<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
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ACT OF 1934
For the quarterly period ended June 30, 1996
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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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
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(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.)
1077 Pleasant Street Norwood, MA 02062
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(Address of principal executive offices) (Zip Code)
(617) 551-0656
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(Registrant's telephone number, including area code)
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(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
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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
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of July 1, 1996. 4,129,267 shares.
<PAGE> 2
BIRD CORPORATION
----------------
INDEX
PAGE NO.
--------
Part I. Financial Information:
Consolidated Balance Sheets
June 30, 1996 and December 31, 1995 .............................. 2
Consolidated Statements of Operations For the Three and
Six Months Ended June 30, 1996 and 1995 . ......................... 4
Consolidated Statements of Cash Flows For the Three and
Six Months Ended June 30, 1996 and 1995.............................. 5
Notes to Consolidated Financial Statements.............................. 6
Management's Discussion and Analysis of
Financial Condition and Results of
Operations .......................................................... 11
Part II. Other Information ..................................... 16
1
<PAGE> 3
BIRD CORPORATION AND SUBSIDIARIES
<TABLE>
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE, PAR VALUE, AND LIQUIDATION VALUE DATA)
<CAPTION>
(UNAUDITED)
JUNE 30, DECEMBER 31,
1996 1995
-------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 270 $ 3,679
Accounts and notes receivable 10,023 5,614
Allowance for doubtful accounts (229) (153)
Inventories 5,972 4,701
Refundable income taxes 1,021 1,021
Prepaid expenses and other assets 915 1,157
Deferred income taxes 435 435
------- -------
Total current assets 18,407 16,454
------- -------
PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements 2,810 2,810
Buildings 6,896 7,184
Machinery and equipment 29,965 28,980
Construction in progress 659 672
------- -------
40,330 39,646
Less - Depreciation and amortization 17,524 16,127
------- -------
22,806 23,519
------- -------
Deferred income taxes 3,631 3,631
Other assets 169 99
------- -------
$45,013 $43,703
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 4
BIRD CORPORATION AND SUBSIDIARIES
<TABLE>
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE, PAR VALUE, AND LIQUIDATION VALUE DATA)
<CAPTION>
(UNAUDITED)
JUNE 30, DECEMBER 31,
1996 1995
-------- ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $10,502 $ 9,363
Long-term debt, portion due within one year 5,229 1,113
------- -------
Total current liabilities 15,731 10,476
------- -------
Long-term debt, portion due after one year 1,817 4,869
------- -------
Other liabilities 3,743 3,942
------- -------
STOCKHOLDERS' EQUITY
5% cumulative preferred stock, par value
$100. Authorized 15,000 shares;issued 5,820
shares (liquidating preference $110 per share,
aggregating $640,000) 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 $16,286,000) 814 814
Common stock, par value $1. Authorized
15,000,000 shares; 4,404,367 shares issued
in 1996 and 4,395,162 shares issued in 1995 4,404 4,395
Other capital 27,403 27,362
Retained earnings (deficit) (6,490) (5,746)
------- -------
26,713 27,407
Less -
Treasury stock, at cost:
Common - 275,100 shares in 1996 and 1995 (2,991) (2,991)
------- -------
23,722 24,416
------- -------
$45,013 $43,703
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 5
BIRD CORPORATION AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $ 14,960 $ 15,138 $ 21,406 $ 31,761
---------- ---------- ---------- ----------
Costs and expenses:
Cost of sales 12,018 12,517 18,575 27,608
Selling, general and
administrative expense 2,070 2,374 3,444 6,913
Interest expense 142 145 217 786
Net discontinued business
activities expense (income) (410) 1,959 (410) (17,120)
Equity losses from partnership 0 0 0 372
---------- ---------- ---------- ----------
Total costs and expenses 13,820 16,995 21,826 18,559
---------- ---------- ---------- ----------
