Financial Statements:

 

 

 

 

Supplemental Schedule:

 

 

 

 

/s/ Sobel & Co., LLC

Livingston, New Jersey

June 23, 2009

 

 

 

Employer contributions

Participant contributions

Due from third party administrator

 

 

 

 

 

Operating payables

 

 

 

 

Adjustment from fair value to contract value for fully benefit Responsive investment contract

 

 

 

Net (depreciation) appreciation in fair value of investments

Net realized (loss) gain on sale of investments

Interest/dividends

 

Employer

Participant

Rollover

 

 

 

Benefits paid to participants

Administrative expenses

 

 

 

 

 

 

Beginning of year

 

End of year

 

SL Industries, Inc. Savings and Pension Plan (the “Plan”), originally adopted May 1, 1976, is a defined contribution savings and pension plan covering substantially all U.S. non-union employees of SL Industries, Inc.’s Corporate Office, SL Power Electronics Corp. (a combination of Condor D.C. Power Supplies, Inc. and Ault Incorporated), SL Montevideo Technology, Inc., Teal Electronics Corp., RFL Electronics Inc., and MTE Corporation. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA). Participants should refer to the Summary Plan Description for more complete information with respect to the provisions of the Plan.

As of January 2, 2007, RFL Electronics, Inc. Employees’ 401(k) and Profit Sharing Plan, Ault Incorporated Profit Sharing Plan, and Teal Electronics Corporation Employee Savings Plan were merged into the existing Plan. All transactions for these plans are included in the Statement of Changes in Net Assets for the twelve months ended December 31, 2007.

Subsequent to the acquisition of MTE Corporation on October 31, 2006, the MTE Corporation 401(k) Profit Sharing Plan was merged into the Plan as of May 1, 2007. The Statement of Changes in Net Assets for the year ended December 31, 2007 includes transactions for the eight months from May 1, 2007 to December 31, 2007.

Total net assets transferred to the Plan related to the above merger were $24,324,225 (see Note 10).

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.

Forfeitures are created when participants terminate employment before becoming entitled to their full benefits under the Plan. Forfeitures may be used to reduce future Employer contributions to the Plan or to offset Plan administrative expenses. For the years ended December 31, 2008 and 2007, approximately $45,000 and $68,000 was used to pay Plan administrative expenses. At December 31, 2008 and 2007, approximately $47,000 and $51,000, respectively, was available in the forfeiture account. At December 31, 2008, that amount included a receivable from Fidelity in the amount of $33,000 and market value of investments of $14,000.

Description of Plan and Summary of Significant Accounting Policies (Continued)

Certain amounts reported in the 2007 financial statements have been reclassified to conform to the 2008 presentation.

The Plan’s investments are stated at fair value. Quoted market prices are used to value investments, if readily available. Purchases and sales of securities are recorded on a trade-date basis. Dividend income is recorded on the ex-dividend date. Interest income is recorded as earned on the accrual basis.

Financial Accounting Standards Board Statement No. 157, Fair Value Measurements (FASB Statement No. 157), establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under FASB Statement No. 157 are described below:

Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access.

 

Inputs to the valuation methodology include:

 

Quoted prices for similar assets or liabilities in active markets;

 

Quoted prices for identical or similar assets or liabilities in inactive markets;

 

Inputs other than quoted prices that are observable for the asset or liability;

 

Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

 

Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Description of Plan and Summary of Significant Accounting Policies (Continued)

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2008.

Registered Investment Companies — Mutual Funds: Valued at quoted market prices, which represent the net asset value of shares held by the Plan at year-end. (Level 1 input)

Unallocated Contracts: Valued at fair value by discounting the related cash flows based on current yields of similar instruments with comparable durations considering the credit worthiness of the issuer. (Level 2 input)

Participant Loans: Participant loans are valued at the amortized cost, which approximates fair value. (Level 3 input)

