-----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, Q+at74/SzX4klzcT4WgzTEokxT4jCqULwqepv74unNBRGVW2XlsXpHwSxAWzxcbA B0HLJbS5gKh28Os5tLdz8w== 0000862255-04-000042.txt : 20041108 0000862255-04-000042.hdr.sgml : 20041108 20041105181249 ACCESSION NUMBER: 0000862255-04-000042 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041108 DATE AS OF CHANGE: 20041105 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18434 FILM NUMBER: 041123861 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 10-Q 1 q3200410q.txt U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-Q (Mark One) [X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: September 30, 2004 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from ____________ to _____________ Commission file number: 0-18434 REINHOLD INDUSTRIES, INC. - -------------------------------------------------------------------------------- (Exact name of small business issuer as specified in charter) Delaware 13-2596288 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 12827 East Imperial Hwy, Santa Fe Springs, CA 90670 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code (562) 944-3281 - -------------------------------------------------------------------------------- Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [ X ] NO [ ] Check whether the issuer has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to distribution of securities under a plan confirmed by the Court. YES [ X ] NO [ ] State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: Class A Common Stock, Par Value $.01 - 3,194,678 shares as of November 1, 2004. REINHOLD INDUSTRIES, INC. INDEX PART I - FINANCIAL INFORMATION PAGE Item 1. Condensed Consolidated Statements of Operations 3 Condensed Consolidated Balance Sheets 5 Condensed Consolidated Statements of Cash Flows 6 Notes to Condensed Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 14 Item 3. Quantitative and Qualitative Disclosures About Market Risk 21 Item 4. Controls and Procedures 21 PART II - OTHER INFORMATION 22 SIGNATURES 26 EXHIBITS 27 REINHOLD INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data) (Unaudited) Three Months Ended September 30, 2004 2003 ---- ---- Net sales $13,841 $11,988 Cost of goods sold 9,114 7,815 ----- ----- Gross profit 4,727 4,173 Selling, general and administrative expenses 2,386 1,969 ----- ----- Operating income 2,341 2,204 Interest income, net 58 14 ----- ----- Income before income taxes 2,399 2,218 Income tax expense 820 784 ------ ------- Income from continuing operations 1,579 1,434 ------ ------ Discontinued operations: Loss from operations of discontinued component (4,528) (347) Income tax benefit 1,195 124 ------ ------- Loss on discontinued operations (3,333) (223) ------ ------- Net income (loss) ($ 1,754) $ 1,211 ======= ======== Basic earnings per share - continuing operations $ 0.52 $ 0.49 Diluted earnings per share - continuing operations $ 0.50 $ 0.46 Basic (loss) per share - discontinued operations ($ 1.10) ($ 0.08) Diluted (loss) per share - discontinued operations ($ 1.10) ($ 0.08) Basic earnings (loss) per share ($ 0.58) $ 0.41 Diluted earnings (loss) per share ($ 0.58) $ 0.39 Weighted average common shares outstanding - basic 3,046 2,930 Weighted average common shares outstanding - diluted 3,181 3,144 Dividends per common share $ 0.50 $ 0.00 See accompanying notes to condensed consolidated financial statements REINHOLD INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data) (Unaudited) Nine Months Ended September 30, 2004 2003 ---- ---- Net sales $41,988 $37,477 Cost of goods sold 27,927 24,050 ------ ------ Gross profit 14,061 13,427 Selling, general and administrative expenses 6,755 5,578 ----- ----- Operating income 7,306 7,849 Interest income, net 92 32 ------ ----- Income before income taxes 7,398 7,881 Income tax expense 2,574 2,839 ------ ------- Income from continuing operations 4,824 5,042 ------ ------- Discontinued operations: Loss from operations of discontinued component (5,200) (664) Income tax benefit 1,487 237 ------ ------- Loss on discontinued operations (3,713) (427) ------- ------- Net income $ 1,111 $ 4,615 ======= ======== Basic earnings per share - continuing operations $ 1.62 $ 1.72 Diluted earnings per share - continuing operations $ 1.57 $ 1.63 Basic (loss) per share - discontinued operations ($ 1.25) ($ 0.14) Diluted (loss) per share - discontinued operations ($ 1.25) ($ 0.14) Basic earnings per share $ 0.37 $ 1.58 Diluted earnings per share $ 0.36 $ 1.49 Weighted average common shares outstanding - basic 2,979 2,927 Weighted average common shares outstanding - diluted 3,079 3,094 Dividends per common share $ 0.50 $ 0.00 See accompanying notes to condensed consolidated financial statements REINHOLD INDUSTRIES, INC CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except per share data) (Unaudited) September 30, 2004 December 31, 2003 ASSETS Current assets: Cash and cash equivalents $ 12,331 $ 6,172 Accounts receivable 6,873 8,584 Inventories 9,514 7,472 Other current assets 2,448 3,024 ------- ------- Total current assets 31,166 25,252 Property, plant and equipment, net 9,124 12,664 Goodwill 2,521 3,786 Deferred Charges 1,930 1,915 Other assets 154 173 ------- -------- $ 44,895 $ 43,790 ====== ====== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,152 $ 3,414 Accrued expenses 3,139 3,881 Current portion - long term debt 47 102 ------ ------ Total current liabilities 7,338 7,397 Long-term pension liability 6,978 6,978 Long term debt - less current portion - 30 Other long term liabilities 311 319 Commitments and contingencies Stockholders' equity: Preferred stock: Authorized: 250,000 shares Issued and outstanding: None - - Common stock, $0.01 par value: Class A - Authorized: 4,750,000 shares Issued and outstanding: 3,194,678 shares and 2,935,201 shares, respectively 32 29 Additional paid-in capital 29,981 28,303 Retained earnings 7,235 7,721 Accumulated other comprehensive loss (6,980) (6,987) -------- -------- Net stockholders' equity 30,268 29,066 ------ ------- $ 44,895 $ 43,790 ====== ====== See accompanying notes to condensed consolidated financial statements REINHOLD INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited) Nine Months Ended September 30, 2004 2003 ---- ---- Cash flow from operating activities: Income from continuing operations $ 4,824 $ 5,042 Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Depreciation 1,043 937 Additions to paid-in capital resulting from tax benefits 90 1,180 Non-cash compensation 54 36 Changes in assets and liabilities: Accounts receivable 1,596 1,024 Inventories (1,944) (2,173) Other current assets 683 (514) Accounts payable 820 5 Accrued expenses 62 648 Other, net (8) 44 -------- ------- Net cash provided by operating activities 7,220 6,229 Cash flows used in investing activities: Capital expenditures (566) (1,926) ----- ------- Net cash used in investing activities (566) (1,926) Cash flows used in financing activities: Dividends paid (1,597) (9) Proceeds from exercise of stock options 1,534 33 Repayment of long-term debt (85) (102) ---- ------ Net cash used in financing activities (148) (78) Effect of exchange rate changes on cash (7) 205 ------ ------ Cash flows used in discontinued operations (340) (3,309) ----- ------ Net increase in cash and cash equivalents 6,159 1,121 Cash and cash equivalents, beginning of period 6,172 3,037 ----- ------- Cash and cash equivalents, end of period $12,331 $ 4,158 ======= ======= See accompanying notes to condensed consolidated financial statements REINHOLD INDUSTRIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 2004 (Unaudited) DESCRIPTION OF BUSINESS Reinhold Industries, Inc. ("Reinhold" or the "Company") is a manufacturer of advanced custom composite components, sheet molding compounds, and graphic arts and industrial rollers for a variety of applications in the United States and Europe. Reinhold derives revenues from the defense contract industry, the aircraft industry, the printing industry and other commercial industries. USE OF ESTIMATES The Company's consolidated financial statements and related public financial information are based on the application of generally accepted accounting principles ("GAAP"). GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in the external disclosures of the Company including information regarding contingencies, risk and financial condition. The Company believes its use of estimates and underlying accounting assumptions adhere to generally accepted accounting principles and are consistently and conservatively applied. Valuations based on estimates are reviewed for reasonableness and conservatism on a consistent basis throughout the Company. Primary areas where financial information of the Company is subject to the use of estimates, assumptions and the application of judgment include revenues, receivables, inventories, acquisitions, valuation of long-lived and intangible assets, pension and post-retirement benefits, the realizability of deferred tax assets, and foreign exchange translation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. BASIS OF PRESENTATION The accompanying financial statements of the Company for the three and nine months ended September 30, 2004 and 2003 are unaudited. The financial statements consolidate the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. In the opinion of management, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments consisted only of normal recurring items. Interim results are not necessarily indicative of results for a full year. The condensed financial statements and notes are presented as permitted by Form 10-Q and, therefore, should be read in conjunction with the Company's annual report on Form 10-K for the year ended December 31, 2003. Notes to Condensed Consolidated Financial Statements (Continued) INVENTORIES Inventories are stated at the lower of cost or market on a first-in, first-out (FIFO) basis. Inventoried costs relating to long-term contracts and programs are stated at the actual production costs, including factory overhead, initial tooling and other related non-recurring costs incurred to date, reduced by amounts related to revenue recognized on units delivered. The components of inventory are as follows (in thousands): September 30, 2004 December 31, 2003 - -------------------------------------------------------------------------------- Raw material $ 7,303 5,236 Work-in-process 1,711 1,843 Finished goods 500 393 - ------------------------------------------------------------------------------- Total $ 9,514 7,472 EARNINGS PER COMMON SHARE The Company presents basic and diluted earnings per share ("EPS"). Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the assumed conversion of all dilutive securities, consisting of employee stock options and shares to be issued to Directors. On April 30, 2003, the Board of Directors approved the distribution of a 10% stock dividend to shareholders of record as of May 16, 2003. As a result, an additional 265,418 shares were issued on May 29, 2003. All common stock information and earnings per share computations for all periods presented have been adjusted for the stock dividend. The number of stock options outstanding and the exercise price were also adjusted for the impact of the 10% stock dividend. The reconciliations of basic and diluted weighted average shares are as follows (in thousands, except exercise price data): Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 --------------------------------------------- Income from continuing operations $1,579 $1,434 $4,824 $ 5,042 ====== ====== ====== ======= Net income (loss) ($1,754) $1,211 $1,111 $ 4,615 ======= ====== ====== ======= Weighted average shares used in basic computation 3,046 2,930 2,979 2,927 Dilutive effect of stock options 128 210 94 164 Other dilutive shares 7 4 6 3 ------ ----- ----- ----- Weighted average shares used for diluted calculation 3,181 3,144 3,079 3,094 ===== ===== ===== ===== Stock options outstanding 99 355 99 355 Range of exercise price $5.63-$11.36 $5.63-$11.36 $5.63-$11.36 $5.63-$11.36 Notes to Condensed Consolidated Financial Statements (Continued) STOCK OPTION PLAN The Company accounts for its stock-based compensation in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", and has adopted the disclosure-only alternative of Statement of Financial Accounting Standard ("SFAS") No. 123 "Accounting For Stock-Based Compensation", as amended by SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure." The following table illustrates the effect on net income and earnings per share had compensation expense for the employee stock-based plans been recorded based on the fair value method under SFAS No. 123 (in thousands except for per share data):
Three Months Nine Months Ended Sept 30, Ended Sept 30, 2004 2003 2004 2003 - ---------------------------------------------------------------------------------------------------- Net income (loss) as reported ($1,754) $1,211 $1,111 $4,615 - ---------------------------------------------------------------------------------------------------- Deduct, total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects (26) (31) (79) (87) - ----------------------------------------------------------------------------------------------------- Net income (loss), as adjusted ($1,780) $1,180 $1,032 $4,528 ======= ====== ====== ====== Earnings (loss) per share: - ----------------------------------------------------------------------------------------------------- Basic - as reported ($ 0.58) $ 0.41 $ 0.37 $ 1.58 Basic - as adjusted ($ 0.58) $ 0.40 $ 0.35 $ 1.55 Diluted - as reported ($ 0.58) $ 0.39 $ 0.36 $ 1.49 Diluted - as adjusted ($ 0.58) $ 0.38 $ 0.34 $ 1.46
