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SECURITIES AND EXCHANGE COMMISSION
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
New Jersey | 21-0682685 | |
(State of other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
520 Fellowship Road, Suite A114, Mt. Laurel, NJ | 08054 | |
(Address of principal executive offices) | (Zip Code) |
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock, $.20 par value | NYSE Amex |
Large accelerated filero | Accelerated filero | Non-accelerated filero | Smaller reporting companyþ | |||
(Do not check if a smaller reporting company) |
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F-1 | ||||||||
Exhibit 10.17 | ||||||||
Exhibit 21 | ||||||||
Exhibit 23 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32 |
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ITEM 1. | BUSINESS |
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ITEM 1A. | RISK FACTORS |
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
ITEM 2. | PROPERTIES |
Approx. | ||||||||
Square | Owned or Leased And | |||||||
Location | General Character | Footage | Expiration Date | |||||
Ventura, CA | Administration, design and sales of power supply products (SLPE) | 31,200 | Leased — 1/31/2016 | |||||
Canton, MA | Design of power supply products (SLPE) | 4,800 | Leased — 8/31/2013 | |||||
Mexicali, Mexico | Manufacture and distribution of power supply products (SLPE)(1) | 62,500 | Leased — Monthly | |||||
Mexicali, Mexico | Manufacture and distribution of power supply products (SLPE) | 82,400 | Leased — 12/15/2020 | |||||
South Molton, United Kingdom | Sales and distribution of power supply products (SLPE) | 2,500 | Leased — 3/31/2012 | |||||
Beijing, China | Design of power supply products (SLPE) | 1,100 | Leased —12/31/2011 | |||||
Shanghai, China | Design of power supply products (SLPE) | 8,800 | Leased — 7/31/2013 | |||||
Shanghai, China | Design of power supply products (SLPE) | 600 | Leased — 6/30/2011 | |||||
Shanghai, China | Employee dormitory (SLPE) | 1,400 | Leased — 7/31/2013 |
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Approx. | ||||||||
Square | Owned or Leased And | |||||||
Location | General Character | Footage | Expiration Date | |||||
Xianghe, China | Manufacture and distribution of power supply products and employee dormitory (SLPE) | 60,600 | Owned | |||||
Xianghe, China | Employee dormitory (SLPE) | 3,900 | Leased — 12/31/2011 | |||||
San Diego, CA | Administration, sales, design and manufacture of power distribution and conditioning units (High Power Group) | 35,500 | Leased — 12/31/2012 | |||||
Tecate, Mexico | Manufacture of power distribution and conditioning units (High Power Group) | 20,800 | Leased — 4/1/2011 | |||||
Menomonee Falls, WI | Design, sales, manufacture and distribution of power quality electromagnetic products (High Power Group) | 25,000 | Leased — 7/31/2015 | |||||
Montevideo, MN | Administration, design, sales and manufacture of precision motors and motion control systems (SL-MTI) | 30,000 | Owned | |||||
Matamoros, Mexico | Manufacture of precision motors (SL-MTI) | 28,300 | Leased — 12/31/2011 | |||||
Boonton Twp., NJ | Administration, design, sales and manufacture of electric utility equipment protection systems (RFL) | 78,000 | Owned | |||||
Pennsauken, NJ | Document warehouse (Other)(2) | 6,000 | Owned | |||||
Mt. Laurel, NJ | Corporate office (Other) | 4,200 | Leased — 11/30/2012 |
(1) | The Company expects to relocate its manufacturing facility in Mexicali, Mexico to a more modern facility in the same general area during the second quarter of 2011. | |
(2) | Formerly used for industrial surface finishing operations. |
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ITEM 3. | LEGAL PROCEEDINGS |
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ITEM 4. | (REMOVED AND RESERVED) |
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Year | Year | |||||||||||||||
Ended December 31, | Ended December 31, | |||||||||||||||
2010 | 2009 | |||||||||||||||
HIGH | LOW | HIGH | LOW | |||||||||||||
Stock Prices | ||||||||||||||||
1st Quarter | $ | 9.29 | $ | 6.90 | $ | 8.50 | $ | 2.06 | ||||||||
2nd Quarter | $ | 13.44 | $ | 9.32 | $ | 8.53 | $ | 4.16 | ||||||||
3rd Quarter | $ | 14.24 | $ | 11.82 | $ | 8.30 | $ | 5.51 | ||||||||
4th Quarter | $ | 17.99 | $ | 14.00 | $ | 8.49 | $ | 6.25 |
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Total Number | Maximum Number | |||||||||||||||
of Shares | of Shares That May | |||||||||||||||
Total | Purchased as Part | Yet Be Purchased | ||||||||||||||
Number of | Average | of Publicly | under Publicly | |||||||||||||
Shares | Price Paid | Announced Plans | Announced Plans or | |||||||||||||
Period | Purchased(1) | per Share | or Programs | Programs | ||||||||||||
January 2010 | 13,351 | $ | 8.36 | — | 500,000 | |||||||||||
February 2010 | 5,131 | 8.08 | — | 500,000 | ||||||||||||
March 2010 | 101,694 | 8.09 | — | 500,000 | ||||||||||||
April 2010 | 14,300 | 10.51 | — | 500,000 | ||||||||||||
May 2010 | 73,000 | 11.38 | — | 500,000 | ||||||||||||
June 2010 | 2,900 | 12.47 | — | 500,000 | ||||||||||||
July 2010 | 5,400 | 12.69 | — | 500,000 | ||||||||||||
August 2010 | 1,900 | 12.73 | — | 500,000 | ||||||||||||
September 2010 | 2,800 | 14.00 | — | 2,038,461 | (2) | |||||||||||
October 2010 | 1,337,424 | (3) | 14.50 | 1,334,824 | 500,000 | |||||||||||
November 2010 | 4,400 | (4) | 15.77 | — | 470,000 | (5) | ||||||||||
December 2010 | 250,564 | (4) | 17.46 | — | 470,000 | |||||||||||
Total | 1,812,864 | $ | 14.32 | 1,334,824 | ||||||||||||
(1) | The Company purchased these shares other than through a publicly announced plan or program, except where noted. | |
(2) | On September 14, 2010, the Company announced a Tender Offer to purchase up to 1,538,461 shares of its common stock, of which 1,334,824 shares of common stock were purchased at an average price of $14.50 per share. | |
(3) | Of the 1,337,424 shares purchased, 1,334,824 shares were purchased by the Company through a publicly announced plan or program. Under the terms of the Tender Offer, the Company accepted for purchase 1,334,824 shares of its common stock at a purchase price of $14.50 per share. The aggregate purchase price that has been paid by the Company in connection with the Tender Offer is $19,354,948, excluding transaction costs. | |
(4) | The Company purchased these shares other than through a publicly announced plan or program. During the fourth quarter of 2010, in response to the diversification requirements in the Pension Protection Act of 2006 for defined contribution plans holding publicly traded employer securities, the Company purchased all Company shares held by its defined contribution plan. As a result, the Company purchased 252,064 shares of Company common stock at an average cost of $17.45 per share, at a total cost of $4,398,664. Of the 252,064 shares purchased, 1,500 shares were purchased during November 2010 and 250,564 shares were purchased during December 2010. | |
