<PAGE>
==============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
For the quarterly period ended June 30, 2000
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---- ----
COMMISSION FILE NUMBER 1-333-36675
--------------------
BURKE INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 94-3081144
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13767 FREEWAY DRIVE
SANTA FE SPRINGS, CALIFORNIA 90670
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (800) 221-0923
--------------------
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, as amended, 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 .
--- ---
As of August 14, 2000, the number of shares outstanding of the
Registrant's Common Stock was 3,894,500.
===============================================================================
<PAGE>
BURKE INDUSTRIES, INC.
QUARTERLY REPORT ON FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE NUMBER
<S> <C> <C>
Item 1 Financial Statements
Condensed Consolidated Statements of Operations for the
three months and six months ended June 30, 2000 and
July 2, 1999 (unaudited) 3
Condensed Consolidated Balance Sheets as of June 30, 2000
(unaudited) and December 31, 1999 4
Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 2000 and July 2, 1999
(unaudited) 5
Notes to Condensed Consolidated Financial Statements (unaudited) 6-7
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations 8-11
Item 3 Quantitative and Qualitative Disclosures About Market Risk 12
PART II OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 12
Signature 13
</TABLE>
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BURKE INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the Three Month Period Ended For the Six Month Period Ended
June 30, 2000 July 2, 1999 June 30, 2000 July 2, 1999
------------------ ------------------- ----------------- ----------------
(Unaudited)
<S> <C> <C> <C> <C>
Net sales........................... $ 27,197 $ 28,427 $ 54,851 $ 57,061
Costs and expenses:.................
Cost of sales................. 18,996 20,245 38,855 40,675
Selling, general and
administrative................. 5,187 4,181 10,322 8,698
Amortization of goodwill....... 505 505 1,009 1,009
------------------ ------------------- ----------------- ----------------
Income from operations.............. 2,509 3,496 4,665 6,679
Interest expense, net............... 4,017 3,798 7,938 7,536
------------------ ------------------- ----------------- ----------------
(Loss) before income tax benefit.... (1,508) (302) (3,273) (857)
Income tax benefit.................. ---- (121) ---- (342)
------------------ ------------------- ----------------- ----------------
Net loss............................ $ (1,508) $ (181) $ (3,273) $ (515)
================== =================== ================= ================
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
3
<PAGE>
BURKE INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
June 30, 1999
2000 (Derived from audited
(Unaudited) financial statements)
----------------------- -----------------------
ASSETS (In Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents........................................... $ 154 $ 348
Trade accounts receivable, less allowance of $854 in 2000 and
$658 in 1999...................................................... 15,133 13,627
Inventories......................................................... 15,813 15,585
Prepaid expenses and other current assets........................... 1,427 1,510
Deferred income tax assets.......................................... 503 503
----------------------- -----------------------
Total current assets.............................................. 33,030 31,573
Property, Plant and Equipment:
Land and improvements............................................... 2,107 2,107
Buildings and improvements.......................................... 11,210 11,210
Equipment........................................................... 19,543 19,543
Leasehold improvements.............................................. 1,040 1,040
Assets under capital leases......................................... 1,589 1,589
----------------------- -----------------------
35,489 35,489
Accumulated depreciation and amortization........................... 15,678 14,464
----------------------- -----------------------
19,811 21,025
Construction in process............................................. 841 419
----------------------- -----------------------
Net property, plant and equipment................................. 20,652 21,444
Other Assets:
Prepaid pension cost................................................... 442 442
Goodwill, net.......................................................... 26,709 27,718
Deferred financing costs, net.......................................... 5,307 5,718
Other assets........................................................... 135 139
----------------------- -----------------------
Total other assets................................................ 32,593 34,017
----------------------- -----------------------
Total assets................................................ $ 86,275 $ 87,034
======================= =======================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Revolving line of credit............................................ $ 4,728 $ --
Trade accounts payable and accrued expenses......................... 6,764 8,174