As part of the Plan provisions, participants are no longer able to invest in SL Industries, Inc. Common Stock (“Common Stock”), but can invest in various combinations of eighteen Fidelity Institutional Retirement Services Co., Inc. (“Fidelity”) funds: Managed Income Portfolio, Total Bond, Capital and Income, Value, Capital Appreciation, Diversified International, Freedom Income Fund, Freedom 2000 Fund, Freedom 2005 Fund, Freedom 2010 Fund, Freedom 2015 Fund, Freedom 2020 Fund, Freedom 2025 Fund, Freedom 2030 Fund, Freedom 2035 Fund, Freedom 2040 Fund, Freedom 2045 Fund, Freedom 2050 Fund. Also available are Spartan U.S. Equity Index Fund, Allianz NJF Dividend Value Fund, WFA Small Cap Value Z, Davis NY Venture Fund, Columbia Acorn Fund, Hartford Small Company Y, and Dodge & Cox International Stock Fund.

All income, gains, losses or other amounts from any investment are reinvested in the same investment from which they are received. The amounts are then allocated, as appropriate, to each participant’s account balance.

Except for the Plan’s investment in the Fidelity Managed Income Portfolio (see note 11), the Plan’s investments are stated at fair value, as determined by market value reported by Fidelity as of the Plan’s year-end. The fair value of SL Industries, Inc. Common Stock is based on the market price as quoted on the American Stock Exchange.

Investments (Continued)

The Managed Income Portfolio represents a benefit-responsive deposit contract with Fidelity’s Managed Income Fund. Contributions are maintained in pooled accounts. The account is credited with earnings on the underlying investments at various rates and charged for Plan withdrawals because the deposit contract is fully benefit responsive and, in accordance with SOP 94-4, “Reporting of Investment Contracts Held By Health and Welfare Benefit Plans and Defined Contribution Pension Plans,” contract value is the relevant measurement attribute for that portion of net assets available for benefits attributable to the deposit contract. The financial statements reflect the contract value as reported by Fidelity as of the Plan year-end. The average yields based on the market value spot yield (underlying investment return) for the years ended December 31, 2008 and 2007, were 3.57% and 4.82%, respectively. The average yields based on the contract value spot yield (credited to participants) for the years ended December 31, 2008 and 2007 were 3.04% and 4.40%, respectively. There are no reserves against contract value for credit risk of the contract issuer.

Employer matching contributions are invested solely in Common Stock of SL Industries, Inc., a related party to the Plan. Until a participant is fully vested, the employer matching contribution credited to the participant’s account cannot be liquidated.

The Plan presents in the statements of changes in net assets available for benefits the net appreciation (depreciation) in investments, which consists of the realized gains or losses and the unrealized appreciation or depreciation of those investments.

Interest and dividend income are recorded as earned on an accrual basis.

During 2008 and 2007, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) (depreciated) appreciated in value by $(15,984,424) and $1,181,905 as follows:

Mutual funds

Common stock

 

 

 

Investments (Continued)

The following table represents investments at Plan year end values that represent 5% or more of the Plan’s net assets:

Contract Value:

Fidelity Managed Income Portfolio

Fair Value:

*SL Industries, Inc. Common Stock

Fidelity Freedom 2015

Fidelity Freedom 2020

Fidelity Freedom 2025

Fidelity Freedom 2030

Contract Value:

Fidelity Managed Income Portfolio

Fair Value:

*SL Industries, Inc. Common Stock

Fidelity Freedom 2010 Fund

Fidelity Freedom 2015 Fund

Fidelity Freedom 2020 Fund

Fidelity Freedom 2025 Fund

Fidelity Freedom 2030 Fund

Investments (Continued)

Information about the significant components of the changes in net assets relating to SL Industries, Inc. Common Stock, which is both a participant directed and a non-participant directed investment option, is as follows:

Changes in Net Assets:

Contributions

Net (depreciation) appreciation

Benefits paid to participants

Transfer/loan activity

 

Net changes

Fair market value, beginning of year

 

Fair Market Value, End of Year

 

 

Fair market value includes:

 

SL Industries, Inc. — Common Stock

Cash and in-transit items

 

Total Fair Market Value

 

Employees’ contributions are based upon authorized payroll withholdings. Participants may make elective deferrals up to an annual maximum of the lesser of 60% of their annual compensation, as defined by the Plan, or $15,500 in the calendar years 2008 and 2007, and thereafter as adjusted by the Secretary of the Treasury. Additionally, eligible participants may elect to defer “catch-up” contributions.

