<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT TO APPLICATION OR REPORT
Filed pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
SL INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items,
financial statements, exhibits or other portions of its Form 8-K as set forth
in the pages attached hereto.
This amendment supplements the Form 8-K dated May 8, 1995 by:
(1) Including the Financial Statements of businesses acquired required
by Article 2 and 3 ofRegulation S-X.
(2) Including the Pro Forma Financial Information required by Article
11 of Regulation S-X.
This amendment supplements the Form 8-K dated May 24, 1995 by:
(1) Including the Pro Forma Financial Information required by Article
11 of Regulation S-X.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
SL INDUSTRIES, INC.
BY:Owen Farren
-----------
Owen Farren
President and Chief Executive Officer
Date: July 24, 1995
================================================================================
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements and pro forma financial information
are filed as part of this report:
a) Financial statements of businesses acquired
Teal Electronics Corporation - Years ended December 31, 1994 and
1993 (Audited)
- Three-months ended March 31, 1995
and 1994 (Unaudited)
b) Pro forma financial information
Pro forma condensed consolidated balance sheet - April 30, 1995
(unaudited)
Pro forma condensed consolidated statements of operations - year
ended July 31, 1994 (unaudited)
Pro forma condensed consolidated statements of operations -
nine-months ended April 30, 1995 (unaudited)
Notes to pro forma condensed consolidated financial statements
<PAGE> 3
Financial Statements
Teal Electronics Corporation
Years ended December 31, 1994 and 1993
with Report of Independent Auditors
<PAGE> 4
Teal Electronics Corporation
Financial Statements
Years ended December 31, 1994 and 1993
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Statements of Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>
<PAGE> 5
[ERNST & YOUNG LLP LETTERHEAD]
Report of Independent Auditors
The Board of Directors
Teal Electronics Corporation
We have audited the accompanying balance sheets of Teal Electronics Corporation
as of December 31, 1994 and 1993, and the related statements of income,
shareholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Teal Electronics Corporation
at December 31, 1994 and 1993, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
January 20, 1995
1
<PAGE> 6
Teal Electronics Corporation
Balance Sheets
<TABLE>
<CAPTION>
DECEMBER 31
1994 1993
---------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 367,083 $ 411,530
Accounts receivable, net of allowance for doubtful accounts
of $39,000 in 1994 and $34,000 in 1993 1,076,996 563,374
Inventories 507,637 370,340
Prepaid and other current assets 71,457 51,087
---------------------------------
Total current assets 2,023,173 1,396,331
Furniture, fixtures and equipment at cost, net of accumulated
depreciation 447,417 335,027
Notes receivable from shareholders - 120,000
Other assets 40,863 19,925
---------------------------------
Total assets $2,511,453 $1,871,283
=================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 265,905 $ 173,474
Accrued payroll and related taxes 201,706 106,916
Accrued commissions payable 210,108 158,135
Other accrued liabilities 57,623 123,803
---------------------------------
Total current liabilities 735,342 562,328
Commitments
Shareholders' equity:
Common stock, $0.01 par value:
1,000,000 shares authorized; 135,000 shares issued and
outstanding 1,350 1,350
Additional paid-in capital 273,650 273,650
Notes receivable from shareholders (498,913) (458,913)
Retained earnings 2,000,024 1,492,868
---------------------------------
Total shareholders' equity 1,776,111 1,308,955
---------------------------------
Total liabilities and shareholders' equity $2,511,453 $1,871,283
=================================
</TABLE>
See accompanying notes.
2
<PAGE> 7
Teal Electronics Corporation
Statements of Income
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
1994 1993
---------------------------------
<S> <C> <C>
Net sales $8,055,929 $6,151,005
Cost of sales 4,290,642 3,262,914
---------------------------------
Gross profit 3,765,287 2,888,091
Expenses:
Selling and marketing 1,250,885 879,864
General and administrative 777,859 719,220
Engineering 478,056 408,069
Research and development 178,404 158,058
---------------------------------
2,685,204 2,165,211
---------------------------------
Income from operations 1,080,083 722,880
Other income (expense):
Interest, net 26,265 (4,907)
Other (8,159) (8,835)
---------------------------------
Income before provision for income taxes 1,098,189 709,138
Provision for income taxes 13,208 11,001
---------------------------------
Net income $1,084,981 $ 698,137
=================================
</TABLE>
See accompanying notes.
