SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
Amendment No. 1 to Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 9, 2000
REINHOLD INDUSTRIES,INC.
- -----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 0-18434 13-2596288
- -----------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
12827 EAST IMPERIAL HWY., SANTA FE SPRINGS, CA 90670
- -----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (562) 944-3281
N/A
- -----------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 9, 2000, Reinhold Industries, Inc. (the "Company"), through
its wholly-owned subsidiary, Samuel Bingham Enterprises, Inc., an Indiana
corporation, purchased substantially all of the assets, including real, personal
and intellectual properties, and assumed certain liabilities of Samuel Bingham
Company, an industrial and graphic arts roller manufacturing and supplying
business, headquartered in Bloomingdale, Illinois ("Bingham").
The purchase price paid at closing consisted of cash consideration of
Fifteen Million Dollars ($15,000,000.00) plus additional cash consideration of
Five Hundred and Five Thousand Three Hundred Seventeen Dollars and Three Cents
($505,317.03). The additional cash consideration was based on estimated working
capital as of March 8, 2000 and is subject to change as more fully described in
Section 2.5 of the attached Asset Purchase Agreement. A source of funds for the
purchase price was a five-year term loan with the Bank of America for Eleven
Million Dollars ($11,000,000.00) with the balance being paid from cash on hand.
The purchase was accounted for by the purchase method of accounting.
The asset purchase was pursuant to an Asset Purchase Agreement, dated
as of February 3, 2000, by and among Samuel Bingham Company, a Delaware
corporation, Larry W. Ekstrom, As Trustee Under Declaration of Trust Dated
February 13, 1990, and JoAnn Barrett, and Samuel Bingham Enterprises, Inc., as
amended by that certain Amendment to Asset Purchase Agreement, dated as of March
9, 2000, by and among Samuel Bingham Company, a Delaware corporation, Larry W.
Ekstrom, As Trustee Under Declaration Of Trust Dated February 13, 1990, and
JoAnn Barrett, Samuel Bingham Enterprises, Inc., an Indiana corporation, and
Samuel Bingham Company (Canada) Limited, an Ontario corporation.
The above description of the Asset Purchase Agreement does not purport
to be complete and is qualified in its entirety by the full text of such
document which is attached as an Exhibit hereto.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
SAMUEL BINGHAM COMPANY
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITOR'S REPORT
FOR THE YEAR ENDED
DECEMBER 31, 1998
<PAGE>
CONTENTS
PAGE
Independent Auditor's Report 1
Consolidated Financial Statements:
Balance Sheet 2
Statement of Stockholders' Equity 3
Statement of Income 4
Statement of Cash Flows 5
Notes to Financial Statements 6-10
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Samuel Bingham Company
Bloomingdale, Illinois
We have audited the accompanying consolidated balance sheet of SAMUEL BINGHAM
COMPANY AND SUBSIDIARIES as of December 31, 1998, and the related consolidated
statements of stockholders' equity, income and cash flows for the year then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Samuel Bingham
Company and Subsidiaries as of December 31, 1998, and the results of their
operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
Wolf & Company LLP
Oak Brook, Illinois
April 1, 1999
<PAGE>
SAMUEL BINGHAM COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
--------------------------
December 31, 1998
A S S E T S
Current assets (Notes 4 and 5):
Cash $ 69,071
Accounts receivable:
Trade, less allowance for doubtful accounts of $30,000 3,537,378
Other 2,706
Inventories (Note 2) 1,615,501
Prepaid expenses 143,707
Due from officers/stockholders (Note 3) 127,770
-----------
Total current assets 5,496,133
-----------
Property, plant and equipment (Notes 4 and 5):
Land 301,703
Buildings and improvements 3,228,508
Furniture and equipment 7,463,762
-----------
10,993,973
Less accumulated depreciation 6,087,390
-----------
4,906,583
Other assets:
Cash surrender value of officers' life insurance 234,776
Other 16,497
-----------
251,273
$ 10,653,989
=============
See accompanying notes to consolidated financial statements.
