<PAGE>

                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                            -------------------------

(Mark One)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

Commission File No. 0-25848

                                    SLI, INC.

                (Exact name of registration specified in charter)

           OKLAHOMA                                      73-1412000
  (State of Incorporation)                (I.R.S. Employer Identification No.)

                      500 Chapman Street, Canton, MA 02021
                    (Address of principal executive offices)

                                  781/828-2948
              (Registrant's telephone number, including area code)

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 the number of shares outstanding of each of the issuer's classes of
common stock as of the last practicable date.

As of June 30, 2002, 33,404,933 shares of Registrant's Common Stock, $.01 par
value, were outstanding.
<PAGE>
                         PART I - FINANCIAL INFORMATION
                          ITEM 1.- FINANCIAL STATEMENTS
                           SLI, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                  (Dollars in Thousands, Except Per Share Data)

<TABLE>
<CAPTION>
                                                                                   June 30,      December 30,
                                                                                     2002           2001
                                                                                     ----           ----
                                                                                  (Unaudited)     (Note 1)
<S>                                                                               <C>           <C>
                           ASSETS

CURRENT ASSETS:
       Cash and cash equivalents                                                   $  29,471     $  50,535
       Accounts receivable, net                                                      183,913       172,380
       Inventories                                                                   160,294       169,482
       Prepaid expenses and other                                                     34,674        18,040
                                                                                   ---------     ---------
            Total current assets                                                     408,352       410,437
                                                                                   ---------     ---------
PROPERTY, PLANT AND EQUIPMENT, AT COST:                                              473,123       430,207
       Less - Accumulated depreciation                                                99,908        70,772
                                                                                   ---------     ---------
                                                                                     373,215       359,435
                                                                                   ---------     ---------
OTHER ASSETS:

       Goodwill, net of accumulated amortization                                      13,938        54,238
       Other intangible assets, net of accumulated amortization                       13,686        13,080
       Other assets                                                                   16,427        17,358
                                                                                   ---------     ---------
            Total other assets                                                        44,051        84,676
                                                                                   ---------     ---------
ASSETS OF DISCONTINUED OPERATIONS                                                      5,066        24,635
                                                                                   ---------     ---------
            Total assets                                                           $ 830,684     $ 879,183
                                                                                   =========     =========
         LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

       Short-term notes payable                                                    $  85,683     $  60,120
       Current portion of long-term debt                                              26,994        26,994
       Long-term debt                                                                338,024       350,016
       Current portion of capital lease obligations                                    1,316         1,152
       Accounts payable                                                               90,682       104,611
       Accrued income taxes payable                                                    9,862        10,135
       Other accrued expenses                                                         87,602        90,949
                                                                                   ---------     ---------
            Total current liabilities                                                640,163       643,977
                                                                                   ---------     ---------
LONG-TERM DEBT, LESS CURRENT PORTION                                                   5,918         5,755
                                                                                   ---------     ---------
OTHER LIABILITIES:

       Deferred income taxes                                                           8,056         7,956
       Pension Liability                                                              21,546        21,410
       Long-term capital lease obligation, less current portion                       21,952        20,329
       Minority interest                                                               5,726         5,769
       Other long-term liabilities                                                    15,819        13,404
                                                                                   ---------     ---------
            Total other liabilities                                                   73,099        68,868
                                                                                   ---------     ---------
LIABILITIES OF DISCONTINUED OPERATIONS                                                 2,019        13,273
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS'  EQUITY:

       Common stock, $.01 par value-
            Authorized - 100,000,000 shares
            Issued - 33,404,933 and 33,405,229
            shares at June 30, 2002 and December 30, 2001, respectively                  334           334
       Additional paid-in capital                                                    272,270       272,270
       Accumulated deficit                                                          (115,607)      (43,615)
       Accumulated other comprehensive loss                                          (47,512)      (81,679)
                                                                                   ---------     ---------
            Total stockholders' equity                                               109,485       147,310
                                                                                   ---------     ---------
            Total liabilities and stockholders' equity                             $ 830,684     $ 879,183
                                                                                   =========     =========
</TABLE>


See accompanying notes to the condensed financial statements.
<PAGE>
                           SLI, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                (Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                         Three Months Ended                    Six Months Ended
                                                         ------------------                    ----------------
                                                      June 30,           July 1,          June 30,          July 1,
                                                        2002              2001              2002             2001
                                                        ----              ----              ----             ----
                                                            (Unaudited)                            (Unaudited)
<S>                                                  <C>               <C>               <C>               <C>
Net sales                                            $ 185,375         $ 191,506         $ 383,611         $ 419,828
Cost of products sold                                  145,711           151,032           300,987           325,527
                                                     ---------         ---------         ---------         ---------
Gross margin                                            39,664            40,474            82,624            94,301
Selling, general and administrative expenses            41,426            43,903            79,779            90,297
Restructuring costs and other costs                      3,660             7,428             3,990            55,748
                                                     ---------         ---------         ---------         ---------
Operating loss                                          (5,422)          (10,857)           (1,145)          (51,744)
Other (income) expenses:
       Interest, net                                     7,719             6,304            14,630            12,992
       Loss on sale of assets                            2,007                --             2,007             4,163
       Other, net                                         (734)              129             2,301              (691)
                                                     ---------         ---------         ---------         ---------
Loss before income taxes                               (14,414)          (17,290)          (20,083)          (68,208)
Income taxes (benefits)                                    767               697              (180)            2,397
                                                     ---------         ---------         ---------         ---------
Loss from continuing operations                        (15,181)          (17,987)          (19,903)          (70,605)
                                                     ---------         ---------         ---------         ---------
Discontinued operations:

Profit (Loss) from operations                               (2)           (2,826)              152            (6,004)
Profit (Loss) from disposal                             (8,650)          (56,769)           (8,650)          (58,982)
                                                     ---------         ---------         ---------         ---------
Loss from discontinued operations,
       (net of income taxes)                            (8,652)          (59,595)           (8,498)          (64,986)
                                                     ---------         ---------         ---------         ---------
Loss before accounting change                          (23,833)          (77,582)          (28,401)         (135,591)

Cumulative effect of accounting change                      --                --           (43,591)               --
                                                     ---------         ---------         ---------         ---------
Net loss                                             $ (23,833)        $ (77,582)        $ (71,992)        $(135,591)
                                                     =========         =========         =========         =========

Net loss per common share - basic & diluted

       Loss from continuing operations               $   (0.45)        $   (0.51)        $   (0.60)        $   (2.02)
       Loss from discontinued operations                 (0.26)            (1.71)            (0.25)            (1.86)
       Cumulative effect of accounting change               --                --             (1.31)               --
                                                     ---------         ---------         ---------         ---------
       Net loss per share                            $   (0.71)        $   (2.22)        $   (2.16)        $   (3.88)
                                                     =========         =========         =========         =========

       Weighted average shares outstanding              33,405            34,927            33,405            34,927
                                                     =========         =========         =========         =========
</TABLE>

See accompanying notes to the condensed financial statements.
<PAGE>
                            SLI, INC AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 SIX MONTHS ENDED
                                                                 ----------------
                                                            JUNE 30,          JULY 1,
                                                              2002             2001
                                                              ----             ----
                                                                   (UNAUDITED)
<S>                                                         <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Net cash by (used in) continuing activities                 $(16,147)        $(23,351)
Net cash used in discontinued operations                      (5,170)            (103)
                                                            --------         --------
Net cash used in operating activities                        (21,317)         (23,454)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant and equipment                    (8,959)         (25,998)
Proceeds from disposal of assets                                 296            6,824
Acquisitions, net of cash acquired                                --           (8,752)
                                                            --------         --------
Net cash used in investing activities                         (8,663)         (27,926)

