1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) FOR THE FISCAL YEAR ENDED JULY 31, 1995 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period ______ to ______ Commission file number 1-4987 SL INDUSTRIES, INC. (Exact name of registrant as specified in its charter) NEW JERSEY 21-0682685 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 520 FELLOWSHIP ROAD, SUITE 306C, MT. LAUREL, NJ 08054 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 609-727-1500 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Common stock, $.20 par value New York Stock Exchange Philadelphia Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- ---- Indicate by check mark if disclosure of delinquent filers to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to this Form 10-K./X/ On October 13, 1995, the aggregate market value of SL common stock was approximately $43,875,000. The number of shares of common stock outstanding as of October 13, 1995, was 5,661,312. DOCUMENTS INCORPORATED BY REFERENCE: Part I, II, IV - Annual Report to Shareholders for the fiscal year ended July 31, 1995 Part III - Proxy Statement dated October 12, 1995 2 PART I ITEM 1. DESCRIPTION OF BUSINESS (a) General Development of Business On March 29, 1956, the Registrant was incorporated as G-L Electronics Company in the state of New Jersey. Its name was changed to G-L Industries, Inc., in November 1963, SGL Industries, Inc., in November 1970 and then to the present name of SL Industries Inc., in September 1984. The Registrant and its subsidiaries design, manufacture and distribute a broad range of innovative engineered products for industrial and consumer niche markets, as well as customized components and other products for a wide range of original equipment manufacturers ("OEM"). The Registrant currently defines its operations in two business segments: Power and Data Quality and Specialty Products. The products of the Registrant and its subsidiaries either become components of other industrial or consumer products or are sold through distribution for general retail or commercial use. For the most part, the Registrant and its subsidiaries concentrate on specialty markets believed to offer higher profit margins and greater potential for growth than industrial commodities. Sales between segments are not material. No single customer accounts for more than 10% of consolidated net sales nor are export sales material thereto. On May 1, 1995, the Registrant acquired substantially all of the assets and liabilities of Teal Electronics Corporation ("Teal"). Teal was founded in 1985 and is based in San Diego, California. Teal designs, manufactures and distributes custom AC power subsystems for OEM. Teal serves a variety of niche markets, which include medical, telecommunications, printing and test equipment. This strategic acquisition enhances the Registrant's reputation for supplying superior power and data quality products. On May 24, 1995, the Registrant distributed all of the shares of its wholly-owned subsidiary, SL LUBE/systems, Inc., in a tax free distribution, in exchange for 400,000 shares of its common stock owned by Vesper Corporation. (b) Financial Segment Information Financial information about the Registrant's business segments is incorporated herein by reference to Note 13 in the Annual Report to Shareholders for the fiscal year ended July 31, 1995. 3 (c) Narrative Description of Business The following narrative reflects the reclassification of the aviation and industrial igniter and spark plug product line from the Power and Data Quality segment to the Specialty Products segment because its products no longer fit the definition of power and data quality. Power and Data Quality Segment: Products The products of SL Waber, Inc. ("Waber"), consist of over 200 models and configurations of multiple outlet strips, surge suppressors, voltage regulators, power conditioners, and uninterruptible and standby power supplies. These products are sold by independent sales representatives and company sales personnel to distributors and dealers of electronics and electrical supplies; retailers and wholesalers of office, computer and consumer products; and to OEM. The products include those sold under the trademarks of "POWERMASTER(R)", "DATAGARD(R)", "SURGE SENTRY(TM)", "MEDGARD(TM)", "POWERHOUSE(R)", "CLIPSTRIP(R)" and "LINEBACKER(TM)". In fiscal 1994, Waber introduced a new line of satellite network surge protectors and significantly increased its penetration in the private label OEM business market. For the years ended July 31, 1995, 1994, and 1993, net sales, as a percentage of consolidated net sales, were 46%, 45% and 46%, respectively. Condor D.C. Power Supplies, Inc. ("Condor"), designs, manufactures and markets standard and custom AC-DC power supplies in both linear and switching configurations. These