Beginning January 1, 2007, employees’ are eligible to designate their elective deferrals as an after tax, Roth 401(k) Deferral Contribution, a pre-tax traditional 401(k) Deferral Contribution, or a combination of both. Once made, the election is irrevocable and contributions cannot later be re-characterized.

The employer may match fifty percent (50%) of the participant’s elective deferrals, not to exceed three percent (3%) of the participant’s eligible compensation for 2008. Matching employer contributions have been contributed solely in the Common Stock of SL Industries, Inc.

Investments (Continued)

A profit sharing contribution may be made annually to all Plan participants who have earned at least 1,000 hours of service during the Plan year and are employed on the last day of the Plan year, with the exception of participants who are disabled, die or retire. This is a discretionary contribution determined by resolution of the Board of Directors. Profit sharing contributions are invested in accordance with the election of each participant. Profit sharing contributions, if any, made to the Plan by the Company will be allocated to a participant’s account in the ratio that the participant’s eligible compensation bears to the total eligible compensation paid to all participants.

At the time of separation, the vested portion of a participant’s account represents the participant’s accumulated benefit. If a participant’s account balance is less than $1,000, a lump sum distribution will be made regardless of whether the participant requests a distribution. A participant who has an account balance of $1,000 or greater may elect to: (1) continue to invest their accumulated benefit in the Plan until their normal retirement date; (2) receive payment in one lump sum; or (3) have all of the participant’s vested account balance paid directly to an eligible retirement plan specified by the distributee in a direct rollover.

At the retirement date, a participant may elect to receive their retirement benefit in one lump sum payment or in various types of installments. The amount of the benefit payment depends on the value of the participant’s account and the retirement benefit option the participant elects.

Participants become immediately vested in their elective deferral contributions plus actual earnings and their employer’s profit sharing contributions. Employer matching contributions become vested as follows:

Five years or more

Four years or more, but less than five years

Three years or more, but less than four years

Two years or more, but less than three years

One year or more, but less than two years

Less than one year

In determining years of service for vesting, the Plan considers service from the participant’s date of hire. Only whole years of service will be counted for vesting purposes. The non-vested portion of a participant’s account, if any, will be forfeited in accordance with the provisions of the Plan.

Investments (Continued)

Vesting (Continued)

The Plan allows for grandfathered vesting schedules for employees who were members of Ault Incorporated Profit Sharing Plan and Trust and MTE Corporation 401(k) Profit Sharing Plan. Members of Ault Incorporated Profit Sharing Plan and Trust are 100% vested in Employer matching contributions, no matter the length of service. Members of MTE Corporation 401(k) Profit Sharing Plan will be vested as follows:

2

1

Less than 1

For financial statement purposes, interest and dividend income includes amounts earned on investments and participant loans. For purposes of reporting on Form 5500, interest and dividend income only includes amounts earned on participant loans.

The Plan makes loans to participants on a reasonably equivalent basis and subject to the hardship provisions of the Plan. Loans are collateralized by the employee account balances. The minimum loan amount is $1,000 and may not exceed the lesser of $50,000 or one-half of the participant’s vested account balance. Loans bear interest at an interest rate as determined by the Plan Administrator based upon the prevailing rates of interest charged by persons in the business of lending money. The interest rates on the participant loans receivable as of December 31, 2008 and December 31, 2007 range from 5.00% to 9.25%. The term of any loan to a participant shall be no greater than five years, except in the case of a loan to acquire a dwelling unit that is considered a principal residence, in which case the term is 10 years.

While SL Industries has not expressed any interest to do so, it may terminate the Plan at any time with, the approval of the Board of Directors and subject to the penalties set forth in ERISA, as amended. In the event of such Plan termination, participants will become vested in their accounts.

