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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-K/A (Amendment No. 1)
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the fiscal year ended December 31, 2002, Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
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Commission File Number 33-64325
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REUNION INDUSTRIES, INC.
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(Exact name of Registrant as specified in its charter)
DELAWARE 06-1439715
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(State of Incorporation) (I.R.S. Employer Identification No.)
11 STANWIX STREET, SUITE 1400, PITTSBURGH, PENNSYLVANIA 15236
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(Address of principal executive offices, including zip code)
(412) 281-2111
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(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class: COMMON STOCK, $.01 par value
Name of Each Exchange on Which Registered: AMERICAN STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of regulation S-K is not contained herein, and will not be contained, to the
best of the 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.
-----
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Act). Yes No X
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At June 28, 2002, 15,590,619 shares of common stock were issued and
outstanding. As of June 28, 2002, the aggregate market value of the voting
stock held by non-affiliates of the registrant (computed by reference to the
average of the high and low sales prices on the American Stock Exchange) was
$641,864.
DOCUMENTS INCORPORATED BY REFERENCE: NONE.
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Reunion Industries, Inc. (the "Company", "Reunion Industries" or
"Reunion") is filing this Amendment No. 1 to its Annual Report on Form 10-K
for the year ended December 31, 2002 as filed with the Securities and Exchange
Commission on March 31, 2003, to provide certain information previously
omitted from and to correct certain typographical errors in such report.
Four items herein provided that were previously omitted relate to PART
III of Form 10-K and include:
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
One item herein provided that included typographical errors relates to
PART IV of Form 10-K and is:
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
NOTE 9: STOCK OPTIONS is amended to indicate that, of the 44,000
remaining outstanding options to purchase Reunion common stock, 37,334 were
exercisable at December 31, 2002.
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
As of April 30, 2003, the following individuals were directors and/or
named executive officers of Reunion Industries, Inc. (the "Company", "Reunion
Industries" or "Reunion").
Director
Name Principal Position Age Since
----------------------- ------------------------- --- --------
Thomas N. Amonett(1)(2) Director 59 1992
Charles E. Bradley, Sr. Director, Chairman & CEO 73 1995
Kimball J. Bradley Director, President & COO 37 2000
Thomas L. Cassidy(1) Director 74 1995
W. R. Clerihue(1)(2) Director 79 1996
Joseph C. Lawyer Director, Vice Chairman 57 2000
Franklin Myers(2) Director 50 1995(3)
John G. Poole Director 60 1996
John M. Froehlich Executive Vice President, 60 N/A
Chief Financial Officer
and Secretary
(1) Member, Compensation Committee of the Board of Directors.
(2) Member, Audit Committee of the Board of Directors.
(3) Prior to his reappointment in October 1995, Mr. Myers was a Director of
Reunion Industries from July 1992 to June 1995.
THOMAS N. AMONETT has served as a director of Reunion Industries since
July 1, 1992 and served as its President and Chief Executive Officer from
July 1, 1992 until October 26, 1995. He also served as the President of
Reunion Energy Company, then a wholly-owned subsidiary of Reunion Industries
in the oil and gas operating business, from July 1, 1992 until May 24, 1996.
Mr. Amonett is President and Chief Executive Officer of Champion Technologies,
Inc., a manufacturer and distributor of specialty chemicals and related
services, primarily to the oil and gas industry. From November 1998 to
June 1999, he was President, Chief Executive Officer and a director of
American Residential Services, Inc., a company providing equipment and
services relating to residential heating, ventilating, air conditioning,
plumbing, electrical and indoor air quality systems and appliances. From July
1996 until June 1997, Mr. Amonett was Interim President and Chief Executive
Officer of Weatherford Enterra, Inc., an energy services and manufacturing
company. Mr. Amonett serves as a director of Petro Corp. Incorporated, a
Houston-based oil and gas company, and Stelmar Shipping Ltd., an international
provider of petroleum product and crude oil transportation services.
CHARLES E. BRADLEY, SR. became a director of Reunion Industries on
June 20, 1995 and was appointed President and Chief Executive Officer of
Reunion Industries on October 26, 1995. He became Chairman effective March
16, 2000. Mr. Bradley, Sr. was a co-founder of Stanwich Partners, Inc.
("Stanwich Partners") in 1982 and has served as its President since that time.