Accrued compensation and related liabilities........................ 1,405 1,743
Accrued interest.................................................... 5,615 5,528
Payable to shareholders............................................. 785 785
Capital lease obligations........................................... 514 514
Income taxes payable................................................ 222 481
----------------------- -----------------------
Total current liabilities......................................... 20,033 17,225
Senior notes........................................................... 110,000 110,000
Floating notes......................................................... 30,000 30,000
Capital lease obligations, non-current 375 669
Other non-current liabilities.......................................... 444 444
Deferred income tax liabilities........................................ 2,388 2,388
Preferred stock, no par value; 50,000 shares authorized; 30,000
Series A Redeemable shares designated; 18,611 Series A shares issued
and outstanding; 5,000 Series B Redeemable shares designated;
2,326 Series B shares issued and outstanding (aggregate liquidation
and redemption preference $18,000)..................................... 21,696 20,536
Shareholders' equity (deficit):
Convertible preferred stock, no par value: 3,000 Series C shares
designated, issued and outstanding (liquidation preference
$3,000)........................................................... 3,000 3,000
Class A common stock, no par value: Authorized shares-20,000,000
issued and outstanding shares--3,894,500 in 2000 and 1999......... 25,708 25,708
Accumulated deficit.................................................... (127,369) (122,936)
----------------------- -----------------------
Total shareholders' equity (deficit)................................ (98,661) (94,228)
----------------------- -----------------------
Total liabilities and shareholders' equity (deficit).............. $ 86,275 $ 87,034
======================= =======================
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
4
<PAGE>
BURKE INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the Six Month Period
Ended
-----------------------------
June 30, July 2,
2000 1999
------------- -------------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net (loss) $(3,273) $ (515)
Adjustments to reconcile net (loss) to net cash used in operating
activities:
Depreciation and amortization:
Property, plant and equipment 1,214 1,039
Goodwill 1,009 1,009
Debt financing costs 411 412
Other adjustments to reconcile net (loss) to net cash used
in operating activities (3,861) (2,691)
------------- -------------
Net cash used in operating activities (4,500) (746)
INVESTING ACTIVITIES
Purchases of property, plant and equipment (422) (1,500)
------------- -------------
Net cash used in investing activities (422) (1,500)
FINANCING ACTIVITIES
Issuance of preferred stock -- 244
Borrowings under revolving line of credit 9,228 --
Repayments under revolving line of credit (4,500) --
------------- -------------
Net cash provided by financing activities 4,728 244
------------- -------------
Decrease in cash (194) (2,002)
Cash at beginning of period 348 2,981
------------- -------------
Cash at end of period $ 154 $ 979
============= =============
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of the
Company have been prepared without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. The condensed
consolidated balance sheet as of December 31, 1999 was derived from audited
financial statements. The accompanying condensed consolidated financial
statements should be read in conjunction with the audited consolidated
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1999.
The financial information included herein reflects all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
period. The results of operations for the three and six months ended June 30,
2000 are not necessarily indicative of the results to be expected for the
full year. Certain prior year reclassifications have been made in order to
conform to current year presentation.
The Company uses a 52 to 53-week fiscal year ending on the Friday
closest to December 31. The Company also follows a thirteen-week quarterly
cycle. The six-month periods ended on June 30, 2000 and July 2, 1999.
2. INVENTORIES
Inventories consist of the following at the period ended:
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------- --------------
(In thousands)
<S> <C> <C>
Raw materials................................................... $ 5,001 $ 5,540
Work-in-process................................................. 1,982 1,861
Finished goods.................................................. 8,830 8,184
------------- --------------
$15,813 $15,585
============= ==============
</TABLE>
3. SEGMENT INFORMATION
The Company has two reportable business segments: BurkeMercer (organic
products) and Engineered Polymers (silicone products). The BurkeMercer division
produces and distributes rubber and vinyl wall base, other floor covering
accessory products, flexible membranes and other organic rubber products. The
Engineered Polymers division produces and distributes precision silicone seals
and other products used on commercial and military aircraft as well as high
performance silicone truck and bus engine hoses and other silicone rubber
products.
