<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 MARCH 31, 1998
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
BIRD CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 4-3082903
(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)
(781) 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.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of May 1, 1998: 4,161,376 shares.
<PAGE> 2
BIRD CORPORATION
INDEX
PAGE NO.
Part I. Financial Information:
Consolidated Balance Sheets
March 31, 1998 and December 31, 1997 .................................. 2
Consolidated Statements of Operations for the
Three Months Ended March 31, 1998 and 1997 ............................... 4
Consolidated Statements of Cash Flows For the
Three Months Ended March 31, 1998 and 1997................................ 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
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE, PAR VALUE, AND LIQUIDATION VALUE DATA)
<TABLE>
<CAPTION>
(UNAUDITED)
MARCH 31, DECEMBER 31,
1998 1997
----------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 195 $ 784
Accounts and notes receivable 4,824 3,567
Allowance for doubtful accounts (171) (153)
Inventories 7,620 5,250
Prepaid expenses and other assets 89 243
Deferred income taxes 153 153
-------- --------
Total current assets 12,710 9,844
-------- --------
PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements 3,294 3,294
Buildings 7,042 7,042
Machinery and equipment 30,950 30,950
Construction in progress 652 458
-------- --------
41,938 41,744
Less - Depreciation 21,972 21,290
-------- --------
19,966 20,454
-------- --------
Deferred income taxes 3,913 3,913
Other assets 34 37
-------- --------
$ 36,623 $ 34,248
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 4
BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE, PAR VALUE, AND LIQUIDATION VALUE DATA)
<TABLE>
<CAPTION>
(UNAUDITED)
MARCH 31, DECEMBER 31,
1998 1997
----------- ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 6,868 $ 5,896
Revolving line of credit 0 1,700
Note payable to parent 4,100 0
Long term debt, portion due within one year 159 255
-------- --------
Total current liabilities 11,127 7,851
Other liabilities 2,485 2,567
-------- --------
Total liabilities 13,612 10,418
-------- --------
STOCKHOLDERS' EQUITY:
5% cumulative preferred stock, par value $100. Authorized
15,000 shares; 5,795 shares issued
(liquidating preference $110 per share, aggregating $637,000) 580 580
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;
4,436,488 shares issued in 1998 and 4,434,989 shares
issued in 1997 4,436 4,435
Other capital 27,516 27,511
Retained earnings (deficit) (7,344) (6,519)
-------- --------
26,002 26,821
Less -
Treasury stock, at cost:
Common - 275,112 shares (2,991) (2,991)
-------- --------
23,011 23,830
$ 36,623 $ 34,248
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 5
BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
------------------------
1998 1997
--------- ---------
<S> <C> <C>
Net sales $ 7,360 $ 9,206
--------- ---------
Costs and expenses:
Cost of sales 6,583 8,456
Selling, general and administrative expense 1,562 1,387
Interest expense 40 36
--------- ---------
Total costs and expenses 8,185 9,879
--------- ---------
Loss before income taxes (825) (673)
Provision for income taxes 0 0
--------- ---------
Net loss before dividends (825) (673)
Preferred and preference stock cumulative dividends 384 384
--------- ---------
Net loss applicable to common stockholders ($1,209) ($1,057)
========= =========
Basic and diluted loss per common share after dividends ($ 0.29) ($ 0.26)
========= =========
Average number of shares used in loss per share
computations:
Basic and diluted 4,161,226 4,143,321
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 6
BIRD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
------------------------
1998 1997
--------- ---------
<S> <C> <C>
Cash flow provided (used) by operations:
Net loss ($ 825) ($ 673)
Adjustments to reconcile to net cash used by operations:
Depreciation and amortization 682 716
Provision for losses on accounts receivable 18 0
Changes in balance sheet items:
Accounts receivable (1,257) (453)
Inventories (2,370) (1,703)
Prepaid expenses 154 302
Liabilities not related to financing activities 890 893
Other assets 3 36
------ ------
Cash flow used by operations (2,705) (882)
------ ------
Cash flows from investing activities:
Acquisition of property, plant and equipment (194) (447)
Cash flows from financing activities:
Proceeds from borrowings 4,300 0
Debt repayments (1,996) (586)
Dividends paid 0 (384)
Other equity changes 6 35
------ ------
Net cash provided by (used in) financing activities 2,310 (935)
------ ------
Net decrease in cash and equivalents (589) (2,264)
Cash and equivalents at beginning of year 784 2,310
------ ------
Cash and equivalents at end of period $ 195 $ 46
====== ======
</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, 1998 and December 31,
1997 and the results of its operations and cash flows for the three
month periods ended March 31, 1998 and 1997.
