##### Table of Contents



FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________

(Mark One)

|    |  |                                                                                       
|--- |  | --------------------------------------------------------------------------------------
|[X] |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2002

OR

|      |  |                                                                                        
|----- |  | ---------------------------------------------------------------------------------------
|[   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

Commission File No. 0-25848

SLI, INC.

(Exact name of registration specified in charter)


|                                  |  |                                                                               |  |                                                
|--------------------------------- |  | ----------------------------------------------------------------------------- |  | -----------------------------------------------
|OKLAHOMA
(State of Incorporation) |  |                                                                               |  | 73-1412000
(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 March 31, 2002, 33,404,933 shares of Registrants Common Stock $.01 par
value, were outstanding.





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TABLE OF CONTENTS



|                                                     |                                                                   |                                                 |  |  |  |  |  | 
|---------------------------------------------------- | ----------------------------------------------------------------- | ----------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION                      
|                                                     | ITEM 1.  FINANCIAL STATEMENTS                                   
|                                                     |                                                                   | CONDENSED CONSOLIDATED BALANCE SHEETS          
|                                                     |                                                                   | CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS 
|                                                     |                                                                   | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|Condensed Consolidated Notes To Financial Statements
|                                                     | Item 3. Quantitative and Qualitative Disclosure about Market Risk
|PART II  OTHER INFORMATION                         
|                                                     | Item 6 Exhibit and Report on Form 8K                             
|SIGNATURES                                          



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##### Table of Contents












PART I  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

SLI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Data)

|                                           |                                                                                                                                                              |                                            |                                      |         |         |             |         |              |         |  |  | 
|------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ------------------------------------ | ------- | ------- | ----------- | ------- | ------------ | ------- |  |  | 
|                                           |                                                                                                                                                              |                                            |                                      |         |         | March 31,   |         | December 30,
|                                           |                                                                                                                                                              |                                            |                                      |         |         | 2002        |         | 2001        
|                                           |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|                                           |                                                                                                                                                              |                                            |                                      |         |         | (Unaudited) |         | (Note 1)    
|                                           |                                                                                                                                                              |                                            |                                      | ASSETS  |         |             |         |              |         |  |  | 
|                                          
|                                          
|                                          
|                                          
|Current Assets:                            |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|                                          
|                                          
|                                          
|                                          
|                                           | Cash and cash equivalents                                                                                                                                    |                                            | $                                    | 35,632  |         |             | $       | 50,535       |        
|                                          
|                                          
|                                          
|                                          
|                                           | Accounts receivable, net                                                                                                                                     |                                            |                                      | 175,136 |         |             |         | 174,526      |        
|                                          
|                                          
|                                          
|                                          
|                                           | Inventories                                                                                                                                                  |                                            |                                      | 170,450 |         |             |         | 178,850      |        
|                                          
|                                          
|                                          
|                                          
|                                           | Prepaid expenses and other                                                                                                                                   |                                            |                                      | 19,137  |         |             |         | 18,527       |        
|                                           |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|                                           |                                                                                                                                                              | Total current assets                       |                                      |         | 400,355 |             |         |              | 422,438 | 
|                                           |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|Property, Plant and Equipment, at cost:    |                                                                                                                                                              |                                            | 430,260                              |         |         |             | 436,465 |             
|                                          
|                                          
|                                          
|                                          
|                                           | Less  Accumulated depreciation                                                                                                                              |                                            |                                      | 75,252  |         |             |         | 70,772       |        
|                                           |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|                                           |                                                                                                                                                              |                                            | 355,008                              |         |         |             | 365,693 |             
|                                           |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|Other Assets:                              |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|                                          
|                                          
|                                          
|                                          
|                                           | Goodwill, net of accumulated amortization                                                                                                                    |                                            |                                      | 53,895  |         |             |         | 54,238       |        
|                                          
|                                          
|                                          
|                                          
|                                           | Other intangible assets, net of accumulated amortization                                                                                                     |                                            |                                      | 12,522  |         |             |         | 13,080       |        
|                                          
|                                          
|                                          
|                                          
|                                           | Other assets                                                                                                                                                 |                                            |                                      | 17,685  |         |             |         | 17,479       |        
|                                           |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|                                           |                                                                                                                                                              | Total other assets                         |                                      |         | 84,102  |             |         |              | 84,797  | 
|                                           |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|Net assets of discontinued operations      |                                                                                                                                                              |                                            | 1,589                                |         |         |             |        |             
|                                           |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|                                           |                                                                                                                                                              | Total assets                               |                                      | $       | 841,054 |             |         | $            | 872,928 | 
|                                           |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|                                           |                                                                                                                                                              |                                            | LIABILITIES AND STOCKHOLDERS EQUITY |         |         |             |         |              |         |  | 
|                                          
|                                          
|                                          
|                                          
|Current Liabilities:                       |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|                                          
|                                          
|                                          
|                                          
|                                           | Short-term notes payable                                                                                                                                     |                                            | $                                    | 56,313  |         |             | $       | 60,120       |        
|                                          
|                                          
|                                          
|                                          
|                                           | Current portion of long-term debt                                                                                                                            |                                            |                                      | 26,994  |         |             |         | 26,994       |        
|                                          
|                                          
|                                          
|                                          
|                                           | Long-term debt                                                                                                                                               |                                            |                                      | 343,085 |         |             |         | 350,016      |        
|                                          
|                                          
|                                          
|                                          
|                                           | Current portion of capital lease obligations                                                                                                                 |                                            |                                      | 1,154   |         |             |         | 1,152        |        
|                                          
|                                          
|                                          
|                                          
|                                           | Accounts payable                                                                                                                                             |                                            |                                      | 102,593 |         |             |         | 108,681      |        
|                                          
|                                          
|                                          
|                                          
|                                           | Accrued income taxes payable                                                                                                                                 |                                            |                                      | 9,693   |         |             |         | 10,314       |        
|                                          
|                                          
|                                          
|                                          
|                                           | Other accrued expenses                                                                                                                                       |                                            |                                      | 89,516  |         |             |         | 92,371       |        
|                                           |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|                                           |                                                                                                                                                              | Total current liabilities                  |                                      |         | 629,348 |             |         |              | 649,648 | 
|                                           |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|Long-term debt, less current portion       |                                                                                                                                                              |                                            | 5,243                                |         |         |             | 5,755   |             
|                                           |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|Other Liabilities:                         |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|                                          
|                                          
|                                          
|                                          
|                                           | Deferred income taxes                                                                                                                                        |                                            |                                      | 7,518   |         |             |         | 7,956        |        
|                                          
|                                          
|                                          
|                                          
|                                           | Pension Liability                                                                                                                                            |                                            |                                      | 19,477  |         |             |         | 21,410       |        
|                                          
|                                          
|                                          
|                                          
|                                           | Long-term capital lease obligation, less current portion                                                                                                     |                                            |                                      | 19,783  |         |             |         | 20,329       |        
|                                          
|                                          
|                                          
|                                          
|                                           | Minority interest                                                                                                                                            |                                            |                                      | 5,677   |         |             |         | 5,769        |        
|                                          
|                                          
|                                          
|                                          
|                                           | Other long-term liabilities                                                                                                                                  |                                            |                                      | 15,893  |         |             |         | 14,274       |        
|                                           |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|                                           |                                                                                                                                                              | Total other liabilities                    |                                      |         | 68,348  |             |         |              | 69,738  | 
|                                           |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|Net liabilities of discontinued operations |                                                                                                                                                              |                                            |                                     |         |         |             | 477     |             
|                                          
|                                          
|                                          
|                                          
|Commitments and Contingencies              |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|                                          
|                                          
|                                          
|                                          
|Stockholders Equity:                      |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|                                          
|                                          
|                                          
|                                          
|                                           | Common
stock, $.01 par value-Authorized - 100,000,000 shares
Issued - 33,404,933 and 32,405,229
shares at March 31, 2001 and December 30, 2001, respectively |                                            |                                      | 334     |         |             |         | 334          |        
|                                          
|                                          
|                                          
|                                          
|                                           | Additional paid-in capital                                                                                                                                   |                                            |                                      | 272,270 |         |             |         | 272,270      |        
|                                          
|                                          
|                                          
|                                          
|                                           | Accumulated deficit                                                                                                                                          |                                            |                                      | (48,183 | )       |             |         | (43,615      | )      
|                                          
|                                          
|                                          
|                                          
|                                           | Accumulated other comprehensive loss                                                                                                                         |                                            |                                      | (86,306 | )       |             |         | (81,679      | )      
|                                           |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|                                           |                                                                                                                                                              | Total stockholders equity                 |                                      |         | 138,115 |             |         |              | 147,310 | 
|                                           |                                                                                                                                                              |                                            |                                      |         |         |             |         |             
|                                           |                                                                                                                                                              | Total liabilities and stockholders equity |                                      | $       | 841,054 |             |         | $            | 872,928 | 
|                                           |                                                                                                                                                              |                                            |                                      |         |         |             |         |             