products range in power from 10-400 watts and are manufactured in either commercial or medical configurations. Condor power supplies closely regulate and monitor power outputs, using patented filter and other technologies, resulting in little or no electrical interference. These products are sold through manufacturers sales representatives and electronic distributors to customers in the medical, industrial, telecommunications and instrumentation markets. Medical customers use Condor's products to supply power in devices such as heart and respiration monitors, infusion pumps, pacemaker programmers and other critical patient-connected applications, all of which depend upon precise, low-voltage power outputs. For the years ended July 31, 1995, 1994 and 1993, net sales, as a percentage of consolidated net sales, were 23%, 22% and 14%, respectively. SL Montevideo Technology, Inc. ("MTI"), is continuing its recent growth as a technological leader in the design and manufacture of intelligent, high power density, precision motors. MTI has been capitalizing on its new motor and (patent pending) motor control technologies to win important programs in both traditional and new market areas. MTI has been validating its 4 new technologies through customer applications ranging from the Windows(R) based computer driven Digital Signal Process motion control package, which has enabled highly efficient oil field exploration, to an advanced hybrid chip motor controller that has allowed a more compact and reliable brushless DC motor for aerospace actuators. Contributing equally as well over the past year was MTI's effort to provide "Customer Delight" in designing new solutions for older problems using advanced technology, and responding with samples and production with ever decreasing lead and cycle times. Recent program successes include high volume iron gyro upgrades and pickoff assemblies for actuation. Its defense markets continue strong, despite further program cutbacks, with recent successes in drone unmanned reconnaissance aircraft, and the newest missile programs. Negotiations are continuing with customers on advanced designs for numerous programs including Flywheel Energy Storage Systems, high performance missile guidance motors, and medical/surgical drills and saws. The aerospace and industrial markets are served by both internal company sales personnel and manufacturers' representatives. For the years ended July 31, 1995, 1994 and 1993, net sales, as a percentage of consolidated net sales, were 9%, 10% and 12%, respectively. Teal develops and manufactures custom electrical subsystems for OEM of semiconductor, medical imaging, printing and telecommunication systems. Outsourcing the AC power system to Teal helps the customers reduce cost and time to market, while increasing system performance and customer satisfaction. Custom products are often called "Power Conditioning and Distribution Units," which provide voltage conversion and stabilization, system control, power distribution, and agency approvals for systems such as CT and MRI scanners, chip testers and cellular radio systems. Most of Teal's products are sold direct to its OEM customers who include it with their systems, which are sold to the end user. Raw Materials Raw materials are supplied by various domestic and international vendors and availability for materials other than platinum and specialty metals is not foreseen to be a problem. Certain electronic components, platinum and specialty metals are subject to long lead times and limited availability. Seasonality Generally, seasonality is not a factor in this segment. 5 Significant Customers No business has a customer which accounts for 10% or more of consolidated net sales. Backlog Backlog at September 3, 1995, and September 4, 1994, was $25,197,000 and $15,166,000, respectively. The increase is primarily related to increased bookings and the acquisition of Teal. Competitive Conditions The businesses in this segment are in active competition with domestic companies, some with national name recognition, offering similar products or services and with companies producing alternative products appropriate for the same uses. In addition, Waber and Condor have experienced significant off-shore competition, for certain products in certain markets. Currently, the businesses are sourcing many components and products outside the United States. The decreasing military market has also created more competitive conditions in both the military and commercial markets. Methods of competition are primarily quality, service, delivery and price. Specialty Products Segment: Products SL Auburn, Inc. ("Auburn"), is one of the world's major producers of aviation spark plugs and igniters, under "Spitfire(TM)" and "auburn(TM)" trademarks; and the world's largest producer of custom engineered