REPORTING OTHER COMPREHENSIVE INCOME The Company reports other comprehensive income under Statement of Financial Accounting Standard ("SFAS") No. 130, "Reporting Comprehensive Income". The difference between net income and total comprehensive income during the three months ended September 30, 2004 and 2003 was a loss on foreign currency translation of $178,000 and a gain of $43,000, respectively. The difference between net income and total comprehensive income during the nine months ended September 30, 2004 and 2003 was a loss on foreign currency translation of $7,000 and a gain of $205,000, respectively. INCOME TAXES Income taxes for interim periods are computed using the estimated effective tax rate to be applicable for the current year. Notes to Condensed Consolidated Financial Statements (Continued) LONG TERM DEBT On March 20, 2002, the Company entered into a one year $10,000,000 revolving credit facility with LaSalle Bank National Association ("LaSalle"). Interest is at a rate which approximates LIBOR plus 2.50% and is secured by all financial assets of the Company. The credit agreement with LaSalle is subject to various financial covenants to which the Company must comply. The covenants require the Company to maintain certain ratios of profitability, cash flow, total outstanding debt, minimum net worth and limits on capital expenditures. As of September 30, 2004, the Company was in compliance with all applicable covenants. On March 21, 2002, the Company received approximately $7,200,000 from LaSalle against this credit facility. The proceeds from the credit facility and additional cash on hand were used to extinguish all outstanding debt (approximately $8,700,000) with a prior bank. On March 21, 2003, the Company amended the credit facility to extend the termination date to June 20, 2003. No changes were made to any other terms and conditions. On June 20, 2003 the Company amended the credit facility to extend the termination date to June 20, 2004. The line of credit under the facility has been reduced from $10,000,000 to $8,000,000. On June 19, 2003 the Company paid off the remaining outstanding balance pertaining to the LaSalle credit facility. On October 31, 2003, the Company amended the LaSalle credit facility to extend the termination date to October 31, 2004. On October 20, 2004, the Company amended the LaSalle credit facility to extend the termination date to April 30, 2005. PENSION PLANS The Company currently has four pension plans covering substantially all employees. The benefits paid under the pension plans generally are based on an employee's years of service and compensation during the last years of employment (as defined). Annual contributions made to the pension plans are determined in compliance with the minimum funding requirements of ERISA, using a different actuarial cost method and different actuarial assumptions than are used for determining pension expense for financial reporting purposes. Plan assets consist principally of publicly traded equity and debt securities. Net pension cost included the following (in thousands): Three Months Nine Months Ended Sept 30, Ended Sept30, 2004 2003 2004 2003 - -------------------------------------------------------------------------------- Service cost $79 $69 $209 $177 Interest cost on benefits earned in prior years 327 287 872 739 Expected return on assets (294) (257) (782) (663) Amortization of net obligation at transition - 1 1 1 Amortization of net loss 157 136 417 354 - -------------------------------------------------------------------------------- Net pension cost $269 $236 $717 $608 Notes to Condensed Consolidated Financial Statements (Continued) FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of the following financial instruments approximate fair value because of the short maturity of those instruments: cash and cash equivalents, accounts receivable, other current assets, other assets, accounts payable, accrued expenses and current installments of long-term debt. The long-term debt bears interest at a variable market rate and, thus, has a carrying amount that approximates fair value. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. FOREIGN CURRENCY The reporting currency of the Company is the United States dollar. The functional currency of NP Aerospace is the UK pound sterling. For consolidation purposes, the assets and liabilities of the Company's subsidiaries are translated at the exchange rate in effect at the balance sheet date. The consolidated statement of operations is translated at the average exchange rate in effect during the period being reported. Exchange differences arise mainly from the valuation rates of the intercompany accounts and are taken directly to Stockholders' equity. DISCONTINUED OPERATIONS During the three months ended September 30, 2004, management committed to a plan of action to sell its wholly-owned subsidiary, Samuel Bingham Enterprises, Inc. The decision to sell was based on continuing losses from operations and a negative long-term outlook in the marketplaces this subsidiary serves. Management believes that a sale can be completed prior to December 31, 2004. On September 30, 2004, management determined that the plan of sale criteria in FASB No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets, " had been met. Accordingly, the carrying value of its fixed assets and goodwill was adjusted to its fair value less costs to sell, amounting to $2.9 million. Fair value was determined based on the highest offer received from several potential strategic suitors. The resulting $4.3 million impairment charge was included in "Loss from operations of discontinued component" in the statement of operations. Assets held for sale included in the consolidated balance sheet as of September 30, 2004 and December 31, 2003 are as follows: September 30, 2004 December 31, 2003 - -------------------------------------------------------------------------------- Accounts receivable $2,082 $2,197 Inventory 1,543 1,445 Prepaid expenses 303 230 Property, plant and equipment, net of impairment 933 4,010 Other assets, net of impairment 149 1,418 Accounts payable (747) (829) Accrued expenses (426) (338) Long-term pension liability (987) (987) - -------------------------------------------------------------------------------- Net assets held for sale $2,850 $7,146 Notes to Condensed Consolidated Financial Statements (Continued) Operating results of the discontinued operations for the three and nine months ended September 30, 2004 and 2003 are summarized as follows: Three Months Nine Months Ended Sept 30, Ended Sept30, 2004 2003 2004 2003 - -------------------------------------------------------------------------------- Net sales $3,901 $3,878 $12,180 $12,467 - -------------------------------------------------------------------------------- Loss from operations (198) (347) (870) (664) Impairment loss (4,330) - (4,330) - Tax benefit 1,195 124 1,487 237 - -------------------------------------------------------------------------------- Loss on discontinued operations ($3,333) ($ 223) ($ 3,713) ($ 427) OPERATING SEGMENTS The Company reports operating segment data under SFAS No. 131 "Disclosures about Segments of an Enterprise and Related Information". Reinhold is a manufacturer of advanced custom composite components and sheet molding compounds for a variety of applications primarily in the United States and Europe. The Company generates revenues from four operating segments: Aerospace, CompositAir, Commercial and NP Aerospace. Management has determined these to be Reinhold's operating segments based upon the nature of their products. Aerospace produces a variety of products for the U.S. military and space programs. CompositAir produces components for the commercial aircraft seating industry. The Commercial segment produces lighting housings and pool filters. NP Aerospace, our subsidiary located in Coventry, England, produces products for law enforcement, lighting, military, automotive and commercial aircraft. Due to the status of the Bingham business unit as a discontinued operation, historical segment data has been removed from the presentation. The information in the following tables is derived directly from the segment's internal financial reporting for corporate management purposes (in thousands).
Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 - ------------------------------------------------------------------------------------------------------------------------------------ Net sales Aerospace $ 5,705 $ 5,571 $ 16,242 $ 16,298 CompositAir 1,154 778 3,581 4,053 Commercial 885 1,004 2,456 2,575 NP Aerospace 6,097 4,635 19,709 14,551 - ------------------------------------------------------------------------------------------------------------------------------------ Total sales $ 13,841 $ 11,988 $ 41,988 $ 37,477 - ------------------------------------------------------------------------------------------------------------------------------------ Income before income taxes from continuing operations Aerospace $ 1,825 $ 1,709 $ 5,030 $ 5,188 CompositAir (205) (128) (360) 269 Commercial 97 (1) 270 33 NP Aerospace 964 878 3,654 3,158 Unallocated corporate expenses (282) (240) (1,196) (767) - ------------------------------------------------------------------------------------------------------------------------------------ Total income before income taxes from continuing operations $ 2,399 $ 2,218 $ 7,398 $ 7,881 - ------------------------------------------------------------------------------------------------------------------------------------
Notes to Condensed Consolidated Financial Statements (Continued) September 30, 2004 December 31, 2003 - -------------------------------------------------------------------------------- Total assets Aerospace $11,504 $11,077 CompositAir 2,425 2,635 Commercial 1,552 1,598 NP Aerospace 14,420 11,220 Unallocated corporate 9,984 7,960 Assets held for sale 5,010 9,300 - ------------------------------------------------------------------------------- Total assets $44,895 $43,790 LEGAL PROCEEDINGS The Company has been informed that it may be a potentially responsible party ("PRP") under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"), with respect to certain environmental liabilities arising at the Valley Forge National Historical Park Site ("Valley Forge Site") located in Montgomery County, Pennsylvania and at a site formerly known as the Casmalia Resources Hazardous Waste Management Facility, located in Santa Barbara County, California ("Casmalia Site"). CERCLA imposes liability for the costs of responding to a release or threatened release of "hazardous substances" into the environment. CERCLA liability is imposed without regard to fault. PRPs under CERCLA include current owners and operators of the site, owners and operators at the time of disposal, as well as persons who arranged for disposal or treatment of hazardous substances sent to the site, or persons who accepted hazardous substances for transport to the site. Because PRPs' CERCLA liability to the government is joint and several, a PRP may be required to pay more than its proportional share of such costs. Liability among PRPs, however, is subject to equitable allocation through contribution actions. On August 11, 2000, the EPA notified the Company that it is a PRP by virtue of waste materials deposited at the site. The EPA has designated the Company as a "de minimis" waste generator at this site, based on the amount of waste at the Casmalia Site attributed to the Company. The Company is not currently a party to any litigation concerning the Casmalia Site, and based on currently available data, the Company believes that the Casmalia Site is not likely to have a material adverse impact on the Company's consolidated financial position or results of operations. The Company is involved in various other claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material effect on the Company's financial position, results of operations, or liquidity. REINHOLD INDUSTRIES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS September 30, 2004 The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included in Item 1 of this filing and the financial statements and notes thereto and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2003. Reinhold Industries, Inc. ("Reinhold" or the "Company") is a manufacturer of advanced custom composite components and sheet molding compounds for a variety of applications in the United States and Europe. Reinhold derives revenues from the defense contract industry, the aircraft industry and other commercial industries. CRITICAL ACCOUNTING POLICIES The Company's consolidated financial statements and related public financial information are based on the application of generally accepted accounting principles ("GAAP"). GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in the external disclosures of the Company including information regarding contingencies, risk and financial condition. The Company believes its use of estimates and underlying accounting assumptions adhere to generally accepted accounting principles and are consistently and conservatively applied. Valuations based on estimates are reviewed for reasonableness and conservatism on a consistent basis throughout the Company. Primary areas where financial information of the Company is subject to the use of estimates, assumptions and the application of judgment include revenues, receivables, inventories, acquisitions, valuation of long-lived and intangible assets, pension and post-retirement benefits, the realizability of deferred tax assets, and foreign exchange translation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. Revenue Recognition And Allowances For Doubtful Accounts The Company recognizes revenue when title and risk of ownership have passed to the buyer. Allowances for doubtful accounts are estimated based on estimates of losses related to customer receivable balances. Estimates are developed by using standard quantitative measures based on historical losses, adjusting for current economic conditions and, in some cases, evaluating specific customer accounts for risk of loss. The establishment of reserves requires the use of judgment and assumptions regarding the potential for losses on receivable balances. Though the Company considers these balances adequate and proper, changes in economic conditions in specific markets in which the Company operates could have a material effect on reserve balances required. Inventories We value our inventories at lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method, including material, labor and factory overhead. The Company writes down its inventory for estimated obsolescence equal to the cost of the inventory. Product obsolescence may be caused by shelf-life expiration, discontinuance of a product line, replacement products in the marketplace or other competitive situations. Management's Discussion and Analysis (cont'd) Fair Value Of Assets Acquired And Liabilities Assumed In Purchase Combinations