See accompanying notes to the condensed
financial statements.





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##### Table of Contents






SLI, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in thousands, except per share amounts)

|                                             |                                     |   |                    |        |             |   |         |        |  
|-------------------------------------------- | ----------------------------------- | - | ------------------ | ------ | ----------- | - | ------- | ------ | -
|                                             |                                     |   | Three Months Ended
|                                             |                                     |   |                   
|                                             |                                     |   | March 31,          |        | April 1,   
|                                             |                                     |   | 2002               |        | 2001       
|                                             |                                     |   |                    |        |            
|                                             |                                     |   |                    |        | (Unaudited)
|Net sales                                    |                                     | $ | 205,246            |        |             | $ | 235,240 |       
|                                            
|                                            
|                                            
|                                            
|Cost of products sold                        |                                     |   | 160,833            |        |             |   | 180,070 |       
|                                             |                                     |   |                    |        |             |   |         |       
|Gross margin                                 |                                     |   | 44,413             |        |             |   | 55,170  |       
|                                            
|                                            
|                                            
|                                            
|Selling, general and administrative expenses |                                     |   | 39,629             |        |             |   | 47,677  |       
|                                            
|                                            
|                                            
|                                            
|Restructuring costs                          |                                     |   | 330                |        |             |   | 48,320  |       
|                                             |                                     |   |                    |        |             |   |         |       
|Operating income (loss)                      |                                     |   | 4,454              |        |             |   | (40,827 | )     
|                                            
|                                            
|                                            
|                                            
|Other (income) expenses:                     |                                     |   |                    |        |             |   |         |       
|                                            
|                                            
|                                            
|                                            
|                                             | Interest, net                       |   |                    | 6,921  |             |   |         | 6,682  |  
|                                            
|                                            
|                                            
|                                            
|                                             | Loss on sale of assets              |   |                    |       |             |   |         | 4,163  |  
|                                            
|                                            
|                                            
|                                            
|                                             | Other, net                          |   |                    | 3,024  |             |   |         | (835   | )
|                                             |                                     |   |                    |        |             |   |         |       
|Loss before income taxes                     |                                     |   | (5,491             | )      |             |   | (50,837 | )     
|                                            
|                                            
|                                            
|                                            
|Income taxes (benefits)                      |                                     |   | (923               | )      |             |   | 1,722   |       
|                                             |                                     |   |                    |        |             |   |         |       
|Loss from continuing operations              |                                     |   | (4,568             | )      |             |   | (52,559 | )     
|                                             |                                     |   |                    |        |             |   |         |       
|Discontinued operations                     
|                                            
|                                            
|                                            
|                                            
|                                             | Loss from operations                |   |                    |       |             |   |         | (3,237 | )
|                                            
|                                            
|                                            
|                                            
|                                             | Loss from disposal                  |   |                    |       |             |   |         | (2,213 | )
|                                             |                                     |   |                    |        |             |   |         |       
|Loss from discontinued operations,           |                                     |   |                    |        |             |   |         |       
|                                             | (net of income taxes)               |   |                    |       |             |   |         | (5,450 | )
|                                             |                                     |   |                    |        |             |   |         |       
|                                            
|                                            
|                                            
|                                            
|Net loss                                     |                                     | $ | (4,568             | )      |             | $ | (58,009 | )     
|                                             |                                     |   |                    |        |             |   |         |       
|Net loss per common share  basic & diluted  |                                     |   |                    |        |             |   |         |       
|                                            
|                                            
|                                            
|                                            
|                                             | Loss from continuing operations     |   | $                  | (0.14  | )           |   | $       | (1.50  | )
|                                            
|                                            
|                                            
|                                            
|                                             | Loss from discontinued operations   |   |                    |       |             |   |         | (0.16  | )
|                                             |                                     |   |                    |        |             |   |         |       
|                                             | Net loss per share                  |   | $                  | (0.14  | )           |   | $       | (1.66  | )
|                                             |                                     |   |                    |        |             |   |         |       
|                                             | Weighted average shares outstanding |   |                    | 33,405 |             |   |         | 34,927 |  
|                                             |                                     |   |                    |        |             |   |         |       