CASH FLOWS FROM FINANCING ACTIVITIES:

Net borrowings of revolving credit line                        9,368           39,316
Payments of long-term debt                                      (602)            (565)
Interest paid on forward share agreement                          --           (5,573)
Payment of dividends                                              --           (6,712)
                                                            --------         --------
Net cash provided by financing activities                      8,766           26,466

Effect of exchange rate changes on cash                          150           (4,345)
                                                            --------         --------
Net decrease in cash and cash equivalents                    (21,064)         (29,259)

Cash and cash equivalents, beginning of period                50,535           77,271
                                                            --------         --------
Cash and cash equivalents, end of period                    $ 29,471         $ 48,012
                                                            ========         ========
</TABLE>


See accompanying notes to the condensed financial statements.
<PAGE>
                           SLI, Inc. and Subsidiaries
              Condensed Consolidated Notes To Financial Statements

Note 1 General

         The interim unaudited condensed consolidated financial statements
presented have been prepared by SLI, Inc. (the "Company") and in the opinion of
management, reflect all adjustments of a normal recurring nature necessary for a
fair presentation of (a) the results of operations and cash flows for the three
and six month periods ended June 30, 2002 and July 1, 2001, respectively and (b)
the financial position at June 30, 2002. Interim results are not necessarily
indicative of results for a full year.

         In June 2001, the Company announced its intention to divest itself of
its Power Lighting Products (PLP) segment. In accordance with APB Opinion No. 30
- Reporting the Effects of Disposal of a Segment, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions, PLP's results of operations have
been reclassified as discontinued operations for all periods presented.

         In the second quarter of fiscal year 2002, the Company sold the assets
of its German subsidiary, SLI Miniature Lighting GmbH (OSA), and all of the
outstanding stock of its Australia subsidiary, Sylvania Lighting International
PTY Limited. In accordance with the Statement of Financial Accounting Standards
(SFAS) No. 144 - "Accounting for the Impairment or Disposal of Long-Lived
Assets," the results of these two operations have been reclassified as
discontinued operations for all periods presented.

         Additionally, during the second quarter of fiscal year 2002, the
Company defaulted on certain conditions under its Second Amended and Restated
Credit Agreement, dated October 29, 1999, as amended (the "Credit Agreement").
The Company was granted a series of waivers of its defaults under the Credit
Agreement from the Company's bank lenders, with the final waiver expiring on
June 30, 2002. On July 1, 2002, the Company defaulted on a principal payment
obligation under its Credit Agreement and entered into that certain Waiver and
Agreement, dated July 1, 2002, with the Company's bank lenders (the "Forbearance
Agreement"). The Forbearance Agreement granted the Company a waiver of certain
covenants and forbearance from its principal payment default.

         On August 1, 2002, the Company announced that it was unable to obtain
an extension to the Forebearance Agreement. As of August 19, 2002, the Company
continued to be unable to obtain an extension to the Forebearance Agreement
with respect to such defaults. The Company continues to explore all available
alternatives to restructuring its existing debt and addressing its current
liquidity issues, including the possibility of filing a voluntary petition for
reorganization under Chapter 11 of the U.S. Bankruptcy Code and obtaining
debtor-in-possession financing. For additional discussion regarding the
foregoing, please see "Note 3 - Long Term Debt."

         The consolidated balance sheet presented as of December 30, 2001 has
been derived from the consolidated financial statements that have been audited
by the Company's independent public accountants. The consolidated financial
statements and notes are condensed and do not contain
<PAGE>
certain information included in the audited annual financial statements and
notes of the Company. The consolidated financial statements and notes in the
financial statements included herein should be read in conjunction with the
financial statements and notes included in the Company's Annual Report on Form
10-K filed with the Securities and Exchange Commission and dated April 15, 2002.

Note 2 Inventories

         Inventories are stated at the lower of cost or market and include
materials, labor and overhead. Cost is determined by the first-in, first-out
(FIFO) method. Inventories consist of the following (dollars in thousands):

<TABLE>
<CAPTION>
                       June 30,      December 30,
                         2002            2001
                         ----            ----
<S>                    <C>           <C>
Raw Materials          $ 39,696        $ 39,745
Work in process          16,175          16,628
Finished Goods          104,423         113,109
                       --------        --------
                       $160,294        $169,482
                       ========        ========
</TABLE>

Note 3 Long-term Debt

Credit Agreement

         During the second quarter of fiscal year 2002, the Company's primary
borrowings were under its Credit Agreement. Under the terms of the Credit
Agreement, the Company is required to make quarterly payments totaling $6.7
million.

         On November 13, 2001, the Company entered into a Fourth Amendment to
the Credit Agreement, which became effective September 30, 2001 (the "Fourth
Amendment"), and provided for the conversion of the Company's 364-day revolving
credit facility (the "Revolving Credit Facility"), under which $80 million was
outstanding, into a term loan maturing in October 2004, amortizing in equal
installments over the term of the loan (the "Term Loan"). The Fourth Amendment
also permits the Company to secure other lines of credits and indebtedness.

         Under the Fourth Amendment, the applicable interest rates on such
indebtedness are LIBOR plus 3.75% or base rate plus 2.25%, so long as total
outstanding indebtedness under the Revolving Credit Facility and the Term Loan
exceeds $300 million, reducing to LIBOR plus 2.5% or base rate plus 1%, if such
total outstanding indebtedness is below $200 million. Effective July 1, 2002,
due to the Company's defaults under the Credit Agreement, any new loans or
rollovers of outstanding indebtedness under the Credit Agreement are subject to
an interest rate calculated as the sum of (a) the prime rate, plus (b) 2.25%,
plus (c) 2.0% (default premium).

         During the second quarter of fiscal year 2002, the Company defaulted on
certain conditions under the Credit Agreement. The Company was granted a series
of waivers of its current defaults under the Credit Agreement from the Company's
senior bank lenders, with the final waiver expiring on June 30, 2002. Prior to
the expiration of the final waiver, the Company engaged in negotiations with its
senior bank lenders in an effort to obtain a long-term amendment to the Credit
Agreement.
<PAGE>
         On July 1, 2002, the Company defaulted on a principal payment
obligation under its Credit Agreement and entered into the Forbearance
Agreement with respect to the Company's defaults, including the principal
payment default. Under the terms of the Forbearance Agreement, the Company was
granted a waiver of certain covenants and forbearance from its principal
payment default, while the Company continued to negotiate a long-term amendment
to the Credit Agreement with its senior bank lenders.

         On August 1, 2002, the Company announced that it was unable to obtain
an extension to the Forbearance Agreement. As of August 19, 2002, the Company
continued to be unable to obtain an extension to the Forbearance Agreement with
respect to the Company's current defaults. The Company continues to explore all
available alternatives to restructuring its existing debt and addressing its
current liquidity issues, including the possibility of filing a voluntary
petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code and
obtaining debtor-in-possession financing.

         As of June 30, 2002, the amount of borrowings under the Revolving
Credit Facility totaled approximately $365.0 million, and the face amount of
letters of credit issued and outstanding under the Revolving Credit Facility
totaled approximately $2.3 million. The Company also has a number of other
committed and uncommitted facilities worldwide, which it utilizes for short-term
working capital requirements.

         At June 30, 2002, short-term debt includes $16.9 million denominated in
Euro (bearing interest of 7.2% per annum) and $6.8 million in Sterling (bearing
interest at 7.9% per annum) under the Credit Agreement.

