For Immediate Release
AGENCY 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
SL INDUSTRIES, INC. ANNOUNCES THIRD QUARTER RESULTS
AND DISCLOSES STRATEGIC DIRECTION
Sets Special Meeting of Shareholders for January 22, 2002
MT. LAUREL, NEW JERSEY, NOVEMBER 5, 2001 . . . SL INDUSTRIES, INC. (NYSE
& PHLX:SL) announced today that net sales from continuing operations for the
third quarter ended September 30, 2001 were $34 million, compared to net sales
of $36.3 million for the third quarter last year, a decrease of $2.3 million or
6%. Pro forma net income from continuing operations was $63,000 for the third
quarter ended September 30, 2001, compared to pro forma net income of $973,000
for the same period last year. Pro forma net income from continuing operations
for the third quarter ended September 30, 2001 excludes the effects of
restructuring costs of $1.1 million, net of taxes, and the write-down of
inventory of continuing operations of $33,000, net of taxes. Pro forma net
income from continuing operations for the third quarter ended September 30, 2000
excludes a gain on the settlement of a class action lawsuit of $0.9 million.
Actual net loss for the third quarter ended September 30, 2001 was $2.7
million, or $0.47 per diluted share, which includes a net loss of $1.6 million
from the discontinued operations of SL Waber, compared with actual net income of
$0.7 million, or $0.13 per diluted share, for the same period last year, which
includes a net loss of $1.1 million from the discontinued operations of SL
Waber.
Net sales from continuing operations for the nine months ended September
30, 2001 were $104 million, compared to net sales of $112.8 million for the nine
months ended September 30, 2000, a decrease of $8.8 million or 8%. Pro forma net
income from continuing operations was $475,000 for the nine months ended
September 30, 2001, compared to pro forma net income of $4.3 million for the
same period last year. Pro forma net income from continuing operations excludes
the effects of restructuring costs of $1.8 million, net of taxes, and the
write-down of inventory of continuing operations of $1.9 million, net of taxes.
Pro forma net income from continuing operations for the nine months ended
September 30, 2000 excludes a gain on the settlement of a class action lawsuit
of $0.9 million.
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SL INDUSTRIES ANNOUNCES THIRD QUARTER RESULTS
November 5, 2001
Page Two
Actual net loss for the nine months ended September 30, 2001 was $7.5
million, or $1.32 per diluted share, which includes a net loss of $4.2 million
from the discontinued operations of SL Waber, compared with actual net income of
$2.1 million, or $0.36 per diluted share, for the same period last year, which
includes a net loss of $3.1 million from the discontinued operations of SL
Waber.
Subsequent to announcing second quarter results, the Company made two
announcements of programs to reduce its workforce, consolidate excess facilities
and dispose of poorly performing operations. These actions were taken largely as
a result of the sudden, severe and continuing downturn in sales to
telecommunications equipment manufacturers. In these announcements, the Company
stated that it would record additional pre-tax restructuring charges of $2.4
million, of which $1.1 million was recorded in the third quarter. The additional
$1.3 million will be recognized primarily in the fourth quarter of 2001.
Commenting on the results, Owen Farren, President and Chief Executive
Officer of SL Industries, Inc., said, "As we have been reporting throughout the
year, SL Industries has been, and continues to be, adversely affected by the
downturn in capital spending in the telecommunications and semiconductor
industries. In response, the Company implemented a restructuring plan to
conserve cash and reduce fixed costs. As a result of these measures, it appears
the Company's financial condition and results have improved.
"SL Industries operates in five primary markets - aerospace, medical,
semiconductor, utilities, and telecommunications. During 2001, the semiconductor
and telecom industries have suffered historic declines. Additionally, the
terrorist attacks of September 11 clearly have had an adverse impact on the
commercial aerospace industry. We have managed the business to adapt to these
extraordinarily difficult circumstances. Barring any further economic slowdown,
we believe SL Industries' financial performance should continue to improve."
Farren continued, "Before the slowdown in the telecommunications and
manufacturing sectors became apparent, the Board of Directors retained Credit
Suisse First Boston (CSFB) to explore a sale of the business. With the
assistance of CSFB, the Company engaged in an extensive process to solicit and
analyze transaction proposals from a number of potential purchasers. These
proposals included indications of interest to acquire the entire corporation,
the power electronics group, the power motion group and certain individual
subsidiaries. Based on the advice of CSFB concerning preliminary bids received
to date from prospective purchasers, the Board of Directors has determined that
it is not in the best interests of the shareholders to sell the entire Company
at this time. We believe that, due to the difficult economic and financing
environment, among other factors, potential purchasers have discounted their
preliminary bids to levels that we feel are not acceptable or reflective of the
value of our business.