See accompanying notes to the condensed financial statements.





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##### Table of Contents






SLI, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)

|                                                      |  |                    |         |          |  |   |         |  
|----------------------------------------------------- |  | ------------------ | ------- | -------- |  | - | ------- | -
|                                                      |  | Three Months Ended
|                                                      |  |                   
|                                                      |  | March 31,          |         | April 1,
|                                                      |  | 2002               |         | 2001    
|                                                      |  |                    |         |         
|                                                      |  | (Unaudited)       
|Cash flows from operating activities                  |  |                    |         |          |  |   |         |  
|                                                     
|                                                     
|                                                     
|                                                     
|Net cash provided by (used in) continuing activities: |  | $                  | 1,083   |          |  | $ | (8,669  | )
|                                                     
|                                                     
|                                                     
|                                                     
|Net cash used in discontinued operations              |  |                    | (1,889  | )        |  |   | (3      | )
|                                                      |  |                    |         |          |  |   |         |  
|Net cash used in operating activities                 |  |                    | (806    | )        |  |   | (8,672  | )
|                                                     
|                                                     
|                                                     
|                                                     
|Cash flows from investing activities:                 |  |                    |         |          |  |   |         |  
|                                                     
|                                                     
|                                                     
|                                                     
|Purchases of property, plant and equipment            |  |                    | (3,301  | )        |  |   | (16,455 | )
|                                                     
|                                                     
|                                                     
|                                                     
|Proceeds (costs) from disposal of assets              |  |                    | (208    | )        |  |   | 6,360   |  
|                                                     
|                                                     
|                                                     
|                                                     
|Acquisitions, net of cash acquired                    |  |                    |        |          |  |   | (8,752  | )
|                                                      |  |                    |         |          |  |   |         |  
|Net cash used in investing activities                 |  |                    | (3,509  | )        |  |   | (18,847 | )
|                                                     
|                                                     
|                                                     
|                                                     
|Cash flows from financing activities:                 |  |                    |         |          |  |   |         |  
|                                                     
|                                                     
|                                                     
|                                                     
|Net borrowings (repayment) of revolving credit line   |  |                    | (10,680 | )        |  |   | 19,851  |  
|                                                     
|                                                     
|                                                     
|                                                     
|Payments of long-term debt                            |  |                    | (283    | )        |  |   | (294    | )
|                                                     
|                                                     
|                                                     
|                                                     
|Interest paid on forward share agreement              |  |                    |        |          |  |   | (312    | )
|                                                     
|                                                     
|                                                     
|                                                     
|Payment of dividends                                  |  |                    |        |          |  |   | (3,356  | )
|                                                      |  |                    |         |          |  |   |         |  
|Net cash (used) provided by financing activities      |  |                    | (10,963 | )        |  |   | 15,889  |  
|                                                     
|                                                     
|                                                     
|                                                     
|Effect of exchange rate changes on cash               |  |                    | 375     |          |  |   | (3,408  | )
|                                                      |  |                    |         |          |  |   |         |  
|Net decrease in cash and cash equivalents             |  |                    | (14,903 | )        |  |   | (15,038 | )
|                                                     
|                                                     
|                                                     
|                                                     
|Cash and cash equivalents, beginning of period        |  |                    | 50,535  |          |  |   | 77,271  |  
|                                                      |  |                    |         |          |  |   |         |  
|Cash and cash equivalents, end of period              |  | $                  | 35,632  |          |  | $ | 62,233  |  
|                                                      |  |                    |         |          |  |   |         |  

See accompanying notes to the condensed financial statements.





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##### Table of Contents






SLI, Inc. and Subsidiaries
Condensed Consolidated Notes To Financial Statements

Note 1   General

The interim consolidated financial statements presented have been prepared
by SLI, Inc. (Company) without audit 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
month period ended April 1, 2001 and March 31, 2002 and (b) the financial
position at March 31, 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.

