-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HHEH43ha8op+gFLgioWep6zqUQojmr+qli5UpPuUAaUIHpGwwwzrJVaqEWU6g7Kz hTf7UZ4Nwa9pDzH8daK5OQ== 0001047469-99-021154.txt : 19990518 0001047469-99-021154.hdr.sgml : 19990518 ACCESSION NUMBER: 0001047469-99-021154 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990402 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BURKE INDUSTRIES INC /CA/ CENTRAL INDEX KEY: 0001046777 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS, MATERIALS, SYNTH RESINS & NONVULCAN ELASTOMERS [2821] IRS NUMBER: 943081144 STATE OF INCORPORATION: CA FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-36675 FILM NUMBER: 99627542 BUSINESS ADDRESS: STREET 1: 2250 SOUTH TENTH STREET CITY: SAN JOSE STATE: CA ZIP: 95112 BUSINESS PHONE: 4082973500 MAIL ADDRESS: STREET 1: 2250 SOUTH TENTH STREET CITY: SAN JOSE STATE: CA ZIP: 95112 10-Q 1 10-Q - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 10-Q (MARK ONE) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED For the quarterly period ended April 2, 1999 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ COMMISSION FILE NUMBER 1-333-36675 ---------------- BURKE INDUSTRIES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) CALIFORNIA 94-3081144 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2250 SOUTH TENTH STREET SAN JOSE, CALIFORNIA 95112 (Address of Principal Executive Offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 297-3500 ---------------- Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . --- --- As of May 14, 1999, the number of shares outstanding of the Registrant's Common Stock was 3,894,500. - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ BURKE INDUSTRIES, INC. QUARTERLY REPORT ON FORM 10-Q INDEX
PART I FINANCIAL INFORMATION PAGE NUMBER - ------ --------------------- ----------- Item 1 Financial Statements Condensed Consolidated Statements of Operations for the three months ended April 2, 1999 and April 3, 1998 (unaudited) 3 Condensed Consolidated Balance Sheets as of April 2, 1999 (unaudited) and January 1, 1999 4 Condensed Consolidated Statements of Cash Flows for the three months ended April 2, 1999 and April 3, 1998 (unaudited) 5 Notes to Condensed Consolidated Financial Statements (unaudited) 6-7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 8-11 Item 3 Quantitative and Qualitative Disclosures About Market Risk 12 PART II OTHER INFORMATION - ------- ----------------- Item 1 Legal Proceedings 13 Item 5 Other Information 13 Item 6 Exhibits and Reports on Form 8-K 13 Signature 14
2 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BURKE INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (DOLLARS IN THOUSANDS)
For the Three Month Period Ended -------------------------------------- April 2, 1999 April 3, 1998 ------------------ ------------------- (Unaudited) Net sales.................................................. $28,634 $22,943 Costs and expenses: Cost of sales......................................... 20,430 16,180 Selling, general and administrative................... 4,517 3,247 Amortization of goodwill.............................. 504 9 ------- ------ Income from operations..................................... 3,183 3,507 Interest expense, net...................................... 3,738 2,787 ------- ------ Income (loss) before income tax provision (benefit).................................................. (555) 720 Income tax provision (benefit)............................. (221) 288 ------- ------ Net income................................................. $(334) $ 432 ------- ------ ------- ------
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 3 BURKE INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
January 1, 1999 (Derived from audited April 2, 1999 financial (Unaudited) statements) ------------- --------------- (In thousands) ASSETS Current assets: Cash and cash equivalents........................................... $ 376 $ 2,981 Trade accounts receivable, less allowance of $860 in 1999 and $812 in 1998..................................... 15,153 13,109 Inventories......................................................... 15,071 14,574 Other current assets................................................ 4,707 5,013 -------- -------- Total current assets.............................................. 35,307 35,677 Property, plant and equipment.......................................... 34,443 33,679 Accumulated depreciation and amortization.............................. 12,827 12,300 -------- -------- Net property, plant and equipment...................................... 21,616 21,379 Goodwill, net.......................................................... 29,231 29,735 Deferred financing costs, net.......................................... 6,336 6,542 Other assets........................................................... 612 612 -------- -------- Total assets...................................................... $ 93,102 $ 93,945 -------- -------- -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities: Trade accounts payable and accrued expenses......................... $ 9,044 $ 6,934 Payable to shareholders............................................. 953 953 Other current liabilities........................................... 5,176 8,844 -------- -------- Total current liabilities......................................... 15,173 16,731 Fixed - Rate Senior notes.............................................. 110,000 110,000 Floating - Rate Senior notes........................................... 30,000 30,000 Other noncurrent liabilities........................................... 5,576 4,526 Preferred stock, no par value; 50,000 shares authorized; 30,000 Series A Redeemable shares designated; 16,000 Series A shares issued and outstanding; 5,000 Series B Redeemable shares designated; 2,000 Series B shares issued and outstanding (aggregate liquidation and redemption preference $18,000).................................. 18,663 18,160 Shareholders' equity (deficit): Convertible preferred stock, no par value: 3,000 Series C shares designated, issued and outstanding (liquidation preference $3,000). 3,000 3,000 Class A common stock, no par value: Authorized shares-20,000,000 issued and outstanding shares--3,857,000 in 1999 and 1998......... 25,464 25,464 Accumulated deficit.................................................... (114,774) (113,936) -------- -------- Total shareholders' equity (deficit)................................ (86,310) (85,472) -------- -------- Total liabilities and shareholders' equity (deficit).............. $ 93,102 $ 93,945 -------- -------- -------- --------
