EX-99.1 2 a2166135zex-99_1.htm EXHIBIT 99.1
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Exhibit 99.1

LOGO   Contacts:   Frederick M. Green,
President and Chief Executive Officer
Phone: (763) 592-1900
  
Bill Birmingham
Interim Chief Financial Officer
Phone: (763) 592-1900

Ault Incorporated Announces Signing of Definitive Merger Agreement with SL Industries
and Restatement of Financial Results

SL to Commence Tender Offer at $2.90 per Share in Cash

Company Also Announces Restatement of Financial Results Following Continued
Investigation and Remediation of Financial Controls at its China Operations

        MINNEAPOLIS—December 19, 2005—Ault Incorporated (Nasdaq CM: AULT) announced today that it has signed a definitive merger agreement with SL Industries, Inc. (AMEX & PHLX: SLI). Under the terms of the agreement, a wholly owned subsidiary of SL Industries will commence a cash tender offer to acquire all of Ault's outstanding shares of common stock. Upon completion of the tender offer, SL Industries will effect a merger between this subsidiary and Ault in which the remaining Ault shareholders will receive $2.90 per share in cash. In addition, SL Industries will cash out Ault stock options with an exercise price of less than $2.90 per share and all other outstanding options will be canceled. Following the merger, Ault will become a wholly owned subsidiary of SL Industries.

        The Board of Directors of Ault has unanimously approved the acquisition and has voted to recommend that Ault's shareholders accept the tender offer and tender their Ault shares. In addition, the Company's financial advisor, Stephens, Inc., provided a fairness opinion to the Board that the terms of the transaction were fair to Ault's shareholders from a financial point of view.

        The consummation of the transaction is subject to certain conditions; including the valid tender of at least a majority of the outstanding shares of common stock of Ault, excluding any shares held by SL Industries.

        "We are pleased to announce this strategic combination with SL Industries," commented Frederick M. Green, Ault's President and Chief Executive Officer. "We believe the agreement is a sound one for our employees, customers and shareholders. Our employees will benefit by becoming part of an organization that has a larger financial base and is a leader in the power supply industry. Our customers will benefit from the added resources in the areas of purchasing, logistical support and engineering expertise. This translates into greater scale, increased competitiveness in our target market segments and improved profitability. And, our shareholders have the opportunity to be paid a fair price for their shares that reflects a substantial premium over the current market price."

        In addition to announcing the agreement with SL Industries, Ault reported that it is restating its financial results for the first quarter of fiscal year 2006 and its full fiscal years of 2005 and 2004 based on findings during a continuing evaluation and remediation of financial controls at its China manufacturing operations, Ault Xianghe. As a result of the restatement, the previously reported loss for the first fiscal 2006 quarter increased from $(458,000) to $(803,480), the previously reported loss for fiscal 2005 increased from $(5,129,997) to $(5,472,302) and the previously reported loss for fiscal 2004 increased from $(5,545,646) to $(5,793,646). The increase in the previously reported losses is due to increasing the Company's cost of goods sold for the first quarter ended August 28, 2005 by $345,480 and for the fiscal years of 2005 and 2004 by $342,385 and $248,000, respectively. Increasing cost of goods sold for each period was required due to accounting errors in accruals for payables due to certain vendors of Ault Xianghe.


        Summary financial information for the first quarter of 2006 and fiscal 2005 reflecting the restatement follows. The restated results will also be presented in amendments to its Form 10-K Report for fiscal 2005 and its Form 10-Q Report for the first quarter of fiscal 2006 that are expected to be filed with the Securities and Exchange Commission on or about January 11, 2006.

        Ault designs, manufactures and markets power conversion products. The Company is a leading supplier to original equipment manufacturers of telecommunications equipment, computer peripherals and medical equipment. Ault's power conversion products provide power at various levels from 1 to 1200 watts for a wide variety of applications.


NOTICE TO INVESTORS

        This announcement is neither an offer to purchase nor a solicitation of an offer to sell securities. The tender offer for the outstanding shares of Ault common stock described in this announcement has not commenced. At the time the offer is commenced, SL Industries' wholly owned subsidiary will file a tender offer statement with the Securities and Exchange Commission (SEC), and Ault will file a solicitation and recommendation statement with respect to the offer. The tender offer statement (including an offer to purchase, a related letter of transmittal and other offer documents) and the solicitation/recommendation statement will contain important information that should be read carefully before any decision is made with respect to the tender offer. Those materials will be made available to Ault's security holders at no expense to them. In addition, all of those materials (and all other offer documents filed with the SEC) will be available at no charge on the SEC's web site (www.sec.gov).

