<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A-1
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-828
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BIRD CORPORATION
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-3082903
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
980 Washington Street, Suite 120 Dedham, Massachusetts 02026-6714
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(Address of principal executive offices) (Zip Code)
(617) 461-1414
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(Registrant's telephone number, including area code)
- -----------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed, since last
report.)
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
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of November 1, 1994. 4,088,778 shares.
<PAGE> 2
BIRD CORPORATION
INDEX
PAGE NO.
Part I. Financial Information:
Consolidated Balance Sheets
September 30, 1994 and December 31, 1993 ............. 2
Consolidated Statements of Operations
Three and Nine Months Ended September 30, 1994 and 1993... 4
Consolidated Statements of Cash Flows For The
Nine Months Ended September 30, 1994 and 1993 ............ 5
Notes to Consolidated Financial
Statements .............................................. 6
Management's Discussion and Analysis of
Financial Condition and Results of
Operations .............................................. 17
Part II. Other Information ................................ 30
1
<PAGE> 3
BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
(000) Omitted (except share data) September 30, December 31,
1994 1993
------------- ------------
<S> <C> <C>
Assets
Current Assets:
Cash and equivalents $200 $7,518
Accounts and notes receivable 28,541 36,969
Allowance for doubtful accounts (3,344) (4,273)
Inventories 10,767 22,157
Prepaid Expenses 2,632 4,046
Receivable from sale of assets 1,996 0
Deferred income tax 170 170
------- --------
Total current assets 40,962 66,587
------- --------
Property, Plant and Equipment:
Land and land improvements 3,145 4,716
Buildings 11,437 14,700
Machinery and equipment 29,686 40,686
Construction in progress 4,480 14,882
------- --------
48,748 74,984
Less - Depreciation and amortization 23,390 30,410
------- --------
25,358 44,574
------- --------
Other investments 2,868 5,551
Assets held for sale 7,500 0
Other assets 1,660 1,466
Deferred income tax 5,051 5,051
------- --------
$83,399 $123,229
======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 4
BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED)
September 30, December 31,
(000) Omitted (except share data) 1994 1993
------------- ------------
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities:
Long-term debt, portion due within one year $666 $3,400
Long-term debt in default, classified as current 28,158 0
Accounts payable and accrued expenses 16,392 26,377
Retirement plan contributions payable 384 513
Income taxes payable 452 809
Liquidation Reserve 2,777 5,398
------- --------
Total current liabilities 48,829 36,497
------- --------
Long-term Debt, Portion Due After One Year 1,140 43,127
------- --------
Other Liabilities 1,250 3,021
------- --------
Deferred Income Taxes 23 23
------- --------
Stockholders' Equity
5% cumulative preferred stock, par value
$100. Authorized 15,000 shares;issued 5,820
shares (liquidating preference $110 per share,
aggregating $640 before dividends) 582 582
Preference stock, par value $1. Authorized
1,500,000 shares; issued 814,300 shares
of $1.85 cumulative convertible preference
stock (liquidating preference $20 per share,
aggregating $16,286 before dividends) 814 814
Common stock, par value $1. Authorized
15,000,000 shares; issued 4,338,550 shares
in 1994, 4,291,565 shares in 1993 4,339 4,291
Other capital 26,899 26,456
Retained earnings 2,611 11,551
------- --------
35,245 43,694
Less -
Treasury stock, at cost:
Common - 249,664 shares in 1994
and 163,791 in 1993 (2,795) (2,179)
Unearned compensation (293) (954)
------- --------
32,157 40,561
------- --------
$83,399 $123,229
======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 5
BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
(000) Omitted (except share data)
Net Sales $46,246 $53,438 $141,595 $140,512
------- ------- -------- --------
Costs and expenses:
Cost of sales 37,077 42,652 114,813 111,574
Selling, general and
administrative expense 6,492 7,799 22,371 23,065
Interest expense 1,612 547 4,138 1,485
Net discontinued business
activities (income) (2,677) 0 (1,416) 0
Non recurring income 0 0 0 (1,377)
Equity losses from partnership 206 297 1,644 859
Other expense 232 354 1,619 1,364
------- ------- -------- --------
Total costs and expenses 42,942 51,649 143,169 136,970
------- ------- -------- --------
Earnings (loss) from continuing operations
before income taxes 3,304 1,789 (1,574) 3,542
Provision for income taxes 0 216 0 428
------- ------- -------- --------
Earnings (loss) from continuing operations 3,304 1,573 (1,574) 3,114
------- ------- -------- --------
Discontinued operation:
Earnings (loss) from operations of
discontinued environmental business 0 (2,857) 2,019 (5,378)
Loss on disposal of environmental business (907) 0 (9,384) 0
------- ------- -------- --------
Net loss from discontinued operation (907) (2,857) (7,365) (5,378)
------- ------- -------- --------
Cumulative effect of accounting change 0 0 0 2,733
------- ------- -------- --------
Net earnings (loss) before dividends $2,397 ($1,284) ($8,939) $469
Preferred and preference stock
cumulative dividends 384 384 1,152 1,152
------- ------- -------- --------
Net earnings (loss) applicable to common
stockholders $2,013 ($1,668) ($10,091) ($683)
======= ======= ======== ========
Primary earnings (loss) per common share:
Continuing operations $0.76 $0.29 ($0.67) $0.48
Discontinued operation ($0.24) ($0.70) ($1.82) ($1.32)
Cumulative effect of accounting change $0.00 $0.00 $0.00 $0.67
------- ------- -------- --------
Net earnings (loss) after dividends $0.52 ($0.41) ($2.49) ($0.17)
======= ======= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 6
BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
Nine Months Ended
(000) Omitted September 30,
1994 1993
---- ----
<S> <C> <C>
Cash flow provided (used)
by operations:
Net earnings (loss) ($8,939) $469
Adjustments to reconcile to net
cash used by operations:
Depreciation and amortization 4,070 4,680
Provision for losses on accounts receivable 1,044 1,585
Cumulative effect of accounting change 0 (2,733)
Gain on sale of distribution business (1,416) 0
Loss (gain) on disposal of environmental business 9,384 (825)
Changes in balance sheet items:
Accounts receivable (5,566) (15,157)
Inventories 603 (2,003)
Prepaid expenses (2,727) (2,232)
Liquidation reserve (4,461) 0
Liabilities not related to
financing activities (4,722) 8,312
Other assets 660 944
-------- ----------
Cash flow used by operations (12,070) (6,960)
-------- ----------
Cash flows from investing activities:
Acquisition of property, plant and equipment (5,055) (11,328)
Proceeds from disposal of assets 27,195 9,141
Other investments (1,313) (1,861)
-------- ----------
Net cash provided by (used in) investing activities 20,827 (4,048)
-------- ----------
Cash flows from financing activities:
Debt proceeds 119,451 1,030,600
Debt repayments (136,014) (1,020,648)
Dividends paid 0 (1,770)
Other equity changes 488 303
-------- ----------
Net cash provided by (used in) financing activities (16,075) 8,485
-------- ----------
Net decrease in cash and equivalents (7,318) (2,523)
Cash and cash equivalents at beginning of year 7,518 3,223
-------- ----------
Cash and cash equivalents at end of period $200 $700
======== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 7
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying unaudited Consolidated
Financial Statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly its financial
position as of September 30, 1994 and December 31, 1993 and the
results of its operations and cash flows for the three and nine month
periods ended September 30, 1994 and 1993.
2. The Company's business is seasonal to the extent that activity in the
outside repair and remodeling business and in new construction
declines in certain areas of the country during the winter months.
Accordingly, the results of operations for the three and nine month
periods ended September 30, 1994 and 1993 are not necessarily
indicative of the results to be expected for the full year.
3. Primary earnings(loss) per common share are determined after deducting
the dividend requirements of the preferred and preference shares and
are based on the weighted average number of common shares outstanding
during each period increased by the effect of dilutive stock options.
Fully diluted earnings(loss) per common share also give effect to the
reduction in earnings per share which would result from the conversion
of the $1.85 cumulative convertible preference stock at the
beginning of each period. Fully diluted loss per share amounted to
$1.87 for the nine month period ended September 30, 1994.
4. It is not practical to separate LIFO inventories by raw materials and
finished goods components; however, the following table presents
these components on a current cost basis with the LIFO reserve shown
as a reduction.