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 certain information
included in the 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 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):

|                |  |           |         |              |  |   |         | 
|--------------- |  | --------- | ------- | ------------ |  | - | ------- | 
|                |  | March 31, |         | December 30,
|                |  | 2002      |         | 2001        
|                |  |           |         |             
|Raw Materials   |  | $         | 40,097  |              |  | $ | 41,751  | 
|               
|               
|               
|               
|Work in process |  |           | 15,398  |              |  |   | 16,730  | 
|               
|               
|               
|               
|Finished Goods  |  |           | 114,955 |              |  |   | 120,369 | 
|                |  |           |         |              |  |   |         | 
|                |  | $         | 170,450 |              |  | $ | 178,850 | 
|                |  |           |         |              |  |   |         | 





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##### Table of Contents



Note 3   Long-term Debt

On November 13, 2001, the Company entered into a Fourth Amendment to its
Second Amended and Restated Credit Agreement, which is effective September 30,
2001 and provides for the conversion of the Companys 364-day Revolving Credit
Facility and Term Loan, under which $80 million was outstanding, into a Term
Loan maturing in October 2004, amortizing in equal installments over that term.
The Fourth Amendment also permits the Company to maintain its $300 million
Revolving Credit Facility. Under the terms of the Fourth Amendment, the
financial covenants which the Company is required by its lenders to maintain,
includes a maximum leverage ratio, an interest coverage ratio, and a fixed
charge coverage ratio.

Under the provisions of the Fourth Amendment, the
Company is required to maintain certain financial and other covenants
including a maximum leverage ratio. At March 31, 2002, the
Company exceeded the maximum leverage ratio of 9.30 times, and
incurred two other non-payment defaults during the month of April. It has obtained a waiver for
these covenant defaults through June 14, 2002 and is in the
process of negotiating with its lenders a long-term amendment to cure
these defaults and to implement a revised set of financial covenants.
The Company expects these modifications to be completed by the end of
the current waiver period; however, there can be no assurance that
the Company and its lenders will agree to any modification by that
date. If no agreement is reached by June 14, 2002, or if the
waiver period is not extended, the Company will be in default of its
Credit Agreement. Accordingly, the Company has classified the amounts
payable under its Credit Agreement as a current liability in the
accompanying balance sheet.

The Credit Agreement calls for the quarterly amortization in the amount of
$6.7 million, payable on January 1, April 1, July 1 and October 1 of each
fiscal year, maturing on October 31, 2004.

As of March 31, 2002, the amount of borrowings under the Revolving Credit
Facility and Term Loan totaled approximately $370.1 million.

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.

At March 31, 2002, long-term debt includes $14.9 million denominated in
Euro (bearing interest of 7.1% per annum) and $6.4 million in Sterling (bearing
interest at 7.8% per annum) under the Credit Agreement.

At March 31, 2002, the Company had outstanding letters of credit totaling
$2.3 million.

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, or whenever indicators of
impairment are identified. The provisions of this accounting standard
also require the completion of a transitional impairment test within
six months of adoption, with any impairments identified accounted for
as a cumulative effect of a change in accounting principle. The
Company is in the process of completing the initial testing of
goodwill for possible impairment and expects to complete the process
no later than the second quarter of fiscal 2002.





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##### Table of Contents



In accordance with SFAS No. 142, the Company discontinued the amortization
of goodwill effective December 31, 2001. Amortization of intangible assets
totaled $.3 million for the three months ended March 31, 2002, and amortization
of goodwill and intangible assets totaled $1.8 million for the three months
ended April 1, 2001. Without the amortization of goodwill, pro forma net loss
would have decreased approximately $1.1 million, or $0.03 per diluted earnings
per share.

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

|                                       |                                   |   |                    |       |          |   |         |       |  
|-------------------------------------- | --------------------------------- | - | ------------------ | ----- | -------- | - | ------- | ----- | -
|                                       |                                   |   | Three Months Ended
|                                       |                                   |   |                   
|                                       |                                   |   | March 31,          |       | April 1,
|                                       |                                   |   | 2002               |       | 2001    
|                                       |                                   |   |                    |       |         
|Reported
net loss                      |                                   | $ | (4,568             | )     |          | $ | (58,009 | )    
|                                      
|                                      
|                                      
|                                      
|Add: Goodwill amortization, net of tax |                                   |   |                   |       |          |   | 1,069   |      
|                                       |                                   |   |                    |       |          |   |         |      
|Adjusted net loss                      |                                   | $ | (4,568             | )     |          | $ | (56,940 | )    
|                                       |                                   |   |                    |       |          |   |         |      
|Basic & diluted loss per common share  |                                   |   |                    |       |          |   |         |      
|                                      
|                                      
|                                      
|                                      
|                                       | Reported net loss                 |   | $                  | (0.14 | )        |   | $       | (1.66 | )
|                                      
|                                      
|                                      
|                                      
|                                       | Goodwill amortization, net of tax |   |                    |      |          |   |         | 0.03  |  
|                                       |                                   |   |                    |       |          |   |         |      
|Adjusted net loss                      |                                   | $ | (0.14              | )     |          | $ | (1.63   | )    
|                                       |                                   |   |                    |       |          |   |         |      

Patents and other intangible assets at March 31, 2002 and December 30,
2001, subject to amortization expense are as follows (dollars in thousands):

|                                   |  |                |        |                   |  |     |       |        |  |              |        |             |  |   |        |  |  |   |       |  |  |   |        | 
|---------------------------------- |  | -------------- | ------ | ----------------- |  | --- | ----- | ------ |  | ------------ | ------ | ----------- |  | - | ------ |  |  | - | ----- |  |  | - | ------ | 
|                                   |  | March 31, 2002 |        | December 30, 2001
|                                   |  |                |        |                  
|                                   |  | Carrying       |        | Accumulated       |  |     |       |        |  | Carrying     |        | Accumulated |  |   |        | 
|                                   |  | Amount         |        | Amortization      |  | Net |       | Amount |  | Amortization |        | Net        
|                                   |  |                |        |                   |  |     |       |        |  |              |        |            
|Patents and Non-compete
Agreements |  | $              | 11,762 |                   |  | $   | 1,314 |        |  | $            | 10,448 |             |  | $ | 11,793 |  |  | $ | 1,020 |  |  | $ | 10,773 | 
|                                  
|                                  
|                                  
|                                  
|Engineering Technology             |  |                | 4,374  |                   |  |     | 2,300 |        |  |              | 2,074  |             |  |   | 4,406  |  |  |   | 2,099 |  |  |   | 2,307  | 
|                                   |  |                |        |                   |  |     |       |        |  |              |        |             |  |   |        |  |  |   |       |  |  |   |        | 
|Total                              |  | $              | 16,136 |                   |  | $   | 3,614 |        |  | $            | 12,522 |             |  | $ | 16,199 |  |  | $ | 3,119 |  |  | $ | 13,080 | 
|                                   |  |                |        |                   |  |     |       |        |  |              |        |             |  |   |        |  |  |   |       |  |  |   |        | 

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
$1.3 million, $1.3 million, $1.2 million, $.5 million and $.4 million for
fiscal
years 2002, 2003, 2004, 2005 and 2006.





