<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 ACT OF 1934
For the quarterly period ended September 30, 1996
------------------------------------------------
OR
--- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------ --------------------------
Commission file number 0-828
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BIRD CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-3082903
- --------------------------------------------------------------------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1077 Pleasant Street Norwood, MA 02062
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(617) 551-0656
- --------------------------------------------------------------------------------
(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 October 1, 1996. 4,135,995 shares.
<PAGE> 2
BIRD CORPORATION
----------------
INDEX
PAGE NO.
--------
Part I. Financial Information:
Consolidated Balance Sheets
September 30, 1996 and December 31, 1995 .................. 2
Consolidated Statements of Operations For the Three and
Nine Months Ended September 30, 1996 and 1995 ............. 4
Consolidated Statements of Cash Flows For the Three and
Nine Months Ended September 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 ...................................... 15
1
<PAGE> 3
BIRD CORPORATION AND SUBSIDIARIES
<TABLE>
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE, PAR VALUE, AND LIQUIDATION VALUE DATA)
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 287 $ 3,679
Accounts and notes receivable 11,144 5,614
Allowance for doubtful accounts (229) (153)
Inventories 5,248 4,701
Refundable income taxes 1,021 1,021
Prepaid expenses and other assets 311 1,157
Deferred income taxes 435 435
------- -------
Total current assets 18,217 16,454
------- -------
PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements 2,810 2,810
Buildings 6,936 7,184
Machinery and equipment 30,479 28,980
Construction in progress 361 672
------- -------
40,586 39,646
Less - Depreciation 18,199 16,127
------- -------
22,387 23,519
------- -------
Deferred income taxes 3,631 3,631
Other assets 161 99
------- -------
$44,396 $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)
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $10,528 $ 9,363
Long-term debt, portion due within one year 3,209 1,113
------- -------
Total current liabilities 13,737 10,476
------- -------
Long-term debt, portion due after one year 1,510 4,869
------- -------
Other liabilities 3,594 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; 4,411,097 shares issued
in 1996 and 4,395,162 shares issued in 1995 4,411 4,395
Other capital 27,420 27,362
Retained earnings (deficit) (4,681) (5,746)
------- -------
28,546 27,407
Less -
Treasury stock, at cost:
Common - 275,102 shares in 1996 and
275,100 shares in 1995 (2,991) (2,991)
------- -------
25,555 24,416
------- -------
$44,396 $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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- -----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $ 17,084 $ 12,170 $ 38,490 $ 43,931
---------- ---------- ---------- ----------
Costs and expenses:
Cost of sales 13,545 10,353 32,120 37,961
Selling, general and
administrative expense 1,825 2,308 5,269 9,221
Interest expense 137 105 354 891
Net discontinued business
activities income (535) 0 (945) (17,120)
Equity losses from partnership 0 0 0 372
---------- ---------- ---------- ----------
Total costs and expenses 14,972 12,766 36,798 31,325
---------- ---------- ---------- ----------
Earnings (loss) from continuing operations
before income taxes 2,112 (596) 1,692 12,606
Provision for income taxes 0 0 0 8,232
---------- ---------- ---------- ----------
Earnings (loss) from continuing operations 2,112 (596) 1,692 4,374
Earnings (loss) from discontinued operations 81 0 141 (11,604)
---------- ---------- ---------- ----------
Net earnings (loss) before dividends $ 2,193 $ (596) $ 1,833 $ (7,230)
Preferred and preference stock
cumulative dividends 384 384 1,152 1,152
---------- ---------- ---------- ----------
Net earnings (loss) applicable to common
stockholders $ 1,809 $ (980) $ 681 $ (8,382)
========== ========== ========== ==========
Primary earnings (loss) per common share:
Continuing operations $0.42 $(0.24) $0.13 $ 0.79
Discontinued operations $0.02 $ 0.00 $0.03 $(2.83)
---------- ---------- ---------- ----------
Net earnings (loss) after dividends $0.44 $(0.24) $0.16 $(2.04)
========== ========== ========== ==========
Average number of shares used in primary
earnings per share computations 4,132,572 4,113,136 4,138,836 4,100,751
========== ========== ========== ==========
</TABLE>
4
<PAGE> 6
BIRD CORPORATION AND SUBSIDIARIES
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<CAPTION>
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
1996 1995
--------- ----------
<S> <C> <C>
Cash flow provided (used) by operations:
Net earnings (loss) $ 1,833 $ (7,230)
Adjustments to reconcile to net
cash used by operations:
Depreciation and amortization 2,096 2,193
Provision for losses on accounts receivable 78 32
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 (5,532) (470)
Inventories (547) (4,361)
Prepaid expenses 765 1,425
Liabilities not related to
financing activities 817 (10,300)
Other assets (62) 100
------- --------
Cash flow used by operations (552) (22,427)
------- --------
Cash flows from investing activities:
Acquisition of property, plant and equipment (883) (1,437)
Proceeds from disposal of assets 0 50,680
Other investments 0 230
------- --------
Net cash provided by (used in) investing activities (883) 49,473
------- --------
Cash flows from financing activities:
Debt proceeds 7,670 17,034
Debt repayments (8,933) (41,213)
Dividends paid (768) (1,173)
Other equity changes 74 122
------- --------
Net cash used in financing activities (1,957) (25,230)
------- --------
Net increase (decrease) in cash and equivalents (3,392) 1,816
Cash and cash equivalents at beginning of year 3,679 321
------- --------
Cash and cash equivalents at end of period $ 287 $ 2,137
======= ========
</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 September 30, 1996 and December 31, 1995 and
the results of its operations and cash flows for the three and nine month
periods ended September 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 nine month periods ended September
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 earnings per share amounted
to $.37 for the nine month period ended September 30, 1996 compared to a
loss per share of $1.50 for the same period in the prior year.