(5) | On November 16, 2010, the Board of Directors approved a plan to repurchase up to an aggregate of 470,000 shares of the Company’s outstanding common stock. Previously, the Board of Directors had authorized the repurchase of up to 500,000 shares of the Company’s common stock. |
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Number of securities | ||||||||||||
remaining available for | ||||||||||||
Number of securities | future issuance under equity | |||||||||||
to be issued upon | Weighted average | compensation plans | ||||||||||
exercise of | exercise price of | excluding shares reflected in | ||||||||||
outstanding options | outstanding options | column (a) | ||||||||||
(a) | (b) | (c) | ||||||||||
Equity compensation plans approved by security holders | 252,591 | $ | 11.339 | 135,000 | ||||||||
Equity compensation plans not approved by security holders | none | |||||||||||
Total | 252,591 | $ | 11.339 | 135,000 | ||||||||
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ITEM 6. | SELECTED FINANCIAL DATA |
Years Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006(1) | ||||||||||||||||
(amounts in thousands except per share data) | ||||||||||||||||||||
Net sales | $ | 189,768 | $ | 147,551 | $ | 185,954 | $ | 200,863 | $ | 176,773 | ||||||||||
Income from continuing operations | $ | 9,782 | $ | 3,564 | $ | 4,636 | $ | 10,274 | $ | 6,860 | ||||||||||
(Loss) from discontinued operations(2) | $ | (7,226 | ) | $ | (628 | ) | $ | (2,302 | ) | $ | (1,863 | ) | $ | (3,307 | ) | |||||
Net income(3) | $ | 2,556 | $ | 2,936 | $ | 2,334 | $ | 8,411 | $ | 3,553 | ||||||||||
Diluted net income per common share | $ | 0.44 | $ | 0.49 | $ | 0.39 | $ | 1.43 | $ | 0.61 | ||||||||||
Shares used in computing diluted net income per common share | 5,811 | 6,015 | 5,948 | 5,876 | 5,823 | |||||||||||||||
Year-end financial position | ||||||||||||||||||||
Working capital | $ | 20,121 | $ | 35,064 | $ | 29,528 | $ | 30,606 | $ | 27,511 | ||||||||||
Current ratio | 1.49 | 2.68 | 2.22 | 2.10 | 1.94 | |||||||||||||||
Total assets(4) | $ | 104,899 | $ | 99,451 | $ | 98,980 | $ | 104,673 | $ | 106,543 | ||||||||||
Long-term debt | $ | — | $ | — | $ | — | $ | 6,000 | $ | 19,800 | ||||||||||
Shareholders’ equity | $ | 47,249 | $ | 69,100 | $ | 64,860 | $ | 61,629 | $ | 50,419 | ||||||||||
Book value per share | $ | 10.53 | $ | 11.27 | $ | 10.98 | $ | 10.54 | $ | 8.94 | ||||||||||
Other | ||||||||||||||||||||
Capital expenditures(5) | $ | 1,416 | $ | 838 | $ | 2,426 | $ | 1,742 | $ | 3,055 | ||||||||||
Depreciation and amortization | $ | 3,026 | $ | 3,395 | $ | 3,652 | $ | 3,600 | $ | 2,605 |
(1) | On January 26, 2006, the Company completed the acquisition of Ault. On October 31, 2006, the Company completed the acquisition of MTE. Sales and operating results for both entities are included in fiscal year 2006 from the date of acquisition. | |
(2) | Discontinued operations for the periods indicated largely relate to expenses for environmental remediation activities and legal expenses associated with SurfTech. | |
(3) | Fiscal 2010 includes a provision for environmental remediation of $5,132,000, net of tax, related to the Pennsauken Site and $784,000, net of tax, related to the Camden Site. Fiscal 2008 includes a provision for environmental remediation of $1,410,000, net of tax. Fiscal 2006 includes a provision for environmental remediation of $2,480,000, net of tax. | |
(4) | Deferred tax assets and liabilities, as of December 31, 2008, have been reclassified to include a deferred tax liability for foreign taxes previously reported as accrued income taxes. | |
(5) | Excludes assets acquired in business combinations. |
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ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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• | a one percentage point decrease in the perpetual growth rate would reduce the indicated fair value of each reporting unit by a range of approximately 2% to 5% and would not result in an impairment of any reporting unit; |
• | a three percentage point decrease in the operating margin (operating income before tax) would reduce the indicated fair value of each reporting unit by a range of approximately 10% to 21% and would not result in an impairment of any reporting unit; or |
• | a one percentage point increase in the discount rate would reduce the indicated fair value of each reporting unit by a range of approximately 5% to 6% and would not result in an impairment of any reporting unit. |
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December 31, | December 31, | |||||||||||||||
2010 | 2009 | $ Variance | % Variance | |||||||||||||
(in thousands) | ||||||||||||||||
Cash and cash equivalents | $ | 1,374 | $ | 9,967 | $ | (8,593 | ) | (86 | %) | |||||||
Bank debt | $ | 9,800 | $ | — | $ | 9,800 | — | |||||||||
Working capital | $ | 20,121 | $ | 35,064 | $ | (14,943 | ) | (43 | %) | |||||||
Shareholders’ equity | $ | 47,249 | $ | 69,100 | $ | (21,851 | ) | (32 | %) |
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Less Than | 1 to 3 | 4 to 5 | After | |||||||||||||||||
1 Year | Years | Years | 5 Years | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Operating Leases | $ | 1,594 | $ | 2,744 | $ | 994 | $ | 1,317 | $ | 6,649 | ||||||||||
Debt(1) | 9,964 | — | — | — | 9,964 | |||||||||||||||
Capital Leases | — | — | — | — | — | |||||||||||||||
Other Obligations | — | — | — | — | — | |||||||||||||||
$ | 11,558 | $ | 2,744 | $ | 994 | $ | 1,317 | $ | 16,613 | |||||||||||
(1) | Includes interest payments through maturity of $164,000. |
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Years Ended December 31, | ||||||||||||||||
2010 | 2009 | $ Variance | % Variance | |||||||||||||
(in thousands) | ||||||||||||||||
Net sales | ||||||||||||||||
Power Electronics Group: | ||||||||||||||||
SLPE | $ | 79,615 | $ | 53,464 | $ | 26,151 | 49 | % | ||||||||
High Power Group | 56,494 | 44,865 | 11,629 | 26 | % | |||||||||||
Total | 136,109 | 98,329 | 37,780 | 38 | % | |||||||||||
SL-MTI | 31,261 | 28,277 | 2,984 | 11 | % | |||||||||||
RFL | 22,398 | 20,945 | 1,453 | 7 | % | |||||||||||
Total | $ | 189,768 | $ | 147,551 | $ | 42,217 | 29 | % | ||||||||
Years Ended December 31, | ||||||||||||||||
2010 | 2009 | $ Variance | % Variance | |||||||||||||
(in thousands) | ||||||||||||||||
Income from operations | ||||||||||||||||
Power Electronics Group: | ||||||||||||||||
SLPE | $ | 6,389 | $ | 735 | $ | 5,654 | 769 | % | ||||||||
High Power Group | 5,418 | 3,194 | 2,224 | 70 | % | |||||||||||
Total | 11,807 | 3,929 | 7,878 | 201 | % | |||||||||||
SL-MTI | 4,801 | 4,426 | 375 | 8 | % | |||||||||||
RFL | 2,990 | 1,919 | 1,071 | 56 | % | |||||||||||
Other | (6,350 | ) | (5,185 | ) | (1,165 | ) | (22 | %) | ||||||||
Total | $ | 13,248 | $ | 5,089 | $ | 8,159 | 160 | % | ||||||||
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10-K.