6
<PAGE>
BURKE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
<TABLE>
<CAPTION>
BurkeMercer Engineered Polymers Total
------------ ---------------------- -----------
(Amounts in Thousands)
<S> <C> <C> <C>
THREE MONTH PERIOD ENDED JUNE 30, 2000
Revenues from external customers............ $16,060 $11,137 $27,197
Segment profit.............................. 3,007 1,122 4,129
THREE MONTH PERIOD ENDED JULY 2, 1999
Revenues from external customers............ $16,165 $12,262 $28,427
Segment profit.............................. 3,051 1,206 4,257
SIX MONTH PERIOD ENDED JUNE 30, 2000
Revenues from external customers............ $31,328 $23,523 $54,851
Segment profit.............................. 5,286 2,426 7,712
SIX MONTH PERIOD ENDED JULY 2, 1999
Revenues from external customers............ $31,158 $25,903 $57,061
Segment profit.............................. 5,585 2,837 8,422
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTH PERIOD FOR THE SIX MONTH PERIOD
ENDED ENDED
JUNE 30, 2000 JULY 2, 1999 JUNE 30, 2000 JULY 2, 1999
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
PROFIT
Total profit for reportable segments $4,129 $4,257 $7,712 $8,422
Unallocated items:
Corporate general and administrative
expenses 1,115 256 2,038 734
Amortization of goodwill related to the
Mercer acquisition 505 505 1,009 1,009
Interest expense, net 4,017 3,798 7,938 7,536
------------- ------------ ------------- ------------
(Loss) before income taxes ($1,508) ($302) ($3,273) ($857)
============= ============ ============= ============
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion should be read in conjunction with the
Company's Unaudited Condensed Consolidated Financial Statements and Notes
thereto included elsewhere in this Quarterly Report on Form 10-Q.
This Report contains certain forward-looking statements and information
relating to the Company that are based on the beliefs of management as well as
assumptions made by and information currently available to management. The words
"anticipates," "believes," "estimates," "expects," "plans," "intends," and
similar expressions, as they relate to the Company or its management, are
intended to identify forward-looking statements. Such statements reflect the
current views of the Company, with respect to future events and are subject to
certain risks, uncertainties and assumptions, that could cause actual results to
differ materially from those expressed in any forward-looking statement,
including, without limitation: competition from other manufacturers in the
Company's aerospace, flooring or commercial product lines, loss of key
employees, general economic conditions and adverse factors impacting the
aerospace industry such as changes in government procurement policies. Should
one or more of these risks or uncertainties materialize, or should the
underlying assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated or expected. The
Company does not intend to update these forward-looking statements.
RESULTS OF OPERATIONS
The Company operates within one industry segment, elastomer products,
and is organized into two business segments: BurkeMercer and Engineered
Polymers. The Company's products are organized into three product groups:
Aerospace and Defense Products, which produces precision silicone seals and
other products used on commercial and military aircraft; Flooring Products,
which produces and distributes rubber and vinyl cove base and other floor
covering accessory products; and Commercial Products, which produces various
intermediate and finished silicone and organic rubber products.
