<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------------
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM _____________ TO _____________
COMMISSION FILE NUMBER 1-7726
REUNION INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 06-1439715
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
62 SOUTHFIELD AVENUE
ONE STAMFORD LANDING SUITE 208
STAMFORD, CT 06902
(Address of principal executive offices)
(203) 324-8858
(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
----- -----
As of May 1, 1997 the Registrant had 3,855,100 shares of common stock, par
value $.01, outstanding.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
-----
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 1997 (Unaudited)
and December 31, 1996 2
Consolidated Statements of Operations (Unaudited)
Three Months Ended March 31, 1997 and 1996 4
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31, 1997 and 1996 5
Notes to Consolidated Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURE 12
</TABLE>
1
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
REUNION INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------ -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents $ 2,884 $ 1,407
Accounts Receivable, Less Allowance for
Doubtful Accounts of $ 510 and $ 434, respectively 15,313 12,747
Inventories 7,729 7,381
Customer Tooling-in-Process 988 1,107
Note Receivable from Sale of Oil & Gas Operations - 2,200
Other Current Assets 242 443
------- -------
Total Current Assets 27,156 25,285
------- -------
Property, Plant and Equipment---- Net 25,001 24,333
------- -------
Other Assets
Goodwill 9,589 9,766
Assets of Discontinued Agricultural Operations 14,063 14,139
Other Assets Held for Sale 401 401
Other 1,650 1,252
------- -------
25,703 25,558
------- -------
$77,860 $75,176
======= =======
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
2
<PAGE>
REUNION INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---------- ------------
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
Current Portion of Long-Term Debt $12,527 $10,865
Accounts Payable 9,991 9,459
Advances From Customers 1,557 1,922
Other Current Liabilities 6,312 5,175
------- -------
Total Current Liabilities 30,387 27,421
Long-Term Debt 13,765 14,190
Long-Term Debt - Related Parties 1,385 1,385
Other Liabilities 3,158 3,236
------- -------
Total Liabilities 48,695 46,232
------- -------
Commitments and Contingencies
Shareholders' Equity
Common Stock ($.01 par value; 20,000 authorized;
3,855 issued and outstanding) 38 38
Additional Paid-in Capital 29,242 29,242
Retained Earnings (Since January 1, 1989) (12) (307)
Foreign Currency Translation Adjustments (103) (29)
------- -------
Total Shareholders' Equity 29,165 28,944
------- -------
$77,860 $75,176
======= =======
</TABLE>
See Accompanying Notes to Consoldiated Financial Statements
3
<PAGE>
REUNION INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1997 1996
---------- ----------
<S> <C> <C>
Net Sales $24,672 $13,952
Cost of Sales 20,839 11,766
------- -------
Gross Profit 3,833 2,186
Selling, General and Administrative Expenses 2,861 2,079
------- -------
Operating Profit 972 107
Other Income and (Expense)
Interest Expense (754) (550)
Other, Including Interest Income 129 27
------- -------
(625) (523)
------- -------
Income (Loss) From Continuing Operations Before
Income Taxes 347 (416)
Income Tax Expense (52) (4)
------- -------
Income (Loss) From Continuing Operations 295 (420)
Loss From Discontinued Operations - (122)
------- -------
Net Income (Loss) $ 295 $ (542)
======= =======
Net Income (Loss) Per Common Share and
Common Share Equivalent -- Primary and Fully Diluted
Income (Loss) From Continuing Operations $ 0.07 $ (0.11)
Loss From Discontinued Operations - (0.03)
------- -------
Net Income (Loss) $ 0.07 $ (0.14)
======= =======
Weighted Average Number of Common Shares
and Common Share Equivalents Outstanding
Primary and Fully Diluted 3,949 3,855
======= =======
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
REUNION INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1997 1996
--------- --------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss) $ 295 $ (542)
Adjustments to Reconcile Net Income (Loss) to Net Cash (Used in)