<TABLE>
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.
<CAPTION>
September 30, December 31,
1996 1995
------------ ------------
(Thousands of dollars)
<S> <C> <C>
Current costs:
Raw materials $1,436 $1,202
Finished goods 4,530 4,217
------ ------
5,966 5,419
Less: LIFO reserve 718 718
------ ------
$5,248 $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>
September 30, December 31,
1996 1995
------------- ------------
(Thousands of dollars)
<S> <C> <C>
Term loan $2,000 $5,000
Revolving credit
facility 2,000 0
Obligations under
capital leases 719 982
------ ------
4,719 5,982
Less - portion due
within one year 3,209 1,113
------ ------
Long term debt $1,510 $4,869
====== ======
</TABLE>
Letters of credit outstanding as of September 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 October 23, 1996, an aggregate of $12,563,000
was available to Bird under the terms of the revolving credit facility
under the Loan Agreement of which $8,525,000 remains available, net of
current borrowings and letter of credit utilization. The interest rates on
outstanding revolver and term loan borrowings at September 30, 1996 were
8.25% and 8.1875%, respectively. As of September 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 650 product
liability cases throughout the United States by persons claiming to have
suffered asbestos-related diseases as a result of alleged exposure to
asbestos used in products
7
<PAGE> 9
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(continued)
manufactured and sold by Bird. Approximately 229 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 September 30, 1996, the Company has recorded a reserve of
$950,000 to cover its share of 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 September 30, 1996 to cover the remaining proportionate share of
the estimated total remaining cost of cleanup. 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 position and the estimated accrual recorded, its
remediation expense with respect to this site is not likely
8
<PAGE> 10
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(continued)
to have a material adverse effect on its consolidated financial position or
results of operations of the Company.
7. For the nine months ended September 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 for the nine month
period ended September 30, 1995, included an aggregate of $10,575,000
related to discontinued business activities.
8. 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.
9. In July 1996, the Company received an aggregate of $535,000 in cash for the
settlement of three legal disputes relating to insurance coverage. These
proceeds were reported as discontinued business activity income during the
third quarter of 1996.
10. 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 the Loan Agreement. The quarterly
dividends on the preferred stock due March 1 and September 1, 1996 in the
aggregate amount of $15,000 were declared and paid in full. Dividends are
in arrears on the preferred stock in the amount of $7,000 for the quarterly
period ended June 1, 1996. The quarterly dividends on the preference stock
due February 15 and August 15, 1996 have, with the consent of Fleet
Capital, been declared and paid in full. Dividends are in arrears on the
preference stock in the
9
<PAGE> 11
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
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.
11. For the nine months ended September 30, 1995, the Company recorded a loss
from discontinued operations of $11.6 million related to the disposal of
Bird Environmental Gulf Coast, Inc.
12. 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 its warranty at no additional cost to the customer. In
addition, for marketing considerations, Bird makes elective settlements in
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.
13. 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. Two of its insurance carriers has assumed
its defense.
14. In April 1996, the Company received a grand jury subpoena issued upon
application of the Department of Justice for the production of certain
documents. In addition, an executive officer and a senior manager of Bird
had received grand jury subpoenas to provide testimony before the grand
jury. On or about September 27, 1996, the United States Department of
Justice, Antitrust Division advised the Company that the Department closed
its investigation of restraint of trade by manufacturers in the roofing
industry without taking any action against any companies or individuals. As
a result of complying with the subpoenas and otherwise cooperating with the
Justice Department, the Company incurred costs of approximately $350,000
for the nine months ended September 30, 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. The approximate cost
associated with the termination of this merger agreement is $800,000 for the
nine months ended September 30, 1996.
