-----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, AD6XY2hbwX/bwJLHqiHGEgf+KVdUV3QrnbKI1LjqhI3BZRZaVzjZjW41TjmyIxUc NwntHG8qxtA/45hS/jlkdA== 0000950135-95-002339.txt : 19951118 0000950135-95-002339.hdr.sgml : 19951118 ACCESSION NUMBER: 0000950135-95-002339 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951109 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIRD CORP CENTRAL INDEX KEY: 0000012245 STANDARD INDUSTRIAL CLASSIFICATION: ASPHALT PAVING & ROOFING MATERIALS [2950] IRS NUMBER: 043082903 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00828 FILM NUMBER: 95589053 BUSINESS ADDRESS: STREET 1: 1077 PLEASANT ST STREET 2: STE 120 CITY: NORWOOD STATE: MA ZIP: 02062 BUSINESS PHONE: 6174611414 MAIL ADDRESS: STREET 1: 980 WASHINGTON ST CITY: DEDHAM STATE: MA ZIP: 02026 FORMER COMPANY: FORMER CONFORMED NAME: BIRD INC DATE OF NAME CHANGE: 19900419 FORMER COMPANY: FORMER CONFORMED NAME: BIRD & SON INC DATE OF NAME CHANGE: 19830719 10-Q 1 BIRD CORPORATION 1 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 For the quarterly period ended September 30, 1995 ------------------------------------------------ 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 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 November 1,1995. 4,117,555 shares. 2 BIRD CORPORATION ---------------- INDEX
PAGE NO. -------- Part I. Financial Information: Consolidated Balance Sheets September 30, 1995 and December 31, 1994................. 2 Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 1995 and 1994... 4 Consolidated Statements of Cash Flows For the Nine Months Ended September 30, 1995 and 1994............. 5 Notes to Consolidated Financial Statements.................. 6 Management's Discussion and Analysis of Financial Condition and Results of Operations .............................................. 13 Part II. Other Information ................................ 19
1 3 BIRD CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(Unaudited) $(000 omitted except share data) September 30, December 31, 1995 1994 ------------- ------------ Assets Current Assets: Cash and equivalents $ 2,137 $ 321 Accounts and notes receivable 11,109 22,781 Allowance for doubtful accounts (2,064) (3,137) Inventories 6,398 8,371 Prepaid expenses and other assets 1,465 3,095 Deferred income tax 680 6,836 ------- ------- Total current assets 19,725 38,267 ------- ------- Property, Plant and Equipment: Land and land improvements 2,853 3,145 Buildings 6,960 11,742 Machinery and equipment 28,729 33,760 Construction in progress 1,205 5,705 ------- ------- 39,747 54,352 Less - Depreciation and amortization 15,714 24,323 ------- ------- 24,033 30,029 ------- ------- Assets held for sale 0 7,500 Other assets 548 1,247 Deferred tax asset 7,514 8,662 ------- ------- $51,820 $85,705 ======= =======
See accompanying notes to consolidated financial statements. 2 4 BIRD CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(Unaudited) September 30, December 31, ($000 omitted except share data) 1995 1994 ------------- ------------ Liabilities and Stockholders' Equity Current Liabilities: Accounts payable and accrued expenses $12,233 $13,671 Long-term debt, portion due within one year 922 18,071 Retirement plan contributions payable 192 302 Income taxes payable 317 596 ------- ------- Total current liabilities 13,664 32,640 ------- ------- Long-term debt, portion due after one year 5,196 12,504 ------- ------- Other liabilities 3,622 2,715 ------- ------- Deferred income taxes 128 128 ------- ------- Stockholders' Equity 5% cumulative preferred stock, par value $100. Authorized 15,000 shares;issued 5,820 shares (liquidating preference $110 per share, aggregating $640 before dividends) 582 582 Preference stock, par value $1. Authorized 1,500,000 shares; issued 814,300 shares of $1.85 cumulative convertible preference stock (liquidating preference $20 per share, aggregating $16,286 before dividends) 814 814 Common stock, par value $1. Authorized 15,000,000 shares; issued 4,390,991 shares in 1995, 4,375,179 shares in 1994 4,391 4,375 Other capital 27,341 27,235 Retained earnings (927) 7,860 ------- ------- 32,201 40,866 Less - Treasury stock, at cost: Common - 275,100 shares in 1995 and 1994 (2,991) (2,991) Unearned compensation 0 (157) ------- ------- 29,210 37,718 ------- ------- $51,820 $85,705 ======= =======