Earnings (loss) from continuing operations
before income taxes 1,140 (1,857) (420) 13,202
Provision for income taxes 0 2,209 0 8,232
---------- ---------- ---------- ----------
Earnings (loss) from continuing operations 1,140 (4,066) (420) 4,970
Earnings (loss) from discontinued operations 60 (11,368) 60 (11,604)
---------- ---------- ---------- ----------
Net earnings (loss) before dividends $ 1,200 $ (15,434) $ (360) $ (6,634)
Preferred and preference stock
cumulative dividends 384 384 768 768
---------- ---------- ---------- ----------
Net earnings (loss) applicable to common
stockholders $ 816 $ (15,818) $ (1,128) $ (7,402)
========== ========== ========== ==========
Primary earnings (loss) per common share:
Continuing operations $ 0.19 $ (1.08) $ (0.28) $ 1.03
Discontinued operations $ 0.01 $ (2.77) $ 0.01 $ (2.84)
---------- ---------- ---------- ----------
Net earnings (loss) after dividends $ 0.20 $ (3.85) $ (0.27) $ (1.81)
========== ========== ========== ==========
Average number of shares used in primary
earnings per share computations 4,159,402 4,110,345 4,124,953 4,094,456
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 6
BIRD CORPORATION AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<CAPTION>
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
----------------------
1996 1995
------- --------
<S> <C> <C>
Cash flow used by operations:
Net loss $ (360) $ (6,634)
Adjustments to reconcile to net
cash used by operations:
Depreciation and amortization 1,340 1,525
Provision for losses on accounts receivable 78 17
Deferred income taxes 0 7,304
Loss on disposal of environmental business 0 7,500
Gain on sale of vinyl business 0 (20,579)
Loss on sale of window business 0 1,959
Changes in balance sheet items:
Accounts receivable (4,411) 2
Inventories (1,271) (4,788)
Prepaid expenses 242 1,179
Liabilities not related to
financing activities 940 (8,712)
Other assets (70) 61
------- --------
Cash flow used by operations (3,512) (21,166)
------- --------
Cash flows from investing activities:
Acquisition of property, plant and equipment (627) (941)
Proceeds from disposal of assets 0 50,680
Other investments 0 (9)
------- --------
Net cash provided by (used in) investing activities (627) 49,730
------- --------
Cash flows from financing activities:
Debt proceeds 4,050 16,814
Debt repayments (2,986) (40,901)
Dividends paid (384) (414)
Other equity changes 50 95
------- --------
Net cash provided by (used) in financing activities 730 (24,406)
------- --------
Net increase (decrease) in cash and equivalents (3,409) 4,158
Cash and cash equivalents at beginning of year 3,679 321
------- --------
Cash and cash equivalents at end of period $ 270 $ 4,479
======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 7
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. In the opinion of Bird Corporation (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 March 31, 1996 and December 31,
1995 and the results of its operations and cash flows for the three
and six month periods ended June 30, 1996 and 1995.
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 six month
periods ended June 30, 1996 and 1995 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, if any, which would result from the conversion of the
$1.85 cumulative convertible preference stock at the beginning
of each period if the effect is dilutive. Fully diluted loss
per share amounted to $.08 for the six month period ended June
30, 1996 compared to a loss per share of $1.38 for the same
period in the prior year.
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.
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
(Thousands of dollars)
<S> <C> <C>
Current costs:
Raw materials $1,149 $1,202
Finished goods 5,541 4,217
------ ------
6,690 5,419
Less: LIFO reserve 718 718
------ ------
$5,972 $4,701
====== ======
</TABLE>
6
<PAGE> 8
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(continued)
<TABLE>
5. The Company's borrowing and debt obligations are summarized as
follows:
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
(Thousands of dollars)
<S> <C> <C>
Term loan $2,188 $5,000
Revolving credit
facility 4,050 0
Obligations under
capital leases 808 982
------ ------
$7,046 5,982
Less - portion due
within one year 5,229 1,113
------ ------
Long term debt $1,817 $4,869
====== ======
</TABLE>
As of June 30, 1996, the Company had cash and cash equivalents on
hand totaling $270,000 and total debt of approximately $7 million.