Provided by Operating Activities
Depreciation and Amortization 879 477
------- -------
1,174 (65)
Changes in Assets and Liabilities:
(Increase) Decrease in Accounts Receivable (2,566) 38
(Increase) Decrease in Inventory (348) 153
Decrease in Other Current Assets 320 323
Increase in Accounts Payable 532 432
Increase in Other Current Liabilities 772 377
Other (869) (205)
------- -------
Net Cash (Used in) Provided by Operating Activities (985) 1,053
Cash Flows From Investing Activities:
Collection of Note Receivable from Sale of Oil and Gas Business 2,200 -
Acquisition of Rostone Net of Cash Acquired - (118)
Change in Net Assets of Discontiued Operations - 1,256
Investment In and Advances to The Juliana Preserve - (6)
Capital Expenditures (975) (296)
------- -------
Net Cash Provided by Investing Activities 1,225 836
Cash Flows From Financing Activities:
Increase in Revolver Borrowings 1,336 3,612
Proceeds from Issuance of Debt Obligations 713 500
Payments of Debt Obligations (812) (6,284)
------- -------
Net Cash Provided by (Used in) Financing Activities 1,237 (2,172)
Increase (Decrease) in Cash and Cash Equivalents 1,477 (283)
Cash and Cash Equivalents at Beginning of Period 1,407 529
------- -------
Cash and Cash Equivalents at End of Period $ 2,884 $ 246
======= =======
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
5
<PAGE>
REUNION INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
NOTE 1. CONSOLIDATED FINANCIAL STATEMENTS
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Reunion
Industries, Inc. ("RII") and its majority owned subsidiaries. As used herein,
the term "Company" refers to RII, its predecessors and its subsidiaries, unless
the context indicates otherwise. All intercompany transactions and accounts are
eliminated in consolidation.
FINANCIAL STATEMENTS AT MARCH 31, 1997
The Consolidated Balance Sheet at March 31, 1997, and the Consolidated
Statements of Operations and Cash Flows for the three months ended March 31,
1997 and 1996 included herein are unaudited; however, in the opinion of
management of the Company, they reflect all adjustments necessary to present
fairly the results for the interim periods. Such results are not necessarily
indicative of results to be expected for the year. The Consolidated Balance
Sheet at December 31, 1996 has been derived from the audited financial
statements at that date. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996.
EARNINGS PER SHARE
Earnings per Common Share and Common Share Equivalent are computed based on
the weighted average number of common and common equivalent shares outstanding
during each period. Common equivalent shares include shares issuable upon
exercise of the Company's stock options and warrants. For the three months
ended March 31, 1996, common equivalent shares relating to options and warrants
to purchase common stock were not included in the weighted average number of
shares because their effect would have been anti-dilutive.
NOTE 2. BUSINESS ACQUISITIONS
ROSTONE
On February 2, 1996, the Company acquired Rostone Corporation
("Rostone") which was merged with and into the Company's subsidiary, Oneida
Molded Plastics Corp. ("Oneida"). The surviving corporation changed its name to
Oneida Rostone Corp. ("ORC"). The Rostone acquisition was accounted for using
the purchase method, and the results of Rostone's operations are included in the
Company's consolidated financial statements from the date of the acquisition,
February 2, 1996.
DATA PACKAGING LIMITED
On October 21, 1996, DPL Acquisition Corp. ("DPLAC"), a wholly-owned
subsidiary of ORC, acquired a 27.5% interest in Data Packaging Limited ("DPL"),
a Bermuda corporation operating in Ireland. On November 18, 1996, DPLAC
acquired an additional 68% of the outstanding stock of DPL. Together, these
transactions represent the "DPL Acquisition."
The remaining 4.5% of the outstanding stock of DPL is owned by Forbairt, an
agency of the Irish government, and is accounted for as a minority interest in
the accompanying financial statements. The DPL Acquisition was accounted for
using the purchase method and the results of DPL's operations are included in
the consolidated financial statements from the date of acquisition.