The following table sets forth certain income statement information for
the Company for the three month period ended June 30, 2000 compared to the three
month period ended July 2, 1999:
<TABLE>
<CAPTION>
Fiscal Second Quarter
=====================================================================
Percentage Percentage
2000 of Net Sales 1999 of Net Sales
=====================================================================
(dollars in thousands)
<S> <C> <C> <C> <C>
Net sales:
Aerospace and Defense Products......... $6,565 24.1% $7,812 27.5%
Flooring Products....................... 11,936 43.9% 12,188 42.9%
Commercial Products..................... 8,696 32.0% 8,427 29.6%
------------------------------ -------------------------------
Net sales.................................... 27,197 100.0% 28,427 100.0%
Cost of sales................................ 18,996 69.9% 20,245 71.2%
------------------------------ -------------------------------
Gross profit................................. 8,201 30.1% 8,182 28.8%
Selling, general and
administrative expenses.................... 5,187 19.1% 4,181 14.7%
Amortization of goodwill..................... 505 1.8% 505 1.8%
------------------------------ -------------------------------
Income from operations....................... 2,509 9.2% 3,496 12.3%
Interest expense............................. 4,017 14.7% 3,798 13.4%
------------------------------ -------------------------------
Loss before income tax benefit (1,508) -5.5% (302) -1.1%
Income tax provision (benefit) --- --- (121) -0.4%
------------------------------ -------------------------------
Net loss.................................... ($1,508) -5.5% ($181) -0.7%
============================== ===============================
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Fiscal Six Months
=====================================================================
Percentage Percentage
2000 of Net Sales 1999 of Net Sales
=====================================================================
(dollars in thousands)
<S> <C> <C> <C> <C>
Net sales:
Aerospace and Defense Products......... $14,195 25.9% $16,926 29.7%
Flooring Products....................... 23,430 42.7% 23,145 40.6%
Commercial Products..................... 17,226 31.4% 16,990 29.7%
------------------------------ -------------------------------
Net sales.................................... 54,851 100.0% 57,061 100.0%
Cost of sales................................ 38,855 70.8% 40,675 71.3%
------------------------------ -------------------------------
Gross profit................................. 15,996 29.2% 16,386 28.7%
Selling, general and
administrative expenses.................... 10,322 18.8% 8,698 15.2%
Amortization of goodwill..................... 1,009 1.8% 1,009 1.8%
------------------------------ -------------------------------
Income from operations....................... 4,665 8.6% 6,679 11.7%
Interest expense............................. 7,938 14.5% 7,536 13.2%
------------------------------ -------------------------------
Loss before income tax benefit.............. (3,273) -5.9% (857) -1.5%
Income tax benefit........................... -- -- (342) -0.6%
------------------------------ -------------------------------
Net loss.................................... ($3,273) -5.9% ($515) -0.9%
============================== ===============================
</TABLE>
COMPARISON OF THE THREE-MONTH PERIOD ENDED JUNE 30, 2000 VERSUS THE THREE-MONTH
PERIOD ENDED JULY 2, 1999.
NET SALES. Total net sales decreased 4.3%, from $28.4 million for the
three-month period ended July 2, 1999 to $27.2 million for the same period in
2000. Aerospace and Defense Products sales decreased 16.0%, from $7.8 million
for the three-month period ended July 2, 1999 to $6.6 million for the same
period in 2000, due to a decrease in demand for commercial and military
products. Flooring Products net sales decreased 2.1% from $12.2 million for the
three-month period ended July 2, 1999 to $11.9 million for the same period in
2000, due to lower demand for vinyl flooring and cove base products. Commercial
Products sales increased 3.2%, from $8.4 million for the three-month period
ended July 2, 1999 to $8.7 million for the same period in 2000. The increase in
sales as compared to the prior year was the result of stronger demand for
commercial silicone specialty products.
COST OF SALES. Cost of sales decreased 6.2%, from $20.2 million for the
three-month period ended July 2, 1999 to $19.0 million for the same period in
2000. As a percentage of net sales, gross profit increased from 28.8% for the
three-month period ended July 2, 1999 to 30.1% for the same period in 2000. The
improved gross profit percentage was due to an improved sales mix resulting from
a greater proportion of net sales of higher margin Flooring and Commercial
Products in the three-month period.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased 24.1%, from $4.2 million for the three-month
period ended July 2, 1999 to $5.2 million for the same period in 2000. As a
percentage of net sales, selling, general and administrative expenses increased
from 14.7% for the three-month period ended July 2, 1999 to 19.1% for the same
period in 2000. The increase in expenses was due to increased shipping and
warehousing costs and one-time expenses associated with the recent management
reorganization within the Company.