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SL INDUSTRIES ANNOUNCES THIRD QUARTER RESULTS
November 5, 2001
Page Three
"Notwithstanding these developments, the Company did receive attractive
offers for two subsidiaries. It is too early to determine if negotiations
associated with these offers will be successful.
"The decision to explore a sale of the Company was based on an analysis
of long-term market developments. That analysis is unchanged. The Board of
Directors will continue to work with CSFB to evaluate offers for the Company or
its business units, which, in its judgment, will maximize shareholder value over
a reasonable period of time."
Farren concluded, "Now that a decision has been made for the present
with respect to the sales process, the Company has determined to schedule a
special meeting of shareholders for the election of directors. As was previously
discussed, this meeting was postponed pending the outcome of CSFB's solicitation
efforts. Accordingly, the Company hereby announces that a Special Meeting of
Shareholders will be held on January 22, 2002 for shareholders of record on
December 5, 2001. We look forward to discussing the events of the past year and
the prospects for the future with our shareholders."
CONFERENCE CALL
SL Industries has scheduled a conference call today at 11:00 AM EST to
discuss its results for the third quarter of 2001, its efforts to sell the
Company and other matters contained in this release. A simultaneous WebCast of
the conference call may be accessed online at www.CompanyBoardroom.com or at
www.slpdq.com. A replay will be available immediately following the WebCast at
these same Internet addresses. For a telephone replay, dial (800) 633-8284,
reservation #19925400 beginning at approximately 1:00 PM EST.
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 reductions undertaken by the Company, the Company's ability to obtain
adequate working capital on satisfactory terms, the Company's ability to meet
its obligations under its credit facility or to obtain waivers thereof, 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.
SL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(All amounts in thousands)
September 30, December 31,
2001 2000
------------ ------------
Cash and cash equivalents ..................... $ 1,444 $ 1,189
Accounts receivable ........................... 21,707 20,312
Inventories ................................... 20,971 23,491
Net current assets of discontinued operations . -- 4,866
Other current assets .......................... 10,493 6,004
-------- --------
Total current assets ........................ 54,615 55,862
Property, plant and equipment, net ............ 18,989 19,781
Fixed assets of discontinued operations ....... -- 980
Intangible assets, net ........................ 19,806 20,770
Other assets .................................. 15,661 16,088
-------- --------
Total assets ................................ $109,071 $113,481
======== ========
Current liabilities ........................... $ 62,874 $ 24,682
Long-term debt less portion due within one year 1,052 36,533
Other liabilities ............................. 8,557 8,916
Shareholders' equity .......................... 36,588 43,350
-------- --------
Total liabilities and shareholders' equity .. $109,071 $113,481
======== ========
SL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(All amounts in thousands, except for per share data)
Three-Months Ended Nine-Months Ended
September-30 September-30
2001 2000 2001 2000
---------- ---------- --------- ---------
Net sales ................................................... $ 33,968 $ 36,260 $ 104,029 $ 112,767
--------- --------- --------- ---------
Cost and expenses:
Cost of products sold ..................................... 22,716 24,848 70,490 73,508
Write-down of inventory ................................... 50 -- 2,940 --
Engineering and product development ....................... 1,979 2,361 6,560 7,381
Selling, general and administrative ....................... 6,612 5,414 20,101 19,072
Depreciation and amortization ............................. 1,248 1,472 3,561 3,780
Restructuring costs ....................................... 1,783 -- 2,891 --
Settlement of class action suit ........................... -- (875) -- (875)
--------- --------- --------- ---------
Total cost and expenses ..................................... 34,388 33,220 106,543 102,866
--------- --------- --------- ---------
Income (loss) from operations ............................... (420) 3,040 (2,514) 9,901
Other income (expense):
Interest income ........................................... 99 56 278 258
Interest expense .......................................... (1,168) (706) (2,628) (2,221)
--------- --------- --------- ---------
Income (loss) from continuing operations before income taxes (1,489) 2,390 (4,864) 7,938
