and Selas U.K.
(Derbyshire). These subsidiaries form the Companys large
custom-engineered furnaces division whose products are used
primarily in the steel and glass industries worldwide. The
furnaces engineered by this division are custom-engineered to
meet customer specific requirements. These subsidiaries
generated approximately $15.6 million and $27.3 million of
revenue and a loss from discontinued operations of $5.3 million
and $69,000 in 2001 and 2000, respectively. The Company has
accounted for the plan to dispose of the subsidiaries as a
discontinued operation and, accordingly, has reclassified the
historical financial data of these subsidiaries. See further
information in note 2 to the consolidated financial statements.
HEAT TECHNOLOGY
The Company specializes in the controlled application of heat to
achieve precise process and temperature control. The Company's
principal heat technology equipment and systems are smaller
standard-engineered systems, burners and combustion control
equipment, (continuing operations) and large custom-engineered
furnaces (discontinued operations).
CONTINUING OPERATIONS
STANDARD-ENGINEERED SYSTEMS, BURNERS AND COMBUSTION CONTROL
EQUIPMENT.
Standard Engineered Systems. The Company engineers and
fabricates a variety of small heat treating furnaces and heat
processing equipment. This standard equipment and small-furnace
business is conducted principally by its wholly-owned
subsidiaries in Europe, CFR (Paris), Ermat S.A. (Lyon) and CFR
Portugal (Leiria). These companies typically engineer and design
atmosphere-controlled batch and continuous furnaces that are used
for heat treating both ferrous and non-ferrous metals and
glassware. Its continuous heat treating systems include not only
the hardening and tempering furnaces central to the systems, but
also the ancillary loading, quenching and washing equipment.
The Company also manufactures non-atmosphere-controlled
batch-type furnaces in a variety of designs. These batch
furnaces are supplied to customers with a need for the precise,
accurately controlled application of heat to their products.
The Companys standard systems also include automatic brazing and
soldering systems used in the assembly of radiators, air
conditioner coils and electrical appliances. The precise
application of heat in these systems improves a customers
product quality and uniformity while reducing production costs.
The Company also produces the fuel mixing and monitoring systems,
burners and product handling equipment necessary for these
systems.
The Company also produces custom designed barrel furnaces used
primarily to heat treat long metal parts, and also products
specialized glass lehrs for heating glass products. Other
furnaces are designed to harden and etch glass and ceramic
tableware.
Burners and Combustion Control Equipment. At its Dresher,
Pennsylvania facility and through its subsidiaries in Europe,
Selas Waermetechnik (Ratingen) and Japan, Nippon Selas (Tokyo),
the Company designs, manufactures and sells an array of original
equipment and replacement gas-fired industrial burners for many
applications.
The Company is a producer of burners used in fluid processing
furnaces serving the petrochemical industry. One type of fluid
processing burner is capable of minimizing the emission of oxides
of nitrogen as combustion products. As many jurisdictions reduce
the permissible level of emissions of these compounds, the
Company believes that the demand for low Nox burners will
increase. The Company also produces burners suitable for
creating a high temperature furnace environment desirable in
steel and glass heat treating furnaces. The Companys burners
accommodate a wide variety of fuel types, environmental
constraints and customer production requirements.
The Company furnishes many industries with gas combustion control
equipment sold both as component parts and as systems that have
been engineered to meet a particular customers needs. This
equipment is provided with the Company's original
custom-engineered and standard heat treating equipment, as
replacement or additional components for existing furnaces being
refurbished or upgraded, and as original components for heat
treating equipment manufactured by others. The components of the
combustion control systems include mixing valves capable of
mixing gas and air and controlling the air/gas ratio, pressure
and total flow of the mixed gases. The Company also produces its
Qual-O-RimeterTM automated monitoring and control device used in
conjunction with its mixing valves to maintain precise, uniform
heat release and flame shape, despite fluctuations in fuel mix
and quality, air temperature and humidity.
Additional combustion control products include Flo-ScopeTM flow
meters, which measure the rate of flow of gases, and automatic
fire checks and automatic blowouts, which arrest flame and
pressure resulting from backfire from the burners into the pipe
line.
Marketing and Competition. The Company markets its
standard-engineered systems products on a global basis through
its sales and marketing personnel located in Dresher,
Pennsylvania, and also sells these products through licensees and
agents located in various parts of the world. Although the
Company competes for orders for such products with many other
manufacturers, some of which are larger and have greater
financial resources, the Company believes that its reputation and
its high standard for quality allow it to compete effectively
with other manufacturers.
Operations. At its CFR and Ermat businesses in France and
Portugal, the Company employs approximately 103 people of whom 14
are administrative personnel, 27 are fabrication and 62 are
sales, engineering and operations personnel. Its Selas
Waermetechnik subsidiary in Germany employs 6 people of whom 1 is
administrative personnel and 5 are sales and engineering. At its
Dresher facility, the Company employs approximately 52 persons,
of whom 13 are executive and administrative personnel, 12 are
sales and engineering personnel and 27 are personnel engaged in
manufacturing. The hourly personnel are represented by a union,
and the current union contract expires May, 2004. The Company
considers its relations with its employees to be satisfactory.
In April, 2001, the Company sold a minority interest of Nippon
Selas to three directors of Nippon Selas. Its Tokyo facility
employs 13 people; 4 administrative and 9 sales and engineering.
The principal components used in the Company's heat processing
equipment and other products are steel, special castings
(including high-alloy materials), electrical and electronic
controls and materials handling equipment. These items are
available from a wide range of independent suppliers.
Research and Development. The Company conducts research and
development activities at its Dresher facility to support its
heat processing services and products. The Company's research
efforts are designed to develop new products and technology as
well as to improve existing products and technology. The Company
also conducts research on behalf of particular customers in
connection with customers' unusual process needs. Research and
development expenditures for heat processing aggregated $33,000,
$31,000 and $38,000 in 2001, 2000 and 1999, respectively.
It is the Company's policy to apply for domestic and foreign
patents on those inventions and improvements which it considers
significant and which are likely to be incorporated in its
products. It owns a number of United States and foreign
patents. It is licensed under patents owned by others and has
granted licenses to others on a fee basis. The Company believes
that, although these patents collectively are valuable, no one
patent or group of patents is of material importance to its
business as a whole.
DISCONTINUED OPERATIONS
LARGE CUSTOM-ENGINEERED FURNACES
Products and Industries Served. The Company designs specialized
furnaces for use primarily in the steel and glass industries
worldwide. The furnaces are engineered to subject a customer's
products to carefully controlled heating and cooling processes in
order to improve the physical characteristics of those products.