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Years Ended December 31, | ||||||||||||||||
2009 | 2008 | $ Variance | % Variance | |||||||||||||
(in thousands) | ||||||||||||||||
Net sales | ||||||||||||||||
Power Electronics Group: | ||||||||||||||||
SLPE | $ | 53,464 | $ | 72,811 | $ | (19,347 | ) | (27 | %) | |||||||
High Power Group | 44,865 | 60,462 | (15,597 | ) | (26 | %) | ||||||||||
Total | 98,329 | 133,273 | (34,944 | ) | (26 | %) | ||||||||||
SL-MTI | 28,277 | 28,647 | (370 | ) | (1 | %) | ||||||||||
RFL | 20,945 | 24,034 | (3,089 | ) | (13 | %) | ||||||||||
Total | $ | 147,551 | $ | 185,954 | $ | (38,403 | ) | (21 | %) | |||||||
Years Ended December 31, | ||||||||||||||||
2009 | 2008 | $ Variance | % Variance | |||||||||||||
(in thousands) | ||||||||||||||||
Income from operations | ||||||||||||||||
Power Electronics Group: | ||||||||||||||||
SLPE | $ | 735 | $ | 315 | $ | 420 | 133 | % | ||||||||
High Power Group | 3,194 | 4,868 | (1,674 | ) | (34 | %) | ||||||||||
Total | 3,929 | 5,183 | (1,254 | ) | (24 | %) | ||||||||||
SL-MTI | 4,426 | 3,892 | 534 | 14 | % | |||||||||||
RFL | 1,919 | 2,379 | (460 | ) | (19 | %) | ||||||||||
Other | (5,185 | ) | (4,141 | ) | (1,044 | ) | (25 | %) | ||||||||
Total | $ | 5,089 | $ | 7,313 | $ | (2,224 | ) | (30 | %) | |||||||
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ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A. | CONTROLS AND PROCEDURES |
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• | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the Company’s transactions and dispositions of the Company’s assets; |
• | provide reasonable assurance that the Company’s transactions are recorded as necessary to permit preparation of the Company’s financial statements in accordance with GAAP, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and the Company’s directors; and |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on its financial statements. |
ITEM 9B. | OTHER INFORMATION |
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ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
ITEM 11. | EXECUTIVE COMPENSATION |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE |
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
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SL INDUSTRIES, INC. (Company) | ||||
By | /s/ William T. Fejes | Date: March 31, 2011 |
By | /s/ Glen M. Kassan | Date: March 31, 2011 | ||
By | /s/ William T. Fejes (Principal Executive Officer) | Date: March 31, 2011 | ||
By | /s/ Louis J. Belardi Treasurer and Secretary (Principal Financial and Accounting Officer) | Date: March 31, 2011 | ||
By | /s/ Warren G. Lichtenstein | Date: March 31, 2011 | ||
By | /s/ Avrum Gray | Date: March 31, 2011 | ||
By | /s/ James A. Risher | Date: March 31, 2011 | ||
By | /s/ Mark E. Schwarz | Date: March 31, 2011 | ||
By | /s/ John H. McNamara | Date: March 31, 2011 |
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Exhibit # | Description | |||
2.1 | Securities Purchase Agreement by and among SL Industries, Inc., SL Industries Vertrieb GmbH, and DCX-Chol Holding GmbH, DCX-Chol Enterprises, Inc. and Chol Enterprises, Inc. dated as of January 3, 2003. Incorporated by reference to Exhibit 2.1 to the Company’s report on Form 8-K filed with the Securities and Exchange Commission on January 17, 2003. | |||
2.2 | Agreement and Plan of Merger, dated December 16, 2005, by and among SL Industries, Inc., Lakers Acquisition Corp. and Ault Incorporated. Incorporated by reference to Exhibit 2.1 to the Company’s report on Form 8-K filed with the Securities and Exchange Commission on December 16, 2005. | |||
2.3 | Stock Purchase Agreement, dated October 31, 2006 by and among SL Industries, Inc., Norbert D. Miller, Revocable Living Trust of Fred A. Lewis and Margaret Lange-Lewis U/A dated January 28, 1993, as Amended and Restated as of October 31, 2001 and the Einhorn Family Foundation. Incorporated by reference to Exhibit 10.1 to the Company’s report on Form 8-K/A filed with the Securities and Exchange Commission on December 21, 2006. | |||
3.1 | Restated Articles of Incorporation. Incorporated by reference to Exhibit 3.1 to the Company’s report on Form 10-K for the fiscal year ended December 31, 2000. | |||
3.2 | Restated By-Laws. Incorporated by reference to Exhibit 3.2 to the Company’s report on Form 10-K for the fiscal year ended December 31, 2000. | |||
10.1 | * | Supplemental Compensation Agreement for the Benefit of Byrne Litschgi. Incorporated by reference to Exhibit 10.1 to the Company’s report on Form 8-K dated November 9, 1990. | ||
10.2 | * | 1991 Long Term Incentive Plan of SL Industries, Inc., as amended, is incorporated by reference to Appendix to the Company’s Proxy Statement for its 1995 Annual Meeting held November 17, 1995, previously filed with the Securities and Exchange Commission. | ||
10.3 | * | Change-in-Control Agreement, dated May 1, 2001, between the Teal Electronics Corporation and James C. Taylor. Incorporated by reference to Exhibit 10.9 to the Company’s report on Form 10-K for the fiscal year ended December 31, 2003. | ||
10.4 | * | Bonus Agreement dated August 5, 2002 between the Company and James C. Taylor. Incorporated by reference to Exhibit 10.10 to the Company’s report on Form 10-K for the fiscal year ended December 31, 2003. | ||
10.5 | * | Management Agreement dated as of January 23, 2002 between the Company and Steel Partners, Ltd. Incorporated by reference to Exhibit 10.12 to the Company’s report on Form 10-K for the fiscal year ended December 31, 2003. | ||
10.6 | * | Long-Term Bonus Agreement, dated September 1, 2005 between the Company and James C. Taylor. Incorporated by reference to Exhibit 10.1 to the Company’s report on Form 8-K filed with the Securities and Exchange Commission on September 7, 2005. | ||
10.7 | * | 2008 Incentive Stock Plan, is incorporated by reference to Exhibit A to the Company’s Proxy Statement for its 2008 Annual Meeting held May 14, 2008, previously filed with the Securities and Exchange Commission. |
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Exhibit # | Description | |||
10.8 | Amended And Restated Revolving Credit Agreement dated as of October 23, 2008, among Bank of America, N.A., as Agent, various financial institutions party hereto from time to time, as Lenders, SL Industries, Inc., as the parent borrower and, SL Delaware, Inc., SL Delaware Holdings, Inc., MTE Corporation, RFL Electronics Inc., SL Montevideo Technology, Inc., Cedar Corporation, Teal Electronics Corporation, MEX Holdings LLC, SL Power Electronics Corporation, SLGC Holdings, Inc., SLW Holdings, Inc., SL Auburn, Inc., and SL Surface Technologies, Inc. as subsidiary borrowers. Incorporated by reference to Exhibit 10.1 to the Company’s report on Form 10-Q for the fiscal quarter ended September 30, 2008. | |||
10.9 | * | Amendment to Change-in-Control Agreement, dated December 22, 2008, to the Change-in-Control Agreement dated, May 1, 2001, between the Teal Electronics Corporation and James C. Taylor. Incorporated by reference to Exhibit 10.6 to the Company’s report on Form 10-K for the fiscal year ended December 31, 2008. | ||
10.10 | First Amendment and Waiver Under Credit Agreement dated as of October 23, 2008, among Bank of America, N.A., as Agent, various financial institutions party hereto from time to time, as Lenders, SL Industries, Inc., as the parent borrower and, SL Delaware, Inc., SL Delaware Holdings, Inc., MTE Corporation, RFL Electronics Inc., SL Montevideo Technology, Inc., Cedar Corporation, Teal Electronics Corporation, MEX Holdings LLC, SL Power Electronics Corporation, SLGC Holdings, Inc., SLS Holdings, Inc., SL Auburn, Inc., and SL Surface Technologies, Inc. as subsidiary borrowers. Incorporated by reference to Exhibit 10.1 to the Company’s report on Form 10-Q for the fiscal quarter ended June 30, 2009. | |||
10.11 | * | Employment Agreement, dated June 29, 2010, between the SL Industries, Inc. and William Fejes, Jr. Incorporated by reference to Exhibit 10.1 to the Company’s report on Form 10-Q for the fiscal quarter ended June 30, 2010. | ||
10.12 | * | Stock Option Agreement, dated June 29, 2010, between the SL Industries, Inc. and William Fejes, Jr. Incorporated by reference to Exhibit 10.2 to the Company’s report on Form 10-Q for the fiscal quarter ended June 30, 2010. | ||
10.13 | * | Separation Agreement and Mutual Release of a former officer, dated as of October 20, 2010. Incorporated by reference to Exhibit 10.1 to the Company’s report on Form 10-Q for the fiscal quarter ended September 30, 2010. | ||
10.14 | * | Separation Agreement and Mutual Release of a former officer, dated as of October 14, 2010. Incorporated by reference to Exhibit 10.2 to the Company’s report on Form 10-Q for the fiscal quarter ended September 30, 2010. | ||
10.15 | * | Change of Control Agreement, dated August 31, 2010, between the SL Industries, Inc. and Louis J. Belardi. Incorporated by reference to Exhibit 10.3 to the Company’s report on Form 10-Q for the fiscal quarter ended September 30, 2010. | ||
10.16 | * | Stock Option Agreement, dated September 2, 2010, between the SL Industries, Inc. and Louis J. Belardi. Incorporated by reference to Exhibit 10.4 to the Company’s report on Form 10-Q for the fiscal quarter ended September 30, 2010. | ||
10.17 | Second Amendment to Credit Agreement with Bank of America, N.A., dated November 19, 2010, as administrative agent and lender, and a syndicate of other lenders party thereto, further amending that certain Amended and Restated Revolving Credit Agreement entered into as of October 23, 2008 among the Company, subsidiaries of the Company party thereto, Bank of America, N.A., as administrative agent and lender, and a syndicate of other lenders party thereto (transmitted herewith). | |||
14 | Code of Conduct and Ethics. Incorporated by reference to Exhibit 14 to the Company’s report on Form 10-K for the fiscal year ended December 31, 2003. |
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Exhibit # | Description | |||
21 | Subsidiaries of the Company (transmitted herewith). | |||
23 | Consent of Independent Registered Public Accounting Firm (transmitted herewith). | |||
31.1 | Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (transmitted herewith). | |||
31.2 | Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (transmitted herewith). | |||
32 | Certification by Chief Executive Officer and Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (transmitted herewith). |
* | Indicates a management contract or compensatory plan or arrangement. |
Page 47
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Index to Financial Statements and Financial Statement Schedule
Page number | ||||
in this report | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 to F-40 | ||||
Financial Statement Schedule: | ||||
F-41 |
F-1
Table of Contents
SL Industries, Inc.