See accompanying notes to consolidated financial statements. 3 5 BIRD CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 1995 1994 1995 1994 ($000 omitted except share data) ---- ---- ---- ---- Net Sales $12,170 $46,246 $ 43,931 $141,595 ------- ------- -------- -------- Costs and expenses: Cost of sales 10,353 37,077 37,961 114,813 Selling, general and administrative expense 2,308 6,724 9,221 23,990 Interest expense 105 1,612 891 4,138 Net discontinued business activities expense (income) 0 (2,677) (17,120) (1,416) Equity losses from partnership 0 206 372 1,644 ------- ------- -------- -------- Total costs and expenses 12,766 42,942 31,325 143,169 ------- ------- -------- -------- Earnings (loss) from continuing operations before income taxes (596) 3,304 12,606 (1,574) Provision for income taxes 0 0 8,232 0 ------- ------- -------- -------- Earnings (loss) from continuing operations (596) 3,304 4,374 (1,574) ------- ------- -------- -------- Discontinued operations: Earnings from operations of discontinued businesses, net of taxes 0 0 0 2,019 Loss on disposal of environmental business 0 (907) (11,604) (9,384) ------- ------- -------- -------- Net loss from discontinued operations 0 (907) (11,604) (7,365) ------- ------- -------- -------- Net earnings (loss) before dividends $ (596) $ 2,397 $ (7,230) $ (8,939) Preferred and preference stock cumulative dividends 384 384 1,152 1,152 ------- ------- -------- -------- Net earnings (loss) applicable to common stockholders $ (980) $ 2,013 $ (8,382) $(10,091) ======= ======= ======== ======== Primary earnings (loss) per common share: Continuing operations $ (0.24) $ 0.76 $ 0.79 $ (0.67) Discontinued operations $ 0.00 $ (0.24) $ (2.83) $ (1.82) ------- ------- -------- -------- Net earnings (loss) after dividends $ (0.24) $ 0.52 $ (2.04) $ (2.49) ======= ======= ======== ========
See accompanying notes to consolidated financial statements. 4 6 BIRD CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) Nine Months Ended ($000 omitted) September 30, 1995 1994 ---- ---- Cash flow provided (used) by operations: Net loss $ (7,230) $ (8,939) Adjustments to reconcile to net cash used by operations: Depreciation and amortization 2,193 4,070 Provision for losses on accounts receivable 32 1,044 Deferred income taxes 7,304 0 Gain on sale of distribution business 0 (1,416) Loss on disposal of environmental business 7,500 9,384 Gain on sale of vinyl business (20,579) 0 Loss on sale of window business 1,959 0 Changes in balance sheet items: Accounts receivable (470) (5,566) Inventories (4,361) 603 Prepaid expenses 1,425 (2,727) Liquidation reserve 0 (4,461) Liabilities not related to financing activities (10,300) (4,722) Other assets 100 660 -------- --------- Cash flow used by operations (22,427) (12,070) -------- --------- Cash flows from investing activities: Acquisition of property, plant and equipment (1,437) (5,055) Proceeds from sale of businesses 50,680 27,195 Other investments 230 (1,313) -------- --------- Net cash provided by investing activities 49,473 20,827 -------- --------- Cash flows from financing activities: Debt proceeds 17,034 119,451 Debt repayments (41,213) (136,014) Dividends paid (1,173) 0 Other equity changes 122 488 -------- --------- Net cash used in financing activities (25,230) (16,075) -------- --------- Net increase (decrease) in cash and equivalents 1,816 (7,318) Cash and cash equivalents at beginning of year 321 7,518 -------- --------- Cash and cash equivalents at end of period $ 2,137 $ 200 ======== =========
See accompanying notes to consolidated financial statements. 5 7 BIRD CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ 1. In the opinion of the Company, the accompanying unaudited Consolidated Financial Statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly its financial position as of September 30, 1995 and December 31, 1994 and the results of its operations and cash flows for the three and nine month periods ended September 30, 1995 and 1994. 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. 3. Primary earnings(loss) per common share are determined after deducting the dividend requirements of the preferred and preference shares and are based on the weighted average number of common shares outstanding during each period increased by the effect of dilutive stock options. Fully diluted earnings (loss) per common share also give effect to the reduction in earnings per share which would result from the conversion of the $1.85 cumulative convertible preference stock at the beginning of each period. Fully diluted loss per share amounted to $1.50 for the nine month period ended September 30, 1995 compared to a loss per share of $1.87 for the same period in the prior year. 4. It is not practical to separate LIFO inventories by raw materials and finished goods components; however, the following table presents these components on a current cost basis with the LIFO reserve shown as a reduction.
