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 11, 1999 by:
(1) Including the Financial Statements of businesses acquired required
by Article 2 and 3 of Regulation S-X.
(2) 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: /s/ Owen Farren
Owen Farren
President and Chief Executive Officer
Date: July 12, 1999
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 business acquired
RFL Electronics Inc. - Years ended March 31, 1998 and 1997 (Audited)
b) Pro forma financial information
Pro forma condensed consolidated balance sheet - April 30, 1999
(unaudited)
Pro forma condensed consolidated statements of operations - year
ended July 31, 1998 (unaudited)
Pro forma condensed consolidated statements of operations -
nine-months ended April 30, 1999 (unaudited)
Notes to pro forma condensed consolidated financial statements
3
ARTHUR ANDERSEN LLP
RFL ELECTRONICS INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 1999 AND 1998
TOGETHER WITH
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
4
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Stockholders of
RFL Electronics Inc.:
We have audited the accompanying consolidated balance sheets of RFL Electronics
Inc. (a Delaware corporation) and subsidiary as of March 31, 1999 and 1998, and
the related consolidated statements of income, stockholders' 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 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 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 RFL Electronics Inc. and
subsidiary as of March 31, 1999 and 1998, and the results of their operations
and their cash flows for the years then ended in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
------------------------
Arthur Andersen LLP
Roseland, New Jersey
May 4, 1999 (except with respect to
the matter discussed in Note 9, as to
which the date is May 11, 1999)
5
RFL ELECTRONICS INC. AND SUBSIDIARY
-----------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
MARCH 31, 1999 AND 1998
-----------------------
(000's omitted)
---------------
ASSETS 1999 1998
------ ------- -------
CURRENT ASSETS:
Cash and cash equivalents $ 1,755 $ 499
Accounts receivable, net of allowance for doubtful accounts of $86 and $42
in 1999 and 1998, respectively 2,604 2,846
Due from affiliate 162 638
Inventories 2,528 2,220
Prepaid and other current assets 44 24
------- -------
Total current assets 7,093 6,227
PROPERTY, PLANT AND EQUIPMENT, net 4,579 4,256
DEMONSTRATION EQUIPMENT, net of accumulated depreciation of $602
and $433 in 1999 and 1998, respectively 355 207
GOODWILL, net of accumulated amortization of $287 and $239 in 1999
and 1998, respectively 653 701
OTHER ASSETS 270 334
------- -------
Total assets $12,950 $11,725
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Current maturities of long-term debt $ 467 $ 367
Accounts payable and accrued expenses 2,864 2,597
Income taxes payable 294 303
------- -------
Total current liabilities 3,625 3,267
------- -------
LONG-TERM DEBT 1,833 2,300
OTHER LIABILITIES 93 --
------- -------
1,926 2,300
------- -------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par value: 999,000 shares authorized,
925,000 shares issued and outstanding -- --
Paid-in capital 4,043 4,043
Retained earnings 3,356 2,115
------- -------
Total stockholders' equity 7,399 6,158
------- -------
Total liabilities and stockholders' equity $12,950 $11,725
======= =======
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
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RFL ELECTRONICS INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
(000's omitted)
1999 1998
-------- --------
SALES $ 20,331 $ 17,503
COST OF SALES (11,223) (10,121)
-------- --------
Gross profit 9,108 7,382
ENGINEERING COSTS (1,525) (1,630)
SELLING, GENERAL AND ADMINISTRATIVE COSTS (5,413) (4,540)
-------- --------
Operating profit 2,170 1,212
OTHER INCOME 82 36
-------- --------
Income before interest expense and
provision for income taxes 2,252 1,248
INTEREST EXPENSE (209) (284)
-------- --------
Income before provision for income taxes 2,043 964
PROVISION FOR INCOME TAXES (802) (361)
-------- --------
Net income $ 1,241 $ 603
======== ========
The accompanying notes to consolidated financial statements
are an integral part of these consolidated financial statements.
