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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
- ----- OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
- ------ EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ to _______
COMMISSION FILE NUMBER 0-18434
REINHOLD INDUSTRIES, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 13-2596288
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
12827 East Imperial Hwy, Santa Fe Springs, California 90670
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code (562) 944-3281
CLASS A COMMON STOCK, PAR VALUE $.01 OTC BULLETIN BOARD
- ------------------------------------- ----------------------------
(Title of each class) (Name of each exchange on
which registered)
Securities registered under Section 12(g) of the Exchange Act: NONE
- --------------------------------------------------------------------------------
Indicate by check mark whether the registrant (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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in part iii of this Form 10-K or any amendment to this
Form 10-K. X
The aggregate market value of the voting and non-voting stock held by
non-affiliates of the registrant as of March 15, 2001 was $17,584,000.
The number of shares of common stock outstanding as of March 15, 2001 were
2,198,058.
Documents incorporated in part by reference:
Reinhold Industries, Inc. 2000 Annual Report to Stockholders - Parts I, II
Reinhold Industries, Inc. Proxy Statement - Part III
PART I
Item 1. BUSINESS
Reinhold Engineered Plastics, the forerunner to today's Reinhold
Industries, Inc., was founded in 1928. The purpose of the business was the
molding of components from Bakelite, the first commercially available polymer
molding material.
In the 1940's, Reinhold was a pioneer in making some of the earliest
fiberglass plastic components for the aircraft industry such as radomes and
antenna covers.
In the early 1950's, with the advent of the missile industry, Reinhold
moved into the newly created field of ablative composites. Ablative composites
are fiber reinforced polymer structures which absorb, as they decay, the
destructive thermal energy generated by burning rocket propellants or hypersonic
re-entry. This field became Reinhold's core business for decades to come.
In the 1970's, the molding of structures from fiberglass polyester
Sheet Molding Compound (SMC) was a new and growing industry in the Eastern U.S.
Reinhold was convinced that the potential of the SMC material was broad enough
that markets in the West could be found and developed. These markets included
swimming pool filter tanks and in-ground lighting housings.
From the 1950's through the early 1980's, Reinhold went through a
number of ownership and name changes. In June 1984, Reinhold was sold to Keene
Corporation, an operating division of Bairnco Corporation. In 1990, following
Bairnco's spin-off of its Keene Corporation subsidiary to Bairnco's
shareholders, Reinhold became an incorporated (Delaware) entity and a direct
wholly-owned subsidiary of Keene Corporation.
On December 3, 1993, Keene Corporation ("Keene") filed a voluntary
petition for relief under Chapter 11 of Title 11 of the United State Code (the
"Bankruptcy Code") in the United States Bankruptcy Court in the Southern
District of New York (the "Bankruptcy Court"), Case No. 93-B-46090 (SMB).
Keene's Chapter 11 filing came as a direct result of tens of thousands of
asbestos-related lawsuits which named Keene as a party. Reinhold did not file
any petitions for relief under the bankruptcy code and continued to operate in
the normal course of business.
Keene's asbestos-related liabilities stem entirely from its 1968
purchase of Baldwin-Ehret-Hill, Inc. ("BEH"), a manufacturer of acoustical
ceilings, ventilation systems, and thermal insulation products. Over the past 20
years, Keene spent over $530 million (approximately 75% of which has been in the
form of insurance proceeds) in connection with Asbestos-Related Claims asserted
against Keene, all stemming from Keene's ownership, for a period of
approximately five years, of BEH.
By the end of 1992, Keene had exhausted substantially all of its
insurance coverage for Asbestos-Related Personal Injury Claims and by 1993,
Keene had exhausted substantially all of its insurance related to Asbestos In
Building Claims. Therefore, Keene had to bear directly the costs of all Claims.
In May 1993, Keene filed a limited fund, mandatory settlement action
("Limited Fund Action"). This Limited Fund Action sought a declaration that
Keene had only limited funds available to resolve the numerous Asbestos-Related
Claims against it, including Asbestos-Related Claims that might be filed in the
future.