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##### Table of Contents



Note 5   Comprehensive income

During the three months ended March 31, 2002 and April 1, 2001, total comprehensive loss
amounted to $9.2 million and $80.5 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 three months ended
March 31, 2002, 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):

|                |  |                    |        |          |  |  |        | 
|--------------- |  | ------------------ | ------ | -------- |  |  | ------ | 
|                |  | Three Months Ended
|                |  |                   
|                |  | March 31,          |        | April 1,
|                |  | 2002               |        | 2001    
|                |  |                    |        |         
|Basic & Diluted |  |                    | 33,405 |          |  |  | 34,927 | 

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 Statement of Accounting
Standards 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.





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##### Table of Contents





| |  | 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 March 31, 2002, the notional principal amount of the
swap agreement was Euros 18.9 million (approximately $16.5 million) having
a fixed rate of 5.46 %. The fair value of the swap at March 31, 2002 was
Euros 512,927 (approximately $447,776) 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | 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 months ended April 1, 2001, the Company recognized
approximately $1.1 million of net gain in the cumulative translation
adjustment, related to net investment hedges. During the three months
ended March 31, 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 FASB issued Statement No. 143 Accounting for Asset
Retirement Obligations. This Statement 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 Financial Accounting Standards Board (FASB) issued
Statement No. 144 Accounting for the Impairment or Disposal of Long-Lived
Assets. This statement supercedes Statement No. 121. Although this statement
retains many of the fundamental provisions of Statement 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 this Statement are effective for fiscal years beginning after
December 15, 2001. Management does not believe the adoption of this statement
will have a material impact on the Companys overall financial results of
operations.

Note 10   Acquisitions

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.





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##### Table of Contents



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 $4.8 million
remain in accruals at March 31, 2002 related to this agreement, which is
expected to be utilized within 12 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 March 31, 2002, $1.2 million of the
accruals had been utilized and the remainder will be paid within 9 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 March 31, 2002. The
remainder will be paid over the next 6 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. As of
March 31, 2002, $258,000 of the accruals had been utilized and the remainder
will be paid over the next 18 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 receivable, inventories and
property, plant and equipment. Results of this operation have been classified
as discontinued and prior periods have been reclassified. Revenues and
operating results, including income tax impact, are reported in discontinued
operations as follows (in thousands):





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##### Table of Contents



|                                   |                    |   |                    |   |          |   |        |        |  
|---------------------------------- | ------------------ | - | ------------------ | - | -------- | - | ------ | ------ | -
|                                   |                    |   | Three Months Ended
|                                   |                    |   |                   
|                                   |                    |   | March 31,          |   | April 1,
|                                   |                    |   | 2002               |   | 2001    
|                                   |                    |   |                    |   |         
|Revenues                           |                    | $ | 52                 |   |          | $ | 11,107 |       
|                                   |                    |   |                    |   |          |   |        |       
|Loss from operations:              |                    |   |                    |   |          |   |        |       
|                                  
|                                  
|                                  
|                                  
|                                   | Loss before taxes  |   |                    |  |          |   |        | (3,086 | )
|                                  
|                                  
|                                  
|                                  
|                                   | Income tax         |   |                    |  |          |   |        | (151   | )
|                                   |                    |   |                    |   |          |   |        |       
|                                   | Net loss after tax |   | $                  |  |          |   | $      | (3,237 | )
|                                   |                    |   |                    |   |          |   |        |       
|Loss from disposal (no tax effect) |                    | $ |                   |   |          | $ | (2,213 | )     
|                                   |                    |   |                    |   |          |   |        |       
|Loss from discontinued operations  |                    | $ |                   |   |          | $ | (5,450 | )     
|                                   |                    |   |                    |   |          |   |        |       

Loss from operations for the three months ended March 31, 2002 included
sales of $52,000 for inventory that was written down to net realizable value.
The loss from operations for the three months ended March 31, 2002 and April 1,
2001 includes allocated interest expense to discontinued operations of $0 and
$923,000, 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 months ended April 1, 2001, totaled $2.2
million, which includes a reduction in headcount of 802 employees totaling $1.9
million and other exit costs totaling $.3 million. Loss from disposal for the
fiscal year 2001 includes asset write-downs to net realizable value totaling
$45.4 million, warranty, supplier and lease obligations of $7.3 million and
other liquidation and exit costs of $10.3 million. At March 31, 2002
approximately $5.1 million remain in accruals for warranty, supplier and lease
obligations as well as $309,000 for other liquidation and exit costs. 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, of which $1.0 million remains in the accruals at March
31, 2002.