Note 4 Goodwill and Other Intangible Assets

         As of December 31, 2001, the Company adopted SFAS No. 142, "Goodwill
and Other Intangible Assets". SFAS No. 142 sets forth new financial accounting
and reporting standards that require goodwill to be separately disclosed from
other intangible assets in the statement of financial position, and no longer
amortized, but tested for impairment on an annual basis and whenever indicators
of impairment are identified. In accordance with the provisions of this
accounting standard, the Company assigned previously recognized goodwill to
individual reporting units and undertook to review such goodwill for possible
impairment. As a result of this review, there was an impairment of $43.6
million for goodwill relating to the General Lighting reporting unit segment,
which was recognized in the second quarter of fiscal 2002 and was accounted for
as a cumulative effect of a change in accounting principle.

         In accordance with SFAS No. 142, the Company discontinued the
amortization of goodwill effective December 31, 2001. Amortization of definite
lived intangible assets totaled $.3 and $.6 million for the three and six months
ended June 30, 2002, and amortization of goodwill and intangible assets totaled
$1.5 and $3.3 million for the three and six months ended July 1, 2001. Without
the amortization of goodwill, pro forma net loss would have decreased
approximately $.7 million and $1.7 million, or $0.02 and $0.05 per diluted
earnings per share for the three and six months ended July 1, 2001.

         A reconciliation of previously reported net loss and loss per share to
the amounts adjusted for
<PAGE>
the exclusion of goodwill amortization net of the related income tax effect
follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                   Three Months Ended                Six Months Ended
                                                   ------------------                ----------------
                                                June 30,          July 1,        June 30,          July 1,
                                                  2002             2001            2002             2001
                                                  ----             ----            ----             ----
<S>                                            <C>              <C>              <C>              <C>
Reported net loss                              $(23,833)        $(77,582)        $(71,992)        $(135,591)
Add: Goodwill amortization, net of tax               --              677               --             1,746
                                               --------         --------         --------         ---------
Adjusted net loss                              $(23,833)        $(76,905)        $(71,992)        $(133,845)
                                               ========         ========         ========         =========
Basic & diluted loss per common share
      Reported net loss                        $  (0.71)        $  (2.22)        $  (2.16)        $   (3.88)
      Goodwill amortization, net of tax              --             0.02               --              0.05
                                               --------         --------         --------         ---------
Adjusted net loss                              $  (0.71)        $  (2.20)        $  (2.16)        $   (3.83)
                                               ========         ========         ========         =========
</TABLE>

         Patents and other intangible assets at June 30, 2002 and December 30,
2001, subject to amortization expense are as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                June 30, 2002                            December 30, 2001
                                                -------------                            -----------------
                              Carrying       Accumulated                   Carrying      Accumulated
                               Amount       Amortization       Net          Amount      Amortization       Net
                               ------       ------------       ---          ------      ------------       ---
<S>                           <C>           <C>              <C>           <C>          <C>              <C>
Patents and Non-compete        $12,793         $1,370        $11,423        $11,793        $1,020        $10,773
  Agreements
Engineering Technology           5,018          2,755          2,263          4,406         2,099          2,307
                               -------         ------        -------        -------        ------        -------
Total                          $17,811         $4,125        $13,686        $16,199        $3,119        $13,080
                               =======         ======        =======        =======        ======        =======
</TABLE>

         Intangible assets are being amortized using the straight-line method
over their respective lives or contract periods, which range from 3 to 25 years.
Estimated amortization expense for each of the five succeeding fiscal years is
$1.2 million, $1.2 million, $1.1 million, $1.1 million and $.5 million for
fiscal years 2002, 2003, 2004, 2005 and 2006, respectively.

Note 5 Comprehensive income

         During the three months ended June 30, 2002 and July 1, 2001, total
comprehensive income (loss) amounted to $15.0 million and ($90.5) million,
respectively. During the six months ended June 30, 2002 and July 1, 2001, total
comprehensive (loss) amounted to ($37.8) million and ($171.0) million,
respectively. The components of comprehensive loss are net loss and cumulative
foreign currency translation adjustment.

Note 6 Income taxes

         The Company's effective tax rate is lower than the U.S. statutory
effective tax rate due to the impact of income in countries with effective tax
rates lower than those in the U.S. and realization of tax attributes, including
net operating loss carry forwards. For the six months ended June 30, 2002,
<PAGE>
the Company realized a one-time tax benefit of $1.8 million, as a result of
changes in US tax laws.

Note 7 Net Income Per Share Data

         The numerator in calculating both basic and diluted earnings per share
for each year is reported net income. The denominator is based on the following
weighted-average number of common shares (in thousands):

<TABLE>
<CAPTION>
                      Three Months Ended              Six Months Ended
                      ------------------              ----------------
                       June 30,      July 1,       June 30,      July 1,
                        2002          2001          2002          2001
                        ----          ----          ----          ----
<S>                   <C>            <C>           <C>           <C>
Basic & Diluted        33,405        34,927        33,405        34,927
</TABLE>

         Any difference between basic and diluted weighted-average common shares
results from the assumption that dilutive stock options outstanding were
exercised.

Note 8 Derivatives Instruments and Hedging Activities

         The Company adopted the SFAS No. 133 Accounting for Derivatives
Instruments and Hedging Activities (Statement 133), as amended by SFAS Nos. 137
and 138. Statement 133 requires all derivatives to be recognized in the balance
sheet as either assets or liabilities at fair value. Derivatives not qualifying
for special hedge accounting must be adjusted to fair value through income. If
the derivative is a hedge, depending on the nature of the hedge, changes in the
fair value of derivatives will either be offset against the change in fair value
of the hedged assets, liabilities, or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized in
income. The ineffective portion of a derivative's change in fair value will be
immediately recognized in earnings.

         Cash Flow Hedge

         In connection with the capital lease of the warehouse distribution
         center in France, the Company entered into an interest swap agreement,
         whereby the Company agreed with the counterparty to exchange, at
         quarterly intervals, the difference between the Company's fixed pay
         rate and the counterparty's variable rate at three-month EURIBOR. The
         agreement expires March 10, 2005. At June 30, 2002, the notional
         principal amount of the swap agreement was Euros 18.9 million
         (approximately $18.6 million) having a fixed rate of 5.46 %. The fair
         value of the swap at June 30, 2002 was Euros 675,090 (approximately
         $663,805) in favor of the counterparty.

         Because the hedge is fully effective, the change in fair value of the
         interest rate swap was recorded in the cumulative translation
         adjustment account included in other comprehensive income.
<PAGE>
         Hedge of Net Investment in Foreign Operations.

         The Company has used Euro denominated debt to protect the value of its
         investments in its foreign subsidiaries. Realized and unrealized gains
         and losses from these hedges are not included in the income statement,
         but are shown in the cumulative translation account, with the related
         amounts due to or from counterparties included in other liabilities or
         other assets.

         During the three and six months ended July 1, 2001, the Company
         recognized approximately a gain/(loss) of ($0.8) million and $0.3
         million, respectively, included in the cumulative translation
         adjustment, related to net investment hedges. During the three and six
         months ended June 30, 2002, the Company did not utilize investment
         hedges nor recognize any gain in the cumulative translation adjustment
         related to net investment hedges.

Note 9 Adoption of Accounting Principles

         In July 2001, the Financial Accounting Standard Board (FASB) issued
SFAS No. 143 "Accounting for Asset Retirement Obligations". Statement No. 143
requires that the fair value of a liability for an asset retirement obligation
be recorded in the period in which it is incurred and to capitalize costs as
part of the carrying amount of the long-lived asset. Adoption of this Statement
is required for fiscal years beginning after June 15, 2002. Management does not
believe that the adoption of this Statement will have a material impact on the
Company's overall financial position or results of operations.

