<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period ______ to ______
Commission file number 1-4987
SL INDUSTRIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW JERSEY 21-0682685
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
520 FELLOWSHIP ROAD, SUITE A114, MT. LAUREL, NJ 08054
- ----------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 856-727-1500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ---------------------------- -----------------------------------------
Common stock, $.20 par value New York Stock Exchange
Philadelphia 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 ___
The number of shares of common stock outstanding as of November 28, 1999, was
5,609,957.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
October 31, July 31,
1999 1999
------------ ------------
(Unaudited) *
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................................... $ -- $ 71,000
Receivables, less allowances of
$1,963,000 and $1,985,000, respectively ............................ 24,652,000 23,663,000
Inventories (Note 2) ................................................ 28,270,000 26,151,000
Prepaid expenses .................................................... 1,554,000 1,069,000
Deferred income taxes ............................................... 4,559,000 3,033,000
------------ ------------
Total current assets ............................................ 59,035,000 53,987,000
------------ ------------
Property, plant and equipment, less accumulated depreciation
of $19,917,000 and $19,103,000, respectively ......................... 20,361,000 21,416,000
Long-term note receivable .............................................. 2,158,000 2,167,000
Deferred income taxes .................................................. 2,017,000 1,813,000
Cash surrender value of life insurance policies ........................ 9,890,000 9,592,000
Intangible assets, less accumulated amortization
of $3,919,000 and $3,554,000, respectively ........................... 22,454,000 22,350,000
Other assets ........................................................... 1,204,000 1,361,000
------------ ------------
Total assets ................................................... $117,119,000 $112,686,000
============ ============
LIABILITIES
Current liabilities:
Short-term bank debt ................................................ $ 809,000 $ --
Long-term debt due within one year .................................. 197,000 1,095,000
Accounts payable .................................................... 12,562,000 12,085,000
Accrued income taxes ................................................ 1,892,000 1,220,000
Accrued liabilities:
Payroll and related costs ......................................... 5,310,000 5,405,000
Other ............................................................. 10,275,000 9,370,000
------------ ------------
Total current liabilities ...................................... 31,045,000 29,175,000
------------ ------------
Long-term debt less portion due within one year ........................ 35,549,000 31,984,000
Deferred compensation and supplemental retirement benefits ............. 5,602,000 5,486,000
Other liabilities ...................................................... 3,304,000 3,199,000
------------ ------------
Total liabilities .............................................. $ 75,500,000 $ 69,844,000
------------ ------------
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, 8,257,000 and 8,240,000 shares, respectively ................. 1,652,000 1,648,000
Capital in excess of par value ......................................... 37,475,000 36,932,000
Retained earnings ...................................................... 18,241,000 19,374,000
Accumulated other comprehensive income ................................. 40,000 49,000
Treasury stock at cost, 2,652,000 and 2,608,000 shares, respectively ... (15,789,000) (15,161,000)
------------ ------------
Total shareholders' equity ..................................... 41,619,000 42,842,000
------------ ------------
Total liabilities and shareholders' equity ..................... $117,119,000 $112,686,000
============ ============
</TABLE>
* Condensed from audited financial statements
See accompanying notes to consolidated financial statements.
<PAGE> 3
SL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three-Months Ended
October 31,
1999 1998
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
Net sales ............................................ $42,156,000 $30,247,000
----------- -----------
Cost and expenses:
Cost of products sold .............................. 27,687,000 19,424,000
Write-down of inventory and losses on commitments .. 3,145,000 --
Engineering and product development ................ 2,925,000 1,917,000
Selling, general and administrative ................ 8,492,000 5,786,000
Depreciation and amortization ...................... 1,429,000 964,000
Restructuring costs ................................ 1,051,000 --
----------- -----------
Total cost and expenses .............................. 44,729,000 28,091,000
----------- -----------
Income (Loss) from operations ........................ (2,573,000) 2,156,000
Other income (expense):
Interest income .................................... 45,000 76,000
Interest expense ................................... (610,000) (241,000)
Gain from demutualization of inurance company ...... 1,812,000 --
----------- -----------
Income (Loss) before income taxes .................... (1,326,000) 1,991,000
Provision (Benefit) for federal and state income taxes (475,000) 778,000
----------- -----------
Net income (loss) .................................... $ (851,000) $ 1,213,000
=========== ===========
Basic net income (loss) per common share ............. $ (0.15) $ 0.22
=========== ===========
Diluted net income (loss) per common share ........... $ (0.15) $ 0.21
=========== ===========
Shares used in computing basic net income (loss)
per common share ................................... 5,632,000 5,627,000
Shares used in computing diluted net income (loss)
per common share ................................... 5,632,000 5,861,000
</TABLE>
See accompanying notes to consolidated financial statements.