In addition, the Company has presented the assets and liabilities relating
to its discontinued operations separately in the accompanying condensed balance
sheets as of March 31, 2002 and December 30, 2001. Net current assets
(liabilities) of discontinued operations are comprised of the following
(dollars in thousands):

|                            |  |           |        |              |  |   |        |  
|--------------------------- |  | --------- | ------ | ------------ |  | - | ------ | -
|                            |  | March 31, |        | December 30,
|                            |  | 2002      |        | 2001        
|                            |  |           |        |             
|Accounts receivable         |  | $         |       |              |  | $ | 862    |  
|                           
|                           
|                           
|                           
|Inventories                 |  |           | 1,610  |              |  |   | 2,063  |  
|                           
|                           
|                           
|                           
|Property, plant & equipment |  |           | 3,499  |              |  |   | 3,330  |  
|                           
|                           
|                           
|                           
|Accounts payable & accruals |  |           | (2,337 | )            |  |   | (5,549 | )
|                           
|                           
|                           
|                           
|Other                       |  |           | (1,183 | )            |  |   | (1,183 | )
|                            |  |           |        |              |  |   |        |  
|Net assets (liabilities)    |  | $         | 1,589  |              |  | $ | (477   | )
|                            |  |           |        |              |  |   |        |  





---



##### Table of Contents



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 is 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 months ended March 31, 2002 and April 1, 2001
was as follows (dollars in thousands):





---



##### Table of Contents



|                                          |  |           |         |          |  |          |         |          |  |       |         |   |  |  |        |   |  |  |         |  
|----------------------------------------- |  | --------- | ------- | -------- |  | -------- | ------- | -------- |  | ----- | ------- | - |  |  | ------ | - |  |  | ------- | -
|                                          |  |           |         |          |  | General  |         | Disposed |  |       |         |   |  |  |        |  
|                                          |  | Miniature |         | Lighting |  | Business |         | Other    |  | Total
|                                          |  |           |         |          |  |          |         |          |  |      
|For the three months ended March 31, 2002 |  |           |         |          |  |          |         |          |  |       |         |   |  |  |        |   |  |  |         |  
|                                         
|                                         
|                                         
|                                         
|Net Sales                                 |  |           | 40,397  |          |  |          | 164,778 |          |  |       | 71      |   |  |  |       |   |  |  | 205,246 |  
|                                         
|                                         
|                                         
|                                         
|Operating profit (loss)                   |  |           | 4,075   |          |  |          | 2,183   |          |  |       | (330    | ) |  |  | (1,474 | ) |  |  | 4,454   |  
|                                         
|                                         
|                                         
|                                         
|Identifiable assets (a)                   |  |           | 184,263 |          |  |          | 645,061 |          |  |       | 9,604   |   |  |  | 537    |   |  |  | 839,465 |  
|                                         
|                                         
|                                         
|                                         
|Depreciation & Amortization               |  |           | 1,597   |          |  |          | 6,468   |          |  |       |        |   |  |  |       |   |  |  | 8,065   |  
|                                         
|                                         
|                                         
|                                         
|Capital Expenditures                      |  |           | 578     |          |  |          | 2,723   |          |  |       |        |   |  |  |       |   |  |  | 3,301   |  
|                                         
|                                         
|                                         
|                                         
|For the three months ended April 1, 2001  |  |           |         |          |  |          |         |          |  |       |         |   |  |  |        |   |  |  |         |  
|                                         
|                                         
|                                         
|                                         
|Net Sales                                 |  |           | 44,881  |          |  |          | 182,094 |          |  |       | 8,265   |   |  |  |       |   |  |  | 235,240 |  
|                                         
|                                         
|                                         
|                                         
|Operating profit (loss)                   |  |           | 5,777   |          |  |          | 8,392   |          |  |       | (53,910 | ) |  |  | (1,086 | ) |  |  | (40,827 | )
|                                         
|                                         
|                                         
|                                         
|Identifiable assets (a)                   |  |           | 177,689 |          |  |          | 699,767 |          |  |       | 27,606  |   |  |  | 5,295  |   |  |  | 910,357 |  
|                                         
|                                         
|                                         
|                                         
|Depreciation & Amortization               |  |           | 1,672   |          |  |          | 6,578   |          |  |       | 523     |   |  |  | 327    |   |  |  | 9,100   |  
|                                         
|                                         
|                                         
|                                         
|Capital Expenditures                      |  |           | 7,240   |          |  |          | 9,033   |          |  |       | 20      |   |  |  | 162    |   |  |  | 16,455  |  



---

|(a) |  | Identifiable assets are net of discontinued operations.
|--- |  | -------------------------------------------------------

Note 14   Subsequent Events

On April 12, 2002, the Company sold one of its subsidiaries for $3.8 million.
The transaction resulted in a one time, non-cash loss of approximately $2.2
million, which was recognized as Other Expenses in the current quarter.





---



##### Table of Contents



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 months ended March 31, 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.

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 March 31, 2002 had 37 manufacturing
plants in 12 countries. SLI, Inc. acquired EBT (Germany) in 2001, which has an
impact on year-to-year comparisons of revenues and earnings.

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 three months ended March 31, 2002 and April 1, 2001, 79.9% and
79.6%, 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.

Discontinued Operations

In June 2001, the Company announced its intention to divest itself of its
Power Lighting Products (PLP) segment. As of March 31, 2002, the Companys
Condensed Consolidated Financial Statements reflect the classification of PLP
as discontinued operations. See Note 12 to the Condensed Consolidated Financial
Statements for further information.





---



##### Table of Contents



Results of Continuing Operations

Three months ended March 31, 2002 compared to the three months ended April 1, 2001.

Net sales.Net sales decreased by $30 million or 12.8% from $235.2 million
for the three months ended April 1, 2001 to $205.2 million for the three months
ended March 31, 2002. This decrease was partially due to the loss in sales
volume resulting from the sale of the lighting service and maintenance business
of $8.2 million and a $16.2 million loss in sales volume due to demand. In
addition, the generally higher value of the US dollar compared to other
currencies worldwide decreased net sales by approximately 2.4% or $5.6 million,
for the three months ended March 31, 2002 as compared to the three months ended
April 1, 2001.

Gross Margin.Gross margin decreased from $55.2 million for the three
months ended April 1, 2001 to $44.4 million for the three months ended March
31, 2002. Due to the reduction in product demand, the gross margin was
adversely impacted by $4.1 million for the three months ended March 31, 2002,
as compared to the three months ended April 1, 2001. The translation effects of
the weakening European currency negatively impacted gross margin by
approximately 2.5% or $1.4 million for the three months ended March 31, 2002 as
compared to the three months ended April 1, 2001. In addition, the gross margin
increased $2.8 million for the three months ended March 31, 2002 as compared to
the three months ended April 1, 2001, due to 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 23.5% for the three months
ended April 1, 2001 to 21.6% for the three months ended March 31, 2002.