Each furnace is custom-engineered by the Company to meet
customer's specific requirements. The Company believes that the
Selas TM name, its reputation for quality and its leadership in
the design and engineering of direct gas-fired heat processing
furnaces are important factors in its business. The Company also
offers gas-fired radiant tube and electric heating technology for
heat processing furnaces.
The Company's custom-engineered systems for the steel industry
include continuous annealing furnaces and continuous galvanizing
furnaces. Continuous annealing furnaces are used to heat-treat
semi-finished steel sheet and strip to soften it to improve the
ductility of the steel, thereby making it suitable for use in the
manufacture of automobiles, appliances and other items.
Continuous galvanizing furnaces consist of continuous annealing
furnaces plus the components used to apply a zinc coating to
steel strip to improve its resistance to corrosion.
The Company's furnaces for the glass industry are used for the
tempering, bending and etching of glass. The glass tempering
process toughens glass plate through a controlled process of
heating and cooling. Glass manufacturers use the Company's glass
bending furnaces to heat and bend plate glass for automotive and
architectural uses.
From time to time, the Company also designs various other
specialized furnaces for use by manufacturers in a variety of
industries to suit particular process requirements. For example,
over the years the Company has engineered large barrel line
furnaces used for the continuous heat treatment of steel pipe,
tube or bar.
Marketing and Competition. The Company markets its
custom-engineered furnaces on a global basis. Marketing
personnel are located at the Company's offices in Paris,
Derbyshire and Milan. Over the years, the Company has installed
custom-engineered systems in Europe, North America, South
America, Asia, Australia and Africa. In a particular period, a
single contract may account for a large percentage of sales, but
the Company is not dependent on any custom-engineered systems
customer on an ongoing basis.
Company engineering and marketing personnel maintain contact with
potential major steel and glass customers to determine their
needs for new furnaces, typically for expansion or new
technology. The Company's furnaces have long useful lives, and
replacement business is not a major factor in sales of
custom-engineered systems. The Company has and continues to
perform modifications to older existing furnaces to improve
production quantities, along with quality of the end product.
The Company also markets its products and services through agents
and licensees located in various parts of the world. Typically,
the Company's license agreements provide that the licensee will
act as the Company's sales agent in a particular territory, is
granted a license to utilize the Company's heat processing
technology in that territory, and is granted the right to utilize
technical services provided by the Company. In exchange, the
Company receives certain fees when the licensee sells the
Company's products or services in the territory.
Over the years, Japanese steel producers have aligned themselves
in semi-exclusive relationships with furnace manufacturers. For
a number of years, the Company has licensed direct fired furnace
technology to NKK Corporation, the second largest steel producer
in Japan.
Furnaces for continuous galvanizing and annealing lines generally
utilize either direct fired or radiant tube technology. The
Company is the market leader for furnaces based on direct fired
technology, and also sells furnaces of the radiant tube design
utilized primarily by its competitors. Some of the Company's
competitors are larger and have greater financial resources. In
recent years, the Company has faced increased competition from
competitors supplying smaller, less sophisticated steel lines.
These competitors do not generally offer custom engineering on a
par with the Company, but have been willing to offer a more
standardized and less sophisticated furnace for a lower price.
Operations. The Company's large custom-engineered furnace
business is conducted principally by its wholly-owned
subsidiaries, Selas (SAS) (Paris), Selas Italiana, S.r.L.
(Milan) and Selas U.K. (Derbyshire). These subsidiaries
currently employ approximately 68 persons, of whom 11 are
administrative personnel, and 57 are sales, engineering and
operations personnel.
On large-scale projects, such as a continuous steel strip
annealing or galvanizing line, the customer frequently contracts
for the entire line on a turnkey basis with an engineering and
construction firm specializing in line terminal equipment, and
the Company acts as a subcontractor for the design, engineering,
supply of material and installation of the furnace portion of the
line, or, alternatively, as a subcontractor only for design and
engineering. When the Company provides only design and
engineering services, the prime contractor handles the
fabrication and erection of the furnace. With the exception of
certain proprietary parts, the Company does not manufacture the
components used in such systems.
The Company's large custom-engineered furnace business is
historically cyclical in nature.
PRECISION MINIATURE MEDICAL AND ELECTRONIC PRODUCTS
Resistance Technology, Inc. ("RTI"), a wholly-owned subsidiary,
manufactures microminiature components, systems and molded
plastic parts for hearing instrument manufacturers and the
medical equipment, electronics, telecommunications and computer
industries. RTI Electronics, Inc. ("RTIE"), formed in 1997, has
expanded RTI's microminiature components business through the
manufacture of electrical resistors known as thermistors and film
capacitors.
Products and Industries Serviced. RTI is a leading manufacturer
and supplier of microminiature electromechanical components to
hearing instrument manufacturers. These components consist of
volume controls, trimmer potentiometers and switches. RTI also
manufactures hybrid amplifiers and integrated circuit components
("hybrid amplifiers"), along with faceplates for in-the-ear and
in-the-canal hearing instruments. Components are offered in a
variety of sizes, colors and capacities in order to accommodate a
hearing manufacturer's individualized specifications. Sales to
hearing instrument manufacturers represented approximately 73% of
2001 annual net sales for the Company's precision miniature
medical and electronic products business.
Hearing instruments, which fit behind or in a person's ear to
amplify and process sound for a hearing impaired person,
generally are composed of four basic parts and several
supplemental components for control or fitting purposes. The
four basic parts are microphones, amplifier circuits, miniature
receivers/speakers and batteries. RTI's hybrid amplifiers are a
type of amplifier circuit. Supplemental components include
volume controls, trimmer potentiometers, which shape sound
frequencies to respond to the particular nature of a person's
hearing loss, and switches used to turn the instrument on and off
and to go from telephone to normal speech modes. Faceplates and
an ear shell molded to fit the user's ear often serve as a
housing for hearing instruments.
The potential range of applications for RTI's molded plastic
parts is broad. RTI has produced intravenous flow restrictors
for a medical instruments manufacturer and cellular telephone
battery sockets for a telecommunications equipment manufacturer.
Sales by RTI to industries other than the hearing instrument
industry represented approximately 9% of 2001 annual net sales
for the Company's precision miniature medical and electronic
products business.
RTI manufactures its components on a short lead-time basis in
order to supply "just-in-time" delivery to its customers. Due to
the short lead-time, the Company does not include orders from
RTI's customers in its published backlog figures.