<PAGE>
SAMUEL BINGHAM COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
--------------------------
December 31, 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank notes payable (Note 4) $1,697,000
Current maturities of long-term debt (Note 5) 331,421
Trade accounts payable 1,915,133
Salaries, wages and bonuses 173,088
Taxes other than income taxes 159,743
Vacation pay accrued 338,362
Income taxes payable 82,166
Other accrued expenses 88,306
-----------
Total current liabilities 4,785,219
-----------
Long-term liabilities:
Long-term debt (Note 5) 1,538,140
Deferred employee benefits (Note 6) 123,056
Deferred income taxes 152,325
Obligation under stock redemption (Note 10) 430,789
------------
2,244,310
Stockholders' equity:
Capital stock, par value $3.33 a share; authorized and issued
(including shares in treasury) - 3,409 shares 11,363
Additional paid-in capital 421,470
Retained earnings 4,156,647
Accumulated other comprehensive income 83,412
Treasury stock at cost (1,768 shares) (1,048,432)
-------------
Total stockholders' equity 3,624,460
-------------
$ 10,653,989
=============
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
SAMUEL BINGHAM COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
----------------------------------------------
For the Year Ended December 31, 1998
Capital Stock Accumulated
----------------------------- Additional Other
Shares Paid-in Retained Comprehensive
Issued Amount Capital Earnings Income
----------- --------------- ----------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 3,409 $ 11,363 $ 421,470 $ 3,117,363 $ (44,235)
Net income - - - 1,556,192 -
Other comprehensive income
Foreign currency
translation adjustment - - - - 127,647
Distributions:
Payments to stockholders - - - (516,908) -
---- ---- ---- --------- --------
Comprehensive income
Balance, December 31, 1998 3,409 $ 11,363 $ 421,470 $ 4,156,647 $ 83,412
======== ========== ============= ============= ==========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
Treasury Comprehensive
Stock Total Income
--------------- -------------- ----------------
$(1,048,432) $ 2,457,529
1,556,192 $ 1,556,192
- 127,647 127,647
-------
- (516,908)
---- ---------
$ 1,683,839
===========
$(1,048,432) $ 3,624,460
============ ============
<PAGE>
SAMUEL BINGHAM COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
For the Year Ended December 31, 1998
Income:
Net sales $ 25,011,378
Other, net 344,775
-------------
25,356,153
Costs and expenses:
Cost of products sold 14,936,056
Provision for depreciation and amortization 402,899
Selling and delivery expenses 4,112,700
Administrative and general expenses 3,352,110
Adjustment for restructuring (Note 1) 349,611
Plant closing and moving expense 211,615
Interest expense 434,970
------------
23,799,961
Net income $1,556,192
============
See accompanying notes to consolidated financial statements.
<PAGE>
SAMUEL BINGHAM COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
For the Year Ended December 31, 1998
Cash flows from operating activities:
Net income $1,556,192
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 402,899
Adjustment for restructuring 349,611
Foreign currency translation 147,996
Gain on sale of fixed assets (111,503)
Decrease (increase) in:
Receivables 404,161
Inventories 172,393
Prepaid expenses 55,515
Other assets 1,533
Increase (decrease) in:
Accounts payable (1,081,379)
Accrued expenses and other 33,444
Deferred employee benefits 9,640
------------
Net cash provided by operating activities 1,940,502
------------
Cash flows from investing activities:
Proceeds from sale of fixed assets 212,257
Purchase of property, plant and equipment (246,451)
Increase in cash surrender value of officers life insurance (39,492)
------------
Net cash used by investing activities (73,686)
------------
Cash flows from financing activities:
Proceeds from officer notes 93,530
Net reduction of revolving line of credit (1,103,000)
Principal payments on long-term debt (406,418)
Distributions to stockholders (516,908)
Payments under stock redemption agreement (16,688)
-----------
Net cash used by financing activities (1,949,484)
-----------
Net decrease in cash (82,668)
Cash, beginning of year 151,739
-----------
Cash, end of year $ 69,071
=========
Supplemental disclosure of cash flow information:
Cash paid during year for:
Interest $ 448,393
Income taxes $ 20,058
See accompanying notes to consolidated financial statements.
<PAGE>
SAMUEL BINGHAM COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies
Principles of Consolidation - The consolidated financial statements
include the accounts and transactions of the Company and its
subsidiaries, Samuel Bingham Company (Canada) Limited and Samuel
Bingham Company of Canada (Quebec) Limited. Significant intercompany
accounts and transactions have been eliminated in consolidation.
Effective December 31, 1998, the subsidiaries were liquidated and the
net assets of the aforementioned subsidiaries were merged into the
Company. An adjustment to carrying values of the Canadian operations
was charged to 1998 income in the amount of $349,611.
Nature of Operations - The Company is a manufacturer and distributor of
printing rollers and related products. Facilities are located
throughout the United States and Canada.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Inventories - Inventories are valued at the lower of cost or market.
Cost of inventories is determined by either the last-in, first-out
method or the first-in, first-out method.
Other Comprehensive Income - In June 1997, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 130, Reporting Comprehensive Income. SFAS No. 130
requires that all items of comprehensive income be classified
separately and the accumulated balance of comprehensive income be
reported in the equity section of the financial statements. The Company
adopted SFAS No. 130 during 1998. The Company has one item of
comprehensive income which relates to foreign currency translation
adjustments. The adoption of SFAS No. 130 did not have an effect on the
Company's financial condition.
