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For Immediate Release
INVESTOR RELATIONS CONTACT: COMPANY CONTACT:
Neil Berkman or Melanie Beeler Owen Farren
Neil Berkman Associates President & CEO
(310) 277-5162 (856) 727-1500
info@BerkmanAssociates.com www.slpdq.com
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SL INDUSTRIES ANNOUNCES FURTHER RESTRUCTURING
MT. LAUREL, NEW JERSEY, July 19, 2001 . . . SL INDUSTRIES, INC. (NYSE &
PHLX:SL) today announced that its Board of Directors recently approved a series
of business restructuring actions in its power electronics group as a result of
the prolonged downturn in the telecommunications industry. These actions include
adjusting manufacturing capacity and reducing personnel.
The first of these actions involves a personnel reduction of 175
employees at the Company's Condor D.C. Power Supplies subsidiary, representing
27% of Condor's workforce. The reduction is in addition to the reduction of
approximately 400 employees announced in April. Pre-tax charges of $700,000
associated with severance costs for this most recent reduction will be recorded
in the third quarter ending September 30. The Company expects to realize
annualized pre-tax savings of approximately $6,000,000 as a result of the
personnel reductions effected this year. Initial savings from the latest
reductions will begin during the third quarter ending September 30.
Actions to adjust manufacturing capacity and dispose of underperforming
assets are also being undertaken. In this regard, the Company expects to incur
pre-tax charges of approximately $3,200,000, associated with accrued operating
losses of discontinued operations and anticipated asset impairment charges
relating to such discontinued operations. These charges will be recorded in the
second quarter ended June 30.
In addition, the Company will take pre-tax charges of approximately
$2,900,000 to write down excess inventory acquired or produced for customers in
the telecommunications market. The write down is the result of an internal
review of anticipated inventory usage in light of program cancellations,
delivery postponements, and slow order activity in the telecommunications
market. These inventory charges will be recorded in the second quarter ended
June 30.
Owen Farren, President and Chief Executive Officer, stated, "SL
Industries invested to meet the anticipated demand for telecommunications and
data communications products throughout the world. The Condor business unit
developed a manufacturing platform with sufficient capacity to accommodate
robust growth at low incremental costs. Unfortunately, not only has the
projected growth not materialized, but it appears the market will remain
depressed for a prolonged period of time. While we deeply regret the impact of
the personnel reductions on our employees, the Company must take significant
measures to adapt its asset and expense structure in the face of these poor
conditions."
Farren added, "As we entered the year, customers in the
telecommunications market forecast strong sales growth in 2001, just as a
worldwide component shortage was increasing the prices of certain raw materials.
In an effort to meet our customers' expectations, SL Industries increased
inventory to keep up with rising demand. This inventory write down reflects the
effects of the substantial and sudden decline in customer demand throughout the
industry.
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SL INDUSTRIES ANNOUNCES FURTHER RESTRUCTURING
July 19, 2001
Page 2
"The severe slowdown in the telecommunications and semiconductor markets
continues to have a significant impact on the Company's financial performance.
The Company believes that it will have adequate liquidity from operations and
through its credit facility to fund operations and working capital requirements
through the end of the third quarter. It is considering raising additional funds
in the near term through the sale or other disposition of certain of its
non-operating assets and is engaged in discussions with its lenders regarding
its liquidity position and working capital needs. The Company may seek to obtain
additional financing through other sources. There can be no assurance that the
Company will be able to obtain funds, sufficient to conduct its operations, on
satisfactory terms, in which event its ability to continue operations as
presently conducted will be materially adversely affected."
Farren continued, "The Company's business units continue to perform well
in sectors not affected by the telecom and semiconductor market slowdowns. In
the power electronics group, Condor and Teal Electronics are engaged in a number
of new programs for medical and industrial equipment manufacturers, and RFL
Electronics is benefiting from increased capital investment by the utility
industry. In the Company's power motion group, both SL Montevideo Technology and
Elektro-Metall Export are realizing strong growth in aerospace-related sales.
Full results for the second quarter ended June 30 are anticipated to be released
the first half of August.
"Despite the market downturn in the telecommunications and semiconductor
industries, SL Industries is continuing its discussions with potential
acquirers. Based on interest expressed by certain parties, the Company has
directed Credit Suisse First Boston to solicit interest in SL's power
electronics group and power motion group separately, while it continues to work
with us in pursuing the original process to sell the entire Company. We
anticipate that by the end of August interested parties will have completed
their due diligence reviews and submitted formal offers for evaluation."
ABOUT SL INDUSTRIES
SL Industries, Inc. designs, manufactures and markets Power and Data
Quality (PDQ) equipment and systems for industrial, medical, aerospace and
consumer applications. For more information about SL Industries, Inc. and its
products, please visit the Company's web site at www.SLpdq.com.
FORWARD-LOOKING STATEMENTS
This press release contains statements that are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These statements are based on current expectations, estimates and
projections about the Company's business based, in part, on assumptions made by
management. These statements are not guarantees of future performance and
involve risks, uncertainties and assumptions that are difficult to predict.
Therefore, actual outcomes and results may differ materially from what is
expressed or forecasted in such forward-looking statements due to numerous
factors, including those described above and the following: the effectiveness of
the cost reduction initiatives undertaken by the Company, changes in demand for
the Company's products, product mix, the timing of customer orders and
deliveries, the impact of competitive products and pricing, constraints on
supplies of critical components, excess or shortage of production capacity,
difficulties encountered in the integration of acquired businesses and other
risks discussed from time to time in the Company's Securities and Exchange
Commission filings and reports. In addition, such statements could be affected
by general industry and market conditions and growth rates, and general domestic
and international economic conditions. Such forward-looking statements speak
only as of the date on which they are made, and the Company does not undertake
any obligation to update any forward-looking statement to reflect events or
circumstances after the date of this release.
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