September 30, December 31,
1994 1993
------------- ------------
(Thousands of dollars)
Current Costs:
Raw Materials $ 3,304 $ 3,541
Finished goods 9,144 20,297
------- -------
12,448 23,838
Less: LIFO reserve 1,681 1,681
------- -------
$10,767 $22,157
======= =======
6
<PAGE> 8
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
5. The Company's borrowing and debt obligations are summarized as
follows:
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
------------- ------------
(Thousands of dollars)
<S> <C> <C>
Long-term debt:
Revolving Credit
Agreement $ 28,158 $ 44,000
Notes payable 0 56
Obligations under
capital leases 1,806 2,471
------- -------
29,964 46,527
Less - portion due
within one year 666 3,400
------- -------
29,298 43,127
Less - long term debt
in default, classified
as current 28,158 0
-------- -------
Long term debt $ 1,140 $ 43,127
======== =======
</TABLE>
Prior to November 30, 1994, the Company's external financial needs
were satisfied by borrowing under the Second and Third Amended Credit
Agreements with the First National Bank of Boston, Philadelphia
National Bank, incorporated as Corestates Bank, N.A. and the Bank of
Tokyo Trust Company (the "Banks"). Effective as of November 30, 1994,
such needs are satisfied primarily by borrowing under the Loan And
Security Agreement between the Company and Barclays Business Credit,
Inc. of Glastonbury, Connecticut ("Barclays").
The Second Amended Credit Agreement contained financial and operating
covenants which, among other things, required the Company to maintain
prescribed levels of pre-tax earnings, net worth, ratios of debt to
net worth and ratios of current assets to current liabilities. There
were also restrictions on indebtedness, liens, investments,
acquisitions, dispositions, mergers, and payment of dividends.
On March 4, 1994, the Banks executed the Third Amended Credit
Agreement to allow the Company to borrow up to $65 million until
January 31, 1996. The loan, which was secured by substantially all of
the Company's assets, was defined as a $40 million revolving credit
line commitment for working capital and letters of credit and a $25
million term loan for general corporate purposes.
7
<PAGE> 9
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
On July 12, 1994, the Company used proceeds from the sale of assets to
reduce its revolving credit line commitment to $38,825,000. On August
22, 1994 the revolving credit line commitment was further reduced to
$25,825,000 concurrent with the sale of the assets of substantially
all of the Company's building materials distribution businesses (see
note 12). The revolving credit availability was determined with
reference to a percentage of accounts receivable and inventory which
were pledged to the Banks. The Company believed that the referenced
availability formula was sufficient to support the Company's financing
requirements at that time. Proceeds from the sale of assets were also
used to reduce the amount outstanding under the term loan from
$25,000,000 to $14,828,000 as of September 30, 1994 and to $11,999,000
as of November 29, 1994. Under the Third Amended Credit Agreement,
the term loan had to be reduced by $11,200,000 on April 30, 1995 with
any balance payable on January 31, 1996.
By letters dated April 11, 1994, April 20, 1994, July 20, 1994, August
17, 1994, September 1, 1994 and September 13, 1994 the Company was
notified by the Agent Bank under the Third Amended Credit Agreement of
certain alleged covenant defaults and events of default under the
Third Amended Credit Agreement. As a result of the write-down in the
recorded value of BEGCI (defined below), the Company did not meet its
minimum net worth covenant as of June 30, 1994. The Banks were under
no obligation to make revolving credit loans under the Third Amended
Credit Agreement following the occurrence and during the continuance
of a default or event of default. The Banks continued to lend, and
the Company continued to take necessary action to cure certain of the
alleged defaults and events of default and requested the Banks to
waive or to forbear from asserting the remainder of the alleged
defaults and events of default. As a result of these alleged defaults
and events of default, all loans under the Third Amended Credit
Agreement are classified as current on the September 30, 1994 balance
sheet.
Except for a short period following the sale of assets to Cameron,
since April 11, 1994, the Banks charged interest on any loan under the
Third Amended Credit Agreement at a rate of interest equal to 4% above
the rate otherwise applicable to such loans. As a result, the
interest for the revolving credit portion of the loan was 12.75% and
13.75% for the term portion of the loan at September 30, 1994.
On November 30, 1994, Bird Incorporated entered into a $39,000,000,
three year Loan and Security Agreement (the "Loan Agreement") with
Barclays. At the end of the three year period, the Loan Agreement is
automatically renewed annually
8
<PAGE> 10
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
for a one year period unless terminated specifically in writing. The
Loan Agreement consists of a $24,000,000 revolving credit commitment
and two equal term loans (Term Loan A and Term Loan B) totaling
$15,000,000. Up to $5,000,000 of the revolving credit facility can be
used for letters of credit. Letters of Credit outstanding as of
November 30, 1994 totaled $2,927,000. Borrowings by Bird Incorporated
under the Loan Agreement are guaranteed by the Company and its other
subsidiaries and are secured by substantially all of the assets of the
Company and its subsidiaries. The revolving credit line availability
is determined with reference to a percentage of accounts receivable
and inventory which are pledged to the lender. During the period
January 1 through April 30, the Loan Agreement provides a $2,000,000
over advance on accounts receivable and inventories in order to assist
the Company in adequate funding of the seasonal build up of accounts
receivable which may occur under sales programs which may be offered
during the winter months. Currently, the availability calculation
does not allow borrowings to the full extent of the revolving credit
commitment, due to the seasonality of the building materials
manufacturing business. As of November 30, 1994, the calculated
availability consistent with the terms of the Loan Agreement totaled
$22,294,000. The Loan Agreement contains financial and operating
covenants which, among other things, (i) require the Company to
maintain prescribed levels of tangible net worth, net cash flow and
working capital and (ii) place limits on capital expenditures. The
Loan Agreement also contains restrictions on indebtedness, liens,
investments, distributions (including payment of common and preference
dividends), mergers, acquisitions and disposition of assets. The
proceeds of the initial borrowings under the Loan Agreement were used
to pay in full the outstanding loan balances under the Third Amended
Credit Agreement. A commitment fee of $150,000 was due and paid to
Barclays as of the closing date of the Loan Agreement.
Interest on the revolving credit commitment under the Loan Agreement
accrues at the Barclays base rate (as specified in the Agreement) plus
1% on all borrowings and the greater of $25,000 per annum or 1/4% on
any unused portion of the commitment payable monthly in arrears.
Interest on Term Loan A and Term Loan B accrues at the base rate plus
1 1/2%. The combined repayment of the principal on Term Loan A and
Term Loan B is $125,000 per month in year one and $142,800 per month
in years two and three with a final principal payment of $10,072,800
due on November 30, 1997. Proceeds in excess of $100,000 from the
sale of fixed assets may, at Barclays' discretion, be applied to the
outstanding principal payments of the term loan(s).
9
<PAGE> 11
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
In the event of a sale of the Company's 80% interest in BEGCI,
proceeds would be applied to the outstanding principal balance of Term
Loan A. In the event of a sale of the assets of the Vinyl division,
Term Loan B would be reduced to $5,000,000 and the revolving credit
commitment would be reduced to $15,000,000 at which time interest
rates on the loans would accrue at either the base rate or at the
London Interbank Offering Rate ("LIBOR") plus 275 basis points.
On June 18, 1994, the Company entered into a Settlement Agreement and
Full and Final Release ("Settlement") with the minority shareholders
of the Company's Bird Environmental Gulf Coast, Inc. ("BEGCI")
subsidiary, thus resolving a suit filed by the minority shareholders
of the subsidiary claiming breach of contract and a countersuit filed
by the Company in 1994. Pursuant to the Settlement, the Company has
agreed to sell its 80% interest in BEGCI to the minority shareholders
on or before February 28, 1995, subject to financing. During that
period, the Company retains the right to sell all of its interest in
BEGCI to another buyer provided that the shares of common stock of
BEGCI owned by the minority shareholders are also sold at no less than
the same price per share. Since the decision by the Company's Board
of Directors to enter into the Settlement Agreement and the execution
of the Settlement Agreement itself established a measurement date (see
Note 11), the Company has written down the recorded value of BEGCI as
of June 30, 1994. The remaining net asset value of this business of
$7.5 million is shown as "Assets Held for Sale" on the September 30,
1994 balance sheet.
The operating lease on the roofing machine at the Company's Norwood,
Massachusetts facility was collateralized by a mortgage on the Norwood
property. The mortgage required the consent of the lessor to allow a
second mortgage on the real property. The terms of the Third Amended
Credit Agreement required security on all of the Company's assets, and
as a result, a second mortgage in favor of the Banks was placed on the
Norwood property. The lessor's consent had not been obtained. The
Company was notified by letter dated April 25, 1994 that the lessor
was declaring the Equipment Leasing Agreement dated as of December 28,
1984 (as amended) to be in default, and by letter dated May 23, 1994,
the lessor declared the lease terminated. On August 30, 1994, the
Company and the lessor entered into an agreement pursuant to which the
Company would purchase the leased equipment for a purchase price of
approximately $4 million payable in installments between August 30,
1994 and January 15, 1995, by which date the final payment of
approximately $2.3 million had to be made. Concurrent with
10
<PAGE> 12
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
the Company's refinancing with Barclays Business Credit, Inc. on
November 30, 1994, the Company satisfied all outstanding obligations
with respect to the purchase agreement it had entered into with the
lessor and acquired title to the roofing machine.