6
<PAGE>
REUNION INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
QUALITY MOLDED PRODUCTS
On November 18, 1996, ORC acquired (the "QMP Acquisition") substantially
all of the assets and the business and assumed certain liabilities of Quality
Molded Products, Inc. ("QMP"). The QMP Acquisition was accounted for using the
purchase method, and the results of QMP's operations are included in the
consolidated financial statements from the date of acquisition.
PRO FORMA RESULTS
The following unaudited pro forma results of operations for the three
months ended March 31, 1996 have been prepared assuming the acquisitions of
Rostone, DPL and QMP had occurred as of January 1, 1996. These pro forma results
are not necessarily indicative of the results of future operations or of results
that would have occurred had the acquisitions been consummated as of that date.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, 1996
----------------
<S> <C>
Revenues.............................. $23,239
Income (Loss) From Continuing
Operations........................... (478)
Net Income (Loss)..................... $ (600)
Loss per Common Share and Common
Share Equivalent..................... $ (.16)
</TABLE>
NOTE 3. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
MARCH 31, 1997 DECEMBER 31, 1996
-------------- -----------------
<S> <C> <C>
Raw Materials $4,314 $3,719
Work-in process 1,219 1,170
Finished Goods 2,196 2,492
------ ------
Total $7,729 $7,381
====== ======
</TABLE>
NOTE 4. CONTINGENCIES
In early 1996, the State of California Franchise Tax Board initiated an
audit of the Company's franchise tax returns for the years 1991, 1992 and 1993.
In October 1996, the Company received a formal notice of assessment from the
taxing authority in the aggregate amount of $716 plus interest. Of this amount,
$645 results from the auditor's conclusion that income from gain on sales of
certain Canadian assets in 1991 should be reclassified from nonbusiness to
business income. The Company believes its classification of such income was
correct, and has appealed the assessment of tax. If the Company's positions
prevail on this issue, management believes that the amounts due would not exceed
amounts previously paid or provided for. No additional accruals have been
made for any amounts that may be due if the Company does not prevail because
the outcome cannot be determined. The Company recorded a provision for $85
in 1996 for certain other adjustments proposed.
7
<PAGE>
REUNION INDUSTRIES, INC. AND SUBSIDIARIES
In connection with the sale of Reunion Energy Company ("REC"), the Company
retained certain oil and gas properties in Louisiana because of litigation
concerning environmental matters. The Company is in the process of environmental
remediation under a plan approved by the Louisiana Office of Conservation. The
Company has recorded an accrual of $533 for its proportionate share of the
remaining estimated costs to remediate the site based on plans and estimates
developed by the environmental consultants hired by the Company. Owners of a
portion of the property have objected to the Company's proposed cleanup
methodology and have filed suit to require additional procedures. The Company is
contesting this litigation, and believes its proposed clean up methodology is
well within accepted industry practice for remediation efforts of a similar
nature. No accrual has been made for any additional costs of possible
alternative clean up methods because the nature and dollar amount of such
alternative cannot presently be determined.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company's principal operations are in the plastic products industry.
During 1996 the Company completed the Rostone, DPL and QMP Acquisitions which
added new customers and products to the plastic products segment. The Company is
considering additional acquisitions to increase its customer base and expand its
product offerings and service capabilities in the plastics industry. In
addition, the Company may consider acquisitions in other industries.
The Company and Chatwins Group, Inc. ("Chatwins") are considering the
merger of Chatwins with and into the Company following the third anniversary of
the acquisition by Chatwins, in June 1995, of approximately 38% of the Company's
outstanding common stock. However, this or any other transaction between
Chatwins and the Company in which Chatwins has an interest separate from that of
the Company will be subject to approval by the Boards of Directors of the
Company and of Chatwins and compliance by Chatwins with the covenants in its
financing agreements. There can be no assurance that any transaction will be
proposed or that any proposed transaction will be consummated.
Discontinued operations consist of the Company's former oil and gas
operations, sold in 1996, and wine grape agricultural and real estate
development operations, held for sale since December 1996.