F-2
Table of Contents
Item 1. | Financial Statements |
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,374,000 | $ | 9,967,000 | ||||
Receivables, net | 30,753,000 | 22,388,000 | ||||||
Inventories, net | 22,225,000 | 18,815,000 | ||||||
Other current assets | 1,994,000 | 685,000 | ||||||
Deferred income taxes, net | 4,743,000 | 4,058,000 | ||||||
Total current assets | 61,089,000 | 55,913,000 | ||||||
Property, plant and equipment, net | 8,921,000 | 9,274,000 | ||||||
Deferred income taxes, net | 6,984,000 | 5,331,000 | ||||||
Goodwill | 22,756,000 | 22,769,000 | ||||||
Other intangible assets, net | 4,012,000 | 4,939,000 | ||||||
Other assets and deferred charges, net | 1,137,000 | 1,225,000 | ||||||
Total assets | $ | 104,899,000 | $ | 99,451,000 | ||||
LIABILITIES | ||||||||
Current liabilities: | ||||||||
Debt, current portion | $ | 9,800,000 | $ | — | ||||
Accounts payable | 14,894,000 | 10,208,000 | ||||||
Accrued income taxes | 1,400,000 | 830,000 | ||||||
Accrued liabilities: | ||||||||
Payroll and related costs | 6,260,000 | 3,482,000 | ||||||
Other | 8,614,000 | 6,329,000 | ||||||
Total current liabilities | 40,968,000 | 20,849,000 | ||||||
Debt, less current portion | — | — | ||||||
Deferred compensation and supplemental retirement benefits | 2,244,000 | 2,365,000 | ||||||
Other long-term liabilities | 14,438,000 | 7,137,000 | ||||||
Total liabilities | 57,650,000 | 30,351,000 | ||||||
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, 6,963,000 and 8,298,000 shares, respectively | 1,393,000 | 1,660,000 | ||||||
Capital in excess of par value | 24,085,000 | 43,027,000 | ||||||
Retained earnings | 44,627,000 | 42,071,000 | ||||||
Accumulated other comprehensive (loss) | (87,000 | ) | (141,000 | ) | ||||
Treasury stock at cost, 2,477,000 and 2,166,000 shares, respectively | (22,769,000 | ) | (17,517,000 | ) | ||||
Total shareholders’ equity | 47,249,000 | 69,100,000 | ||||||
Total liabilities and shareholders’ equity | $ | 104,899,000 | $ | 99,451,000 | ||||
F-3
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FOR THE YEARS ENDED DECEMBER 31,
2010 | 2009 | 2008 | ||||||||||
Net sales | $ | 189,768,000 | $ | 147,551,000 | $ | 185,954,000 | ||||||
Cost and expenses: | ||||||||||||
Cost of products sold | 128,011,000 | 98,732,000 | 129,473,000 | |||||||||
Engineering and product development | 12,664,000 | 11,575,000 | 13,972,000 | |||||||||
Selling, general and administrative | 32,819,000 | 28,070,000 | 30,867,000 | |||||||||
Depreciation and amortization | 3,026,000 | 3,395,000 | 3,652,000 | |||||||||
Restructuring costs | — | 690,000 | 677,000 | |||||||||
Total cost and expenses | 176,520,000 | 142,462,000 | 178,641,000 | |||||||||
Income from operations | 13,248,000 | 5,089,000 | 7,313,000 | |||||||||
Other income (expense): | ||||||||||||
Amortization of deferred financing costs | (252,000 | ) | (351,000 | ) | (77,000 | ) | ||||||
Fire related loss, net | (109,000 | ) | — | — | ||||||||
Interest income | 2,000 | 8,000 | 28,000 | |||||||||
Interest expense | (86,000 | ) | (63,000 | ) | (237,000 | ) | ||||||
Income from continuing operations before income taxes | 12,803,000 | 4,683,000 | 7,027,000 | |||||||||
Income tax provision | 3,021,000 | 1,119,000 | 2,391,000 | |||||||||
Income from continuing operations | 9,782,000 | 3,564,000 | 4,636,000 | |||||||||
(Loss) from discontinued operations (net of tax) | (7,226,000 | ) | (628,000 | ) | (2,302,000 | ) | ||||||
Net income | $ | 2,556,000 | $ | 2,936,000 | $ | 2,334,000 | ||||||
Basic net income (loss) per common share | ||||||||||||
Income from continuing operations | $ | 1.69 | $ | 0.59 | $ | 0.79 | ||||||
(Loss) from discontinued operations (net of tax) | (1.25 | ) | (0.10 | ) | (0.39 | ) | ||||||
Net income | $ | 0.44 | $ | 0.49 | $ | 0.40 | ||||||
Diluted net income (loss) per common share | ||||||||||||
Income from continuing operations | $ | 1.68 | $ | 0.59 | $ | 0.78 | ||||||
(Loss) from discontinued operations (net of tax) | (1.24 | ) | (0.10 | ) | (0.39 | ) | ||||||
Net income | $ | 0.44 | $ | 0.49 | $ | 0.39 | ||||||
Shares used in computing basic net income (loss) per common share | 5,775,000 | 6,004,000 | 5,868,000 | |||||||||
Shares used in computing diluted net income (loss) per common share | 5,811,000 | 6,015,000 | 5,948,000 |
FOR THE YEARS ENDED DECEMBER 31,
2010 | 2009 | 2008 | ||||||||||
Net income | $ | 2,556,000 | $ | 2,936,000 | $ | 2,334,000 | ||||||
Other comprehensive income (net of tax): | ||||||||||||
Foreign currency translation | 54,000 | (23,000 | ) | (48,000 | ) | |||||||
Comprehensive income | $ | 2,610,000 | $ | 2,913,000 | $ | 2,286,000 | ||||||
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FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 AND 2010
Accumulated | ||||||||||||||||||||||||||||||||
Common Stock | Capital in | Other | Total | |||||||||||||||||||||||||||||
Issued | Held In Treasury | Excess of | Retained | Comprehensive | Shareholders’ | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Par Value | Earnings | (Loss) | Equity | |||||||||||||||||||||||||
Balance December 31, 2007 | 8,298,000 | $ | 1,660,000 | (2,449,000 | ) | $ | (19,761,000 | ) | $ | 42,999,000 | $ | 36,801,000 | $ | (70,000 | ) | $ | 61,629,000 | |||||||||||||||
Net income | 2,334,000 | 2,334,000 | ||||||||||||||||||||||||||||||
Foreign currency translation | (48,000 | ) | (48,000 | ) | ||||||||||||||||||||||||||||
Other, including exercise of employee stock options and related income tax benefits | 4,000 | 34,000 | 27,000 | 61,000 | ||||||||||||||||||||||||||||
Stock-based compensation | 317,000 | 317,000 | ||||||||||||||||||||||||||||||
Treasury stock sold | 84,000 | 684,000 | 308,000 | 992,000 | ||||||||||||||||||||||||||||
Treasury stock purchased | (30,000 | ) | (425,000 | ) | (425,000 | ) | ||||||||||||||||||||||||||
Balance December 31, 2008 | 8,298,000 | $ | 1,660,000 | (2,391,000 | ) | $ | (19,468,000 | ) | $ | 43,651,000 | $ | 39,135,000 | $ | (118,000 | ) | $ | 64,860,000 | |||||||||||||||
Net income | 2,936,000 | 2,936,000 | ||||||||||||||||||||||||||||||
Foreign currency translation | (23,000 | ) | (23,000 | ) | ||||||||||||||||||||||||||||
Stock-based compensation | 253,000 | 253,000 | ||||||||||||||||||||||||||||||
Treasury stock sold | 391,000 | 3,182,000 | (877,000 | ) | 2,305,000 | |||||||||||||||||||||||||||
Treasury stock purchased | (166,000 | ) | (1,231,000 | ) | (1,231,000 | ) | ||||||||||||||||||||||||||
Balance December 31, 2009 | 8,298,000 | $ | 1,660,000 | (2,166,000 | ) | $ | (17,517,000 | ) | $ | 43,027,000 | $ | 42,071,000 | $ | (141,000 | ) | $ | 69,100,000 | |||||||||||||||