In November 1993, Keene reached an agreement in principle with the
lawyers representing each subclass with respect to the allocation of Keene's
remaining assets. However, on December 1, 1993, the Court of Appeals for the
Second Circuit issued a decision dismissing the Limited Fund Action on the
grounds of lack of subject matter jurisdiction.
In light of this decision, on December 3, 1993, Keene filed its
voluntary petition for relief under Chapter 11.
On March 28, 1995, Keene, the Official Committee of Unsecured
Creditors' and the Legal Representative for Future Claimants entered into a
stipulation to file a consensual plan of reorganization that would resolve
Keene's Chapter 11 Case.
On March 11, 1996, the Bankruptcy Court approved the Second Amended
Disclosure Statement regarding Keene's Fourth Amended Plan of Reorganization for
solicitation.
On June 12, 1996, the Bankruptcy Court and the U.S. District Court held
a confirmation hearing on Keene's Fourth Amended Plan of Reorganization, as
modified (the "Plan"). The Plan was confirmed by the U.S. District Court by
order entered on June 14, 1996.
On July 31, 1996, Keene's Fourth Amended Plan of Reorganization, as
modified, became effective (the "Effective Date"). On the Effective Date,
Keene's wholly-owned subsidiary, Reinhold Industries, Inc. ("Reinhold") was
merged into and with Keene, with Keene becoming the surviving entity. Pursuant
to the merger, all the issued and outstanding capital stock of Reinhold was
canceled. Keene, as the surviving corporation of the merger, was renamed
Reinhold. On the Effective Date, Reinhold issued 1,998,956 shares of Common
Stock, of which 1,020,000 shares of Class B Common Stock were issued to the
Trustees of a Creditors' Trust (the "Creditors' Trust") set up to administer
Keene's asbestos claims. The remaining 978,956 shares, identified as Class A
Common Stock, were issued to Keene's former shareholders as of record date, June
30, 1996. All of Keene's previously outstanding Common Stock was canceled.
Today, Reinhold Industries, Inc. is a manufacturer of advanced custom
composite components, sheet molding compounds and rubber rollers for a variety
of applications in the United States and Europe. Reinhold derives revenues from
the defense, aerospace, printing and other commercial industries. Reinhold is
currently organized in five operating segments as follows:
Aerospace - The Aerospace business unit manufactures structural and
ablative composite components mainly for subcontractors of the U.S. defense
industry. These components include rocket nozzles, exit cones, re-entry
heatshields, radomes, and airframe and missile frames. In March 1992, to
strengthen its market position in defense and aerospace markets, Reinhold
acquired 100% of the outstanding common stock of Reynolds & Taylor, Inc. ("R &
T"), a California corporation and manufacturer of structural composite
components serving, primarily, the defense and aerospace markets. R & T's
operations were consolidated into Reinhold's existing facility.
During 2000, Aerospace's sales increased dramatically due to the award
of a major contract (to be completed in early 2001) and business transferred
from a competitor. Because a substantial portion of Reinhold's business has been
as a supplier to government contractors, Reinhold has developed a limited number
of customers with which it does significant amounts of business. Sales to two
major customers constituted approximately 55% of this business units' total
sales in 2000. Reinhold's future prospects will depend on the continued business
of such customers and on Reinhold's continued status as a qualified supplier to
such customers.
Due to reduced military spending in recent years, business
consolidation in the markets the Company serves continue to persist. On January
31, 2001, Alliant Techsystems, Inc. ("ATK") announced that it would be
purchasing Thiokol Propulsion ("Thiokol") from Alcoa, Inc. Both ATK and Thiokol
are major customers of the Company. The impact, if any, to the Company due to
this transaction is indeterminable at this time.