The purchase combinations carried out by us require management to estimate the fair value of the assets acquired and liabilities assumed in the combinations. These estimates of fair value are based on our business plan for the entities acquired including planned redundancies, restructuring, use of assets acquired and assumptions as to the ultimate resolution of obligations assumed for which no future benefit will be received. Should actual use of assets or resolution of obligations differ from our estimates, revisions to the estimated fair values would be required. If a change in estimate occurs after one year of the acquisition, the change would be recorded in our statement of operations. Pensions And Post Retirement Benefits The valuation of the Company's pension and other post-retirement plans requires the use of assumptions and estimates that are used to develop actuarial valuations of expenses and assets/liabilities. These assumptions include discount rates, investment returns, projected salary increases and benefits, and mortality rates. The actuarial assumptions used in the Company's pension reporting are reviewed annually and compared with external benchmarks to assure that they accurately account for our future pension obligations. Changes in assumptions and future investment returns could potentially have a material impact on the Company's pension expenses and related funding requirements. Valuation Of Long-Lived Assets In accordance with Statement of Financial Accounting Standard ("SFAS") No. 142 and SFAS No. 144, we assess the fair value and recoverability of our long-lived assets, including goodwill, whenever events and circumstances indicate the carrying value of an asset may not be recoverable from estimated future cash flows expected to result from its use and eventual disposition. In doing so, we make assumptions and estimates regarding future cash flows and other factors to make our determination. The fair value of our long-lived assets and goodwill is dependent upon the forecasted performance of our business and the overall economic environment. When we determine that the carrying value of our long-lived assets and goodwill may not be recoverable, we measure any impairment based upon a forecasted discounted cash flow method. If these forecasts are not met, we may have to record additional impairment charges not previously recognized. Income Taxes We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities. We regularly review our deferred tax assets for recoverability and establish a valuation allowance based upon historical losses, projected future taxable income and the expected timing of the reversals of existing temporary differences. Cumulative Foreign Exchange Translation Accounting In preparing our consolidated financial statements, we are required to translate the financial statements of NP Aerospace from the currency in which they keep their accounting records, the British Pound Sterling, into United States dollars. This process results in exchange gains and losses which are either included within the statement of operations or as a separate part of our net equity under the caption "accumulated other comprehensive loss." Under the relevant accounting guidance, the treatment of these translation gains or losses is dependent upon management's determination of the functional currency of NP Aerospace. Generally, the currency in which the subsidiary transacts a majority of its transactions, including billings, financing, payroll and other expenditures would be considered the functional currency but any dependency upon the parent and the nature of the subsidiary's operations must also be considered. Management's Discussion and Analysis (cont'd) If any subsidiary's functional currency is deemed to be the local currency, then any gain or loss associated with the translation of that subsidiary's financial statements is included in cumulative translation adjustments. However, if the functional currency is deemed to be the United States dollar then any gain or loss associated with the translation of these financial statements would be included within our statement of operations. Based on our assessment of the factors discussed above, we consider NP Aerospace's local currency to be the functional currency. Accordingly, we had cumulative foreign currency translation losses of approximately $734,000 and $727,000 that were included as part of "accumulated other comprehensive loss" within our balance sheet at September 30, 2004 and December 31, 2003, respectively. Environmental Liabilities With respect to outstanding actions that are in preliminary procedural stages, as well as any actions that may be filed in the future, insufficient information exists upon which judgments can be made as to the validity or ultimate disposition of such actions, thereby making it difficult to reasonably estimate what, if any, potential liability or costs may be incurred. Accordingly, no estimate of future liability has been included for such claims. Comparison of Third Quarter 2004 to 2003 In the third quarter of 2004, net sales increased $1.8 million (15%) to $13.8 million, compared to third quarter 2003 sales of $12.0 million. Sales in the Aerospace business unit increased by $0.1 million (2%) to $5.7 million. Sales increased by $0.4 million (48%) in the CompositAir business unit to $1.2 million compared with the third quarter of 2003, in which the slowdown in the airline industry heavily impacted the division. Sales decreased $0.1 million (12%) to $0.9 million in the Commercial business unit due to lower shipments of pool filter tanks and heater covers, in-ground lighting housings and production tooling. Sales at NP Aerospace increased by $1.5 million (32%) to $6.1 million due primarily to retrofitting of light armored vehicles for the U.K. Ministry of Defense. Gross profit margin in the third quarter was unchanged at 34%. Gross profit margin for Aerospace increased from 44% to 47% due to changes in product mix. Gross profit margin for CompositAir increased from 4% to 10% due to higher sales volume. Gross profit margin for Commercial increased from 15% to 29% due primarily to increased selling prices. Gross profit margin for NP Aerospace decreased from 33% to 28% due to changes in product mix. Selling, general and administrative expenses for the third quarter 2004 were $2.4 million (17% of sales) compared to $2.0 million (16% of sales) for the same quarter of 2003. The increase is primarily due to increased compensation costs. Interest income, net of $0.06 million was realized in the third quarter of 2004 compared to interest income, net of $0.01 million in the third quarter of 2003 due to higher cash balances. Management's Discussion and Analysis (cont'd) Income before income taxes increased to $2.4 million (17% of sales) in the third quarter of 2004 from $2.2 million (18% of sales) in the same period of 2003. Income before income taxes for Aerospace was $1.8 million (32% of sales) in 2004 compared to $1.7 million (31% of sales) in 2003 due to changes in product mix. A loss before income taxes was realized for CompositAir in the third quarter of 2004 of $0.2 million (-18% of sales) compared