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 month periods ended March 31,
1998 and 1997 are not necessarily indicative of the results to be
expected for the full year.
3. On February 16, 1998, BI Expansion II Corp. ("Acquisition Sub"), a
wholly-owned subsidiary of CertainTeed Corporation ("CertainTeed"), an
indirect wholly-owned subsidiary of Compagnie de Saint-Gobain, accepted
for payment pursuant to a cash tender offer (the "Tender Offer")
3,991,022 shares of common stock, $1 par value per share, of the
Company ("Common Shares") or approximately 95% of the Common Shares
outstanding, and 772,735 shares of the $1.85 Cumulative Convertible
Preference Stock, $1 par value per share, of the Company ("Preference
Shares"), or approximately 95% of the Preference Shares outstanding, at
a price of $5.50 per Common Share and $20 per Preference Share, without
any adjustment for dividends accrued and unpaid through the date of the
expiration of the Tender Offer (February 13, 1998). Such dividends
amounted to $2,260,000 on February 16, 1998, which included the
undeclared dividend of $377,000 due on February 15, 1998. Pursuant to
an Agreement and Plan of Merger dated as of January 12, 1998 between
the Company, CertainTeed, and Acquisition Sub, the Company will not pay
or set aside for payment any accumulated dividends on the Common Shares
or the Preference Shares.
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 (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ------------
<S> <C> <C>
Current costs:
Raw materials $1,613 $1,318
Finished goods 6,637 4,562
------ ------
8,250 5,880
Less: LIFO reserve 630 630
------ ------
$7,620 $5,250
====== ======
</TABLE>
6
<PAGE> 8
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
5. The Company's borrowing and debt obligations are summarized as follows
(in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ------------
<S> <C> <C>
Debt Obligations:
Note payable to parent $4,100 $ 0
Revolving credit facility 0 1,700
Obligations under capital leases 159 255
------ ------
4,259 1,955
Less - portion due within one year 4,259 1,955
----- -----
Long term debt $ 0 $ 0
====== ======
</TABLE>
As of March 31, 1998, the Company had cash and equivalents on hand
totaling $195,000 and total debt of approximately $4.3 million. Letters
of credit outstanding as of March 31, 1998 totaled $805,000. The
Company's external financing needs prior to the change of control on
February 16, 1998 were augmented by the ability of its wholly owned
subsidiary, Bird Incorporated, to borrow under a three year $15,000,000
Revolving Credit and Security Agreement ("Credit Agreement") dated July
8, 1997 between Bird Incorporated and Fleet National Bank ("Fleet"). As
a result of the change of control, the terms of the Credit Agreement
required repayment of all of the Company's indebtedness. On February
18, 1998, the Company repaid all indebtedness with the exception of
outstanding letters of credit aggregating $805,000. Fleet will maintain
its security interest in the assets of the Company until these letters
of credit are revoked, which is expected to occur in the second quarter
of 1998. After February 16, 1998, the Company's financing needs have
been satisfied under the terms of a note dated February 17, 1998
between Bird Incorporated and its indirect parent, CertainTeed
Corporation. The note allows for borrowings from time to time, at
prevailing interest rates, and is payable on demand.
6. Basic earnings (loss) per share are computed by dividing earnings
(loss) available to common stockholders by the weighted average number
of common shares outstanding during the period. Diluted earnings per
share reflect per share amounts that would have resulted if dilutive
potential common stock had been converted to common stock. Diluted loss
per share amounts exclude potential common stock as its inclusion would
be anti-dilutive.