SL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS
<TABLE>
<CAPTION>
Three-Months Ended
October 31,
1999 1998
--------- ----------
(Unaudited) (Unaudited)
<S> <C> <C>
Net income (loss) ..................................... $(851,000) $1,213,000
Other comprehensive income (loss):
Currency translation adjustment, net of related taxes (8,000) 198,000
--------- ----------
Comprehensive income (loss) ........................... $(859,000) $1,411,000
========= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
SL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three-Months Ended
October 31,
1999 1998
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) ......................................................... $ (851,000) $ 1,213,000
Adjustments to reconcile net income (loss) to net cash
(used in) provided by operating activities:
Depreciation ........................................................... 967,000 656,000
Amortization ........................................................... 462,000 308,000
Restructuring charges, inventory writedown and losses on commitments ... 4,196,000 --
Provisions for losses on accounts receivable ........................... 16,000 3,000
Additions to other assets .............................................. (538,000) (226,000)
Cash surrender value of life insurance premium ......................... (297,000) (160,000)
Deferred compensation and supplemental retirement payments ............. 245,000 391,000
Deferred compensation and supplemental retirement benefit cash payments (132,000) (186,000)
(Increase) Decrease in deferred income taxes ........................... (1,730,000) 460,000
Cash dividends declared, but not paid .................................. (282,000) (226,000)
Changes in operating assets and liabilities:
Accounts receivable .................................................. (1,061,000) 948,000
Inventories .......................................................... (4,597,000) (443,000)
Prepaid expenses ..................................................... (489,000) 68,000
Accounts payable ..................................................... 282,000 913,000
Other accrued liabilities ............................................ 101,000 (3,149,000)
Accrued income taxes ................................................. 843,000 (54,000)
----------- -----------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES ......................... $(2,865,000) $ 516,000
----------- -----------
INVESTING ACTIVITIES:
Investment in Kreiss Johnson .............................................. 60,000 --
Purchases of property, plant and equipment ................................ (724,000) (886,000)
Proceeds from notes receivable ............................................ 9,000 7,000
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES ....................................... $ (655,000) $ (879,000)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from long-term debt .............................................. 8,302,000 2,910,000
Payments on long-term debt ................................................ (4,710,000) (2,700,000)
Proceeds from stock options exercised ..................................... 303,000 48,000
Treasury stock (acquired) sold ............................................ (555,000) 287,000
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES ................................... $ 3,340,000 $ 545,000
----------- -----------
Effect of exchange rate changes on cash ..................................... $ 109,000 $ (131,000)
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS ..................................... $ (71,000) $ 51,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR .............................. 71,000 --
----------- -----------
CASH AND CASH EQUIVALENTS AT OCTOBER 31, .................................... $ -- $ 51,000
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest ................................................................ $ 557,000 $ 319,000
Income taxes ............................................................ $ 411,000 $ 218,000
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
SL INDUSTRIES, INC.
Notes to Consolidated Financial Statements
1. In the opinion of the Registrant, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) and reclassifications necessary to present fairly the
financial position as of October 31, 1999, and July 31, 1999, the results of
operations and comprehensive operations for the three-month periods ended
October 31, 1999 and 1998, and the cash flows for the three-month periods ended
October 31, 1999 and 1998.