CompositAir - In May 1994, Reinhold acquired CompositAir from SP
Systems, Inc. CompositAir is a niche manufacturer of composite commercial
aircraft seatbacks and other commercial products. CompositAir has been in
continuous production of composite seat back frames since 1980. Composites of
epoxy, phenolic, or other resin systems, reinforced with aramid or other glass
fibers, are laminated into the complex shapes required by today's feature-packed
commercial aircraft seats. The weight of frames so produced is 30% to 40% less
than equivalent aluminum frames. CompositAir operates in both Camarillo,
California and Santa Fe Springs, California.
Almost 100% of CompositAir's sales are from two major customers.
Reinhold's future prospects will depend on the continued business of such
customers and on Reinhold's continued status as a qualified supplier to such
customers. In 2000, sales dropped by 38% compared to 1999. The decline was due
to commercial difficulties at one of CompositAir's main customers as well as a
temporary decline in the general aircraft marketplace.
Commercial - The Commercial business unit manufactures compression
molded "SMC" (Sheet Molding Compound) products for lighting, water filtration
and other various commercial and aerospace applications. SMC formulations
include thermosetting polymer matrix resins, glass fibers and other additives
which provide strength, stiffness, and protection from corrosion, chemical
environments and ultraviolet degradation.
During 2000, sales increased by 27% over 1999 due mainly to sales of
compression molding tooling used for manufacture of products.
NP Aerospace - On April 24, 1998, NP Aerospace Limited ("NP
Aerospace"), a wholly owned subsidiary of Reinhold, purchased from Courtaulds
Aerospace Limited ("CAL"), a U.K. Corporation, which is a wholly owned
subsidiary of Courtaulds plc, a U.K. Corporation, certain assets (consisting of
Accounts Receivable, Inventory, Machinery and Equipment, Land and Intellectual
Property and Patents) and assumed certain liabilities of the Ballistic and
Performance Composites Division of CAL. Reinhold, as the Guarantor for NP
Aerospace, became obligated to pay to Courtaulds plc net consideration
consisting of (a) Two Million Two Hundred Thousand pounds sterling
((pound)2,200,000) ($3,706,340 based on an exchange rate of $1.6847) cash on the
Closing Date and (b) within 120 days following the end of each of the calendar
years 1998 through 2001, a cash amount equal to 25% of the Pre-tax Profit on the
light armored vehicle business only, the maximum aggregate amount of which shall
not exceed Twenty Million pounds sterling ((pound)20,000,000). Additional
payments of (pound)0 and (pound)140,000 ($227,000) were capitalized in 2000 and
1999, respectively, as part of the purchase price. NP Aerospace operates in
Coventry, England.
Additional information on the NP Aerospace acquisition is set forth in
Note 2 to the Consolidated Financial Statements on page 32 and "Management
Discussion and Analysis of Financial Condition and Results of Operations " on
page 22 of Reinhold's 2000 Annual Report to Stockholders, which is incorporated
herein by reference.
NP Aerospace manufactures a wide variety of composite products
including compression molded canopies for street lights, commercial aircraft
seatback frames, aramid composite combat helmets, protective personal body
armor, carbon composite radiography support couches and light-armored composite
vehicle structures.
NP Aerospace operates in niche marketplaces for the sale of commercial
aircraft seatbacks, helmets and light armored vehicles. Due to the limited
marketplaces for these products, sales from year-to-year are very uncertain. Due
to the high selling price of vehicles, large swings in revenue are possible.
Overall sales in 2000 were 32% lower than in 1999 due mainly to the lack of new
orders for vehicles.
Samuel Bingham Enterprises, Inc. - On March 9, 2000, Samuel Bingham
Enterprises, Inc., a newly formed wholly-owned subsidiary of Reinhold
Industries, Inc., purchased certain assets and assumed certain liabilities of
Samuel Bingham Company for $15.2 million in cash. A majority of the purchase
price was financed through a five year term loan with the Bank of America for
$11.0 million with the balance being paid from cash on hand.
