U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-QSB
(Mark One)
[X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended : March 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ____________ to _____________
Commission file number: 0-18434
REINHOLD INDUSTRIES, INC.
(Exact name of small business issuer as specified in charter)
Delaware 13-2596288
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
12827 East Imperial Hwy, Santa Fe Springs, CA 90670
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (562) 944-3281
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ] NO [ X ]
Check whether the issuer has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to distribution of securities under a plan confirmed by the Court.
YES [ X ] NO [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class A Common Stock, Par Value $.01 - 978,956 shares as of May 9, 1997.
Class B Common Stock, Par Value $.01 - 1,020,000 shares as of May 9, 1997.
Transitional Small Business Disclosure Format (Check one):
YES [ ] NO [ X ]
<PAGE>
REINHOLD INDUSTRIES, INC.
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1.
Condensed Statements of Operations 3
Condensed Balance Sheet 4
Condensed Statements of Cash Flows 5
Notes to Condensed Financial Statements 6
Item 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II - OTHER INFORMATION 10
SIGNATURES 11
EXHIBITS 12
<PAGE>
<TABLE>
PART I. - FINANCIAL INFORMATION
REINHOLD INDUSTRIES, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands, except per share data)
<CAPTION>
Reorganized Predecessor
Company Company
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
<S> <C> <C>
Net sales $3,261 $ 2,504
Cost of goods sold 2,470 2,243
----- ------
Gross profit 791 261
Selling, general and administrative expenses 733 654
----- ------
Operating income (loss) 58 (393)
Interest income, net 25 505
----- ------
Income before reorganization
expenses and income taxes 83 112
Reorganization expenses - 1,403
----- ------
Income (loss) before income taxes 83 (1,291)
Income tax provision 9 21
----- ------
Net income (loss) $ 74 $(1,312)
===== ======
Net income per share $ .04 N.M.*
Weighted average shares outstanding 1,999 N.M.*
<FN>
*N.M.- Not meaningful - historical per share data for the Predecessor Company is
not meaningful since the Company has been recapitalized and has adopted
fresh-start reporting as of July 31, 1996.
See accompanying notes to condensed financial statements
</FN>
</TABLE>
<PAGE>
<TABLE>
REINHOLD INDUSTRIES, INC.
CONDENSED BALANCE SHEET
(Unaudited)
(Amounts in thousands, except per share data)
<CAPTION>
March 1997
<S> <C>
ASSETS
Current assets
Cash and cash equivalents $ 1,275
Marketable securities 447
Accounts receivable 1,321
Inventories 1,370
Other current assets 625
------
Total current assets 5,038
Property, plant and equipment less accumulated depreciation of $2,923 5,151
Marketable securities 750
Deferred costs and other assets 1,055
------
TOTAL ASSETS $ 11,994
======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 770
Accrued expenses 557
------
Total current liabilities 1,327
Long term pension liability 2,591
Other long term liabilities 2,283
Stockholders' equity
Common stock authorized- 1,480,000 Class A shares and 1,020,000 Class B shares
Issued and outstanding - 978,956 Class A shares and 1,020,000 Class B shares 20
Additional paid-in capital 7,791
Additional pension liability in excess of unrecognized prior service cost (2,493)
Retained earnings 475
------
Net stockholders' equity 5,793
------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,994
======
<FN>
See accompanying notes to condensed financial statements
</FN>
</TABLE>
<PAGE>
<TABLE>
REINHOLD INDUSTRIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
<CAPTION>
Reorganized Predecessor
Company Company
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
<S> <C> <C>
Cash flow from operating activities:
Income (loss) from operations $ 74 $ (1,312)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Depreciation 218 213
Obligations subject to Chapter 11 proceedings,
including reorganization costs - (87)
Changes in assets and liabilities:
Accounts receivable 502 (247)
Inventories 121 93
Other current assets (167) 1,323
Other assets - (79)
Accounts payable 12 347
Accrued expenses (381) 192
Other, net (5) (7)
----- -------
Net cash provided by operating activities $ 374 $ 436
----- -------
Cash flow from investing activities:
Investment in marketable securities, net $ (197) $(12,362)
Proceeds from sale of equipment - 13
Capital expenditures (178) (44)
----- -------
Net cash used in investing activities $ (375) $(12,393)
----- -------
Cash flow from financing activities -
Cash paid for acquisition of Reynolds & Taylor $ (246) $ (206)
----- -------
Net decrease in cash (247) (12,163)
Cash at beginning of period $1,522 $ 20,852
----- -------
Cash at end of period $1,275 $ 8,689
===== =======
Cash paid during period for:
Income taxes $ 1 $ 187
Interest expense $ - $ -
<FN>
See accompanying notes to condensed financial statements
</FN>
</TABLE>
<PAGE>
REINHOLD INDUSTRIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
March 31, 1997
DESCRIPTION OF BUSINESS
Reinhold Industries, Inc. ("Reinhold" or the "Company") is a manufacturer
of advanced custom composite components and sheet molding compounds for a
variety of applications. Reinhold derives revenues from the United States
defense contract industry, the aerospace industry and other commercial
industries.