RTIE manufactures and sells thermistors and thermistor
assemblies, which are solid state devices that produce precise
changes in electrical resistance as a function of any change in
absolute body temperature. RTIE's Surge-Gard TM product line, an
inrush current limiting device used primarily in computer power
supplies represents approximately 50% of RTIE's sales. The
balance of sales represent various industrial, commercial and
military sales for thermistor and thermistor assemblies to
domestic and international markets.
RTI's and RTIE's principal raw materials are plastics, polymers,
metals, various metal oxide powders and silver paste, for which
there are multiple sources of supply.
In order to enhance its product line offering, RTI made several
strategic acquisitions in 1998. These acquisitions bolster RTI's
and RTIE's precision miniature mechanical and electronic products.
On May 27, 1998, RTI Electronics acquired the stock of IMB
Electronics Products, Inc., a manufacturer of film capacitors,
which are energy storage devices used primarily to resist changes
in voltage. The film capacitor business represents a product
line addition for the power and computer industries which RTIE
serves. Effective January 1, 1999, IMB Electronics Products,
Inc. was merged into RTIE.
In October, 1998, the Company acquired a product manufacturing
line from Lectret which was newly formed as RTI Technologies PTE
LTD. In January, 2001, the Company acquired the stock of
Lectret, a Singapore manufacturer of microphone capsules. The
acquisitions expand RTI's product capability in the hearing
health market by adding a microphone product line.
Certain information regarding the acquisition of RTI Technologies
PTE LTD business is set forth in note 3 to the Company's
Consolidated Financial Statements.
Marketing and Competition. RTI sells its hearing instrument
components directly to domestic hearing instrument manufacturers
through an internal sales force. Sales of microphone products
and of molded plastic parts to industries other than hearing
instrument manufacturers are made through a combination of
independent sales representatives and internal sales force. In
recent years, three companies have accounted for a substantial
portion of the U.S. hearing instrument sales. In 2001, these
three customers accounted for approximately 26% of RTI's net
sales.
Internationally, sales representatives employed by Resistance
Technology, GmbH ("RT, GmbH"), a German company 90% of whose
capital is owned by RTI, solicit sales from European hearing
instrument manufacturers and facilitate sales with Japanese and
Australian hearing instrument markets.
RTI believes that it is the largest supplier worldwide of
microminiature electromechanical components to hearing instrument
manufacturers and that its full product line and automated
manufacturing process allow it to compete effectively with other
manufacturers with respect to these products.
In the market of hybrid amplifiers and molded plastic faceplates,
RTI's primary competition is from the hearing instrument
manufacturers themselves. The hearing instrument manufacturers
produce a substantial portion of their internal needs for these
components.
RTI markets its microphone products to the radio communication
and professional audio industries and has several competitors who
are larger and have greater financial resources. RTI holds a
small market share in the global market for microphone capsules
and other related products.
RTIE sells its thermistors and film capacitors through a
combination of independent sales representatives and internal
sales force.
RTIE has many competitors, both domestic and foreign, that sell
various thermistor and film capacitors and some of these
competitors are larger and have greater financial resources. In
addition, RTIE holds a relatively small market share in the
world-market of thermistor and film capacitor products.
Operations. RTI currently employs 225 people, of whom 52 are
executive and administrative personnel and 173 are sales,
engineering and operations personnel at RTI's two facilities near
Minneapolis, Minnesota. A small number of sales personnel
employed by RT, GmbH are located in Munich, Germany and RTI
Technologies employs 100 people at its Singapore location.
At its facilities in Anaheim, California, RTIE employs 88
full-time employees, of which 5 are administrative and 83 are
sales and operations personnel.
As a supplier of parts for consumer and medical products, RTI is
subject to claims for personal injuries allegedly caused by its
products. The Company maintains what it believes to be adequate
insurance coverage.
Research and Development. RTI and RTIE conduct research and
development activities primarily to improve its existing products
and technology. Their research and development expenditures were
$1,237,000, $899,000 and $964,000 in 2001, 2000 and 1999,
respectively.
RTI owns a number of United States patents which cover a number
of product designs and processes. The Company believes that,
although these patents collectively add some value to the
Company, no one patent or group of patents is of material
importance to its business as a whole.
TIRE HOLDERS, LIFTS AND RELATED PRODUCTS
Deuer Manufacturing, Inc. ("Deuer"), a wholly-owned subsidiary,
manufactures tire holders, lifts, and other related products
based principally on cable winch designs.
Products and Industries Served. Deuer is a leading supplier of
spare tire holders used on light trucks and mini-vans
manufactured by the major domestic automotive manufacturers.
Deuer's spare tire holder holds the spare tire to the underbody
of the vehicle by means of a steel cable running to the underside
of the vehicle's frame. One end of the steel cable is attached
to a hub placed through the center of the spare tire's rim, and
the other end is attached to a hand-operated winch mounted at an
accessible location on the vehicle. The spare tire holding
system permits the spare tire to be stored in a remote location
and to be easily removed without the need to crawl under the
vehicle. During 2001, sales of spare tire holders accounted for
approximately 93% of Deuers net sales.
Deuer also produces a variety of hand-operated hoist-pullers,
using primarily a cable winch design, sold under the Mini-MuleTM
brand name. These products, which retail from $30 to $60, are
portable hand winches designed for a variety of uses, such as
pulling objects, rigging loads and installing fencing. Deuer
furnishes these hoist-pullers in a variety of sizes and
capacities. It also manufactures accessories for use with the
products, including slings, clamps, blocks and gantries.
Deuer manufactures products on a short lead time basis in order
to furnish "just-in-time" delivery to its automotive customers.
Because of the substantial variances between manufacturers'
estimated and actual requirements, the Company does not include
blanket order commitments from automotive manufacturers in its
published backlog figures.
Marketing and Competition. Deuer sells its spare tire holders
directly to domestic automotive manufacturers. Deuer's spare
tire holders are sold to Chrysler Corporation, General Motors,
Toyota, Ford Motor Company, New United Motor Manufacturing, Inc.
and Mobile Home Manufactures. The design and quality of Deuer's
spare tire holders have been recognized by its major customers.
The Company sells its hoist-pullers through a network of
distributors as well as directly to some large retail outlets.