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RFL ELECTRONICS INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
(000's omitted, except share information)
Common Stock Total
------------------ Paid-in Retained Stockholders'
Shares Amount Capital Earnings Equity
-------- -------- ------- -------- -------------
BALANCE, March 31, 1997 925,000 $ -- $4,043 $1,512 $5,555
Net income -- -- -- 603 603
------- ----- ------ ------ ------
BALANCE, March 31, 1998 925,000 -- 4,043 2,115 6,158
Net income -- -- -- 1,241 1,241
------- ----- ------ ------ ------
BALANCE, March 31, 1999 925,000 $ -- $4,043 $3,356 $7,399
======= ===== ====== ====== ======
The accompanying notes to consolidated financial statements
are an integral part of these consolidated financial statements.
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RFL ELECTRONICS INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1999 AND 1998
(000's omitted)
1999 1998
------ ------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,241 $ 603
Adjustments to reconcile net income to net cash provided by
operating activities-
Depreciation and amortization 559 566
Deferred income taxes (117) (35)
Change in assets and liabilities-
Decrease (increase) in accounts receivable, net 242 (262)
Decrease (increase) in due from affiliate 476 (358)
Decrease in income tax receivable -- 100
Increase in inventories (308) (109)
(Increase) decrease in prepaid expenses and other current assets (20) 24
Increase in other assets (6) (26)
Increase in accounts payable, accrued expenses, income taxes
payable and other liabilities 214 587
------ ------
Net cash provided by operating activities 2,281 1,090
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (337) (175)
Purchases of demonstration equipment, net (321) (109)
------ ------
Net cash used in investing activities (658) (284)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments under revolving credit facility, net -- (300)
Repayments of long-term debt (367) (267)
------ ------
Net cash used in financing activities (367) (567)
------ ------
Net increase in cash and cash equivalents 1,256 239
CASH AND CASH EQUIVALENTS, beginning of year 499 260
------ ------
CASH AND CASH EQUIVALENTS, end of year $1,755 $ 499
====== ======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for-
Interest $ 235 $ 289
Income taxes 715 104
NONCASH INVESTING ACTIVITIES:
Financed purchases of property, plant and equipment 254 --
The accompanying notes to consolidated financial statements
are an integral part of these consolidated financial statements.
9
RFL ELECTRONICS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999 AND 1998
(000's omitted)
1. ORGANIZATION AND BUSINESS ACTIVITY
RFL Electronics Inc. designs, manufactures, sells and services communications
and relaying products and calibration equipment for the electric utilities, oil
and gas markets and transportation industries. RFL International Inc., a wholly
owned subsidiary of the Company, is a foreign sales corporation (FSC) and sells
RFL Electronics Inc.'s products internationally. Collectively, RFL Electronics
Inc. and RFL International Inc. are referred to as the "Company."
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed in the preparation of the
accompanying consolidated financial statements are discussed below.
Principles of Consolidation
The consolidated financial statements include the accounts of RFL Electronics
Inc. and its wholly owned subsidiary, RFL International Inc. All significant
intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
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Inventories
Inventories are valued at the lower of cost or market using the first-in
first-out ("FIFO") method of accounting. Provisions are made for obsolete,
slow-moving and defective inventory as necessary. Inventories are comprised of
the following:
March 31
----------------
1999 1998
------ ------
Raw materials $1,646 $1,465
Work-in-process 756 647
Finished goods 126 108
------ ------
$2,528 $2,220
====== ======
Property, Plant and Equipment
Property, plant and equipment are carried at cost and are generally depreciated
using the straight-line method over their estimated service lives, which range
from 5 to 45 years. Upon retirement or sale, the cost and related accumulated
depreciation are removed from the accounts and any resulting gain or loss is
included in the consolidated statements of income. Repairs and maintenance
costs are expensed as incurred.
Demonstration Equipment
Demonstration equipment is depreciated using the straight-line method over 3
years.