REORGANIZATION AND BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements are those of
Reinhold as of and for the three months ended March 31, 1997. The accompanying
unaudited condensed financial statements for the three months ended March 31,
1996 include the accounts of Keene Corporation and subsidiary ("Predecessor
Company"). The condensed financial statements are unaudited and have been
prepared by the Company in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they do not include
all the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of the Company, all
material adjustments and disclosures necessary for a fair presentation have been
made. The accompanying unaudited condensed financial statements should be read
in conjunction with the audited financial statements and notes thereto for the
year ended December 31, 1996, included in the Company's Form 10-KSB filed with
the Securities and Exchange Commission on March 17, 1997. The financial
statements should also be read in conjunction with the Form 8-K dated June 14,
1996, filed by Keene Corporation , ("Keene") with the Securities and Exchange
Commission on June 28, 1996, relating to the confirmation of Keene's Fourth
Amended Plan of Reorganization (the "Plan").
Reinhold was acquired by Keene in 1984 and operated as a division of Keene
until 1990, when Reinhold was incorporated in Delaware as a wholly owned
subsidiary of Keene. On July 31, 1996 (the "Effective Date"), Keene consummated
its plan of reorganization under Chapter 11 of the United States Bankruptcy Code
and emerged from bankruptcy. On the Effective date, Reinhold was merged into and
with Keene, with Keene becoming the surviving corporation. Keene, as the
surviving corporation of the merger, was renamed Reinhold.
<PAGE>
Notes to Condensed Financial Statements (Continued)
INCOME PER SHARE
Computation of income per share was based on the weighted average number
of shares outstanding for the three months ended March 31, 1997 plus common
stock equivalents arising from outstanding options using the treasury stock
method.
COMMITTMENTS AND CONTINGENCIES
Reinhold is involved in certain legal actions and claims arising in the
ordinary course of business. Management believes that such litigation and claims
will be resolved without material effect on the Company's financial position or
results of operations.
EFFECT OF RECENT ACCOUNTING CHANGES
In February 1997, the Financial Standards Board issued SFAS No. 128,
"Earnings Per Share". SFAS No. 128 specifies new standards designed to improve
the earnings per share ("EPS") information provided in financial statements by
simplifying the existing computational guidelines, revising the disclosure
requirements and increasing the comparability of EPS data on an international
basis. Some of the changes made to simplify the EPS computations include: (a)
eliminating the presentation of primary EPS and replacing it with basic EPS,
with the principal difference being that common stock equivalents are not
considered in computing basic EPS, (b) eliminating the modified treasury stock
method and the three percent materiality provision and (c) revising the
contingent share provision and the supplemental EPS data requirements. SFAS No.
128 is effective for financial statements issued for periods ending December 15,
1997, including interim periods. The Company has not determined the impact of
the implementation of SFAS No. 128.
<PAGE>
REINHOLD INDUSTRIES, INC.
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
March 31, 1997
The following discussion should be read in conjunction with the condensed
financial statements and notes thereto included in Item 1 of this filing, the
financial statements and notes thereto and Management's Discussion and Analysis
of Financial Condition and Results of Operations contained in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1996 and the Form
8-K dated June 14, 1996, filed with the Securities and Exchange Commission on
June 28, 1996 relating to the confirmation of Keene's Fourth Amended Plan of
Reorganization.
Reinhold is a manufacturer of advanced custom composite components and
sheet molding compounds for a variety of applications. Reinhold derives revenues
from the United States defense contract industry, the aerospace industry and
other commercial industries.
Comparison of First Quarter 1997 to 1996
In the first quarter of 1997, net sales of $3.3 million increased $0.8
million, or 30%, compared with first quarter 1996 sales of $2.5 million. The
increase primarily reflects higher sales of aircraft seatbacks components.
Gross profit margin increased to 24.3% in the first quarter of 1997
compared with gross profit margin of 10.4% in the first quarter of 1996 due to
higher absorption of overhead related to higher sales volume.
Selling, general and administrative expenses in the first quarter of 1997
were $0.7 million (22.5% of sales) compared with $0.7 million (26.1% of sales)
for the comparable quarter of 1996. However, higher costs for public compliance
were offset by lower general insurance costs in 1997.
Interest income in the first quarter of 1997 declined to $0.03 million
from $0.5 million in the first quarter of 1996 due to the transfer of most of
the investment portfolio to the Creditors' Trust on the Effective Date of the
Plan of Reorganization.
In the first quarter of 1997, there were no reorganization expenses.