Deuer is one of several suppliers of spare tire holders to
domestic mini-van and light truck manufacturers. Some of Deuer's
competitors are larger and have greater financial resources. The
Company believes that price and Deuer's reputation for quality
and reliability of delivery are important factors in competition
for business from the domestic automotive manufacturers. A
number of other domestic and foreign manufacturers sell
hoist-pullers to the retail market, and Deuer's share of this
market is relatively small.
Operations. At its Dayton facility, Deuer employs 15 executive
and administrative personnel and approximately 140 manufacturing
employees. Some of the manufacturing employees are represented
by a union, and the current union contract expires in October,
2002. Deuer considers its relations with its employees to be
satisfactory.
Deuer's principal raw material is coil rolled steel and metal
cable which is widely available. Deuer also conducts research
and development activities which consist of the development of
new products and technology and the modification of existing
products. Deuer's research and development expenditures
aggregated $252,000, $252,000 and $258,000 in 2001, 2000 and
1999, respectively.
As a consumer products manufacturer, Deuer is subject to claims
for personal injuries allegedly caused by its products. The
Company maintains what it believes to be adequate insurance
coverage.
ITEM 2. Properties
Continuing Operations
The Company owns the manufacturing facility in Dresher,
Pennsylvania in which its standard-engineered systems, burners
and combustion control equipment are produced. The Company's
headquarters are located on the same 17 acre site. The 136,000
square foot Dresher facility has more space than is currently
needed for the Company's operations and headquarters, and the
Company is seeking to lease all or a portion of the excess office
and manufacturing space to a suitable tenant. This property is
subject to a mortgage. See note 9 of the Company's consolidated
financial statements.
RTI leases a 47,000 sq. ft. manufacturing facility in Arden
Hills, Minnesota from a partnership consisting of two former
officers of RTI and Mark S. Gorder who serves as an officer of
the Company and RTI and on the Company's Board of Directors. At
this facility, RTI manufactures all of its products other than
plastic component parts. The lease expires in October, 2003,
with two successive 5-year renewal options.
In addition, RTI owns, subject to a mortgage from a third party
lender, a 34,000 sq. ft. building in Vadnais Heights, Minnesota
at which RTI produces plastic component parts. (See notes 9, 18
and 19 of the Company's consolidated financial statements.)
RTIE leases a building in Anaheim, California, which contains its
manufacturing facilities and offices and consists of a total of
50,000 square feet. The lease expires September, 2008.
Deuer owns its 92,000 square foot manufacturing facility located
on 6.5 acres in Dayton, Ohio, where it produces its spare tire
holders and hoist-pullers. The facility is furnished with a
variety of steel fabrication equipment, including punch presses,
drill presses, screw machines, grinders, borers, lathes and
welders. This property is subject to a mortgage. See note 9 of
the Company's consolidated financial statements.
Selas Waermetechnik GmbH, the Companys German subsidiary, leases
facilities in Ratingen, Germany which are used for sales,
administrative and engineering activities and assembly of small
furnaces and furnace components, with the lease expiring October,
2008. Resistance Technology, GmbH, leases office space in
Munich, Germany which are used for sales, administrative and
engineering activities and assembly of small furnaces and furnace
components, with the lease expiring October, 2008. Resistance
Technology, GmbH, leases office space in Munich, Germany for its
sales personnel with the lease expiring in July, 2007.
CFR leases facilities in Paris and Maisse, both in France. The
facilities in Paris house engineering, sales and administrative
operations and has 10,000 square feet. The Maisse facility is
40,000 square feet and houses CFR's fabrication and assembly
operations. The Paris lease expires January, 2003 and the Maisse
lease expires February, 2004, each with three-year optional
renewal terms. Ermat leases a building in Lyon, France with
sales and administrative facilities which expires June, 2007.
CFR Portugal leases a building in Leiria, Portugal which houses
its fabrication facilities and administrative offices. The lease
expires in 2003.
RTI Technologies PTE LTD leases a building in Singapore which
houses its production facilities and administrative offices. The
building contains 6,000 square feet and its lease expires June,
2004, with a three-year renewal option. Nippon Selas leases
office space in Tokyo, Japan for its sales and administrative
facilities. The lease expires in June, 2002 and the Company
expects to be able to renew the lease.
Discontinued Operations
Selas (SAS) owns the land and building which houses its
engineering, sales and administrative operations in
Gennevilliers, France (outside of Paris). The land under the
building is owned by Selas (SAS) and the property outside of the
building is jointly owned by the building owners in the office
complex. The building has 22,000 square feet. This property is
subject to a mortgage. See note 9 of the Company's consolidated
financial statements.
Selas Italiana S.r.L., the Company's Italian subsidiary and Selas
UK, the Company's United Kingdom subsidiary, lease facilities in
Milan, Italy and Derbyshire, UK, respectively. The Milan and
Derbyshire facilities are comprised of engineering, sales and
administrative offices with the leases expiring in February, 2007
and a month to month basis, respectively.
ITEM 3. Legal Proceedings
The Company is a defendant along with a number of other parties
in approximately 253 lawsuits as of December 31, 2001
(approximately 100 as of December 31, 2000) 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 lead insurance 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 Companys 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
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.
The Company is also involved in other lawsuits arising in the
normal course of business. While it is not possible to predict
with certainty the outcome of these matters, management is of the
opinion that the disposition of these lawsuits and claims will
not materially affect the Companys consolidated financial
position, liquidity, or results of operations.
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 4A. Executive Officers of the Company
The names, ages and offices (as of February 25, 2002) of the
Company's officers were as follows:
Name Age Office
Mark S. Gorder 55 President and Chief Executive Officer
and President of Resistance Technology,
Inc.; Director of the Company
Christian Bailliart 53 Vice President and Chairman-Director
Generale of Selas (SAS)
James C. Deuer 73 Vice President and President of Deuer
Manufacturing, Inc.
Francis A. Toczylowski 51 Vice President, Treasurer and Secretary
Mr. Gorder joined the Company October 20, 1993 when Resistance
Technology, Inc. (RTI) was acquired. Prior to the acquisition,
Mr. Gorder was President and one of the founders of RTI, which
began operations in 1977. Mr. Gorder was promoted to Vice
President of the Company and elected to the Board of Directors in
1996. In 2000 he was elected President and Chief Operating
Officer and in April, 2001, Mr. Gorder assumed the role of Chief
Executive Officer. Mr. Bailliart joined Selas (SAS) in 1974 and
in 1989 he was promoted to Chairman-Director Generale of Selas
(SAS) from Vice President, Treasurer. On January 1, 1993, he was
elected Vice President of the Company. Mr. Deuer joined the
Company as President of Deuer Manufacturing when it was acquired
in May, 1986 and was promoted to Vice President of the Company
and President of Deuer Manufacturing in December, 1990. From
1965 to 1986 he was President of Deuer Manufacturing. Mr.