(Unaudited) September 30, December 31, 1995 1994 ------------- ------------ (Thousands of dollars) Current Costs: Raw Materials $ 1,278 $ 3,554 Finished goods 5,654 6,924 -------- --------- 6,932 10,478 Less: LIFO reserve 534 2,107 -------- --------- $ 6,398 $ 8,371 ======== =========
6 8 BIRD CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (continued) 5. The Company's borrowing and debt obligations are summarized as follows:
(Unaudited) September 30, December 31, 1995 1994 ------------- ------------ (Thousands of dollars) Long-Term Debt: Revolving Credit Agreement $ 0 $ 13,937 Term Loans 5,039 15,000 Obligations under capital leases 1,079 1,638 -------- -------- 6,118 30,575 Less - portion due within one year 922 18,071 -------- -------- Long term debt $ 5,196 $ 12,504 ======== ========
As of September 30, 1995, the Company had cash and cash equivalents on hand totaling $2,137,000. Additionally, the Company's external financial needs are augmented by its ability to borrow under a loan and security agreement dated November 30, 1994, as amended (the "Loan Agreement") between Bird Incorporated and Shawmut Capital (the "Bank"). The Loan Agreement contains financial and operating covenants, which among other things, (i) require the Company to maintain prescribed levels of tangible net worth, cash flow, earnings before interest, taxes, depreciation and amortization and (ii) place limits on capital expenditures. There are also restrictions on indebtedness, liens, investments, acquisitions, dispositions, mergers, and the payment of dividends. As of September 30, 1995 the Company was in default under Section 8.3.3 of the Loan Agreement as a result of failing to achieve a stated level of cash flow for the third quarter. As a result of the weak remodeling market during 1995, sales volume and earnings were less than anticipated, negatively impacting cash flow. At the request of the Company, the Bank waived the cash flow requirements for this period without penalty. The Company expects to be able to meet more lenient covenant requirements at measurement dates within the next twelve months. The loan, which is guaranteed by the Company and secured by substantially all of the assets of the Company and its subsidiaries, is defined as a $15 million revolving credit line and a $5 million term loan for working capital, letters of credit and general corporate purposes. The revolving credit 7 9 BIRD CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (continued) availability is determined with reference to a percentage of accounts receivable and inventory which are pledged to the Bank. Currently the availability calculation does not allow borrowing to the full extent of the loan due to the seasonality of the housing business. As of October 31, 1995, an aggregate amount of $11,805,000 was available to the Company under the terms of the revolving credit facility under the Loan Agreement. As of September 30, 1995 there were no loans outstanding under the revolving credit line portion of the Loan Agreement. Principal payments of $62,500 on the $5 million term loan are due and payable monthly commencing on January 1, 1996 and continuing on the first day of each month thereafter to and including the first day of November, 1996 after which beginning on December 1, 1996 the monthly principal payment will increase to $71,417 continuing monthly through and including November 1, 1997. The entire remaining principal amount then outstanding will be due and payable on November 30, 1997. Proceeds in excess of $100,000 from the sale of any fixed asset may, at the Bank's discretion, be applied against the outstanding principal balance of the term loan at the time of any such sale. Interest on the loans is either the Bank's base rate which was 8.75% on September 30, 1995, or at the London Interbank Offering Rate ("LIBOR") plus 275 basis points, at the Company's election. The Company also pays an annual fee equal to the greater of $25,000 or 1/4% on the average of the unused portion of the facility. 6. On July 1, 1992 the Company entered into a 50% joint venture with Kensington Manufacturing Company to manufacture vinyl replacement windows through Kensington Partners ("Kensington"). Prior to March 1, 1995, the Company's portion of the joint venture results were reported using the equity method. Beginning March 1, 1995, results have been included in the Company's consolidated results as discussed below. In 1993, Kensington accepted significant contracts which provided an immediate impact of new orders. Additionally, Kensington greatly improved the design of its windows by introducing a new manufacturing process. The combination of the rapid increase of business and manufacturing changes caused unusual delays in meeting customer needs and therefore sales and profits were negatively impacted. As a result, Kensington experienced serious cash needs which further hampered production requirements. Primarily as a result of continuing losses