Stanwich Partners is a private investment company. He was a director of
Chatwins Group, Inc. ("Chatwins Group") from 1986 until its merger with
Reunion Industries on March 16, 2000 and was Chairman of the Board of Chatwins
Group from 1988 until the merger. Mr. Bradley, Sr. is currently the
President, acting Chief Financial Officer and a director of Sanitas, Inc., an
inactive company, and President, acting Chief Financial Officer and a director
of Texon Energy Corporation, an inactive company. He was President and sole
director of Stanwich Financial Services Corp. when, on June 25, 2001, it filed
a voluntary petition in the United States Bankruptcy Court for the District of
Connecticut for reorganization under Chapter 11 of the United States
Bankruptcy Code. Stanwich Financial Services Corp. is in the structured
settlement business. Mr. Bradley, Sr. was chairman of the board of directors
of DeVlieg-Bullard, Inc. when, on July 15, 1999, it filed a voluntary petition
in the United States Bankruptcy Court for the Northern District of Ohio for
reorganization under Chapter 11 of the United States Bankruptcy Code. Mr.
Bradley is the father of Kimball J. Bradley.
- 3 -
KIMBALL J. BRADLEY became President and Chief Operating Officer of
Reunion Industries effective May 1, 2000. He was Executive Vice President of
Operations of Reunion Industries following the Chatwins Group merger and was a
Senior Vice President of Chatwins Group from August 1998 until the merger and
a Vice President of Chatwins Group from January 1996 to August 1998. From
November 1995 until August 1998, Mr. Bradley was President of the Auto-Lok
division of Chatwins Group, having served as acting President of Auto-Lok
beginning in August 1995. Prior to assuming that position, he managed various
special projects at Chatwins Group's corporate office beginning in
November 1993 and at Chatwins Group's CP Industries division from
February 1993 to November 1993. Mr. Bradley is the son of Charles E. Bradley,
Sr.
THOMAS L. CASSIDY became a director of Reunion Industries on June 20,
1995. He was a Managing Director of Trust Company of the West, an investment
management firm, from 1984 until his retirement in 1999. Mr. Cassidy is a
Partner of TCW Capital, an affiliate of Trust Company of the West. Mr.
Cassidy was a director of Chatwins Group from March 1993 to June 1997.
W. R. CLERIHUE became a director of Reunion Industries in December 1996.
He was Chairman of the Board of Directors of Spartech Corporation, a plastics
manufacturing company, from October 1991 to March 1999 and continued as a
director of Spartech until his retirement in 2002.
JOSEPH C. LAWYER became Vice Chairman of Reunion Industries effective May
1, 2000. He was President and Chief Operating Officer of Reunion Industries
following the Chatwins Group merger and was President, Chief Executive Officer
and a director of Chatwins Group from 1988 until the merger. Mr. Lawyer is a
director of Respironics, Inc., a company engaged in design, manufacture and
sale of home and hospital respiratory medical products.
FRANKLIN MYERS served as a director of Reunion Industries from July 1,
1992 until June 20, 1995, when he resigned contemporaneously with the sale of
1,450,000 shares of Reunion Industries' common stock by Parkdale Holdings
Corporation N.V. to Chatwins Group. He was reappointed as a director of
Reunion Industries on October 26, 1995. Mr. Myers is Senior Vice President of
Cooper Cameron Corporation, an oil field equipment manufacturer. From 1999 to
2001, he was President of Cooper Energy Services, Inc., a manufacturer of gas
compression equipment, a subsidiary of Cooper Cameron Corporation. In 2003,
he became Chief Financial Officer of Cooper Cameron Corporation. From 1995 to
1999, Mr. Myers was Senior Vice President, General Counsel and Secretary of
Cooper Cameron Corporation. He is also a director of Metals USA, Inc., a
steel distributor, and Input/Output, Inc., an oilfield equipment supplier.
JOHN G. POOLE became a director of Reunion Industries on April 19, 1996.
Mr. Poole is a private investor. He was a co-founder of Stanwich Partners
with Charles E. Bradley, Sr. in 1982 and served as Stanwich Partners' Vice
President until 2001. Mr. Poole was a director of Chatwins Group from 1988
until the merger. He is also a director of Consumer Portfolio Services, Inc.,
engaged in the business of purchasing, selling and servicing retail automobile
installment sales contracts.
