<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 SEPTEMBER 30, 1995
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 RESOURCES COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 76-0404108
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2801 POST OAK BOULEVARD
SUITE 400
HOUSTON, TEXAS 77056
(Address of principal executive offices)
(713) 627-9277
(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 September 30, 1995, the Registrant had 3,845,085 shares of common stock,
par value $.01, outstanding.
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1995 (Unaudited)
and December 31, 1994 2
Consolidated Statements of Operations (Unaudited)
Three and Nine Months Ended September 30, 1995 and 1994 4
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30, 1995 and 1994 5
Notes to Consolidated Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 18
SIGNATURE 19
</TABLE>
1
<PAGE>
PART 1--FINANCIAL INFORMATION
Item 1. Financial Statements
REUNION RESOURCES COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1995 1994
------------ -----------
(UNAUDITED)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $ 1,572 $ 9,225
Accounts Receivable, Less Allowance for
Doubtful Accounts of $505 and $215, respectively 7,340 2,702
Inventories 2,543 --
Customer Tooling-in-process 1,473
Prepaid Expenses and Other Current Assets 1,667 450
------- -------
TOTAL CURRENT ASSETS 14,595 12,377
------- -------
PROPERTY, PLANT AND EQUIPMENT
Proved Oil and Gas Properties (Full Cost Method) 39,097 34,502
Plastics Plants and Equipment 5,752 --
Other 916 896
------- -------
45,765 35,398
Less Accumulated Depreciation,
Depletion and Amortization (23,881) (14,989)
------- -------
21,884 20,409
------- -------
OTHER ASSETS
Investment in The Juliana Preserve 15,693 14,828
Goodwill 5,456 --
Property Held for Sale 2,166 2,166
Other 1,005 1,859
------- -------
24,320 18,853
------- -------
$60,799 $51,639
======= =======
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
2
<PAGE>
REUNION RESOURCES COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------ ------------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current Portion of Long-Term Debt $ 5,627 $ 569
Accounts Payable 5,564 2,141
Customer deposits 1,682 --
Accrued Expenses and Other 4,516 866
------- -------
TOTAL CURRENT LIABILITIES 17,389 3,576
LONG-TERM DEBT 3,084 2,693
LONG-TERM DEBT-CHATWINS 4,933 --
OTHER 504 746
------- -------
TOTAL LIABILITIES 25,910 7,015
------- -------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common Stock ($.01 par value; 8,000 authorized:
4,102 and 4,051 issued; 3,845 and 3,794
outstanding, respectively) 40 40
Additional Paid-in Capital 30,988 30,437
Retained Earnings (Since January 1, 1989) 5,659 15,945
Less Treasury Shares, at cost (257 shares) (1,798) (1,798)
------- -------
TOTAL SHAREHOLDERS' EQUITY 34,889 44,624
------- -------
$60,799 $51,639
======= =======
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
REUNION RESOURCES COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
1995 1994 1995 1994
------- ------- -------- -------
<S> <C> <C> <C> <C>
OPERATING REVENUE
Plastic Products $ 1,804 $ -- $ 1,804 $ --
Oil and Gas 1,472 1,633 4,272 4,337
Agriculture -- 1,619 -- 1,619
------- -------- -------- -------
3,276 3,252 6,076 5,956
OPERATING COSTS AND EXPENSES
Plastic Products-Cost of Sales 1,524 -- 1,524 --
Oil and Gas - Operating Costs 835 750 2,425 2,355
Agriculture - Operating Costs -- 1,432 -- 1,432
Impairment of Oil and Gas Properties 1,464 3,183 6,979 3,183
Oil and Gas - Depreciation, Depletion
and Amortization 644 883 1,889 2,207
Selling, General and Administrative 1,832 638 3,682 2,412
------- -------- -------- -------
6,299 6,886 16,499 11,589
------- -------- -------- -------
OPERATING LOSS (3,023) (3,634) (10,423) (5,633)
------- -------- -------- -------
OTHER INCOME AND (EXPENSE)
Gain on Sale of Property -- 21 133 192
Other, Including Interest Income 70 81 338 338
Interest Expense (191) (81) (334) (221)
------- -------- -------- -------
(121) 21 137 309
------- -------- -------- -------
NET LOSS $(3,144) $ (3,613) $(10,286) $(5,324)
======= ======== ======== =======
NET LOSS PER COMMON SHARE AND
COMMON SHARE EQUIVALENT $ (.82) $ (.95) $ (2.69) $ (1.40)
======= ======== ======== =======
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
AND COMMON SHARE EQUIVALENTS OUTSTANDING 3,845 3,804 3,825 3,804
======= ======== ======== =======
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
REUNION RESOURCES COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1995 1994
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(10,286) $ (5,324)
Adjustments to Reconcile Net Loss to Net Cash
Provided From Operating Activities
Impairment of Oil and Gas Properties 6,979 3,183
Depreciation, Depletion and Amortization 1,889 2,207
Extension of Warrants to Purchase Common Stock 478 --
Other (107) (181)
-------- --------
(1,047) (115)
Changes in Assets and Liabilities:
(Increase) Decrease in Accounts Receivable 1,238 (2,641)
(Increase) Decrease in Other Current Assets (449) 332
Increase in Current Liabilities 1,347 616
Other (33) (44)
-------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 1,056 (1,852)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Oneida Molded Plastics Corp. (3,398) --
Acquisition of Oil and Gas Properties -- (4,862)
Exploration and Development of Oil and Gas Properties (4,371) (1,478)
Investment in The Juliana Preserve (805) --
Other Capital Expenditures (12) (658)
Other 128 340
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (8,458) (6,658)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Debt Obligations -- 550
Payments of Debt Obligations (324) (166)
Proceeds From Exercise of Common Stock Options 73 1
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (251) 385
DECREASE IN CASH AND CASH EQUIVALENTS (7,653) (8,125)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,225 16,014
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,572 $ 7,889
======== ========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
5
<PAGE>
REUNION RESOURCES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. CONSOLIDATED FINANCIAL STATEMENTS
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Reunion
Resources Company ("RRC") and its majority owned subsidiaries. As used herein,
the term "Company" refers to RRC, its predecessors and its subsidiaries, unless
the context indicates otherwise. All intercompany transactions and accounts are
eliminated in consolidation. The consolidated financial statements for
September 30, 1995 include the financial statements of Oneida Molded Plastics
Corporation which was acquired by the Company on September 14, 1995 (See Note 2
- - Business Acquisitions).