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 4 BURKE INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS)
For the Three Month Period Ended ------------------------------- April 2, 1999 April 3, 1998 ------------- ------------- (Unaudited) OPERATING ACTIVITIES Net income (loss)........................................................ $ (334) $ 432 Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization: Property, plant and equipment...................................... 527 357 Goodwill........................................................... 504 9 Debt financing costs............................................... 206 148 Other adjustments to reconcile net income (loss) to net cash used in operating activities............................................... (2,744) (5,221) -------- ------- Net cash used in operating activities.................................... (1,841) (4,275) INVESTING ACTIVITIES Purchases of property, plant and equipment............................... (764) (419) -------- ------- Net cash used in investing activities.................................... (764) (419) FINANCING ACTIVITIES Restricted cash.......................................................... -- 1,070 Payable to shareholders.................................................. -- (3,934) Deferred financing costs................................................. -- (121) -------- ------- Net cash used in financing activities.................................... -- (2,985) -------- ------- Decrease in cash......................................................... (2,605) (7,679) Cash at beginning of period.............................................. 2,981 11,563 -------- ------- Cash at end of period.................................................... $ 376 $ 3,884 -------- ------- -------- -------
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 5 BURKE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying condensed consolidated financial statements of the Company have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet as of January 1, 1999 was derived from audited financial statements. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1999. The financial information included herein reflects all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the results for the interim period. The results of operations for the three months ended April 2, 1999 are not necessarily indicative of the results to be expected for the full year. The Company uses a 52 to 53-week fiscal year ending on the Friday closest to December 31. The company also follows a thirteen-week quarterly cycle. The three-month periods ended on April 3, 1998 and April 2, 1999. 2. INVENTORIES Inventories consist of the following at the period ended:
April 2, 1999 January 1, 1999 ------------- --------------- (In thousands) -------------------------------- Raw materials................................................... $ 5,118 $ 5,123 Work-in-process................................................. 2,104 2,085 Finished goods.................................................. 7,849 7,366 ------- ------- $15,071 $14,574 ------- ------- ------- -------
3. SEGMENT INFORMATION The Company has two reportable business segments: organic products and silicone products. The organic products group produces and distributes rubber and vinyl wall base, other floor covering accessory products, flexible membranes and other organic rubber products. The silicone products group produces and distributes precision silicone seals and other products used on commercial and military aircraft as well as high performance silicone truck and bus engine hoses and other silicone rubber products. 6 BURKE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
THREE MONTH PERIOD ENDED APRIL 2, 1999 Organic Products Silicone Products Total ---------------- ----------------- -------- (Amounts in Thousands) Revenues from external customers............ $14,993 $13,641 $28,634 Segment profit.............................. 2,534 1,631 4,165 PROFIT Total profit for reportable segments........ $ 4,165 Unallocated items: Corporate general and administrative expenses.................................. 478 Amortization of goodwill related to the acquisition of Mercer..................... 504 Interest expense, net..................... 3,738 ------- Income before income taxes.................. $ (555) ------- ------- THREE MONTH PERIOD ENDED APRIL 3, 1998 Organic Products Silicone Products Total ---------------- ----------------- -------- (Amounts in Thousands) Revenues from external customers............ $8,975 $13,968 $22,943 Segment profit.............................. 1,067 2,808 3,875 PROFIT Total profit for reportable segments........ $ 3,875 Unallocated items: Corporate general and administrative expenses.................................. 368 Amortization of goodwill related to the acquisition of Mercer..................... -- Interest expense, net..................... 2,787 ------- Income before income taxes.................. $720 ------- -------