Depreciation of Property, Plant and Equipment - Depreciation is
computed on the straight-line method for financial reporting purposes
and by accelerated methods for tax purposes, based on the following
estimated useful lives:
Useful Life
-----------
Buildings and improvements 40 years
Furniture and equipment 5-20 years
Foreign Currency Translation - The financial statements of the Canadian
subsidiaries are translated to United States dollars in accordance with
FASB Statement No. 52, Foreign Currency Translation. All balance sheet
accounts are translated at the current exchange rate, and income
statement items are translated at the average exchange rate for the
year; resulting translation adjustments are made directly to a separate
component of stockholders' equity. Certain other transaction
adjustments are reported in income.
<PAGE>
SAMUEL BINGHAM COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
------------------------------------------
2. Inventories
The excess of current cost over the carrying amount of inventories
valued by the last-in, first-out method amounted to approximately
$1,166,361 at December 31, 1998. Inventory costs of the Canadian
operations are stated using the first-in, first-out method and
approximated $335,843 at December 31, 1998.
3. Receivables from Officers/Stockholders
In connection with the Company's election of Subchapter S status during
1986, the stockholders purchased 21% of the outstanding capital stock
of the Company's Canadian subsidiaries in exchange for notes receivable
in the original amount of $163,800. During the current year the notes
were paid in full. Other receivables from stockholders arising during
1998 have no formal terms of repayment and are non-interest bearing.
4. Bank Notes Payable
The bank note payable reflects a line of credit which bears interest at
prime, and is secured by substantially all of the Company's assets. The
maximum amount which can be drawn on the line of credit is $2,800,000
of which $1,500,000 is outstanding at December 31, 1998. The current
agreement expires on May 31, 1999. Certain financial and operating
covenants must be met.
A second note bears interest at the bank's prime rate and is secured by
substantially all of the Company's assets. The amount due as of
December 31, 1998 was $197,000.
5. Long-term Debt
<TABLE>
<CAPTION>
The Company is liable for the following long-term notes payable:
<S> <C>
Note payable, dated May, 1993, payable in monthly installments of $1,488, plus
interest at 70% of prime rate with a floor of 5%. Final payment due September,
2000, secured by equipment. $ 31,250
Note payable, dated April, 1994, payable in quarterly installments of $25,000, plus
interest at prime plus one-quarter percent. Final payment due April, 1999,
secured by substantially all of the Company's assets. 25,000
Note payable, dated November, 1995, payable in monthly installments of $1,653, plus
interest at 8.25%. Final payment due November, 2000, secured by substantially all
of the Company's assets. 236,339
Note payable, dated June, 1996, payable in monthly installments of $5,167, plus
interest at 8.55%. Final payment due May, 2003, secured by substantially all of
the Company's assets. 459,823
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SAMUEL BINGHAM COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
------------------------------------------
5. Long-term Debt (Cont.)
--------------
<S> <C>
Note payable, dated May, 1996, payable in monthly installments of $13,060, plus
interest at 8.66%. Final payment due May, 2003, secured by substantially all of
the Company's assets. 692,155
Note payable, dated June, 1997, payable in monthly installments of $4,167, plus
interest at prime. Final payment due June, 2002, secured by substantially all of
the Company's assets. 424,994
-------------
1,869,561
Less current portion 331,421
-------------
$ 1,538,140
</TABLE>
Aggregate principal maturities of long-term debt for the years
succeeding December 31, 1998 are as follows:
1999 $ 331,421
2000 498,624
2001 268,728
2002 493,706
2003 277,082
----------
$1,869,561
==========
6. Retirement Plans
The Company has two plans to provide retirement benefits for eligible
employees. Generally, the Company's funding policy is to contribute the
ERISA minimum required contribution. Benefits for retired or terminated
employees or their beneficiaries are based on the employees' highest
earnings during any five consecutive calendar years of employment.
The following table sets forth the plans' funded status and amounts
recognized in the Company's balance sheet at December 31, 1998, related
to the retirement plans:
Benefit obligation at December 31 $1,990,226
Fair value of plan assets at December 31 2,142,665
----------
Funded status $ (152,439)
==========
<PAGE>
SAMUEL BINGHAM COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
------------------------------------------
6. Retirement Plans
Weighted-average asumptions as of December 31:
Discount rate 8.00%
Expected return on plan assets 8.00%
Rate of compensation increase N/A
The Company also sponsors an employee 401(k) plan, whereby the Company
may contribute a percentage of employee contributions to the Plan at
the discretion of the Company's Board of Directors. In 1998, Company
contributions amounted to $26,163.
The Company has entered into a non-qualified agreement to provide
retirement benefits to a former employee. Interest is accruing on the
liability at 6% to 11%. Total interest expense for the year ended
December 31, 1998 was $9,640. The remaining benefit (all vested) was
$123,056 at December 31, 1998.