Toczylowski joined the Company in 1981 and has held several
positions in the accounting and finance area, most recently as
Corporate Controller. In December, 1998, he was elected Vice
President and Treasurer and in November, 2001 was elected
Secretary of the Company.
PART II
ITEM 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The Company's common shares are listed on the American Stock
Exchange. The high and low sale prices during each quarterly
period during the past two years were as follows:
Market and Dividend Information
2001 2000
---------------- -----------------
Market Market
Price Range Price Range
---------------- -----------------
Quarter High Low High Low
First . . . . $4.000 $3.100 $6.750 $4.875
Second . . . . 4.750 3.300 7.625 5.250
Third . . . . 4.500 2.850 7.500 4.625
Fourth . . . . 3.600 2.000 5.937 2.750
At February 7, 2002 the Company had 413 shareholders of record.
2001 2000 1999
Dividends per share:
First Quarter . . . $.045 $.045 $.045
Second Quarter. . . .045 .045 .045
Third Quarter . . . .045 .045 .045
Fourth Quarter. . . .000 .045 .045
The payment of any future dividends is subject to the discretion
of the Board of Directors and is dependent on a number of
factors, including the Companys capital requirements, financial
condition, financial covenants and cash availability.
ITEM 6. Selected Financial Data
Certain selected financial data is incorporated by reference to
"Selas Corporation of America Five-Year Summary of Operations",
page 4, and "Other Financial Highlights", page 5, of the
Company's 2001 annual report to shareholders.
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Management's Discussion and analysis is incorporated by reference
to page 6 through 12 of the Company's 2001 annual report to
shareholders.
Forward-Looking and Cautionary Statements. Certain statements
herein that include forward-looking terminology such as "may",
"will", "should", "expect", "anticipate", "estimate", "plan" or
"continue" or the negative thereof or other variations thereon
are, or could be deemed to be, "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E 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 the Company's 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 competition by competitors with more resources
than the Company, foreign currency risks arising from the
Company's foreign operations, and the cyclical nature of the
market for large heat technology contracts.
The Company's standard engineered systems business, which has
contributed substantially to the Company's consolidated results,
is affected by, among other things, the capital expenditures of
steel, aluminum and glass manufacturers and processors,
industries that are cyclical in nature. It is difficult to
predict demand for the Company's standard engineered system products, and
the financial results of the Company's standard engineered system business
have fluctuated, and may continue to fluctuate, materially from
year to year.
Several of the Company's competitors have been able to offer more
standardized and less technologically advanced heat technology
systems and equipment at lower prices. Although the Company
believes that it has produced higher quality systems and
equipment than these lower priced competitors, in certain
instances price competition has had an adverse effect on the
Company's sales and margins. There can be no assurance that the
Company will be able to maintain or enhance its technical
capabilities or compete successfully with its existing and future
competitors.
There can be no assurance that the Company will remain a
competitive supplier to the automobile and truck industry in view
of, among other things, the general trend in recent years in that
industry toward a reduction in the number of third-party
suppliers and toward more integrated component suppliers.
The Company's precision miniature medical and electronics
business has benefited from its ability to automate and keep
costs and prices low. There can be no assurance that the Company
will be able to continue to achieve such automation and its
historical profit margins particularly as the technology of
hearing instruments changes and as the business expands into
other product lines. The precision miniature medical and
electronics business has also been affected by unfavorable
conditions in the hearing health market and the impact of the
Asian economic situation. The Company is unable to predict with
any certainty when these conditions will improve.
The Company has international operations, as a result, the
Company's performance may be materially affected by foreign
economies and currency movements.
The Company cautions that the foregoing list of important factors
is not intended to be, and is not, exhaustive. 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.
ITEM 7A. Quantitative and Qualitative Disclosures About Market
Risk
The Company's consolidated cash flows and earnings are subject to
fluctuations due to changes in foreign currency exchange rates.
The Company attempts to limit its exposure to changing foreign
currency exchange rates through operational and financial market
actions. The Company does not hold derivatives for trading
purposes.
The Company manufactures and sells its products in a number of
locations around the world, resulting in a diversified revenue
and cost base that is exposed to fluctuations in European and
Asian currencies. This diverse base of foreign currency revenues
and costs serves to create a hedge that limits the Company's net
exposure to fluctuations in these foreign currencies.
Short-term exposures to changing foreign currency exchange rates
are occasionally managed by financial market transactions,
principally through the purchase of forward foreign exchange
contracts (with maturities of six months or less) to offset the
earnings and cash flow impact of the nonfunctional currency
denominated receivables and payables relating to select custom
engineered heat technology segment contracts. The decision by
management to hedge any such transaction is made on a
case-by-case basis. Foreign exchange forward contracts are
denominated in the same currency as the receivable or payable
being covered, and the term and amount of the forward foreign
exchange contract substantially mirrors the term and amount of
the underlying receivable or payable. The receivables and
payables being covered arise from trade and intercompany
transactions of and among the Company's foreign subsidiaries. At
December 31, 2001 the Company did not have any forward foreign
exchange contracts outstanding.
To manage exposure to interest rate movements and to reduce its
borrowing costs, the Company's French subsidiary, Selas (SAS),
has entered into an interest rate swap agreement. Selas (SAS) is
exposed to changes in interest rates primarily due to its
borrowing activities which are related to long-term debt used to
finance its office building. The swap agreement requires fixed
interest payments based on an effective rate of 8.55% for the
remaining term through May, 2006. A 100 (10% adverse change)
basis point move in interest rates would affect the Company's
floating and fixed rate instruments, including short and
long-term debt and derivative instruments, by approximately
$17,000 at December 31, 2001.
Swap and forward foreign exchange contracts are entered into for
periods consistent with related underlying exposures. The
Company does not enter into contracts for speculative purposes
and does not use leveraged instruments.
The Company's consolidated balance sheets as of December 31, 2001
and 2000, and the related consolidated statements of operations,
cash flows and shareholders' equity for each of the years in the
three-year period ended December 31, 2001, and the report of
independent auditors thereon and the quarterly results of
operations (unaudited) for the two-year period ended December 31,
2001 are incorporated by reference to pages 13 to 42 of the
Company's 2001 annual report to shareholders.