Net income | 2,556,000 | 2,556,000 | ||||||||||||||||||||||||||||||
Foreign currency translation | 54,000 | 54,000 | ||||||||||||||||||||||||||||||
Other, including exercise of employee stock options and related income tax benefits | 107,000 | 877,000 | (104,000 | ) | 773,000 | |||||||||||||||||||||||||||
Stock-based compensation | 174,000 | 174,000 | ||||||||||||||||||||||||||||||
Repurchase and retirement of common stock | (1,335,000 | ) | (267,000 | ) | (19,184,000 | ) | (19,451,000 | ) | ||||||||||||||||||||||||
Treasury stock sold | 60,000 | 476,000 | 172,000 | 648,000 | ||||||||||||||||||||||||||||
Treasury stock purchased | (478,000 | ) | (6,605,000 | ) | (6,605,000 | ) | ||||||||||||||||||||||||||
Balance December 31, 2010 | 6,963,000 | $ | 1,393,000 | (2,477,000 | ) | $ | (22,769,000 | ) | $ | 24,085,000 | $ | 44,627,000 | $ | (87,000 | ) | $ | 47,249,000 | |||||||||||||||
F-5
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FOR THE YEARS ENDED DECEMBER 31,
2010 | 2009 | 2008 | ||||||||||
OPERATING ACTIVITIES: | ||||||||||||
Net income | $ | 2,556,000 | $ | 2,936,000 | $ | 2,334,000 | ||||||
Adjustment for losses from discontinued operations | 7,226,000 | 628,000 | 2,302,000 | |||||||||
Income from continuing operations | 9,782,000 | 3,564,000 | 4,636,000 | |||||||||
Adjustments to reconcile income from continuing operations to net cash provided by operating activities: | ||||||||||||
Depreciation | 1,894,000 | 2,080,000 | 2,218,000 | |||||||||
Amortization | 1,132,000 | 1,315,000 | 1,434,000 | |||||||||
Amortization of deferred financing costs | 252,000 | 351,000 | 77,000 | |||||||||
Stock-based compensation | 174,000 | 253,000 | 317,000 | |||||||||
Tax benefit from exercise of stock options | (19,000 | ) | — | (7,000 | ) | |||||||
Non-cash compensation expense (benefit) | 156,000 | (18,000 | ) | (655,000 | ) | |||||||
Non-cash fire related loss | 109,000 | — | — | |||||||||
Non-cash restructuring | — | — | 170,000 | |||||||||
(Recoveries of) provisions for losses on accounts receivable | (66,000 | ) | 22,000 | (169,000 | ) | |||||||
Cash surrender value of life insurance policies | 1,000 | (14,000 | ) | (13,000 | ) | |||||||
Deferred compensation and supplemental retirement benefits | 428,000 | 421,000 | 431,000 | |||||||||
Deferred compensation and supplemental retirement benefit payments | (536,000 | ) | (740,000 | ) | (543,000 | ) | ||||||
Deferred income taxes | (2,047,000 | ) | 152,000 | (1,013,000 | ) | |||||||
Loss on sales of equipment | 41,000 | 104,000 | 159,000 | |||||||||
Changes in operating assets and liabilities, excluding effects of business combinations and dispositions: | ||||||||||||
Accounts receivable | (8,299,000 | ) | 3,087,000 | 4,809,000 | ||||||||
Inventories | (3,250,000 | ) | 2,762,000 | 664,000 | ||||||||
Prepaid expenses | (1,060,000 | ) | 373,000 | (100,000 | ) | |||||||
Other assets | (107,000 | ) | 35,000 | 91,000 | ||||||||
Accounts payable | 4,681,000 | 267,000 | (2,358,000 | ) | ||||||||
Other accrued liabilities | 2,126,000 | (1,676,000 | ) | (2,645,000 | ) | |||||||
Accrued income taxes | 3,922,000 | (442,000 | ) | 2,543,000 | ||||||||
Net cash provided by operating activities from continuing operations | 9,314,000 | 11,896,000 | 10,046,000 | |||||||||
Net cash (used in) operating activities from discontinued operations | (1,496,000 | ) | (2,297,000 | ) | (1,680,000 | ) | ||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 7,818,000 | 9,599,000 | 8,366,000 | |||||||||
INVESTING ACTIVITIES: | ||||||||||||
Purchases of property, plant and equipment | (1,416,000 | ) | (838,000 | ) | (2,426,000 | ) | ||||||
Purchases of other assets | (232,000 | ) | (110,000 | ) | (8,000 | ) | ||||||
NET CASH (USED IN) INVESTING ACTIVITIES | (1,648,000 | ) | (948,000 | ) | (2,434,000 | ) | ||||||
FINANCING ACTIVITIES: | ||||||||||||
Proceeds from Revolving Credit Facility | 19,800,000 | 100,000 | 20,440,000 | |||||||||
Payments of Revolving Credit Facility | (10,000,000 | ) | (100,000 | ) | (26,440,000 | ) | ||||||
Payments of deferred financing costs | (57,000 | ) | (250,000 | ) | (551,000 | ) | ||||||
Repurchase and retirement of common stock | (19,451,000 | ) | — | — | ||||||||
Treasury stock purchases | (6,605,000 | ) | (1,231,000 | ) | (425,000 | ) | ||||||
Treasury stock sales | 648,000 | 2,305,000 | 992,000 | |||||||||
Proceeds from stock options exercised | 754,000 | — | 54,000 | |||||||||
Tax benefit from exercise of stock options | 19,000 | — | 7,000 | |||||||||
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | (14,892,000 | ) | 824,000 | (5,923,000 | ) | |||||||
Effect of exchange rate changes on cash | 129,000 | (12,000 | ) | (238,000 | ) | |||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | (8,593,000 | ) | 9,463,000 | (229,000 | ) | |||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 9,967,000 | 504,000 | 733,000 | |||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 1,374,000 | $ | 9,967,000 | $ | 504,000 | ||||||
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F-8
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F-9
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F-10
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December 31, | December 31, | December 31, | ||||||||||
2010 | 2009 | 2008 | ||||||||||
(in thousands, except per share amounts) | ||||||||||||
Basic net income available to common shareholders: | ||||||||||||
Net income available to common shareholders from continuing operations | $ | 9,782 | $ | 3,564 | $ | 4,636 | ||||||
Diluted net income available to common shareholders from continuing operations | $ | 9,782 | $ | 3,564 | $ | 4,636 | ||||||
Shares: | ||||||||||||
Basic weighted average number of common shares outstanding | 5,775 | 6,004 | 5,868 | |||||||||
Common shares assumed upon exercise of stock options | 36 | 11 | 80 | |||||||||
Diluted weighted average number of common shares outstanding | 5,811 | 6,015 | 5,948 | |||||||||
Basic net income (loss) per common share: | ||||||||||||
Income from continuing operations | $ | 1.69 | $ | 0.59 | $ | 0.79 | ||||||
(Loss) from discontinued operations (net of tax) | (1.25 | ) | (0.10 | ) | (0.39 | ) | ||||||
Net income | $ | 0.44 | $ | 0.49 | $ | 0.40 | ||||||
Diluted net income (loss) per common share: | ||||||||||||
Income from continuing operations | $ | 1.68 | $ | 0.59 | $ | 0.78 | ||||||
(Loss) from discontinued operations (net of tax) | (1.24 | ) | (0.10 | ) | (0.39 | ) | ||||||
Net income | $ | 0.44 | $ | 0.49 | $ | 0.39 | ||||||
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Year Ended | Year Ended | Year Ended | ||||||||||
December 31, | December 31, | December 31, | ||||||||||