FINANCIAL STATEMENTS AT SEPTEMBER 30, 1995
The Consolidated Balance Sheet at September 30, 1995, and the Consolidated
Statements of Operations and Cash Flows for the three and nine months ended
September 30, 1995 and 1994 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 due to seasonal
variations, changes in market conditions and other significant transactions.
The Consolidated Balance Sheet at December 31, 1994 has been taken from the
audited financial statements at that date. Certain reclassifications have been
made to the September 30, 1994 and December 31, 1994 financial statements to
conform to classifications in the current period.
OIL AND GAS PROPERTIES
The Company follows the full cost method of accounting for its investment in
oil and gas properties and, accordingly, capitalizes all acquisition,
exploration and development costs incurred for the purpose of finding oil and
gas reserves. The Company limits the capitalized costs of oil and gas
properties, net of accumulated depreciation, depletion and amortization, to the
estimated future net cash flows from proved oil and gas reserves discounted at
ten percent, plus the lower of cost or fair value of unproved properties, as
adjusted for related income tax effects (the "full cost ceiling"). A current
period charge to operations is required to the extent that capitalized costs
plus certain estimated costs for future property development, plugging,
abandonment and site restoration, net of related accumulated depreciation,
depletion and amortization and related deferred income taxes, exceed the full
cost ceiling. Approximately 87% of the Company's proved reserves, on an
equivalent barrel basis, are natural gas reserves, and the decreases in natural
gas prices have adversely affected the Company's full cost ceiling. As a
result, the Company was required to take charges totaling $3.9 million, $1.6
million and $1.5 million against earnings in the quarterly periods ended March
31, June 30, and September 30, 1995, respectively. The average price being
received for the Company's sales of natural gas was $1.55 per Mcf at September
30, 1994 $1.75 per Mcf at December 31, 1994, $1.18 per Mcf at March 31, 1995,
$1.27 per Mcf at June 30, 1995 and $1.40 at September 30, 1995. Given the
sensitivity of the Company's full cost ceiling to decreases in oil and gas
prices, the Company may be required to record additional writedowns of its oil
and gas properties if the depressed market for natural gas does not improve.
CASH, CASH EQUIVALENTS AND CASH FLOWS
Cash equivalents include time deposits, certificates of deposit and all highly
liquid instruments with maturities when purchased of three months or less.
Restricted cash balances aggregating $360,000 at September 30, 1995 and
December 31, 1994 have been included in Other Current Assets or Other Assets
based on the nature of the underlying asset collateralized. Such balances
primarily relate to regulatory operating deposits and performance bonds.
The Company made interest payments totaling $213,000 and $188,000 during the
nine months ended September 30, 1995 and 1994, respectively.
6
<PAGE>
REUNION RESOURCES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
INVENTORIES
Plastic products inventories are stated at the lower of cost or market. Cost
is determined using the first-in, first-out method. Work-in-process and
finished goods include material costs, labor costs and manufacturing overhead.
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 respective period. Common equivalent shares include shares issuable
upon exercise of the Company's stock options and warrants. For the three and
nine months ended September 30, 1995 and 1994, 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
ONEIDA MOLDED PLASTICS CORPORATION
On September 14, 1995, the Company purchased all of the issued and outstanding
shares of common stock and preferred stock of Oneida Molded Plastics Corporation
("Oneida"), a New York corporation, from Chatwins Holdings, Inc., a Delaware
corporation and a wholly-owned subsidiary of Chatwins Group, Inc. (collectively
referred to as "Chatwins"). Chatwins owns approximately 38% of the common stock
of the Company and exercises voting rights over an aggregate of approximately
45% of the Company's common stock. Mr. Charles E. Bradley is president, chief
executive officer and a director of the Company and the chairman, a director and
the majority shareholder of Chatwins. Mr. Thomas L. Cassidy also is a director
of the Company and a director of Chatwins. The aggregate purchase price for the
shares totaled $3,107,000, which was funded entirely from internal cash reserves
of the Company. Oneida's liabilities on the closing date included a $4,268,000
note payable to a bank and $4,933,000 payable to Chatwins. The Stock Purchase
Agreement between the Company and Chatwins requires the repayment of the
indebtedness to Chatwins on or before September 14, 1997, or earlier from the
net proceeds, if any, from the sale of the Company's other material assets.
Oneida manufactures precision plastic products and provides engineered
plastics services. Oneida's principal products consist of components for office
equipment, recreational products, computer and other consumer electronics and
telecommunications equipment. Oneida operates three injection molding
facilities in Oneida and Phoenix, New York and Clayton, North Carolina including
two related tooling facilities.
Oneida was acquired by Chatwins effective April 1, 1994. For the nine months
ended December 31, 1994, Oneida had net sales of $23,195,000, operating profit
of $742,000 and a pre-tax loss of $95,000. Oneida's unaudited results of
operations for the nine months ended September 30, 1995, were net sales of
$28,029,000, operating income of $2,022,000 and pre-tax income of $714,000.