3
<PAGE> 8
Teal Electronics Corporation
Statements of Shareholders' Equity
<TABLE>
<CAPTION>
Notes
Common Stock Additional Receivable
--------------------------- Paid-in from Retained
Shares Amount Capital Shareholders Earnings Total
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992 90,000 $ 900 $ 44,500 $ $1,023,731 $1,069,131
Exercise of stock options
through issuance of notes
receivable 45,000 450 229,150 (229,600)
Dividends to shareholders (229,000) (229,000)
Distribution of cash to
shareholders in exchange for
notes receivable (229,313) (229,313)
Net income 698,137 698,137
----------------------------------------------------------------------------------------------
Balance at December 31, 1993 135,000 1,350 273,650 (458,913) 1,492,868 1,308,955
Dividends to shareholders (cash
- $457,825, notes
receivable - $120,000) (577,825) (577,825)
Distribution of cash in
exchange for note receivable (50,000) (50,000)
Payment received for notes
receivable from shareholders 10,000 10,000
Net income 1,084,981 1,084,981
----------------------------------------------------------------------------------------------
Balance at December 31, 1994 135,000 $1,350 $273,650 $(498,913) $2,000,024 $1,776,111
==============================================================================================
</TABLE>
See accompanying notes.
4
<PAGE> 9
Teal Electronics Corporation
Statements of Cash Flows
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
1994 1993
--------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $1,084,981 $698,137
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 175,664 135,548
Loss on sale of equipment 8,158 8,835
Changes in operating assets and liabilities:
Accounts receivable (513,622) 173,429
Inventories (137,297) (58,073)
Prepaid and other assets (20,370) (2,915)
Accounts payable 92,431 30,158
Accrued payroll and related taxes 94,790 471
Accrued commissions payable 51,973 92,034
Other accrued liabilities (66,180) (4,016)
--------------------------------
Net cash provided by operating activities 770,528 1,073,608
INVESTING ACTIVITIES
Purchase of furniture, fixtures and equipment (293,390) (99,518)
Notes receivable from shareholders (40,000) (349,313)
Other assets (23,760) (5,258)
--------------------------------
Net cash used in investing activities (357,150) (454,089)
FINANCING ACTIVITIES
Dividends to shareholders (457,825) (229,000)
Advances under line of credit agreement 75,000 515,000
Payments under line of credit agreement (75,000) (515,000)
--------------------------------
Net cash used by financing activities (457,825) (229,000)
Net increase (decrease) in cash (44,447) 390,519
Cash at beginning of year 411,530 21,011
--------------------------------
Cash at end of year $367,083 $411,530
================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 3,146 $ 5,593
================================
Income taxes $ 7,500 $22,442
================================
</TABLE>
See accompanying notes.
5
<PAGE> 10
Teal Electronics Corporation
Notes to Financial Statements
December 31, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Teal Electronics Corporation (the "Company") was incorporated in California in
1985. The Company designs, manufactures and markets electrical power
interfaces which protect computerized systems from noise and spikes. The
Company primarily sells to medical, automatic test, telecommunications and
factory automation equipment manufacturers.
REVENUE RECOGNITION
The Company recognizes revenue on product sales at the time of shipment.
INVENTORIES
Inventories are stated at the lower of weighted average cost or market.
DEPRECIATION AND AMORTIZATION
Depreciation of furniture, fixtures and equipment is provided on the
straight-line method over estimated useful lives of 3 to 5 years.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the current
year presentation.