ITEM 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure
None
PART III
The information called for by Items 10, 11, 12 and 13 (except the
information concerning executive officers included in Item 4A) is
incorporated by reference to the Company's definitive proxy
statement relating to its 2002 Annual Meeting of shareholders,
which the Company will file in April, 2002. However, the
portions of such proxy statement constituting the reports of the
Audit Committee and Compensation Committees of the Board of
Directors and the graph showing performance of the Company's
common shares and certain share indices shall not be deemed to be
incorporated herein or filed for purposes of the Securities
Exchange Act of 1934.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) The following documents are filed as a part of this report:
1. Financial Statements - The Company's consolidated financial
statements, as described below, are incorporated by reference
to pages 13 through 42 of the Company's 2001 annual report to
shareholders.
Consolidated Balance Sheets at December 31, 2001 and 2000.
Consolidated Statements of Operations for the years ended
December 31, 2001, 2000 and 1999.
Consolidated Statements of Cash Flows for the years ended
December 31, 2001, 2000 and 1999.
Consolidated Statements of Shareholders' Equity for the years
ended December 31, 2001, 2000 and 1999.
Notes to Consolidated Financial Statements.
Report of Independent Auditors.
2. Financial Statement Schedules
Page
Report of Independent Auditors on
Financial Statement Schedules 19
Schedule I - Condensed Financial Information of
Registrant (Parent only) 20-23
Schedule II - Valuation and Qualifying Accounts 24-25
All other schedules are omitted because they are not
applicable, or because the required information is included in
the consolidated financial statements or notes thereto.
3. Exhibits
3A. The Company's Articles of Incorporation as amended
May 18, 1984 and April 25, 1991. Exhibit 3A to the
Company's report on Form 10-K for the year ended
December 31, 1984 and Exhibit 3A1 to the Company's
report on Form 10-K for the year ended December 31,
1991 are incorporated by reference.
3B. The Company's By-Laws as amended. Exhibit 3B to the
Companys report on Form 10-K for the year ended December
31, 2000 is incorporated by reference.
4A. Amended and Restated Credit Agreement dated July 31, 1998
among the Company, Deuer Manufacturing, Inc., Resistance
Technology, Inc., RTI Export, Inc. and RTI Electronics,
Inc. Exhibit 4A to the Company's report on Form 10-Q for
the nine months ended September 30, 1998 is incorporated
by reference.
4B. Amendment to Amended and Restated Credit Agreement
dated June 30, 1999 among the Company, Deuer
Manufacturing, Inc., Resistance Technology, Inc.,
RTI Export, Inc. and RTI Electronics, Inc. The
Exhibit to the Company's report on Form 10-Q for
the six months ended June 30, 1999 is incorporated
by reference.
4C. Amended and Restated Revolving Credit Note, dated
July 31, 1998, of the Company in favor of First
Union National Bank. Exhibit 4B to the Company's
report on Form 10-Q for the nine months ended
September 30, 1999 is incorporated by reference.
4D. Guaranty dated February, 1998 of the Company in
favor of First Union/First Fidelity, N.A.
Pennsylvania. Exhibit 4H to the Company's report
on Form 10-K for the year ended December 1997 is
hereby incorporated by reference.
4E. Second Amendment to Amended and Restated Credit
Agreement, dated as of July 7, 2000. Exhibit 4C to
the Company's report on Form 10-Q for the period
ended September 30, 2000 is incorporated by
reference.
4F. Third Amendment to Amended and Restated Credit
Agreement, dated as of January 19, 2001. Exhibit
4F to the Companys report on Form 10-K for the
year ended December 31, 2001 is incorporated by
reference.
4G. Waiver and Amendment Agreement dated November 20,
2001 among the Company, certain of its
subsidiaries, and First Union National Bank.
4H. First Amendment to Waiver and Amendment Agreement
dated February 28, 2002 among the Company, certain
of its subsidiaries, and First Union National Bank.
4I. Second Amendment to Waiver and Amendment Agreement
dated March 20, 2002 among the Company, certain of
its subsidiaries, and First Union National Bank.
10A.Form of termination agreement between the Company and
Messrs. Deuer and Toczylowski. Exhibit 10A to the
Company's report on Form 10-K for the year ended
December 31, 1996 is incorporated by reference.
10B.1985 Stock Option Plan, as amended. Exhibit 10C to the
Company's Registration Statement on Form S-2 filed
on June 15, 1990 (No. 33-35443) is incorporated by
reference.
10C.Form of Stock Option Agreements granted under the 1985
Stock Option Plan. Exhibit 10D to the Company's
Registration Statement on Form S-2 filed on June
15, 1990 (No. 33-35443) is incorporated by
reference.
10D.Form of Amendments to Stock Option Agreements granted under
the 1985 Stock Option Plan. Exhibit 10D to the
Company's Registration Statement on Form S-2 filed
on June 15, 1990 (No. 33-35443) is incorporated by
reference.
10E.Amended and Restated 1994 Stock Option Plan. Exhibit 10E
to the Company's report on Form 10-K for the year
ended December 31, 1997 is incorporated by
reference.
10F.Form of Stock Option Agreements granted under the
Amended and Restated 1994 Stock Option Plan.
Exhibit 10F to the Company's report on Form 10-K
for the year ended December 31, 1995 is
incorporated by reference.
10G.2001 Stock Option Plan. Exhibit 10G to the Company's
report on Form 10-K for the year ended December 31,
2001 is incorporated by reference.
10H.Supplemental Retirement Plan (amended and restated
effective January 1, 1995). Exhibit 10H. to the
Company's report on Form 10-K for the year ended
December 31, 1995 is incorporated by reference.
10I.Employment Agreement dated June 19, 2001 among the
Company, Resistance Technology, Inc. and Mark S.
Gorder. Exhibit 102 to the Company's report on
Form 10-Q for the period ended June 30, 2001 is
incorporated by reference.
10J.Amended and Restated Agreement on Termination Following
Change of Control or Asset Sale, dated June 19,
2001, between the Company and Mark S. Gorder.
Exhibit 10.1 to the Companys report on Form 10-Q
for the period ended June 30, 2001 is incorporated
by reference.
10K.Amended and Restated Office/Warehouse Lease, between
Resistance Technology, Inc. and Arden Partners I.
L.L.P. (of which Mark S. Gorder is one of the
principal owners) dated November 1, 1996. Exhibit
10J to the Company's report on Form 10-K for the
year ended December 31, 1996 is incorporated by
reference.
10L.Amended and Restated Non-Employee Directors' Stock Option
Plan.