7
<PAGE> 9
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------ ---------
<S> <C> <C> <C>
FOR THE THREE MONTHS
ENDED MARCH 31, 1998
Earnings (loss) from continuing operations $ (825,000)
Deduct dividend requirements:
Preferred stock (7,000)
Convertible preference stock (377,000)
----------
BASIC EARNINGS (LOSS) PER SHARE (1,209,000) 4,161,226 $ (0.29)
Income (loss) available to common stockholders
EFFECT OF DILUTIVE SECURITIES
Options 0 0
Convertible preference stock 0 0
----------- ---------
DILUTED EARNINGS (LOSS) PER SHARE
Income (loss) available to common stockholders $(1,209,000) 4,161,226 $ (0.29)
=========== ========= ========
FOR THE THREE MONTHS
ENDED MARCH 31, 1997
Earnings (loss) from continuing operations $ (673,000)
Deduct dividend requirements:
Preferred stock (7,000)
Convertible preference stock (377,000)
----------
BASIC EARNINGS (LOSS) PER SHARE
Income (loss) available to common stockholders (1,057,000) 4,143,321 $ (0.26)
EFFECT OF DILUTIVE SECURITIES
Options 0 0
Convertible preference stock 0 0
----------- ---------
DILUTED EARNINGS (LOSS) PER SHARE
Income (loss) available to common stockholders $(1,057,000) 4,143,321 $ (0.26)
=========== =========== ========
</TABLE>
7. Since 1981 the Company 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 manufactured and sold by
the Company. Approximately 150 of these cases are currently pending and
costs of approximately $2 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
March 31, 1998, the Company had 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.
8
<PAGE> 10
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
In 1986, the Company, along with numerous other companies, was named by
the United States Environmental Protection Agency ("EPA") and other
governmental agencies responsible for regulation of the environment as
a Potentially Responsible Person ("PRP") under the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended, 42
U.S.C. Section 9601, et seq. ("CERCLA"), in connection with 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. This settlement
agreement is embodied in a consent decree filed 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 soil has been
cleaned-up and the groundwater is now being treated. The remaining cost
to the Company of the remedial work and other expenses covered by the
settlement agreement is estimated to be approximately $200,000, payable
over the next three years. As of March 31, 1998, the Company had a
reserve of $200,000 to cover the estimated cost of the Company's
remaining proportionate share (i.e., 17%) of the cost to clean-up the
groundwater. Based on information currently available to the Company,
management believes that it is probable that the major responsible
parties will fully pay the costs apportioned to them. The Company's
management believes that, based on its financial position and the
estimated accrual recorded, the Company's 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.
8. The Company has owned and operated a sanitary landfill since the late
1960's used exclusively by the Company's roofing plant for the disposal
of its own manufacturing process waste, primarily asphalt roofing
materials. The Company is not aware of any hazardous or other specially
regulated wastes disposed of at this site. As a result of a 1995
regulatory decision by the Massachusetts Department of Environmental
Protection ("DEP") to disallow the continued operation of all unlined
landfills, the Company chose not to seek to renew its operating permit
at the state and local level, which expired at the end of August 1997.
The Company determined that continuation of operations at the landfill
would be of no financial benefit over the existing outside disposal
alternatives, given the new regulatory requirements and the Company's
use of the site. Therefore, as a result of this decision, the Company
has begun negotiating a landfill closure plan with the D.E.P., which
may commence construction in 1998 and be completed in 1999. As of March
31, 1998, the Company had a reserve of approximately $777,000 to cover
the estimated cost to close the landfill. Management believes that the
closure expense with respect to this site will not have a material
adverse effect on the results of operations or financial condition of
the Company.
9
<PAGE> 11
BIRD CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
9. The Company 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. The Company offers the original
manufacturer's warranty only as part of the original sale and at no
additional cost to the customer. In addition, for marketing
considerations, the Company makes elective settlements in response to
customer complaints. The Company records the liability for warranty
claims and elective customer settlements when it determines that a
specific liability exists or a payment will be made.