2. BALANCE SHEET INFORMATION
The composition of certain balance sheet accounts is as follows:
<TABLE>
<CAPTION>
1994 1993
-----------------------------
<S> <C> <C>
Inventories:
Raw materials $400,100 $222,603
Work-in-process 74,936 92,310
Finished goods 32,601 55,427
-----------------------------
$507,637 $370,340
=============================
Furniture, fixtures and equipment:
Machinery and equipment $418,293 $261,673
Furniture and fixtures 335,103 275,195
Leasehold improvements 138,178 101,507
-----------------------------
891,574 638,375
Less accumulated depreciation and amortization (444,157) (303,348)
-----------------------------
$447,417 $335,027
=============================
</TABLE>
6
<PAGE> 11
Teal Electronics Corporation
Notes to Financial Statements (continued)
3. EMPLOYEE BENEFIT PLAN
In August 1992, the Company established an employee benefit plan under the
provisions of Internal Revenue Code Section 401(k). All employees who have a
minimum of one year, (1,000 hours) of service and have reached the age of 18
years old are eligible to participate. Employees may contribute up to 15% of
their compensation subject to a limitation. Employee contributions are always
100% vested. The Company, at its discretion may make a matching contribution
up to 50% of employees contribution limited to a maximum of four percent of an
employee's base compensation. The Company's contribution vests 20% per year.
The Company contributed $26,800 and $18,200 to the Plan for the years ended
December 31, 1994 and 1993, respectively.
4. INCOME TAXES
The Company elected S Corporation status for federal income tax purposes in
1985 and for California franchise tax purposes in 1990. Taxable income and tax
benefits are passed through to the shareholders for federal and California
purposes, except for a 1.5% California franchise tax applicable to S
Corporations.
5. LINE OF CREDIT
At December 31, 1994, the Company has $700,000 available under a revolving line
of credit agreement with its principal bank. The line of credit expires June
30, 1995 and has an interest rate of 0.875% above the prime rate (9.375% at
December 31, 1994). The line of credit is collateralized by substantially all
of the Company's inventory, accounts receivable, contract rights and
intangibles. There are no compensating balance requirements. At December 31,
1994, there was no outstanding balance under the line.
6. COMMITMENTS AND RELATED PARTY TRANSACTIONS
The Company currently leases its office, manufacturing and marketing facilities
under a noncancellable operating lease agreement expiring in 2000. The
agreement contains two three-year renewal options and provides for rental
adjustments based on specific increases. Rent expense under operating leases
for the years ended December 31, 1994 and 1993 was $204,324 and $197,513,
respectively.
7
<PAGE> 12
Teal Electronics Corporation
Notes to Financial Statements (continued)
6. COMMITMENTS AND RELATED PARTY TRANSACTIONS (CONTINUED)
Minimum future rental payments under operating leases as of December 31, 1994
are as follows:
<TABLE>
<S> <C>
1995 $211,262
1996 211,791
1997 219,282
1998 93,914
-------------
$736,249
=============
</TABLE>
On September 30, 1993, the Company terminated a royalty agreement with an
officer who is also a stockholder of the Company. Royalty expense for the year
ended December 31, 1993 was $34,830.
During 1993 the Company received notes receivable from shareholders of the
Company totaling $120,000 in exchange for cash. During 1994, the notes
receivable were paid off through the application of funds to be received by the
shareholders through the Company's dividend.
7. COMMON STOCK
During 1993, four Company employees exercised stock options to purchase a total
of 45,000 shares of the Company's common stock which were issued in exchange
for notes receivable totaling $229,600. Additionally, the Company received
notes receivable from these shareholders in exchange for cash which totaled
$184,313. The notes bear interest at 5.1% and payments of interest only are
due annually beginning September 30, 1997 through September 30, 2002. All
principal and interest is due upon the earlier of (1) September 30, 2002, (2)
the sale of substantially all assets of the Company and a dividend is paid to
the makers of the notes, or (3) a majority of the capital stock of the Company,
including the shares purchased, are sold. The notes are collateralized through
a security interest in the underlying shares of common stock. The Company also
received notes receivable from another shareholder of $45,000 in exchange for
cash. These notes bear interest at 4%, are due in 2003 and are secured by
shares of the Company's stock. The notes have been classified as a reduction
to shareholders' equity in the accompanying balance sheet.