6. On July 1, 1992, the Company entered into a 50% joint venture with
ZES, Inc. (formerly known as Kensington Manufacturing Company), to
manufacture vinyl replacement windows through Kensington Partners
("Kensington"). After negotiating with its partner, in early 1994
Bird Corporation agreed to invest additional cash in return for
temporarily increasing its ownership in Kensington to 90%. The terms
of the new agreement allow Kensington to return to an equal
partnership if, before the later of December 31, 1994 or six months
following the Company's last investment, its partner can match the
additional investment made by the Company. Under the terms of the
Kensington Partnership Agreement, a Management Committee was
established to oversee the operations of the partnership. The
agreement required, among other things, unanimous approval of the
Management Committee for the following: (a) any distributions; (b) the
incurrence of any indebtedness; (c) the creation of any form of
encumbrance; (d) the adoption or modification of the partnership's
annual plan and operating budget; and (e) any transaction requiring
expenditures in excess of $15,000 and not contemplated or provided for
in the annual business plan or operating budget. Each partner is
entitled to name two of the five members of the Management Committee
with the fifth member being the President of Kensington. Approval
from both partners was required to hire the President of Kensington.
Significant operating decisions require unanimous approval as noted
above. Accordingly, the Company does not possess unilateral control
and, as a result, the partnership is accounted for on the equity
method.
The following table presents unaudited summarized financial
information for Kensington Partners for the nine months ended
September 30, 1994 and 1993.
<TABLE>
<CAPTION>
September 30 September 30
1994 1993
------------ ------------
(thousands of dollars)
<S> <C> <C>
Current Assets $ 8,944 $10,267
Property and Equipment 3,239 2,472
Other Assets 384 393
------- -------
Total Assets $12,567 $13,132
======= =======
Current Liabilities $11,300 $ 9,593
Other Liabilities 1,249 204
------- -------
Total Liabilities $12,549 $ 9,797
======= =======
</TABLE>
11
<PAGE> 13
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
<TABLE>
<CAPTION>
Nine months ended September 30,
1994 1993
---- ----
<S> <C> <C>
Net Sales $19,277 $14,693
Gross Profit $ 2,246 $ 2,284
Net Loss $(1,936) $(1,717)
</TABLE>
On January 25, 1994, the bank servicing the Kensington Credit
Agreement dated October 25, 1993 gave notice that Kensington had
breached certain covenants. Subsequently, the bank agreed to forbear
from exercising its rights and remedies under the loan agreement until
August 31, 1994. In accordance with this forbearance agreement
interest accrued at 3% above the prime lending rate. On May 2, 1994,
the bank applied the Company's $750,000 cash deposit which was held by
the bank as collateral against the total amount owed which was then
$2,158,000. A payment schedule was established to repay the remainder
of the loan. The loan availability calculation was amended to allow
aggregate borrowings equal to the lesser of the borrowing base
calculation or a set borrowing schedule over a prescribed time frame.
The borrowing availability schedule began April 29, 1994 at $1,550,000
and was periodically reduced to $475,000 through August 31, 1994, at
which time the outstanding balance was paid in full.
This reduced borrowing availability schedule required Kensington to
find a new lending arrangement. As of June 15, 1994, the partnership
entered into a financing agreement with Bankers Capital of Chicago,
Illinois. Under the terms of the agreement, Bankers Capital agreed to
provide up to $2.5 million in financing based on the value of certain
acceptable receivables. The amount advanced at any one time cannot
exceed 80% of the value of these receivables. Interest on the amount
advanced is at the prime lending rate plus 1 1/2%. Additionally,
Bankers Capital charges a fee ranging from 1.0% to 3.5% of the total
amount of the value of acceptable receivables used to extend financing
and the age of such receivables. As a result, interest and fees
result in a average borrowing rate of approximately 18 1/2% at
September 30, 1994. The financing by Bankers Capital is co-guaranteed
by the Company. Bankers Capital initially funded Kensington on August
25, 1994 including payment in full of the outstanding loan balance
with Kensington's previous lender.
7. In 1986, the Company, along with numerous other companies, was named
by the Environmental Protection Agency ("EPA") as a Potentially
Responsible Party ("PRP") under the Comprehensive Environmental
Response, Compensation, and Liability Act, as amended, 42 U.S.C.
Paragraph 9601, et seq. ("CERCLA"), in
12
<PAGE> 14
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
connection with the existence of hazardous substances at a site known
as the Fulton Terminal Superfund site located in Fulton, Oswego
County, New York. On September 28, 1990 the Company and a number of
other PRPs reached a negotiated settlement with the EPA pursuant to
which the settling PRPs agreed to pay the costs of certain expenses in
connection with the proceedings, and to pay certain other expenses
including the costs and expenses of administering a trust fund to be
established by the settling PRPs. The settlement agreement is
embodied in a consent decree lodged with the United States District
Court for the Western District of New York and fixed the Company's
proportionate share of the total expenses. The ultimate cost of the
remedial work and other expenses covered by the settlement agreement
can only be estimated. At September 30, 1994, the Company has
provided a reserve totalling $953,000 to offset its proportionate
share of the estimated ultimate cost of cleanup.
On June 21, 1994, the Arizona Department of Environmental Quality (the
"ADEQ") issued a notice of violation ("NV") to Southwest Roofing
Supply, a division of the Company ("Southwest") which directed
Southwest to conduct a site investigation of property formerly leased
by Southwest. Receipt of the NV prompted negotiations between the
ADEQ, Southwest and the Company. The negotiation resulted in a
consent order between the ADEQ and the Company on September 23, 1994.
Pursuant to the consent order, the Company agreed to submit a work
plan with a view to remediating the soil and ground water that may
have been contaminated by leaks from an underground storage tank
previously removed by the Company. In accordance with the work plan,
the Company expects to remediate soil and ground water where and if
necessary. The Company's management believes that the cost to the
Company of such remediation will be in the range from $200,000 to
$700,000. The Company has provided a reserve totalling $400,000 for
its proportionate share of the estimated ultimate cost of cleanup at
September 30, 1994 based on management's best estimate of the costs to
be incurred. The Company anticipates that $200,000 will be reimbursed
to the Company by the ADEQ in accordance with Arizona law and
regulation. This potential recovery has not been recorded as of
September 30, 1994.
8. Non-recurring income in the nine months ended September 30, 1993
represents a net gain from a settlement with an insurance provider
relating to product liability claims.
9. Restrictions on the payment of dividends were imposed by the terms of
the Third Amended Credit Agreement. As a result of the defaults under
the Third Amended Credit Agreement, the Company suspended dividends on
all classes of its stock after the third quarter of 1993. As of
September 30, 1994, dividends
13
<PAGE> 15
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
would have had to have been paid (or declared and set apart for
payment) in the amount of $22,000 on the Preferred Stock and
$1,506,000 on the Preference Stock before any dividends could have
been paid or declared on the Common Stock. On October 31, 1994, the
Banks consented to payment of the fourth quarter, 1994 dividend on the
Preferred Stock. The quarterly dividend on the Preferred Stock due
December 1, 1994 was declared and paid in full as of that date.
Restrictions on the payment of dividends on Common and Preference
Stock are imposed by the terms of the Agreement dated November 30,
1994 with Barclays Business Credit, Inc. Payment of dividends on
Preferred Stock are permitted under the Agreement.
10. On June 10, 1994, the Company's 40% interest in Mid-South Building
Supply, Inc. was redeemed for $1,000,000 in cash. The resulting loss
of $1,261,000 is reflected as a discontinued business activities
expense in the accompanying consolidated statement of operations.
11. On June 18, 1994, the Company agreed to sell its 80% interest in BEGCI
to the minority shareholders thereof, subject to financing, resulting
in the complete withdrawal from the environmental business.
Accordingly, the Company, as of June 30, 1994, recorded the operating
results of BEGCI as a discontinued operation. In conjunction with
this decision, the Company recorded an aggregate charge of $9,569,000
to adjust its book value to approximate the net realizable value of
$7.5 million at June 30, 1994. In June 1994, the Company estimated
that the results of operations from the "off-site" environmental
business would be breakeven through the disposal date and,
accordingly, no liability for anticipated losses from the
measurement date to the disposal date was recorded. Currently, the
expected disposal date is by the end of the first quarter of 1995.