and the inability of Kensington to properly finance its operation, Kensington's independent accountants issued "going concern" opinions at December 31, 1994 and December 31, 1993. After negotiating with its partner, the Company agreed to invest additional cash in return for temporarily increasing its 8 10 BIRD CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) ownership in Kensington to 90%. The terms of the new agreement allowed Kensington to return to an equal partnership if, before the later of December 31, 1994 or six months following the Company's last investment (made in August, 1994), its partner matched the additional investment made by the Company. As of February 28, 1995, the minority partner did not match the additional investment made by the Company. As a result, the Company's ownership in the joint venture was permanently fixed at 90%, resulting in a change in financial reporting from the equity method to consolidation beginning March 1, 1995. On June 2, 1995, the Company sold all of the outstanding capital stock of Bird-Kensington Holding Corp. ("Bird-Kensington"), which owned the Company's interest in Kensington, to Jannock, Inc. ("Jannock"). The sale was consummated pursuant to the exercise by Jannock of an option granted under the Asset Purchase Agreement dated as of September 23, 1994 (as amended by amendments dated as of January 24, 1995, January 31, 1995, and April 27, 1995) (the "Asset Purchase Agreement"). The purchase price consisted of cash in the amount of $2,780,000 and the assumption of certain liabilities related to the Kensington business. One million dollars of the cash proceeds were used to acquire the minority partner's interest in Kensington. In addition, $3,692,000 was invested by the Company in Bird-Kensington, as a condition of the sale, to enable Kensington to pay certain liabilities and to assure that the equity of Kensington was not less than $1,150,000 at the time of closing as stipulated in the Asset Purchase Agreement. Certain adjustments, subject to increase or decrease upon final determination at the closing date, affecting equity were required to be made to the Kensington financial statements as of March 31, 1995. These adjustments were primarily asset write-downs and the exclusion of certain assets related to affiliated companies to be assumed by the Company of approximately $700,000 and $500,000, respectively. Within 30 days following the closing date, Jannock presented to the Company Kensington's financial statements as of June 2, 1995, in accordance with the Asset Purchase Agreement, as amended, indicating that the Company make an additional investment of up to $471,000 as a condition of the sale to assure that the equity of Bird-Kensington was not less than $1,050,000, as stipulated in the Asset Purchase Agreement. The Company established a reserve for the full amount at June 30, 9 11 BIRD CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (continued) 1995 and subsequently paid to Jannock $398,000 in full settlement of the terms of the Asset Purchase Agreement. 7. In 1986, the Company, along with numerous other companies, was named by the 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 and fixed the Company's proportionate share of the total expenses. The ultimate cost of the remedial work and other expenses covered by the settlement agreement can only be estimated. The Company has provided a reserve amounting to $1 million at September 30, 1995 for its estimated share of the ultimate cost of cleanup, most of which will be paid in 1996. In 1994, the Arizona Department of Environmental Quality (the "ADEQ") issued a notice of violation ("NV") to Southwest Roofing Supply, a former division of the Company ("Southwest"), which directed Southwest to conduct a site investigation of property formerly leased by Southwest. Receipt of the NV prompted negotiations between the ADEQ, Southwest and the Company. The negotiation resulted in a consent order between the ADEQ and the Company on September 23, 1994. Pursuant to the consent order, the Company agreed to submit a work plan with a view to remediating the soil and ground water that may have been contaminated by leaks from an underground storage tank previously removed by the Company. In accordance with the work plan, the Company expects to remediate the soil and ground water where and if necessary. The Company's management believes that the cost to the Company of such remediation will be in the range from $200,000 to $700,000. The Company has provided a reserve totaling $454,000 at September 30, 1995 for its proportionate share of the estimated ultimate cost of cleanup based on management's best estimate of the cost to be incurred. The Company anticipates that $200,000 will be reimbursed to the Company by the ADEQ in accordance with Arizona law and regulation. This potential recovery has not been recorded as of September 30, 1995. 10 12 BIRD CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (continued) 8. 