During the first quarter of 1996, $1.4 million was incurred for reorganization
expenses.
<PAGE>
Liquidity and Capital Resources
As of March 31, 1997, working capital was $3.7 million, down $0.1 million
from December 31, 1996. Cash and cash equivalents of $1.3 million held at March
31, 1997 were $0.2 million lower than cash and cash equivalents held at December
31, 1996 primarily due to the $0.2 million increase in marketable securities.
Marketable securities were $1.2 million at March 31, 1997 compared with $1.0
million held at December 31, 1996.
Net cash provided by operations amounted to $0.4 million for the three
months ended March 31, 1997 and 1996.
Net cash used in investing activities for the three months ended March 31,
1997 consisted of purchases of marketable securities and property and equipment
expenditures totaling $0.4 million. Net cash used in investing activities for
the three months ended March 31, 1996 consisted primarily of purchases of
marketable securities totaling $12.3 million.
Net cash used in financing activities for the three months ended March 31,
1997 and 1996 totaled $0.2 million in both periods and related to payments made
for the acquisition of Reynolds & Taylor.
Expenditures in 1997 and 1996 related to investing and financing activities
were financed by existing cash and cash equivalents.
The Company does not have any material commitments of capital
expenditures at March 31, 1997.
The Company has a credit facility with the Creditors' Trust whereby the
Company has the ability to draw on a $1.5 million line of credit through July
31, 1998. All amounts borrowed under this line of credit will become due and
payable by July 31, 1999. No amounts have been used under this facility.
Management believes that the available cash and the amount available under
the Credit Facility, described above, will be sufficient to fund the Company's
operating and capital expenditure requirements.
Inflation
General economic inflation has not had a significant impact on the
Company's operations during the three months ended March 31, 1997 and 1996.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
2.1 Keene Corporation's Fourth Amended Plan of Reorganization Under
Chapter 11 of the Bankruptcy Code dated March 11, 1996, incorporated
herein by reference to Exhibit 99(a) to Keene Corporation's Form 8-K
filed with the Commission on June 28, 1996.
2.2 Motion to Approve Modifications to the Keene Corporation Fourth
Amended Plan of Reorganization Under Chapter 11 of the Bankruptcy
Code dated June 12, 1996, incorporated herein by reference to Exhibit
99(b) to Keene Corporation's Form 8-K filed with the Commission on
June 28, 1996.
2.3 Finding of Fact, Conclusions of Law and Order Confirming Keene's
Fourth Amended Plan of Reorganization Under Chapter 11 of the
Bankruptcy Code, as modified, entered June 14, 1996, herein
incorporated by reference to Exhibit 99(c) to Keene Corporation's
Form 8-K filed with the Commission on June 28, 1996.
3.1 Amended and restated Certificate of Incorporation of Reinhold
Industries, Inc., incorporated herein by reference to Exhibit 99(a),
Exhibit A to the Plan, to Keene Corporation's Form 8-K filed with the
Commission on June 28, 1996.
3.2 Amended and restated By-laws of Reinhold Industries, Inc. (Formerly
Keene Corporation), incorporated herein by reference to Exhibit
99(a), Exhibit B to the Plan, to Keene Corporation's Form 8-K filed
with the Commission on June 28, 1996.
3.3 Certificate of Merger of Reinhold Industries, Inc. into Keene
Corporation, incorporated herein by reference to Exhibit 99(a),
Exhibit C to the Plan, to Keene Corporation's Form 8-K filed with the
Commission on June 28, 1996.
27 Financial Data Schedule
b. Reports on Form 8-K
No Reports on Form 8-K were filed during the period covered by this
report.
<PAGE>
REINHOLD INDUSTRIES, INC.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, as
amended, the registrant has duly cause this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
REINHOLD INDUSTRIES, INC.
Registrant
DATE: May 9, 1997
By: /S/ David M. Blakesley
David M. Blakesley
Vice President-Finance and Administration,
Treasurer and Secretary
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENTS OF OPERATIONS ON PAGES 3 AND 4 OF THE COMPANY'S 10-QSB.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Mar-31-1997
<CASH> 1275
<SECURITIES> 1197
<RECEIVABLES> 1822
<ALLOWANCES> 501
<INVENTORY> 1370
<CURRENT-ASSETS> 5038
<PP&E> 8074
<DEPRECIATION> 2923
<TOTAL-ASSETS> 11994
<CURRENT-LIABILITIES> 1327
<BONDS> 0
0
0
<COMMON> 20
<OTHER-SE> 5773
<TOTAL-LIABILITY-AND-EQUITY> 11994
<SALES> 3261
<TOTAL-REVENUES> 3261
<CGS> 2470
<TOTAL-COSTS> 3203
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 83
<INCOME-TAX> 9
<INCOME-CONTINUING> 74
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 74
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