Oneida's results are included in the Company's financial statements as of
September 14, 1995, the date of acquisition.
The Oneida acquisition is being accounted for using the purchase method, with
the purchase price, including acquisition costs, allocated to the assets
acquired and liabilities assumed based upon their respective estimated fair
values at the date of acquisition. The excess of purchase price over the net
assets acquired (approximately $5,471,000) is being amortized on a straight-line
basis over 15 years. The estimated fair values of assets and liabilities
acquired in the Oneida acquisition are summarized as follows (in thousands):
7
<PAGE>
REUNION RESOURCES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
Cash $ --
Accounts Receivable 5,917
Inventories 2,543
Customer Tooling-in-process 1,473
Other Current Assets 9
Property, Plant and Equipment 5,727
Other Assets 54
Goodwill 5,471
Accounts Payable and Other Current Liabilities (12,153)
Long-term Debt (5,643)
---------
Total $ 3,398
=========
</TABLE>
The Company is in the process of obtaining certain evaluations, estimations,
appraisals and actuarial and other studies for the purposes of determining
certain values, and may revise certain of the estimated values.
OIL AND GAS PROPERTIES
On May 5, 1994, the Company purchased from Santa Fe Minerals, Inc., a
privately held corporation, interests in producing gas properties in the
Sacramento Basin of Northern California. The purchased interests comprise 55
operated wells in the Sutter Buttes Field and 31 non-operated wells located
primarily in the Grimes Field. The leasehold interests in the Sutter Buttes
Field represent a 50% working interest in approximately 9,200 acres held by
production. At the date of acquisition, the company estimated proved reserves
of approximately five bcf of gas could be attributable to its interest in the
properties. The purchase price for the properties totaled approximately
$4,862,000, which was funded entirely from internal cash reserves of the
Company. The acquisition was accounted for as a purchase. The results of
operations of the acquired properties are included in the Consolidated
Statements of Operations from the date of the acquisition.
PRO FORMA RESULTS
The following pro forma results of operations for the three and nine months
ended September 30, 1995 and 1994 have been prepared assuming the acquisitions
of Oneida and of the oil and gas properties had occurred as of January 1, 1994.
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 January 1, 1994 (in thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -------------------
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues $13,042 $11,336 $34,105 $29,719
Loss From Operations $(2,445) $(3,520) $(8,371) $(4,789)
Net Loss $(2,986) $(3,903) $(9,535) $(5,484)
Earnings per Common Share and
Per Common Share Equivalent $ (0.78) $ (1.03) $ (2.49) $ (1.44)
</TABLE>
8
<PAGE>
REUNION RESOURCES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 3. INVESTMENT IN THE JULIANA PRESERVE
The Company's agricultural operations consist primarily of an investment in
The Juliana Preserve ("The Preserve"), a California general partnership, formed
on October 1, 1994 between Juliana Vineyards and Crescent Farms Company (wholly
owned subsidiaries of the Company), together referred to herein as "Juliana",
and Freedom Vineyards, Inc., a California corporation ("Freedom Vineyards"), to
jointly farm, manage and develop and ultimately dispose of the combined interest
of all the parties. In forming the joint venture, each party effectively
contributed its ownership interest in agricultural real estate and wine grape
vineyards located in Napa County, California in exchange for undivided ownership
interests in the joint venture of 71.7% to Juliana and 28.3% to Freedom
Vineyards, based on appraisals of their respective interests. Although Juliana
has a 71.7% interest in the net income and net assets of the joint venture, it
only has a 50% voting interest in matters concerning the operation, development
and ultimate disposition of the property, and therefore accounts for its
investment on the equity method. Juliana remains obligated on indebtedness of
$2.5 million payable to an insurance company, which is collateralized by land
and vineyards.
The following summarizes The Preserve's results of operations for the fiscal
year ended September 30, 1995 (in thousands):
<TABLE>
<CAPTION>
Year Ended
Sept. 30, 1995
--------------
<S> <C>
Operating Revenue $ 2,134
Operating Costs $ 2,184
Net Loss $ (48)
</TABLE>
Juliana recognized a net loss of $34,000 on its investment in The Preserve under
the equity method of accounting.
The following summary represents The Preserve's financial position as of
September 30, 1995 and December 31, 1994 (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------ ------------
<S> <C> <C>
Current Assets $ 2,392 $ 435
Property and Equipment 21,120 20,461
------------ ------------
$ 23,512 $ 20,896
============ ============
Current Liabilities $ 1,224 $ 216
Long-Term Debt 500 --
Venturer's Equity 21,788 20,680
------------ ------------
$ 23,512 $ 20,896
============ ============
</TABLE>
In January 1995, The Preserve entered into a Development and Marketing
Agreement with Juliana Pacific, Inc., a California corporation, and an affiliate
of Pacific Union Company, to develop The Preserve into a master-planned estate-
oriented residential community encompassing the entire vineyard. The joint
venture agreement contemplates that any development costs of the joint venture
would be financed solely from the assets of the joint venture, including the
sale of such assets. In November 1995, The Preserve received a $3 million
development loan to finance the property's development from Washington Federal
Savings, an affiliate of Freedom Vineyards ("Washington Federal").
9
<PAGE>
REUNION RESOURCES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The $3.0 million Development Loan from Washington Federal dated October 27,
1995 was funded on November 8, 1995. The loan is collateralized by land and
vineyards. Interest on the loan is calculated based on a Bank's Prime Rate,
initially 8.75% per annum, plus 2.5%. Interest is due monthly with principal
payments due from the cash proceeds from sales of land. As of November 8, 1995,
borrowings under the loan aggregated $900,700. Disbursements include repayment
of Juliana's joint venture advances for development expenses after October 1,
1994 of $531,000.