Goodwill
The excess of purchase price over net assets acquired is being amortized using
the straight-line method over 20 years.
Long-Lived Assets
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Assets," requires, among other things, that an
entity review its long-lived assets and certain related intangibles for
impairment whenever changes in circumstances indicate that the carrying amount
of an asset may not be fully recoverable. The Company does not believe that any
such changes have occurred.
Income Taxes
The Company provides for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." Deferred income taxes are provided on
transactions recorded for financial statement purposes different from that in
which such transactions are recorded for tax reporting purposes.
11
-3-
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are comprised of the following:
March 31
-----------------
1999 1998
------- -------
Land $ 875 $ 875
Buildings and improvements 2,822 2,822
Machinery and equipment 1,905 2,003
Computers 2,312 1,787
Furniture and fixtures 1,409 1,409
------- -------
9,323 8,896
Less-Accumulated depreciation and amortization (4,744) (4,640)
------- -------
$ 4,579 $ 4,256
======= =======
4. RELATED PARTY INFORMATION
During the fiscal year ended March 31, 1997, the Company purchased approximately
5% of a formerly affiliated company whose operations are located in Europe for
$14. The investment, which is included in other assets, is being accounted for
under the cost method of accounting. Receivables due from this affiliate totaled
$162 and $638 as of March 31, 1999 and 1998, respectively.
5. BORROWINGS
The Company's loan agreement with a bank (the "Loan Agreement") provides for a
revolving credit facility, a mortgage loan and a term loan. The Loan Agreement
is collateralized by substantially all of the Company's assets.
The Loan Agreement provides for a revolving credit facility of up to $2,050
through September 1999. As of March 31, 1999 and 1998, no borrowings were
outstanding under the revolving credit facility. The revolving credit facility
provides for up to $750 in letters of credit and bankers acceptances and up to
$750 in standby letters of credit. As of March 31, 1999, the Company had
outstanding standby letters of credit in the amount of $155 and there were no
outstanding bankers acceptances or letters of credit. Availability under the
revolving credit facility is limited to the lesser of $2,050 or 85% of eligible
accounts receivable, as defined, plus the lesser of $800 or 35% of eligible
inventories, as defined. At March 31, 1999, $2,050 was available for future
borrowings under the revolving credit facility. The interest rate for the
revolving credit facility is selected by the Company at the time of borrowing
and may be the prime interest rate (7.75% at March 31, 1999) or the LIBOR rate
plus 2% (7.00% at March 31, 1999).
The Loan Agreement also contains certain covenants which, among other things,
provide for limitations on indebtedness, investments and the payment of
dividends and require the maintenance of ratios relating to tangible net worth,
debt to net worth and minimum debt service coverage, as defined.
12
-4-
Long-term debt is comprised of the following:
March 31
------------------
1999 1998
------ ------
Mortgage loan(a) $1,488 $1,604
Term loan(a) 412 563
Subordinated unsecured not payable(b) 400 500
------ ------
2,300 2,667
Less-Current maturities (467) (367)
------ ------
$1,833 $2,300
====== ======
(a) The Loan Agreement provides for a mortgage loan of $1,750. The mortgage
is payable in quarterly principal installments of $29 with a final
payment of $1,167 due in December 2001. Interest is payable at LIBOR
plus 2% (7.00% at March 31, 1999).
The Loan Agreement also provides for a term loan of $750. The term
loan is payable in quarterly principal installments of $38 through
December 2001. Interest is payable at LIBOR plus 2% (7.00% at
March 31, 1999).
(b) In April 1996, the Company entered into a subordinated unsecured note
agreement for $500. Interest is payable at 10% per annum. During
fiscal 1999, $100 was repaid and the balance is payable as follows:
March 31, 2000 $200
March 31, 2001 200
----
$400
====
Annual maturities of long-term debt as of March 31, 1999 are as follows:
2000 $ 467
2001 467
2002 1,366
------
$2,300
======
6. LEASES
The Company leases certain equipment and autos for use in its business. The
leases have varying terms and expire through fiscal year 2004. Rent expense
was $94 and $85 for the years ended March 31, 1999 and 1998, respectively.