Samuel Bingham Company ("Bingham") is a manufacturer and supplier of
graphic arts and industrial rollers for a variety of applications. Samuel
Bingham was born in 1789 and began manufacturing rollers for the printing
industry in 1848. The Company has been in continuous existence since that date.
In addition to serving the graphic arts marketplace, the Company also serves
other industries such as steel mills, paper mills, converters, metal coaters,
textile mills and plastic processors. Products are manufactured from various
elastomers including SBR, silicones, EPDM's, Hypalons, Buna N, Neoprenes,
natural rubber, vinyl-nitriles, fluoroelastomers, polyether urethanes and
polyester urethanes.
Bingham manufactures at eight separate locations throughout the United
States and sells through a direct sales force to approximately 3,000 customers.
Due to the existence of many other manufacturers in the marketplace, the Company
is forced to be highly competitive.
Additional information on the Bingham acquisition is set forth in Note
2 to the Consolidated Financial Statements on page 33 and "Management Discussion
and Analysis of Financial Condition and Results of Operations " on page 22 of
Reinhold's 2000 Annual Report to Stockholders, which is incorporated herein by
reference.
Additional information on operating segments is set forth in Note 8 to
the Consolidated Financial Statements on pages 40 through 42 and "Management
Discussion and Analysis of Financial Condition and Results of Operations " on
pages 21 through 22 of Reinhold's 2000 Annual Report to Stockholders, which is
incorporated herein by reference.
Significant Customers
Information about significant customers is set forth in note 10 to the
Consolidated Financial Statements on page 44 of Reinhold's 2000 Annual Report to
Stockholders, which is incorporated herein by reference.
Distribution
Products are marketed by company sales personnel and sales
representatives in the United States and Europe.
Competition
Reinhold competes with many companies in the sale of ablative and
structural composite products. The markets served by Reinhold are specialized
and competitive. Several of its competitors have greater financial, technical
and operating resources than Reinhold. Although Reinhold has competed
successfully in the critical areas of price, product performance and engineering
support services, there is no assurance that Reinhold will be able to continue
to manufacture and sell its products profitably in competitive markets.
Because a substantial portion of Reinhold's business has been as a
supplier to government contractors, Reinhold has developed a limited number of
customers with which it does significant amounts of business. Reinhold's future
prospects will depend on the continued business of such customers and on
Reinhold's continued status as a qualified supplier to such customers.
Reinhold's success also depends on developing additional commercial composite
products to replace heavier and shape restrictive metals-based products.
Raw Materials and Purchased Components
The principal raw materials for composite fabrication include
pre-impregnated fiber cloth (made of carbon, graphite, aramid or fiberglass
fibers which have been heat-treated), molding compounds, resins (phenolic and
epoxy), hardware, adhesives and solvents. Occasionally, certain raw materials
and parts are supplied by customers for incorporation into the finished product.
Reinhold's principal suppliers of raw materials are Cytec Fiberite, Inc. and
Newport Adhesives and Composites, Inc.
No significant supply problems have been encountered in recent years.
Reinhold uses PAN (polyacrylonitrile) and rayon in the manufacture of
composites. However, the supply of rayon used to make carbon fiber cloth
typically used in ablative composites is highly dependent upon the qualification
of the rayon supplier by the United States Department of Defense. North American
Rayon has ceased production of the rayon used in Reinhold's ablative products.
This could have an effect on the rayon supply in the coming years. Also, a
European company has become the world's sole supplier of graphite and carbon,
which is used in Reinhold's ablative applications. At this time, Reinhold can
not determine if there will be any significant impact on price or supply.
Environmental Matters
Reinhold's manufacturing facilities are subject to regulation by
federal, state and local environmental agencies. Management believes all
facilities meet or exceed all applicable environmental requirements in all
material respects and believes that continued compliance will not materially
affect capital expenditures, earnings or competitive position.
Refer to Item 3 for additional environmental legal proceedings.