to $0.1 million (-16% of sales) in 2003 due to the elimination of technology transfer fee income. Income before income taxes for Commercial increased to $0.1 million (11% of sales) compared to breakeven in 2003. Income before income taxes for NP Aerospace increased to $1.0 million (16% of sales) from $0.9 million (19% of sales) due to higher sales of lower gross margin products. A tax provision of $820,000 was recorded in the third quarter of 2004 as compared to $784,000 in the third quarter of 2003. Income taxes for interim periods are computed using the effective tax rate estimated to be applicable for the full fiscal year, which is subject to ongoing review and evaluation by management. Loss on discontinued operations, net of income tax benefit, increased to $3.3 million in the third quarter of 2004 compared to $0.2 million in 2003 due primarily to the $4.3 million impairment loss related to fixed assets and goodwill. Comparison of Nine Months 2004 to 2003 In the first nine months of 2004, net sales increased $4.5 million, or 12%, to $42.0 million, compared to 2003 sales of $37.5 million. Sales in the Aerospace business unit decreased by $0.1 million (0.3%) to $16.2 million. Sales in the CompositAir business unit decreased $0.5 million (12%) to $3.6 million due to an industry slowdown. Sales decreased $0.1 million (5%) to $2.5 million in the Commercial business unit due to decreased shipments of pool filter tanks and heater covers and in-ground lighting housings. Sales at NP Aerospace increased $5.2 million (35%) to $19.7 million due primarily to retrofitting of light armored vehicles for the U.K. Ministry of Defense. Gross profit margin in the first nine months decreased from 36% in 2003 to 33% in 2004. Gross profit margin for Aerospace increased from 45% to 46% for the first nine months of 2004. Gross profit margin for CompositAir decreased from 22% to 10% due to reduced sales volume. Gross profit margin for Commercial increased from 17% to 29% due primarily to higher selling prices. Gross profit margin for NP Aerospace decreased from 33% to 28% due to changes in product mix. Selling, general and administrative expenses for the first nine months of 2004 were $6.8 million (16% of sales) compared to $5.6 million (15% of sales) for the first nine months of 2003. The increase is due primarily to higher pension and other compensation expenses. Interest income, net, in the first nine months of 2004 increased by $0.1 million due to lower outstanding debt. Management's Discussion and Analysis (cont'd) Income before income taxes decreased to $7.4 million (18% of sales) in the first nine months of 2004 from $7.9 million (21% of sales) in the same period of 2003. Income before income taxes for Aerospace was $5.0 million (31% of sales) in 2004 compared to $5.2 million (32% of sales) in 2003. CompositAir sustained a loss before income taxes in the first nine months of 2004 of $0.4 million (-10% of sales) compared to income before income taxes of $0.3 million (7% of sales) in 2003 due to reduced sales caused by severe economic problems in the airline industry. Income before income taxes for Commercial increased to $0.3 million (11% of sales) in the first nine months of 2004 from breakeven in 2003 due primarily to higher selling prices. Income before income taxes for NP Aerospace increased to $3.7 million (19% of sales) from $3.2 million (22% of sales) due to increased sales. A tax provision of $2.6 million was recorded in the first nine months of 2004 as compared to $2.8 million in the first nine months of 2003. Income taxes for interim periods are computed using the effective tax rate estimated to be applicable for the full fiscal year, which is subject to ongoing review and evaluation by management. Loss on discontinued operations, net of income tax benefit, increased to $3.7 million in the first nine months of 2004 compared to $0.4 million in 2003 due primarily to the $4.3 million impairment loss related to fixed assets and goodwill recorded in the third quarter 2004. At December 31, 2003, the Company had net operating loss carryforwards for Federal income tax purposes of approximately $20.7 million. The Company may utilize the Federal net operating losses by carrying them forward to offset future Federal taxable income, if any, through 2011. As more fully described in Note 3 to the 2003 consolidated financial statements filed on Form 10-K, benefits realized from loss carryforwards arising prior to the reorganization have been recorded directly to additional paid-in capital. Liquidity and Capital Resources As of September 30, 2004, working capital was $23.8 million, up $6.0 million from December 31, 2003. Cash and cash equivalents of $12.3 million held at September 30, 2004 were $6.2 million higher than cash and cash equivalents held at December 31, 2003 primarily due to the increased profitability of the Company. Net cash provided by operating activities totaled $7.2 million for the nine months ended September 30, 2004. Net cash provided by operating activities totaled $6.2 million for the comparable period in 2003. The increase over the prior period is due to improved working capital management. Net cash used in investing activities for the nine months ended September 30, 2004 and 2003 totaled $0.6 million and $1.9 million, respectively, and consisted of capital expenditures. Net cash used in financing activities for the nine months ended September 30, 2004 totaled $0.1 million and consisted of dividends paid of $1.6 million less proceeds from the exercise of stock options of $1.5 million. Net cash used in financing activities for the nine months ended September 30, 2003 totaled $0.1 million and consisted of repayment of long-term debt. Management's Discussion and Analysis (cont'd) Expenditures in 2004 and 2003 related to investing and financing activities were financed by existing cash and cash equivalents. On March 20, 2002, the Company entered into a one year $10,000,000 revolving credit facility with LaSalle Bank National Association ("LaSalle"). Interest is at a rate which approximates LIBOR plus 2.50% and is secured by all financial assets of the Company. The credit agreement with LaSalle is subject to various financial covenants to which the Company must comply. The covenants require the Company to maintain certain ratios of profitability, cash flow, total outstanding debt, minimum net worth and limits on capital expenditures. As of September 30, 2004, the Company was in compliance with all applicable covenants. On March 21, 2002, the Company received approximately $7,200,000 from LaSalle against this credit facility. The proceeds from the credit facility and additional cash on hand were used to extinguish all outstanding debt with a prior bank. On March 21, 2003, the Company amended the credit facility to extend the termination date to June 20, 2003. No changes were made to any other terms and conditions. On June 20, 2003 the Company amended the credit facility to extend the termination date to June 20, 2004. The line of credit under the facility has been reduced from $10,000,000 to $8,000,000. On June 19, 2003 the Company paid off the remaining outstanding balance pertaining to