JOHN M. FROEHLICH became Executive Vice President of Finance and Chief
Financial Officer of Reunion Industries on March 16, 2000. He became
Secretary on June 12, 2002. He was a Vice President of Chatwins Group from
1989 until the merger of Chatwins Group and Reunion Industries on March 16,
2000 and its Chief Financial Officer and Treasurer from 1988 until the merger.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Reunion's directors and officers and persons who own beneficially more than
10% of the common stock of Reunion Industries to file with the Securities and
Exchange Commission and the American Stock Exchange initial reports of
beneficial ownership and reports of changes in beneficial ownership of the
common stock of Reunion Industries. Directors, officers and persons owning
more than 10% of the common stock of Reunion Industries are required to
furnish Reunion Industries with copies of all such reports. Based solely on
Reunion's review of the copies of such forms it has received and
representations from certain persons that they were not required to file
reports on Form 5 for 2002, Reunion Industries believes that all its officers,
directors and greater than 10% beneficial owners complied with all filing
requirements applicable to them with respect to transactions during 2002,
except that Joseph C. Lawyer filed one late report of one transaction.
ITEM 11. EXECUTIVE COMPENSATION
Chatwins Group was merged into the Company on March 16, 2000. The
following table reflects all forms of compensation for services to Reunion
Industries or Chatwins Group by our executive officers for the last three
completed fiscal years. There was no other annual compensation for any
executive of the Company in the last three completed fiscal years.
Long-Term
Compensation
------------
Annual Compensation Shares
------------------- Underlying All Other
Name and Position Year Salary Bonus(1) Stock Option Compensation
----------------------- ---- -------- -------- ------------ ------------
Charles E. Bradley, Sr. 2002 $400,024 $ 0 0 $ 6,516(2)
Chairman and Chief 2001 400,024 0 5,000 6,266(2)
Executive Officer 2000 336,498 0 45,000 356,395(2)
Joseph C. Lawyer 2002 245,830 0 0 1,020(3)
Vice Chairman 2001 289,011 0 10,000 9,520(3)
2000 368,532 0 45,000 51,193(3)
Kimball J. Bradley 2002 347,765 0 0 1,020(4)
President and Chief 2001 318,238 0 50,000 9,520(4)
Operating Officer 2000 290,968 150,000 45,000 14,020(4)
John M. Froehlich 2002 206,246 0 0 1,020(5)
Executive Vice 2001 180,000 0 25,000 9,520(5)
President of Finance 2000 163,247 50,000 39,000 13,948(5)
and Chief Financial
Officer
Jack T. Croushore 2002 209,000 0 0 6,476(6)
President CPI Division 2001 212,360 100,000 25,000 14,223(6)
2000 193,360 175,000 39,000 13,533(6)
(1) Amounts shown for bonuses are amounts earned for the period shown,
although such bonuses are generally paid in the subsequent year.
(2) Includes premiums paid by Reunion Industries and Chatwins Group for life
insurance for the benefit of Mr. Bradley of $355,375 in 2000; and 401(k)
matching payments of $5,496 in 2002 and $5,246 in 2001. Includes a healthcare
benefit credit of $1,020 in each year.
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(3) Includes 401(k) matching payments of $5,000 in 2000; premiums paid by
Chatwins Group for life insurance for the benefit of Mr. Lawyer of $37,173 in
2000; and payments under the Chatwins Group, Inc. Money Purchase Pension Plan
of $8,500 in 2001 and $8,000 in 2000. Includes a healthcare benefit credit of
$1,020 in each year.
(4) Includes 401(k) matching payments of $5,000 in 2000; and payments under
the Chatwins Group, Inc. Money Purchase Pension Plan of $8,500 in 2001 and
$8,000 in 2000. Includes a healthcare benefit credit of $1,020 in each year.
(5) Includes 401(k) matching payments of $4,928 in 2000; and payments under
the Chatwins Group, Inc. Money Purchase Plan of $8,500 in 2001 and $8,000 in
2000. Includes a healthcare benefit credit of $1,020 in each year.
(6) Includes 401(k) matching payments of $5,456 in 2002, $4,703 in 2001 and
$4,513 in 2000; and payments under the Chatwins Group, Inc. Money Purchase
Plan of $8,500 in 2001 and $8,000 in 2000. Includes a healthcare benefit
credit of $1,020 in each year.
Option Grants
There were no options granted in the year ended December 31, 2002.