FORWARD LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements speak only as of the
date of this Form 10-Q, and the Company expressly disclaims any obligation or
undertaking to publicly release any updates or revisions to any forward-looking
statements contained herein. Although the Company believes that its
expectations are based on reasonable assumptions, it cannot assure that the
expectations contained in such forward-looking statements will be achieved.
Such statements involve risks, uncertainties and assumptions which could cause
actual results to differ materially from those contained in such statements.
The Company's operations are affected by domestic and international economic
conditions which affect the volume and pricing of sales of business and consumer
goods, for which the Company produces components, the cost and availability of
materials, labor and other goods and services used in the Company's operations
and the cost of interest on the Company's debt.
8
<PAGE>
REUNION INDUSTRIES, INC. AND SUBSIDIARIES
RESULTS OF CONTINUING OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997
The Company recognized income from continuing operations of $ 0.3 million
during the three months ended March 31, 1997 compared to a loss of $0.4 million
for the comparable prior year period. The 1997 income reflects a full three
months of results of each of the businesses acquired in February 1996 (Rostone)
and November 1996 (QMP and DPL) described in Note 2 "Business Acquisitions".
The loss for the first three months of 1996 includes two months of Rostone's
results, acquired in February 1996 and does not include the results of QMP and
DPL acquired later in the year.
PLASTICS PRODUCTS SEGMENT: The Company, through its wholly owned subsidiary
ORC, manufactures high volume, precision plastic products and provides
engineered plastic services. Revenues and operating income of the plastic
products segment were $24.7 million and $1.4 million, respectively, for the for
the three months ended March 31, 1997. This compares to revenues and operating
profit of $14.0 million and $0.7 million, respectively, for the three months
ended March 31, 1996.
Revenues increased $10.7 million to $24.7 million for the three months
ended March 31, 1997 from $14.0 million for the three months ended March 31,
1996. The majority of the 76.8% increase in revenues is attributable to the
business acquisitions competed during 1996. The remaining increase in revenues
contributed from the existing business is attributable to parts sales to new
customers combined with higher levels of sales to existing customers. The
Company's tooling sales, historically a leading indicator of future sales,
remain strong. Tooling sales for the three months ended March were $1.5 million,
comparable to sales of $1.5 million for the prior year period. Excluding
effects of acquisitions, tooling sales decreased by $0.3 million for the three
months ended March 31, 1997 compared to the prior year period. Plastic products
segment backlog totaled $ 24.7 million at March 31, 1997, compared to
backlog of $25.1 million at December 31, 1996 and backlog of $16.3 million at
March 31, 1996.
Cost of sales totaled $20.8 million, or 84.5% of net sales, for the three
months ended March 31, 1997 compared to $11.8 million, or 84.3% of net sales for
the three months ended March 31, 1996. Excluding effects of acquisitions, cost
of sales in the Company's existing business remained consistent for the three
months ended March 31, 1997 versus 1996. As a result of the increase in sales,
gross margins increased to $3.8 million, or 15.5% of net sales for the three
months ended March 31, 1997 from $2.2 million, or 15.7% of net sales in the
prior year period.
Selling, general and administrative expenses were $2.4 million for the
three months ended March 31, 1997, compared to $1.5 million for the three months
ended March 31, 1996, reflecting the businesses acquired in 1996. Operating
income was $ 1.4 million, or 5.7% of net sales, for the three months ended
March 31, 1997 compared to $0.7 million, or 5.0% of net sales in the comparable
1996 period.
CORPORATE GENERAL AND ADMINISTRATIVE EXPENSE: Corporate general and
administrative expenses, consisting primarily of executive and administrative
salaries and benefits, professional fees and other public company costs, totaled
$0.4 million for the three months ended March 31, 1997 compared to $0.6 million
for the three months ended March 31, 1996. The expenses for the three months
ended March 31, 1996 included occupancy and office costs for both the Company's
previous headquarters in Houston, Texas, closed in May 1996, and its new
headquarters in Stamford, Connecticut.