         In October 2001, the FASB issued SFAS No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets". This statement supercedes SFAS No.
121. Although this statement retains many of the fundamental provisions of SFAS
No. 121, it expands the scope of discontinued operations to include more
disposal transactions and significantly changes the criteria for classifying an
asset as held-for-sale. The provisions of SFAS No. 144 are effective for fiscal
years beginning after December 15, 2001. The Company adopted the provision of
this statement beginning fiscal year 2002. Management based on projected cash
flows has determined there is no impairment for the long lived assets, thus no
impairment has been recorded. Management will continue to review the cash flow
for long lived assets and if required an impairment would be recorded.

Note 10 Acquisitions

         In January 2001, the Company acquired EBT (Germany) for approximately
$10 million in cash, as financed primarily through the Company's revolving
credit facility and 200,000 shares of the Company's common stock. EBT assembles
and distributes light emitting diodes (LED) products in Europe.

         In January 1999, the Company acquired Lighting Partners B.V.
(Netherlands), a manufacturer of lighting fixtures. Under the terms of the
purchase agreement between the Company and Lighting Partners B.V., a contingent
purchase price adjustment is required if certain conditions are met, including
management retention for a period of time, increased pre-tax income and new
business revenue. No contingent purchase price had been paid or recorded at June
30, 2002. The Company estimates a purchase price adjustment contingency to be in
the range of $5 million to $15 million, which will be recorded in the fourth
quarter of fiscal 2002 as a goodwill adjustment. When this charge is recorded
the Company will perform the necessary test as required in SFAS No. 142 for
impairment.
<PAGE>
Note 11 Restructuring and other related costs


Restructuring of existing operations


         In March 2001, the Company entered into an agreement to sell certain
assets and service contracts of its lighting service and maintenance business.
As a result of this divestiture, cumulative charges totaling $56.9 million were
incurred in fiscal 2001, consisting of a goodwill write-off of $32.9 million,
other asset write-downs of $13.5 million and exit costs of $10.5 million. In the
three months ended March 31, 2002, an additional charge of $330,000 relating to
unfavorable contractual agreements was incurred. Approximately $.4 million
remain in accruals at June 30, 2002 related to this agreement, which is expected
to be utilized within 6 months. The exit costs primarily relate to unfavorable
contractual agreements and payroll costs.

         In April 2001, the Company approved restructuring plans in Europe to
relocate some manufacturing activities into more cost-effective areas. As a
result, severance costs of $2.0 million related to 73 employees were accrued in
the second quarter of fiscal 2001. As of June 30, 2002, $1.1 million of the
accruals had been utilized and the remainder will be paid within 6 months.

         In April 2002, the Company approved restructuring plans in Europe to
reduce its fixed overhead costs in the manufacturing process in its Germany
plant and close one of its manufacturing plants in the UK. As a result,
cumulative charges totaling $3.7 million were incurred in the second quarter of
fiscal 2002, consisting of severance costs of $1.6 million related to 214
employees, asset write-downs of $.6 million and exit costs of $1.5 million.
Approximately $3.2 million remain in the accruals at June 30, 2002 related to
this plan, which is expected to be utilized within 6 months.

Restructuring of acquired operations

         In connection with the acquisition of certain business lines of EMESS
PLC, effective July 2000, the Company approved a restructuring plan, which
resulted in reorganization accruals of $2.3 million as follows:

        i.) Severance costs of $2.1 million include the termination of 120
            employees in Europe and 2 employees in the U.S. Approximately $1.8
            million of severance cost was paid as of June 30, 2002. The
            remainder will be paid over the next 3 months.

        ii.) Costs of $178,000 are associated with the disposal of fixed assets
            and other exit costs. All costs had been utilized as of March 31,
            2002.

         In January 2001, the Company approved a restructuring plan in
connection with the purchase price accounting for the acquisition of EBT,
resulting in accruals of $2.2 million. This plan includes $1.9 million of
severance costs for the termination of 125 employees and $250,000 of other exit
costs. The termination of employees was due to plans in Europe to relocate some
manufacturing activities into more cost-effective areas. However, the Company
decided not to carry out this portion of the restructuring plan. As a result, in
the second quarter of fiscal 2002 the Company has reversed $1.9 million of the
restructure accrual against the purchased goodwill. As of June 30, 2002, $0.2
million of the accruals had been utilized and the remainder will be paid over
the next 6 months.

Note 12 Discontinued Operations

         In June 2001, the Company announced its intention to divest itself of
its Power Lighting Products (PLP) segment. The Company adopted a plan that
expects to divest the segment through sale and liquidation over the next 12
months. The assets to be sold consist primarily of accounts
<PAGE>
receivable, inventories and property, plant and equipment. Results of this
operation have been classified as discontinued and prior periods have been
reclassified.

         In the second quarter of fiscal 2002, the Company sold the assets of
its German subsidiary, SLI Miniature Lighting GmbH ("OSA") and all of the
outstanding stock of its Australia subsidiary, Sylvania Lighting International
PTY Limited. In accordance with SFAS No. 144 the results of these two operations
have been classified as discontinued operations and prior periods have been
reclassified.

         Revenues and operating results, including income tax impact, are
reported in discontinued operations as follows (in thousands):

<TABLE>
<CAPTION>
                                           Three Months Ended                Six Months Ended
                                           ------------------                ----------------
                                          June 30,       July 1,         June 30,        July 1,
                                            2002          2001             2002           2001
                                            ----          ----             ----           ----
<S>                                       <C>           <C>              <C>            <C>
Revenues                                  $  9,094      $ 11,393         $ 16,156       $ 29,418
                                          ========      ========         ========       ========
Profit (Loss) from operations:
       Profit (Loss) before taxes               67        (2,775)             245         (5,780)
       Income tax                              (69)          (51)             (93)          (224)
                                          --------      --------         --------       --------
       Net Profit (loss) after tax        $     (2)     $ (2,826)        $    152       $ (6,004)
                                          --------      --------         --------       --------
Loss from disposal (no tax effect)        $ (8,650)     $(56,769)        $ (8,650)      $(58,982)
                                          --------      --------         --------       --------
Loss from discontinued operations         $ (8,652)     $(59,595)        $ (8,498)      $(64,986)
                                          ========      ========         ========       ========
</TABLE>

         Loss from operations for the three and six months ended June 30, 2002
included sales of $53,000 and $105,000, respectively, for inventory that was
written down to net realizable value. The loss from operations for the three
months ended June 30, 2002 and July 1, 2001 includes allocated interest expense
to discontinued operations of $0 and $810,000, respectively. The loss from
operations for the six months ended June 30, 2002 and July 1, 2001 includes
allocated interest expense to discontinued operations of $0 and $1.7 million,
respectively. The allocation of interest expenses to the discontinued operations
was based on identified debt that can be specifically attributed to the
discontinued operations.

         Loss from disposal for the three and six months ended June 30, 2002,
consists of the net loss of $3.7 million resulting from the sale of OSA and $5.0
million resulting from the sale of Sylvania Lighting International PTY Limited.
Loss from disposal for the six months ended July 1, 2001, includes asset
write-downs to net realizable value totaling $41.4 million, warranty, supplier
and lease obligations of $7.3 million and other liquidation and exit costs of
$8.1 million. At June 30, 2002 approximately $4.3 million remain in accruals for
warranty, supplier and lease obligations. Included in other exit costs is an
allocation of interest expense totaling $3.9 million based on debt that can be
identified as specifically attributed to the discontinued operations, none of
which remains in the accruals at June 30, 2002.