7. Subchapter S Election and Income Taxes
During December, 1986, the stockholders elected, under the provisions
of Subchapter S of the Internal Revenue Code, to have the Company's
income from United States operations for years subsequent to 1986
included in their own income for federal and certain state income tax
purposes. Accordingly, the Company is not subject to United States
federal and certain state income taxes. It is the intention of the
Board of Directors to make distributions to the stockholders for the
individual taxes attributable to the Company's United States income.
The Company remains liable for certain state and Canadian income taxes.
Deferred tax liability is provided for temporary differences on state
returns and other potential liabilities for federal corporate taxes.
8. Commitments
The Company leases real estate and vehicles used in operations. Rental
expense amounted to $745,790 in 1998, including charges for automobile
and truck rentals of $377,632.
Future minimum rental commitments under noncancelable operating leases
at December 31, 1998, are approximately as follows:
1999 $ 312,919
2000 284,965
2001 280,903
2002 277,532
2003 223,690
Thereafter 289,553
----------
$1,669,562
==========
<PAGE>
SAMUEL BINGHAM COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
------------------------------------------
8. Commitments (Cont.)
-----------
Certain lease agreements for office and plant space provide for
increased rental payments dependent upon future real estate taxes and
other operating cost increases. Options to renew for periods ranging
from three to five years are contained in several leases.
The Company has agreed to purchase, under certain circumstances, all of
the outstanding capital stock of any shareholder. The purchase price is
to equal book value, as defined, and is payable under various methods
as described in the agreement.
9. Medical Benefits
The Company is self-insured for medical benefits to employees. The
amount charged to expense for group insurance in 1998 was $286,251,
based upon actual and projected claims incurred. No accrual for
unprocessed claims was reported at December 31, 1998 as claims are
being paid weekly as presented.
10. Stock Redemption
During 1994 a stockholder retired, resulting in the redemption of 37.9%
of the Company's outstanding common stock. As consideration for the
redemption, a lifetime annual annuity of $50,000 was entered into,
along with other considerations. Total present value of the
consideration at the time of redemption was $964,818. At December 31,
1998, the remaining liability has been stated at its present value of
$447,477, of which $16,688 is included with other accrued expenses in
current liabilities.
<PAGE>
SAMUEL BINGHAM COMPANY
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITOR'S REPORT
FOR THE YEAR ENDED
DECEMBER 31, 1999
<PAGE>
CONTENTS
PAGE
Independent Auditor's Report 1
Financial Statements:
Balance Sheet 2
Statement of Stockholders' Equity 3
Statement of Income 4
Statement of Cash Flows 5-6
Notes to Financial Statements 7-11
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Samuel Bingham Company
Bloomingdale, Illinois
We have audited the accompanying balance sheet of SAMUEL BINGHAM COMPANY as of
December 31, 1999, and the related statements of stockholders' equity, income
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Samuel Bingham Company as of
December 31, 1999, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
Wolf & Company LLP
Oak Brook, Illinois
March 13, 2000
<PAGE>
SAMUEL BINGHAM COMPANY
BALANCE SHEET
---------------
December 31, 1999
A S S E T S
Current assets (Notes 4 and 5):
Cash $ 146,639
Accounts receivable:
Trade, less allowance for doubtful
accounts of $30,000 3,498,491
Other 58,324
Inventories (Note 2) 1,662,390
Prepaid expenses 427,378
Due from stockholder (Note 3) 332,312
------------
Total current assets 6,125,534
------------
Property, plant and equipment (Notes 4 and 5):
Land 235,953
Buildings and improvements 2,277,052
Furniture and equipment 7,661,608
------------
10,174,613
Less accumulated depreciation 5,636,787
------------
4,537,826
Other assets:
Cash surrender value of officers' life insurance 2,301
Other 40,843
------------
43,144
$ 10,706,504
=============
See accompanying notes to consolidated financial statements.