Letters of credit outstanding as of June 30, 1996 totaled
$1,401,000. The Company plans to continue its aggressive efforts of
managing working capital as a means of generating funds. The
Company's external financing needs are augmented by the ability of
its wholly owned subsidiary, Bird Incorporated ("Bird"), to borrow
under the Loan and Security Agreement (the "Loan Agreement") dated
November 30, 1994 between Bird and Fleet Capital Corporation ("Fleet
Capital").
During the period January 1 through April 30, the Loan Agreement
provides a $2 million over-advance on accounts receivable and
inventories in order to assist Bird in assuring adequate funding of
any seasonal build-up of accounts receivable 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 July 24, 1996, an aggregate of $11,638,000 was available to
Bird under the terms of the revolving credit facility under the Loan
Agreement of which $7,276,000 is outstanding. The interest rate on
outstanding borrowings at June 30, 1996 was 8.1875%. As of June 30,
1996, Bird was in compliance with each of the prescribed financial
and operating covenants as outlined in the Loan Agreement.
6. Since 1981 Bird has been named as a defendant in approximately
550 product liability cases throughout the United States by
persons claiming to have suffered asbestos-related diseases as a
7
<PAGE> 9
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(continued)
result of alleged exposure to asbestos used in products manufactured
and sold by Bird. Approximately 233 of these cases are currently
pending and costs of approximately $2.5 million in the aggregate
have been incurred in the defense of these claims since 1981.
Employers Insurance of Wausau has accepted the defense of these
cases under an agreement for sharing of the costs of defense,
settlements and judgments, if any. At June 30, 1996, the Company has
recorded a reserve of $950,000 to cover the estimated cost of these
claims. In light of the nature and merits of the claims alleged, in
the opinion of management, the resolution of these remaining claims
will not have a material adverse effect on the results of operations
or financial condition of the Company.
In 1986, the Company, along with numerous other companies, was named
by the United States 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 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. The ultimate cost to the Company of
the remedial work and other expenses covered by the settlement
agreement is estimated to be between $1 million to $2 million. This
range is based, in part, on an allocation of certain sites' costs
which, due to the joint and several nature of the liability, could
increase if the other PRP's are unable to bear their allocated
share. The Company has provided a reserve of approximately $1
million at June 30, 1996 to cover the remaining proportionate share
of the estimated total remaining cost of cleanup, most of which will
be paid in 1996. Clean-up of the soil has been completed and the
equipment that has been in place to facilitate the clean-up has been
demobilized and removed from the site. At the present time, the EPA
and the PRP group are discussing the clean-up of any water beneath
the site. Based on information currently available to the Company,
management believes that it is probable that the major responsible
parties will fully pay the cost apportioned to them. Management
believes that, based on its financial
8
<PAGE> 10
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(continued)
position and the estimated accrual recorded, its remediation expense
with respect to this site is not likely to have a material adverse
effect on its consolidated financial position or results of
operations of the Company.
7. For the six months ended June 30, 1995, the Company recorded
income from discontinued business activities of $17,120,000
comprised of a first quarter gain of $20,579,000 on the sale of
its vinyl products business to Jannock, Inc. reduced by charges
of $1,500,000 relating to employee benefit plans and product
liability claims, both associated with former roofing operations
and a second quarter loss of $1,959,000 on the sale of the
Kensington window fabrication business to Jannock.
Sales of $6,365,000 were recorded for the vinyl business for the
period ended March 7, 1995. As a percentage of sales, the gross
margin for this period was 6.5%.
8. Restrictions on the payment of dividends on common and
preference stock are imposed by the terms of the Loan Agreement.
Payment of dividends on preferred stock are permitted under said
Loan Agreement. The quarterly dividends on the preferred stock
due March 1 and June 1, 1996 in the aggregate amount of $15,000
were declared and paid in full. The quarterly dividend on the
preferred stock due September 1, 1996 in the amount of $7,000
was declared on July 23, 1996 and is expected to be paid in
full. The quarterly dividend on the preference stock due
February 15, 1996 has, with the consent of Fleet Capital, been
declared and paid in full. Dividends are in arrears on the
preference stock in the aggregate amount of $1,506,000 for the
four quarterly periods ended February 15, 1995 and $377,000 for
the quarterly period ended May 15, 1996.