Selling, general and administrative expenses.Selling, general and
administrative expenses decreased from $47.7 million for the three months ended
April 1, 2001 to $39.6 million for the three months ended March 31, 2002. As a
percentage of net sales, selling, general and administrative expenses decreased
from 20.3% for the three months ended April 1, 2001 to 19.3% for the three
months ended March 31, 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 $48.3 million were incurred in the three months ended April 1, 2001,
consisting of a goodwill write-off of $32.9 million, other asset write-downs of
$8.9 million and exit costs of $6.5 million. The exit costs primarily relate
to unfavorable contractual agreements and severance related costs. In the
three months ended March 31, 2002, an additional charge of $330,000 relating to
unfavorable contractual agreements was incurred.

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 of the Condensed Notes to the Companys
Consolidated Financial Statements.

Interest (income) expense, net.Interest expense, net, increased from
$6.7 million for the three months ended April 1, 2001 to $6.9 million for the
three months ended March 31, 2002 as a result of an increase in average
borrowings.





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Other (income) expense.Other expense for the three months ended March 31,
2002 was
approximately $3,024,000 as compared to other income for the three
months ended April 1, 2001 of ($835,000). The other expense recorded in the
current fiscal year was primarily due to the loss on the sale of one of the
Companys subsidiaries, which was sold for $1.2 million and resulted in a loss
of $1.0 million. Other expense recorded in the current fiscal year also
includes the recognized loss of
$2.2 million, resulting from the planned sale of net assets of one of the
Companys subsidiaries. See Note 14. 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 $50.8 million for the three months ended April 1,
2001 to $5.5 million for the three months ended March 31, 2002.

Income taxes (benefits).For the three months ended March 31, 2002, the
Company recorded a tax benefit of ($.9) million on a pretax loss of $5.5
million compared to a tax provision of $1.7 million on pretax loss of $50.8
million for the three months ended April 1, 2001. The pretax loss of $5.5
million during the three months ended March 31, 2002 generally was from
domestic operations, restructuring and other related costs. The tax benefit of
($.9) million for the three months ended March 31, 2002 was 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 of the Condensed Notes to the Companys Consolidated Financial Statements.
The results of operations from these three reportable segments for the three
months ended March 31, 2002 as compared to the three months ended April 1, 2001
are more fully described below.

Miniature Lighting:

The Miniature Lighting segment, which represents 19.7% of the Companys
consolidated revenues, reported revenues of $40.4 million for the three months
ended March 31, 2002, a decrease of 10.0% from the three months ended April 1,
2001. The generally higher value of the US dollar compared to other currencies
worldwide decreased net sales by approximately 1.7% or $.7 million, for the
three months ended March 31, 2002 as compared to the three months ended April
1, 2001. The decline was also due to a $3.7 million loss in sales volume due to
demand. Miniature lighting operating profits decreased $1.7 million for the
three months ended March 31, 2002 to $4.1 million, as compared to the three
months ended April 1, 2001.

The decrease in the miniature lighting operating results for the three
months ended March 31, 2002 as compared to the prior year is primarily due to
inventory adjustments by Company customers in the electronic and automotive industries and a general
decrease in demand due to a slowing in the economy.

General Lighting:

The General Lighting segment, which represents 80.3% of the Companys
consolidated revenues, reported revenues of $164.8 million for the three months
ended March 31, 2002, and a decrease of 9.5% from the three months ended April
1, 2001. The generally higher value of the US dollar compared to other
currencies worldwide decreased net sales by approximately 2.6% or $4.8 million,
for the three months ended March 31, 2002 as compared to the three months ended
April 1, 2001. The decline was also due to a $12.5 million
reduction in sales volume. General lighting operating profits for the three months ended
March 31, 2002 of $2.2 million decreased $6.2 million as compared to the three
months ended April 1, 2001.





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##### Table of Contents



The decrease in the general lighting operating results for the three
months ended March 31, 2002 as compared to the prior year is primarily due to
the adverse impact of the foreign currency
translation and a 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 totaled $.1 million for the three months ended
March 31, 2002 as compared to $8.3 million for the three months ended April 1,
2001. The Disposed business operating loss for the three months ended March 31,
2002 totaled $.3 million as compared to a loss of $53.9 million in the three
months ended April 1, 2001. The operating loss for the three months ended March
31, 2002 represent charges, as a result of restructuring charges due to
unfavorable contractual agreements.

Subsequent Events:

On April 12, 2002, the Company sold one of its subsidiaries for $3.8 million.
The transaction resulted in a one time, non-cash loss of approximately $2.2
million, which was recognized as Other Expenses in the current quarter.

Liquidity and Capital Resources

The Companys major uses of cash have historically been for acquisitions,
working capital to support sales growth, ongoing capital expenditures and stock
repurchases. Sources of cash have typically included operating cash flow, bank
borrowings and proceeds from the sale of Common Stock.

As of March 31, 2002, the Companys cash on hand was $35.6 million. For
the three months ended March 31, 2002, net cash used in operating activities
was $.8 million and cash used in investing activities totaled $3.5 million, net
of proceeds from the sale of assets amounting to $.2 million. The investing
activities primarily included capital expenditures for production equipment,
totaling $3.3 million. Net cash used by financing activities for the three
months ended March 31, 2002 aggregated $11.0 million, which included $10.7
million for the repayment of the revolving credit line.

On November 13, 2001, the Company entered into a Fourth Amendment to its
Second Amended and Restated Credit Agreement, which is effective September 30,
2001 and provides for the conversion of the Companys 364-day Revolving Credit
Facility, under which $80 million was outstanding, into a Term Loan maturing in
October 2004, amortizing in equal installments over that term. The Fourth
Amendment also permits the Company to maintain its $300 million Revolving
Credit Facility.