The Company continues to believe that by the disposal date, the
results of operations will be breakeven. However, at September 30,
1994, the Company had invested an additional $907,000 in BEGCI which,
based on the Company's assessment, would not be recoverable and was
accordingly written-off, thus maintaining the Company's investment at
$7.5 million.
In 1993, the Company decided to close the "on-site" environmental
remediation business. As a result of that decision, the Company
recorded a provision totaling approximately $11 million which
represented the estimated net costs associated with the closing
including a $5.8 million write-down of assets to net realizable value,
$4 million for the expected losses from operations resulting from
projects being closed and $100,000 of general expenses associated with
14
<PAGE> 16
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
closing the business. As a result, historical results of operations
for all of the environmental businesses have been classified as
discontinued operations. Based upon the actual results of the
environmental "on-site" remediation operations and the sale of its
assets, excess costs of $3,861,000 charged in 1993 have been reversed
and are recorded as discontinued operations in the consolidated
statement of operations for the nine months ended September 30, 1994.
As of September 30, 1994, the remaining assets and liabilities
relating to the "on-site" environmental remediation business
approximated $569,000 and $1.4 million, respectively. The assets
relate primarily to accounts receivable due to holdbacks on asset
sales and the liabilities relate primarily to severance payments, a
disputed trade payable and certain other obligations such as for taxes
and workers compensation. The estimated net realizable value of its
investment in the "off-site" environmental remediation business
totaled $7.5 million and is shown as "Assets held for sale" on the
consolidated balance sheet.
12. On August 22, 1994, the Company sold the assets of substantially all
of its distribution businesses to Wm. Cameron & Co. for a purchase
price consisting of cash in the amount of $24,245,000 (based on the
July 31, 1994 net book value), including $1,300,000 held in escrow to
pay any indemnification claims arising under the purchase and sale
agreement, and the assumption of certain liabilities of the selling
companies. The sale will result in a gain of $2,677,000. The
purchase price was subject to adjustment based on an audit of the book
value of the acquired assets and assumed liabilities as of the closing
date. Adjustments to the book value for the period August 1, 1994
through August 22, 1994 resulted in an increase in the purchase price
of $1,897,000, payable to the Company as of November 17, 1994. Sales
of $67,089,000 were recorded for these businesses for the nine month
period ending September 30, 1994.
On November 28, 1994, the Company sold its last remaining building
materials distribution business, Southland Building Products, Inc. to
Ashley Aluminum, Inc. for a purchase price of $2,134,000. The sale
will result in a modest gain. The purchase price is subject to
adjustment based on an audit of the book value of the acquired assets
and assumed liabilities as of the closing date. Sales for the current
calendar year of $9,092,000 were recorded for this business for the
cumulative period ending November 27, 1994.
15
<PAGE> 17
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
13. On September 26, 1994, the Company announced that it had signed a
definitive agreement to sell the assets of its vinyl building products
manufacturing operation located in Bardstown, Kentucky to Jannock
Limited for $47.5 million which will result in a significant gain.
The transaction also includes Jannock's assumption of balance sheet
and certain other liabilities related to this business. Sales for the
nine month period ending September 30, 1994 for the vinyl building
manufacturing operation totalled $36,348,000. This transaction also
includes an option to purchase the Company's interest in Kensington
Partners for a purchase price which will net the Company up to an
additional $1,390,000. Kensington Partners operates a vinyl window
fabrication business in Leechburg, Pennsylvania. The sale is subject
to approval by the shareholders of the Company, which will be sought
at a special meeting for purposes of acting on the proposed sale.
Proceeds from the sale would be used to pay down debt under the Loan
Agreement with Barclays with any cash balance held in short term
investments until the Company's management and its Board of Directors
have had sufficient time to review longer term options.
16
<PAGE> 18
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Prior to November 30, 1994, the Company's external financial needs were
satisfied by borrowing under the Second and Third Amended Credit Agreements
with The First National Bank of Boston, Philadelphia National Bank incorporated
as Corestates Bank, N.A. and The Bank of Tokyo Trust Company. Effective as of
November 30, 1994, such needs are satisfied primarily by borrowing under the
Loan And Security Agreement between the Company and Barclays Business Credit,
Inc. of Glastonbury, Connecticut ("Barclays"). In addition, the Company's cash
requirements have been supplemented recently by the sale of certain assets
and/or businesses.
The Second Amended Credit Agreement contained financial and operating covenants
which, among other things, required the Company to maintain prescribed levels
of pre-tax earnings, net worth, ratios of debt to net worth and ratios of
current assets to current liabilities. As of September 30, 1993, the Company
was in default in the performance of its obligations with respect to certain of
its covenants under the Second Amended Credit Agreement regarding the ratio of
adjusted earnings, permitted capital expenditures and investments by the
Company in Kensington Partners, its window manufacturing joint venture. The
banks were under no obligation to make revolving credit loans under the Second
Amended Credit Agreement following the occurrence and during the continuance of
a default or event of default. The Banks continued to lend notwithstanding the
foregoing defaults. The Company classified the related debt as current on its
September 30, 1993 balance sheet in light of the fact that the Second Amended
Credit Agreement provided for automatic acceleration of the indebtedness upon
the occurrence of a default or event of default. No such acceleration
occurred.
On February 14, 1994 the Company's bank group entered into an agreement to
forbear from exercising their rights and remedies under the Second Amended
Credit Agreement and to continue to extend credit under the Second Amended
Credit Agreement through March 15, 1994. During this period of time, certain
operating and financial covenants in the forbearance agreement were operative,
and the Company agreed to collateralize the loans with the accounts receivable
of two of its roofing distribution companies.
On March 4, 1994, the Company and its lending banks executed the Third Amended
Credit Agreement, pursuant to which the Company was permitted to borrow up to
$65 million until January 31, 1996. Loans under the Third Amended Credit
Agreement, which were secured by substantially all of the Company's assets,
were made pursuant to a $40 million revolving credit line commitment for
working capital,
17
<PAGE> 19
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
letters of credit and a $25,000,000 term loan for general corporate purposes.
The revolving credit line availability was determined with reference to a
percentage of accounts receivable and inventory which were pledged to the
banks.
On August 22, 1994, the Company sold substantially all of the assets of its
building materials distribution businesses to a Cameron Subsidiary for a
purchase price of $24,245,000 based on the July 31, 1994 net book value.
Concurrently, the Company exercised its right under the Third Amended Credit
Agreement to reduce the revolving credit commitment by $13,000,000 to
$25,825,000, thereby reducing fees charged on the unused portion of the
facility. The purchase price with respect to assets acquired by a Cameron
Subsidiary at the August 22, 1994 closing was subject to later adjustment based
on an audit of the net book value of the acquired assets and assumed
liabilities as of the closing date. Due to the increase in the net book value
for the period from July 31, 1994 through August 31, 1994, the Company received
an additional $1,897,000 in respect of such adjustment, which amount was paid
to the Company on November 17, 1994. On November 28, 1994, Ashley Aluminum,
Inc., a Cameron Subsidiary, acquired the net assets of Southland, the Company's
sole remaining building materials distribution business, for a purchase price
of $2,134,000 (which does not take into account $193,000 paid for a minority
interest acquired by the Company in contemplation of the closing of the sale).
There was an insignificant gain on this sale.
The Company used proceeds from the sale of the assets of its building materials
distribution business to reduce the term loan under the Third Amended Credit
Agreement from $25,000,000 to $11,999,000 as of November 29, 1994 and to reduce
the amount outstanding under the revolving credit line to $11,529,000 as of the
same date. Under the terms of the Third Amended Credit Agreement, the term
loan was to be further reduced by a principal payment of $11,200,000 on April
30, 1995 with the balance of the term loan payable on January 31, 1996.
Under the Third Amended Credit Agreement and prior to the execution of the
Barclays' Loan and Security Agreement dated November 30, 1994, repayment of the
term loan was also required to be made from excess proceeds of future asset
sales (calculated as the amount remaining after net asset sale proceeds were
used to reduce revolving credit loans to less than borrowing base availability
with borrowing base availability being calculated after the effect of such an
asset sale). The term loan was also required to be reduced
18
<PAGE> 20
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
on any date other than the payment due dates specified in the preceding
paragraph by the amount (if any) by which the term loan exceeded 70% of the
fair market value of all of the Company's fixed assets.