10
<PAGE> 12
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ACQUISITION BY CERTAINTEED CORPORATION
On February 16, 1998, BI Expansion II Corp. ("Acquisition Sub"), a wholly-owned
subsidiary of CertainTeed Corporation ("CertainTeed"), an indirect wholly-owned
subsidiary of Compagnie de Saint-Gobain, accepted for payment pursuant to a cash
tender offer (the "Tender Offer") 3,991,022 shares of the common stock, $1 par
value per share, of the Company (the "Common Shares"), or approximately 95% of
the Common Shares outstanding, and 772,735 shares of the $1.85 Cumulative
Convertible Preference Stock, $1 par value per share, of the Company (the
"Preference Shares"), or approximately 95% of the Preference Shares outstanding,
at a price of $5.50 per Common Share and $20 per Preference Share, without any
adjustment for dividends accrued and unpaid through the date of the expiration
of the Tender Offer. The Tender Offer expired at midnight, February 13, 1998.
As a result of the completion of the Tender Offer, CertainTeed owns, through
Acquisition Sub, all but 170,354 shares of the outstanding Common Shares and all
but 41,565 shares of the outstanding Preference Shares. The Common Shares no
longer meet the continuing inclusion requirements for Nasdaq National Market
securities, and there is little or no market for either the Common Shares or the
Preference Shares. Accordingly, the Company withdrew the Common Shares and the
Preference Shares from the Nasdaq Stock Market listing effective at the close of
business on March 3, 1998.
The Tender Offer was the first step in the acquisition of the Company by
CertainTeed contemplated by an Agreement and Plan of Merger dated as of January
12, 1998 (the "Merger Agreement") between the Company, CertainTeed, and
Acquisition Sub. The second step in the transaction will be the merger (the
"Merger") of Acquisition Sub with and into the Company, with the Company
surviving the Merger as a wholly-owned subsidiary of CertainTeed. Upon the
effective date of the Merger, each outstanding Common Share (other than shares
held by stockholders who perfect their appraisal rights under Massachusetts law,
shares held in the Company's treasury, and shares held directly by Acquisition
Sub or CertainTeed) will be converted into the right to receive $5.50 in cash,
and each Preference Share (other than shares held by stockholders who perfect
their appraisal rights under Massachusetts law, shares held in the Company's
treasury, and shares held directly by Acquisition Sub or CertainTeed) will be
converted into the right to receive $20 in cash, which amount will not be
adjusted for any dividends accrued and unpaid through the date of the
consummation of the Merger. Outstanding options to acquire Common Shares with an
exercise price less than $5.50 per share will be converted into the right to
receive a cash payment without interest equal to $5.50 per share less the per
share exercise price of each such option. Outstanding options to acquire Common
Shares with an exercise price equal to or greater than $5.50 will be cancelled
upon the effective date without payment of any consideration. The Company's
outstanding 5% Cumulative Preferred Stock, par value $100 per share (the "5%
Stock"), will remain issued and outstanding upon the effective date of the
Merger and will be called for redemption and retirement as
11
<PAGE> 13
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
soon as is practicable thereafter at a price equal to $110 per share, plus all
accrued and unpaid dividends thereon as of the date of redemption and
retirement. The total consideration for CertainTeed's acquisition of the Company
is approximately $40 million, including payment for the Common Shares and the
Preference Shares pursuant to the Tender Offer and Merger and for the 5% Stock
upon redemption, but excluding the assumption of outstanding indebtedness of the
Company.
The closing of the Merger is anticipated during the second quarter of 1998,
following distribution of an Information Statement to the Company's stockholders
and approval of the Merger Agreement at a special meeting of stockholders. The
consummation of the Merger is subject to approval of the Merger Agreement by at
least 66 2/3% of the outstanding Common Shares and at least 66 2/3% of the
outstanding Preference Shares. As a result of the completion of the Tender
Offer, Acquisition Sub has sufficient voting power to effect the Merger without
the vote of any other stockholder of the Company.