Patents and Trademarks
Reinhold, through its wholly-owned subsidiary, Samuel Bingham
Enterprises, Inc., owns one patent registered with the United States Patent and
Trademark Office for the "Method of Making Roll for Use in Printing" (U.S.
Patent No. 4,492,012). The patent expires in January 2002. Samuel Bingham
Enterprises, Inc. holds ten registered trademarks with expiration dates ranging
from February 2002 through August 2009.
Research and Development
Research and development expenditures were approximately $327,000,
$155,000 and $158,000 for the years ended December 31, 2000, 1999 and 1998,
respectively.
Employees
At December 31, 2000, Reinhold had 444 full-time employees and 10
part-time employees. Of these employees, 356 ( 346 full-time and 10 part-time)
were employed in manufacturing and 98 (all full-time) in administration, product
development and sales. Approximately 18% of the personnel are based at
Reinhold's Santa Fe Springs, California facility, approximately 8% are based in
Camarillo, California, approximately 24% are based at NP Aerospace located in
Coventry, England and approximately 50% are based at the various manufacturing
and administration facilities of Samuel Bingham. Approximately 70 of the
employees in Coventry, England are represented by a labor union. Certain Samuel
Bingham employees, approximately 55, located in San Leandro, California, Searcy,
Arkansas and Blacklick, Pennsylvania are also represented by a labor union.
Reinhold believes its workforce to be relatively stable and considers its
employee relations to be excellent.
Item 2. DESCRIPTION OF PROPERTY
The following chart lists the principal locations and size of
Reinhold's facilities and indicates whether the property is owned or leased and,
if leased, the lease expiration.
LEASED OR OWNED
LOCATION USE SIZE LEASE EXPIRATION
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Santa Fe Springs, CA Administration and 130,000 sq. ft. Leased (Expires 2014)
Manufacturing
Camarillo, CA Manufacturing 18,000 sq. ft. Leased (Expires 2002)
Coventry, England Administration and 80,000 sq. ft Own
Manufacturing
Samuel Bingham Properties
- -------------------------
Portland, OR Manufacturing 14,000 sq. ft. Leased (Expires 2006)
San Leandro, CA Manufacturing 21,000 sq. ft. Own
Kansas City, MO Manufacturing 10,000 sq. ft. Own
Kansas City, MO Manufacturing 19,000 sq. ft. Leased (Expires 2003)
Searcy, AK Manufacturing 38,000 sq. ft. Own
Dallas, TX Manufacturing 16,000 sq. ft. Own
Houston, TX Manufacturing 9,000 sq. ft. Own
College Park, GA Manufacturing 16,000 sq. ft. Own
Blacklick, PA Manufacturing 22,000 sq. ft. Own
Palmyra, NY Manufacturing 17,000 sq. ft. Leased (Expires 2003)
Franklin Park, IL Manufacturing 13,000 sq. ft. Leased (Expires 2003)
Montreal, Quebec, Canada Manufacturing 23,000 sq. ft. Own
Bloomingdale, IL Administration 4,000 sq. ft. Leased (Expires 2004)
Cincinnati, OH Manufacturing 15,000 sq. ft. Own
Construction of a new building and additional improvements at the Santa
Fe Springs location are expected to be completed by the end of September 2001.
Reinhold believes its facilities are utilized consistent with economic
conditions and the requirements of its operations.
Item 3. 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 June 16, 2000 the U.S. Department of Justice notified the Company
that it may be a PRP with respect to the Valley Forge Site and demanded payment
for past costs incurred by the United States in connection with the site, which
the Department of Justice estimated at $1,753,726 incurred by the National Park
Service as of May 31, 2000 and $616,878 incurred by the United States
Environmental Protection Agency ("EPA") as of November 30, 1999. Payment of
these past costs would not release the Company from liability for future
response costs.