9. During the second quarter of 1995, the Company's remaining
investment in Bird Environmental Gulf Coast, Inc. of $8.4 million
was written-off to discontinued operations and a $3 million reserve
was established for additional costs associated with the closure and
disposition of the facility.
10. Bird warrants under certain circumstances, that its building
material products meet certain manufacturing and material
specifications. The warranty policy is unique to each portion
of the labor and material cost and requires the owner to meet
specific criteria such as proof of purchase. Bird offers the
original manufacturer's warranty only as part of the original
sale and at no addition cost to the customer. In addition, for
marketing considerations, Bird makes elective settlements in
9
<PAGE> 11
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(continued)
response to customer complaints. Bird records the liability for
warranty claims and elective customer settlements when it determines
that a specific liability exists or a payment will be made.
11. On April 16, 1996, a class action suit was filed in the Superior
Court of the Commonwealth of Massachusetts against Bird. The
complaint alleges that Bird has knowingly manufactured,
distributed and falsely advertised defectively designed fiber
glass based roofing shingles. The complaint sets forth claims
of fraud, negligent misrepresentation, negligence and breach of
express and implied warranty. The Company is currently in the
process of evaluating the complaint. The Company has tendered
the defense of the action to its insurance carriers. One of its
insurance carriers has assumed its defense.
12. On or about April 18, 1996, Bird received a grand jury subpoena
issued upon application of the United States Department of
Justice, Antitrust Division, for the production of certain
documents. In addition, an executive officer and a senior
manager of Bird have received grand jury subpoenas to provide
testimony before the grand jury. Bird and such executive
officer and senior manager are in the process of evaluating the
subpoena and intend to cooperate fully with the Department of
Justice. It appears that the subpoena relates to an
investigation of the roofing materials industry. Management
does not believe that this matter will cause any material
change, adverse or otherwise, in the financial position or
results of operations of the Company.
13. Kensington Partners owned a 50% equity investment in Quantum II
Partners which was formed in 1993 to be the exclusive marketing
representative to sell Quantum II replacement windows
manufactured by Kensington Partners. In April 1996, certain
litigation between the other 50% owner of Quantum II Partners
and Bird, as successor in interest to certain of Kensington
Partners' rights and obligations under the Quantum II
Partnership, Supply and Sales Representative Agreements, was
concluded as a result of the parties entering into a settlement
agreement. The agreement called for Bird to receive total
payments of $410,000 and for cancellation of the Sale
Representative and Supply Agreements, and termination of the
partnership. The settlement was reported as discontinued
business activity income during the second quarter of 1996.
14. In July 1996, the Company received $500,000 in cash for the
settlement of two legal disputes. These proceeds will be recognized
as income in the third quarter of 1996.
10
<PAGE> 12
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
TERMINATED MERGER AGREEMENT
---------------------------
On March 14, 1996, the Company signed a definitive agreement with
CertainTeed Corporation ("CertainTeed"), a subsidiary of Saint-Gobain
Corporation, providing for CertainTeed to acquire in a merger transaction
all of the Company's outstanding common, preferred and
preference shares.
On May 10, 1996, the Company received a notice from CertainTeed that
stated that CertainTeed terminated the merger agreement in accordance
with its terms and allowed the related tender offer for the outstanding
common and preference stock of the Company to expire without accepting
any shares.
FINANCIAL CONDITION
-------------------
As of June 30, 1996, the Company had cash and cash equivalents on hand
totaling $270,000 and total debt of approximately $7 million. Letters of
credit outstanding as of June 30, 1996 totaled $1,401,000. The Company
plans to continue its aggressive efforts of managing working capital as a
means of generating funds. The Company's external financing needs are
augmented by the ability of its wholly owned subsidiary, Bird
Incorporated ("Bird"), to borrow under the Loan and Security Agreement
(the "Loan Agreement") dated November 30, 1994 between Bird and Fleet
Capital Corporation ("Fleet Capital").