8
<PAGE> 13
Teal Electronics Corporation
Notes to Financial Statements (continued)
7. COMMON STOCK (CONTINUED)
During 1994 the Company received a note receivable from a shareholder for
$50,000 in exchange for cash. This note bears interest at 4%, is due in 2004
and is secured by shares of the Company's stock. This note also has been
classified as a reduction of shareholders' equity.
9
<PAGE> 14
Teal Electronics Corporation
Balance Sheet (unaudited)
($000's)
<TABLE>
<CAPTION>
March 31, 1995
--------------
<S> <C>
ASSETS:
Current assets
Cash $511
Accounts receivable, net of allowance for doubtful
accounts of $39,000 1,118
Inventories
Finished goods 42
Work in process 174
Raw materials 427
Prepaid and other current assets 43
--------------
Total current assets 2,315
--------------
Furniture, fixtures and equipment at cost, net of
accumulated depreciation 447
Interest receivable from shareholders 32
Other assets 17
--------------
Total assets $2,811
==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable 325
Accrued payroll and related taxes 203
Accrued commissions payable 108
Other accrued liabilities 47
--------------
Total current liabilities 683
--------------
Commitments
Shareholders' equity:
Common stock, $0.01 par value:
1,000,000 shares authorized; 135,000 shares issued
and outstanding 1
Additional paid-in capital 274
Notes receivable from shareholders (499)
Retained earnings 2,352
--------------
Total shareholders' equity 2,128
--------------
Total liabilities and shareholders' equity $2,811
==============
</TABLE>
See accompanying note to financial statements.
<PAGE> 15
Teal Electonics Corporation
Statements of Income (unaudited)
($000's)
<TABLE>
<CAPTION>
Three-months ended March 31,
1995 1994
---------------------------
<S> <C> <C>
Net sales $2,276 $1,537
Cost of sales 1,244 863
---------------------------
Gross profit 1,032 674
Expenses:
Selling and marketing 310 226
General and administrative 201 156
Engineering 171 159
---------------------------
682 541
---------------------------
Income from operations 350 133
Interest, net 7 2
---------------------------
Income before provision for income taxes 357 135
Provision for income taxes 5 1
---------------------------
Net income $352 $134
===========================
</TABLE>
See accompanying note to financial statements.
<PAGE> 16
Teal Electronics Corporation
Statements of Cash Flows (unaudited)
($000's)
<TABLE>
<CAPTION>
Three-months ended March 31,
1995 1994
----------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $352 $134
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 54 36
Changes in operating assets and liabilites:
Accounts receivable (41) (344)
Inventories (135) (45)
Prepaid and other assets 29 (45)
Accounts payable 59 0
Accrued payroll and related taxes 1 41
Accrued commissions payable (102) (76)
Other accrued liabilities (11) (25)
----------------------------
Net cash provided (used) by operating activites 206 (324)
INVESTING ACTIVITIES
Purchase of furniture, fixtures and equipment (53) (12)
Interest receivable from shareholders (6) (5)
Other assets (3) 37
----------------------------
Net cash provided (used) in investing activities (62) 20
FINANCING ACTIVITIES
Advances under line of credit agreement 0 75
----------------------------
Net cash provided by financing activities 0 75
Net increase (decrease) in cash 144 (229)
Cash at beginning of period 367 411
Cash at end of period ----------------------------
$511 $182
===========================
</TABLE>
See accompanying note to financial statements.