In August 1995, The Preserve obtained a $500,000 Interim Loan from Washington
Federal for payment of certain development costs before funding of the
Development Loan was completed. The Interim Loan was paid in full by the joint
venturers after they were reimbursed for development costs with proceeds from
the Development Loan on November 8, 1995. Interest on the Interim Loan was
calculated on the same terms as the Development Loan.
NOTE 4. INVENTORIES
Inventories, principally for Oneida's plastic products business, at September
30, 1995 consist of the following (in thousands):
<TABLE>
<CAPTION>
Sept. 30, 1995
----------------
<S> <C>
Raw Materials $ 1,505
Work-in-process 843
Finished Goods 195
----------------
Total $ 2,543
================
</TABLE>
NOTE 5. LONG-TERM DEBT
The following table sets forth the Company's long-term debt (in thousands):
<TABLE>
<CAPTION>
Sept. 30, 1995 Dec. 31, 1994
-------------- -------------
<S> <C> <C>
Congress (Revolver and Term)(1) $ 4,676 $ --
Notes Payable to an Insurance
Company(2) 2,540 2,652
Other Oneida Debt(3) 1,097 --
Recourse Note(4) 398 610
Chatwins(5) 4,933 --
-------------- -------------
Total Debt $ 13,644 $ 3,262
============== =============
Current Portion of Long-Term Debt $ 5,627 $ 569
Long-Term Debt 3,084 2,693
Long-Term Debt-Chatwins 4,933 --
-------------- -------------
Total Debt $ 13,644 $ 3,262
============== =============
</TABLE>
(1) On August 12, 1991, Oneida and its subsidiaries obtained a financing
facility of up to $8,000,000 from Congress Financial Corporation
("Congress"). This facility consisted of term loans of $2,750,000 and
revolving loans with an initial maximum of $5,250,000 based on the value,
as defined, of Oneida's
10
<PAGE>
REUNION RESOURCES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
accounts receivable and inventory. In April 1994, the maximum availability
under this facility was reduced to $5,000,000, consisting of an initial
term loan of $3,000,000, and an initial revolving loan maximum of
$2,000,000. Subject to the availability of collateral, the revolving loans
generally increase as the term loans are paid down.
Interest on the revolving and term loans is payable at prime rate plus
2.5%, subject to an additional 3% default increment. In addition, there
are an annual facility fee of $50,000 and quarterly audit fees, as
defined. The loans are secured by substantially all of Oneida's assets
and are subject to early termination fees. The initial term of this
facility was three years, from August 12, 1991 through August 12, 1994,
with one-year renewals thereafter absent termination notification at least
sixty days prior to a renewal anniversary. As Oneida had not received any
such notification at least sixty days prior to August 12, 1995, the
facility has been extended to August 12, 1996.
At September 30, 1995, Oneida was not in compliance with certain financial
covenants contained in the loan agreement with Congress relating to
capital expenditures. Under this covenant, Oneida is limited to $500,000
in capital additions on an annual basis. As of September 30, 1995, Oneida
acquired $620,000 of capital additions in calendar 1995. Oneida has
communicated this verbally to Congress, but has not requested a waiver.
Oneida management expects no action from Congress on this issue at this
time and intends to request modification of this covenant.
(2) Notes payable to an insurance company consist of three notes as follows:
The principal outstanding as of September 30, 1995 on the first note was
$1,839,000 and is payable monthly with principal payments amortized based
on a 20-year rate and due in full in 1998. In January 1994, the interest
rate was adjusted to a rate of 6.7% per annum and will be adjusted to
future market rates again in January 1997. The note is collateralized by
a first lien on certain Juliana land parcels.
The principal outstanding as of September 30, 1995 on a second note was
$472,000 and is payable semiannually with fixed principal payments. The
note was refinanced in January 1994 to extend the due date from January
1994 to January 1997 and to reduce the interest rate to 7.75% per annum.
The note is collateralized by a first lien on a certain Juliana land
parcel.
The principal outstanding as of September 30, 1995 on a third note was
$228,000 and is payable monthly. The note was refinanced in January 1994
to extend the due date from January 1994 to January 1997 and to reduce the
interest rate to 7.75% per annum. The note is collateralized by a first
lien on a certain Juliana land parcel.
(3) Other Oneida debt includes a note payable to a supplier, capitalized
equipment lease obligations, economic development loans, small business
loans, an obligation to a former owner for his agreement not to compete,
and loans from other related parties. Some of these obligations are
secured by equipment or other assets of Oneida. These obligations vary in
terms and conditions and bear rates of interest ranging from 5% to 19% at
September 30, 1995.
(4) The recourse note of the Company dated February 17, 1989 is payable to the
paying agent as trustee for the RRC Class 6 Creditors. The note is
collateralized by certain agriculture notes receivable (including the
ongoing proceeds therefrom), the Company's interests in undeveloped land
and the stock of certain wholly owned agricultural subsidiaries, including
Juliana.
For the remaining term of the note, principal is payable in mandatory
prepayments based on proceeds, if any, from the collateral, or otherwise
in quarterly installments through February 1996. Interest accrues at 10%
per annum, payable quarterly in arrears. All payments made are applied to
current maturities then to the next succeeding principal payments due
under the note.