<PAGE>
SAMUEL BINGHAM COMPANY
BALANCE SHEET
---------------
December 31, 1999
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank note payable (Note 4) $2,490,000
Current maturities of long-term debt (Note 5) 498,623
Note payable - former stockholder (Note 10) 278,310
Trade accounts payable 2,077,212
Salaries, wages and bonuses 115,122
Taxes other than income taxes 126,699
Vacation pay accrued 335,727
Income taxes payable 36,626
Current portion of obligation under stock redemption 17,997
Other accrued expenses 52,242
----------
Total current liabilities 6,028,558
----------
Long-term liabilities:
Long-term debt (Note 5) 1,039,517
Note payable - former stockholder (Note 10) 459,137
Deferred income taxes 152,325
Obligation under stock redemption (Note 10) 412,792
----------
2,063,771
Stockholders' equity:
Capital stock, par value $3.33 a share; authorized and issued
(including shares in treasury) - 2,788 shares 9,295
Additional paid-in capital 262,155
Retained earnings 3,396,317
Accumulated other comprehensive loss (5,160)
Treasury stock at cost (1,768 shares) (1,048,432)
----------
Total stockholders' equity 2,614,175
----------
$ 10,706,504
=============
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
SAMUEL BINGHAM COMPANY
STATEMENT OF STOCKHOLDERS' EQUITY
---------------------------------
For the Year Ended December 31, 1999
Capital Stock Accumulated
----------------------------- Additional Other
Shares Paid-in Retained Comprehensive
Issued Amount Capital Earnings Income (Loss)
----------- ---------------- -------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1998 3,409 $ 11,363 $ 421,470 $ 4,156,647 $ 83,412
Net income - - 1,965,547 -
Other comprehensive income:
Foreign currency
translation adjustment - - - (88,572)
Redemption of capital stock (621) (2,068) (159,315) (1,223,223) -
Distributions:
Payments to stockholders - - (1,502,654) -
------ ------ ----------- ---------- ---------
Comprehensive income
Balance, December 31, 1999 2,788 $ 9,295 $ 262,155 $ 3,396,317 $ (5,160)
====== ======== ========== =========== =========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
Treasury Comprehensive
Stock Total Income
----------------- -------------- -----------------
$(1,048,432) $ 3,624,460
1,965,547 $1,965,547
- (88,572) (88,572)
--------
- (1,384,606)
- (1,502,654)
------------ --------------
$ 1,876,975
===========
$(1,048,432) $ 2,614,175
============ ============
<PAGE>
SAMUEL BINGHAM COMPANY
STATEMENT OF INCOME
-------------------
For the Year Ended December 31, 1999
Income:
Net sales $ 24,206,452
Other, net 455,821
-------------
24,662,273
Costs and expenses:
Cost of products sold 14,818,760
Provision for depreciation and amortization 383,461
Selling and delivery expenses 4,235,187
Administrative and general expenses 2,927,730
Plant closing and moving expense 6,018
Interest expense 325,570
-----------
22,696,726
Net income $1,965,547
============
See accompanying notes to consolidated financial statements.
<PAGE>
SAMUEL BINGHAM COMPANY
STATEMENT OF CASH FLOWS
-------------------------
For the Year Ended December 31, 1999
Cash flows from operating activities:
Net income $ 1,965,547
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 383,461
Foreign currency translation (96,161)
Gain on sale of fixed assets (332,865)
Decrease (increase) in:
Receivables (16,731)
Inventories (46,889)
Prepaid expenses (283,671)
Other assets (26,808)
Increase (decrease) in:
Accounts payable 91,376
Accrued expenses and other (157,252)
Deferred employee benefits 10,459
---------
Net cash provided by operating activities 1,490,466
---------
Cash flows from investing activities:
Proceeds from sale of fixed assets 1,065,000
Purchase of property, plant and equipment (666,085)
Decrease in cash surrender value of officers life insurance 232,475
----------
Net cash provided by investing activities 631,390
----------
Cash flows from financing activities
Redemption of stock (215,721)
Net increase in revolving line of credit 793,000
Principal payments on long-term debt (331,421)
Distributions to stockholders (1,498,670)
Payments on notes payable-officer (773,479)
Payments under stock redemption agreement (17,997)
-----------
Net cash used by financing activities (2,044,288)
-----------
Net increase in cash 77,568
Cash, beginning of year 69,071
-----------
Cash, end of year $ 146,639
===========
See accompanying notes to consolidated financial statements.
<PAGE>
SAMUEL BINGHAM COMPANY
STATEMENT OF CASH FLOWS (CONT.)
-------------------------
For the Year Ended December 31, 1999
Supplemental disclosure of cash flow information:
Cash paid during year for:
Interest $ 324,033
Income taxes $ 72,290
Non-cash financing activities:
- -----------------------------
During the year the Company redeemed stock for $1,384,606 and settled other
liabilities to the former shareholder, of which $1,377,412 was in the
form of a note payable.
See accompanying notes to consolidated financial statements.
<PAGE>
SAMUEL BINGHAM COMPANY
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
Nature of Operations - The Company is a manufacturer and distributor of
printing rollers and related products. Facilities are located throughout
the United States and Canada.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Inventories - Inventories are valued at the lower of cost or market. Cost
of inventories is determined by either the last-in, first-out method or
the first-in, first-out method.
Other Comprehensive Income - Statement of Financial Accounting Standards
(SFAS) No. 130, Reporting Comprehensive Income, requires that all items
of comprehensive income be classified separately and the accumulated
balance of comprehensive income be reported in the equity section of the
financial statements. The Company has one item of comprehensive income
which relates to foreign currency translation adjustments.