Option Exercises
The following tables sets forth information with respect to the exercise
of options during the year ended December 31, 2002. There were no options to
purchase shares of common stock held by named executive officers at December
31, 2002.
Number of
Shares
Acquired on Value
Name Exercise Realized
----------------------- ------------ --------
Charles E. Bradley, Sr. 125,000 $ 0 (1)
Joseph C. Lawyer 0 0
Kimball J. Bradley 95,000 0 (1)
John M. Froehlich 64,000 0 (1)
Jack T. Croushore 64,000 0 (1)
(1) The closing price on the date of exercise was less than the exercise
price.
Director Compensation
Directors not otherwise compensated by Reunion receive annual retainers
of $18,000 for service on the board and $500 for each board or committee
meeting attended. Compensation paid to nonemployee directors during 2002 for
service in all board capacities aggregated $106,500. Directors are reimbursed
for the actual cost of any travel expenses incurred. In addition to his
director's fees, Mr. Poole received $42,000 for consulting services during
2002.
Nonemployee directors of Reunion Industries are eligible for awards under
the 1998 Stock Option Plan. During 2002, no options were granted.
- 6 -
Key Person Insurance
As of June 29, 1994, Chatwins Group and Charles E. Bradley, Sr. agreed to
a split-dollar life insurance arrangement. Pursuant to this arrangement,
Chatwins Group agreed to maintain three universal type life policies on Mr.
Bradley, Sr. and his wife. Chatwins Group will be reimbursed for the premiums
it pays for such policies from either the death benefit of the policies or
their cash surrender value. Mr. Bradley, Sr. agreed with Chatwins Group that
if the policy proceeds are insufficient to reimburse Chatwins Group for the
full amount of premiums paid, he would pay the shortfall to Chatwins Group.
This arrangement was assumed by Reunion in connection with the merger. No
premiums were paid by the Company in 2002.
As of October 24, 1994, Chatwins Group and Joseph C. Lawyer agreed to a
split-dollar life insurance arrangement. Pursuant to this arrangement,
Chatwins Group agreed to maintain a universal type life policy on Mr. Lawyer.
Chatwins Group will be reimbursed for the premiums it pays for such policy
from either the death benefit of the policy or its cash surrender value. Mr.
Lawyer agreed with Chatwins Group that if the policy proceeds are insufficient
to reimburse Chatwins Group for the full amount of premiums paid, he would pay
the shortfall to Chatwins Group. This arrangement was assumed by Reunion
Industries in connection with the merger. No premiums were paid by the
Company in 2002.
As of December 12, 1995, Chatwins Group and John G. Poole agreed to a
split-dollar life insurance arrangement. Pursuant to this arrangement,
Chatwins Group agreed to maintain two universal type life policies on Mr.
Poole. Chatwins Group will be reimbursed for the premiums it pays for these
policies from either the death benefit of the policies or their cash surrender
value. Mr. Poole agreed with Chatwins Group that if the policy proceeds are
insufficient to reimburse Chatwins Group for the full amount of premiums paid,
he would pay the shortfall to Chatwins Group. This arrangement was assumed by
Reunion Industries in connection with the merger. No premiums were paid by
the Company in 2002.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Reunion Industries has 16,278,519 shares of common stock outstanding as
of April 30, 2003. The following table sets forth information regarding the
beneficial ownership of our common stock by (i) each stockholder known to us
to own 5% or more of our common stock, (ii) each director of Reunion
Industries, (iii) each of the chief executive officer and the other named
executives of Reunion, and (iv) all current directors and executive officers
as a group. Except as set forth in the footnotes to the following table, each
stockholder has sole dispositive and voting power with respect to the shares
of our common stock shown as beneficially owned by him.
- 7 -
% of
Outstanding
Beneficial Owner Shares Owned Shares
-------------------------------- ------------------------- -----------
Charles E. Bradley, Sr. 6,601,464 (1)(2)(3)(5)(6) 40.6%
c/o Stanwich Partners, Inc.
62 Southfield Ave.
One Stamford Landing
Stamford, CT 06902
Kimball J. Bradley
c/o Reunion Industries, Inc.
11 Stanwix Street, suite 1400
Pittsburgh, PA 15222 6,378,582 (1)(5)(6) 39.2%
The Charles E. Bradley, Sr.