The Third Amended Credit Agreement contained financial and operating covenants
which, among other things, (i) required the Company to maintain prescribed
levels of tangible net worth, net cash flow, earnings before interest, taxes,
depreciation and amortization, and ratio of current assets to current
liabilities, and (ii) limited capital expenditures by the Company. The Third
Amended Credit Agreement also contained restrictions on indebtedness, liens,
investments, distributions (including payment of dividends), mergers,
acquisitions and disposition of assets.
In a letter dated April 11, 1994, the Company was notified by the Agent under
the Third Amended Credit Agreement of certain alleged defaults with respect to
certain post closing undertakings (that were primarily administrative in
nature) including but not limited to, delivery of certain legal opinions and
the issuance of certain certificates of title and title policies. By letters
dated April 20, 1994, July 20, 1994, August 17, 1994, September 1, 1994 and
September 13, 1994, the Company was notified by the agent bank under the Third
Amended Credit Agreement of the continuation of the defaults under certain of
the above-mentioned administrative covenants, as well as certain alleged
defaults and events of default resulting from the fact that the Company did not
meet its minimum net worth covenant as of June 30, 1994. The Company's failure
to satisfy the minimum net worth covenant was due to the $8,477,000 write-down
in the recorded value of Bird Environmental Gulf Coast, Inc. ("BEGCI"). The
banks were under no obligation to extend credit under the Third Amended Credit
Agreement following the occurrence and during the continuance of a default or
event of default. Although not formalized in the form of a written amendment,
waiver or forbearance, the banks continued to lend, and the Company continued
to take action necessary to cure certain of the alleged defaults and events of
default. The Company requested the banks to waive or to forbear from asserting
the remainder of the alleged defaults and events of default. During the
existence of these alleged defaults and events of default, the Company
continued to meet its payment obligations as required. As a result of the
alleged defaults and events of default, all loans under the Third Amended
Credit Agreement have been classified as current on the September 30, 1994
balance sheet.
19
<PAGE> 21
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Interest on the revolving credit line under the Third Amended Credit Agreement
accrued at the base rate (as specified in such agreement) plus 1% on all
borrowings and 1/2% on any unused portion. The interest on the term loan
portion accrued at the base rate plus 2%. Due to the Company's defaults under
the Third Amended Credit Agreement, however, except for a short period
following the August 22, 1994 closing of the sale of assets to Cameron, from
April 11, 1994 until November 30, 1994, the Banks charged interest on the loans
under the Third Amended Credit Agreement at a rate of interest equal to 4%
above the rate otherwise applicable to each such loan. Therefore, the interest
rate for outstanding loans under the revolving credit line was 12.75% and
13.75% for the term loan, at September 30, 1994.
On November 30, 1994, Bird Incorporated entered into a $39,000,000, three year
Loan and Security Agreement (the "Loan Agreement") with Barclays. At the end
of the three year period, the Loan Agreement is automatically renewed annually
for a one year period unless terminated specifically in writing. The Loan
Agreement consists of a $24,000,000 revolving credit commitment and two equal
term loans (Term Loan A and Term Loan B, as defined in the Loan Agreement)
totaling $15,000,000. Up to $5,000,000 of the revolving credit facility can be
used for letters of credit. Letters of Credit outstanding as of November 30,
1994 totaled $2,927,000. Intercompany loans and advances to non-borrowing
affiliates including BEGCI and Kensington are permitted under the Loan
Agreement. Borrowings by Bird Incorporated under the Loan Agreement are
guaranteed by the Company and the Company's other subsidiaries and are secured
by substantially all of the assets of the Company and its subsidiaries. The
revolving credit line availability is determined with reference to a percentage
of accounts receivable and inventory which are pledged to the lender. During
the period January 1 through April 30, the Loan Agreement provides a $2,000,000
over advance on accounts receivable and inventories in order to assist the
Company in assuring adequate funding of any seasonal build up of accounts
receivable which may occur under sales programs which may be offered during the
winter months. Currently, the availability calculation does not allow
borrowings to the full extent of the revolving credit commitment, due to the
seasonality of the building materials manufacturing business. As of November
30, 1994, an aggregate of $22,294,000 was available to the Company under the
terms of the revolving credit facility under the Loan Agreement. The Loan
Agreement contains financial and operating covenants which, among other things,
(i) require the Company to maintain prescribed levels of tangible net worth,
net cash flow and working capital and (ii) place limits on the Company's
capital expenditures. The Loan
20
<PAGE> 22
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Agreement also contains restrictions on indebtedness, liens, investments,
distributions (including payment of common and preference dividends), mergers,
acquisitions and disposition of assets (except that the Company is not
precluded from consummating the sale of the assets of its vinyl building
products manufacturing operation or a sale of its interest in BEGCI). The
proceeds of the initial borrowings under the Loan Agreement were used to pay in
full the outstanding loan balances under the Third Amended Credit Agreement. A
commitment fee of $150,000 was due and paid to Barclays as of the closing date
of the Loan Agreement.
Interest on the revolving credit commitment under the Loan Agreement accrues at
the Barclays base rate (as specified in such Agreement) plus 1% on all
borrowings and the greater of $25,000 per annum or 1/4% on any unused portion
of the commitment payable monthly in arrears. Interest on Term Loan A and Term
Loan B accrues at the base rate plus 1 1/2%. The combined repayment of the
principal on Term Loan A and Term Loan B is $125,000 per month in year one and
$142,800 per month in years two and three with a final principal payment of
$10,072,800 due on November 30, 1997. Proceeds in excess of $100,000 from the
sale of fixed assets may, at Barclays' discretion, be applied to the
outstanding principal payments of the term loans.
In the event of a sale of the Company's 80% interest in BEGCI, proceeds would
be applied to the outstanding principal balance of Term Loan A. In the event
of a sale of the assets of the Vinyl division, proceeds shall be applied first
to the repayment of Term Loan A, second to the repayment of Term Loan B so that
the outstanding principal amount of Term Loan B equals $5,000,000 and third to
the outstanding Revolving Credit Loans with the balance of proceeds to be
retained by the Company. The revolving credit commitment would be reduced to
$15,000,000 at which time interest rates on the loans would accrue at either
the base rate or at the London Interbank Offering Rate ("LIBOR") plus 275 basis
points at the borrower's election.
On January 25, 1994, the bank that was party to Kensington's Credit Agreement
dated October 25, 1993 gave notice that Kensington had breached certain
financial covenants including the ratio of Current Assets to Current
Liabilities, Tangible Net Worth and Total Liabilities to Tangible Net Worth in
each case as defined therein (although it continued to meet its payment
obligations throughout the term of the Credit Agreement). Subsequently, the
bank agreed to forbear from exercising its rights and remedies under such
agreement until August 31, 1994. In accordance with this forbearance
agreement, interest accrued at 3% above the bank's prime lending rate. On May
2, 1994, this bank applied the Company's $750,000 cash deposit, which was held
by the bank as collateral, against the total
21
<PAGE> 23
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
amount owed which was then $2,158,000. A payment schedule was established to
repay the remainder of the loan. The loan availability calculation was amended
to allow aggregate borrowings equal to the lesser of the borrowing base
calculation or a set borrowing schedule over a prescribed time frame. The
borrowing availability schedule began April 29, 1994 at $1,550,000 and was
periodically reduced to $475,000 through August 31, 1994, at which time the
outstanding balance was paid in full.
This reduced borrowing availability schedule required Kensington to seek a new
lending arrangement. As of June 15, 1994, the Partnership entered into a
financing/factoring agreement with Bankers Capital of Chicago, Illinois. On
July 20, 1994, the Company's Banks amended the Third Amended Credit Agreement
to permit the refinancing of Kensington with Bankers Capital. Under the terms
of the agreement, Bankers Capital agreed to provide up to $2.5 million in
financing based on the value of certain acceptable receivables. The amount
advanced at any one time cannot exceed 80% of the value of these receivables.
Interest on the amount advanced is at the prime lending rate plus 1 1/2%.
Additionally, Bankers Capital charges a fee ranging from 1.0% to 3.45% of the
total amount of the value of acceptable receivables used to extend financing
and based on the age of such receivables. As the receivables age, the
applicable fee percentage increases. In light of the interest and fees
described above, the average borrowing rate was approximately 18 1/2% at
September 30, 1994. The financing by Bankers Capital is co-guaranteed by the
Company. Bankers Capital initially funded Kensington on August 25, 1994, which
funding included payment in full of the outstanding loan balance with
Kensington's previous lender.