Depreciation of Property, Plant and Equipment - Depreciation is computed
on the straight-line method for financial reporting purposes and by
accelerated methods for tax purposes, based on the following estimated
useful lives:
Useful Life
-----------
Buildings and improvements 40 years
Furniture and equipment 5-20 years
Foreign Currency Translation - The financial statements of the Canadian
subsidiaries are translated to United States dollars in accordance with
FASB Statement No. 52, Foreign Currency Translation. All balance sheet
accounts are translated at the current exchange rate, and income
statement items are translated at the average exchange rate for the year;
resulting translation adjustments are made directly to a separate
component of stockholders' equity. Certain other translation adjustments
are reported in income.
2. Inventories
The excess of current cost over the carrying amount of inventories valued
by the last-in, first-out method amounted to approximately $944,150 at
December 31, 1999. Inventory costs of the Canadian operations are stated
using the first-in, first-out method and approximated $261,000 at
December 31, 1999.
<PAGE>
SAMUEL BINGHAM COMPANY
NOTES TO FINANCIAL STATEMENTS (CONT.)
-----------------------------
3. Receivable from Stockholder
Receivable from stockholder has no formal terms of repayment and is
non-interest bearing. It is anticipated that the balance at December 31,
1999 will be settled in 2000.
4. Bank Notes Payable
The bank note payable reflects a line of credit which bears interest at
prime, and is secured by substantially all of the Company's assets. The
maximum amount which can be drawn on the line of credit is $2,800,000 of
which $2,490,000 is outstanding at December 31, 1999. The current
agreement expires on May 31, 2000. Certain financial and operating
covenants must be met. Retired in March 2000 (See Note 11).
5. Long-term Debt
<TABLE>
<CAPTION>
The Company is liable for the following long-term notes payable:
<S> <C>
Note payable, dated May 1993, payable in monthly installments of $1,488, plus
interest at 70% of prime rate with a floor of 5%. Final payment due September
2000, secured by equipment. $ 13,393
Note payable, dated November 1995, payable in monthly installments of $1,653, plus
interest at 8.25%. Final payment due November 2000, secured by substantially all
of the Company's assets. 216,503
Note payable, dated June 1996, payable in monthly installments of $5,167, plus
interest at 8.55%. Final payment due May 2003, secured by substantially all of
the Company's assets. 397,819
Note payable, dated May 1996, payable in monthly installments of $13,060, plus
interest at 8.66%. Final payment due May 2003, secured by substantially all of
the Company's assets. 535,435
Note payable, dated June 1997, payable in monthly installments of $4,167, plus
interest at prime. Final payment due June 2002, secured by substantially all of
the Company's assets. 374,990
-------------
1,538,140
Less current portion 498,623
-------------
$ 1,039,517
<FN>
Long-term debt listed above was retired in March 2000 following the
transaction described in Note 11.
</FN>
</TABLE>
<PAGE>
SAMUEL BINGHAM COMPANY
NOTES TO FINANCIAL STATEMENTS (CONT.)
-----------------------------
5. Long-term Debt (Cont.)
--------------
Aggregate principal maturities of long-term debt for the years succeeding
December 31, 1999 are as follows:
2000 $ 498,623
2001 268,728
2002 493,706
2003 277,083
----------
$1,538,140
==========
6. Retirement Plans
The Company has two plans to provide retirement benefits for eligible
employees. Generally, the Company's funding policy is to contribute the
ERISA minimum required contribution. Benefits for retired or terminated
employees or their beneficiaries are based on the employees' highest
earnings during any five consecutive calendar years of employment.
The following table sets forth the plans' funded status and amounts
recognized in the Company's balance sheet at December 31, 1999, related
to the retirement plans:
Benefit obligation at December 31 $1,965,201
Fair value of plan assets at December 31 2,388,027
----------
Funded status 422,826
Unrecognized transition asset (53,979)
Prior service costs 166,184
Unrecognized actual gain (396,142)
----------
Prepaid pension cost at December 31, 1999 $ 139,549
==========
The net periodic pension cost for 1999 was $24,002.
Weighted-average asumptions as of December 31:
Discount rate 8.00%
Expected return on plan assets 8.00%
Rate of compensation increase N/A
The Company also sponsors an employee 401(k) plan, whereby the Company
may contribute a percentage of employee contributions to the Plan at the
discretion of the Company's Board of Directors. In 1999 there were no
Company contributions.
<PAGE>
SAMUEL BINGHAM COMPANY
NOTES TO FINANCIAL STATEMENTS (CONT.)
-----------------------------
6. Retirement Plans (Cont.)
----------------
The Company has entered into a non-qualified agreement to provide
retirement benefits to a former stockholder. Interest is accruing on the
liability at 6% to 11%. Total interest expense for the year ended
December 31, 1999 was $10,460. The remaining benefit (all vested) was
$133,516 at December 31, 1999 (See Note 10).
7. Subchapter S Election and Income Taxes
During December 1986, the stockholders elected, under the provisions of
Subchapter S of the Internal Revenue Code, to have the Company's income
from United States operations for years subsequent to 1986 included in
their own income for federal and certain state income tax purposes.