Income taxes ................................................ (405) 542 (1,565) 2,743
--------- --------- --------- ---------
Income (loss) from continuing operations .................... (1,084) 1,848 (3,299) 5,195
Discontinued operations (net of tax) ........................ (1,626) (1,119) (4,244) (3,122)
--------- --------- --------- ---------
Net income (loss) ........................................... $ (2,710) $ 729 $ (7,543) $ 2,073
========= ========= ========= =========
BASIC NET INCOME (LOSS) PER COMMON SHARE
Income (loss) from continuing operations ................ $ (0.19) $ 0.33 $ (0.58) $ 0.92
Discontinued operations (net of tax) .................... (0.28) (0.20) (0.74) (0.55)
--------- --------- --------- ---------
Net income (loss) ....................................... $ (0.47) $ 0.13 $ (1.32) $ 0.37
========= ========= ========= =========
DILUTED NET INCOME (LOSS) PER COMMON SHARE
Income (loss) from continuing operations ................ $ (0.19) $ 0.32 $ (0.58) $ 0.90
Discontinued operations (net of tax) .................... (0.28) (0.19) (0.74) (0.54)
--------- --------- --------- ---------
Net income (loss) ....................................... $ (0.47) $ 0.13 $ (1.32) $ 0.36
========= ========= ========= =========
Shares used in computing basic net income (loss)
per common share .......................................... 5,707 5,643 5,695 5,628
Shares used in computing diluted net income (loss)
per common share .......................................... 5,707 5,743 5,695 5,760
SL INDUSTRIES, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(All amounts in thousands, except for per share data)
THREE-MONTHS ENDED NINE-MONTHS ENDED
SEPTEMBER-30 SEPTEMBER-30
2001 2000 2001 2000
Net sales ................................................... $ 33,968 $ 36,260 $ 104,029 $ 112,767
--------- --------- --------- ---------
Cost and expenses:
Cost of products sold ..................................... 22,716 24,848 70,490 73,508
Engineering and product development ....................... 1,979 2,361 6,560 7,381
Selling, general and administrative ....................... 6,612 5,414 20,101 19,072
Depreciation and amortization ............................. 1,248 1,472 3,561 3,780
--------- --------- --------- ---------
Total cost and expenses ..................................... 32,555 34,095 100,712 103,741
--------- --------- --------- ---------
Income from operations ...................................... 1,413 2,165 3,317 9,026
Other income (expense):
Interest income ........................................... 99 56 278 258
Interest expense .......................................... (1,168) (706) (2,628) (2,221)
Income from continuing operations before income taxes........ 344 1,515 967 7,063
Income taxes ................................................ 281 542 492 2,743
--------- --------- --------- ---------
PRO FORMA INCOME FROM CONTINUING OPERATIONS ................. 63 973 475 4,320
Restructuring costs (net of taxes) .......................... (1,114) -- (1,842) --
Write-down of inventory (net of taxes) ...................... (33) -- (1,932) --
Settlement of class action suit ............................. -- 875 -- 875
Discontinued operations (net of taxes) ...................... (1,626) (1,119) (4,244) (3,122)
--------- --------- --------- ---------
Actual net income (loss) .................................... $ (2,710) $ 729 $ (7,543) $ 2,073
========= ========= ========= =========
BASIC NET INCOME PER COMMON SHARE
Income from continuing operations ....................... $ 0.01 $ 0.17 $ 0.08 $ 0.76
Restructuring costs of continuing operations ............ (0.19) -- (0.32) --
Write-down of inventory (net of taxes) .................. (0.01) -- (0.34) --
Settlement of class action suit ......................... -- 0.16 -- 0.16
Discontinued operations ................................. (0.28) (0.20) (0.74) (0.55)
--------- --------- --------- ---------
Net income (loss) ....................................... $ (0.47) $ 0.13 $ (1.32) $ 0.37
========= ========= ========= =========
DILUTED NET INCOME PER COMMON SHARE
Income from continuing operations ....................... $ 0.01 $ 0.17 $ 0.08 $ 0.75
Restructuring costs of continuing operations ............ (0.19) -- (0.32) --
Write-down of inventory (net of taxes) .................. (0.01) -- (0.34) --
Settlement of class action suit ......................... -- 0.15 -- 0.15
Discontinued operations ................................. (0.28) (0.19) (0.74) (0.54)
--------- --------- --------- ---------
Net income (loss) ....................................... $ (0.47) $ 0.13 $ (1.32) $ 0.36
========= ========= ========= =========
Shares used in computing basic net income (loss)
per common share .......................................... 5,707 5,643 5,695 5,628
Shares used in computing diluted net income (loss)
per common share .......................................... 5,707 5,743 5,695 5,760