13
- 5 -
Future minimum rental payments under operating leases that have initial or
remaining noncancelable lease terms in excess of one year as of March 31, 1999
are as follows:
2000 $ 89
2001 75
2002 59
2003 40
2004 7
----
$270
====
7. INCOME TAXES
The Company follows the provisions of SFAS No. 109, "Accounting for Income
Taxes," which utilizes the liability method and results in the determination of
deferred taxes based on the estimated future tax effects of differences between
the financial statement and tax bases of assets and liabilities using enacted
tax rates currently in effect. The Company has recorded a valuation allowance
against the tax benefits of its deferred tax asset due to the uncertainty of
its realization.
Deferred income taxes are provided on transactions recorded for financial
statement purposes in periods different from that in which such transactions
are recorded for tax purposes.
The provision (benefit) for income taxes for the years ended March 31, 1999 and
1998 is as follows:
For the Years Ended
March 31
-------------------
1999 1998
-------- --------
Current:
Federal $ 709 $298
State 210 98
Deferred:
Federal (100) (31)
State (17) (4)
----- ----
$ 802 $361
===== ====
The components of deferred income taxes are as follows:
March 31,
--------------------
1999 1998
-------- ---------
Deferred tax assets:
Inventory reserve $ 236 $ 211
Deferred compensation reserve 123 120
Warranty reserve 101 73
Other liabilities and reserves 141 99
----- -----
601 503
Deferred tax liabilities - depreciation and amortization (263) (282)
----- -----
Net deferred tax asset 338 221
Valuation allowance (338) (221)
----- -----
$ -- $ --
===== =====
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8. COMMITMENTS AND CONTINGENCIES
Profit Sharing Plan
The Company maintains a 401(k) and profit sharing plan which provides
retirement, death and disability benefits to all eligible employees, including
officers of the Company. Contributions by the Company to the plan are based
upon a percentage of the Company's operating profit, as defined, and totaled
$524 and $276 for the fiscal years ended March 31, 1999 and 1998, respectively.
In addition, the Company may make additional discretionary contributions to the
plan. There were no discretionary contributions to the plan for the years ended
March 31, 1999 and 1998.
Litigation
The Company is, from time-to-time, party to litigation arising in the normal
course of its business. Management believes that none of these actions will have
a material adverse effect on the consolidated financial position or results of
operations of the Company.
9. SUBSEQUENT EVENT
On May 11, 1999, SL Industries, Inc. purchased all of the Company's outstanding
common stock.
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PRO FORMA FINANCIAL INFORMATION
On May 11, 1999, SL Industries, Inc. (the "Registrant") acquired 100% of the
issued and outstanding shares of capital stock of RFL Electronics Inc. ("RFL")
pursuant to the terms of a Share Purchase Agreement (the "Agreement") dated
April 1, 1999. Under the terms of the Agreement, the Registrant acquired RFL for
approximately $12 million in cash, and a contingent payment of an additional $1
million in cash. This contingent payment was based upon the financial
performance of RFL for its fiscal year ended March 31, 1999.
The following pro forma condensed consolidated financial statements are
unaudited and have been prepared to give effect to (I) the acquisition of RFL
and (ii) the issuance of senior debt used to finance the acquisition, as if
these transactions had occurred as of the close of business on April 30, 1999,
in the case of the pro forma condensed consolidated balance sheet, or on August
1, 1997, in the case of the pro forma condensed consolidated statements of
operations. The RFL 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 RFL, including the
notes thereto and the Registrant's Forms 8-K dated May 11, 1999. Historical
financial statements of RFL 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, 1998 and in its
April 30, 1999, Form 10-Q.