AMORTIZATION OF GOODWILL. Amortization of goodwill was $0.5 million for
the three-month period ended June 30, 2000, which was unchanged from the same
period in 1999.
9
<PAGE>
INCOME FROM OPERATIONS. As a result of the above factors, income from
operations decreased 28.2%, from $3.5 million for the three-month period ended
July 2, 1999 to $2.5 million for the same period in 2000.
INTEREST EXPENSE. Interest expense increased from $3.8 million for the
three-month period ended July 2, 1999 to $4.0 million for the same period in
2000. The increase is due to the Company's use of its Credit Facility during the
quarter, and the interest expense associated with the capital lease for the
Company's new computer system which was entered into in March of 1999.
NET LOSS. As a result of the above factors, net loss increased from
$0.2 million for the three-month period ended July 2, 1999 to a loss of $1.5
million for the same period in 2000.
COMPARISON OF THE SIX-MONTH PERIOD ENDED JUNE 30, 2000 VERSUS THE SIX-MONTH
PERIOD ENDED JULY 2, 1999.
NET SALES. Total net sales decreased 3.9%, from $57.1 million for the
six-month period ended July 2, 1999 to $54.9 million for the same period in
2000. Aerospace and Defense Products sales decreased 16.1%, from $16.9 million
for the six-month period ended July 2, 1999 to $14.2 million for the same period
in 2000, due to decreases in demand for commercial and military products.
Flooring Products net sales increased 1.2%, from $23.1 million for the six-month
period ended July 2, 1999 to $23.4 million for the same period in 2000, due to
higher demand for both vinyl and rubber flooring and cove base products.
Commercial Products sales increased 1.4%, from $17.0 million for the six-month
period ended July 2, 1999 to $17.2 million for the same period in 2000. The
increase in sales as compared to the prior year was the result of higher demand
for the Company's commercial silicone specialty products.
COST OF SALES. Cost of sales decreased 4.5%, from $40.7 million for the
six-month period ended July 2, 1999 to $38.9 million for the same period in
2000, due primarily to the decrease in net sales. As a percentage of net sales,
gross profit increased from 28.7% for the six-month period ended July 2, 1999 to
29.2% for the same period in 2000. The increase in gross profit percentage was
due to an improved sales mix resulting from a higher proportion of net sales of
the higher margin Flooring and Commercial Products in the six month period. The
improved sales mix helped offset the impact of the year on year reduction in net
sales of Aerospace and Defense products, which have a high proportion of fixed
operating expenses.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased 18.7%, from $8.7 million for the six-month
period ended July 2, 1999 to $10.3 million for the same period in 2000. As a
percentage of net sales, selling, general and administrative expenses increased
from 15.2% for the six-month period ended July 2, 1999 to 18.8% for the same
period in 2000. The increase in expenses was due to increased shipping and
warehousing costs and one-time costs associated with the recent management
reorganization within the Company.
AMORTIZATION OF GOODWILL. Amortization of goodwill was $1.0 million for
the six-month period ended June 30, 2000, which was unchanged from the same
period in 1999.
INCOME FROM OPERATIONS. As a result of the above factors, income from
operations decreased 30.2%, from $6.7 million for the six-month period ended
July 2, 1999 to $4.7 million for the same period in 2000.
10
<PAGE>
INTEREST EXPENSE. Interest expense increased from $7.5 million for the
six-month period ended July 2, 1999 to $7.9 million for the same period in 2000.
The increase is due to the debt service associated with the Company's use of its
Credit Facility during the quarter, and the interest expense associated with the
capital lease for the Company's new computer system which was entered into in
March of 1999.