Management believes that in or about 1977, the Company's predecessor,
Keene Corporation ("Keene"), sold to the U.S. Department of Interior certain
real property and improvements now located within the Valley Forge Site. Prior
to the sale, Keene operated a manufacturing facility on the real property and
may have used friable asbestos, the substance which gives rise to the claim at
the Valley Forge Site. The Company is in the process of analyzing the legal
foundations of the Department of Justice claim in light of the bankruptcy
proceeding described below. The Company believes that two injunctions issued in
1996 in connection with Keene's bankruptcy proceeding under chapter 11 of Title
11 of the United States Code ("Bankruptcy Code") are relevant to the Justice
Department's claim.
As previously reported, Keene acquired Reinhold in 1984. On December 3,
1993, Keene filed a voluntary petition for relief under chapter 11 of the
Bankruptcy Code in the United States Bankruptcy Court. Keene's chapter 11 filing
came as a direct result of the demands on Keene of thousands of asbestos-related
lawsuits that named Keene as a party. On July 31, 1996 (the "Effective Date"),
Keene consummated its Fourth Amended Plan of Reorganization, as modified, under
the Bankruptcy Code (the "Plan"). On the Effective Date, Reinhold was merged
into and with Keene, with Keene becoming the surviving corporation. Keene, as
the surviving corporation of the merger, was renamed Reinhold Industries, Inc.
On the Effective Date, pursuant to the Plan the Company issued its Class B
Common Stock to the Trustees of a Creditors' Trust, which was established under
the Plan to administer Keene's asbestos liabilities. The Creditors' Trust has
since sold most of its Class B Common Stock.
The general bankruptcy injunction issued in the chapter 11 proceeding
generally prohibits any entity from commencing or continuing any action,
employment of process or act to collect, offset, affect or recover any claim,
demand, interest or cause of action satisfied, released or discharged under the
Plan. Such claims, demands, interests and causes of action include, whether
known or unknown, all claims against Keene or the Company or their assets and
all related causes of action, regardless of whether a proof of claim or interest
was filed or allowed, and whether or not the holder of such claim or interest
has voted on the Plan, or any causes of action based on any act or omission of
any kind occurring prior to the Effective Date. In addition to this general
bankruptcy injunction, the Company received the benefit of a supplemental
"Permanent Channeling Injunction" as part of the Plan.
The Permanent Channeling Injunction bars "Asbestos-Related Claims" and
"Demands," as defined in the Plan, against the Company and channels those Claims
and Demands to the Creditors' Trust. Pursuant to the Permanent Channeling
Injunction, on or after the Effective Date of the Plan, any person or entity who
holds or may hold an Asbestos-Related Claim or Demand against Keene will be
forever stayed, restrained, and enjoined from taking certain actions for the
purpose of, directly or indirectly, collecting, recovering, or receiving payment
of, on, or with respect to such Asbestos-Related Claims or Demands against the
Company.
It is difficult to estimate the timing and ultimate costs to be
incurred by the Company in connection with environmental liability claims in the
future due to uncertainties about the status of laws and regulations, the
adequacy of information available for individual sites and the extended time
periods over which site remediation occurs. However, based on currently
available information, if the environmental liability claims relating to the
Valley Forge Site arose prior to the filing of Keene's bankruptcy case or if
these claims were deemed to be Asbestos-Related Claims or Demands within the
meaning of the Plan, then the Company does not believe that environmental
liabilities associated with the Valley Forge Site should result in a material
adverse impact on the Company's consolidated financial position or results of
operation. However, if these claims are deemed to have arisen subsequent to the
filing of Keene's bankruptcy case -- i.e the "release" or "threatened release,"
within the meaning of CERCLA, is deemed to have occurred after Keene filed its
chapter 11 petition with the Bankruptcy Court or the claims are held to have
arisen when the response costs were incurred -- and these claims are not deemed
to be Asbestos-Related Claims or Demands as defined under the Plan, then the
Company could incur liability for the claims. If a court were to determine that
the Company was liable for recoverable costs associated with the Valley Forge
Site under CERCLA, the resulting liability could have a material adverse impact
on the Company's consolidated financial position and results of operations.