During the period January 1 through April 30, the Loan Agreement provides
a $2 million over-advance on accounts receivable and inventories in order
to assist Bird in assuring adequate funding of any seasonal build-up of
accounts receivable 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 July 24, 1996, an aggregate of $11,638,000
was available to Bird under the terms of the revolving credit
facility under the Loan Agreement of which $7,276,000 is outstanding. The
interest rate on outstanding borrowings at June 30, 1996 was 8.1875%. As
of June 30, 1996, Bird was in compliance with each of the prescribed
financial and operating covenants as outlined in the Loan Agreement.
Net cash and cash equivalents decreased during the six month period ended
June 30, 1996 by approximately $3.4 million primarily due to the pay down
of the term loan in January 1996. The cash used by
11
<PAGE> 13
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
(continued)
operations for the period ended June 30, 1996 decreased by $17,654,000
from $21,166,000 to $3,512,000 as compared to the comparable period in
1995. Cash used by operations for the period ended June 30, 1996 was
attributable to a net loss of approximately $360,000 and several changes
in the balance sheet such as an increase of $4,411,000 in trade accounts
receivable, an increase of $940,000 in liabilities not relating to
financing activities and an increase of $1,271,000 relating to
inventories. Due to the seasonality of the roofing business, the winter
months are historically the time when the Company builds its inventory in
anticipation of sales for the summer months.
The Company used $627,000 in investing activities for the period ended
June 30, 1996 as compared to $49,730,000 of net cash provided from
investing activities for the same period in the prior year. The change is
the result of approximately $50.7 million of cash receipts from the
proceeds of the sale of primarily the assets of the vinyl and window
businesses, offset by cash used for capital expenditures of the roofing
business of approximately $900,000.
The net cash resulting from financing activities changed by approximately
$25 million from the same period in the prior year. Cash provided by
financing activities during 1996 was primarily due to approximately $1
million of net borrowings as compared to 1995 when the Company had net
debt repayments of approximately $24 million.
The Company believes that cash flows generated from operations and funds
available as a result of its borrowing capacity will be adequate to meet
its working capital, projected capital expenditures and other financing
needs.
RESULTS OF OPERATIONS
---------------------
Net sales from continuing operations decreased 32.6% from $31,761,000 to
$21,406,000 for the first six months of 1996 as compared to the same
period in the prior year primarily a consequence of the sale of the
Company's window fabrication and vinyl products business units. Net sales
from the roofing manufacturing business increased $220,000 or 1% compared
to the same six month period in the prior year. Net sales from continuing
operations decreased $178,000 or 1.2% for the second quarter of 1996
compared to the same quarter in the prior year primarily as a result of
the sale of the Company's window fabrication and vinyl products business
units. Net sales for the roofing
12
<PAGE> 14
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
(continued)
manufacturing business increased 21.8% for the second quarter of 1996
compared to the same quarter in the prior year due to the release of
pent-up demand caused by the severe weather conditions in the northeast
during the first quarter of 1996.
The Company's cost of sales from continuing operations compared to the
same period in the prior year decreased 32.7% from $27,608,000 to
$18,575,000 for the six months of 1996. The decline was primarily a
result of the sale of the Company's window fabrication and vinyl products
business units. Cost of sales for the roofing business increased 3.7% due
primarily to unabsorbed fixed costs from the first quarter 1996 routine
plant shutdown and raw material price increases in glass mat and dry
felt. The Company's cost of sales from continuing operations for the
second quarter of 1996 compared to the same period in the prior year
decreased 4% from $12,517,000 to $12,0l8,000. Cost of sales for the
roofing business increased 21% for the second quarter of 1996 as compared
to the same period in the prior year primarily due to the increase in
sales volume. For the six month period ended June 30, 1996, the roofing
manufacturing business cost of sales as a percentage of sales increased
2.3% as compared to the same period in the prior year. The increase
related primarily to unabsorbed fixed costs during the first quarter 1996
routine plant shutdown and raw material price increases in glass mat and
dry felt. For the second quarter of 1996, the roofing manufacturing
business cost of sales as a percentage of sales decreased slightly from
80.8% to 80.3% as compared to the same period in the prior year.