FINANCIAL CONDITION
- -------------------
As of September 30, 1996, the Company had cash and cash equivalents on hand
totaling $287,000 and total debt of approximately $4.7 million. Letters of
credit outstanding as of September 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
October 23, 1996, an aggregate of $12,563,000 was available to Bird under the
terms of the revolving credit facility under the Loan Agreement of which
$8,525,000 remains available, net of current borrowings and letter of credit
utilization. The interest rates on outstanding revolver and term loan borrowings
at September 30, 1996 were 8.25% and 8.1875%, respectively. As of September 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 nine month period ended
September 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 September 30, 1996 decreased by $21,875,000 from
$22,427,000 to $552,000 as compared to the comparable period in 1995. Cash used
by operations for the period ended September 30, 1996 was attributable to net
earnings of approximately $1,833,000 and several changes in the balance sheet
such as an increase of $5,532,000 in trade accounts receivable, an increase of
$817,000 in liabilities not relating to financing activities and an increase of
$547,000 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 $883,000 in investing activities for the period ended
September 30, 1996 as compared to $49,473,000 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 proceeds from the sale of the
assets of the vinyl and window businesses, offset by cash used for capital
expenditures of approximately $1,400,000 for the period ended September 30,
1995 compared to capital expenditures of $883,000 for the same period in 1996.
The net cash used in financing activities changed by approximately $23 million
from the same period in the prior year. Cash used in financing activities during
1996 was primarily due to approximately $1 million of debt repayments as
compared to 1995 when the Company had net debt repayments of approximately $25
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 obligations, projected capital expenditures and other financing
needs.
RESULTS OF OPERATIONS
- ---------------------
Net sales decreased 12.4% from $43,931,000 to $38,490,000 for the first nine
months of 1996 as compared to the same period in the prior year, a consequence
of the sale of the Company's window fabrication and vinyl products business
units which had aggregate sales of $10,575,000. Net sales increased $4,914,000
or 40.4% for the third quarter of 1996 compared to the same quarter in the prior
year due in part to the release of pent-up demand caused by the severe weather
conditions in the northeast during the first quarter of 1996.
12
<PAGE> 14
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
(continued)
The Company's cost of sales for the first nine months of 1995 compared to the
same period in the prior year decreased 15.4% from $37,961,000 to $32,120,000
for the nine months of 1996. The decline was primarily a result of the sale of
the Company's window fabrication and vinyl products business units. The
Company's cost of sales for the third quarter of 1996 compared to the same
period in the prior year increased 30.8% from $10,353,000 to $13,545,000,
primarily due to the increase in sales volume. For the three and nine month
periods ended September 30, 1996, cost of sales as a percentage of sales
decreased 5.8% and 2.9%, respectively, as compared to the same periods in the
prior year. The decrease related primarily to lower conversion costs and
improved control of raw material waste.
Selling, general and administrative ("SG&A") expenses for the three months ended
September 30, 1996 decreased 20.9% from $2,308,000 to $1,825,000 and decreased
42.9% for the nine month comparative period from $9,221,000 to $5,269,000. 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 nine month period ended September 30, 1996, included costs
of approximately $800,000 associated with the terminated merger agreement with
CertainTeed Corporation. In addition, approximately $350,000 was incurred to
comply with the United States Department of Justice investigation of the
restraint of trade by manufacturers in the roofing industry which has since been
closed without taking any action against any companies or individuals.
Interest expense increased 30.5% from $105,000 to $137,000 for the third quarter
of 1996 compared to the third quarter of 1995. For the nine months ended
September 30, 1996, interest expense decreased approximately 60.3% or $537,000
as compared to the same period in the 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.
During the second quarter of 1996, 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.
During the third quarter of 1996, the Company received an aggregate of $535,000
in cash for the settlement of three legal disputes. The settlements were
recorded as discontinued business activity income during the respective quarters
of 1996 and amounted to $945,000 for the nine months ended September 30, 1996.
13
<PAGE> 15
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
(continued)
Discontinued business activities income for the nine months ended September 30,
1995 reflects a 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 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 provision was recorded for the nine month period ended September 30, 1996
as the Company expects to utilize existing loss carryforwards to offset the
obligations. The Company's effective income tax rate from continuing operations
was 65.3% 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 nine month period ended September 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 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.
Two of its insurance carriers has assumed its defense.
14
<PAGE> 16
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. Two of its insurance carriers has assumed
its defense.
