SL Industries Second Quarter Results, 2004

August 12, 2004

SL Industries, Inc. Announces Financial Results for Its Second Quarter Ended June 30, 2004

MT. LAUREL, NEW JERSEY, August 12, 2004 . . . SL INDUSTRIES, INC. (AMEX & PHLX: SLI) announced today that net sales for the second quarter ended June 30, 2004 was $30,508,000, compared to $26,927,000 for the second quarter last year, an increase of $3,581,000, or 13.3%. Net income from continuing operations was $1,559,000, or $0.26 per diluted share, compared to net income from continuing operations of $1,127,000, or $0.19 per diluted share, for the same period in 2003.

Net sales from continuing operations for the six months ended June 30, 2004 were $57,150,000, compared to net sales of $52,637,000 for the six months ended June 30, 2003, an increase of $4,513,000, or 8.6%. Net income from continuing operations for the six months ended June 30, 2004 was $2,244,000, or $0.37 per diluted share, compared to net income from continuing operations of $1,598,000, or $0.27 per diluted share, for the same period last year. Net income for the six months ended June 30, 2004 was $4,720,000, or $0.79 per diluted share, compared to net income of $885,000, or $0.15 per diluted share, for the same period in 2003. Included in net income for 2004 was the receipt of settlement fees in connection with the Company’s dismissed lawsuit with American Power Conversion Corporation. The settlement fees were recorded in the first quarter and have been reported as part of discontinued operations.

Results for the Company’s four business segments were mixed over the first six months of 2004. Condor D.C. Power Supplies, Inc. recorded net sales of $19,523,000 and operating income of $1,400,000, as compared to net sales of $20,077,000 and operating income of $1,805,000 for the same period in 2003. Teal Electronics Corp. recorded net sales of $14,801,000 and operating income of $2,428,000, as compared to net sales of $9,388,000 and operating income of $900,000 for the same period last year. SL Montevideo Technologies, Inc. recorded net sales of $11,783,000 and operating income of $1,259,000, as compared to net sales of $11,129,000 and operating income of $806,000 for the first six months of 2003. RFL Electronics Inc. recorded net sales of $11,043,000 and operating income of $836,000, as compared to net sales of $12,043,000 and operating income of $1,150,000 for the same period last year.

Engineering and product development expenses for the first six months of 2004 increased by $559,000, or approximately 14%, as compared to the same period last year. Increased research and development costs were recorded at each of the Company’s subsidiaries.

The Company reported net new orders of $32 million in the second quarter of 2004, compared to net new orders of $24.5 million in the second quarter of 2003. Backlog at June 30, 2004 was $44.1 million, as compared to $37 million a year earlier.

Commenting on the results, Warren Lichtenstein, Chairman and Chief Executive Officer of SL Industries, Inc. said, “We achieved improved financial results for the period in the Power Electronics Group and at SL Montevideo Technologies. In the Power Electronics Group, strong demand for the Company’s products in the medical and semiconductor industries drove the improved performance.

Anticipated margin improvements were not realized in the first part of the year, as Condor experienced delays in shipments from its contract manufacturers in China. Teal also experienced higher production costs due to higher prices for certain raw materials and lower operating efficiencies in the course of training a substantial number of new employees to meet sharply increased demand. We expect margin improvements in the Power Electronics Group over the second half of the year.” “SL-MTI continues to perform well. Defense related aerospace bookings have been increasing at a steady rate. Strong sales to new medical customers also contributed to the six month results. Looking ahead, there are some encouraging signs that activity may pick up in the commercial aerospace segment. With steady volume increases, SL-MTI has been able to improve operating efficiencies and increase margins.”

Lichtenstein continued, “RFL Electronics continued to experience sluggish demand from electric power utility customers. The entire industry is reporting weak business activity, which has now continued for a period of nearly two years. We believe this pattern will continue until the status of pending federal energy legislation is determined. RFL has taken steps to contain its cost structure to be in line with current sales activity. At the same time, RFL has materially increased its engineering and product development costs over the first six months of the year. This increase is the principal reason for RFL’s reduced operating margins from 2003. We expect RFL to incur a similar level of engineering and productdevelopment costs through the end of 2004, as it upgrades and expands its product lines.”

“Corporate and other expenses, which relate to corporate administration, strategic management
and oversight, capital financing, risk management, corporate governance and controls, legal and litigation activities and public reporting expenses were $2,440,000 for the six months ended June 30, 2004, as compared to $1,717,000 for the same period in 2003. The increase of $723,000 primarily related to the addition of the position of Chief Operating Officer to the corporate staff and compensation expense related to certain phantom stock compensation.”

“The Company also continued to improve its cash position during the year. For the first six
months of the year, free cash flow was $2,967,000, (defined as EBITDA less capital expenditures and increases in working capital), with a return on invested capital of 11.5% (defined as net income over shareholders equity, bank debt and capital leases). On June 30, 2004, our cash balance equaled $4,252,000, an increase of $751,000 from December 31, 2003. Bank debt was reduced by $608,000 over the first half of the year, to $2,294,000 at June 30, 2004. Cash flow from operations was a negative $113,000 for the first six months of 2004; however, as the Company increased its working capital by $4,209,000 over the period to meet increased demand for its products. In addition, the Company acquired 83,450 shares of its stock in the first half of the year for an aggregate purchase price of $821,442, or an average of $9.84 per share.”

Lichtenstein concluded, “On June 9, the Company held its Annual Shareholders Meeting, at
which time shareholders re-elected all of the directors standing for re-election by margins exceeding 96%. On behalf of the entire Board of Directors, we thank our shareholders for their continued support.”

About SL Industries, Inc.

SL Industries, Inc. designs, manufactures and markets power electronics, power motion, power protection, teleprotection and communications equipment and systems that is used in a variety of medical, aerospace, computer, datacom, industrial, telecom, transportation and electric power utility applications. For more information about SL Industries, Inc. and its products, please visit the Company's web site at www.slindustries.com.

Forward-Looking Statements

This press release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about the Company's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including those described above and the following: the effectiveness of the cost reduction initiatives undertaken by the Company, changes in demand for the Company's products, product mix, the timing of customer orders and deliveries, the impact of competitive products and pricing, constraints on supplies of critical components, excess or shortage of production capacity, difficulties encountered in the integration of acquired businesses and other risks discussed from time to time in the Company's Securities and Exchange Commission filings and reports. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.

Source: SL Industries, Inc.