<PAGE> 17
TEAL ELECTRONICS CORPORATION
Note to Financial Statements
1. The accompanying unaudited financial statements contain all adjustments
(consisting of only normal recurring accruals) and reclassifications necessary
to present fairly the financial position as of March 31, 1995, the results of
operations for the three-month periods ended March 31, 1995 and 1994, and the
cash flows for the three-month periods ended March 31, 1995 and 1994.
<PAGE> 18
PRO FORMA FINANCIAL INFORMATION
On May 8, 1995, SL Industries, Inc. (the "Registrant") acquired substantially
all of the assets and assumed certain liabilities of Teal Electronics
Corporation ("Teal") pursuant to the terms of an Asset Purchase Agreement (the
"Agreement") dated May 1, 1995. Under the terms of the Agreement the
Registrant paid Teal approximately $6.1 million in cash and a contingent amount
equal to 50% of the annual net profits of the acquired business in excess of
$1.1 million for each of the five twelve month periods beginning May 1, 1995.
On May 24, 1995, the Registrant disposed of all of its shares of its
wholly-owned subsidiary, SL LUBE/systems, Inc. ("LUBE") pursuant to an
Agreement to Exchange Shares with Vesper Corporation dated May 24, 1995. Under
the terms of the Agreement to Exchange Shares, the Registrant received 400,000
shares of its common stock owned by Vesper Corporation.
The following pro forma condensed consolidated financial statements are
unaudited and have been prepared to give effect to (i) the acquisition of Teal,
(ii) the issuance of senior debt used to finance the acquisition and (iii) the
disposition of LUBE, as if these transactions had occurred on April 30, 1995,
in the case of the pro forma condensed consolidated balance sheet, or on August
1, 1993, in the case of the pro forma condensed consolidated statements of
operations. The Teal acquisition has been accounted for using the purchase
method of accounting.
The pro forma condensed consolidated statements of operations do not purport to
represent what the Registrant's results of operations for the periods indicated
would actually have been had the transactions in fact occurred on the
aforementioned date, or to project the Registrant's results of operations for
any future period. The pro forma adjustments are based upon available
information and upon certain assumptions that management believes are
reasonable under the circumstances.
The pro forma financial information should be read in conjunction with the
historical financial statements of both the Registrant and Teal, including the
notes thereto and the Registrant's Forms 8-K dated May 8, 1995 and May 24,
1995. Historical financial statements of Teal are included under this Form
8-K/A. Historical financial statements of the Registrant are included in the
Registrant's Annual Report to Shareholders and Form 10-K for the year ended
July 31, 1994 and in its April 30, 1995, Form 10-Q.
<PAGE> 19
SL INDUSTRIES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
APRIL 30, 1995
<TABLE>
<CAPTION>
Teal SL LUBE Pro Forma Pro Forma
As Reported Electronics /systems Adjustments Consolidated
------------ ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . $ --- $ 282,000 $ --- $ (282,000) A $ ---
Receivables, net of allowances. . . . . . . . . 12,540,000 1,189,000 (206,000) 5,000 A 13,528,000
Inventories . . . . . . . . . . . . . . . . . . 17,741,000 685,000 (159,000) 62,000 B 18,329,000
Prepaid expenses . . . . . . . . . . . . . . . 1,941,000 39,000 (4,000) --- 1,976,000
Deferred income taxes and other assets. . . . . 1,327,000 --- --- 55,000 B 1,382,000
----------- ---------- ----------- ----------- -----------
Total current assets . . . . . . . . . . . 33,549,000 2,195,000 (369,000) (160,000) 35,215,000
----------- ----------- ----------- ----------- -----------
Property, plant and equipment, net. . . . . . . . 9,441,000 443,000 (108,000) 40,000 A/B 9,816,000