On June 18, 1994, the Company entered into a Settlement Agreement and Full and
Final Release (the "Settlement Agreement") with the minority stockholders of
BEGCI, the owner of the San Leon Facility, thus resolving a suit filed by such
minority stockholders claiming a breach of contract and a countersuit filed by
the Company in January 1994. The claim was based on the minority stockholders'
allegations that the Company, without minority stockholder approval, caused
BEGCI to fund the construction of a solid waste treatment facility featuring
desorption technology owned by one of the minority stockholders rather than
funding a less costly liquid waste treatment facility featuring centrifuge
technology. Pursuant to the Settlement Agreement, the Company has agreed to
sell its 80% interest in BEGCI to the Minority Stockholders for approximately
$7.5 million in cash on or before February 28, 1995. Such proposed sale is
subject to financing, and also allows the Company to sell all of its interest
in BEGCI to another buyer, provided that the shares of common stock of BEGCI
owned by the minority stockholders are also sold at no less than the same price
per share. The
22
<PAGE> 24
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
minority stockholders continue to discuss financing with various interested
parties. However, the minority stockholders and the Company are working
together to sell the Company's interest or the entire facility to any of a
number of potential acquirors who are in various stages of their due diligence
reviews. As the Board of Directors decision to sell BEGCI and this Settlement
Agreement established a measurement date for financial accounting purposes, the
Company has written down the recorded value of BEGCI as of June 30, 1994 to
$7.5 million.
Until the Company's purchase of the roofing machine at the Company's Norwood,
Massachusetts facility on November 30, 1994, the operating lease on such
machine was collateralized by a mortgage on the Norwood property. The mortgage
required the consent of the lessor to allow a second mortgage on the real
property. The terms of the Third Amended Credit Agreement required security on
all of the company's assets, and as a result, a second mortgage in favor of the
banks was placed on the Norwood property without obtaining the lessor's
consent. The Company was notified by letter dated April 25, 1994 that the
lessor was declaring the Equipment Leasing Agreement dated as of December 28,
1984 (as amended) to be in default, and by letter dated May 23, 1994, the
lessor declared the lease terminated. The Company and the lessor entered into
an agreement pursuant to which the Company agreed to purchase the leased
equipment for a purchase price of approximately $4.0 million payable in
installments between August 30, 1994 and January 15, 1995, by which date the
final payment of approximately $2.3 million had to be made. Concurrent with
the Company's refinancing with Barclays on November 30, 1994, the Company
satisfied all outstanding obligations with respect to the purchase agreement it
had entered into with the lessor and acquired title to the roofing machine.
In order to control its cost and supply of asphalt, the Company is continuing
the construction of an asphalt oxidizer plant expansion at its roofing facility
in Norwood, Massachusetts. The Company's decision to build the oxidizer was
triggered by the decision of Exxon (the only remaining supplier of asphalt in
New England) to exit the New England market. The expected cost of this plant
expansion is anticipated to be approximately $4.9 million, of which the Company
has spent $3.4 million through September 30, 1994. Until the oxidizer is
complete, the Company faces significantly higher costs in obtaining raw
materials and risks the possibility of production delays due to its reliance on
suppliers in other states. Currently, the Company's asphalt needs are being
supplied on a timely basis and there have been no significant delays in
production. The Company was not able to pass along the additional freight
costs to customers in 1994 since several of the other suppliers of roofing in
New England produce their product in the mid-Atlantic area and were not subject
to the increased asphalt costs.
23
<PAGE> 25
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Net cash and cash equivalents decreased during the nine month period ending
September 30, 1994 by $7,318,000 to $200,000. The cash used by continuing
operations for the nine month period ended September 30, 1993 increased
$5,110,000, from $6,960,000 to $12,070,000. The change was attributable
primarily to the fact that at September 30, 1993 the Company reported net
earnings of $469,000 as compared to a net loss of $8,939,000 for the period
ended September 30, 1994. In addition, there were several significant changes
in the balance sheet items such as a decrease of approximately $6 million in
trade accounts receivable, a decrease of approximately $5 million in
liabilities not relating to financing activities and an increase of $5 million
relating to the establishment of the liquidation reserve. In addition, the
Company recorded a charge of $9,348,000 relating to the disposal of the
environmental business for the period ended September 30, 1994. The Company
had approximately $20.8 million of net cash provided from investing activities
for the period ended September 30, 1994 as compared to a total of approximately
$4 million of net cash used in investing activities for the period ended
September 30, 1993. The change is primarily the result of $27 million of cash
receipts from the proceeds of the sale of certain of the Company's assets
(including, primarily, the sale of the assets of the distribution companies to
a Cameron subsidiary in August 1994), offset by cash used for capital
expenditures. The net cash resulting from financing activities changed by $24
million for the period ended September 30, 1994 as compared to the period ended
September 30, 1993. The change is attributable to the fact that during 1994
the Company repaid significant amounts of debt by approximately $17 million in
excess of borrowings, as compared to 1993 when the Company borrowed
approximately $10 million in excess of repayments.
There were several significant changes in the balance sheet accounts between
September 30, 1994 and December 31, 1993. The inventory balance decreased
$11,390,000 to $10,767,000 at September 30, 1994 from $22,157,000 at December
31, 1993. The decrease was due to management's deliberate decision to reduce
working capital and manage the level of inventories. Due to the seasonality of
the business, the winter months are historically the time when the Company
builds its inventory in anticipation of sales for the summer months. The
prepaid balance at September 30, 1994 decreased by approximately $1.4 million
to $2,632,000 from $4,046,000 at December 31, 1993 due primarily to the
capitalization of refinancing costs incurred relating to the Third Amended
Credit Agreement which had been classified as prepaid expenses at the end of
1993. Other investments balance at September 30, 1994 was $2,868,000 and
$5,551,000 at December 31, 1993. The decrease of approximately $2.7 million is
due primarily to the sale of the Company's 40% interest
24
<PAGE> 26
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
in Mid-South Building Supply, Inc. ("Mid-South") on June 10, 1994. The
decrease in the Company's liquidation reserve reflects the fact that, during
the nine months ended September 30, 1994, the Company was able to either
complete or terminate all of the contracts related to the "on-site"
environmental business, sell the related assets, close the facilities and
offices and terminate a significant number of employees. The Company
anticipates that the remaining portion of this reserve will be utilized by the
end of 1994.
RESULTS OF OPERATIONS
The Company is focusing on its roofing manufacturing operations as its primary
business. The Company acknowledges that as a result of this decision, its
future prospects and sales will be tied solely to one line of business which
will, at least in the near future (and in the absence of any current plans of
the Company to expand significantly its operations and enter new markets), be
dependent upon the economy in the northeastern United States, the territory
which currently constitutes the Company's current market, and produce all of
its output at a single plant which currently relies on one major supplier for
critical raw materials (i.e., glass mat). Nevertheless, the Company believes
it has significant competitive advantages in this business. These advantages
stem from and are expected to continue in light of the Company's leading market
share, its low cost production abilities resulting from a state-of-the-art
plant, its internal supply of granules from its own quarry and granule plant,
future cost improvements which will result from the purchase of its roofing
machine from the former lessor and the expected completion of its construction
of an asphalt oxidizing plant.
The Company's recent cash flow difficulties slowed down the construction of the
asphalt oxidizer, thus extending the period during which the Company has been
required to purchase asphalt from more costly outside vendors. In addition,
due to the Company's limited working capital and to its difficulty in obtaining
an adequate supply of asphalt for "off-hours" and weekend production during
peak- production times, the roofing manufacturing facility was forced to
operate at less than full capacity at certain times during the year, resulting
in limited inventory. Although the Company was not always able to meet
customers' demand for its roofing products on a timely basis due to such
circumstances, market share did not decrease significantly. However, the
Company's limited cash flow has hindered the Company's ability to attract new
customers.
25
<PAGE> 27
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
The Company believes that the vinyl products industry as a whole exhibits a
trend towards continued growth, projected to be in the range of approximately
6% per year through the balance of the decade. Although all trade factors
within the industry are projected to grow, the largest growth during the next
few years is expected to be in the home center/lumber yard segment and in new
construction. It is estimated that "commodity" or low-end, lower-priced
products currently account for 35% to 40% of the industry, which percentage
portion is expected to increase more rapidly than that of standard and premium
products with better performance characteristics and greater aesthetic appeal.
The Company currently does not participate significantly in the commodity, or
lower-end, lower-margin product market, including in the very low-margin
manufactured housing segment. It currently sells less than 10% of its products
to lumber yards through two-step distribution. The bulk of the Company's
volume consists of standard and premium products sold to specialty distributors
serving professional siding and remodeling contractors. The Company would have
to (complete development of) and introduce several new siding products,
including new lower-priced, commodity-type siding, in order to penetrate
profitably the expanding market for commodity products, incrementally
increasing its volume.