the LaSalle credit facility. On October 31, 2003, the Company amended the LaSalle credit facility to extend the termination date to October 31, 2004. On October 20, 2004, the Company amended the LaSalle credit facility to extend the termination date to April 30, 2005. Management believes that the available cash, cash flows from operations and cash available under the line of credit will be sufficient to fund the Company's operating and capital expenditure requirements through at least September 30, 2005. Stock Dividend On April 30, 2003, the Board of Directors approved the distribution of a 10% stock dividend to shareholders of record as of May 16, 2003. As a result, an additional 265,418 shares were issued on May 29, 2003. All common stock information and earnings per share computations for all periods presented have been adjusted for the stock dividend. The number of stock options outstanding and the exercise price were also adjusted for the impact of the 10% stock dividend. Forward Looking Statements This Form 10-Q contains statements which, to the extent that they are not recitations of historical fact, constitute "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). The words "estimate", "anticipate", "project", "intend", "expect", and similar expressions are intended to identify forward looking statements. All forward looking statements involve risks and uncertainties, including, without limitation, statements and assumptions with respect to future revenues, program performance and cash flow. Readers are cautioned not to place undue reliance on these forward looking statements which speak only as of the date of this 10-Q. The Company does not undertake any obligation to publicly release any revisions to these forward looking statements to reflect events, circumstances or changes in expectations after the date of this Form 10-Q or to reflect the occurrence of unanticipated events. The forward looking statements in this document are intended to be subject to safe harbor protection provided by Sections 27A of the Securities Act and 21E of the Exchange Act. Recent Accounting Pronouncements The effective recent accounting pronouncements are included in the notes to the condensed consolidated financial statements included herein. Item 3. Quantitative and Qualitative Disclosures About Market Risk There are no material changes to the disclosures made in the Annual Report on Form 10-K for the year ended December 31, 2003. Item 4. Controls and Procedures (a) Evaluation of Disclosure Controls and Procedures As of September 30, 2004, an evaluation was performed by the Chief Executive Officer and Chief Financial Officer of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14 and 15d-14. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective in ensuring that all material information required to be filed in this annual report has been made known to them in a timely fashion. (b) Changes in Internal Controls There have been no significant changes in internal controls or in factors that could significantly affect internal controls subsequent to the date the Chief Executive Officer and Chief Financial Officer completed their evaluation. PART II - OTHER INFORMATION Item 1. Legal Proceedings The information required in this section is included in Part I under the heading "LEGAL PROCEEDINGS". Item 4. Results of Votes of Security Holders None Item 6. Exhibits and Reports on Form 8-K a. Exhibits 2.1 Keene Corporation's Fourth Amended Plan of Reorganization Under Chapter 11 of the Bankruptcy Code dated March 11, 1996, incorporated herein by reference to Exhibit 99(a) to Keene Corporation's Form 8-K filed with the Commission on June 28, 1996. 2.2 Motion to Approve Modifications to the Keene Corporation Fourth Amended Plan of Reorganization Under Chapter 11 of the Bankruptcy Code dated June 12, 1996, incorporated herein by reference to Exhibit 99(b) to Keene Corporation's Form 8-K filed with the Commission on June 28, 1996. 2.3 Finding of Fact, Conclusions of Law and Order Confirming Keene's Fourth Amended Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, as modified, entered June 14, 1996, incorporated herein by reference to Exhibit 99(c) to Keene Corporation's Form 8-K filed with the Commission on June 28, 1996. 3.1 Amended and restated Certificate of Incorporation of Reinhold Industries, Inc., incorporated herein by reference to Exhibit 99(a), Exhibit A to the Plan, to Keene Corporation's Form 8-K filed with the Commission on June 28, 1996. 3.2 Amended and restated By-laws of Reinhold Industries, Inc. (Formerly Keene Corporation), incorporated herein by reference to Exhibit 99(a), Exhibit B to the Plan, to Keene Corporation's Form 8-K filed with the Commission on June 28, 1996. 3.3 Certificate of Merger of Reinhold Industries, Inc. into Keene Corporation, incorporated herein by reference to Exhibit 99(a), Exhibit C to the Plan, to Keene Corporation's Form 8-K filed with the Commission on June 28, 1996. 3.4 Second amended and restated Certificate of Incorporation and amended By-laws of Reinhold Industries, Inc., on Form DEFS14A filed with the Commission on September 24, 1999. 3.5 Third amended and restated Certificate of Incorporation of Reinhold Industries, Inc., on Form DEF14C filed with the Commission on October 10, 2000. 3.6 Amended and restated By-Laws of Reinhold Industries, Inc. on form 8-K filed with the Commission on August 31, 2004. 4.1 Share Authorization Agreement, incorporated herein by reference to Exhibit 99(a), Exhibit H to the Plan, to Keene Corporation's Form 8-K filed with the Commission on June 28, 1996. 4.2 Registration Rights Agreement, incorporated herein by reference to Exhibit 99(a), Exhibit G to the Plan, to Keene Corporation's Form 8-K filed with the Commission on June 28, 1996. 9.1 Creditors' Trust Agreement, incorporated herein by reference to Exhibit 99(a), Exhibit D to the Plan, to Keene Corporation's Form 8-K filed with the Commission on June 28, 1996. 10.1 Reinhold Industries, Inc. Stock Incentive Plan, on Form S-8, filed with the Commission on November 10, 1997. 10.2 Reinhold Management Incentive Compensation Plan, incorporated by reference to Page 34 to Keene's (Predecessor Co.) Form 10, dated April 4, 1990, as amended by Form 8, Exhibit 10(e), dated July 19, 1990. 10.3 Lease, dated January 4, 1990, by and between Imperial Industrial Properties, Inc. and Reinhold Industries, incorporated by reference to Exhibit 10(b) to Keene's Form 10 dated April 4, 1990, as amended by Form 8, dated July 19, 1990. 10.4 Reinhold Industries, Inc. Retirement Plan (formerly Keene Retirement Plan), incorporated by reference to Exhibit 10(i) to Keene's Form 10 dated April 4, 1990, as amended by Form 8, dated July 19, 1990. 10.5 Management Agreement between Reinhold Industries, Inc. and Hammond, Kennedy, Whitney & Company, Inc. dated May 31, 1999 on Form 10-QSB filed with the Commission on August 16, 1999. 10.6 Stock Option Agreement between Reinhold Industries, Inc. and Michael T. Furry dated June 3, 1999 on Form 10-QSB filed with the Commission on August 16, 1999. 10.7 Stock Price Deficiency Payment Agreement between Reinhold Industries, Inc. and various stockholders dated June 16, 1999 on Form 10-QSB filed with the Commission on August 16, 1999. 