Family Limited Partnership
c/o Stanwich Partners, Inc.
62 Southfield Ave.
One Stamford Landing
Stamford, CT 06902 4,672,393 (5)(6) 28.7%
John G. Poole and the John Grier
Poole Family Limited Partnership
c/o Stanwich Partners, Inc.
62 Southfield Ave.
One Stamford Landing
Stamford, CT 06902 2,257,185 (4)(5) 13.9%
Stanwich Financial Services Corp.
62 Southfield Ave.
One Stamford Landing
Stamford, CT 06902 1,651,697 (2) 10.1%
Thomas N. Amonett 78,000 0.5%
Thomas L. Cassidy 62,362 0.4%
W.R. Clerihue 45,667 (7) 0.3%
Joseph C. Lawyer 701,751 (8) 4.3%
Franklin Myers 18,400 0.1%
John M. Froehlich 74,008 0.5%
Jack T. Croushore 195,187 1.2%
All Officers and Directors as
a group (10 individuals) 11,740,213 (7) 71.9%
(1) Includes 4,672,393 shares owned by The Charles E. Bradley, Sr. Family
Limited Partnership (the "Bradley Partnership"), of which Mr. Bradley, Sr.
owns 1% as general partner and 27% as a limited partner. The Partnership has
designated Mr. Kimball J. Bradley to vote these shares on its behalf.
Pursuant to Rule 13d-3, Mr. Charles E. Bradley, Sr. may be deemed to be the
beneficial owner of these shares with dispositive power (but no voting power)
with respect thereto that he shares with the Bradley Partnership, and Mr.
Kimball J. Bradley may be deemed to be the beneficial owner of these shares
with voting power (but no dispositive) with respect thereto that he shares
with the Bradley Partnership.
(2) Includes 1,651,697 shares owned by Stanwich Financial Services Corp.,
with which Mr. Bradley, Sr. shares voting and dispositive power. Mr. Bradley,
Sr. owns 100% of the parent company of Stanwich Financial Services Corp., and
may be deemed to be the beneficial owner of these shares. Disposition of
these shares is subject to the approval of the bankruptcy court before which
Stanwich Financial Services Corp.'s Chapter 11 case is pending.
(3) Includes 100,000 shares owned by Hanna Investment Corporation, with
which Mr. Bradley, Sr. shares voting and dispositive power. Mr. Bradley, Sr.
is the controlling stockholder of the parent company of Hanna Investment
Corporation and may be deemed to be the beneficial owner of these shares.
- 8 -
(4) Includes 1,499,746 shares owned by the John Grier Poole Family Limited
Partnership, of which Mr. Poole owns 1% and is the sole general partner.
Pursuant to Rule 13d-3, Mr. Poole may be deemed to be the beneficial owner of
these shares, with sole voting and dispositive power with respect thereto.
Also includes 139,808 shares as to which Mr. Poole has voting rights, but not
dispositive rights. Pursuant to Rule 13d-3, Mr. Poole may be deemed to be the
beneficial owner of these shares, with sole voting rights with respect
thereto.
(5) Pursuant to the Securities Pledge Agreement dated as of May 1, 1993
among the Charles E. Bradley, Sr. Family Limited Partnership, the John Grier
Poole Family Limited Partnership, and U.S. Bank, National Association, as
successor Collateral Agent to State Street Bank and Trust Company and the
First National Bank of Boston, the Bradley Partnership pledged 4,145,247
shares and the Poole Partnership pledged 552,703 shares to secure the
obligations of Reunion Industries under the Indenture, dated as of May 1,
1993, between Reunion and the Collateral Agent relating to certain Senior
Notes issued by Reunion Industries in 1993 that are due in 2003. Because
"Realization Events" have occurred under the Securities Pledge Agreement as a
result of the Company's failure to make certain payments due under the Senior
Notes, the Collateral Agent has the right to receive any dividends from, and
any proceeds from the sale of such pledged shares (but not more than the
amount of the debt secured by such pledges). The Collateral Agent also has
the right to vote these shares during the continuation of such event.
(6) Mr. Bradley, Sr. and the Bradley Partnership have pledged, respectively,
51,897 and 361,580 shares to Sovereign Bank to secure certain indebtedness of
Mr. Bradley, Sr. Because a default has occurred under the indebtedness,
Sovereign Bank has the right to receive any dividends from, and any proceeds
from the sale of, the pledged shares (but not more than the amount of the debt
secured by such pledges), and it may have the right to vote with respect to
these pledged shares.