OTHER INCOME AND (EXPENSE): Interest expense was $0.8 million for the three
months ended March 31,1997 compared to $0.6 million as a result of interest on
ORC debt subsequent to the Rostone, QMP and DPL Acquisitions.
9
<PAGE>
REUNION INDUSTRIES, INC. AND SUBSIDIARIES
DISCONTINUED OPERATIONS
The Company resolved to sell its Agricultural operations in December 1996
and recorded a provision in 1996 to record estimated losses on disposal and
estimated losses in 1997 through the date of disposition. In May 1996, the
Company sold its REC subsidiary which substantially completed the disposition of
its oil and gas operations. The Company retained certain Louisiana oil and gas
properties because of litigation concerning environmental contamination.
Results from discontinued operations for the three months ended March 31,
1996 were a loss of $0.1 million consisting of interest expense and depreciation
from the Company's discontinued agricultural operations.
LIQUIDITY AND CAPITAL RESOURCES
SUMMARY OF 1997 ACTIVITIES
Cash and cash equivalents totaled $2.9 million at March 31, 1997. During
the three months ended March 31, 1997, cash increased $1.5 million, with $0.9
million used by operations, $1.2 million provided by investing activities and
$1.2 million provided by financing activities.
INVESTING ACTIVITIES: Capital expenditures were $1.0 million, and the
Company received $2.2 million, plus interest, in final payment on the sale of
the REC subsidiary.
FINANCING ACTIVITIES: Principal payments reduced long-term obligations by
$0.8 million in the three months ended March 31, 1997. Proceeds from new term
loan borrowings totaled $0.7 million. Proceeds from net revolving loan
borrowings totaled $1.3 million.
OPERATING ACTIVITIES: Net cash used in operating activities was $0.9
million in 1997.
FACTORS AFFECTING FUTURE LIQUIDITY
Because of various restrictions included in the Company's loan
arrangements, management must separately consider liquidity and financing for
corporate requirements, ORC and discontinued operations.
CORPORATE: Management estimates that corporate expenses, including salaries
and benefits, professional fees and other public company costs, will approximate
$1.6 million in 1997. The Company's source of funds for these requirements and
for future acquisitions, other than from additional borrowings, are from
permitted payments by ORC and from cash generated by the operations or sale of
discontinued operations and other assets held for sale.
ORC's credit facility with Congress Financial Corporation ("Congress")
limits payments to Reunion by ORC. If certain levels of availability (as defined
in the loan agreements) are maintained, ORC is permitted to pay Reunion
management fees of up to $0.3 million, dividends on preferred stock of up to
$0.6 million, and tax sharing payments of up to 50% of the tax savings realized
by ORC because of Reunion's net operating loss carryovers. There can be no
assurances that ORC will be able to maintain the required levels of availability
and be permitted to make the management fee and tax sharing fee payments to
Reunion. In any event, the maximum amount of such payments is not expected to be
sufficient for Reunion's corporate operating and debt service requirements.
10
<PAGE>
REUNION INDUSTRIES, INC. AND SUBSIDIARIES
In February 1997, the Company received repayment on the $2.2 million note,
including interest thereon, from the sale of REC.
As result of the above transactions, management believes that the Company
will have sufficient resources to meet its corporate obligations as they become
due over the next twelve months.
ORC: On February 2, 1996, in connection with the Rostone Acquisition, ORC
entered into a new credit facility with Congress which was amended in November
1996 in connection with the QMP Acquisition. The credit facility as amended
provides for maximum borrowings of $20.0 million under a term loan in the
original amount of $7.7 million and revolving loans based on the eligible
balances of accounts receivable and inventory. Management believes that ORC's
cash flow from operations, together with this credit facility and permitted
levels of capital and operating leases, will be sufficient for ORC's operating
requirements, including capital expenditures and debt service over the next
twelve months. At March 31, 1997 ORC had $2.0 million in revolving credit
availability.