10M.Retirement Agreement, Consulting Agreement and
General Release, dated August 30, 2000, between the
Company and Stephen F. Ryan. Exhibit 10 to the
Company's report on Form 10-Q for the period ended
September 30, 2000 is incorporated by reference.
10N.Separation Agreement dated November 30, 2001
between the Company and Robert W. Ross.
13. "Selas Corporation of America Five-Year Summary of
Operations" contained on Page 4 of the Company's
2001 annual report to shareholders; "Other
Financial Highlights" contained on page 5 of the
Company's 2001 annual report to shareholders;
"Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained on
pages 6-12 of the Company's 2001 annual report to
shareholders; and the Company's consolidated
financial statements, including the "Notes to
Consolidated Financial Statements" and the "Report
of Independent Auditors contained on pages 13-44
of the Company's 2001 annual report to shareholders.
21. List of significant subsidiaries of the Company.
23. Consent of Independent Auditors
24. Powers of Attorney.
(b) Reports on Form 8-K - There were no reports on Form
8-K filed during the three months ended December
31, 2001.
Report of Independent Auditors on Financial Statement
Schedules
The Board of Directors and Shareholders
Selas Corporation of America:
Under date of April 15, 2002, we reported on
the consolidated balance sheets of Selas Corporation of
America and subsidiaries as of December 31, 2001 and
2000 and the related consolidated statements of
operations, shareholders' equity, and cash flows for
each of the years in the three-year period ended
December 31, 2001, as contained in the 2001 annual
report to shareholders. These consolidated financial
statements and our report thereon are incorporated by
reference in the annual report on Form 10-K for the
year 2001. In connection with our audits of the
aforementioned consolidated financial statements, we
also audited the related financial statement schedules
as listed in the accompanying index (Item 14). These
financial schedules are the responsibility of the
Company's management. Our responsibility is to express
an opinion on these financial statement schedules based
on our audits.
In our opinion, such financial statement schedules,
when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly,
in all material respects, the information set forth
herein.
As discussed in note 1 to the consolidated financial
statements, the Company changed its method of
accounting for derivative instruments and hedging
activities in 2001.
/s/KPMG LLP
Philadelphia, Pennsylvania
April 15, 2002
SCHEDULE I
SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES
Condensed Financial Information of Registrant
Balance Sheets
December 31, 2001 and 2000
ASSETS 2001 2000
Current assets:
Cash $ 153,122 $ 572,232
Accounts receivable (including $3,503,415
and $3,139,822 due from subsidiaries in
2001 and 2000, respectively, eliminated in
consolidation), less allowance for
doubtful accounts of $10,000 in Both years 4,837,871 7,063,803
Inventories, at cost 3,049,454 2,785,884
Prepaid expenses and other current assets 923,939 871,692
Total current assets 8,964,386 11,293,611
Investment in wholly-owned subsidiaries 59,088,668 59,483,530
Net assets of discontinued operations 6,636,127 1,676,929
Property and equipment, at cost 5,841,962 5,939,988
Less: accumulated depreciation (4,992,755) (4,983,785)
849,207 956,203
Other assets 2,011,648 2,344,813
Total Assets $77,550,036 $75,755,086
SCHEDULE I
SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES
Condensed Financial Information of Registrant
Balance Sheets
December 31, 2001 and 2000
LIABILITIES AND SHAREHOLDERS' EQUITY 2001 2000
Current liabilities:
Notes payable and current maturities of
long-term debt $ 9,150,520 $ 6,082,000
Accounts payable (including $19,820,408
and
$15,897,018 due to subsidiaries in 2001
and 2000, respectively, eliminated in
consolidation) 21,047,165 17,981,384
Accrued expenses 3,778,175 3,821,744
Total current liabilities 33,975,860 27,885,128
Long-term debt 1,389,812 116,667
Other postretirement benefit obligations 3,411,042 3,482,508
Deferred income taxes 168,705 172,338
Contingencies and commitments
Shareholders' equity
Common stock 5,634,968 5,634,968
Retained earnings and other equity 34,234,727 39,728,555
Less: 515,754 common shares
held in treasury at cost (1,265,078) (1,265,078)
Total shareholders' equity 38,604,617 44,098,445
Total Liabilities and $77,550,036 $75,755,086
Shareholder's Equity
See accompanying notes to the consolidated financial statements.
SCHEDULE I
SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES
Condensed Financial Information of Registrant
Statements of Operations
Years Ended December 31, 2001, 2000 and 1999
2001 2000 1999
Sales, net $13,830,478 $11,654,081 $ 7,640,167
Add back: license fees and corporate
charges paid by subsidiaries,
eliminated
in consolidation 80,000 400,000 400,000
13,910,478 12,054,081 8,040,167
Costs and expenses:
Cost of goods sold 9,691,279 8,805,571 4,805,422
Selling, general and administrative 3,710,504 3,390,804 4,413,178
Expenses
Rent and depreciation 330,592 290,134 372,942
13,732,375 12,486,509 9,591,542
Income (loss) before income taxes
(benefits)and equity in net income
of subsidiaries 178,103 (432,428) (1,551,375)
Provision for income taxes (benefits) 109,930 (152,964) (486,598)
Income (loss) before equity in net
income
of subsidiaries 68,173 (279,464) (1,064,777)
Equity in net income of subsidiaries 589,442 3,283,999 2,803,219
Income from continuing operations 657,615 3,004,535 1,738,442
(Loss) from discontinued operations (5,274,930) (68,749) (9,282)
Net income $(4,617,315)$ 2,935,786 $1,729,160
See accompanying notes to the consolidated financial statements.
SCHEDULE I
SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES
CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
Statements of Cash Flows
Years Ended December 31, 2001, 2000 and 1999
2001 2000 1999
Operating Activities
Net income (loss) $(4,617,315) $ 2,935,786 $ 1,729,160
Adjustments to reconcile net income to
net
cash provided by operating
activities:
Depreciation and amortization 153,103 183,717 228,979
Other adjustments 1,588,168 (3,068,063) (1,500,233)
Net changes in operating assets and
Liabilities 3,989,174 2,385,559 3,479,413
Net cash provided by operating
activities 1,113,130 2,436,999 3,937,319
Net cash provided (used) by
discontinued Operations 3,071,679 (158,226) (400,150)
Investing Activities
Dividend from unconconsolidated 14,476
affiliate
Purchase of property, plant and Equip. (40,040) (98,336) (70,377)
Additional investment in subsidiary
company (1,024,304) (1,067,140)
Net cash (used) by investing activities (40,040) (1,122,640) (1,123,041)
Financing Activities
Repayments of short term borrowings (3,055,863)
Proceeds from exercise of stock options 83,540
Proceeds from short-term borrowings 1,389,000 1,901,446
Payment of dividends (691,349) (922,052) (934,302)
Repayments of long-term debt (816,667) (1,126,933) (2,576,424)
Purchase of treasury stock (62,308) (820,833)
Net cash (used) by financing
activities (4,563,879) (722,293) (2,346,573)
Increase (decrease) in cash and cash
Equivalents (419,110) 433,840 67,555
Cash and cash equivalents, beginning of
Year 572,232 138,392 70,837
Cash and equivalents, end of year $ 153,122 $ 572,232 $ 138,392
See accompanying notes to the consolidated financial statements.