7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion should be read in conjunction with the Company's Unaudited Condensed Consolidated Financial Statements and Notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This Report contains certain forward-looking statements and information relating to the Company that are based on the beliefs of management as well as assumptions made by and information currently available to management. The words "anticipates," "believes," "estimates," "expects," "plans," "intends," and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. Such statements reflect the current views of the Company, with respect to future events and are subject to certain risks, uncertainties and assumptions, that could cause actual results to differ materially from those expressed in any forward-looking statement, including, without limitation: competition from other manufacturers in the Company's aerospace, flooring or commercial product lines, loss of key employees, general economic conditions and adverse factors impacting the aerospace industry such as changes in government procurement policies. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. The Company does not intend to update these forward-looking statements. RESULTS OF OPERATIONS The Company operates within one industry segment, elastomer products, and is organized into two business segments: silicone and organic products. The Company's products are organized into three product groups: Aerospace and Defense Products, which produces precision silicone seals and other products used on commercial and military aircraft; Flooring Products, which produces and distributes rubber and vinyl cove base and other floor covering accessory products; and Commercial Products, which produces various intermediate and finished silicone and organic rubber products. The following table sets forth certain income statement information for the Company for the three month period ended April 2, 1999 compared to the same period in 1998:
Fiscal First Quarter --------------------------------------------------------------------- Percentage Percentage 1999 of Net Sales 1998 of Net Sales --------------------------------------------------------------------- (dollars in thousands) Net sales: Aerospace and Defense Products......... $ 9,114 31.8% $ 9,551 41.6% Flooring Products....................... 10,957 38.3% 5,842 25.5% Commercial Products..................... 8,563 29.9% 7,550 32.9% ------------------------------ ------------------------------- Net sales.................................... 28,634 100.0% 22,943 100.0% Cost of sales................................ 20,430 71.3% 16,180 70.5% ------------------------------ ------------------------------- Gross profit................................. 8,204 28.7% 6,763 29.5% Selling, general and administrative expenses.................... 4,517 15.8% 3,247 14.2% Amortization of goodwill..................... 504 1.8% 9 0.0% ------------------------------ ------------------------------- Income from operations....................... 3,183 11.1% 3,507 15.3% Interest expense............................. 3,738 13.1% 2,787 12.1% ------------------------------ ------------------------------- Income before income tax provision.......... (555) -2.0% 720 3.2% Income tax provision......................... (221) -0.8% 288 1.3% ------------------------------ ------------------------------- Net income.................................. $ (334) -1.2% $ 432 1.9% ------------------------------ ------------------------------- ------------------------------ -------------------------------
8 NET SALES. Total net sales increased 24.8%, from $22.9 million for the three month period ended April 3, 1998 to $28.6 million for the same period in 1999. Aerospace and Defense Products sales decreased 4.6%, from $9.6 million for the three month period ended April 3, 1998 to $9.1 million for the same period in 1999, due to decreases in demand for commercial products, which were partially offset by increases in demand for military products. Flooring Products sales increased 87.6%, from $5.8 million for the three month period ended April 3, 1998 to $11 million for the same period in 1999, due to the acquisition of Mercer. Commercial Products sales increased 13.4%, from $7.6 million for the three month period ended April 3, 1998 to $8.6 million for the same period in 1999, because of strong demand for the company's organic custom-mixed products and volume associated with new silicone hose products introduced late in the second quarter of 1998. COST OF SALES. Cost of sales increased 26.3%, from $16.2 million for the three month period ended April 3, 1998 to $20.4 million for the same period in 1999. As a percentage of net sales, gross profit decreased from 29.5% for the three month period ended April 3, 1998 to 28.7% for the same period in 1999. The decrease in profit percentage was primarily due to temporary operating inefficiencies at the Company's Southern California facilities; however, results at these facilities during the first quarter of 1999 improved over results during the fourth quarter of 1998. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses increased 39.1%, from $3.2 million for the three month period ended April 3, 1998 to $4.5 million for the same period in 1999. As a percentage of net sales, selling, general and administrative expenses increased from 14.2% for the three month period ended April 3, 1998 to 15.8% for the same period in 1999. The increase in percentage was due to the acquisition of Mercer, because Flooring Products have higher distribution costs than the Company's other product groups. AMORTIZATION OF GOODWILL. Amortization of goodwill increased to $0.5 million for the three months ended April 2, 1999. The increase was due to the acquisition of Mercer. INCOME FROM OPERATIONS. As a result of the above factors, income from operations decreased 9.2%, from $3.5 million for the three month period ended April 3, 1998 to $3.2 million for the same period in 1999. INTEREST EXPENSE. Interest expense increased 34.1%, from $2.8 million for the three month period ended April 3, 1998 to $3.7 million for the same period in 1999. The increase was due to the issuance of the Company's $30 million floating interest rate notes on April 21, 1998. NET INCOME. As a result of the above factors, net income decreased from $0.4 million for the three month period ended April 3, 1998 to a loss of $0.3 million for the same period in 1999. INCOME TAX PROVISION (BENEFIT) For the three month period ended April 2, 1999, the Company recorded an income tax benefit of 40.0%, which represents the effective tax rate projected for the full fiscal year 1999. This effective tax rate differs from the federal statutory rate primarily due to state income taxes (net of federal benefit) and is consistent with the effective tax rate for the three month period ended April 3, 1998. LIQUIDITY AND CAPITAL RESOURCES CASH FLOW. The Company's principal uses of cash are to finance working capital and capital expenditures related to asset acquisitions and internal growth. 9 CAPITAL REQUIREMENTS. The Company expects to spend approximately $2.5 million during 1999 on capital expenditures not directly related to acquisitions. Cash flow from operations, to the extent available, may also be used to fund a portion of any acquisition expenditures. SOURCES OF CAPITAL. Under a Loan and Security Agreement with NationsBank, N.A., as administrative agent, and other lending institutions party thereto, the Company has a borrowing capacity of $25.0 million (the "Credit Facility"). The Credit Facility matures in August 2002. Interest on loans under the Credit Facility bear interest at rates based upon either, at the Company's options, Eurodollar Rates plus a margin of 2.5% or upon the Prime Rate. Loans under the Credit Facility are secured by security interests in substantially all of the assets of the Company and are guaranteed by any and all current or future subsidiaries of the Company, which guarantees are secured by substantially all of the assets of such subsidiaries. The Credit Facility contains customary covenants restricting the Company's ability to, among other things, incur additional indebtedness, create liens or other encumbrances, pay dividends or make other restricted payments, make investments, loans and guarantees or sell or otherwise dispose of a substantial portion of assets to, or merge or consolidate with, another entity. The Credit Facility also contains a number of financial covenants that will require the Company to meet certain ratios and tests and provide that a change of control of the Company (as defined in the Credit Facility) will constitute an event of default. The Company anticipates that its principal use of cash during 1999 will be working capital requirements, capital expenditures and debt service requirements. Based upon current and anticipated levels of operations, the Company believes that its cash flow from operations, together with amounts available under the Credit Facility, will be adequate to meet its anticipated requirements for the foreseeable future for working capital, capital expenditures and interest payments. YEAR 2000 ISSUE GENERAL DESCRIPTION OF THE YEAR 2000 ISSUE AND THE NATURE AND EFFECTS OF THE YEAR 2000 ON INFORMATION TECHNOLOGY (IT) AND NON-IT SYSTEMS The Year 2000 issue ("Year 2000 Issue") is the result of computer programs being written using two digits rather than four digits to define the applicable year. Any of the Company's computer programs or hardware that have date-sensitive software or embedded chips may recognize a date using "00" as the year 1900 rather than the Year 2000. This could result in a system failure or miscalculation causing disruptions of operations, including, among other things, a temporary inability to process transactions, send invoices, or engage in similar normal business activities. Based on its assessments, the Company determined that it had to modify or replace significant portions of its software and certain hardware so that those systems will properly utilize dates beyond December 31, 1999. The Company believes that with modifications or replacements of existing software and certain hardware, the Year 2000 Issue can be mitigated. However, if such modifications and replacements are not made, or are not timely completed, the Year 2000 Issue could have a material impact on the operations of the Company. The Company's plan to resolve the Year 2000 Issue involves the following three phases: assessment, remediation, and testing. The Company has fully completed its assessment of all systems that could be significantly affected by the Year 2000 Issue. The completed assessment indicated that most of the Company's significant information technology systems could be affected, particularly the general ledger, billing, and inventory systems. That assessment also indicated that software and hardware 10 (embedded chips) used in production and manufacturing systems do not represent significant risks. The Company does not believe that the Year 2000 presents a material exposure as it relates to the Company's products. STATUS OF PROGRESS IN BECOMING YEAR 2000 COMPLIANT With respect to its information technology, the Company is 75% complete on the remediation phase and expects to complete software and hardware replacement no later than June 30, 1999. Completion of the testing phase for all