2010 | 2009(1) | 2008 | ||||||||||
Weighted average fair value of grants | $ | 6.78 | — | $ | 4.43 | |||||||
Valuation assumptions: | ||||||||||||
Expected dividend yield | 0.00 | % | — | 0.00 | % | |||||||
Expected volatility | 68.44 | — | 42.52 | |||||||||
Expected life (in years) | 4.44 | — | 4.25 | |||||||||
Risk-free interest rate | 1.71 | % | — | 3.12 | % |
(1) | No stock options were granted during fiscal 2009. |
F-12
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Weighted Average | Aggregate | |||||||||||||||
Remaining | Intrinsic | |||||||||||||||
Shares | Weighted Average | Contractual Term | Value | |||||||||||||
(in thousands) | Exercise Price | (in years) | (in thousands) (1) | |||||||||||||
Outstanding as of December 31, 2008 | 405 | $ | 10.322 | 4.24 | N/M | |||||||||||
Cancelled | (25 | ) | $ | 13.24 | ||||||||||||
Outstanding as of December 31, 2009 | 380 | $ | 10.129 | 3.48 | N/M | |||||||||||
Granted | 160 | $ | 12.59 | |||||||||||||
Exercised | (107 | ) | $ | 7.05 | ||||||||||||
Cancelled | (180 | ) | $ | 12.44 | ||||||||||||
Outstanding as of December 31, 2010 | 253 | $ | 11.339 | 4.93 | $ | 1,554 | ||||||||||
Exercisable as of December 31, 2010 | 100 | $ | 9.448 | 2.50 | $ | 805 | ||||||||||
(1) | N/M — the aggregate intrinsic value was not material since the value was less than $1,000. |
F-13
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Shares | Weighted Average | ||||||||||
(in thousands) | Option Price | Exercise Price | |||||||||
Outstanding and exercisable as of December 31, 2008 | 111 | $ | 6.00 to $12.9375 | $ | 6.86 | ||||||
Cancelled | (6 | ) | $ | 11.375 to $12.9375 | $ | 12.29 | |||||
Outstanding and exercisable as of December 31, 2009 | 105 | $ | 6.00 to $12.84 | $ | 6.58 | ||||||
Exercised | (56 | ) | $ | 6.00 to $8.20 | $ | 6.17 | |||||
Cancelled | (9 | ) | $ | 9.2188 to $12.84 | $ | 11.25 | |||||
Outstanding and exercisable as of December 31, 2010 | 40 | $ | 6.00 to $6.00 | $ | 6.00 | ||||||
Shares | Weighted Average | ||||||||||
(in thousands) | Option Price | Exercise Price | |||||||||
Outstanding and exercisable as of December 31, 2008 | 139 | $ | 5.75 to $13.50 | $ | 10.32 | ||||||
Cancelled | (19 | ) | $ | 13.50 to $13.50 | $ | 13.50 | |||||
Outstanding and exercisable as of December 31, 2009 | 120 | $ | 5.75 to $12.175 | $ | 9.80 | ||||||
Exercised | (51 | ) | $ | 5.75 to $12.175 | $ | 8.02 | |||||
Cancelled | (36 | ) | $ | 11.125 to $12.175 | $ | 11.42 | |||||
Outstanding and exercisable as of December 31, 2010 | 33 | $ | 5.75 to $12.175 | $ | 10.78 | ||||||
Shares | Weighted Average | |||||||||||
(in thousands) | Option Price | Exercise Price | ||||||||||
Outstanding as of December 31, 2008 | 155 | $ | 12.80 to $12.80 | $ | 12.80 | |||||||
Cancelled | — | — | — | |||||||||
Outstanding as of December 31, 2009 | 155 | $ | 12.80 to $12.80 | $ | 12.80 | |||||||
Granted | 160 | $ | 11.75 to $16.75 | $ | 12.59 | |||||||
Cancelled | (135 | ) | $ | 12.80 to $12.80 | $ | 12.80 | ||||||
Outstanding as of December 31, 2010 | 180 | $ | 11.75 to $16.75 | $ | 12.61 | |||||||
F-14
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Weighted Average | ||||||||||||||
Options Outstanding | Range of Option Prices per | Weighted Average | Life Remaining | |||||||||||
(in thousands) | Share | Exercise Price | (years) | |||||||||||
47 | $5.75 to $6.00 | $ | 5.961 | 1.9 | ||||||||||
100 | $11.75 to $11.75 | $ | 11.750 | 6.5 | ||||||||||
106 | $12.175 to $16.75 | $ | 13.322 | 4.8 | ||||||||||
253 |
Options Exercisable | Range of Option Prices per | Weighted Average | ||||||||
(in thousands) | Share | Exercise Price | ||||||||
47 | $5.75 to $6.00 | $ | 5.961 | |||||||
0 | $11.75 to $11.75 | $ | 0.000 | |||||||
53 | $12.175 to $16.75 | $ | 12.497 | |||||||
100 |
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(in thousands) | ||||||||||||
Income tax provision from continuing operations | $ | 3,021 | $ | 1,119 | $ | 2,391 | ||||||
Income tax (benefit) from discontinued operations | (3,351 | ) | (381 | ) | (1,369 | ) | ||||||
Total | $ | (330 | ) | $ | 738 | $ | 1,022 | |||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(in thousands) | ||||||||||||
Domestic | $ | 8,073 | $ | 3,479 | $ | 5,251 | ||||||
Foreign | 4,730 | 1,204 | 1,776 | |||||||||
Total | $ | 12,803 | $ | 4,683 | $ | 7,027 | ||||||
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(in thousands) | ||||||||||||
Current: | ||||||||||||
Federal | $ | (2,317 | ) | $ | 534 | $ | 3,982 | |||||
Foreign | 3,343 | 341 | 598 | |||||||||
State | 1,306 | 267 | (11 | ) | ||||||||
Deferred: | ||||||||||||
Federal | 4,058 | 278 | (2,199 | ) | ||||||||
Foreign | (2,031 | ) | 71 | — | ||||||||
State | (1,338 | ) | (372 | ) | 21 | |||||||
Total Provision | $ | 3,021 | $ | 1,119 | $ | 2,391 | ||||||
December 31, | ||||||||
2010 | 2009 | |||||||
(in thousands) | ||||||||
Deferred tax assets: | ||||||||
Deferred compensation | $ | 948 | $ | 989 | ||||
Inventory valuation | 742 | 1,063 | ||||||
Tax loss carryforward | 2,269 | 3,388 | ||||||
Foreign tax credit carryforward | 373 | 2,537 | ||||||
R&D tax credit carryforward | 1,457 | 1,857 | ||||||
Accrued expenses | 989 | 841 | ||||||
Warranty | 587 | 538 | ||||||
Vacation and bonus expense | 1,538 | 609 | ||||||
Other | 814 | 790 | ||||||
Less valuation allowances | — | (121 | ) | |||||
Deferred tax assets | 9,717 | 12,491 | ||||||
Deferred tax liabilities: | ||||||||
Accelerated depreciation and amortization | 3,130 | 3,648 | ||||||
Unremitted foreign earnings | — | 2,410 | ||||||
Deferred tax liabilities | 3,130 | 6,058 | ||||||
Net deferred tax assets related to continuing operations | 6,587 | 6,433 | ||||||
Net deferred tax assets related to discontinued operations | 5,140 | 2,956 | ||||||
Net deferred tax assets | $ | 11,727 | $ | 9,389 | ||||
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Statutory rate | 34 | % | 34 | % | 34 | % | ||||||
Tax rate differential on domestic manufacturing deduction benefit | (1 | ) | (1 | ) | (1 | ) | ||||||
State income taxes, net of federal income tax | 1 | — | 2 | |||||||||
Foreign operations | (2 | ) | (2 | ) | 1 | |||||||
Research and development credits | (5 | ) | (13 | ) | (5 | ) | ||||||
Other | (3 | ) | 6 | 3 | ||||||||
Effective tax rate | 24 | % | 24 | % | 34 | % | ||||||
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December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Gross unrecognized tax benefits at January 1, 2010 | $ | 2,526,000 | $ | 2,845,000 | $ | 2,785,000 | ||||||
Increases in tax positions taken in the current year | 660,000 | 91,000 | 132,000 | |||||||||