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##### Table of Contents



Under the provisions of the Fourth Amendment, the
Company is required to maintain certain financial and other covenants
including a maximum leverage ratio. At March 31, 2002, the
Company exceeded the maximum leverage ratio of 9.30 times, and
incurred two other non-payment defaults during the month of April. It has obtained a waiver for
these covenant defaults through June 14, 2002 and is in the
process of negotiating with its lenders a long-term amendment to cure
these defaults and to implement a revised set of financial covenants.
The Company expects these modifications to be completed by the end of
the current waiver period; however, there can be no assurance that
the Company and its lenders will agree to any modification by that
date. If no agreement is reached by June 14, 2002, or if the
waiver period is not extended, the Company will be in default of its
Credit Agreement. Accordingly, the Company has classified the amounts
payable under its Credit Agreement as a current liability in the
accompanying balance sheet.

The Credit Agreement calls for the quarterly amortization in the amount of
$6.7 million, payable on January 1, April 1, July 1 and October 1 of each
fiscal year, which matures on October 31, 2004.

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.

As of March 31, 2002, the amount of borrowings under the Revolving Credit
Facility totaled approximately $370.1 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.

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 believes that the actions taken to restructure its business,
which include selling or discontinuing non-profitable operations and the
restructuring of its credit facilities, will provide sufficient cash from
operations and available borrowings to meet the Companys working capital and
capital expenditure needs for the next twelve months and the foreseeable future
thereafter. Capital expenditures during the next twelve months are expected to
be approximately $16 million.





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##### Table of Contents






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:

|         |                                    |  |      |       |      |  |      |   |      |  |                                  |   |            |  |       |   |         |  |  |   |  |  |  |   |  |  |   |      |  |  |       |      | 
|-------- | ---------------------------------- |  | ---- | ----- | ---- |  | ---- | - | ---- |  | -------------------------------- | - | ---------- |  | ----- | - | ------- |  |  | - |  |  |  | - |  |  | - | ---- |  |  | ----- | ---- | 
|         |                                    |  |      |       |      |  |      |   |      |  |                                  |   |            |  |       |   |         |  |  |   |  |  |  |   |  |  |   |      |  |  | Fair 
|         |                                    |  |      |       |      |  |      |   |      |  |                                  |   |            |  |       |   |         |  |  |   |  |  |  |   |  |  |   |      |  |  | Value
|         |                                    |  | 2002 |       | 2003 |  | 2004 |   | 2005 |  | 2006                             |   | Thereafter |  | Total |   | 3/31/02
|         |                                    |  |      |       |      |  |      |   |      |  |                                  |   |            |  |       |   |        
|         |                                    |  |      |       |      |  |      |   |      |  | (Dollars equivalent in millions) |   |            |  |       |   |         |  |  |   |  |  | 
|Euro     |                                    |  |      |       |      |  |      |   |      |  |                                  |   |            |  |       |   |         |  |  |   |  |  |  |   |  |  |   |      |  |  |       |     
|        
|        
|        
|        
|         | Variable rate loan                 |  | $    | 14.9  |      |  |      |  |      |  |                                  |  |            |  |       |  |         |  |  |  |  |  |  |  |  |  | $ | 14.9 |  |  | $     | 14.9 | 
|        
|        
|        
|        
|         | Avg Interest rate                  |  |      | 7.1   | %    |  |      |   |      |  |                                  |   |            |  |       |   |         |  |  |   |  |  |  |   |  |  |   |      |  |  |       |      | 
|        
|        
|        
|        
|         | Avg Forward Currency
Exchange rate |  |      | 0.87  |      |  |      |   |      |  |                                  |   |            |  |       |   |         |  |  |   |  |  |  |   |  |  |   |      |  |  |       |      | 
|        
|        
|        
|        
|Sterling |                                    |  |      |       |      |  |      |   |      |  |                                  |   |            |  |       |   |         |  |  |   |  |  |  |   |  |  |   |      |  |  |       |     
|        
|        
|        
|        
|         | Variable rate loan                 |  | $    | 6.4   |      |  |      |  |      |  |                                  |  |            |  |       |  |         |  |  |  |  |  |  |  |  |  | $ | 6.4  |  |  | $     | 6.4  | 
|        
|        
|        
|        
|         | Avg Interest rate                  |  |      | 7.8   | %    |  |      |   |      |  |                                  |   |            |  |       |   |         |  |  |   |  |  |  |   |  |  |   |      |  |  |       |      | 
|        
|        
|        
|        
|         | Avg Forward Currency
Exchange rate |  |      | 1.422 |      |  |      |   |      |  |                                  |   |            |  |       |   |         |  |  |   |  |  |  |   |  |  |   |      |  |  |       |      | 





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PART II  OTHER INFORMATION




Item 6  Exhibit and Report on Form 8K

No report on form 8K was filed during the quarter ending March 31, 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.
|                   
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|                    |  |           |  |                                                     
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|                    |  | By:       |  | /s/ Frank M. Ward                                   
|                    |  |           |  |                                                     
|                    |  |           |  | Frank M. Ward, President and Chief Executive
Officer
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|Date:  May 15, 2002 |  |           |  |                                                     
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|                    |  |           |  |                                                     
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|                    |  | By:       |  | /s/ Robert J. Mancini                               
|                    |  |           |  |                                                     
|                    |  |           |  | Robert J. Mancini,
Chief Financial Officer          
|                   
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|Date:  May 15, 2002 |  |           |  |                                                     
|                   
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|                    |  |           |  |                                                     
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|                    |  | By:       |  | /s/ Stephen N. Cummings                             
|                    |  |           |  |                                                     
|                    |  |           |  | Stephen N. Cummings,
Chief Accounting Officer       
|                   
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|Date:  May 15, 2002 |  |           |  |