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 the vinyl business to Jannock offset by $1.5 million in provisions relating to pension plans and product liability claims associated with former roofing operations and a second quarter loss of $1,959,000 on the sale of the Kensington business to Jannock. Sales of $6,365,000 and $8,859,000 were recorded for the now-discontinued vinyl business for the periods ending March 7, 1995 and March 31, 1994, respectively. As a percentage of sales, gross margins for these periods were 6.5% and 22.7%, respectively. 9. During the second quarter of 1994, the Company's 40% interest in Mid-South Building Supply, Inc. was redeemed for $1 million in cash resulting in a loss of $1,261,000. 10. Restrictions on the payment of dividends on Common and Preference Stock are imposed by the terms of the Loan Agreement dated November 30, 1994. Payment of dividends on Preferred Stock are permitted under the Loan Agreement. The quarterly dividends on the Preferred Stock due March 1, June 1, and September 1, 1995 in the aggregate amount of $21,825 were declared and paid in full when due. The quarterly dividend on the Preferred Stock due December 1, 1995 in the amount of $7,275 was declared on September 29, 1995 and is expected to be paid when due. Quarterly dividends in arrears on the Preferred Stock due March 1, June 1, and September 1, 1994 amounting to $21,825 were declared and paid in full on June 15, 1995. Dividends are in arrears on the Preference Stock in the aggregate amount of $1,506,000 for the four quarterly periods ended February 15, 1995. The quarterly dividend on the Preference Stock due May 15, 1995 was declared and paid in full when due. The quarterly dividend on the Preferred Stock due August 15, 1995 and one quarterly dividend in arrears were declared and paid in full on August 15, 1995. The quarterly dividend on the Preference Stock due November 15, 1995 in the amount of $376,000 was, with the consent of the Bank, declared on September 29, 1995 and is expected to be paid when due. 11. During 1993, the Company decided to close its "on-site" environmental remediation business. This business involved environmental remediation projects such as the processing of oily waste sites at refineries, operation and management of waste processing sites and the removal and remediation of sludge. 11 13 BIRD CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (continued) As of September 30, 1995, the remaining assets and liabilities relating to the "on site" environmental remediation business approximated $291,000 and $440,000, respectively. The assets relate primarily to accounts receivable due to holdbacks on asset sales and the liabilities relate primarily to severance payments, a disputed trade payable and certain other obligations such as for taxes and workers compensation. During the second quarter of 1994, the Company agreed to sell its 80% interest in Bird Environmental Gulf Coast, Inc. ("BEGCI"), which owns and operates the "on-site" environmental business, to the minority shareholders thereof, subject to financing, resulting in the complete withdrawal from the environmental business. Due to the fact the minority partner was unable to finance the purchase of the facility, the Company actively sought another purchaser. However, efforts to attract a buyer have been unsuccessful even at severely discounted prices. The continuing losses of the facility combined with equipment related problems and the limited apparent prospects for near term improvement precipitated a vote by the Company's Board of Directors in July 1995 to suspend further funding of the facility. As a result of this action, during the second quarter of 1995, the Company's remaining investment of $7.5 million was written off and a $3 million reserve was established for the potential costs, such as the potential buy-out of minority shareholders and cleanup expenses associated with the closure of the facility. In addition, for the nine month period ending September 30, 1995, the Company made additional investments in BEGCI of $1,104,000 which were not considered recoverable and as a result were written-off. 12. The Company warrants under certain circumstances that its building material products meet certain manufacturing and material specifications. The warranty policy is unique to each product, ranges from five to forty years, is generally for some 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. 