Increases in tax positions taken in prior years | 31,000 | — | — | |||||||||
Decreases in tax positions taken in prior years | (138,000 | ) | (39,000 | ) | (48,000 | ) | ||||||
Decreases in tax positions related to settlement with tax authorities | (289,000 | ) | — | — | ||||||||
Statute of limitations expired | (432,000 | ) | (371,000 | ) | (24,000 | ) | ||||||
Gross unrecognized tax benefits at December 31, 2010 | $ | 2,358,000 | $ | 2,526,000 | $ | 2,845,000 | ||||||
December 31, | ||||||||
2010 | 2009 | |||||||
(in thousands) | ||||||||
Trade receivables | $ | 30,728 | $ | 22,607 | ||||
Less: allowance for doubtful accounts | (585 | ) | (651 | ) | ||||
30,143 | 21,956 | |||||||
Recoverable income taxes | 68 | — | ||||||
Other | 542 | 432 | ||||||
$ | 30,753 | $ | 22,388 | |||||
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December 31, | ||||||||
2010 | 2009 | |||||||
(in thousands) | ||||||||
Raw materials | $ | 15,636 | $ | 15,234 | ||||
Work in process | 4,137 | 3,534 | ||||||
Finished goods | 4,814 | 3,368 | ||||||
24,587 | 22,136 | |||||||
Less: allowances | (2,362 | ) | (3,321 | ) | ||||
$ | 22,225 | $ | 18,815 | |||||
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December 31, | ||||||||
2010 | 2009 | |||||||
(in thousands) | ||||||||
Land | $ | 1,074 | $ | 1,074 | ||||
Buildings and leasehold improvements | 8,257 | 7,991 | ||||||
Equipment and other property | 23,849 | 23,020 | ||||||
33,180 | 32,085 | |||||||
Less: accumulated depreciation | (24,259 | ) | (22,811 | ) | ||||
$ | 8,921 | $ | 9,274 | |||||
December 31, 2010 | December 31, 2009 | |||||||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||||||||
Gross Value | Amortization | Net Value | Gross Value | Amortization | Net Value | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Goodwill | $ | 22,756 | $ | — | $ | 22,756 | $ | 22,769 | $ | — | $ | 22,769 | ||||||||||||
Other intangible assets: | ||||||||||||||||||||||||
Customer relationships | 3,700 | 2,079 | 1,621 | 3,700 | 1,570 | 2,130 | ||||||||||||||||||
Patents | 1,245 | 1,107 | 138 | 1,271 | 1,053 | 218 | ||||||||||||||||||
Trademarks | 1,672 | — | 1,672 | 1,672 | — | 1,672 | ||||||||||||||||||
Developed technology | 1,700 | 1,243 | 457 | 1,700 | 940 | 760 | ||||||||||||||||||
Licensing fees | 355 | 231 | 124 | 355 | 196 | 159 | ||||||||||||||||||
Covenant-not-to-compete | — | — | — | 100 | 100 | — | ||||||||||||||||||
Other | — | — | — | 51 | 51 | — | ||||||||||||||||||
Total other intangible assets | 8,672 | 4,660 | 4,012 | 8,849 | 3,910 | 4,939 | ||||||||||||||||||
$ | 31,428 | $ | 4,660 | $ | 26,768 | $ | 31,618 | $ | 3,910 | $ | 27,708 | |||||||||||||
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Balance | Balance | |||||||||||
December 31, | Foreign | December 31, | ||||||||||
2009 | Exchange | 2010 | ||||||||||
(in thousands) | ||||||||||||
SLPE (Ault) | $ | 4,276 | $ | (13 | ) | $ | 4,263 | |||||
High Power Group (MTE) | 8,189 | — | 8,189 | |||||||||
High Power Group (Teal) | 5,055 | — | 5,055 | |||||||||
RFL | 5,249 | — | 5,249 | |||||||||
Total | $ | 22,769 | $ | (13 | ) | $ | 22,756 | |||||
December 31, | ||||||||
2010 | 2009 | |||||||
(in thousands) | ||||||||
2008 Credit Facility: | ||||||||
$40 million variable interest rate revolving credit facility maturing in 2011 | $ | 9,800 | $ | — | ||||
Total | 9,800 | — | ||||||
Less: current portion | (9,800 | ) | — | |||||
Total long-term debt | $ | — | $ | — | ||||
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December 31, | ||||||||
2010 | 2009 | |||||||
(in thousands) | ||||||||
Taxes (other than income) and insurance | $ | 556 | $ | 209 | ||||
Commissions | 707 | 744 | ||||||
Litigation and legal fees | 151 | 96 | ||||||
Other professional fees | 659 | 674 | ||||||
Environmental | 3,132 | 1,355 | ||||||
Warranty | 1,553 | 1,373 | ||||||
Deferred revenue | 78 | 28 | ||||||
Other | 1,778 | 1,850 | ||||||
$ | 8,614 | $ | 6,329 | |||||
December 31, | ||||||||
2010 | 2009 | |||||||
(in thousands) | ||||||||
Liability, beginning of year | $ | 1,373 | $ | 1,325 | ||||
Expense for new warranties issued | 1,293 | 869 | ||||||
Expense related to accrual revisions for prior year | — | (141 | ) | |||||
Warranty claims paid | (1,113 | ) | (680 | ) | ||||
Liability, end of period | $ | 1,553 | $ | 1,373 | ||||
December 31, | ||||||||
2010 | 2009 | |||||||
(in thousands) | ||||||||
Environmental | $ | 11,779 | $ | 4,528 | ||||
Gross unrecognized tax benefits | 2,659 | 2,609 | ||||||
$ | 14,438 | $ | 7,137 | |||||
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Year Ended | ||||||||||||
December 31, 2009 | ||||||||||||
(in thousands) | ||||||||||||
Severance | Other Costs | Total | ||||||||||
Beginning balance | $ | 88 | $ | 82 | $ | 170 | ||||||
Restructuring charges | 526 | 164 | 690 | |||||||||
Cash payments | (614 | ) | (246 | ) | (860 | ) | ||||||
Ending balance | $ | — | $ | — | $ | — | ||||||
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Operating | ||||
Leases | ||||
(in thousands) | ||||
2011 | $ | 1,594 | ||
2012 | 1,282 | |||
2013 | 769 | |||
2014 | 693 | |||
2015 | 639 | |||
Thereafter | 1,672 | |||
Total minimum payments | $ | 6,649 | ||
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(in thousands) | ||||||||||||
Interest paid | $ | 81 | $ | 63 | $ | 347 | ||||||
Income taxes paid | $ | 1,951 | $ | 558 | $ | 725 |
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• | nature of products and services | ||
• | nature of production process | ||
• | type or class of customer | ||
• | methods of distribution |
F-34
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(in thousands) | ||||||||||||
Net sales | ||||||||||||
Power Electronics Group: | ||||||||||||
SLPE | $ | 79,615 | $ | 53,464 | �� | $ | 72,811 | |||||
High Power Group | 56,494 | 44,865 | 60,462 | |||||||||
Total | 136,109 | 98,329 | 133,273 | |||||||||
SL-MTI | 31,261 | 28,277 | 28,647 | |||||||||
RFL | 22,398 | 20,945 | 24,034 | |||||||||
Consolidated | $ | 189,768 | $ | 147,551 | $ | 185,954 | ||||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(in thousands) | ||||||||||||
Income from operations | ||||||||||||
Power Electronics Group: | ||||||||||||
SLPE | $ | 6,389 | $ | 735 | $ | 315 | ||||||
High Power Group | 5,418 | 3,194 | 4,868 | |||||||||
Total | 11,807 | 3,929 | 5,183 | |||||||||
SL-MTI | 4,801 | 4,426 | 3,892 | |||||||||
RFL | 2,990 | 1,919 | 2,379 | |||||||||
Other | (6,350 | ) | (5,185 | ) | (4,141 | ) | ||||||
Income from operations | 13,248 | 5,089 | 7,313 | |||||||||
Amortization of deferred financing costs | (252 | ) | (351 | ) | (77 | ) | ||||||
Fire related loss, net | (109 | ) | — | — | ||||||||