Deferred income taxes . . . . . . . . . . . . . . 982,000 --- --- --- 982,000
Cash surrender value of life insurance policies . 6,522,000 --- --- --- 6,522,000
Other assets and deferred charges . . . . . . . . 3,544,000 17,000 --- 4,385,000 A/B 7,946,000
----------- ---------- ----------- ----------- -----------
Total assets . . . . . . . . . . . . . . . $54,038,000 $2,655,000 $ (477,000) $ 4,265,000 $60,481,000
=========== ========== =========== =========== ===========
LIABILITIES
Current liabilities:
Long-term debt due within one year . . . . . . $ 187,000 $ --- $ --- $ --- $ 187,000
Accounts payable . . . . . . . . . . . . . . . 6,468,000 261,000 (54,000) --- 6,675,000
Other accrued liabilities . . . . . . . . . . . 7,213,000 341,000 (90,000) 812,000 A/E 8,276,000
----------- ---------- ----------- ----------- -----------
Total current liabilities . . . . . . . . 13,868,000 602,000 (144,000) 812,000 15,138,000
----------- ---------- ----------- ----------- -----------
Long-term debt less portion due within one year . 9,973,000 --- --- 6,346,000 C 16,319,000
Deferred compensation and other liabilities . . . 5,005,000 --- 25,000 --- 5,030,000
----------- ---------- ----------- ----------- -----------
Total liabilities . . . . . . . . . . . . $28,846,000 $ 602,000 $ (119,000) $ 7,158,000 $36,487,000
----------- ---------- ----------- ----------- -----------
Commitments and contingencies
SHAREHOLDERS' EQUITY
Preferred stock, no par value; authorized,
6,000,000 shares; none issued . . . . . . . . . $ --- $ --- $ --- $ --- $ ---
Common stock, $.20 par value; authorized,
25,000,000 shares; issued, 7,758,000 shares . . 1,552,000 1,000 --- (1,000) A 1,552,000
Capital in excess of par value . . . . . . . . . 33,684,000 274,000 --- (274,000) A 33,684,000
Notes receivable from shareholders. . . . . . . . --- (499,000) --- 499,000 A ---
Retained earnings (accumulated deficit) . . . . . (2,692,000) 2,277,000 (358,000) (1,067,000) A/F (1,840,000)
Treasury stock at cost, 1,741,000, 0, 0, 400,000
and 2,141,000 shares respectively . . . . . . . (7,352,000) --- --- (2,050,000) D (9,402,000)
----------- ---------- ----------- ----------- -----------
Total shareholders' equity . . . . . . . . 25,192,000 2,053,000 (358,000) (2,893,000) 23,994,000
----------- ---------- ----------- ----------- -----------
Total liabilities & shareholders' equity . $54,038,000 $2,655,000 $ (477,000) $ 4,265,000 $60,481,000
=========== ========== =========== =========== ===========
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
<PAGE> 20
SL INDUSTRIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
YEAR ENDED JULY 31, 1994
<TABLE>
<CAPTION>
Teal SL LUBE Pro Forma Pro Forma
As Reported Electronics /systems Adjustments Consolidated
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . $76,593,000 $6,739,000 $(1,528,000) $ --- $81,804,000
----------- ---------- ----------- --------- -----------
Cost and expenses:
Cost of products sold . . . . . . . . . . . . . . . . . 51,385,000 3,569,000 (517,000) 62,000 H 54,499,000
Selling, general and administrative expenses . . . . . 19,622,000 2,161,000 (573,000) --- 21,210,000
Depreciation and amortization . . . . . . . . . . . . . 1,868,000 150,000 (31,000) 307,000 G 2,294,000
----------- ---------- ----------- --------- -----------
Total cost and expenses . . . . . . . . . . . . . . . . . 72,875,000 5,880,000 (1,121,000) 369,000 78,003,000
----------- ---------- ----------- --------- -----------
Income from operations . . . . . . . . . . . . . . . . . 3,718,000 859,000 (407,000) (369,000) 3,801,000
Nonoperating income (expense):
Interest income . . . . . . . . . . . . . . . . . . . . 50,000 18,000 --- (21,000) I 47,000
Interest expense . . . . . . . . . . . . . . . . . . . (606,000) (16,000) --- (437,000) J (1,059,000)
----------- ---------- ----------- --------- -----------
Income from continuing operations before income taxes . . 3,162,000 861,000 (407,000) (827,000) 2,789,000