10.8 Asset Purchase Agreement by and between Samuel Bingham Company, a Delaware corporation, and Samuel Bingham Enterprises, Inc. dated February 3, 2000 on Form 8-K/A filed with the Commission on May 23, 2000. 10.9 Credit Agreement between Reinhold Industries, Inc., Samuel Bingham Enterprises, Inc., NP Aerospace Limited (the "Borrowers") and LaSalle Bank National Association dated March 21, 2002 on Form 10-Q filed with the Commission on May 9, 2002. 10.10 Amended and Restated Reinhold Industries, Inc. Stock Incentive Plan, on Form S-8, filed with the Commission on December 1, 2002. 10.11 Directors Deferred Stock Plan, on Form 10-K filed with the Commission on March 28, 2003. 20.1 New Keene Credit Facility, incorporated herein by reference to Exhibit 99(a), Exhibit F to the Plan, to Keene Corporation's Form 8-K filed with the Commission on June 28, 1996. 31.1 Certification Of CEO Pursuant To Section 302 Of The Sarbanes-Oxley Act Of 2002 31.2 Certification Of CFO Pursuant To Section 302 Of The Sarbanes-Oxley Act Of 2002 32.1 Certification Of CEO Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002 32.2 Certification Of CFO Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002 b. Reports on Form 8-K Form 8-K was filed on August 12, 2004 announcing second quarter financial results for the company under Item 12 - Results of Operations and Financial Condition. Form 8-K was filed on August 12, 2004 announcing the addition of three new directors, the issuance of a cash dividend and a statement regarding the strategic alternatives available to the Company. Form 8-K was filed on August 31, 2004 announcing a change in the Company's By-laws. REINHOLD INDUSTRIES, INC. SIGNATURES Pursuant to the requirement of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. REINHOLD INDUSTRIES, INC. Registrant DATE: November 5, 2004 By: /S/ Brett R. Meinsen Brett R. Meinsen Vice President - Finance and Administration, Treasurer and Secretary (Principal Financial Officer) Exhibit 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Michael T. Furry, President and Chief Executive Officer of Reinhold Industries, Inc., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Reinhold Industries, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a - 15(e) and 15d - 15(e)) for the registrant and we have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ MICHAEL T. FURRY Michael T. Furry President and Chief Executive Officer November 5, 2004 Exhibit 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Brett Meinsen, Vice President - Finance and Administration, Secretary and Treasurer of Reinhold Industries, Inc., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Reinhold Industries, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a - 15(e) and 15d - 15(e)) for the registrant and we have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ BRETT MEINSEN Brett Meinsen Vice President - Finance and Administration, Secretary, Treasurer November 5, 2004 Exhibit 32.1 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Michael T. Furry, President and Chief Executive Officer of Reinhold Industries, Inc. (the "Company"), hereby certifies that to the best of his knowledge: 1. The Quarterly Report on Form 10-Q for the period ended September 30, 2004 of the Company (the "Report") fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated The foregoing certification is being furnished pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Report or as a separate disclosure document. /s/ MICHAEL T. FURRY Michael T. Furry President and Chief Executive Officer November 5, 2004 A signed copy of this written statement required by section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. Exhibit 32.2 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Brett Meinsen, Vice President - Finance and Administration, Secretary and Treasurer of Reinhold Industries, Inc. (the "Company"), hereby certifies that to the best of his knowledge: 1. The Quarterly Report on Form 10-Q for the period ended September 30, 2004 of the Company (the "Report") fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated The foregoing certification is being furnished pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Report or as a separate disclosure document. /s/ BRETT MEINSEN Brett Meinsen Vice President - Finance and Administration, Secretary, Treasurer November 5, 2004 A signed copy of this written statement required by section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. EX-31 2 ceoq3302cert.txt Exhibit 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Michael T. Furry, President and Chief Executive Officer of Reinhold Industries, Inc., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Reinhold Industries, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a - 15(e) and 15d - 15(e)) for the registrant and we have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ MICHAEL T. FURRY Michael T. Furry President and Chief Executive Officer November 5, 2004 EX-31 3 cfoq3302cert.txt Exhibit 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Brett Meinsen, Vice President - Finance and Administration, Secretary and Treasurer of Reinhold Industries, Inc., certify that: 1. I have reviewed this quarterly report on Form 10-Q of Reinhold Industries, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a - 15(e) and 15d - 15(e)) for the registrant and we have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/ BRETT MEINSEN Brett Meinsen Vice President - Finance and Administration, Secretary, Treasurer November 5, 2004 EX-32 4 ceoq3906cert.txt Exhibit 32.1 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Michael T. Furry, President and Chief Executive Officer of Reinhold Industries, Inc. (the "Company"), hereby certifies that to the best of his knowledge: 1. The Quarterly Report on Form 10-Q for the period ended September 30, 2004 of the Company (the "Report") fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated The foregoing certification is being furnished pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Report or as a separate disclosure document. /s/ MICHAEL T. FURRY Michael T. Furry President and Chief Executive Officer November 5, 2004 A signed copy of this written statement required by section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. EX-32 5 cfoq3906cert.txt Exhibit 32.2 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Brett Meinsen, Vice President - Finance and Administration, Secretary and Treasurer of Reinhold Industries, Inc. (the "Company"), hereby certifies that to the best of his knowledge: 1. The Quarterly Report on Form 10-Q for the period ended September 30, 2004 of the Company (the "Report") fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated The foregoing certification is being furnished pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Report or as a separate disclosure document. /s/ BRETT MEINSEN Brett Meinsen Vice President - Finance and Administration, Secretary, Treasurer November 5, 2004 A signed copy of this written statement required by section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----