Interest income | 2 | 8 | 28 | |||||||||
Interest expense | (86 | ) | (63 | ) | (237 | ) | ||||||
Income from continuing operations before income taxes | $ | 12,803 | $ | 4,683 | $ | 7,027 | ||||||
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December 31, | ||||||||
2010 | 2009 | |||||||
(in thousands) | ||||||||
Total assets | ||||||||
Power Electronics Group: | ||||||||
SLPE | $ | 37,155 | $ | 27,255 | ||||
High Power Group | 31,539 | 27,192 | ||||||
Total | 68,694 | 54,447 | ||||||
SL-MTI | 11,262 | 11,520 | ||||||
RFL | 14,525 | 15,096 | ||||||
Other | 10,418 | 18,388 | ||||||
Consolidated | $ | 104,899 | $ | 99,451 | ||||
December 31, | ||||||||
2010 | 2009 | |||||||
(in thousands) | ||||||||
Intangible assets, net | ||||||||
Power Electronics Group: | ||||||||
SLPE | $ | 5,067 | $ | 5,433 | ||||
High Power Group | 16,328 | 16,866 | ||||||
Total | 21,395 | 22,299 | ||||||
SL-MTI | — | — | ||||||
RFL | 5,373 | 5,409 | ||||||
Consolidated | $ | 26,768 | $ | 27,708 | ||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(in thousands) | ||||||||||||
Capital expenditures | ||||||||||||
Power Electronics Group: | ||||||||||||
SLPE | $ | 492 | $ | 57 | $ | 1,020 | ||||||
High Power Group | 440 | 167 | 756 | |||||||||
Total | 932 | 224 | 1,776 | |||||||||
SL-MTI | 258 | 264 | 432 | |||||||||
RFL | 226 | 350 | 182 | |||||||||
Other | — | — | 36 | |||||||||
Consolidated | $ | 1,416 | $ | 838 | $ | 2,426 | ||||||
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(in thousands) | ||||||||||||
Depreciation and amortization | ||||||||||||
Power Electronics Group: | ||||||||||||
SLPE | $ | 1,381 | $ | 1,647 | $ | 1,820 | ||||||
High Power Group | 831 | 869 | 854 | |||||||||
Total | 2,212 | 2,516 | 2,674 | |||||||||
SL-MTI | 302 | 358 | 388 | |||||||||
RFL | 465 | 465 | 550 | |||||||||
Other | 47 | 56 | 40 | |||||||||
Consolidated | $ | 3,026 | $ | 3,395 | $ | 3,652 | ||||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(in thousands) | ||||||||||||
Net sales(1) | ||||||||||||
United States | $ | 148,361 | $ | 121,399 | $ | 155,002 | ||||||
Foreign | 41,407 | 26,152 | 30,952 | |||||||||
Consolidated | $ | 189,768 | $ | 147,551 | $ | 185,954 | ||||||
Long-lived assets(2) | ||||||||||||
United States | $ | 5,978 | $ | 6,690 | $ | 7,411 | ||||||
Foreign | 2,943 | 2,584 | 3,237 | |||||||||
Consolidated | $ | 8,921 | $ | 9,274 | $ | 10,648 | ||||||
(1) | Net sales are attributed to countries based on location of customer. | |
(2) | Includes net tangible assets excluding goodwill and intangibles. |
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Year Ended | ||||
December 31, 2010 | ||||
(in thousands) | ||||
Fire related loss | $ | (642 | ) | |
Insurance recovery | 533 | |||
Net fire related loss | $ | (109 | ) | |
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F-39
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Three Months | Three Months | |||||||||||||||
Three Months | Three Months | Ended | Ended | |||||||||||||
Ended | Ended | September 30, | December 31, | |||||||||||||
March 31, 2010 | June 30, 2010 | 2010 | 2010 | |||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Net sales | $ | 42,133 | $ | 47,790 | $ | 49,141 | $ | 50,704 | ||||||||
Gross margin | $ | 13,990 | $ | 15,211 | $ | 16,021 | $ | 16,535 | ||||||||
Income from continuing operations before income taxes | $ | 2,044 | $ | 3,193 | $ | 3,102 | $ | 4,464 | ||||||||
Net income (loss)(a) | $ | 1,126 | $ | 1,014 | $ | 2,058 | $ | (1,642 | ) | |||||||
Basic net income (loss) per common share | $ | 0.18 | $ | 0.17 | $ | 0.34 | $ | (0.34 | ) | |||||||
Diluted net income (loss) per common share | $ | 0.18 | $ | 0.17 | $ | 0.34 | $ | (0.33 | ) | |||||||
(a) Includes (loss) from discontinued operations, net of tax | $ | (150 | ) | $ | (1,049 | ) | $ | (267 | ) | $ | (5,760 | )(b) |
(b) | The three months ended December 31, 2010, includes a provision for environmental remediation of $5,132,000, net of tax, related to the Pennsauken Site. |
Three Months | Three Months | |||||||||||||||
Three Months | Three Months | Ended | Ended | |||||||||||||
Ended | Ended | September 30, | December 31, | |||||||||||||
March 31, 2009 | June 30, 2009 | 2009 | 2009 | |||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Net sales | $ | 36,232 | $ | 34,956 | $ | 36,379 | $ | 39,984 | ||||||||
Gross margin | $ | 11,887 | $ | 11,397 | $ | 12,458 | $ | 13,077 | ||||||||
Income (loss) from continuing operations before income taxes | $ | 304 | $ | (506 | ) | $ | 2,298 | $ | 2,587 | |||||||
Net income (loss)(a) | $ | 49 | $ | (434 | ) | $ | 1,719 | $ | 1,602 | |||||||
Basic net income (loss) per common share | $ | 0.01 | $ | (0.07 | ) | $ | 0.28 | $ | 0.27 | |||||||
Diluted net income (loss) per common share | $ | 0.01 | $ | (0.07 | ) | $ | 0.28 | $ | 0.26 | |||||||
(a) Includes (loss) from discontinued operations, net of tax | $ | (196 | ) | $ | (87 | ) | $ | (157 | ) | $ | (188 | ) |
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Balance at | Additions | |||||||||||||||||||
Beginning of | Charged to Costs | Charged to Other | Balance at End of | |||||||||||||||||
Description | Period | and Expenses | Accounts | Deductions | Period | |||||||||||||||
(in thousands) | ||||||||||||||||||||
YEAR ENDED DECEMBER 31, 2010 | ||||||||||||||||||||
Allowance for: | ||||||||||||||||||||
Doubtful accounts | $ | 651 | $ | (48 | ) | $ | (4 | ) | $ | 14 | $ | 585 | ||||||||
YEAR ENDED DECEMBER 31, 2009 | ||||||||||||||||||||
Allowance for: | ||||||||||||||||||||
Doubtful accounts | $ | 621 | $ | 192 | $ | (23 | ) | $ | 139 | $ | 651 | |||||||||
YEAR ENDED DECEMBER 31, 2008 | ||||||||||||||||||||
Allowance for: | ||||||||||||||||||||
Doubtful accounts | $ | 865 | $ | (57 | ) | $ | — | $ | 187 | $ | 621 |
Allowance | Release of | Release of | ||||||||||||||||||
Balance at | Recorded on | Allowance on | Allowance on | |||||||||||||||||
Beginning of | Current Year | Current Year | Losses Expired or | Balance at End of | ||||||||||||||||
Description | Period | Losses | Utilization | Revalued | Period | |||||||||||||||
(in thousands) | ||||||||||||||||||||
YEAR ENDED DECEMBER 31, 2010 | ||||||||||||||||||||
Allowance for: | ||||||||||||||||||||
Deferred tax valuation | $ | 560 | $ | 696 | $ | — | $ | (319 | ) | $ | 937 | |||||||||
YEAR ENDED DECEMBER 31, 2009 | ||||||||||||||||||||
Allowance for: | ||||||||||||||||||||
Deferred tax valuation | $ | 2,018 | $ | — | $ | — | $ | (1,458 | ) | $ | 560 | |||||||||
YEAR ENDED DECEMBER 31, 2008 | ||||||||||||||||||||
Allowance for: | ||||||||||||||||||||
Deferred tax valuation | $ | 2,826 | $ | 18 | $ | — | $ | (826 | ) | $ | 2,018 |
F-41