significant systems is expected by June 30, 1999. The Company is utilizing both internal and external resources to replace and test the software and hardware for resolution of the Year 2000 Issue. In conjunction with the Company's current $2.2 million information technology systems re-engineering effort, approximately 50% of the total cost is estimated to be related to the Year 2000 project. Most of the cost of the new system has been funded through a lease. NATURE AND LEVEL OF IMPORTANCE OF THIRD PARTIES AND THEIR EXPOSURE TO THE YEAR 2000 ISSUE The Company has no significant systems which would interface directly with third party vendors. To date, the Company is not aware of any external agent with a Year 2000 Issue that would materially impact the Company's results of operations, liquidity, or capital resources. The Company has sent out questionnaires to external agents during the first quarter of 1999 in an effort to verify the external agents' Year 2000 readiness. However, the Company has no means of ensuring that the external agents will be Year 2000 ready. The inability of external agents to complete their Year 2000 resolution process in a timely fashion could materially impact the Company. The effect of non-compliance by external agents is not determinable. RISKS Management believes it has an effective program in place to resolve the Year 2000 Issue in a timely manner. As noted above, the Company has not yet completed all necessary phases of its Year 2000 program. In the event that the Company does not complete any additional phases, the Company might be unable to take customer orders, manufacture and ship products, invoice customers or collect payments. In addition, disruptions in the economy generally resulting from the Year 2000 Issue could also materially adversely affect the Company. The amount of potential liability and lost revenue cannot be reasonably estimated at this time. CONTINGENCY PLANS The Company currently has no contingency plans in place in the event it does not complete all phases of the Year 2000 program. The Company plans to evaluate the status of completion in the second quarter of 1999 and determine whether such a plan is necessary. 11 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. As reported by the Company in its Annual Report on Form 10-K for the fiscal year ended January 1, 1999, the Company is exposed to market risks related to fluctuations in interest rates on its $110 million aggregate principal amount of fixed interest rate senior notes due 2007 ("Senior Notes") and its $30 million aggregate principal amount of floating interest rate notes due 2007 ("Floating-Rate Notes"). The Company does not currently use interest rate swaps or other types of derivative financial instruments. For fixed rate debt such as the Senior Notes, changes in interest rates generally affect the fair value of the debt instrument. For variable rate debt such as the Floating-Rate Notes, changes in interest rates generally do not affect the fair value of the debt instrument, but do affect earnings and cash flows. The Company does not have an obligation to repay its Senior Notes prior to maturity in 2007 and, as a result, interest rate risk and changes in fair value should not have a significant impact on the Company. Management believes that the interest rate on the Senior Notes approximates the current rates available for similar types of financing and as a result the carrying amount of the Senior Notes approximates fair value. The carrying value of the Floating-Rate Notes approximates fair value as the interest rate is variable and resets frequently. The Floating-Rate Notes bear interest at a rate per annum equal to LIBOR plus 400 basis points and each one percentage point increase in interest rates would result in an increase in interest expense of $300,000 per year. Management does not believe that the future market rate risk related to the Senior Notes and Floating-Rate Notes will have a material impact on the Company's financial position, results of operations or liquidity. 12 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. Legal proceedings filed against the Company were reported in the Company's Annual Report on Form 10-K for the fiscal year ended January 1, 1999. ITEM 5. OTHER INFORMATION. Mr. Reed Wolthausen, a Director and Senior Vice President of the Company, has recently been engaged in managing the Company's installation of a new information system. With the installation expected to be completed by June 30, 1999, Mr. Wolthausen has tendered his resignation as an employee and director of the Company to pursue other opportunities. Mr. Wolthausen's resignation will become effective on June 30, 1999. He will continue as a consultant until completion of the installation. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) EXHIBITS. EXHIBIT NO. DESCRIPTION *3.1 Articles of Incorporation of the Company *3.2 By-laws of the Company 27 Financial Data Schedule ____________ * Previously filed as an exhibit to the Company's Registration Statement on Form S-4, File No. 333-36675, and incorporated herein by reference. (b) REPORTS ON FORM 8-K There were no reports filed on Form 8-K during the three months ended April 2, 1999. 13 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized in the City of San Jose, State of California on the 17th day of May, 1999. BURKE INDUSTRIES, INC. By: /s/ DAVID E. WORTHINGTON ---------------------------- David E. Worthington Vice President-Finance 14 EX-27 2 EXHIBIT 27
5 1,000 3-MOS DEC-31-2000 JAN-02-1999 APR-02-1999 376 0 16,013 860 15,071 35,307 34,443 12,827 93,102 15,173 140,000 18,663 3,000 25,464 (114,774) 93,102 28,634 28,634 20,430 20,430 4,973 48 3,738 (555) (221) 3,183 0 0 0 (334) 0 0
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