(7) Includes options, exercisable currently or within 60 days, to purchase
40,667 shares of common stock.
(8) Includes 3,567 shares beneficially owned by Mr. Lawyer's wife, as to
which he has no voting or dispositive power. Mr. Lawyer may be deemed to be
the beneficial owner of these shares.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Related Parties
Reunion Industries, Inc. - Reunion is a publicly traded Delaware
corporation which is headquartered in Pittsburgh, Pennsylvania. Charles E.
Bradley, Sr. (Mr. Bradley) is chairman of the board and Chief Executive
Officer of Reunion. Kimball Bradley is President, Chief Operating Officer, a
director of Reunion and son of Mr. Bradley.
Stanwich Partners, Inc. - Stanwich Partners, Inc. (SPI) is engaged in
consulting services in the field of financial planning and reporting. Mr.
Bradley is the President, a director and shareholder of SPI.
Stanwich Financial Services Corp. - Stanwich Financial Services Corp.
(SFSC) is a privately held corporation in the structured settlement business.
SFSC is owned 100% by Mr. Bradley. On June 25, 2001, SFSC filed a voluntary
petition in the United States Bankruptcy Court for the District of Connecticut
for reorganization under Chapter 11 of the United States Bankruptcy Code.
NPS Acquisition Corp. - NPS Acquisition Corp. (NPSAC) was formed by Mr.
Bradley to acquire and hold NAPTech Pressure Systems (NAPTech). NAPTech was
based in Clearfield, Utah and manufactured seamless steel pressure vessels.
In January 2001, NPSAC was merged into Reunion.
CPS Leasing, Inc. - CPS Leasing, Inc. (CPSL) is a subsidiary of Consumer
Portfolio Services, Inc. (CPS). Mr. Bradley and Mr. Poole are stockholders of
CPS. Mr. Poole is a director of CPS and Mr. Bradley was a director of CPS
until July 2001. Charles E. Bradley Jr., Mr. Bradley's son, is President of
CPS. CPSL is primarily engaged in machinery and equipment lease financing.
Transactions and Balances
SPI Consulting Agreement - Reunion maintained a consulting agreement with
SPI under which $300,000 was recorded as expense during each of the years
ended December 31, 2001 and 2000, respectively. The agreement was terminated
effective September 30, 2002. During 2002, $225,000 was expensed related to
this agreement. The Company paid SPI $127,795 under this agreement during
2002. At December 31, 2002, $117,205 was owed to SPI under this agreement.
No amounts were owed under this agreement as of December 31, 2001.
SFSC Notes Payable - The Company assumed three notes payable to SFSC in
connection with acquisitions by merger in 2000 and 2001. At December 31,
2002, their principal balances were $2,998,000, $500,000 and $100,000. During
2002, no interest was paid to SFSC related to these notes payable. At
December 31, 2002, the total of accrued and unpaid interest due to SFSC
related to these notes payable was $1,219,572.
SFSC Note Receivable - SFSC owes Reunion $310,000 principal and $155,000
of interest for a loan originally made in 1999 with interest at 15%.
CPS Leasing, Inc. - During 2002, lease payments totaling $580,000 were
paid to CPSL. At December 31, 2002, the Company has future minimum rental
commitments under noncancellable operating leases with CPSL totaling
$2,144,000. No new leases were entered into in 2002.
SFSC Collateral Fees - SFSC provided side collateral to support Reunion's
borrowings under its credit facility with Bank of America. Under this
arrangement, SFSC is to receive a 5% collateral fee for as long as the
collateral is in place. During 2002, the Company recorded expense of $283,000
related to this arrangement. No payments were made under this arrangement
during 2002. At December 31, 2002, accrued and unpaid fees totaling $690,000
were due to SFSC.
- 10 -
In March 2000, SFSC pledged a $5,000,000 note from CPS to secure the
obligations of NPSAC to the former owners of the business. NPSAC agreed to
pay SFSC a 2% credit support fee for this pledge. In 2001, the Company
assumed this credit support obligation in its acquisition by merger of NPSAC.
During 2002, no fees were paid to SFSC. At December 31, 2002, accrued and
unpaid fees totaling $227,000 were due to SFSC.