11
<PAGE>
REUNION RESOURCES COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(5) Subsequent to Chatwins' acquisition of Oneida, Chatwins made advances to
Oneida totaling $3.7 million through September 14, 1995. Oneida used $1
million of such advances from Chatwins to repay a portion of a note to a
supplier. The remainder was used for working capital and the repayment of
certain related-party payables. In connection with the Company's
acquisition of Oneida, all amounts due Chatwins, including advances,
accrued interest and accrued taxes aggregating $4,933,000, were converted
to an interest bearing loan, with interest at 10% per annum from September
1, 1995. The Stock Purchase Agreement between the Company and Chatwins
requires the repayment of the indebtedness to Chatwins on or before
September 14, 1997, or earlier from the net proceeds, if any, from the
sale of the Company's other material assets.
Maturities of long-term debt, including the principal portions of obligations
under capitalized equipment leases, during the next five years and thereafter as
of September 30, 1995 were as follows: Remainder of 1995 - $492,000; 1996 -
$5,260,000; 1997 - $5,839,000; 1998 - $1,737,000; 1999 - $122,000; thereafter -
$194,000.
Effective August 31, 1995, the Company terminated a revolving credit facility
with a bank which provided $4.5 million of borrowing capacity for use in the
Company's oil and gas business and for general credit purposes. No amounts had
been borrowed under this facility.
NOTE 6. STOCK OPTION PLANS
In January 1995, the Company granted 62,750 incentive stock options, under its
1993 Incentive Stock Option Plan, to certain key employees. The options have an
exercise price of $5.00 per share, based on the market price on the date of
grant, and originally vested 50% in January 1996 and 50% in January 1997. As a
result of the changes to the Board of Directors in 1995, all these options are
fully vested. The options remain exercisable until January 1999.
In June 1995, two warrants to purchase an aggregate of 150,000 shares of the
Company's common stock with an original expiration date of June 30, 1995, and an
exercise price of $1.562 per share, were extended to June 30, 1999. As a result
of extending the period in which the warrants can be exercised, the Company
recognized compensation expense of $478,200 during the second quarter of 1995.
This non-cash charge was credited to additional paid-in capital.
NOTE 7. SUBSEQUENT EVENTS
In October 1995, the Company received $874,000 pursuant to a Texas Court of
Appeals judgment in favor of the Company concerning the Company's share of the
proceeds from a take-or-pay contract settlement dating back to the 1970's.
12
<PAGE>
REUNION RESOURCES COMPANY AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
On September 14, 1995, the Company acquired Oneida, which manufactures
precision plastic products and provides engineered plastics services (see Note 2
of the Notes to Consolidated Financial Statements). As a result of the
acquisition of Oneida, the Company's principal operations are in the plastics
industry. 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. In conjunction with this new strategic direction, the Company is
exploring the sale of its oil and gas operations which, prior to the acquisition
of Oneida, represented its primary business. While the Company is in the
process of receiving indications of interest from various parties regarding the
sale of its oil and gas operations, no understandings or agreements have been
entered into as of the date hereof.
RESULTS OF OPERATIONS
The Company recognized a net loss of $3.1 million for the three months ended
September 30, 1995 compared to a loss of $3.6 million for the three months ended
September 30, 1994. The 1995 loss included a $1.5 million non-cash charge
taken to write down the Company's oil and gas properties in accordance with the
full cost method of accounting and a $1.1 million charge for severance expenses
recorded, pursuant to the Company's existing severance policy, in conjunction
with the Company's intention to close its Houston office and sell a substantial
portion of its oil and gas assets. The 1994 loss included a $3.2 million non-
cash charge to write down oil and gas properties.
The Company recognized a net loss of $10.3 million for the nine months ended
September 30, 1995 compared to a loss of $5.3 million for the 1994 period. The
1995 loss is attributable to non-cash charges totaling $7.0 million to write
down the Company's oil and gas properties in accordance with the full cost
method of accounting, the $1.1 million charge for severance costs, a $0.5
million charge in the second quarter related to the extension of the period in
which two warrants to purchase the Company's Common Stock could be exercised,
and to increased oil and gas operating costs. The 1994 loss included the $3.2
million non-cash charge to write down oil and gas properties. The 1995 period
benefited from overhead reductions implemented by management in the fourth
quarter of 1994. The acquisition of Oneida was not material to net income.
PLASTICS SEGMENT The acquisition of Oneida on September 14, 1995 represented
the Company's entry into a new operating segment, plastics. Revenues and
operating income of the plastics segment were $1.8 million and $0.1 million,
respectively, for both the three month and nine month periods ended September
30, 1995.
On a pro forma basis, as if the acquisition of Oneida had occurred as of
January 1, 1994, revenues increased $4.6 million to $28.0 million for the nine
months ended September 30, 1995 from $23.4 million for the nine months ended
September 30, 1994. This 19.7% increase in revenues is attributable to an
increase in molded plastic products as a result of increased demand from
existing customers, for both existing programs and programs new to Oneida, and
from new customers. During the early part of 1995, Oneida began shipping
production quantities of parts under programs that were in development during
1994 for customers in the office equipment, telecommunications, consumer
products and gaming industries. Tooling sales were approximately $2.5 million in
both the 1995 and 1994 periods. Oneida's backlog totaled $14.7 million at
September 30, 1995 compared to $10.1 million at December 31, 1994 and $8.1
million at September 30, 1994.
On a pro forma basis, cost of sales totaled $23.3 million, or 83.2% of net
sales, for the nine months ended September 30, 1995 compared to $20.1 million,
or 86.0% of net sales, for the nine months ended September 30, 1994. The
improvement in cost of sales as a percentage of net sales is attributable to
reductions in direct labor resulting from improved efficiency and a different
sales mix, participation by Oneida in a reduced rate electricity program that
lowered utility costs at one of its molding facilities, and maintaining
manufacturing overhead spending in 1995 at substantially the same levels as 1994
despite increased sales. These factors were partially offset by an increase in
the material content as a percentage of sales due to the change in sales mix.