         In addition, the Company has presented the assets and liabilities
relating to its discontinued
<PAGE>
operations separately in the accompanying consolidated condensed balance sheets
as of June 30, 2002 and December 30, 2001. These balances are comprised of
(dollars in thousands):

<TABLE>
<CAPTION>
                                  June 30,       December 30,
                                    2002            2001
                                    ----            ----
<S>                               <C>            <C>
Accounts receivable                $    --        $ 3,008
Inventories                          1,571         11,431
Property, plant & equipment          3,495          9,588
Prepaid assets & other                  --            608
                                   -------        -------
Total Assets                       $ 5,066        $24,635
                                   =======        =======
Accounts payable & accruals        $   836        $11,220
Long term liabilities                1,183          2,053
                                   -------        -------
Total Liabilities                  $ 2,019        $13,273
                                   =======        =======
</TABLE>


Note 13 Segment Information

         The Company, as a result of redefining its core business, elected to
change the reporting of its business segments as of January 1, 2001. Four of the
Company's businesses (Miniature Lighting, General Lighting, Power Lighting
Products and Disposed Business) had been designated as separate business
segments; of which three segments remain as reportable segments. Power Lighting
Products, previously a segment, is reflected separately as discontinued
operations in our consolidated financial statements. Corporate expenses are not
allocated.

         The Miniature Lighting segment consists primarily of vertically
integrated manufacturing and sales operations throughout North America and
Europe. A wide variety of products comprised primarily of value added miniature
lighting assemblies and lighting systems are sold primarily to original
equipment manufacturers ("OEMs") in the automotive, electronics and
communication, appliance and aviation industries.

         The General Lighting segment consists primarily of vertically
integrated manufacturing and sales operations throughout Europe, Central and
South America, Pacific Rim and the United States. A wide range of lamp and
fixture products are supplied to wholesalers, OEMs, retailers, architects,
designers and contractors.

         The Disposed Business segment consists of divestitures, which includes
the lighting service and maintenance business. The Company entered into an
agreement in March 2001 to sell certain assets and service contracts of the
lighting service and maintenance business.

Segment information for the three and six months ended June 30, 2002 and July 1,
2001 was as follows (dollars in thousands):
<PAGE>
<TABLE>
<CAPTION>
                                                             General      Disposed
                                               Miniature    Lighting      Business       Other        Total
                                               ---------    --------      --------       -----        -----
<S>                                            <C>          <C>           <C>           <C>          <C>
FOR THE THREE MONTHS ENDED JUNE 30, 2002

Net Sales                                     $  42,612    $ 142,657    $     106           --     $ 185,375
Operating profit (loss)                       $   5,040    $  (7,112)          --     $ (3,350)    $  (5,422)

Identifiable assets (a)                       $ 182,511    $ 683,687    $   2,790     $    221     $ 869,209

Depreciation & Amortization                   $   1,599    $   6,586           --           --     $   8,185
Capital Expenditures                          $   2,105    $   3,553           --           --     $   5,658


FOR THE THREE MONTHS ENDED JULY 1, 2001

Net Sales                                     $  38,412    $ 151,099    $   1,995           --     $ 191,506
Operating profit (loss)                       $   1,408    $  (3,007)   $  (7,113)    $ (2,145)    $ (10,857)

Identifiable assets (a)                       $ 168,659    $ 644,202    $  16,753     $  7,436     $ 837,050

Depreciation & Amortization                   $   1,685    $   6,520    $       3     $    357     $   8,565
Capital Expenditures                          $   1,643    $   7,858           --     $     42     $   9,543

FOR THE SIX MONTHS ENDED JUNE 30, 2002

Net Sales                                     $  82,659    $ 300,775    $     177           --     $ 383,611
Operating profit (loss)                       $   9,126    $  (4,991)   $    (330)    $ (4,950)    $  (1,145)

Depreciation & Amortization                   $   3,156    $  12,928           --           --     $  16,084
Capital Expenditures                          $   2,683    $   6,276           --           --     $   8,959


FOR THE SIX MONTHS ENDED JULY 1, 2001

Net Sales                                     $  83,007    $ 326,561    $  10,260           --     $ 419,828
Operating profit (loss)                       $   7,311    $   5,319    $ (61,023)    $ (3,351)    $ (51,744)

Depreciation & Amortization                   $   3,317    $  13,005    $     526     $    684     $  17,532
Capital Expenditures                          $   8,883    $  16,891    $      20     $    204     $  25,998
</TABLE>


(a)      Identifiable assets are net of discontinued operations.
<PAGE>
Note 14 Sale of Assets

The Brilliant Group disposed of its Paint Shop assets on June 4. Accordingly the
Company accrued for the loss of approximately two million dollars which has been
referred as a Sale of Assets in Company's Statement of Operations.


Note 15 Subsequent Events

         On July 1, 2002, the Company defaulted on a principal payment
obligation under its Credit Agreement and entered into the Forbearance Agreement
with respect to the Company's defaults, including the principal payment default.
Under the terms of the Forbearance Agreement, the Company was granted a waiver
of certain covenants and forbearance from its principal payment default, while
the Company continued to negotiate a long-term amendment to the Credit Agreement
with its senior bank lenders.

         On August 1, 2002, the Company announced that it was unable to obtain
an extension to the Forbearance Agreement. As of August 19, 2002, the Company
continued to be unable to obtain an extension to the Forbearance Agreement with
respect to the Company's current defaults. The Company continues to explore all
available alternatives to restructuring its existing debt and addressing its
current liquidity issues, including the possibility of filing a voluntary
petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code and
obtaining debtor-in-possession financing. For additional discussion regarding
the foregoing, please see "Note 3 - Long Term Debt."

         On August 8, 2002, the Company issued a press release announcing that
the New York Stock Exchange (the "NYSE") has suspended trading of the Company's
common stock effective August 5, 2002. The NYSE halted trading in the Company's
common stock on Thursday, August 1, 2002, pending a material news announcement
from the Company.
<PAGE>
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         The following discussion and analysis of the results of operations for
the three and six months ended June 30, 2002 should be read in conjunction with
the Company's Condensed Consolidated Financial Statements and accompanying
notes. Except for historical matters contained herein, the matters discussed
herein are forward-looking statements and are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements reflect assumptions and involve risks and
uncertainties, which may affect the Company's business and prospects and cause
actual results to differ materially from these forward-looking statements. Among
the factors and risks that may affect the Company's future results are: the
Company's ability to successfully; amend, restructure and/or renegotiate its
existing credit facilities or cure or receive a waiver of the events of default
under its credit facilities; the failure of which may result in the Company
filing a voluntary petition for bankruptcy; continue to operate in the ordinary
course and manage its relationships with its creditors, including its lenders,
vendors and suppliers, employees and customers given the Company's financial
condition, access alternative sources of financing if it is unable to amend,
restructure and/or renegotiate its credit agreements, limit the amount of time
the Company's management and officers devote to restructuring its existing
operations and credit facilities and exploring strategic alternatives in order
to also allow them to run the Company's business and implement its business
strategy; retain its key senior managers and other employees; avoid net losses
which could require the Company to find additional sources of financing to fund
its operations, implement its financial and business strategies, meet
anticipated capital expenditures, research and development costs and financing
commitments; implement its business strategy of reducing expenses and improving
cash flow, retain its key customers and limit the Company's vulnerability to
general adverse economic conditions; sell and market its products worldwide; as
well as manage other uncertainties and risk factors, including those described
from time to time in the Company's filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for the fiscal year ended
December 30, 2001.

GENERAL

         The Company is a leading vertical integrated manufacturer and supplier
of lighting systems, which include lamps and fixtures. Through its acquisition
based growth strategy, the Company has grown from a specialized manufacturer of
miniature lighting products into a manufacturer, supplier and lighting service
provider of a wide variety of lighting products, including lamps (incandescent,
fluorescent, compact fluorescent, HID, halogen, miniature incandescent, neon,
LED's and special lamps) and fixtures. The Company's overall strategic view is
to focus on the growth prospects of core business activities and to divest
itself of non-core products, services and markets within the general lighting
business. In March 2001, the Company entered into an agreement to sell certain
assets and service contracts of its lighting service and maintenance business.
In addition, the Company ceased manufacturing of its magnetic ballasts in
January 2001.