Selling, general and administrative ("SG&A") expenses for the three
months ended June 30, 1996 decreased 12.8% from $2,374,000 to $2,070,000
and decreased 50.2% for the six month comparative period from $6,913,000
to $3,444,000. The decrease was attributable to the sale of the Company's
window fabrication and vinyl products business units; reduction in
corporate staffing and operating expenses; and reduction in roofing plant
expenses.
SG&A expenses for the three and six month periods ended June 30, 1996,
included costs of approximately $300,000 and $650,000, respectively,
associated with the terminated merger agreement with CertainTeed
Corporation.
Interest expense decreased 2.1% from $145,000 to $142,000 for the second
quarter of 1996 compared to the second quarter of 1995. For the six
months ended June 30, 1996, interest expense decreased approximately
72.4% or $569,000 as compared to the same period in the
13
<PAGE> 15
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
(continued)
prior year. The decreased interest expense reflects a reduction of debt
by the use of proceeds from the sale of the vinyl products and window
fabrication business units.
Bird, as successor in certain interests of Kensington Partners, entered
into a settlement agreement with a partner of Kensington Partners which
called for Bird to recover total payments of $410,000. The settlement was
recorded as discontinued business activity income during the second
quarter of 1996. Discontinued business activities income for the six
months ended June 30, 1995 reflects a first quarter gain of $20,579,000
on the sale of the Company's vinyl products business, reduced by a charge
of $1,500,000 for costs associated with the Company's employee benefit
plans and future product liability claims, both related to former roofing
operations, and a second quarter loss of $1,959,000 on the sale of the
Company's window fabrication business.
Equity losses from the Company's partnership in the Kensington window
fabrication business amounted to $372,000 for the period January 1,
through February 28, 1995.
During the second quarter of 1995, the Company's remaining investment in
Bird Environmental Gulf Coast, Inc. of $8.4 million was written-off to
discontinued operations and a $3 million reserve was established for
additional costs associated with the closure and disposition of the
facility.
No tax benefit was recorded for the six month period ended June 30, 1996
as there was not adequate assurance that related deferred tax assets
would be realized in future taxable years. The Company's effective income
tax rate from continuing operations was 62.4% for the same period in the
prior year.
The roofing business is seasonal to the extent that activity in the
outside repair and remodeling business and new construction declines in
certain areas of the country during the winter months. Severe weather
conditions also have a negative impact on short term profitability.
Accordingly, the results of operations for the six month period ended
June 30, 1996 are not necessarily indicative of the results to be
expected for the full year.
On April 16, 1996, a class action suit was filed in the Superior Court of
the Commonwealth of Massachusetts against Bird. The complaint alleges
that Bird has knowingly manufactured, distributed and falsely advertised
defectively designed fiber glass based roofing
14
<PAGE> 16
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
(continued)
shingles. The complaint sets forth claims of fraud, negligent
misrepresentation, negligence and breach of express and implied warranty.
The Company is currently in the process of evaluating the complaint. The
Company has tendered the defense of the action to its insurance carriers.
One of its insurance carriers has assumed its defense.
On or about April 18, 1996, Bird received a grand jury subpoena issued
upon application of the United States Department of Justice, Antitrust
Division, for the production of certain documents. In addition, an
executive officer and a senior manager of Bird have received grand jury
subpoenas to provide testimony before the grand jury. Bird and such
executive officer and senior manager are in the process of evaluating the
subpoena and intend to cooperate fully with the Department of Justice. It
appears that the subpoena relates to an investigation of the roofing
materials industry. Management does not believe that this matter will
cause any material change, adverse or otherwise, in the financial
position or results of operations of the Company.
15
<PAGE> 17
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
---------------------------
On April 16, 1996, a class action suit was filed in the Superior
Court of the Commonwealth of Massachusetts against Bird
Incorporated, a wholly owned subsidiary of the company. The
complaint alleges that Bird Incorporated has knowingly manufactured,
distributed and falsely advertised defectively designed fiber glass
based roofing shingles. The complaint sets forth claims of fraud,
negligent misrepresentation, negligence and breach of express and
implied warranty. The Company is currently in the process of
evaluating the complaint. The Company has tendered the defense of
the action to its insurance carriers. One of its insurance carriers
has assumed its defense.
