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