FINANCIAL CONDITION
As of March 31, 1998, the Company had cash and equivalents on hand totaling
$195,000 and total debt of approximately $4.3 million. Letters of credit
outstanding as of March 31, 1998 totaled $805,000. The Company's external
financing needs prior to the change of control on February 16, 1998, resulting
from completion of the Tender Offer were augmented by the ability of the
Company's wholly owned subsidiary, Bird Incorporated, to borrow under a three
year $15,000,000 Revolving Credit and Security Agreement ("Credit Agreement")
dated July 8, 1997 between Bird Incorporated and Fleet National Bank ("Fleet").
As a result of the change of control, the terms of the Credit Agreement required
repayment of Bird Incorporated's indebtedness to Fleet. On February 18, 1998,
the Company repaid all of Bird Incorporated's indebtedness to Fleet with the
exception of outstanding letters of credit aggregating $805,000. Fleet will
maintain its security interest in the assets of the Company until these letters
of credit are revoked, which is expected to occur during the second quarter of
1998. After February 16, 1998, the Company's financing needs have been satisfied
under the terms of a note dated February 17, 1998 between Bird Incorporated and
its indirect parent, CertainTeed. This note allows for borrowings from time to
time at prevailing interest rates; indebtedness under this note is payable on
demand.
Net cash and cash equivalents decreased during the three month period ended
March 31, 1998 by approximately $589,000. The cash used by operations for the
period ended March 31, 1998 increased by $1,823,000 from $882,000 to $2,705,000
as compared to the same period in 1997. Cash used by operations during the first
quarter of 1998 was attributable to a net loss of approximately $825,000
12
<PAGE> 14
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
and several changes in the balance sheet, such as an a increase of $1,257,000 in
trade accounts receivable and an increase of $2,370,000 relating to inventories,
offset by an increase of $890,000 in liabilities not related to financing
activities. 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 in the summer months.
The Company used $194,000 in investing activities for the period ended March 31,
1998, as compared to $447,000 of net cash used for capital expenditures during
the same period in the prior year. The net cash provided by financing activities
changed by approximately $3.2 million from the same period in the prior year.
Cash provided by financing activities during 1998 was primarily due to
approximately $2.3 million of net borrowings, as compared to 1997 when the
Company had repayments of debt of $586,000 and $384,000 of dividend payments.
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 decreased $1,846,000 or 20.1% for the first quarter of 1998 compared
to the same quarter in the prior year. Mild weather conditions in the
northeastern region of the United States during the fourth quarter of 1997
unfavorably affected first quarter 1998 sales volume.
The Company's cost of sales from continuing operations for the first quarter of
1998 compared to the same period in the prior year decreased 22.1% from
$8,456,000 to $6,583,000 primarily due to decreased sales volume. For the three
month period ending March 31, 1998, cost of sales as a percentage of sales
decreased 2.5% from 91.9% to 89.4% as compared to the same period in the prior
year.
Selling, general and administrative ("SG&A") expenses for the three months ended
March 31, 1998 increased $175,000 or 12.6% from $1,387,000 to $1,562,000 for the
same period in the prior year. As a percentage of sales, SG&A expenses increased
6.1% from 15.1% for the three months ended March 31, 1997 to 21.2% for the same
period in the current year as a result of expenses related to the Company's
acquisition by CertainTeed.
13
<PAGE> 15
BIRD CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
Interest expense increased approximately 11.1% from $36,000 to $40,000 for the
first quarter of 1998 compared to the first quarter of 1997.
No tax benefit was recorded for the periods ended March 31, 1998 and March 31,
1997, as there was no reasonable assurance that related deferred tax assets
would be realized in future taxable years.
The roofing 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 month period ended March 31, 1998 are not necessarily indicative
of the results to be expected for the full year.
14
<PAGE> 16
BIRD CORPORATION
PART II - OTHER INFORMATION
Item 2. Changes in Securities
The Company is in arrears in the payment of dividends on its Preference
Shares. The Company's Articles of Organization provide that in the
event that full cumulative dividends on the Preference Shares have not
been declared and paid, the Company may not declare or pay any
dividends or make any distributions on, or make payment on the Common
Shares until full cumulative dividends on the Preference Shares are
declared and paid or set aside for payment.