industrial spark ignition plugs, under the "Auburn(TM)" and "Durafire(TM)" trademarks. These products convert or transfer electrical power in devices that include aircraft engines (turbine and piston), furnaces and ovens for industrial processes, motors and transformers for air conditioning, and liquid level sensors for boilers and chemical processing. New products developed for introduction in fiscal 1995 included "DuraFire(TM)" industrial spark plugs which are based on new licensed technology and certified leak-proof feed throughs which meet more stringent requirements for extreme temperatures, pressures and environmental mandates. Auburn's customers are categorized as OEM, distributors, government and end users. Auburn's products are sold by company sales representatives, warehouse distributors and independent sales representatives throughout the world. For the years ended July 31, 1995, 1994 and 1993, net sales, as a percentage of consolidated net sales, were 10%, 11% and 14%, respectively. 6 SL Piping Systems, Inc., is an acknowledged leader in the shop fabrication of a wide variety of metallic piping systems used in the chemical process industry. The company also works closely with many industrial and mechanical contractors. In addition to the company's reputation with its customers for providing high quality precision welding, the application of the company's cost effective and quality enhancing pipe bending and forming techniques are preferred. The company is highly regarded for its experience in fabricating high alloy materials such as titanium, aluminum, stainless steel and the nickel alloys. Products and services include the fabrication of piping systems, jacketed piping, ASME code pressure vessels, pipe coils, modular skidded systems and specialty fabrications. Sales are made by company sales personnel and manufacturers' representatives and distributors. SL Piping Systems, Inc.'s facility is one of the largest of its type on the east coast. SL Modern Hard Chrome, Inc. ("MHC"), provides chromium plating services for the steel, paper and automotive industries. The company is a major supplier of these services in the Delaware Valley region, and has recently developed a presence in Western Europe. A new product, Nuchrome(TM), was introduced during 1995 and is intended for use primarily by the paper industry. Sales are made by appropriate company technical personnel. Raw Materials Raw materials are supplied by various domestic vendors and availability is not foreseen to be a problem. Generally, longer lead times and price increases are becoming evident. Seasonality Seasonality is not a factor in this segment. Significant Customers No business has a customer which accounts for 10% or more of consolidated net sales. MHC has four customers which make up approximately seventy-five percent of its sales. Backlog Backlog at September 3, 1995, and September 4, 1994, was $4,146,000 and $2,588,000, respectively. The increase is primarily related to increased bookings for future deliveries of feed throughs and aviation igniters. 7 Competitive Conditions The businesses in this segment compete primarily with companies offering similar services or products. The aviation ignition and service parts markets are global and highly competitive. There are numerous competitors in pipe fabrication which are classified according to scope and type of fabrication, location, materials and degree of difficulty. MHC competes on technology, as well as service. Environmental The Registrant (together with the industries in which it operates or has operated) is subject to United States and Mexican environmental laws and regulations concerning emissions to the air, discharges to surface and subsurface waters, and the generation, handling, storage, transportation, treatment and disposal of waste materials. The Registrant and the industries are also subject to other federal, state, and local environmental laws and regulations, including those that require the Registrant to remediate or mitigate the effects of the disposal or release of certain chemical substances at various sites, including some where it has ceased operations. It is impossible to predict precisely what effect these laws and regulations will have on the Registrant in the future. However, it is not expected that the Registrant will be affected differently from others in its industries. It is the Registrant's policy to comply with all environmental, health and safety regulations, as well as industry standards for maintenance. The Registrant's domestic competitors are subject to the same environmental, health and safety laws and regulations, and the Registrant believes that the compliance issues and potential expenditures of its operating subsidiaries are comparable to those faced by their major domestic competitors. Environmental liabilities and related costs are believed to have been adequately provided for in the consolidated financial statements. Capital expenditures for these purposes for fiscal year 1995 were immaterial and are estimated to be immaterial for fiscal 1996. For additional information related to environmental issues, see Note 10 to the consolidated financial statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Report to Shareholders for the fiscal year ended July 31, 1995. 