SCHEDULE I
SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES
Condensed Financial Information of Registrant
Notes to Condensed Financial Statements
December 31, 2001 and 2000
1. The condensed financial statements include the accounts of Selas
Corporation of America (the parent company). The Companys domestic
and European financing agreements contain certain restrictive
covenants regarding the payments of cash dividends, maintenance of
working capital, net worth and shareholders equity, along with the
maintenance of certain financial ratios. The amount of restricted net
assets of consolidated subsidiaries is $21,019,000 which exceeds 25%
of the consolidated net assets of the Company. See Note 9 to the
Consolidated Financial Statements in Item 13 of Part IV.
SCHEDULE II
SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES
Valuation and Qualifying Accounts
December 31, 2001, 2000 and 1999
Column A Column B Column C
Additions
Balance at Charged to
Beginning Costs and
Classification Of Period Expenses Other
Year ended December 31, 2001:
Reserve deducted in the balance
sheet
from the asset to which it applies:
Allowance for doubtful accounts $ 453,419 $ 251,108 $ (18,976)(a)
Deferred tax asset valuation
Allowance $ 1,085,716 $ 20,154
Reserve not shown elsewhere:
Reserve for estimated future
costs
of service and guarantees $ 506,102 $ 558,963 $ (16,207)(a)
Year ended December 31, 2000:
Reserve deducted in the balance
sheet
from the asset to which it
applies:
Allowance for doubtful accounts $ 422,375 $ 135,097 $ (20,144)(a)
Deferred tax asset valuation
Allowance $ 1,101,378 $ (15,662)
Reserve not shown elsewhere:
Reserve for estimated future costs
of service and guarantees $ 534,646 $ 109,977 $ (19,272)(a)
Year ended December 31, 1999:
Reserve deducted in the balance
sheet
from the asset to which they
apply:
Allowance for doubtful accounts $ 497,884 $ 800,812 $ (55,053)(a)
Deferred tax asset valuation
Allowance $ 1,277,902 $ (176,524)
Reserve not shown elsewhere:
Reserve for estimated future costs
of service and guarantees $ 1,866,732 $(1,111,093) $ (37,537)(a)
a) Represents difference between translation rates of foreign
currency at beginning and end of year and average rate during
year.
SCHEDULE II
SELAS CORPORATION OF AMERICA AND SUBSIDIARY COMPANIES
Valuation and Qualifying Accounts
December 31, 2001, 2000 and 1999
Column A Column D Column E
Balance at
End of
Period
Classification Deductions
Year ended December 31, 2001:
Reserve deducted in the balance sheet from
the asset to which it applies:
Allowance for doubtful accounts $ 229,974(b) $ 455,577
Deferred tax asset valuation allowance $ 1,105,870
Reserve not shown elsewhere:
Reserve for estimated future costs of
service and guarantees $ 169,906(c) $ 878,952
Year ended December 31, 2000:
Reserve deducted in the balance sheet from
the asset to which it applies:
Allowance for doubtful accounts $ 83,909(b) $ 453,419
Deferred tax asset valuation allowance $ 1,085,716
Reserve not shown elsewhere:
Reserve for estimated future costs of
service and guarantees $ 119,249(c) $ 506,102
Year ended December 31, 1999:
Reserve deducted in the balance sheet from
the asset to which it applies:
Allowance for doubtful accounts $ 821,268(b) $ 422,375
Deferred tax asset valuation allowance $ 1,101,378
Reserve not shown elsewhere:
Reserve for estimated future costs of
service and guarantees $ 183,456(c) $ 534,646
(b) Uncollectible accounts charged off.
(c) "After job" costs charged to reserve.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
By:
Francis A. Toczylowski
Vice President, Treasurer
and Secretary
Dated: April 15, 2002
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
(including a majority of members of the Board of Directors) on
behalf of the registrant and in the capacities and on the dates
indicated.
*By:
Mark S. Gorder Mark S. Gorder
Attorney-In-Fact President and Chief
Executive
April 15, 2002 Officer and Director
April 15, 2002
*
Frederick L. Bissinger Francis A. Toczylowski
Director Vice President, Treasurer and
April 15, 2002 Secretary
April 15, 2002
*
John H. Duerden
Director
April 15, 2002
*
Nicholas A. Giordano
Director
April 15, 2002
*
Robert Masucci
Director
April 15, 2002
*
Michael J. McKenna
Director
April 15, 2002
EXHIBIT INDEX
EXHIBITS:
4G. Waiver and Amendment Agreement dated November 20, 2001 among
the Company, certain of its subsidiaries, and First Union
National Bank.
4H. First Amendment to Waiver and Amendment Agreement dated
February 28, 2002 among the Company, certain of its
subsidiaries, and First Union National Bank.
4I. Second Amendment to Waiver and Amendment Agreement dated March
20, 2002 among the Company, certain of its subsidiaries, and
First Union National Bank.
10L.Amended and Restated Non-Employee Directors' Stock Option
Plan.
10N.Separation Agreement dated November 30, 2001 between the Company and
Robert W. Ross.
13. "Selas Corporation of America Five-Year Summary of
Operations" contained on Page 4 of the Company's
2001 annual report to shareholders; "Other
Financial Highlights" contained on page 5 of the
Company's 2001 annual report to shareholders;
"Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained on
pages 6-12 of the Company's 2001 annual report to
shareholders; and the Company's consolidated
financial statements, including the "Notes to
Consolidated Financial Statements" and the "Report
of Independent Auditors' contained on pages 13-44
of the Company's 2001 annual report to shareholders.
21. List of significant subsidiaries of the Company.
23. Consent of Independent Auditors.
24. Powers of Attorney.