On or about April 18, 1996, Bird Incorporated received a grand jury
subpoena issued upon application of the United States Department of
Justices, Antitrust Division, for the production of certain
documents. In addition, an executive officer and a senior manager of
the Company have received grand jury subpoenas to provide testimony
before the grand jury. The Company and such executive officer and
senior manager are in the process of evaluating the subpoena and
intend to cooperate fully with the Department of Justice. It appears
that the subpoena relates to an investigation of the roofing
materials industry. Management does not believe that this matter
will cause any material change, adverse or otherwise, in the
financial position or results of operations of the Company.
Item 2. Changes in Securities
-------------------------------
The Loan and Security Agreement dated as of November 30, 1994 ("Loan
Agreement") by and among Bird Incorporated, a wholly owned
subsidiary of the Company, and Fleet Capital 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 in any fiscal year.
The Company is in arrears in the payment of dividends on its $1.85
cumulative preference stock ("Preference Stock"). (See Item 3 (b),
below). The Articles of Organization of the Company 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
16
<PAGE> 18
PART II - OTHER INFORMATION
---------------------------
(continued)
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.
Item 3. Defaults Upon Senior Securities
----------------------------------------
(b) Dividends are in arrears on the Preference Stock in the
aggregate amount of $1,506,000 for the four quarterly
periods ended February 15, 1995 and $377,000 for the
quarterly period ended May 15, 1996. The Board of
Directors voted to declare the quarterly dividend of
$0.4625 per share on the Company's $1.85 cumulative
convertible preference stock payable on August 15, 1996.
The dividend will be paid to shareholders of record on
August 7, 1996.
Item 4. Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
(a) Proxies for the annual meeting were solicited pursuant to
Regulation 14A under the Securities Exchange Act of 1934, there
was no solicitation in opposition to management's nominees for
the Board of Directors, as listed in the Proxy Statement for
the meeting, and all of such nominees were elected.
(b) A brief description of each matter voted upon at the meeting,
and the results of voting, are as follows:
<TABLE>
(i) Election of two directors to the class whose term
expires in 1999:
<CAPTION>
FOR WITHHELD
--- --------
<S> <C> <C>
Richard C. Maloof 3,969,859 Shares 35,299 Shares
Antonio J. Lorusso, Jr. 3,970,249 Shares 34,909 Shares
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibit 11 - Statement Regarding Computation of per Share
Earnings
(b) Reports on Form 8-K. On April 25, 1996, the Company filed a
Form 8-K disclosing the signing of an amended and restated
agreement and plan of merger with CertainTeed Corporation on
April 8, 1996.
17
<PAGE> 19
BIRD CORPORATION
SIGNATURES
----------
Pursuant to the requirements 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.
BIRD CORPORATION
-------------------------------
Date: July 26, 1996
/s/ Richard C. Maloof
-------------------------------
Richard C. Maloof
President and
Chief Operating Officer
/s/ Donald L. Sloper, Jr.
-------------------------------
Donald L. Sloper, Jr.
Controller (Principal
Accounting Officer)
<PAGE> 20
BIRD CORPORATION
EXHIBIT INDEX
-------------
Sequential
Exhibit No. Page No.