8 Employees As of September 3, 1995, the Registrant had a total of 1,639 employees. Of the total 1,639 employees, 144 employees are subject to collective bargaining agreements. Additional Information For the purposes of providing additional information regarding the development of the Registrant's businesses in fiscal 1995, the "Operations Review" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Report to Shareholders for the fiscal year ended July 31, 1995, are incorporated by reference. ITEM 2. PROPERTIES Approx. Owned or Leased Square And Location General Character Footage Expiration Date - - -------- ----------------- ------- --------------- Power and Data Quality: Montevideo, Manufacture of 26,200 Owned MN precision avionic products Matamoros, Manufacture of 8,600 Leased Mexico precision avionic 11/05/97 products Nogales, Manufacture of 43,500 Leased Mexico power protection 04/30/96 products Nogales, Manufacture and 51,500 Leased AZ distribution of 07/31/96 power protection products Mt. Laurel, Corporate Office - 15,900 Leased NJ power protection 11/30/99 products Oxnard, Manufacture of 36,000 Leased CA power supply products 02/28/03 Mexicali, Manufacture and Leased Mexico distribution of 50,000 06/01/98 power supply products 11,000 08/31/00 San Diego, Manufacture of 31,200 Leased CA AC power subsystems 03/22/00 9 Approx. Owned or Leased Square And Location General Character Footage Expiration Date - - -------- ----------------- ------- --------------- Specialty Products: Auburn, Manufacture of 55,000 Owned NY specialty spark plugs and igniters Newport, Manufacture of 32,500 Leased DE fabricated piping 11/30/98 systems Camden, Industrial chrome 15,800 Owned NJ plating Pennsauken, Industrial chrome 6,000 Owned NJ plating warehouse Other: Mt. Laurel, Corporate Office 4,200 Leased NJ 11/30/99 All manufacturing facilities are adequate for current production requirements. The Registrant believes that its facilities are sufficient for future operations, maintained in good operating condition and adequately insured. Of the owned properties, none are subject to a major encumbrance material to the operations of the Registrant. ITEM 3. LEGAL PROCEEDINGS In the ordinary course of its business, the Registrant is subject to loss contingencies pursuant to federal, state and local governmental laws and regulations and is also party to certain legal actions, most frequently complaints by terminated employees. It is management's opinion that the impact of these legal actions will not have a material effect on the financial position or results of operations of the Registrant. There are no legal proceedings to which any Director or Officer of the Registrant, or any associate of any Director or Officer, is a party or has a material interest adverse to the Registrant's interest. There are no material proceedings with environmental issues, which involve penalties or sanctions. Additional information pertaining to legal proceedings is found in Note 10 to the consolidated financial statements, and in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Report to Shareholders for the fiscal year ended July 31, 1995, and is incorporated herein by reference. 10 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the fourth quarter ended July 31, 1995, there were no matters submitted to a vote of security holders, through a solicitation of proxies or otherwise. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS FISCAL 1995 FISCAL 1994 ------------- ------------- HIGH LOW HIGH LOW ---- --- ---- --- Stock Prices 1st Quarter 4 1/2 3 7/8 4 1/4 3 2nd Quarter 5 4 4 3 3rd Quarter 5 1/4 4 1/2 5 3 1/2 4th Quarter 6 1/4 4 3/4 4 5/8 3 5/8 Dividends Cash - November $.03 $.03 Cash - June $.03 $.03 As of September 15, 1995, there were approximately 1,900 registered shareholders. A semi-annual cash dividend of $.03 per share was declared on September 21, 1995, which is payable on November 30, 1995, to shareholders of record on November 15, 1995. No stock dividend was possible, due to the deficit earnings balance at July 31, 1995. Payments of cash dividends are restricted to $600,000 per fiscal year under the Registrant's revolving credit agreement with its participating banks. ITEM 6. SELECTED FINANCIAL DATA The information required by this item is incorporated herein by reference to the material captioned "Selected Financial Data" in the Annual Report to Shareholders for the fiscal year ended July 31, 1995. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information required by this item is incorporated herein by reference to the material captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Report to Shareholders for the fiscal year ended July 31, 1995. 11 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is incorporated herein by reference to the consolidated financial statements and the notes thereto and the material captioned "Report of Independent Public Accountants" and "Selected Quarterly Financial Data(Unaudited)" in the Annual Report to Shareholders for the fiscal year ended July 31, 1995. ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE This item is not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this item, except for the ages and positions held with the Registrant of the executive officers, is incorporated herein by reference to the material captioned "Election of Directors" on pages 3 through 5 of the proxy statement dated October 12, 1995. The ages of the executive officers are as follows: Owen Farren, age 44, Ted D. Taubeneck, age 68, and James E. Morris, age 58. The capacities in which each served are as follows: O. Farren, President and Chief Executive Officer since April 1991 and prior thereto Executive Vice President since 1990; T.D. Taubeneck, Executive Vice President, Secretary and Treasurer since July 1988; and J.E. Morris, Vice President and Corporate Controller since September 1991 and a financial executive since 1978. ITEM 11. EXECUTIVE COMPENSATION The information required by this item is incorporated herein by reference to the material captioned "The Board Of Directors" and "Executive Officer Compensation" on pages 6 through 10 of the proxy statement dated October 12, 1995. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this item is incorporated herein by reference to the material captioned "Principal Shareholders of the Company", "Share Ownership of Directors and Officers" and "Election of Directors" on pages 3 through 5 of the proxy statement dated October 12, 1995. 12 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item is incorporated herein by reference to the material captioned "Executive Officer Compensation" on pages 7 through 9 of the proxy statement dated October 12, 1995. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) (1) Financial Statements The following consolidated financial statements, related notes to consolidated financial statements and the report of independent public accountants appearing in the portions of the Registrant's Annual Report to Shareholders, filed as Exhibit 13, for the fiscal year ended July 31, 1995, are incorporated herein by reference: Consolidated Statements of Earnings - Years ended July 31, 1995, 1994 and 1993 Consolidated Balance Sheets - July 31, 1995 and 1994 Consolidated Statements of Shareholders' Equity - Years ended July 31, 1995, 1994 and 1993 Consolidated Statements of Cash Flows - Years ended July 31, 1995, 1994 and 1993 Notes to Consolidated Financial Statements Report of Independent Public Accountants (a) (2) Financial Statement Schedules The following financial statement schedules for the years 1995, 1994 and 1993 are submitted herewith: Report of Independent Public Accountants - Arthur Andersen LLP Report of Independent Accountants - Coopers & Lybrand Schedule VIII - Valuation and Qualifying Accounts All other schedules are omitted because (a) the required information is shown elsewhere in the Annual Report, or (b) they are inapplicable, or (c) they are not required. 13 (a) (3) Exhibits The information called for by this section is listed in the Exhibit Index of this report. (b) Reports on Form 8-K On May 22, 1995, the Registrant filed a report on Form 8-K covering the May 1, 1995, acquisition of Teal Electronics Corporation. On June 8, 1995, the Registrant filed a report on Form 8-K covering the May 24, 1995, disposition of its wholly-owned subsidiary, SL LUBE\systems, Inc. On July 24, 1995, the Registrant filed a report on Form 8-K/A to submit financial statements and pro forma financial information for the Teal Electronics Corporation acquisition and the SL LUBE\systems, Inc. disposition. 