13
<PAGE>
REUNION RESOURCES COMPANY AND SUBSIDIARIES
As a result of the increase in sales and the decrease in costs as a percentage
of sales, gross margins on a pro forma basis improved to $4.7 million, or 16.8%
of net sales, in the nine months ended September 30, 1995 from $3.3 million, or
14.1% of net sales, in the nine months ended September 30, 1994. Selling,
general and administrative expenses were approximately $2.6 million in both
periods. Operating income for the nine months ended September 30, 1995 was $2.1
million, or 7.5% of net sales, compared to $0.7 million, or 3.0% of net sales,
for the nine months ended September 30, 1994.
OIL AND GAS SEGMENT Revenues of the oil and gas segment totaled $1.5 million
and $4.3 million for the three and nine month periods ended September 30, 1995,
respectively, compared to $1.6 million and $4.3 million for the comparable
periods of 1994. Throughout the first nine months of 1995, when compared 1994,
the Company was favorably impacted by increased sales of crude oil and higher
crude oil prices. However, these increases were offset by the impact of lower
gas sales volumes and significantly lower gas sales prices. For the three
months ended September 30, 1995, crude oil and natural gas production accounted
for 59% and 39%, respectively, of the segment's revenue, as compared to 41% and
55%, respectively, for 1994. For the nine months ended September 30, 1995,
crude oil production accounted for 59% of the segment's revenue, compared to 40%
in 1994, and natural gas production accounted for 39%, as compared to 56% in
1994. The remaining revenue in each period was derived from ancillary field
service operations.
The following table sets forth information regarding crude oil and natural gas
production volumes and average sales prices and operating costs (excluding the
non-cash charge for impairment of oil and gas properties) for the three month
and nine month periods ended September 30, 1995 and 1994:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ -------------------
1995 1994 1995 1994
------ ------- ------- -------
<S> <C> <C> <C> <C>
Average Sales Prices:
Natural Gas ($/Mcf) $ 1.27 $ 1.62 $ 1.32 $ 1.75
Crude Oil ($/Bbl) $ 16.52 $ 16.79 $ 17.10 $ 15.27
Mcfe ($/Mcfe) $ 1.88 $ 1.98 $ 1.94 $ 2.02
Production Data:
Natural Gas (MMcf) 448 558 1,271 1,382
Crude Oil (MBbl) 53 40 147 115
Mcfe (MMcf) 764 800 2,152 2,071
Additional $/Mcfe Disclosures:
Lifting Cost $ .79 $ .61 $ .80 $ .72
Other Production Cost $ .29 $ .28 $ .31 $ .36
Depreciation, Depletion and Amortization $ .81 $ .76 $ .84 $ .52
</TABLE>
During the third quarter of 1995, the Company experienced a 31% increase in
its sales of crude oil and a 20% decrease in its sales of natural gas, compared
to the third quarter of 1994. The increase in crude oil sales provided $0.2
million of additional revenue for the quarter, however the 20% decline in sales
of natural gas reduced revenue by $0.2 million. For the nine months ended
September 30, 1995, crude oil sales increased 28%, resulting in $0.5 million of
additional revenue, as compared to 1994. Gas sales decreased 8% between the two
periods, resulting in a $0.2 million reduction in revenue. The increase in
crude oil sales is primarily attributable to the production from two oil wells
completed September 1994 and March 1995 in Brazoria County, Texas. The decrease
in the Company's natural gas production during 1995, as compared to 1994, is
primarily attributable to a decrease in production from certain fields affected
by the severe floods which occurred in Northern California in 1995, partially
offset in the nine month period by the increase in sales resulting from the
acquisition of producing gas
14
<PAGE>
REUNION RESOURCES COMPANY AND SUBSIDIARIES
properties in May 1994. The floods caused an interruption of pipeline service in
a gas purchaser's transmission lines serving some of the Company's gas wells and
resulted in the Company being unable to produce approximately 30,000 Mcf and
139,000 Mcf during the three and nine months ended September 30, 1995. Pipeline
service was restored to the affected properties on August 17, 1995. The third
quarter of 1995 was also affected by declining natural gas production from the
Company's existing wells.
Lifting costs for the nine months and the quarter ended September 30, 1995
increased both in amount and per unit of production. These increases
approximated $0.2 million and related primarily to the increase in the Company's
oil production, as described above. Other production costs were relatively
unchanged from 1994 to 1995.
The Company experienced a significant decline in the average price it received
for its sales of natural gas, resulting in a decrease in revenue during the
third quarter and the first nine months of 1995 totaling $0.2 million and $0.6
million, respectively, when compared to the same periods of 1994. Average oil
prices were higher during the nine months ended September 30, 1995 compared to
1994, resulting in increased revenue of $0.3 million which partially offset the
effects of the decrease in gas prices. Average oil prices were slightly lower
in the third quarter of 1995 compared to 1994, resulting in a minor decrease in
revenue.
The continuing depressed market for natural gas resulted in the Company
recording a $7.0 million non-cash impairment charge against earnings during the
first three quarters of 1995 and $3.2 million for the comparable period of 1994.
The Company is required to limit its capitalized costs of oil and gas
properties, net of accumulated depreciation, depletion and amortization, to the
estimated future net cash flows from proved oil and gas reserves, using current
prices, discounted at ten percent, plus the lower of cost or fair value of
unproved properties, as adjusted for related income tax effects (the "full cost
ceiling"). A current period charge to operations is required to the extent that
capitalized costs plus certain estimated costs for future property development,
plugging, abandonment and site restoration, net of related accumulated
depreciation, depletion and amortization and related deferred income taxes,
exceed the full cost ceiling.