2. Inventories at October 31, 1999, and July 31, 1999, were as follows:
<TABLE>
<CAPTION>
October 31, 1999 July 31, 1999
---------------- -------------
<S> <C> <C>
Raw materials $18,140,000 $16,395,000
Work in process 5,438,000 4,336,000
Finished goods 4,692,000 5,420,000
----------- -----------
$28,270,000 $26,151,000
=========== ===========
</TABLE>
3. The Registrant has presented earnings per share pursuant to the Financial
Accounting Standards Board Statement of Financial Accounting Standards ("SFAS")
No. 128, "Earnings per Share." Basic earnings per share is computed by dividing
reported earnings available to common shareholders by weighted average shares
outstanding for the period. Diluted earnings per share is computed by dividing
reported earnings available to common shareholders by weighted average shares
outstanding for the period, adjusted for the dilutive effect of common stock
equivalents, which consist of stock options, using the treasury stock method.
The table below sets forth the reconciliation of the numerators and denominators
of the basic and diluted net income (loss) per common share computations:
<TABLE>
<CAPTION>
Three-Months Ended
--------------------------------------------------------------------------------
October 31, 1999 October 31, 1998
----------------------------------- ---------------------------------
Per Per
Income Share Income Share
(Loss) Shares Amount (Loss) Shares Amount
--------- --------- ------ ---------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
Basic net income (loss) per
common share $(851,000) 5,632,000 $(.15) $1,213,000 5,627,000 $ .22
Effect of dilutive securities -- -- -- -- 234,000 (.01)
--------- --------- ----- ---------- --------- -----
Dilutive net income (loss)
per common share $(851,000) 5,632,000 $(.15) $1,213,000 5,861,000 $ .21
========= ========= ===== ========== ========= =====
</TABLE>
<PAGE> 6
For fiscal 2000 and 1999, 849,945 and 111,767 common stock options,
respectively, were excluded from the dilutive computation because their effect
would be anti-dilutive.
4. In October 1999, the Registrant recorded charges of $4,196,000 ($2,545,000,
net or $.45 per diluted share) to cover restructuring, inventory writedowns and
losses on commitments recognized by its SL Waber subsidiary. In addition,
approximately $300,000 of additional restructuring charges will be recognized
through the first half of calendar year 2000. The Registrant anticipates that
substantially all of the charges will be paid or incurred by the end of the
first half of calendar year 2000. Also in October 1999, the Registrant recorded
a nonrecurring gain of $1,812,000 ($1,111,000, net or $.20 per diluted share)
from the demutualization of a life insurance company. At October 31, 1999, the
$4,196,000 in charges was allocated as follows: $2,425,000 was recorded as an
adjustment to inventory, $852,000 was included in accrued liabilities, $780,000
was recorded as an adjustment to property, plant and equipment and $139,000 was
included in accounts payable. See Management's Discussion and Analysis for
additional information regarding the above charges.
5. These statements should be read in conjunction with the financial statements
and notes thereto included in the Company's Annual Report To Shareholders and
Form 10-K for the year ended July 31, 1999, along with any subsequent Form
10-Q's and Form 8-K's. The interim results of operations are not necessary
indicative of future financial results.
<PAGE> 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
The principal source of cash during the first three months of the Registrant's
transition period ending December 31, 1999, of $3,340,000, net, was provided by
financing activities, while operating and investing activities used cash of
$2,865,000, net, and $655,000, net, respectively. The net cash provided by
financing activities resulted primarily from net debt proceeds of $3,592,000.
The net cash used in operating activities resulted primarily from increased
inventories and accounts receivable. The net cash used in investing activities
resulted primarily from purchases of tooling and computer hardware.
The Registrant's borrowing capacity at October 31, 1999, remained above its use
of outside financing. As of October 31, 1999, the Registrant had $6,069,279
available for use under its $40,000,000 Revolving Credit Agreement since
$301,048 was allocated to outstanding trade letters of credit, $6,330,721
remained from the acquisition of all of the issued and outstanding shares of
Elektro-Metall Export GmbH ("EME"), $12,000,000 remained from the acquisition of
all the issued and outstanding common shares of RFL Electronics Inc. ("RFL"),
$7,200,000 was utilized for the acquisition of certain net operating assets of
Todd Products Corporation and Todd Power Corporation (together, "Todd Products")
and $8,098,952 was utilized for working capital requirements. The available
credit facility is subject to commitment fees, but not compensating balances.