----------- --------
11 Statement regarding computation of per share
earnings
<PAGE> 1
EXHIBIT 11
BIRD CORPORATION
<TABLE>
COMPUTATION OF EARNINGS PER COMMON SHARE (1)
(In thousands, except share and per share amounts)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary earnings per share
--------------------------
Net earnings (loss) from continuing operations $ 1,140 $ (4,066) $ (420) $ 4,970
Deduct dividend requirements:
Preferred stock (7) (7) (14) (14)
Convertible preference stock (377) (377) (754) (754)
---------- ---------- ---------- ----------
Net earnings (loss) from continuing operations 756 (4,450) (1,188) 4,202
Net earnings (loss) from discontinued operations 60 (11,368) 60 (11,604)
---------- ---------- ---------- ----------
Net earnings (loss) applicable to common stock $ 816 $ (15,818) $ (1,128) $ (7,402)
---------- ---------- ---------- ----------
Weighted average number of common
shares outstanding (1) 4,127,164 4,110,345 4,124,953 4,094,456
Assuming exercise of options reduced by
the number of shares which could have
been purchased with the proceeds from
exercise of such options (2) 32,238 0 0 0
---------- ---------- ---------- ----------
Weighted average number of common
shares outstanding as adjusted 4,159,402 4,110,345 4,124,953 4,094,456
---------- ---------- ---------- ----------
Primary earnings (loss) per common share:
Continuing operations $ 0.19 $ (1.08) $ (0.28) $ 1.03
Discontinued operation $ 0.01 $ (2.77) $ 0.01 $ (2.84)
---------- ---------- ---------- ----------
Applicable to common stock $ 0.20 $ (3.85) $ (0.27) $ (1.81)
========== ========== ========== ==========
- ----------
<FN>
(1) See Note 3 of Notes to Consolidated Financial Statements.
(2) 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.
</TABLE>
<PAGE> 2
EXHIBIT 11
BIRD CORPORATION
<TABLE>
COMPUTATION OF EARNINGS PER COMMON SHARE (1)
(In thousands, except share and per share amounts)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Fully diluted earnings per share (2)
- ------------------------------------
Net earnings (loss) from continuing operations $ 1,140 $ (4,066) $ (420) $ 4,970
Deduct dividend requirements of
preferred stock (7) (7) (14) (14)
---------- ---------- ---------- ----------
Net earnings (loss) from continuing operations $ 1,133 $ (4,073) $ (434) $ 4,956
---------- ---------- ---------- ----------
Net (earnings) loss from discontinued operations 60 (11,368) 60 (11,604)
Net earnings (loss) applicable to common stock $ 1,193 $ (15,441) $ (374) $ (6,648)
---------- ---------- ---------- ----------
Weighted average number of common
shares outstanding (1) 4,127,164 4,110,345 4,124,953 4,094,456
Assuming exercise of options reduced by
the number of shares which could have
been purchased with the proceeds from
exercise of such options (3) 32,238 0 0 0
Assuming conversion of convertible
preference stock 731,955 731,955 731,955 731,955
---------- ---------- ---------- ----------
Weighted average number of common
shares outstanding as adjusted 4,891,357 4,842,300 4,856,908 4,826,411
Fully diluted earnings (loss) per common share
applicable to common stock:
Continuing operations $ 0.23 $ (0.84) $ (0.09) $ 1.03
Discontinued operation $ 0.01 $ (2.35) $ 0.01 $ (2.41)
---------- ---------- ---------- ----------
$ 0.24 $ (3.19) $ (0.08) $ (1.38)
========== ========== ========== ==========
- ----------
<FN>
(1) See Note 3 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.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE
30, 1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FORM 10Q
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 270,000
<SECURITIES> 0
<RECEIVABLES> 10,023,000
<ALLOWANCES> 229,000
<INVENTORY> 5,972,000
<CURRENT-ASSETS> 18,407,000
<PP&E> 40,330,000
<DEPRECIATION> 17,524,000
<TOTAL-ASSETS> 45,013,000
<CURRENT-LIABILITIES> 15,731,000
<BONDS> 1,817,000
<COMMON> 4,404,000
0
1,396,000
<OTHER-SE> 20,913,000
<TOTAL-LIABILITY-AND-EQUITY> 45,013,000
<SALES> 21,406,000
<TOTAL-REVENUES> 21,406,000
<CGS> 18,575,000
<TOTAL-COSTS> 18,575,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 217,000
<INCOME-PRETAX> (420,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (420,000)
<DISCONTINUED> 60,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (360,000)
<EPS-PRIMARY> (.27)
<EPS-DILUTED> (.27)
</TABLE>