12 14 BIRD CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- FINANCIAL CONDITION - ------------------- As of September 30, 1995, the Company had cash and cash equivalents on hand totaling $2.1 million and total debt of $6.1 million. The Company's external financial needs are augmented by its ability to borrow under the amended Loan and Security Agreement (the "Loan Agreement") dated November 30, 1994 between Bird Incorporated and Shawmut Capital (the "Bank") of Glastonbury, Connecticut. The Loan Agreement consists of a $15.0 million revolving credit commitment and a $5.0 million term loan. Up to $5.0 million of the revolving credit facility can be used for letters of credit. Borrowings by Bird Incorporated under the Loan Agreement are guaranteed by the Company and the Company's other subsidiaries and are secured by substantially all of the assets of the Company and its subsidiaries. The revolving credit line availability is determined with reference to a percentage of accounts receivable and inventory which are pledged to the Lender. During the period January 1 through April 30, the Loan Agreement provides a $2 million over-advance on accounts receivable and inventories in order to assist the Company in assuring adequate funding of any seasonal build- up of accounts receivable during the winter months. Currently, the availability calculation does not allow borrowings to the full extent of the revolving credit commitment. As of October 31, 1995, an aggregate amount of $11,805,000 was available to the Company under the terms of the revolving credit facility under the Loan Agreement. As of September 30, 1995, there were no amounts outstanding under the revolving credit facility. Letters of credit outstanding as of September 30, 1995 totaled $2,233,000. Intercompany loans and advances to non- borrowing affiliates including BEGCI are permitted under the Loan Agreement. The Loan Agreement contains financial and operating covenants which, among other things,(i) require the Company to maintain prescribed levels of tangible net worth, net cash flow, earnings before interest, taxes, depreciation and amortization, and ratio of current assets to current liabilities and (ii) place limits on capital expenditures. The Loan Agreement also contains restrictions on indebtedness, liens, investments, distributions (including payment of dividends), mergers, acquisitions, and disposition of assets. As of September 30, 1995 the Company was in default under Section 8.3.3 of the Loan Agreement as a result of failing to achieve a stated level of cash flow for the third quarter. As a result of the weak remodeling market during 1995, sales volume and earnings were less than anticipated, negatively impacting cash flow. At the request of the Company, the Bank waived the cash flow requirements for this period without penalty. The Company expects to meet more lenient covenant requirements at measurement dates within the next twelve months. 13 15 BIRD CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ---------------------------------------------- (continued) Interest on both the revolving credit portion and term loan portion of the Loan Agreement accrues at either the base rate which was 8.75% on September 30, 1995, or at the London Interbank Offering Rate ("LIBOR") plus 275 basis points, at the borrower's election. The Company also pays an annual fee equal to the greater of $25,000 or 1/4% on the average of the unused portion of the facility. Principal payments of $62,500 on the $5 million term loan are due and payable monthly commencing on January 1, 1996 and continuing on the first day of each month thereafter to and including November 1, 1996 after which beginning on December 1, 1996 the monthly principal payment will increase to $71,417 continuing monthly through and including November 1, 1997. The entire remaining principal amount then outstanding will be due and payable on November 30, 1997. Proceeds in excess of $100,000 from the sale of any fixed asset may, at the bank's discretion, be applied against the outstanding principal balance of the term loan at the time of any such sale. On March 8, 1995, the Company sold substantially all of the assets of its vinyl business to Jannock, Inc. ("Jannock") for $47.5 million in cash subject to certain downward adjustments which totaled $4,962,000. Net of adjustments, the gain on the sale of the vinyl business totaled $20.6 million. The sale included the assumption by the purchaser of certain specified liabilities of the vinyl business. The transaction also included an option to purchase the Company's interest in Kensington. On June 2, 1995, the Company sold all of the outstanding capital stock of Bird- Kensington Holding Corp. ("Bird-Kensington"), which owned the Company's interest in Kensington, to Jannock. The sale was consummated pursuant to the exercise by Jannock of the option granted under the Asset Purchase Agreement. The purchase price consisted of cash in the gross amount of $2,780,000 and the assumption of certain liabilities related to the Kensington business. One million dollars of the cash proceeds were used to acquire the minority partner's interest in Kensington. In addition, $3,692,000 was invested by the Company in Bird-Kensington, as a condition of the sale, to enable Kensington to pay certain liabilities including the repayment of all loans outstanding with Bankers Capital and to assure that the equity of Kensington was not less than $1,150,000 at the time of closing. Certain adjustments, subject to increase or decrease upon final determination at the closing date, affecting equity were required to be made to the Kensington financial statements as of March 31, 1995. These adjustments were primarily asset write-downs and the exclusion of certain assets related to affiliated companies to be assumed by the Company of approximately $700,000 and $500,000, respectively. 