14 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SL INDUSTRIES, INC. ------------------- (Registrant) /s/ Owen Farren ----------------- Owen Farren, President October 25, 1995 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been `signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated. /s/ Owen Farren /s/ J. Dwane Baumgardner - - ----------------- ------------------------ Owen Farren J. Dwane Baumgardner President and Chief Director Executive Officer October 20, 1995 October 25, 1995 /s/ James E. Morris /s/ Dr. Edward A. Gaugler - - ------------------- ------------------------- James E. Morris Dr. Edward A. Gaugler Vice President and Director Corporate Controller October 23, 1995 October 25, 1995 /s/ Salvatore J. Nuzzo /s/ George R. Hornig - - ---------------------- -------------------- Salvatore J. Nuzzo George R. Hornig Chairman of the Board Director October 20, 1995 October 20, 1995 /s/ Warren G. Lichtenstein -------------------------- Warren G. Lichtenstein Director October 24, 1995 /s/ Robert J. Sanator --------------------- Robert J. Sanator Director October 23, 1995 15 COMMISSION FILE NO. 1-4987 ================================================================================ SL INDUSTRIES, INC. AND SUBSIDIARIES SUPPORTING SCHEDULES FOR ANNUAL REPORT (Form 10-K) TO SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 16 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To SL Industries, Inc.: We have audited in accordance with generally accepted auditing standards, the consolidated financial statements for the years ended July 31, 1995 and 1994 included in SL Industries, Inc.'s annual report to shareholders incorporated by reference in this Form 10-K, and have issued our report thereon dated September 15, 1995. Our audits were made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed in the index at Item 14 (a)(2) is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Philadelphia, PA September 15, 1995 17 [COOPERS & LYBRAND LETTERHEAD] REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders of SL Industries, Inc.: We have audited the consolidated balance sheet of SL Industries, Inc. and subsidiaries as of July 31, 1993, and the related consolidated statements of operations, shareholders' equity, and cash flows for the period ended July 31, 1993 that are incorporated by reference in this Form 10-K from the 1995 Annual Report to Shareholders of SL Industries, Inc. In connection with our audit of such consolidated financial statements, we have also audited the related consolidated financial statement schedule listed in Item 14(a) of this Form 10-K. These financial statements and consolidated financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and consolidated financial statement schedule based on our audits. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit 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 audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly in all material respects, the consolidated financial position of SL Industries, Inc. and subsidiaries as of July 31, 1993, and the consolidated results of their operations and their cash flows for the period ended July 31, 1995 in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein. /s/ COOPERS & LYBRAND --------------------- COOPERS & LYBRAND 2400 Eleven Penn Center Philadelphia, Pennsylvania September 20, 1993 18 SCHEDULE VIII VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED JULY 31, 1995, 1994 AND 1993 (In Thousands) - - --------------------------------------------------------------------------------------------------------------------- Additions ----------------------------- Balance at Charged to Charged Balance at Beginning Costs and to Other End of Description of Period Expenses Accounts Deductions Period - - --------------------------------------------------------------------------------------------------------------------- YEAR 1995 Allowance for: doubtful accounts $256 $ 175 $ 63 $ 41(b) $ 453 ==== ====== ==== ====== ====== customer credits $528 $2,701 $--- $1,862(c) $1,367 ==== ====== ==== ====== ====== YEAR 1994 Allowance for: doubtful accounts $258 $ 50 $111 $ 163(b) $256 ==== ====== ==== ====== ==== customer credits $305 $2,200 $--- $1,977(c) $528 ==== ====== ==== ====== ==== YEAR 1993 Allowance for: doubtful accounts $241 $ 83 $ 25(a) $ 91(b) $258 ==== ====== ==== ====== ==== customer credits $656 $1,330 $--- $1,681(c) $305 ==== ====== ==== ====== ==== - - ---------------- (a) Due to acquisitions. (b) Accounts receivable written off, net of recoveries. (c) Primarily for customer advertising programs. 19 INDEX TO EXHIBITS The exhibit number, description and sequential page number in the original copy of this document where exhibits can be found follows: Exhibit # Description - - --------- ----------- 3.1 Articles of Incorporation. Incorporated by reference to Exhibit 3-A to the Registrant's report on Form 10-K for the fiscal years ended July 31, 1985, July 31, 1986, July 31, 1987, and July 31, 1988. 3.2 By-Laws. Incorporated by reference to Exhibit 3 to the Registrant's report on Form 10-Q dated October 31, 1994. 10.1 Supplemental Compensation Agreement for the Benefit of Byrne Litschgi. Incorporated by reference to Exhibit 10.1 to the Registrants report on Form 8 dated November 9, 1990. 10.2 Chairman's Executive Severance Agreement. Incorporated by reference to Exhibit 10.2 to the Registrant's report on Form 8 dated November 9, 1990. 