On or about September 27, 1996, the United States Department of Justice,
Antitrust Division advised the Company that the Department closed its
investigation of restraint of trade by manufacturers in the roofing
industry without taking any action against any companies or individuals. In
April 1996, the Company 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. As a result of complying with the
subpoenas and otherwise cooperating with the Justice Department, the
Company incurred costs of approximately $350,000 for the nine month period
ended September 30, 1996.
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
15
<PAGE> 17
PART II - OTHER INFORMATION
---------------------------
(continued)
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.
Item 3. Defaults Upon Senior Securities
- ---------------------------------------
(b) Dividends are in arrears on the Preferred Stock in the amount of
$7,000 for the quarterly period ended June 1, 1996 and 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.
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibit 11 - Statement Regarding Computation of per Share Earnings
16
<PAGE> 18
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: October 25, 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> 19
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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
---------- ----------- ---------- ----------
Primary earnings per share
- --------------------------
<S> <C> <C> <C> <C>
Net earnings (loss) from continuing operations $ 2,112 $ (596) $ 1,692 $ 4,374
Deduct dividend requirements:
Preferred stock (7) (7) (22) (22)
Convertible preference stock (377) (377) (1,130) (1,130)
---------- ---------- ---------- ----------
Net earnings (loss) from continuing operations 1,728 (980) 540 3,222
Net earnings (loss) from discontinued operations 81 0 141 (11,604)
---------- ---------- ---------- ----------
Net earnings (loss) applicable to common stock $ 1,809 $ (980) $ 681 $ (8,382)
Weighted average number of common
shares outstanding (1) 4,132,572 4,113,136 4,127,511 4,100,751
Assuming exercise of options reduced by
the number of shares which could have
been purchased with the proceeds from
exercise of such options (2) 0 0 11,325 0
---------- ---------- ---------- ----------
Weighted average number of common
shares outstanding as adjusted 4,132,572 4,113,136 4,138,836 4,100,751
---------- ---------- ---------- ----------
Primary earnings (loss) per common share:
Continuing operations $ 0.42 $(0.24) $0.13 $0.79
Discontinued operation $ 0.02 $ 0.00 $0.03 $(2.83)
------ ------ ----- ------
Applicable to common stock $ 0.44 $(0.24) $0.16 $(2.04)
====== ====== ===== ======
<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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
---------- ----------- ---------- ----------
Fully diluted earnings per share (2)
- ------------------------------------
<S> <C> <C> <C> <C>
Net earnings (loss) from continuing operations $ 2,112 $ (596) $ 1,692 $ 4,374
Deduct dividend requirements of
preferred stock (7) (7) (22) (22)
---------- ---------- ---------- ----------
Net earnings (loss) from continuing operations $ 2,105 $ (603) $ 1,670 $ 4,352
Net (earnings) loss from discontinued operations 81 0 141 (11,604)
---------- ---------- ---------- ----------
Net earnings (loss) applicable to common stock $ 2,186 $ (603) $ 1,811 $ (7,252)
Weighted average number of common
shares outstanding (1) 4,132,572 4,113,136 4,127,511 4,100,751
Assuming exercise of options reduced by
the number of shares which could have
been purchased with the proceeds from
exercise of such options (3) 3,280 0 13,137 0
Assuming conversion of convertible
preference stock 731,955 731,955 731,955 731,955
---------- ---------- ---------- ----------
Weighted average number of common
shares outstanding as adjusted 4,867,807 4,845,091 4,872,603 4,832,706
---------- ---------- ---------- ----------
Fully diluted earnings (loss) per common share
applicable to common stock:
Continuing operations $0.43 $(0.12) $0.34 $ 0.90
Discontinued operation $0.02 $ 0.00 $0.03 $(2.40)
----- ------ ----- ------
$0.45 $(0.12) $0.37 $(1.50)
===== ====== ===== ======
<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 SEPTEMBER
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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 287,000
<SECURITIES> 0
<RECEIVABLES> 11,144,000
<ALLOWANCES> 229,000
<INVENTORY> 5,248,000
<CURRENT-ASSETS> 18,217,000
<PP&E> 40,586,000
<DEPRECIATION> 18,199,000
<TOTAL-ASSETS> 44,396,000
<CURRENT-LIABILITIES> 13,737,000
<BONDS> 0
<COMMON> 4,411,000
0
1,396,000
<OTHER-SE> 22,739,000
<TOTAL-LIABILITY-AND-EQUITY> 44,396,000
<SALES> 38,490,000
<TOTAL-REVENUES> 38,490,000
<CGS> 32,120,000
<TOTAL-COSTS> 32,120,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 354,000
<INCOME-PRETAX> 1,692,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,692,000
<DISCONTINUED> 141,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,833,000
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