Nine Months Ended September 30, 1994 and 1993. Net sales from continuing
operations increased .8% from $140,512,000 to $141,595,000 for the first nine
months of 1994, as compared to the same period in the prior year. Sales from
the Company's roofing manufacturing business and its vinyl business increased
8.1% and 9.4%, respectively. Improved weather conditions and renewed strength
in the remodeling market caused by low interest rates and a generally favorable
economy contributed to the improvement in these businesses. However, a
decrease in sales volume due to the sale of substantially all of the Company's
building materials distribution businesses in August of 1994 significantly
offset the improvement attained by the roofing and vinyl segments. For the
three month period ended September 30, 1994, net sales from continuing
operations decreased 13.5% from $53,438,000 to $46,246,000, as compared to the
same period in the prior year. The decline in sales is attributable to the
sale of the Company's building materials distribution business in the third
quarter of 1994. For the applicable three month periods, sales from the
Company's roofing manufacturing business and vinyl business increased 17.0% and
9.3%, respectively. The increase during such period was primarily attributable
to improved weather conditions and to the renewed strength in the remodeling
market caused by low interest rates and a generally favorable economy.
26
<PAGE> 28
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
The Company's cost of sales from continuing operations compared to the same
period in the prior year increased 2.9% from $111,574,000 to $114,813,000 for
the nine months of 1994. For the nine month period, cost of sales for the
roofing and vinyl businesses increased 11.8% and 13.2%, respectively. Cost of
sales increased due to increased manufacturing costs related to volume and
higher raw materials costs related to the increase in resin prices for the
vinyl business and higher asphalt prices for the roofing manufacturing
business. The increase was more than offset by the decline in cost of sales
due to the August 1994 sale of the Company's building materials distribution
business which caused costs of sales for the three month period ending
September 30, 1994 to decrease 13.1% from $42,652,000 to $37,077,000. However,
cost of sales from continuing operations in the roofing and vinyl manufacturing
businesses increased 17.7% and 8.8%, respectively as compared to the prior
periods primarily reflecting the increased sales volume and higher raw material
prices as previously indicated.
For the nine months ended September 30, 1994, the roofing manufacturing
business cost of sales as a percentage of sales increased 2.8% from 83.1% to
85.9%, as compared to the same period in the prior year. For the three months
ended September 30, 1994, the percentage of cost of sales to sales as compared
to the same period in the prior year remained relatively constant at 82.6% and
82.1%, respectively.
The vinyl business cost of sales as a percentage of sales for the nine months
ended September 30, 1994, increased from 74.3% to 76.9% or 2.6% over the
comparable period in the prior year. Cost of sales as a percentage of sales
for the three month period ended September 30, 1994 decreased slightly from 76%
to 75.6% as compared to the same period in the prior year.
Selling, general and administrative ("SG&A") expenses for the three months
ended September 30, 1994 decreased 16.8% from $7,799,000 to $6,492,000 and
decreased 3.0% for the nine month comparative period from $23,065,000 to
$22,371,000. The decrease was primarily attributable to the sale of the
Company's building materials distribution businesses. The SG&A expenses of the
Company's roofing and vinyl manufacturing businesses, on a combined basis,
decreased 7.5% from year-to-year. However, SG&A expenses (expressed as a
percentage of sales) remained relatively constant at approximately 9% for the
three month comparative period and approximately 10.5% for the nine month
comparative period.
Interest expense increased approximately 195% from $547,000 to $1,612,000 for
the three months ended September 30, 1994 and increased approximately 179%, or
$2,653,000 for the nine month
27
<PAGE> 29
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
comparative period. The increased interest expense reflects the nearly
$10,000,000 increased debt level and higher overall interest costs in 1994.
Since April 11, 1994, the Company has been required to pay a default interest
rate of 4% above the rate otherwise applicable to the revolving credit and term
loans compared to an approximate rate of 4.5% to 5% for the first nine months
of 1993. Default interest expense totaled $381,917 and $842,634 during the
three and nine month periods ended September 30, 1994, respectively.
On June 10, 1994, the Company's 40% interest in Mid-South Building Supply, Inc.
was redeemed for $1,000,000 in cash. In addition, the Company sold virtually
all of its building material distribution businesses to a Cameron subsidiary on
August 22, 1994 for approximately $24,245,000, subject to adjustment. The
resulting gain of $2,677,000 on the sale of the building materials distribution
business and the loss of $1,261,000 on the sale of Mid-South Building Supply,
Inc. were recorded as discontinued business activities.
Kensington incurred losses in the amount of $1,936,000 in the nine month period
ended September 30, 1994, of which $1,644,000 was allocable to the Company in
respect of its ownership interest in the partnership.
Other expenses for the third quarter increased approximately $255,000 for the
nine month period ended September 30, 1994 as compared to the same period in
the prior year. The increase was due primarily to amortized refinancing costs
associated with the Third Amended Credit Agreement.
The Company's effective income tax rate from continuing operations decreased to
zero for the nine months ended September 30, 1994 due to the loss incurred for
such period.
In connection with the Board of Director's decision to sell BEGCI and the
Company's agreement on June 18, 1994 to sell its shares in BEGCI to the
minority stockholders on or before February 28, 1995, subject to financing, the
Company reclassified BEGCI results as a discontinued operation as of June 30,
1994 and adjusted its book value resulting in an aggregate charge for the nine
months ended September 30, 1994 of $11,226,000. The Company intends to operate
the San Leon Facility until the sale of its interest in BEGCI is consummated.
Closing of such sale is expected to occur during the first quarter of 1995. No
assurance can be given that such sale will be successfully completed or, if
completed, that such sale will be on terms which are advantageous to the
Company.
Due to the Company's decision to exit the off-site environmental business by
selling its interest in the San Leon Facility as
28
<PAGE> 30
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
described under "Financial Condition" above, the Company has completely
withdrawn from the environmental business. As a result, historical results of
operations for all of the environmental businesses have been classified as
discontinued operations. In 1993, in connection with its decision to withdraw
from the "on-site" environmental remediation business, the Company charged the
results of operations for the write-down of assets, the expected loss from
operations and general expenses related to closing of such "on- site"
remediation business (see notes to Consolidated Financial Statements). Based
upon the outcome of the sales of assets and results of operations, excess costs
of $3,861,000 charged in 1993 have been reversed and are recorded as
discontinued operations in the consolidated statement of operations for the
nine months ending September 30, 1994.
29
<PAGE> 31
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On June 21, 1994, the Arizona Department of Environmental Quality (the
"ADEQ") issued a notice of violation ("NV") to Southwest Roofing
Supply, a division of the Company ("Southwest") which directed
Southwest to conduct a site investigation of property formerly leased
by Southwest. Receipt of the NV prompted negotiations between the
ADEQ, Southwest and the Company. The negotiation resulted in a
consent order between the ADEQ and the Company on September 23, 1994.
Pursuant to the consent order, the Company agreed to submit a work
plan with a view to remediating the soil and ground water that may
have been contaminated by leaks from an underground storage tank
previously removed by the Company. In accordance with the work plan,
the Company expects to remediate soil and ground water where and if
necessary. The Company's management believes that the cost to the
Company of such remediation will not exceed $700,000, $200,000 of
which amount the Company anticipates will be reimbursed to the Company
by the ADEQ in accordance with Arizona law and regulation.
Item 2. Changes in Securities
The Loan And Security Agreement dated as of November 30, 1994 (the "
Loan Agreement") by and among Bird Corporation and Barclays Business
Credit, Inc. imposes restrictions on the Company with respect to the
purchase, redemption, or other retirement of, or any other
distribution on or in respect of any shares of any class of capital
stock of the Company with the exception of payments of dividends on
the Company's 5% cumulative preferred stock ("Preferred Stock").
Dividends on the Preferred Stock may not exceed $35,000 during any
fiscal year.
The Company is in arrears in the payment of dividends on its $1.85
cumulative preference stock ("Preference Stock") and its Preferred
Stock (see Item 3(c) below). The Articles of Organization of the
Company provide that as long as any arrearage on the payment of
dividends on the Preferred Stock exists, no dividends may be declared
or paid on any other class of stock of the Company and further provide
that in the event that full cumulative dividends on the Preference
Stock have not been declared and paid, the Company may not declare or
pay any dividends or make any distributions on, or make payment on its
Common Stock, until full cumulative dividends on the Preference Stock
are declared and paid or set aside for payment.