The Agreement contains limitations on borrowings and their use, requires
maintenance of specified ratios, with all of which the Registrant is in
compliance, and has a maturity date of October 31, 2001. In addition, EME has
$5,124,000 in lines of credit with its banks. Under the terms of its lines of
credit, the subsidiary can borrow for any purpose at interest rates of 3.7% to
6.125%. No financial covenants are required. Also, as of October 31, 1999, the
Registrant had $9,890,455 available from the cash surrender value of its life
insurance policies.
During the three-month period ended October 31, 1999, the ratio of current
assets to current liabilities remained constant at 1.9 to 1.
Capital expenditures for the three-month period ended October 31, 1999, amounted
to $724,000 and were primarily for purchases of tooling and computer hardware.
The Registrant anticipates that future commitments for additional capital
expenditures will be funded primarily by cash generated by operations and, to
the extent necessary, the utilization of borrowings under its Revolving Credit
Agreement.
The Registrant is not aware of any demands, commitments or uncertainties in the
normal course which are likely to impair its ability to generate or borrow
adequate amounts of cash to meet its future needs, which include payment of
dividends, capital expenditures and expenditures for working capital
requirements.
<PAGE> 8
Results of Operations
Fiscal 2000 Compared to Fiscal 1999
Consolidated net sales for the three-month period ended October 31, 1999,
increased 39%, as compared to the net sales realized during the corresponding
period a year ago. The sales increase included the net sales realized by RFL and
the net sales realized from the Todd Products' product lines, which were
acquired in May 1999 and July 1999, respectively. If the net sales of the RFL
and Todd Products' product lines were excluded from the current three-month
period, net sales increased 1%, as compared to last year. Sale increases in the
power conditioning and distribution units and power supplies segments were
offset by sales decreases in the motion control systems and surge suppressors
segments. The sales increase in the power conditioning and distribution units
segment was a result of both strong demand and a weak semiconductor market, a
year ago. The sales increase in the power supplies segment was primarily due to
an increase in orders received from customers in the distribution channel. The
motion control systems segment's sales decreased due to a reduction in sales of
precision motor products and sales in the surge suppressors segment decreased
because of continued delays in the introduction of new surge protection products
and competitors' aggressive pricing initiatives.
The Registrant also incurred an operating loss of $2,573,000 for the three-month
period, as compared to operating income of $2,156,000 during the corresponding
period a year ago. The operating loss for the three-month period ended October
31, 1999, included restructuring costs of $1,051,000 and inventory writedowns
and losses on commitments of $3,145,000 that were recognized by the Registrant's
SL Waber subsidiary. In addition, approximately $300,000 of additional
restructuring charges will be recognized through the first half of calendar year
2000. These charges are a result of actions taken to restructure SL Waber's
operations and to recognize unprofitable commitments. As a result of a review of
its business and operations, a plan is in place to place greater emphasis on
markets and channels of distribution where SL Waber has a record of sustained
profitability. This plan also includes the scheduled consolidation of many of SL
Waber's operations at its manufacturing facility in Nogales, Mexico. We
anticipate that SL Waber will continue to realize adverse operating financial
results until at least January 31, 2000, which will continue to negatively
impact the Company's consolidated operating financial results. If the $4,196,000
in charges were excluded from the current three-month period, operating income
would have decreased 25%, as compared to last year. The increased operating
income in the power conditioning and distribution units segment was offset by
decreases in power supplies, motion control systems and surge suppressors
segments. The increased operating income in the power conditioning and
distribution units segment was primarily due to higher sales volume and lower
operating costs. The decreased operating income in the power supplies segment
was primarily due to the incremental costs associated with the integration of
the Todd Products' product lines. The decreased operating income in the motion
controls systems and surge suppressors segment was primarily due to lower sales
volume.