As virtually all of the Company's oil and gas sales are made on a spot basis
or under short-term contracts, the revenues which the Company receives for its
production are affected by fluctuations in the prices of these commodities in
the market place. The price changes, both upward and downward, experienced by
the Company during 1995 are a result of this sensitivity to price fluctuations.
Should the currently depressed market for natural gas continue, or should there
be a corresponding decline in the crude oil market, the Company may continue to
experience reduced cash flow and may be required to record further writedowns.
AGRICULTURE SEGMENT The results of agriculture operations for 1994 are
reported as operating revenue and operating expense. Agriculture operations for
1995 are reported under the equity method. Juliana's share of ownership in the
vineyards remained at 71.7% for both crop years. In November 1994, the parties
executed a definitive agreement, documenting the Letter of Intent, forming the
joint venture to jointly farm, manage and develop, and ultimately dispose of,
the combined interest of both parties and confirmed the revised sharing ratios.
The joint venture and the proposed development of the joint venture acreage was
subject to the providing of development financing by Washington Federal Savings
(the parent company of Freedom Vineyards) or another lender; such financing was
provided by Washington Federal in November 1995.
Outlined below are certain operating statistics for both the entire vineyard
operation for the crop years ended September 30, 1995 and 1994, and for
Juliana's net owned interest for the crop years ended September 30, 1995 and
1994:
15
<PAGE>
REUNION RESOURCES COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
ALL VINEYARDS JULIANA'S OWNED INTEREST
------------------ ------------------------
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues (in thousands) $ 2,134 $ 2,257 $ 1,530 $ 1,618
Operating Costs (in thousands) $ 1,832 $ 2,085 $ 1,314 $ 1,495
Acres in Production 417 612 299 439
Operating Cost per Acre $ 4,397 $ 3,406 $ 4,397 $ 3,406
Production per Acre (in Tons) 5.6 4.3 5.6 4.3
Average Sales Price per Ton $ 909 $ 867 $ 909 $ 867
</TABLE>
Principally as a result of the effect of phylloxera on the performance of
certain vineyard blocks, vineyard management estimated at the end of the 1994
crop year it could economically farm only 420 acres for the 1995 crop year, a
decrease of 31% when compared to the productive acreage farmed in the crop year
ended in 1994. New vineyard plantings (45 acres) and interplantings (80 acres)
within the last three years will begin to mature and become productive over the
next several years. Although Juliana is expected to continue to incur operating
losses from its share of vineyard operations, vineyard management currently
estimates that increasing productivity from new plantings and the remaining
productive vines will allow Juliana to be able to operate approximately at cash
breakeven for the 1996 crop year.
GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses
increased $1.2 million and $1.3 million for the three and nine month periods
ended September 30, 1995, respectively, compared to the same periods of 1994.
These increases are attributable to the addition of Oneida in September 1995 and
a $1.1 million charge for severance expenses recorded in conjunction with the
Company's intention to close its Houston offices and sell a substantial portion
of its oil and gas assets, partially offset in each of the periods by cost-
reduction measures implemented during 1994. During the fourth quarter of 1994,
primarily as a result of the anticipated effect of the depressed market for
natural gas, management reduced administrative overhead, including personnel
costs aggregating more than $0.5 million per year. For the nine month period,
the increase also includes a $0.5 million non-cash charge taken in the second
quarter as a result of extending the period in which certain warrants to
purchase the Company's Common Stock can be exercised.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1995, the Company had cash on hand of approximately $1.6
million. During the nine months ended September 30, 1995, cash decreased $7.7
million, with $1.1 million provided by operations, $8.5 million used in
investing activities and $0.3 million used in financing activities. In October
1995, the Company received a payment of approximately $0.9 million for
settlement of certain collection litigation. In addition, the Company expects
to receive an Alternative Minimum Tax refund of approximately $0.7 million in
the first quarter of 1996. These amounts and the Company's existing cash
balances represent the Company's available liquidity. In addition to recurring
operating costs, which management believes will be funded from operations, the
Company expects to pay approximately $1.1 million in the first quarter of 1996
in connection with the closure of its Houston offices.
As discussed above, the Company is presently exploring the sale of its oil and
gas operations in connection with its entry into the plastics segment. Pending
such sale, the Company does not intend to expend any significant amounts for
development of its oil and gas assets. During the first nine months of 1995,
the Company's capital expenditures for oil and gas activities aggregated $4.9
million. Approximately $2.0 million of this amount was attributable to items
not included in the Company's 1995 capital budget. This $2.0 million consisted
of $1.7 million of well plugging and abandonment and site restoration costs and
the balance for well recompletions and maintenance of developed properties. The
$2.9 million of budgeted expenditures consisted of $1.7 million attributable to
the cost of four successful wells and four dry holes; $0.8 million for well
plugging and abandonment and site restoration and $0.2 million on well
recompletions, lease acquisitions and geological and geophysical expenditures on
developed properties. The Company has not capitalized any interest expense or
general and administrative expenses, other than charges of third party
geological, geophysical and engineering consultants, during the nine months
ended September 30, 1995. As of September 30, 1995, the Company was committed
to
16
<PAGE>
REUNION RESOURCES COMPANY AND SUBSIDIARIES
make $0.5 million of capital expenditures for oil and gas activities which the
Company expects to be able to fund from internal cash reserves.