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SL INDUSTRIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF BALANCE SHEETS (UNAUDITED)
APRIL 30, 1999
RFL Pro Forma Pro Forma
As Reported Electronics Adjustments Consolidated
----------- ----------- ----------- ------------
ASSETS
Current assets:
Cash and cash equivalents ....................... $ 129,000 $ 1,135,000 $ (400,000) A $ 864,000
Receivables, net of allowances .................. 17,096,000 2,783,000 -- 19,879,000
Inventories ..................................... 18,502,000 2,515,000 -- 21,017,000
Prepaid expenses ................................ 899,000 65,000 -- 964,000
Deferred income taxes ........................... 2,104,000 -- -- 2,104,000
------------ ----------- ------------ -----------
Total current assets ........................ 38,730,000 6,498,000 (400,000) 44,828,000
------------ ----------- ------------ -----------
Property, plant and equipment, net ............... 13,818,000 4,948,000 -- 18,766,000
Long-term notes receivable ....................... 2,177,000 -- -- 2,177,000
Deferred income taxes ............................ 2,463,000 -- -- 2,463,000
Cash surrender value of life insurance policies .. 9,212,000 -- -- 9,212,000
Intangible assets, net ........................... 10,572,000 649,000 5,598,000 B 16,819,000
Other assets ..................................... 1,397,000 264,000 -- 1,661,000
------------ ----------- ------------ -----------
Total assets ............................. $ 78,369,000 $ 12,359,000 $ 5,198,000 $ 95,926,000
============ ============ ============ ============
LIABILITIES
Current liabilities:
Short-term bank debt ............................ $ 1,082,000 $ -- $ -- $ 1,082,000
Long-term debt due within one year .............. 205,000 467,000 (200,000) A 472,000
Accounts payable ................................ 6,256,000 1,003,000 -- 7,259,000
Notes payable ................................... -- -- 75,000 C 75,000
Accrued income taxes ............................ 1,181,000 172,000 -- 1,353,000
Other accrued liabilities ....................... 9,317,000 1,312,000 316,000 B 10,945,000
------------ ----------- ------------ -----------
Total current liabilities ................ 18,041,000 2,954,000 191,000 21,186,000
------------ ----------- ------------ -----------
Long-term debt less portion due within one year .. 10,064,000 1,633,000 12,400,000 C 24,097,000
Deferred compensation and supplemental
retirement benefits .............................. 5,141,000 286,000 -- 5,427,000
Other liabilities ................................ 3,494,000 293,000 (200,000) A 3,587,000
------------ ----------- ------------ -----------
Total liabilities ........................ $ 36,740,000 $ 5,166,000 $ 12,391,000 $ 54,297,000
------------ ----------- ------------ -----------
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, 8,235,000 ............ 1,647,000 -- -- 1,647,000
Capital in excess of par value ................... 36,924,000 4,043,000 (4,043,000) B 36,924,000
Retained earnings ................................ 18,194,000 3,150,000 (3,150,000) B 18,194,000
Translation adjustment ........................... (54,000) -- -- (54,000)
Treasury stock at cost, 2,606,000 shares ......... (15,082,000) -- -- (15,082,000)
------------ ----------- ------------ -----------
Total shareholders' equity .................... 41,629,000 7,193,000 (7,193,000) 41,629,000
------------ ----------- ------------ -----------
Total liabilities and shareholders' equity .... $ 78,369,000 $ 12,359,000 $ 5,198,000 $ 95,926,000
============ ============ ============ ============
See accompanying notes to consolidated financial statements.