        Statements regarding Ault's anticipated future performance are forward-looking and therefore involve risks and uncertainties that could cause results or developments to differ significantly from those indicated in the forward-looking statements. These include, but are not limited to: market conditions in the global electronics industry, buying patterns of major customers, competitive products and technologies, the ability to control expense growth, risks related to the Company's continuing investigation of material weaknesses in its internal controls and disclosure controls, and other risks including those identified under the heading "Risk Factors" set forth in the Company's Form 10-K for the fiscal year ended May 29, 2005 filed with the Securities and Exchange Commission on October 7, 2005.

Financials Follow


Ault Incorporated and Subsidiaries

Consolidated Balance Sheets

May 29, 2005 and August 28, 2005

US Dollars (000)

 
   May 29, 2005
   August 28, 2005
 
   As Reported
   As Restated
   As Reported
   As Restated
Assets:                
  Cash   2,191   2,191   2,918   2,918
  Trade Receivables   5,766   5,766   6,197   6,197
  Inventories   3,377   3,377   3,283   3,283
  Note JEC Korea—Current Portion   563   563   1,125   1,125
  Prepaid & Other Expenses   741   741   796   796
   
 
 
 
    Total Current Assets   12,638   12,638   14,319   14,319
 
Note JEC Korea—Non-Current
 
1,687
 
1,687
 
1,125
 
1,125
  Property Plant & Equipment, Net   2,375   2,375   2,395   2,395
  Other Assets   106   106   92   92
   
 
 
 
    Total Assets   16,806   16,806   17,931   17,931
   
 
 
 
Liabilities & Equity:                
  Note Payable to Bank   0   0   0   0
  Current Maturities of Long-Term Debt   290   290   296   296
  Accounts Payable   4,892   5,482   6,495   7,431
  Accrued Compensation   978   978   934   934
  Accrued Commissions   272   272   239   239
  Other   350   350   370   370
   
 
 
 
    Total Current Liabilities   6,782   7,372   8,334   9,270
 
Preferred Stock
 
2,074
 
2,074
 
2,074
 
2,074
  Common Stock Equity   7,950   7,360   7,523   6,587
   
 
 
 
    Total Liabilities & Equity   16,806   16,806   17,931   17,931
   
 
 
 


Ault Incorporated and Subsidiaries

Consolidated Statement of Operations

US Dollars (000), Except Share & Amounts Per Share

 
   Fiscal Year Ended
May 29, 2005
   Quarter Ended
August 28, 2005
  
 
   As Reported
   As Restated
   As Reported
   As Restated
  
Net Sales   37,215   37,215   9,198   9,198  

Cost of Goods Sold
 
27,077
 
27,419
 
6,593
 
6,938
 
   
 
 
 
 
  Gross Profit   10,138   9,796   2,605   2,260  

Operating Expenses:
 
 
 
 
 
 
 
 
 
  Marketing   3,366   3,366   798   798  
  Design Engineering   2,995   2,995   697   697  
  General and Administrative   5,641   5,641   1,571   1,571  
   
 
 
 
 
    Total Operating Expenses   12,002   12,002   3,066   3,066  

Operating Loss
 
(1,864
)
(2,206
)
(461
)
(806
)

Other Income (Expense)
 
 
 
 
 
 
 
 
 
  Interest Expense   (407 ) (407 ) (49 ) (49 )
  Other   (111 ) (111 ) 90   90  
   
 
 
 
 
    (518 ) (518 ) 41   41  

Loss Before Income Taxes
 
(2,382
)
(2,724
)
(420
)
(765
)

Income Tax Expense
 
8
 
8
 
2
 
2
 

Loss From Continuing Operations
 
(2,390
)
(2,732
)
(422
)
(767
)

Discontinued Korean Operations
 
(2,595
)
(2,595
)
0
 
0
 

Net Loss
 
(4,985
)
(5,327
)
(422
)
(767
)

Redeemable Convertible Preferred Stock Dividends
 
(145
)
(145
)
(36
)
(36
)
   
 
 
 
 
Net Loss Applicable to Common Stockholders   (5,130 ) (5,472 ) (458 ) (803 )
   
 
 
 
 
Loss Per Common Share   (1.07 ) (1.15 ) (0.09 ) (0.17 )

Weighted Average Common Shares Outstanding
 
4,776,075
 
4,776,075
 
4,831,546
 
4,831,546
 



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NOTICE TO INVESTORS
Ault Incorporated and Subsidiaries Consolidated Balance Sheets May 29, 2005 and August 28, 2005 US Dollars (000)
Ault Incorporated and Subsidiaries Consolidated Statement of Operations US Dollars (000), Except Share & Amounts Per Share