         The Company believes that it is one of the six largest global lighting
companies in the world offering lamps and fixtures. The Company serves a
diverse, international customer base and at June 30, 2002 had 35 manufacturing
plants in 11 countries.

         In January 2001, the Company acquired EBT (Germany) for approximately
$10 million in cash, as financed primarily through the Company's credit facility
and 200,000 common shares. The acquired company assembles and distributes light
emitting diodes (LED) products in Europe.

         For the six months ended June 30, 2002 and July 1, 2001, 80.5% and
79.7%, respectively, of the Company's worldwide net revenue was generated from
international operations. International operations are subject to currency
fluctuations and government actions, such as devaluations. The Company monitors
its currency exposure in each country and cannot predict future foreign currency
fluctuations, which have and may continue to affect the Company's balance sheet
and results of operations.

         On July 1, 2002, the Company defaulted on a principal payment
obligation under its Credit Agreement and entered into the Forbearance Agreement
with respect to the Company's defaults, including the principal payment default.
Under the terms of the Forbearance Agreement, the Company was granted a waiver
of certain covenants and forbearance from its principal payment default,
<PAGE>
while the Company continued to negotiate a long-term amendment to the Credit
Agreement with its senior bank lenders.

         On August 1, 2002, the Company announced that it was unable to obtain
an extension to the Forbearance Agreement. As of August 19, 2002, the Company
continued to be unable to obtain an extension to the Forbearance Agreement with
respect to the Company's current defaults. The Company continues to explore all
available alternatives to restructuring its existing debt and addressing its
current liquidity issues, including the possibility of filing a voluntary
petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code and
obtaining debtor-in-possession financing. For additional discussion regarding
the foregoing, please see "Note 3 - Long Term Debt" of the Condensed Notes to
the Company's Consolidated Financial Statements.

Discontinued Operations

         In June 2001, the Company announced its intention to divest itself of
its Power Lighting Products (PLP) segment. In the second quarter of fiscal 2002,
the Company sold the assets of its German subsidiary, OSA and all of the
outstanding stock of its Australia subsidiary, Sylvania Lighting International
PTY Limited. As of June 30, 2002, the Company's Condensed Consolidated Financial
Statements reflect the classification of PLP, OSA and the Australia subsidiary
as discontinued operations. See "Note 12 - Discontinued Operations" to the
Condensed Consolidated Financial Statements for further information.

Cumulative Effect of Accounting Change

         As of December 31, 2001, the Company adopted SFAS No. 142, "Goodwill
and Other Intangible Assets". SFAS No. 142 sets forth new financial accounting
and reporting standards that require goodwill to be separately disclosed from
other intangible assets in the statement of financial position, and no longer
amortized, but tested for impairment on an annual basis, or whenever indicators
of impairment are identified. In accordance with the provisions of this
accounting standard, the Company assigned previously recognized goodwill to
individual reporting units and undertook to review such goodwill for possible
impairment. As a result of this review, there was an impairment of $43.6 million
for goodwill relating to the General Lighting segment, which was recognized in
the second quarter of fiscal 2002 and was accounted for as a cumulative effect
of a change in accounting principle.

Results of Continuing Operations

Three months ended June 30, 2002 compared to the three months ended July 1,
2001.

         Net sales. Net sales decreased by 3.2% from $191.5 million for the
three months ended July 1, 2001 to $185.4 million for the three months ended
June 30, 2002. This decrease was partially due to the loss in sales volume
resulting from the sale of the SLI Lighting Company (Emess) and lighting service
and maintenance business of $11.0 million and a $4.8 million loss in sales
volume due to demand. In addition, the generally lower value of the US dollar
compared to other currencies worldwide increased net sales by approximately 5.0%
or $9.7 million, for the three months ended June 30, 2002 as compared to the
three months ended July 1, 2001.

         Gross Margin. Gross margin decreased from $40.5 million for the three
months ended July 1,
<PAGE>
2001 to $39.7 for the three months ended June 30, 2002. The translation effects
of the strengthening European currency positively impacted gross margin by
approximately 5.4% or $2.2 million for the three months ended June 30, 2002 as
compared to the three months ended July 1, 2001.

         Selling, general and administrative expenses. Selling, general and
administrative expenses decreased from $43.9 million for the three months ended
July 1, 2001 to $41.4 million for the three months ended June 30, 2002. As a
percentage of net sales, selling, general and administrative expenses decreased
from 22.9% for the three months ended July 1, 2001 to 22.3% for the three months
ended June 30, 2002. This decrease was largely due to the SLI Lighting Company
(Emess) disposals.

         Restructuring and other related costs. In March 2001, the Company
entered into an agreement to sell certain assets and service contracts of its
lighting service and maintenance business. As a result of this divestiture,
charges totaling $5.4 million were incurred in the three months ended July 1
2001. The exit costs primarily relate to unfavorable contractual agreements and
severance related costs.

         In April 2001, the Company approved restructuring plans in Europe to
relocate some manufacturing activities into more cost-effective areas. As a
result, severance costs of $2.0 million related to 73 employees were accrued in
the second quarter of fiscal 2001. As of June 30, 2002, $1.1 million of the
accruals had been utilized and the remainder will be paid within 6 months.

         In April 2002, the Company approved restructuring plans in Europe to
reduce its fixed overhead costs in the manufacturing process in its Germany
plant and close one of its manufacturing plants in the UK. As a result,
cumulative charges totaling $3.7 million were incurred in the second quarter of
fiscal 2002, consisting of severance costs of $1.6 million related to 214
employees, asset write-downs of $.6 million and exit costs of $1.5 million.
Approximately $3.2 million remain in the accruals at June 30, 2002 related to
this plan, which is expected to be utilized within 6 months.

         The Company believes that these restructuring plans are a necessary
action based on the termination of certain activities and are required to
maintain a competitive position. See "Note 11 Restructuring and other related
costs" of the Condensed Notes to the Company's Consolidated Financial
Statements.

         Interest (income) expense, net. Interest expense, net, increased from
$6.3 million for the three months ended July 1, 2001 to $7.7 million for the
three months ended June 30, 2002, as a result of an increase in average
outstanding borrowings.

         Loss on sale of assets. For the three months ended June 30, 2002, as a
result of general lighting restructuring activities in Europe, the Company
recorded a loss on sale of assets of $2.0 million due to the sale of certain
unutilized machinery and equipment

         Other (income) expense. Other income for the three months ended June
30, 2002 was approximately ($.7) million as compared to other expense for the
three months ended July 1, 2001 of $.1 million. These were primarily related to
the recording of the effects of foreign exchange transactions.

         Loss before income taxes. As a result of the above factors, loss
before income taxes decreased from $17.3 million for the three months ended July
1, 2001 to $14.4 million for the three
<PAGE>
months ended June 30, 2002.

         Income taxes. For the three months ended June 30, 2002, the Company
recorded a tax provision of $.8 million on a pretax loss of $14.4 million
compared to a tax provision of $.7 million on pretax loss of $17.3 million for
the three months ended July 1, 2001. The tax provision of $.8 million for the
three months ended June 30, 2002 was the result of taxable profits generated at
the foreign operations.

Six months ended June 30, 2002 compared to the six months ended July 1, 2001.

         Net sales. Net sales decreased by $36.2 million or 8.6% from $419.8
million for the six months ended July 1, 2001 to $383.6 million for the six
months ended June 30, 2002. This decrease was partially due to the loss in sales
volume resulting from the sale of the SLI Lighting Company (Emess) and lighting
service and maintenance business and of $19.2 million and a $21.1 million loss
in sales volume due to demand. In addition, the generally lower value of the US
dollar compared to other currencies worldwide increased net sales by
approximately 1.0% or $4.1 million, for the six months ended June 30, 2002 as
compared to the six months ended July 1, 2001.

