-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KHMWnbtckYk6Mzgk55QHNZzHg5FLcTRmy21P8cHSpPamalWCMgW1gi3BrOL45OuR 3sRITpMk8a+Ji/Vc2GCU9g== 0000862255-00-000005.txt : 20000524 0000862255-00-000005.hdr.sgml : 20000524 ACCESSION NUMBER: 0000862255-00-000005 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000309 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000523 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REINHOLD INDUSTRIES INC/DE/ CENTRAL INDEX KEY: 0000862255 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728] IRS NUMBER: 132596288 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-18434 FILM NUMBER: 641935 BUSINESS ADDRESS: STREET 1: 12827 EAST IMPERIAL HWY CITY: SANTA FE SPRINGS STATE: CA ZIP: 90670-4713 BUSINESS PHONE: 5629443281 MAIL ADDRESS: STREET 1: 12827 EAST IMPERIAL HWY CITY: SANTA FE SPRINGS STATE: CA ZIP: 90670 FORMER COMPANY: FORMER CONFORMED NAME: KEENE CORP /DE/ DATE OF NAME CHANGE: 19930328 8-K/A 1 98/99 BINGHAM FINANCIAL STMTS/1999 PRO FORMA INFO. 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.) 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. 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 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 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 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. 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.
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 ----------- --------------- ----------------- -------------- --------------- 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 ======== ========== ============= ============= ========== See accompanying notes to consolidated financial statements.
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 ============ ============ 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. 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. 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. 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
The Company is liable for the following long-term notes payable: 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
SAMUEL BINGHAM COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) ------------------------------------------ 5. Long-term Debt (Cont.) -------------- 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
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) ========== 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 ========== 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. SAMUEL BINGHAM COMPANY FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT FOR THE YEAR ENDED DECEMBER 31, 1999 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 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 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. 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.
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) ----------- ---------------- -------------- -------------- ----------------- 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) ====== ======== ========== =========== ========= See accompanying notes to consolidated financial statements.
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 ============ ============ 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. 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. 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. 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. 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
The Company is liable for the following long-term notes payable: 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 Long-term debt listed above was retired in March 2000 following the transaction described in Note 11.
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. 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. 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. (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.
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 -------- ------ ----------- -------- 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 ====== ====== ====== ====== See accompanying notes to unaudited pro forma condensed combined financial statements.
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 -------- ------ ----------- -------- 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 See accompanying notes to unaudited pro forma condensed combined financial statements.
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%. (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. 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 -----END PRIVACY-ENHANCED MESSAGE-----