30
<PAGE> 32
PART II - OTHER INFORMATION
(continued)
Item 3. Defaults Upon Senior Securities.
(a) By letters dated April 11, 1994, April 20, 1994, July 20,1994,
August 17, 1994, September 1, 1994 and September 13, 1994 the
Company was notified by the Agent Bank under the Third Amended
Credit Agreement of certain defaults and events of default
which were alleged to have occurred or were existing under
the Third Amended Credit Agreement.
As a result of the write-down in the recorded value of BEGCI
(referred to in Note 5 of Notes to Consolidated Financial Statements),
the Company did not meet its minimum net worth covenant under the
Third Amended Credit Agreement as of June 30, 1994. Other alleged
defaults and events of default included failure to complete certain
post-closing undertakings involving the delivery of additional
documents, certificates of title, or legal opinions on or before the
respective due dates therefore set forth in the Third Amended Credit
Agreement, the existence of certain misrepresentations in the Third
Amended Credit Agreement and the schedules thereto, failure to perfect
the security interest of the banks in certain collateral, failure to
apply proceeds of certain insurance policies to reduce revolving
credit loans under the Third Amended Credit Agreement, failure to
obtain consent of the lessor of certain equipment to a mortgage on
underlying real property granted to the Agent Bank, failure to obtain
bank consent to over-advance funds to Kensington Partners, and certain
alleged defaults with respect to Bid Environmental Gulf Coast, Inc.
("BEGCI") and the related settlement of litigation with its minority
partners. The Banks were under no obligation to make revolving credit
loans under the Third Amended Credit Agreement following the
occurrence an during the continuance of a default or event of default.
The Company continued to take actions necessary to cure all of the
alleged defaults and events of default. Until such time as all events
of default had been cured, interest would accrue on any loan under the
Revolving Credit Agreement at a rate of interest equal to 4% above the
rate otherwise applicable to such loan. As a result of these defaults
and events of default, all loans under the Revolving Credit Agreement
are classified as current on the September 30, 1994 balance sheet.
(b) On November 30, 1994 the Company entered into a Loan And Security
Agreement with Barclays Business Credit, Inc. of
31
<PAGE> 33
PART II - OTHER INFORMATION
(continued)
Glastonbury, Connecticut for purposes of refinancing the
Company. No events of default have occurred or are
continuing under this agreement.
(c) Restrictions on the payment of dividends on the Company's
$1.85 Preference Stock were imposed by the terms of the Third
Amended Credit Agreement and are imposed by the terms of the
Loan Agreement with Barclays Business Credit, Inc. (see Item
2, above). As a result, dividends have not been paid on the
Preference Stock since November 15, 1993. Dividends would
have to be paid (or declared and set apart for payment) in the
amount of $1,506,000 on the Preference Stock before any
dividends could be paid or declared on the Common Stock.
Dividends are also in arrears on the Company's Preferred Stock
in the amount of $22,000 for the three quarterly periods ended
September 1, 1994. The quarterly dividend on the Preferred
Stock due December 1, 1994 was declared and paid in full as of
that date.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Computation of Earnings per Common Share
(b) 1. On August 22, 1994, the Company filed a Form 8-K disclosing
the sale of substantially all the assets of its building
materials distribution businesses to Wm. Cameron & Co. The
Form 8-K included pro forma financial information as of
June 30, 1994, assuming the sale of the distribution
businesses had occurred on that date.
2. On September 23, 1994, the Company filed a Form 8-K disclosing
that it had signed a definitive agreement to sell the assets
of its vinyl building products manufacturing operation to
Jannock Limited. The transaction also includes Jannock's
assumption of balance sheet and certain other liabilities
related to this business as well as an option to purchase the
Company's interest in Kensington Partners.
32
<PAGE> 34
BIRD CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
BIRD CORPORATION
Date: February 21, 1994 /s/ Joseph M. Grigelevich, Jr.
------------------------------
Joseph M. Grigelevich, Jr.
Vice President Finance
and Administration
/s/ Donald L. Sloper, Jr.
------------------------------
Donald L. Sloper, Jr.
Controller (Principal
Accounting Officer)
<PAGE> 35
BIRD CORPORATION
EXHIBIT INDEX
Sequential
Exhibit No. Page No.
11 Statement regarding computation of per
share earnings
<PAGE> 1
EXHIBIT 11
BIRD CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (1)
(Thousands of dollars, except share and per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary earnings per share
- --------------------------
Net earnings (loss) $2,397 ($1,284) ($8,939) $469
Deduct dividend requirements:
Preferred stock (7) (7) (22) (22)
Convertible preference stock (377) (377) (1,130) (1,130)
--------- --------- --------- ---------
Net earnings (loss) applicable
to common stock $2,013 ($1,668) ($10,091) ($683)
--------- --------- --------- ---------
Weighted average number of common
shares outstanding (1) 3,822,763 4,031,198 4,051,050 4,012,551
Assuming exercise of options reduced by
the number of shares which could have
been purchased with the proceeds from
exercise of such options (3) 18,103 83,360 0 60,820
--------- --------- --------- ---------
Weighted average number of common
shares outstanding as adjusted 3,840,866 4,114,558 4,051,050 4,073,371
--------- --------- --------- ---------
Primary earnings (loss) per common share:
Continuing operations $0.76 $0.29 ($0.67) $0.48
Discontinued operation ($0.24) ($0.70) ($1.82) ($1.32)
Cumulative effect of accounting change $0.00 $0.00 $0.00 0.67
--------- --------- --------- ---------
Net earnings (loss) $0.52 ($0.41) ($2.49) ($0.17)
========= ========= ========= =========
</TABLE>
35
<PAGE> 2
EXHIBIT 11
BIRD CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE (1)
(Thousands of dollars, except share and per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Fully diluted earnings per share (2)
- ------------------------------------
Net earnings (loss) $2,397 ($1,284) ($8,939) $469
Deduct dividend requirements of
preferred stock (7) (7) (22) (22)
--------- --------- --------- ---------
Net earnings (loss) applicable
to common stock $2,390 ($1,291) ($8,961) $447
--------- --------- --------- ---------
Weighted average number of common
shares outstanding (1) 3,822,763 4,031,198 4,051,050 4,013,667
Assuming exercise of options reduced by
the number of shares which could have
been purchased with the proceeds from
exercise of such options (3) 18,103 83,360 0 61,572
Assuming conversion of convertible
preference stock 731,955 731,955 731,955 731,955
--------- --------- --------- ---------
Weighted average number of common
shares outstanding as adjusted 4,572,821 4,846,513 4,783,005 4,807,194
--------- --------- --------- ---------
Fully diluted earnings (loss) per common share
applicable to common stock:
Continuing operations $0.72 $0.32 ($0.33) $0.64
Discontinued operation ($0.20) ($0.59) ($1.54) ($1.12)
Cumulative effect of accounting change $0.00 $0.00 $0.00 $0.57
--------- --------- --------- ---------
$0.52 ($0.27) ($1.87) $0.09
--------- --------- --------- ---------
</TABLE>
(1) See Note 1 of Notes to Consolidated Financial Statements.
(2) These calculations are submitted in accordance with Securities Exchange
Act of 1934, Release No. 9083, although in certain instances, it is
contrary to paragraph 40 of APB Opinion No. 15 because it produces an
anti-dilutive result.
(3) APB 15 paragraph 30 indicates, computation of primary earnings per share
should not give effect to common stock equivalents if their inclusion
has the effect of decreasing the loss per share amount otherwise computed
or is anti-dilutive.
36
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEPTEMBER
30, 1994 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FORM 10Q/A-1
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<EXCHANGE-RATE> 1
<CASH> 200,000
<SECURITIES> 0
<RECEIVABLES> 28,541,000
<ALLOWANCES> 3,344,000
<INVENTORY> 10,767,000
<CURRENT-ASSETS> 40,962,000
<PP&E> 48,748,000
<DEPRECIATION> 23,390,000
<TOTAL-ASSETS> 83,399,000
<CURRENT-LIABILITIES> 48,829,000
<BONDS> 1,140,000
<COMMON> 4,339,000
0
1,396,000
<OTHER-SE> 29,510,000
<TOTAL-LIABILITY-AND-EQUITY> 83,399,000
<SALES> 141,595,000
<TOTAL-REVENUES> 141,595,000
<CGS> 114,813,000
<TOTAL-COSTS> 114,813,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,138,000
<INCOME-PRETAX> (1,574,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,574,000)
<DISCONTINUED> (7,365,000)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,939,000)
<EPS-PRIMARY> (2.49)
<EPS-DILUTED> (1.87)
</TABLE>