         Gross Margin. Gross margin decreased from $94.3 million for the six
months ended July 1, 2001 to $82.6 million for the six months ended June 30,
2002. Due to the reduction in product demand, the gross margin was adversely
impacted by $4.7 million for the six months ended June 30, 2002, as compared to
the six months ended July 1, 2001. The translation effects of the strengthening
European currency positively impacted gross margin by approximately .8% or $.8
million for the six months ended June 30, 2002 as compared to the six months
ended July 1, 2001. In addition, the gross margin increased $2.9 million for the
six months ended June 30, 2002 as compared to the six months ended July 1, 2001,
due to the sale of Emess and the exit from the lighting service and maintenance
business and the associated loss in sales volume. As a percentage of net sales,
gross margin decreased from 22.5% for the six months ended July 1, 2001 to 21.5%
for the six months ended June 30, 2002.

         Selling, general and administrative expenses. Selling, general and
administrative expenses decreased from $90.3 million for the six months ended
July 1, 2001 to $79.8 million for the six months ended June 30, 2002. As a
percentage of net sales, selling, general and administrative expenses decreased
from 21.5% for the six months ended July 1, 2001 to 20.8% for the six months
ended June 30, 2002. This decrease was primarily due to the Company's
implementation of restructuring plans.

         Restructuring and other related costs. In March 2001, the Company
entered into an agreement to sell certain assets and service contracts of its
lighting service and maintenance business. As a result of this divestiture,
charges totaling $53.7 million were incurred in the six months ended July 1,
2001, asset write-downs of $46.1 million, and exit costs of $7.6 million. The
exit costs primarily relate to unfavorable contractual agreements and severance
related costs. In the six months ended June 30, 2002, an additional charge of
$330,000 relating to unfavorable contractual agreements was incurred.

         In April 2001, the Company approved restructuring plans in Europe to
relocate some manufacturing activities into more cost-effective areas. As a
result, severance costs of $2.0 million related to 73 employees were accrued in
the second quarter of fiscal 2001. As of June 30, 2002, $1.1 million of the
accruals had been utilized and the remainder will be paid within 6 months.
<PAGE>
         In April 2002, the Company approved restructuring plans in Europe to
reduce its fixed overhead costs in the manufacturing process in its Germany
plant and close one of its manufacturing plants in the UK. As a result,
cumulative charges totaling $3.7 million were incurred in the second quarter of
fiscal 2002, consisting of severance costs of $1.6 million related to 214
employees, asset write-downs of $.6 million and exit costs of $1.5 million.
Approximately $3.2 million remain in the accruals at June 30, 2002 related to
this plan, which is expected to be utilized within 6 months.

         The Company believes that these restructuring plans are a necessary
action based on the termination of certain activities and are required to
maintain a competitive position. See "Note 11 Restructuring and Other Related
Costs" of the Condensed Notes to the Company's Consolidated Financial
Statements.

         Interest (income) expense, net. Interest expense, net, increased from
$13.0 million for the six months ended July 1, 2001 to $14.6 million for the six
months ended June 30, 2002 as a result of an increase in average borrowings.

         Loss on sale of assets. For the six months ended July 1, 2001, as a
result of general lighting restructuring activities in North America, the
Company recorded a loss on sale of assets of $4.2 million due to the sale of
certain unutilized machinery and equipment. For the six months ended June 30,
2002, as a result of general lighting restructuring activities in Europe, the
Company recorded a loss on sale of assets of $2.0 million due to the sale of
certain unutilized machinery and equipment

         Other (income) expense. Other expense for the six months ended June 30,
2002 was approximately $2.3 million as compared to other income for the six
months ended July 1, 2001 of $.7. The other expense recorded in the current
fiscal year was primarily due to the loss on the sale of two of the Company's
subsidiaries, which resulted in losses totaling $3.2 million. The remaining
income was primarily related to the recording of the effects of foreign exchange
transactions.

         Loss before income taxes. As a result of the above factors, loss before
income taxes decreased from $68.2 million for the six months ended July 1, 2001
to $20.1 million for the six months ended June 30, 2002.

         Income taxes (benefits). For the six months ended June 30, 2002, the
Company recorded a tax benefit of ($.2) million on a pretax loss of $20.1
million compared to a tax provision of $2.4 million on pretax loss of $68.2
million for the six months ended July 1, 2001. The tax benefit of ($.2) million
for the six months ended June 30, 2002 was primarily the result of a tax
recovery due to changes in US tax laws, which was offset by taxes as the result
of profits generated at the foreign operations.

         The Company is organized into three separate operating segments. See
"Note 13 Segment Information" of the Condensed Notes to the Company's
Consolidated Financial Statements. The results of operations from these three
reportable segments for the three and six months ended June 30, 2002 as compared
to the three and six months ended July 1, 2001 are more fully described below.

Miniature Lighting:

         The Miniature Lighting segment, which represents 23.0% of the Company's
consolidated revenues, reported revenues of $42.6 million for the three months
ended June 30, 2002, an increase of 10.9% from the three months ended July 1,
2001. Sales in Miniature North America during the three months ended June 30,
2002 increased compared to the three months ended July
<PAGE>
1, 2001 by approximately 24%. Miniature lighting operating profits increased
$3.6 million for the three months ended June 30, 2002 to $5.0 million, as
compared to the three months ended July 1, 2001.

         The Miniature Lighting segment, which represents 21.5% of the Company's
consolidated revenues, reported revenues of $82.7 million for the six months
ended June 30, 2002, a decrease of 0.4% from the six months ended July 1, 2001.
The generally lower value of the U.S. dollar compared to other currencies
worldwide was offset by the strong performance in the U.S., for the six months
ended June 30, 2002 as compared to the six months ended July 1, 2001. Miniature
lighting operating profits increased by $1.8 million for the six months ended
June 30, 2002 to $9.1 million, as compared to the six months ended July 1, 2001.

         The increase in the miniature lighting operating results for both the
three and the six months ended June 30, 2002 as compared to the prior year is
primarily due to savings incurred in SG&A.

General Lighting:

         The General Lighting segment, which represents 77.0% of the Company's
consolidated revenues, reported revenues of $142.7 million for the three months
ended June 30, 2002, and a decrease of 5.6% from the three months ended July 1,
2001. The generally lower value of the US dollar compared to other currencies
worldwide increased net sales by approximately 7.5% or $8.7 million, for the
three months ended June 30, 2002 as compared to the three months ended July 1,
2001. General lighting operating loss for the three months ended June 30, 2002
of $7.1 million, increased $4.1 million as compared to the three months ended
July 1, 2001.

         The General Lighting segment, which represents 78.4% of the Company's
consolidated revenues, reported revenues of $300.8 million for the six months
ended June 30, 2002, a decrease of 7.9% from the six months ended July 1, 2001.
The generally lower value of the US dollar compared to other currencies
worldwide increased net sales by approximately 1.3% or $3.8 million, for the six
months ended June 30, 2002 as compared to the six months ended July 1, 2001.
General lighting operating loss for the six months ended June 30, 2002 of $5.0
million decrease of $10.3 million as compared to the six months ended July 1,
2001.

         The decrease in the general lighting operating results for both the
three and the six months ended June 30, 2002 as compared to the prior year is
primarily due to the sharp decrease in demand due to a slowing in the economy.

Disposed Business:

         The Disposed Business segment includes the service and maintenance
business, which was exited in March 2001.

         Revenues for this segment total $0.1 million for the three months ended
June 30, 2002 as compared to $2.0 million for the three months ended July 1,
2001. The Disposed business operating loss for the three months ended June 30,
2002 totaled $0.0 million as compared to a loss of $7.1 in the three months
ended July 1, 2001.