Item 3. Defaults Upon Senior Securities
(b) Dividends are in arrears on the Preference Shares in the
aggregate amount of $1,506,000 for the four quarterly periods
ended February 15, 1995, $377,000 for the quarterly period
ended May 15, 1996, and $377,000 for the quarterly period
ended February 15, 1998. Pursuant to the Merger Agreement, the
Company will not pay or set aside for payment any accumulated
dividends on the Common Shares or the Preference Shares.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 2 - Agreement and Plan of Merger by and among
CertainTeed Corporation, BI Expansion II Corp. and Bird
Corporation, dated as of January 12, 1998 (Filed as Exhibit
(c)(1) of the Company's Solicitation/Recommendation Statement
on Schedule 14D-9, dated January 16, 1998 and incorporated
herein by reference.)
Exhibit 11 - Statement Regarding computation of per share
earnings
(b) The Company filed two reports on Form 8-K during the quarterly
period ended March 15, 1998. The first Form 8-K, filed as of
January 30, 1998, detailed the execution of the Merger
Agreement with CertainTeed and Acquisition Sub on January 12,
1998. The second Form 8-K filed as of March 3, 1998, detailed
the change in control of the Company as a result of completion
of the Tender Offer.
15
<PAGE> 17
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.
Date: May 15, 1998
/s/ Richard C. Maloof
- -------------------------------------
Richard C. Maloof
President and Chief Operating Officer
/s/ Donald L. Sloper, Jr.
- ------------------------------------
Donald L. Sloper, Jr.
Treasurer and Controller (Principal
Accounting Officer)
<PAGE> 18
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
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1998 1997
----------- -----------
<S> <C> <C>
Basic earnings (loss) per share (1)
Net loss $ (825) $ (673)
Deduct dividend requirements:
Preferred stock (7) (7)
Convertible preference stock (377) (377)
----------- -----------
Net loss applicable to
common stock $ (1,209) $ (1,057)
=========== ===========
Weighted average number of common
shares outstanding as adjusted 4,161,226 4,143,321
=========== ===========
Basic loss per common share $ (0.29) $ (0.26)
=========== ===========
</TABLE>
(1) See Note 6 of Notes to Consolidated Financial Statements.
<PAGE> 2
BIRD CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------
1998 1997
---------- ----------
<S> <C> <C>
Diluted earnings per share(1)
Net loss $(825) $(673)
Deduct dividend requirements of
preferred stock (7) (7)
--------- ---------
Net loss applicable to
common stock (832) (680)
========= =========
Weighted average number of common
shares outstanding 4,161,226 4,143,321
Assuming exercise of options reduced by
the number of shares which could have
been purchased with the proceeds from
exercise of such options 36,784 0
Assuming conversion of convertible
preference stock(2) 713,955 713,955
--------- ---------
Weighted average number of common
shares outstanding as adjusted 4,911,965 4,857,276
========= =========
Diluted loss per common share $(0.17) $(0.14)
========= =========
</TABLE>
(1) See Note 6 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 paragraphs 13-17 of Statement of Financial Accounting
Standards No. 128, Earnings per Share ("SFAS 128") because it produces an
anti-dilutive result. Computation of diluted 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> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MARCH 31,
1998 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 195,000
<SECURITIES> 0
<RECEIVABLES> 4,824,000
<ALLOWANCES> 171,000
<INVENTORY> 7,620,000
<CURRENT-ASSETS> 12,710,000
<PP&E> 41,938,000
<DEPRECIATION> 21,972,000
<TOTAL-ASSETS> 36,623,000
<CURRENT-LIABILITIES> 11,127,000
<BONDS> 0
0
1,394,000
<COMMON> 4,436,000
<OTHER-SE> 20,172,000
<TOTAL-LIABILITY-AND-EQUITY> 36,623,000
<SALES> 7,360,000
<TOTAL-REVENUES> 7,360,000
<CGS> 6,583,000
<TOTAL-COSTS> 6,583,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40,000
<INCOME-PRETAX> (825,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (825,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (825,000)
<EPS-PRIMARY> (.29)
<EPS-DILUTED> (.29)
</TABLE>