Cash Surrender Value of Life Insurance Policies - The Company pays the
premiums on life insurance policies covering Messrs. Bradley, Lawyer and
Poole. Pursuant to these arrangements, the Company will be reimbursed for the
premiums it pays for such policies from either the death benefit of the policy
or their cash surrender value. The covered individuals have agreed with the
Company that if the policy proceeds are insufficient to reimburse the Company
for the full amount of the premiums paid, they will cover the shortfall. As
of December 31, 2002, premiums paid by the Company since their issuance in
1994 in excess of the cash surrender values of the policies totaled
$1,031,000.
Mr. Bradley Note Payable - Reunion owed Mr. Charles E. Bradley $1,017,000
related to its plastics business. This note and any accrued and unpaid
interest thereunder were assigned to SFSC in 2000. No interest was paid in
2002. At December 31, 2002, accrued and unpaid interest due related to this
notes payable totaled $168,000.
Mr. Bradley Guarantee - Through the NPSAC acquisition by merger, the
Company assumed an obligation to pay Mr. Charles E. Bradley a guarantee fee in
connection with his guarantee of certain obligations of NPSAC to the former
owners of the NAPTech business that NPSAC acquired in 1998 (the "Bradley
Guarantee"). At December 31, 2001, a total of $90,000 was due to Mr. Bradley
under this agreement. During 2002, Mr. Bradley assigned his right to this
guarantee fee plus interest at approximately 11%, totaling $100,000, to
Messrs. Lawyer and Froehlich in repayment of loans totaling $100,000 they made
to Mr. Bradley. These employees also had received a total of $100,000 in
advances from the Company during 2001. See "Employee Advances" below.
Mr. Bradley Note Payable - In January 2003, the Company issued to Mr.
Charles E. Bradley a promissory note for $500,000 to evidence its obligation
to reimburse him for a payment made by him in that amount under the Bradley
Guarantee.
Employee Advances - At December 31, 2001, the Company had non-interest
bearing advances due from five employees totaling $213,000, which was also the
highest balance during 2002. During 2002, Messrs. Lawyer and Froehlich repaid
their advances totaling $100,000 by waiving their rights to the guarantee fee
plus interest they received by assignment from Mr. Bradley. See "Mr. Bradley
Guarantee" above.
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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The Company hereby amends Item 15 to correct certain typographical errors
relating to NOTE 9: STOCK OPTIONS in the consolidated financial statements for
the year ended December 31, 2002. Specifically, NOTE 9: STOCK OPTIONS
indicated that, of the 44,000 remaining outstanding options to purchase
Reunion common stock, none were exercisable at December 31, 2002. NOTE 9:
STOCK OPTIONS is hereby amended to indicate that, of the 44,000 remaining
outstanding options to purchase Reunion common stock, 37,334 were exercisable
at December 31, 2002 as follows:
Remaining Number Number
Exercise Contractual Outstanding Exercisable
Price Life at 12/31/02 at 12/31/02
--------- ----------- ----------- -----------
$1.0000 7.50 years 9,000 9,000
$1.4500 8.50 years 10,000 3,334
$3.0000 7.25 years 10,000 10,000
$5.0625 5.00 years 15,000 15,000
--------- ---------
44,000 37,334
========= =========
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Date: April 30, 2003 REUNION INDUSTRIES, INC.
--------------
By: /s/ Charles E. Bradley, Sr.
----------------------------
Charles E. Bradley, Sr.
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report on Form 10-K/A has been signed by the following persons in the
capacities and on this 30th day of April, 2003.
Signature Title
--------- -----
/s/ Kimball J. Bradley President, Chief Operating Officer
--------------------------- and Director
Kimball J. Bradley
/s/ Joseph C. Lawyer Vice Chairman and Director
---------------------------
Joseph C. Lawyer
/s/ John M. Froehlich Executive Vice President, Chief
--------------------------- Financial Officer, Treasurer and
John M. Froehlich Assistant Secretary (chief financial
and accounting officer)
/s/ Thomas N. Amonett Director
---------------------------
Thomas N. Amonett
/s/ Thomas L. Cassidy Director
---------------------------
Thomas L. Cassidy
/s/ W. R. Clerihue Director
---------------------------
W. R. Clerihue
/s/ Franklin Myers Director
---------------------------
Franklin Myers
/s/ John G. Poole Director
---------------------------
John G. Poole
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