With respect to the Casmalia Site, 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 in the process of evaluating its potential environmental
liability exposure at 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.
Reinhold is a defendant in a number of other legal actions arising from
the normal course of business. Management believes that these actions are not
meritorious and will not have a material adverse effect on the financial
position of Reinhold.
Item 4. RESULTS OF VOTES OF SECURITY HOLDERS
On September 8, 2000, a written consent of shareholders to action
without a meeting was coordinated to consider and vote on the following
proposal:
1. To amend the Corporation's existing Amended and Restated Certificate of
Incorporation to (i) decrease the number of total authorized shares from
50,000,000 to 5,000,000; (ii) decrease the number of authorized shares of
Common Stock from 45,000,000 to 4,750,000; and (iii) decrease the number of
authorized shares of preferred stock from 5,000,000 to 250,000. The Board
of Directors' authority to establish the rights and preferences of any
series of preferred stock prior to the issuance of any such series and to
issue preferred stock in one or more series, without further approval of
stockholders of the Company, remains unchanged.
The primary purpose of the proposed amendment is to reduce the number
of authorized shares in order to reduce the minimum franchise tax payable
to the State of Delaware.
Affirmative votes of the holders of at least a majority of the
outstanding shares of Class A Common Stock are required to approve the
proposed amendments to Reinhold's Amended and Restated Certificate of
Incorporation. Under the applicable provisions of the Delaware General
Corporation Law, the Company's stockholders have no appraisal rights with
respect to the proposed amendments. If the amendments are adopted, they
will become effective upon the filing of the Certificate of Incorporation,
as amended, with the Delaware Secretary of State.
Results of the voting were as follows:
Written consents representing 1,260,319 or 57.3% of the 2,198,058
outstanding shares were received approving the proposal.
The approved Amended and Restated Certificate of Incorporation was
filed with the Delaware Secretary of State and became effective on November 1,
2000.
PART II
Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
--------------------------------------------------------
a. Data regarding the market price of Reinhold's common stock is
included in the "Selected Financial Data" on page 1 and under Stockholder
Information on page 47 of Reinhold's 2000 Annual Report to Stockholders, which
is incorporated herein by reference. Reinhold's common stock is traded on the
NASD OTC Bulletin Board under the symbol RNHDA. The stock price quotations
incorporated herein reflect inter-dealer prices, without retail mark-up,
mark-down or commission, and may not represent actual transactions.
b. The approximate number of common equity security holders is as
follows:
Approximate Number
of Holders of Record
Title of Class as of March 15, 2001
-------------- --------------------
Class A Common Stock,
par value $.01 per share 1,546
c. A 10% stock dividend was declared on July 5, 2000 payable to
shareholders of record as of July 11, 2000. The dividend was payable on or about
July 28, 2000. Fractional shares were paid in cash. Fractional share cash
payments totaled $7,142.20.
Item 6. SELECTED FINANCIAL DATA
Reference is made to the "Selected Financial Data" on page 1 of
Reinhold's 2000 Annual Report to Stockholders, which is incorporated herein by
reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-------------------------------------------------
Reference is made to the "Management Discussion and Analysis of
Financial Condition and Results of Operations" on page 21 of Reinhold's 2000
Annual Report to Stockholders, which is incorporated herein by reference.
Item7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
The Company has two main areas of market risk; interest rates on
outstanding debt and fluctuations in the value of the British Pound Sterling to
the United States Dollar.
All of the Company's debt at December 31, 2000 is at variable interest
rates based on LIBOR plus 1.75%. A hypothetical 10% change in interest rates
would have had a $0.1 million and $0.02 million impact on interest expense for
the years ended December 31, 2000 and 1999, respectively.