         Revenues for this segment total $0.2 million for the six months ended
June 30, 2002 as compared to $10.3 million for the six months ended July 1,
2001. The Disposed business operating
<PAGE>
loss for the six months ended June 30 2002 totaled $0.3 million as compared to a
loss of $61.0 in the six months ended July 1, 2001.

Subsequent Events:

         On July 1, 2002, the Company defaulted on a principal payment
obligation under its Credit Agreement and entered into the Forbearance Agreement
with respect to the Company's defaults, including the principal payment default.
Under the terms of the Forbearance Agreement, the Company was granted a waiver
of certain covenants and forbearance from its principal payment default, while
the Company continued to negotiate a long-term amendment to the Credit Agreement
with its senior bank lenders.

         On August 1, 2002, the Company announced that it was unable to obtain
an extension to the Forbearance Agreement. As of August 19, 2002, the Company
continued to be unable to obtain an extension to the Forbearance Agreement with
respect to the Company's current defaults. The Company continues to explore all
available alternatives to restructuring its existing debt and addressing its
current liquidity issues, including the possibility of filing a voluntary
petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code and
obtaining debtor-in-possession financing. For additional discussion regarding
the foregoing, please see "Note 3 - Long Term Debt" of the Condensed Notes to
the Company's Consolidated Financial Statements.

         On August 8, 2002, the Company issued a press release announcing that
the NYSE has suspended trading of the Company's common stock effective August 5,
2002. The NYSE halted trading in the Company's common stock on Thursday,
August 1, 2002, pending a material news announcement from the Company.

LIQUIDITY AND CAPITAL RESOURCES

Cash and Cash Equivalents

         The Company's major uses of cash have historically been for
acquisitions, working capital, ongoing capital expenditures and stock
repurchases. Sources of cash have typically included operating cash flow, bank
borrowings and proceeds from the sale of the Company's common stock.

         As of June 30, 2002, the Company's cash on hand was $29.5 million. For
the six months ended June 30, 2002, net cash used in operating activities was
$21.3 million and cash used in investing activities totaled $8.7 million, net of
proceeds from the sale of assets amounting to $.3 million. The investing
activities primarily included capital expenditures for production equipment,
totaling $9.0 million. Net cash provided by financing activities for the six
months ended June 30, 2002 aggregated $8.8 million, which included $9.4 million
in net borrowings under the Company's existing worldwide credit facilities.

Credit Agreement

         During the second quarter of fiscal year 2002, the Company's primary
borrowings were under its Credit Agreement. Under the terms of the Credit
Agreement, the Company is required to make quarterly payments totaling $6.7
million.

         On November 13, 2001, the Company entered into the Fourth Amendment,
which became effective September 30, 2001, and provides for the conversion of
the Company's Revolving Credit Facility, under which $80 million was
outstanding, into a term loan maturing in October 2004, amortizing in equal
installments over the Term Loan. The Fourth Amendment also permits the
<PAGE>
Company to secure other lines of credits and indebtedness.

         Under the Fourth Amendment, the applicable interest rates on such
indebtedness are LIBOR plus 3.75% or base rate plus 2.25%, so long as total
outstanding indebtedness under the Revolving Credit Facility and the Term Loan
exceeds $300 million, reducing to LIBOR plus 2.5% or base rate plus 1%, if such
total outstanding indebtedness is below $200 million. Effective July 1, 2002,
due the Company's defaults discussed below, any new loans or rollovers on
outstanding indebtedness under the Credit Agreement is subject to an interest
rate calculated as the sum of (a) the prime rate plus (b) 2.25%, plus (c) 2.0%
(default premium).

         During the second quarter of fiscal year 2002, the Company defaulted on
certain conditions under the Credit Agreement. The Company was granted a series
of waivers of its current defaults under the Credit Agreement from the Company's
senior bank lenders, with the final waiver expiring on June 30, 2002. Prior to
the expiration of the waiver, the Company engaged in negotiations with its
senior bank lenders in an effort to obtain a long-term amendment to the Credit
Agreement.

         On July 1, 2002, the Company defaulted on a principal payment
obligation under its Credit Agreement and entered into the Forbearance Agreement
with respect to the Company's defaults, including the principal payment default.
Under the terms of the Forbearance Agreement, the Company was granted a waiver
of certain covenants and forbearance from its principal payment default, while
the Company continued to negotiate a long-term amendment to the Credit Agreement
with its senior bank lenders.

         On August 1, 2002, the Company announced that it was unable to obtain
an extension to the Forbearance Agreement. As of August 19, 2002, the Company
continued to be unable to obtain an extension to the Forbearance Agreement with
respect to the Company's current defaults. The Company continues to explore all
available alternatives to restructuring its existing debt and addressing its
current liquidity issues, including the possibility of filing a voluntary
petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code and
obtaining debtor-in-possession financing. For additional discussion regarding
the foregoing, please see "Note 3 - Long Term Debt" of the Condensed Notes to
the Company's Consolidated Financial Statements.

         As of June 30, 2002, the amount of borrowings under the Revolving
Credit Facility totaled approximately $365.0 million, and the face amount of
letters of credit issued and outstanding under the Revolving Credit Facility
totaled approximately $2.3 million. The Company also has a number of other
committed and uncommitted facilities worldwide, which it utilizes for short-term
working capital requirements.

Foreign Exchange Contracts

         The Company conducts business in countries outside of the United
States, which exposes the Company to fluctuations in foreign currency exchange
rates. The Company may enter into short-term forward exchange contracts to hedge
this risk; nevertheless, fluctuations in foreign currency exchange rates could
have an adverse effect on the Company's business. The Company does not hold or
issue financial instruments for trading or speculative purposes. The Company has
significant operations in Europe and, to a lesser extent, in Latin America. The
Company's operations in Latin America are carried out primarily in Brazil, Costa
Rica and Colombia. Although currently not classified as a hyper-inflationary
country, Brazil has been classified as such in the past.

         The Company continues to evaluate its foreign currency exchange rate
exposure in light of the Company's current liquidity issues.
<PAGE>
         ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         The tables below summarize information on instruments and transactions
that are sensitive to foreign currency exchange rates, including foreign
currency forward exchange agreements and foreign currency denominated debt
obligations.

Debt Denominated in Foreign Currencies is as follows:

<TABLE>
<CAPTION>
                                                                                                                  Fair
                                                                                                                 Value
                                       2002       2003     2004     2005     2006      Thereafter      Total     6/30/02
                                       ----       ----     ----     ----     ----      ----------      -----     -------
                                                                     (Dollars equivalent in millions)
<S>                                    <C>        <C>      <C>      <C>      <C>       <C>             <C>       <C>
Euro

      Variable rate loan               $ 16.9       -        -        -        -           -           $16.9      $16.9
      Avg Interest rate                   7.2%
      Avg Forward Currency
                  Exchange rate         0.983

Sterling

      Variable rate loan               $  6.8       -        -        -        -           -           $ 6.8      $ 6.8
      Avg Interest rate                   7.9%
      Avg Forward Currency
                  Exchange rate         1.522
</TABLE>
<PAGE>
                           PART II - OTHER INFORMATION

Item 6 Exhibit and Report on Form 8-K


         No report on Form 8-K was filed during the quarter ending June 30,
2002.


                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.

                                           SLI, Inc.


                                           By:     /s/ Frank M. Ward
                                                 ------------------------
                                                 Frank M. Ward, President
                                                 and Chief Executive Officer
Date: August 19, 2002

                                           By:     /s/ Robert J. Mancini
                                                 ------------------------
                                                 Robert J. Mancini,
                                                 Chief Financial Officer
Date: August 19, 2002