<PAGE> 9
Cost of sales for the three-month period increased 43%, as compared to last
year. If the results of RFL and Todd Products' product lines were excluded from
the current three-month period, cost of sales increased 5%, as compared to last
year. This increase was primarily related to volume and product mix. As a
percentage of net sales, cost of sales for the current three-month period was
66%, as compared to 64%, a year ago. If the results of RFL and Todd Products'
product lines were excluded, cost of sales, as a percentage of net sales, was
67% for both years.
Engineering and product development expenses for the three-month period
increased 53%, as compared to the same period last year. If the results of RFL
and Todd Products' product lines were excluded from the current three-month
period, engineering and product development expenses remained constant as
compared to last year. As a percentage of net sales, engineering and product
development expenses were 7%, as compared to 6%, a year ago. If the results of
RFL and Todd Products' product lines were excluded, engineering and product
development expenses, as a percentage of net sales, were 6% for both periods.
Selling, general and administrative expenses for the three-month period
increased 47%, as compared to last year. If the results of RFL and the costs
associated with the Todd Products' product lines were excluded from the current
three-month period, selling, general and administrative expenses increased
approximately 4%, as compared to last year. The increase was primarily related
to increased administrative expenses, offset, in part, by decreased delivery
expenses. As a percentage of net sales, selling, general and administrative
expenses for the three-month period were 20%, as compared to 19%, a year ago. If
the results of RFL and the costs associated with the Todd Products' product
lines were excluded from the current three-month period, selling, general and
administrative expenses, as a percentage of net sales, were 20%, as compared to
19%, a year ago.
Depreciation and amortization expense for the three-month period increased 48%,
as compared to last year. If the results of RFL and Todd Products' product lines
were excluded from the current three-month results, depreciation and
amortization expense increased 3%, as compared to last year. The increases were
primarily related to depreciation and amortization of computer hardware and
software, respectively.
Interest income for the three-month period decreased 41%, as compared to last
year. The reasons for the decrease was less cash available for investment and
the inclusion of a nonrecurring item in the prior year results. Interest expense
for the three-month period increased 153%, as compared to last year. The
increase resulted primarily from a higher debt balance as a result of the RFL
and Todd Products acquisitions.
The effective tax rate for the three-month period was a net benefit of 36%, as
compared to a provision of 39% a year ago. The current period effective tax rate
reflects a tax benefit associated with losses from a domestic operation, offset,
in part, by a tax provision which includes the higher effective tax rates
associated with the Registrant's profitable international operations.
<PAGE> 10
Reportable Segment Information
Financial Accounting Standards No. 131 "Disclosures about Segments of an
Enterprise and Related Information ("SFAS No. 131"), was adopted by the
Registrant effective July 31, 1999. Under the disclosure requirements of SFAS
131, the Registrant classifies its operations into the following six business
segments: Power Supplies, Power Conditioning and Distribution Units ("PCDUs"),
Motion Control Systems, Electric Utility Equipment Protection Systems, Surge
Suppressors and Other. Comparative first quarter results are as follows:
<TABLE>
<CAPTION>
Three-Months Ended
October 31,
1999 1998
------- -------
<S> <C> <C>
Net sales
Power Supplies ................... $15,164 $ 8,003
PCDUs ............................ 8,148 5,279
Motion Control Systems ........... 5,580 5,728
Electric Utility Equipment
Protection Systems ............. 5,499 --
Surge Suppressors ................ 6,621 9,963
Other ............................ 1,144 1,274
------- -------
Consolidated ..................... $42,156 $30,247
======= =======
Operating income (loss)
Power Supplies ................... $ 1,221 $ 1,418
PCDUs ............................ 1,144 148
Motion Control Systems ........... 544 615
Electric Utility Equipment
Protection Systems ............. 507 --
Surge Suppressors ................ (1,122) 553
Other ............................ (671) (578)
------- -------
Subtotal ......................... 1,623 2,156
Write-down of inventory and losses
on commitments ................. (3,145) --
Restructuring costs .............. (1,051) --
------- -------
Consolidated ..................... $(2,573) $ 2,156
======= =======
</TABLE>
<PAGE> 11
Year 2000
The Year 2000 issue is the result of computer programs using two digits rather
than four to define the applicable year. Computer programs that have
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in system failures or miscalculations
leading to disruptions in a company's operations.