Accordingly, the Company is not subject to United States federal and
certain state income taxes. It is the intention of the Board of Directors
to make distributions to the stockholders for the individual taxes
attributable to the Company's United States income. The Company remains
liable for certain state and Canadian income taxes. Deferred tax
liability is provided for temporary differences on state returns and
other potential liabilities for federal corporate taxes.
8. Commitments
The Company leases real estate used in operations. Rental expense
amounted to $376,781 in 1999.
Future minimum rental commitments under noncancelable operating leases at
December 31, 1999, are approximately as follows:
2000 $ 353,766
2001 339,220
2002 337,712
2003 214,790
2004 79,665
Thereafter 129,352
----------
$1,454,505
==========
Certain lease agreements for office and plant space provide for increased
rental payments dependent upon future real estate taxes and other
operating cost increases. Options to renew for periods ranging from three
to five years are contained in several leases.
The Company has agreed to purchase, under certain circumstances, all of
the outstanding capital stock of any shareholder. The purchase price is
to equal book value, as defined, and is payable under various methods as
described in the agreement.
<PAGE>
SAMUEL BINGHAM COMPANY
NOTES TO FINANCIAL STATEMENTS (CONT.)
-----------------------------
9. Medical Benefits
The Company is self-insured for medical benefits to employees. The amount
charged to expense for group insurance in 1999 was $373,943, based upon
actual and projected claims incurred. No accrual for unprocessed claims
was reported at December 31, 1999 as claims are being paid weekly as
presented.
10. Stock Redemptions
Note Payable
On January 1, 1999, a stockholder owning 37.8% of the then-outstanding
capital stock redeemed his shares in the Company. As consideration for
the redemption, and settlement of other amounts due him, the shareholder
received cash and life insurance cash value of $190,157, and a note
payable in three installments of $459,137 due on April 26, 1999, 2000 and
2001, respectively. The April 2000 payment was reduced during 1999 for
payments of $314,343 made on behalf of the redeemed shareholder. The
outstanding balance at December 31, 1999 is $737,447, which includes
amounts previously accrued under a deferred compensation agreement (See
Note 6).
Other Obligation
Another former shareholder is being paid $50,000 per year for stock
redeemed in 1994. Payments are due under a lifetime annuity and are
stated at the present value of the projected payments. The outstanding
balance at December 31, 1999 is $430,789, including $17,997 reported as a
current liability.
11. Subsequent Event
On March 9, 2000, the Company sold its operating assets, including
receivables, inventories, prepaids, property, plant and equipment, net of
accounts payable and other accrued expenses, to a new entity - Samuel
Bingham Enterprises, Inc., a wholly-owned subsidiary of Reinhold
Industries, Inc. The Company retained liability for bank debt described
in Notes 4 and 5, and liabilities to former stockholders described in
Note 10. The purchase price for the net assets sold was $15,500,000.
Following the sale and liquidation of retained liabilities, net cash was
distributed to shareholders, and the Company is in the process of being
liquidated.
<PAGE>
(b) Pro forma Financial Information.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial statements as of
December 31, 1999 and for the year ended December 31, 1999 are filed herewith:
Unaudited Pro Forma Condensed Combined Balance Sheet
Unaudited Pro Forma Condensed Combined Statement of Operations
The following unaudited pro forma condensed combined statement of operations for
the year ended December 31, 1999, give effect to the acquisition of the Samuel
Bingham Company (`SBC") by Samuel Bingham Enterprises, Inc., a wholly-owned
subsidiary of Reinhold Industries, Inc. ("the Company"), as if the transaction
had occurred at the beginning of the prospective period rather than the actual
date of March 9, 2000. The pro forma information is based on the historical
financial statements of SBC and the Company giving effect to the transaction
under the purchase method of accounting and the adjustments and assumptions set
forth in the accompanying notes to the unaudited pro forma condensed combined
financial statements.
The unaudited pro forma condensed combined statement of operations do not
necessarily reflect the results of operations of the Company as if the
acquisition had actually occurred on the date indicated or which may be obtained
in the future. The unaudited pro forma condensed combined financial statements
presented should be read in conjunction with the financial statements and
related notes of the Company included in the Annual Report (Form 10-KSB) and the
Quarterly Report (Form 10-Q) filed on March 27, 2000 and May 12, 2000,
respectively, with the Securities and Exchange Commission.