The functional currency of the Company's wholly owned subsidiary, NP
Aerospace, is the British Pound Sterling (the "Pound"). The exchange rate of the
Pound to the Dollar from April 28, 1998 to December 31, 2000 has fluctuated from
1.68 to 1.39, a range of 17%. A hypothetical 15% change in exchange rate would
have had a $0.1 million and $0.2 million impact on net income for the year ended
December 31, 2000 and 1999, respectively.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the Independent Auditors' Report, the Consolidated
Financial Statements and Notes to Consolidated Financial Statements on pages 25
through 46 of Reinhold's 2000 Annual Report to Stockholders, which is
incorporated herein by reference. Financial data schedules are included in Part
IV of this filing.
Schedule II - Valuation and Qualifying Accounts
Allowance for Doubtful Accounts Receivable (in thousands)
- ----------------------------------------------------------------------------------------------------------
Additions Charged to
Balance at ----------------------- Balance at
Beginning of Costs and End of
Fiscal Year Ended Period Expenses Other Deductions Period
- -----------------------------------------------------------------------------------------------------------
December 31, 1998 $344 - - $ 57 $287
- -----------------------------------------------------------------------------------------------------------
December 31, 1999 287 - - 227 60
- -----------------------------------------------------------------------------------------------------------
December 31, 2000 60 - 105 - 165
- -----------------------------------------------------------------------------------------------------------
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
Item 10. DIRECTORS, OFFICERS, PROMOTERS AND CONTROL PERSONS OF THE REGISTRANT
----------------------------------------------------------------------
The information required with respect to directors of Reinhold is included
in the definitive Proxy Statement for the 2001 Annual Meeting of Stockholders of
Reinhold, to be filed with the Securities and Exchange Commission not later than
120 days after the end of the fiscal year and is incorporated herein by
reference.
Item 11. EXECUTIVE COMPENSATION
----------------------
The information required by Item 11 is included in the definitive Proxy
Statement for the 2001 Annual Meeting of Stockholders of Reinhold, to be filed
with the Securities and Exchange Commission not later than 120 days after the
end of the fiscal year and is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
The information required by Item 12 is included in the definitive Proxy
Statement for the 2001 Annual Meeting of Stockholders of Reinhold, to be filed
with the Securities and Exchange Commission not later than 120 days after the
end of the fiscal year and is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
The information required by Item 13 is included in the definitive Proxy
Statement for the 2001 Annual Meeting of Stockholders of Reinhold, to be filed
with the Securities and Exchange Commission not later than 120 days after the
end of the fiscal year and is incorporated herein by reference.
PART IV
Item 14. 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.
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.
13 Annual Report to Stockholders
23.1 Consent of Independent Auditors and Report on Schedule
27 Financial Data Schedules
b) REPORTS ON FORM 8-K
A Form 8-K, Item 5 - Other Events, was filed with the Commission on
November 1, 2000. The information reported was the notification by the U.S.
Department of Justice that the Company may be a Potentially Responsible Party
with respect to certain environmental liabilities and the demand to pay
approximately $2.5 million in remediation costs.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Reinhold has duly caused this Annual Report to be signed on its behalf by the
undersigned thereunto duly authorized.
REINHOLD INDUSTRIES, INC.
Registrant
Date: April 16,2001 By:/s/ Brett R. Meinsen
------------------- --------------------
Brett R. Meinsen
Vice President -
Finance & Administration
(Principal Financial and
Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report is signed below by the following persons on behalf of Reinhold and
in the capacities and on the date indicated.
/s/ Michael T. Furry April 16, 2001
----------------------------------------
Michael T. Furry- President and Director
(Principal Executive Officer)
/s/ Ralph R. Whitney, Jr. April 16, 2001
----------------------------------------
Ralph R. Whitney, Jr.- Chairman
/s/ Andrew McNally, IV April 16, 2001
----------------------------------------
Andrew McNally, IV- Director
/s/ Glenn Scolnik April 16, 2001
----------------------------------------
Glenn Scolnik- Director
/s/ Thomas A. Brand April 16, 2001
----------------------------------------
Thomas A. Brand- Director
/s/ Richard A. Place April 16, 2001
----------------------------------------
Richard A. Place- Director