The following table sets forth by level, within the fair value hierarchy, the Plan’s assets at fair value as of December 31, 2008:

Registered Investment Companies — Mutual Funds/Common Stocks

 

Unallocated Contracts

 

Participant loans

 

 

Total Assets at Fair Value

 

Balance, Beginning of Year

 

Total Contributions

 

Plan Forfeitures

 

Transfers into Fund

 

Distributions and Fees

 

Interest / Dividends

 

New Loan Issuances

 

Loan Payments

 

 

Balance, End of Year

 

Administrative expenses and asset management fees of the Plan may be paid by SL Industries, Inc. at their discretion. Total Plan administrative expenses for the years ended December 31, 2008 and 2007 were $46,115 and $66,937, respectively.

The Internal Revenue Service has issued a favorable determination letter, dated June 9, 2006, stating that the Plan meets the requirements for qualification pursuant to Section 401(a) of the Internal Revenue Code (the “Code”) and that the Plan is exempt from federal income taxes under Section 501(a) of the Code.

The Plan obtained its latest determination letter on June 9, 2006, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. The Plan Administrator and the Plan’s tax counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code.

On August 17, 2006, The Pension Protection Act (“The Act”) of 2006 was signed. The Act may require the Company to change the way the Plan is designed and administered, requiring Plan amendments and make additional disclosures to regulatory agencies and participants. Provisions of The Act were phased in during 2007.

As described in Note 1 to the financial statements, the Plan’s investments are held in separate accounts with the Trustees. According to the Trustees, the participants’ balances are subject to risk conditions of the individual fund objectives, stock market fluctuations, interest rates, economic conditions and world affairs.

Pursuant to the completed mergers into the Plan of RFL Electronics, Inc. Employees’ 401(k) and Profit Sharing Plan, Ault Incorporated Profit Sharing Plan, Teal Electronics Corporation Employee Savings Plan, and MTE Corporation 401(k) Profit Sharing Plan, for calendar year 2007, the following amounts were transferred into the Plan:

Investments

Loan Balances

 

 

 

The following is a reconciliation of net assets available for Plan benefits per the financial statements at December 31, 2008 and 2007 to Form 5500:

Net assets available for benefits per financial statements

Deemed distributions from Plan assets

Net adjustment to fair value for fully benefit-responsive investment contract

Rounding adjustments

 

 

Net Assets Available for Benefits per Form 5500

 

The following is a reconciliation of changes in net assets available for Plan benefits per the financial statements at December 31, 2008 and 2007 to Form 5500:

 

Changes in net assets available for benefits per financial statements

Deemed distributions from Plan assets

Net adjustment to fair value for fully benefit-responsive investment contract

Reversal of prior year adjustments

Rounding adjustments

 

 

Change in Net Assets Available for Benefits per Form 5500

 

Reconciliation of Financial Statements to Form 5500 (Continued)

Deemed distribution represents participant loans pending foreclosure. Per IRS regulations, all participant loans pending foreclosure related to active participants are required to be reported as Plan assets until a distributable event occurs. Accordingly, a difference occurs between net assets available for benefits per the financial statements and Form 5500, as Department of Labor regulations require loans pending foreclosure to be reported as deemed distributions on Form 5500.

For the year ended December 31, 2008, the Fidelity Managed Income Fund, in accordance with requirements for filing Form 5500, is reported at fair value. As indicated in Note 2, the Fidelity Managed Income Fund is reported at contract value in these financial statements. The amount representing the difference between the fair value and the contract value for this fully benefit-responsive investment amounted to $348,580 and $46,200 for the years ended December 31, 2008 and 2007, respectively, is shown as a reconciling item between the financial statements and Form 5500 when reporting Net Assets Available for Benefits and Changes in Net Assets Available for Benefits.

 

SL Industries, Inc.

 

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc.

Fidelity Institutional Retirement Services Co., Inc.

 

Participant Loans Receivable

 

 

 

 

Consent of Independent Registered Public Accounting Firm, Sobel & Co., LLC for the year ended December 31, 2008.