<PAGE>
<TABLE>
<CAPTION>
REINHOLD INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
DECEMBER 31, 1999
(Amounts in thousands)
Pro forma Pro forma
Reinhold SBC Adjustments Combined
-------- ------ ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivilents $ 9,419 $ 147 $ (3,322) $ 6,244
Accounts receivable 4,077 3,498 7,575
Inventories 4,085 1,662 5,747
Prepaid expenses and other current assets 1,157 819 (332) (a) 1,644
------ ------ ------ ------
Total current assets 18,738 6,126 (3,654) 21,210
Property, plant and equipment, net 5,726 4,538 10,264
Goodwill, net of amortization - - 6,759 (f) 6,759
Other assets, less applicable amortization 770 43 (43) (a) 770
------ ------ ------ ------
$ 25,234 $ 10,707 $ 3,062 $ 39,003
====== ====== ====== ======
Liabilities and stockholders equity
Current liabilities:
Accounts payable $ 1,825 $ 2,077 $ - $ 3,902
Accrued expenses 4,719 685 (54) (a) 5,350
Notes payable 2,768 (2,768) (a) -
Current installments of long-term debt 503 499 1,751 (d) 2,753
------ ------ ------ ------
Total current liabilities 7,047 6,029 (1,071) 12,005
Long-term debt, less current portion 1,125 1,040 6,460 (e) 8,625
Other long-term liabilities 204 1,024 (1,024) (a) 204
Stockholders equity:
Common stock 20 9 (9) (a) 20
Additional paid-in capital 7,791 262 (262) (a) 7,791
Retained earnings 9,227 3,396 (2,085) 10,538
Accumulated other comprehensive loss (180) (5) 5 (a) (180)
Treasury stock (1,048) 1,048 (a) -
------ ------ ------ ------
Net stockholders equity 16,858 2,614 (1,303) 18,169
------ ------ ------ ------
$ 25,234 $ 10,707 $ 3,062 $ 39,003
====== ====== ====== ======
<FN>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
REINHOLD INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF EARNINGS
YEAR ENDED DECEMBER 31, 1999
(Amounts in thousands, except per share data)
Pro forma Pro forma
Reinhold SBC Adjustments Combined
-------- ------ ----------- --------
<S> <C> <C> <C> <C>
Net sales $ 39,140 $ 24,206 $ - $ 63,346
Cost of sales 28,357 14,819 - 43,176
------ ------ ------ ------
Gross profit 10,783 9,387 - 20,170
Selling, general and administrative expenses 5,079 7,095 160 (c) 12,334
------ ------ ------ ------
Operating income 5,704 2,292 (160) 7,836
Interest (expense) income, net 100 (326) (454) (b) (680)
------ ------ ------ ------
Income before taxes 5,804 1,966 (614) 7,156
Income taxes 763 - 41 (g) 804
------ ------ ------ ------
Net income $ 5,041 $ 1,966 $ (655) $ 6,352
Earnings per share:
Basic $ 2.52 $ 3.18
Diluted $ 2.51 $ 3.17
Weighted average common shares outstanding:
Basic 1,999 1,999
Diluted 2,006 2,006
<FN>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
</FN>
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(In thousands, except where indicated)
(a) Assets not purchased and liabilities not assumed in purchase transaction.
(b) Interest expense on note payable and long-term debt prior to acquisition
date ($326) offset by estimated interest expense at 8.0% on $11.0 million
loan to fund portion of purchase price ($780).
(c) One-time gain on sale of fixed assets ($333) offset by amortization of
goodwill ($173).
(d) Current portion of $11.0 million loan to fund portion of purchase price
($2.25 million) less current portion of debt not assumed in purchase
transaction ($499).
(e) $11.0 million loan to fund portion of purchase price, less current portion,
less $1.25 million of subsequent repayments.
(f) Goodwill at acquisition date of January 1, 1999 ($6.932 million) less
subsequent amortization ($173). Goodwill is amortized over 40 years.
(g) Estimated income taxes at Reinhold's current effective tax rate of 3%.
<PAGE>
(c) Exhibits.
10.1. Asset Purchase Agreement, dated as of February 3, 2000, by and
among Samuel Bingham Company, a Delaware corporation, Larry W.
Ekstrom, As Trustee Under Declaration Of Trust Dated February
13, 1990, and Joann Barrett, an Illinois resident (together,
the "Stockholders"), and Samuel Bingham Enterprises, Inc., an
Indiana corporation. (a) (b)
10.2 Amendment To Asset Purchase Agreement, dated as of March 9,
2000, by and among Samuel Bingham Company, a Delaware
corporation, Larry W. Ekstrom, As Trustee Under Declaration Of
Trust Dated February 13, 1990, and Joann Barrett, Samuel
Bingham Enterprises, Inc., an Indiana corporation, and Samuel
Bingham Company (Canada) Limited, an Ontario corporation. (b)
(a) The schedules to this agreement were omitted in reliance upon Item
601(b)(2) of Regulation S-K. The Company agrees to furnish a copy of any
omitted schedule to the Commission upon request.
(b) Previously filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
REINHOLD INDUSTRIES, INC.
Date: May 23, 2000 By /s/ MICHAEL T. FURRY
Michael T. Furry
Chief Executive Officer