Provision for federal and state income taxes . . . . . . 1,211,000 8,000 (164,000) 12,000 K 1,067,000
----------- ---------- ----------- --------- -----------
Income from continuing operations (Note M). . . . . . . . $ 1,951,000 $ 853,000 $ (243,000) $(839,000) $ 1,722,000
=========== ========== =========== ========= ===========
Income per common share from continuing operations(Note M) $ 0.32 $ 0.30
=========== ===========
Weighted average number of shares outstanding (Note L). . 6,152,000 5,752,000
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
<PAGE> 21
SL INDUSTRIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
NINE-MONTHS ENDED APRIL 30, 1995
<TABLE>
<CAPTION>
Teal SL LUBE Pro Forma Pro Forma
As Reported Electronics /systems Adjustments Consolidated
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . $64,143,000 $7,181,000 $(1,318,000) $ --- $70,006,000
----------- ---------- ----------- --------- -----------
Cost and expenses:
Cost of products sold . . . . . . . . . . . . . . . . 41,683,000 3,778,000 (416,000) --- 45,045,000
Selling, general and administrative expenses . . . . 17,676,000 2,178,000 (562,000) --- 19,292,000
Depreciation and amortization . . . . . . . . . . . . 1,450,000 155,000 (26,000) 240,000 G 1,819,000
----------- ---------- ----------- --------- -----------
Total cost and expenses . . . . . . . . . . . . . . . . 60,809,000 6,111,000 (1,004,000) 240,000 66,156,000
----------- ---------- ----------- --------- -----------
Income from operations . . . . . . . . . . . . . . . . 3,334,000 1,070,000 (314,000) (240,000) 3,850,000
Nonoperating income (expense):
Interest income . . . . . . . . . . . . . . . . . . . 47,000 21,000 --- (28,000) I 40,000
Interest expense . . . . . . . . . . . . . . . . . . (558,000) 10,000 --- (315,000) J (863,000)
----------- ---------- ----------- --------- -----------
Income from continuing operations before income taxes . 2,823,000 1,101,000 (314,000) (583,000) 3,027,000
Provision for federal and state income taxes . . . . . 1,048,000 13,000 (126,000) 196,000 K 1,131,000
----------- ---------- ----------- --------- -----------
Net income . . . . . . . . . . . . . . . . . . . . . . $ 1,775,000 $1,088,000 $ (188,000) $(779,000) $ 1,896,000
=========== ========== =========== ========= ===========
Net income per common share from continuing operations. $ 0.30 $ 0.34
=========== ===========
Weighted average number of shares outstanding (Note L). 6,013,000 5,613,000
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
<PAGE> 22
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
A. Reflects adjustments from Teals April 30, 1995, historical balance
sheet to the balance sheet acquired.
B. Reflects additions of intangible assets and the write up of property
and equipment and inventories resulting from the allocation of the
Teal purchase price.
C. Reflects an increase in long-term debt to finance the Teal
acquisition.
D. Reflects increase in treasury stock from LUBE disposition.
E. To properly state accrued expenses.
F. Reflects the estimated gain on the disposition of LUBE.
G. Reflects amortization of the intangible assets resulting from the
Teal acquisition.
H. Reflects increased cost of sales resulting from the inventory
write-up.
I. Reflects a reduction for nonrecurring interest income.
J. Reflects an increase in interest expense at an annual rate of 6.9% in
connection with an increase in long-term debt, as a result of the
acquisition.
K. Reflects tax benefit of pro forma adjustments, offset by tax expense
needed to present the operations of Teal as if Teal was a C-corp
during the periods presented.
L. The weighted average number of shares outstanding were reduced to
reflect the 400,000 shares received in connection with the disposition
of LUBE.
M. Income from continuing operations and income per common share exclude
the LUBE disposition gain of $577,000.