10.3 First Amendment to Chairman's Executive Severance Agreement and to Supplemental Compensation Agreement. Incorporated by reference to Exhibit 10.3.1 to the Registrant's report on Form 8 dated November 9, 1990. 10.4 Second Amendment to Chairman's Executive Severance Agreement and to Supplemental Compensation Agreement. Incorporated by reference to Exhibit 10.3.2 to the Registrant's report on Form 8 dated November 9, 1990. 10.5 Third Amendment to Chairman's Executive Severance Agreement and to Supplemental Compensation Agreement. Incorporated by reference to Exhibit 10.3.3 to the Registrant's report on Form 8 dated November 9, 1990. 10.6 Fourth Amendment to Chairman's Executive Severance Agreement and to Supplemental Compensation Agreement. Incorporated by reference to Exhibit 10.3.2 to the Registrant's report on Form 8 dated November 9, 1990. 20 Exhibit # Description - - --------- ----------- 10.7 Deferred Supplemental Compensation Agreement with Grant Heilman. Incorporated by reference to Exhibit 10.4.5 to the Registrant's report on Form 8 dated November 9, 1990. 10.8 Deferred Supplemental Compensation Agreement with William Hess. Incorporated by reference to Exhibit 10.4.6 to the Registrant's report on Form 8 dated November 9, 1990. 10.9 Supplemental Compensation Agreement for the Benefit of Donald J. Lloyd-Jones. Incorporated by reference to Exhibit 10.5.1 to the Registrant's report on Form 8 dated November 9, 1990. 10.10 Supplemental Compensation Agreement for the Benefit of Salvatore J. Nuzzo. Incorporated by reference to Exhibit 10.5.3 to the Registrant's report on Form 8 dated November 9, 1990. 10.11 Supplemental Compensation Agreement for the Benefit of Marlin Miller, Jr. Incorporated by reference to Exhibit 10.5.4 to the Registrant's report on Form 8 dated November 9, 1990. 10.12 Supplemental Compensation Agreement for the Benefit of Grant Heilman. Incorporated by reference to Exhibit 10.5.5 to the Registrant's report on Form 8 dated November 9, 1990. 10.13 Supplemental Compensation Agreement for the Benefit of William M. Hess. Incorporated by reference to Exhibit 10.5.6 to the Registrant's report on Form 8 dated November 9, 1990. 10.14 1988 Deferred Compensation Agreement with a Certain Officer. Incorporated by reference to Exhibit 10.6 to the Registrant's report on Form 8 dated November 9, 1990. 10.15 Death Benefit Arrangement with Certain Officers adopted by Board Resolution dated September 18, 1975. Incorporated by reference to Exhibit 10.7 to the Registrant's report on Form 8 dated November 9, 1990. 21 Exhibit # Description - - --------- ----------- 10.16 Non-Qualified Stock Option Agreement dated June 19, 1991. Incorporated by reference to Exhibit 10-A to the Registrant's report on Form 10-K for the fiscal year ended July 31, 1991. 10.17 Non-Qualified Stock Option Agreement dated September 25, 1991. Incorporated by reference to Exhibit 10-B to the Registrant's report on Form 10-K for the fiscal year ended July 31, 1991. 10.18 Severance Pay Agreement with Owen Farren. Incorporated by reference to Exhibit 10-C to the Registrant's report on Form 10-K for the fiscal year ended July 31, 1991. 10.19 Severance Pay Agreement with Ted D. Taubeneck. Incorporated by reference to Exhibit 10-D to the Registrant's report on Form 10-K for the fiscal year ended July 31, 1991. 10.20 Deferred Compensation Agreement with James E. Morris. Incorporated by reference to Exhibit 10-E to the Registrant's report on Form 10-K for the fiscal year ended July 31, 1991. 10.21 1991 Long Term Incentive Plan of SL Industries, Inc. Incorporated by reference to Exhibit 4.1 to Registration Statement No. 33-53274, filed October 14, 1992. 10.22 SL Industries, Inc. Non-Employee Director Non-Qualified Stock Option Plan. Incorporated by reference to Exhibit 4.3 to Registration Statement No. 33-63681, filed October 25, 1995. 10.23 Capital Accumulation Plan. 11 Statement Re Computation of Per Share Earnings (transmitted herewith). 13 Portions of Annual Report to Shareholders for the fiscal year ended July 31, 1995 (transmitted herewith). 17 Letter Re Director Resignation. Incorporated by reference to the Registrant's report on Form 8-K filed on October 20, 1992. 22 Exhibit # Description - - --------- ----------- 22 Subsidiaries of the Registrant (transmitted herewith). 24 Consent of Independent Public Accountants - Arthur Andersen LLP (transmitted herewith). 24A Consent of Independent Accountants - Coopers & Lybrand L.L.P. (transmitted herewith). 27 Financial Data Schedule (Schedule is furnished for the information of the Securities and Exchange Commission and is not to be deemed "filed" as part of Form 10-K, or otherwise subject to the liabilities of Section 18 of the Securities Exchange Act of 1934). 28 Annual Report on Form 11-K (to be filed by by amendment).