NET LOSS. As a result of the above factors, net loss increased from
$0.5 million for the six-month period ended July 2, 1999 to a loss of $3.3
million for the same period in 2000.
INCOME TAX PROVISION (BENEFIT)
For the three and six month periods ended June 30, 2000, the Company
did not record an income tax provision due to operating losses.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW. The Company's principal uses of cash are to finance working
capital, capital expenditures for property, plant and equipment, internal growth
and debt service.
CAPITAL REQUIREMENTS. The Company expects to spend approximately $2.0
million during 2000 on capital expenditures not directly related to
acquisitions. Cash flow from operations, to the extent available, may also be
used to fund a portion of any acquisition expenditures. The Company anticipates
that its principal use of cash during 2000 will be working capital requirements,
capital expenditures and debt service requirements. Based upon current and
anticipated levels of operations, the Company believes that its cash flow from
operations, together with amounts available under the Credit Facility (described
below), will be adequate to meet its anticipated requirements for the
foreseeable future for working capital, capital expenditures and interest
payments.
SOURCES OF CAPITAL. Under a Loan and Security Agreement with
NationsBank, N.A., as administrative agent, and other lending institutions party
thereto, the Company has a borrowing capacity of $25.0 million (the "Credit
Facility"). The Credit Facility matures in August 2002. Interest on loans under
the Credit Facility bear interest at rates based upon either, at the Company's
options, Eurodollar Rates plus a margin of 2.5% or upon the Prime Rate. Loans
under the Credit Facility are secured by security interests in substantially all
of the assets of the Company and are guaranteed by any and all current or future
subsidiaries of the Company, which guarantees are secured by substantially all
of the assets of such subsidiaries. The Credit Facility contains customary
covenants restricting the Company's ability to, among other things, incur
additional indebtedness, create liens or other encumbrances, pay dividends or
make other restricted payments, make investments, loans and guarantees or sell
or otherwise dispose of a substantial portion of assets to, or merge or
consolidate with, another entity. The Credit Facility also contains a number of
financial covenants that will require the Company to meet certain ratios and
tests and provide that a change of control of the Company (as defined in the
Credit Facility) will constitute an event of default.
11
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As reported by the Company in its Annual Report on Form 10-K for the
fiscal year ended December 31, 1999, the Company is exposed to market risks
related to fluctuations in interest rates on its Senior and Floating-Rate Notes.
The Company does not currently use interest rate swaps or other types of
derivative financial instruments.
Management does not believe that the future market rate risk related to
the Senior Notes and Floating-Rate Notes will have a material impact on the
Company's financial position, results of operations or liquidity.
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS.
EXHIBIT NO. DESCRIPTION
3.1 Amended and Restated Articles of Incorporation of the
Company (1)
3.2 By-laws of the Company (1)
10.1 Letter Agreement, dated June 11, 2000, modifying and
amending the Lease, dated November 17, 1995, by and
between Donald M. Hypes Trust dated April 25, 1983 and
Burke Industries, Inc.
10.2 Amendment to Lease, made and entered into as of July 19,
2000, by and between The Stern Westwood & Santa Fe
Springs Family Limited Partnership and Burke Industries,
Inc.
10.3 Extension and Fifth Amendment of Lease, dated as of
February 23, 2000, by and between RTC Properties, Inc.
and Burke Industries, Inc.
27 Financial Data Schedule
----------------------------
(1) Incorporated by reference to the Company's Registration
Statement on Form S-4, File No. 333-36675, as filed with the
Securities and Exchange Commission on September 29, 1997, as
amended.
(b) REPORTS ON FORM 8-K
The Company filed no reports on Form 8-K during the six months
ended June 30, 2000.
12
<PAGE>
SIGNATURE
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 in the City of Santa Fe
Springs, State of California on the 14th day of August, 2000.
BURKE INDUSTRIES, INC.
By: /s/ STEPHEN G. GEANE
-----------------------
Stephen G. Geane
Chief Financial Officer
13