The Registrant has taken actions to address and complete the work associated
with the Year 2000 issue. Each of its business units and corporate headquarters
established teams to identify and correct Year 2000 issues. Attention was given
to computer hardware and software, communications equipment, manufacturing
equipment and facilities and products sold, if any, to achieve compliance in all
these areas. The teams were also charged with investigating the Year 2000
capabilities of suppliers, customers and other external entities, and with the
development of contingency plans.
During the last three years, four of the Registrant's business units implemented
new enterprise software packages that their suppliers have stated are Year 2000
compliant. A detailed accounting and assessment of all computer systems and
application software utilized through out the Registrant's operations was
completed, and plans for establishing compliance were developed. These plans
identified which non-compliant hardware and software were to be remediated,
upgraded or replaced and the timetable and resource requirements to achieve
those objectives. All material remediation and testing activities have been
completed at each of the Registrant's business units and at corporate
headquarters. In addition, written contingency plans have been completed or are
in the process of being completed by each business unit.
The Registrant has requested information from all its key third party vendors on
their Year 2000 readiness to determine the extent to which their failure to
remedy their own Year 2000 problems will affect the Registrant. In most
circumstances, the information that the Registrant has received from its key
third party vendors to date indicates that they will be Year 2000 compliant by
the end of 1999.
At this time, the Registrant is not aware, of any Year 2000 non-compliance
issues, which would materially affect the Registrant, that will not be remedied
by the end of 1999. However, since the Registrant used numerous assumptions, the
Registrant does face some risks. These risks include an inability of gas and
electric suppliers and telecommunications carriers to supply their services.
There can be no assurance that the Registrant's assumptions will be achieved;
therefore, actual results could differ from those anticipated.
The Company does not expect Year 2000 spending to materially affect consolidated
profitability or liquidity. This expectation assumes that its costs incurred to
date cover all significant actions required, and that the Registrant will not be
obligated to incur significant Year 2000 related costs on behalf of its
customers or suppliers.
<PAGE> 12
Forward-Looking Information
From time to time, information provided by the Registrant, including written or
oral statements made by its representatives, may contain forward-looking
information as defined in the Private Securities Litigation Reform Act of 1995.
All statements, other than statements of historical facts, which address
activities, events or developments that the Registrant expects or anticipates
will or may occur in the future, including such things as expansion and growth
of the Registrant's business, future capital expenditures and the Registrant's
prospects and Year 2000 strategy, contain forward-looking information. In
reviewing such information, it should be kept in mind that actual results may
differ materially from those projected or suggested in such forward-looking
information. This forward-looking information is based on various factors and
was derived utilizing numerous assumptions. Many of these factors have been
previously been identified in filings or statements made by or on behalf of the
Registrant.
Important assumptions and other important factors that could cause actual
results to differ materially from those set forth in the forward-looking
information include changes in the general economy, changes in consumer
spending, competitive factors and other factors affecting the Company's business
in or beyond the Company's control. These factors include changes in the rate of
inflation, changes in state or federal legislation or regulation, adverse
determinations with respect to litigation or other claims (including
environmental matters), adverse effects of failure to achieve Year 2000
compliance, the Company's ability to recruit and develop employees, its ability
to successfully implement new technology and the stability of product costs.
These factors also include, in particular, whether, and the extent to which,
certain of the Registrant's markets which had experienced a slowdown recover or
continue to recover. The Registrant's financial results will also depend on the
extent to which management is able to successfully address the operating issues
in the Registrant's surge suppressors segment and in the uniterruptible power
supplies portion of its power supplies segment.