17
SL INDUSTRIES, INC
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
TWELVE-MONTHS ENDED JULY 31, 1998
RFL Pro Forma Pro Forma
As Reported Electronics Adjustments Consolidated
------------- ------------- ------------- -------------
Net sales ........................... $ 118,212,000 $ 17,914,000 $ -- $ 136,126,000
------------- ------------- ------------- -------------
Cost and expenses:
Cost of products sold ............. 74,646,000 9,926,000 -- 84,572,000
Engineering and product development 6,167,000 1,567,000 -- 7,734,000
Selling, general and
administrative expenses ........... 25,576,000 4,332,000 -- 29,908,000
Depreciation and amortization ..... 3,043,000 548,000 188,000 D 3,779,000
------------- ------------- ------------- -------------
Total cost and expenses ............. 109,432,000 16,373,000 188,000 125,993,000
------------- ------------- ------------- -------------
Income (Loss) from operations ....... 8,780,000 1,541,000 (188,000) 10,133,000
Other income (expense):
Interest income ................... 214,000 -- 7,000 E 221,000
Interest expense .................. (427,000) (257,000) (455,000) F (1,139,000)
------------- ------------- ------------- -------------
Income before income taxes .......... 8,567,000 1,284,000 (636,000) 9,215,000
Provision (Benefit) for income taxes 3,254,000 495,000 (174,000) G 3,575,000
------------- ------------- ------------- -------------
Net income (loss) ................... $ 5,313,000 $ 789,000 $ (462,000) $ 5,640,000
============= ============= ============= =============
Basic net income per common share ... $ 0.95 $ 1.01
============= =============
Diluted net income per common share $ 0.90 $ 0.96
============= =============
Shares used in computing basic
net income per common share ...... 5,598,000 5,598,000
Shares used in computing diluted
net income per common share ...... 5,897,000 5,897,000
See accompanying notes to unaudited pro forma condensed consolidated financial
statements
18
SL INDUSTRIES, INC
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
NINE-MONTHS ENDED APRIL 30, 1999
RFL Pro Forma Pro Forma
As Reported Electronics Adjustments Consolidated
------------ ------------ ----------- -------------
Net sales ........................................... $ 89,805,000 $ 13,831,000 $ -- $103,636,000
------------ ------------ ------------ ------------
Cost and expenses:
Cost of products sold ............................. 57,896,000 8,128,000 -- 66,024,000
Engineering and product development ............... 5,578,000 1,277,000 -- 6,855,000
Selling, general and administrative expenses ...... 16,716,000 3,337,000 -- 20,053,000
Depreciation and amortization ..................... 2,886,000 378,000 141,000 D 3,405,000
------------ ------------ ------------ ------------
Total cost and expenses ............................. 83,076,000 13,120,000 141,000 96,337,000
------------ ------------ ------------ ------------
Income (Loss) from operations ....................... 6,729,000 711,000 (141,000) 7,299,000
Other income (expense):
Interest income ................................... 220,000 -- 5,000 E 225,000
Interest expense .................................. (635,000) (197,000) (338,000) F (1,170,000)
------------ ------------ ------------ ------------
Income before income taxes .......................... 6,314,000 514,000 (474,000) 6,354,000
Provision (Benefit) for income taxes ................ 2,370,000 186,000 (129,000) G 2,427,000
------------ ------------ ------------ ------------
Net income (loss) ................................... $ 3,944,000 $ 328,000 $ (345,000) $ 3,927,000
============ ============ ============ ============
Basic net income per common share ................... $ 0.70 $ 0.70
============ ============
Diluted net income per common share ................. $ 0.67 $ 0.67
============ ============
Shares used in computing basic
net income per common share ...................... 5,648,000 5,648,000
Shares used in computing diluted
net income per common share ...................... 5,883,000 5,883,000
See accompanying notes to unaudited pro forma condensed consolidated financial
statements
19
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A. Reflects payoff of a RFL loan.
B. Reflects adjustments from RFLs April 30, 1999, historical balance sheet
to the balance sheet acquired.
C. Reflects an increase in long-term debt to finance the RFL acquisition.
D. Reflects amortization of the intangible asset resulting from the RFL
acquisition.
E. Reflects an increase in interest income due to additional cash
available for investment, as a result of the acquisition.
F. Reflects an incremental increase in interest expense at an annual rate
of 5.275% in connection with an increase in long-term debt, as a result
of the acquisition.
G. Reflects tax benefit of pro forma adjustments other than goodwill
amortization.