DISCONTINUED OPERATIONS: In connection with the decision to discontinue the
agricultural operations, the Company has halted real estate development
activities and, as of April 2, 1997, has canceled its development agreement with
Pacific Union. Based on projections of farming costs and capital requirements
for the 1997 crop year, the Company believes that the only liquidity
requirements for the discontinued agricultural operations prior to their sale
will be approximately $0.3 million for debt service, which the Company expects
to fund from its cash balances.
RESOLUTION OF STRIKE
On April 15, 1997 ORC experienced a strike by approximately 280 employees
at its Rostone division in Lafayette, Indiana. The striking employees, who were
working under a collective bargaining agreement which expired March 2, 1997,
represent approximately 25% of ORC's full time employees. On May 14, 1997 the
Rostone division employees ratified a new three-year contract and returned to
work. During the four-week strike, management continued production with
salaried and temporary workers and took other actions to mitigate its effects.
CONTINGENCIES AND UNCERTAINTIES
In early 1996, the State of California Franchise Tax Board initiated an
audit of the Company's franchise tax returns for the years 1991, 1992 and 1993.
In October 1996, the Company received a formal notice of assessment from the
taxing authority in the aggregate amount of $0.7 million. Of this amount, $0.6
million results from the auditor's conclusion that income from gain on sales of
certain Canadian assets in 1991 should be reclassified from nonbusiness to
business income. The Company believes its classification of such income was
correct, and has appealed the assessment of tax. If the Company's positions
prevail on this issue, management believes that the amounts due would not exceed
amounts previously paid or provided for. No additional accruals have been made
for any amounts that may be due if the Company does not prevail because the
outcome cannot be determined. The Company recorded a provision of $0.1 million
for certain other adjustments proposed.
In connection with the sale of REC, the Company retained certain properties
in Louisiana because of litigation concerning environmental matters. The Company
is in the process of environmental remediation under a plan approved by the
Louisiana Office of Conservation. The Company has recorded an accrual of $0.5
million for its proportionate share of the remaining estimated costs to
remediate the site based on plans and estimates developed by the environmental
consultants hired by the Company. Owners of a portion of the property have
objected to the Company's proposed cleanup methodology and have filed suit to
require additional procedures. The Company is contesting this litigation, and
believes its proposed clean up methodology is well within accepted industry
practice for remediation efforts of a similar nature. No accrual has been made
for any additional costs of possible alternative clean up methods because the
nature and dollar amount of such alternative cannot presently be determined.
11
<PAGE>
REUNION INDUSTRIES, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBIT
11 Earnings Per Share
27 Financial Data Schedule
(B) CURRENT REPORTS ON FORM 8-K
During the quarter ended March 31, 1997, the Company filed no reports on
Form 8-K.
SIGNATURE
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 thereunto duly authorized.
REUNION INDUSTRIES, INC.
(Registrant)
By /s/ Richard L. Evans
----------------------------------
Richard L. Evans
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: May 15, 1997
12
<PAGE>
EXHIBIT 11
REUNION INDUSTRIES, INC.
COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT PER DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------
1997 1996
--------- ----------
<S> <C> <C>
Income (loss) from continuing operations $ 295 $ (420)
Income (loss) from discontinued operations --- (122)
------ ------
Net Income (loss) $ 295 $ (542)
====== ======
Weighted average common shares outstanding 3,855 3,855
Net additional shares outstanding assuming all
stock options exercised using the Treasury
Stock Method (a) 94 ---
------ ------
Average common shares and common share
equivalents outstanding 3,949 3,855
====== ======
Net income (loss) per common share and
common share equivalent--Primary and fully diluted
Income (loss) from continuing operations $(.07) $ (.11)
Income (loss) from discontinued operations -- (.03)
------ ------
Net income (loss) $(.07) $ (.14)
====== ======
</TABLE>
Notes:
(a) The 1996 computation of common share equivalents excldues anti-dilutive
shares.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,884
<SECURITIES> 0
<RECEIVABLES> 15,823
<ALLOWANCES> 510
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0
0
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</TABLE>