Other factors and assumptions not identified above could also cause actual
results to differ materially from those set forth in the forward-looking
information. The Registrant does not undertake to update forward-looking
information contained herein or elsewhere to reflect actual results, changes in
assumptions or changes in other factors affecting such forward-looking
information.
<PAGE> 13
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The regular annual meeting of shareholders of the Registrant was held on
November 19, 1999. The meeting was held to elect six directors to serve for one
year, to ratify the appointment of a certified public accounting firm to serve
as the Registrant's auditors through fiscal year 2000 and to vote on a
shareholder proposal.
The votes cast with respect to the election of the nominees for the Board of
Directors were as follows:
<TABLE>
<CAPTION>
Name For Withheld
---- --- --------
<S> <C> <C>
Baumgardner, J. Dwane 4,022,255 770,437
Caruso, Richard 3,991,233 801,459
Farren, Owen 4,025,172 767,520
Hornig, George R. 4,024,597 768,095
Rickard, Walter I. 4,027,627 765,065
Sanator, Robert J. 4,023,556 769,136
</TABLE>
All of the above nominees for the Board of Directors were elected.
The votes cast with respect to the ratification of the appointment of Arthur
Andersen LLP as the Registrant's auditors through fiscal year 2000 were as
follows:
For 4,747,762 Against 6,395 Abstain 38,535
The appointment of Arthur Andersen LLP as the Registrant's auditors was
ratified, since this proposal received the required affirmative vote of a
majority of the votes cast at the annual meeting.
The votes cast with respect to the shareholder proposal were as follows:
For 1,805,697 Against 1,940,615 Abstain 70,246
The shareholder proposal was not approved, since this proposal did not receive
the required affirmative vote of a majority of the votes cast at the annual
meeting.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The information called for by this section is listed in the Exhibit
Index of this report.
(b) Reports on Form 8-K
On September 24, 1999, the Registrant filed a report on Form 8-K
covering the change of the date of the end of its fiscal year from July 31 to
December 31, commencing January 1, 2000. For the transition period from August
1, 1999 to December 31, 1999, the Registrant's fiscal first quarter will end on
October 31, 1999, with a short year ending on December 31, 1999.
<PAGE> 14
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SL INDUSTRIES, INC.
-------------------------
Registrant
Dated: December 8, 1999
Owen Farren
-------------------------
Owen Farren
President,
Chief Executive Officer
and Chairman of the Board
Dated: December 8, 1999
James E. Morris
-------------------------
James E. Morris
Vice President,
Corporate Controller,
and Treasurer
<PAGE> 15
INDEX TO EXHIBITS
The exhibit number, description and sequential page number in the original copy
of this document where exhibits can be found follows:
Exhibit Description
------- -----------
27 Financial Data Schedule (Schedule is furnished for
the information of the Securities and Exchange
Commission and is not to be deemed "filed" as part of
Form 10-Q, or otherwise subject to the liabilities of
Section 18 of the Securities Exchange Act of 1934).
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)
CONSOLIDATED STATEMENTS OF OPERATIONS; CONSOLIDATED BALANCE SHEETS AND
CONSOLIDATED STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> AUG-01-1999
<PERIOD-END> OCT-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 24,652
<ALLOWANCES> 1,963
<INVENTORY> 28,270
<CURRENT-ASSETS> 59,035
<PP&E> 40,278
<DEPRECIATION> 19,917
<TOTAL-ASSETS> 117,119
<CURRENT-LIABILITIES> 31,045
<BONDS> 0
1,652
0
<COMMON> 0
<OTHER-SE> 41,619
<TOTAL-LIABILITY-AND-EQUITY> 117,119
<SALES> 42,156
<TOTAL-REVENUES> 42,156
<CGS> 27,687
<TOTAL-COSTS> 44,729
<OTHER-EXPENSES> (1,812)
<LOSS-PROVISION> 16
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,326)
<INCOME-TAX> (475)
<INCOME-CONTINUING> (851)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (851)
<EPS-BASIC> (.15)
<EPS-DILUTED> (.15)
</TABLE>