The Company acquired Oneida for $3.1 million September 14, 1995, which was
funded from the Company's internal cash reserves. The Company has no
commitments to make capital expenditures in the plastics segment, although
management intends to make such expenditures as are necessary to maintain
Oneida's ability to service its customers. Any such expenditures may be funded
from internally generated cash, or from external sources.
Principal payments reduced long-term obligations by $0.3 million during the
first nine months of 1995. The indebtedness of Juliana to an insurance company
aggregating $2.5 million will require principal payments of $0.2 million in the
next twelve months. The remaining indebtedness of the Company to the Class 6
Creditors of $0.4 million requires additional reductions of principal of $0.2
million in November 1995 and $0.2 million in February 1996. Oneida has a
revolving credit facility with Congress Financial Corporation that provides for
borrowing based on the value, as defined, of Oneida's accounts receivable and
inventory. The balance outstanding under this facility was $4.3 million at
September 30, 1995, representing substantially all of Oneida's borrowing
availability at that date. This facility matures in August 1996 unless extended
by Congress. If not extended, Oneida will be required to refinance this debt;
the terms of such refinancing may be substantially different than existing
terms. Oneida has principal payment obligations on its
other debt of $0.8 million in the next twelve months. The Company believes its
results of operations and cash reserves will be sufficient to fund its debt
service requirements over the next twelve months. If the Company sells its oil
and gas operations or other material assets, it will also be required to repay
Oneida's obligations to Chatwins, totaling $4.3 million, from the net proceeds
of such sale.
As discussed above, the Company is considering additional acquisitions in the
plastics industry, and may consider acquisitions in other industries. Unless
the Company sells its oil and gas assets, the Company's ability to finance
future growth from internally generated funds is limited. Any significant
expansion of the Company's activities may require financing from external
sources which could affect the Company's financial position. There can be no
assurance that the Company will effect any expansion of its activities or obtain
requisite financing on terms favorable to the Company.
LIQUIDITY AND CAPITAL RESOURCES OF THE JULIANA PRESERVE
The Preserve generated cash from operations of $0.3 million in the 1995 crop
year ended September 30. Due to the continuing effect of phylloxera, an
organism which attacks grapevine rootstock, the productive capacity of the
vineyard has been reduced from 589 productive acres in 1994, to approximately
417 acres in 1995 and 415 acres in 1996. In an effort to offset the impact of
phylloxera and achieve at least break-even cash flow from farming activities,
the parties initiated, in 1994, limited interplanting on 74 acres at a projected
three year cost of $0.4 million. Interplanting expenditures of $0.1 million
have been incurred through September 30, 1995, with none projected for the
remainder of 1995. Based on current projections, these interplanted acres
together with the currently resistant vines should stabilize the production
capacity at about 255 acres in 1997. Although the parties are taking these steps
with the intent to limit future investment in farming activities, there is no
assurance that the parties will not be required to finance farming operations,
including costs arising out of the risks associated with such activities,
including weather, pests, disease, and the increasing costs of farming.
In addition to farming operations during the nine months ended September 30,
1995, The Preserve also incurred approximately $0.7 million related to the
development of The Preserve's real estate into a master-planned estate-oriented
residential community. The joint venturers and The Preserve have spent a total
of approximately $1.5 million in connection with the development, through
September 30, 1995. Funds advanced since October 1, 1994 pertaining to the
development were repaid to Juliana and Freedom Vineyards on November 8, 1995
from the proceeds of a $3.0 million development loan by Washington Federal
Savings. Future development costs are expected to be funded from this loan and
from property sales.
17
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
10.44 Stock Purchase Agreement dated September 14, 1995, between
Reunion Resources Company and Chatwins Holdings, Inc.,
relating to the purchase of Oneida Molded Plastics
Corporation. (Incorporated by reference to Exhibit 10.44 to
the Company's Current Report on Form 8-K dated September 14,
1995.)
10.45 Letter Agreement between Chatwins Group, Inc. and Reunion
Resources Company dated September 14, 1995. (Incorporated by
reference to Exhibit 10.45 to the Company's Current Report
on Form 8-K dated September 14, 1995.)
27 Financial Data Schedule
(B) CURRENT REPORTS ON FORM 8-K
During the quarter ended September 30, 1995, the Company filed the
following report on Form 8-K:
Report Date Item Reported
September 14, 1995 Item 2. Acquisition or Disposition of Assets. To
report the purchase of all issued and outstanding
shares of Oneida Molded Plastics Corporation, a
New York corporation, from Chatwins Holdings,
Inc., a Delaware corporation and a wholly-owned
subsidiary of Chatwins Group, Inc.
18
<PAGE>
REUNION RESOURCES COMPANY AND SUBSIDIARIES
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 RESOURCES COMPANY
(Registrant)
By /s/Richard L. Evans
-------------------------
Richard L. Evans
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Date: November 14, 1995
19
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,572
<SECURITIES> 0
<RECEIVABLES> 7,845
<ALLOWANCES> (505)
<INVENTORY> 2,543
<CURRENT-ASSETS> 14,595
<PP&E> 45,765
<DEPRECIATION> (23,881)
<TOTAL-ASSETS> 60,799
<CURRENT-LIABILITIES> 17,389
<BONDS> 0
<COMMON> 40
0
0
<OTHER-SE> 34,849
<TOTAL-LIABILITY-AND-EQUITY> 60,799
<SALES> 6,076
<TOTAL-REVENUES> 6,076
<CGS> 0
<TOTAL-COSTS> 16,499
<OTHER-EXPENSES> (471)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 334
<INCOME-PRETAX> (10,286)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,286)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (10,286)
<EPS-PRIMARY> (2.69)
<EPS-DILUTED> (2.69)
</TABLE>