14 16 BIRD CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- (continued) Within 30 days following the closing date, Jannock presented to the Company, Kensington's financial statements as of June 2, 1995, in accordance with the Asset Purchase Agreement as amended, indicating that the Company make an additional investment as a condition of the sale to assure that the equity of Bird-Kensington was not less than $1,050,000. In August 1995, the Company paid to Jannock $398,000 in full settlement of the terms of the Asset Purchase Agreement. Net cash and cash equivalents increased during the nine month period ending September 30, 1995 by $1,816,000 to $2,137,000 due to cash received from the sale of the vinyl business. The cash used by operations for the nine month period ended September 30, 1995 increased $10,357,000, from $12,070,000 to $22,427,000. The change was attributable primarily to the fact that at September 30, 1995 the Company reported a gain of $20,579,000 on the sale of its vinyl business, a loss of $1,959,000 on the sale of its window fabrication business and a $7,304,000 reduction to deferred taxes. There were also changes in balance sheet items such as liabilities not related to financing activities and inventories. Liabilities not related to financing activities increased approximately $6 million primarily the result of the $4 million build-up of finished goods inventory related to sluggish demand for roofing products during the third quarter of 1995 and the establishment of a $3 million reserve for the closure of the San Leon facility. The Company had approximately $49.5 million of net cash provided from investing activities for the period ended September 30, 1995 as compared to a total of approximately $20.8 million for the period ended September 30, 1994. The change is primarily the result of $50.3 million of cash receipts from the proceeds of the sale of certain of the Company's assets (including, primarily, the sale of the assets of the vinyl and window fabrication businesses to Jannock, Inc. in March and June 1995), offset by cash used for capital expenditures of the roofing business. In the prior comparable period, net cash provided by investing activities amounted to $27 million primarily from the proceeds of the sale of the Company's distribution business to Wm. Cameron & Co., offset by cash used for capital expenditures. The net cash resulting from financing activities changed by $9 million for the period ended September 30, 1995 as compared to the same period in the prior year. The change is attributable to the fact that during 1995 the Company repaid $24 million of debt in excess of borrowings and paid dividends of approximately $1 million, as compared to 1994 when the Company repaid approximately $17 million in excess of borrowings and made no dividend payments. There were several significant changes in the balance sheet accounts between December 31, 1994 and September 30, 1995 which related 15 17 BIRD CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- (continued) primarily to the sale of the Company's vinyl business in March, 1995. Cash increased $1.8 million, accounts and notes receivable decreased $11.7 million, deferred income taxes was reduced by $6 million, current liabilities decreased $19 million and long term debt decreased $7.3 million. Assets held for sale decreased $7.5 million due to the write-off of the Company's interest in Bird Environmental Gulf Coast, Inc. ("BEGCI"). RESULTS OF OPERATIONS - --------------------- Net sales from continuing operations decreased 69% from $141,595,000 to $43,931,000 for the first nine months of 1995 as compared to the same period in the prior year primarily due to the sale of the Company's distribution and vinyl products business units. Sales from the roofing manufacturing business decreased $5,999,000 or 15.2% compared to the same nine month period in the prior year due to the erosion of volume. The decreased volume was attributable to a weak remodeling market in the Northeast. The Company plans to expand its sales territories to include areas bordering the Northeastern states in order to replace lost volume. Net sales from continuing operations decreased $34,076,000 or 73.7% for the third quarter of 1995 compared to the same quarter in the prior year primarily as a result of the sale of the Company's distribution and vinyl products business units. Net sales for the roofing manufacturing business decreased $4,276,000 or 26% compared to the same quarter in the prior year due to a decrease in volume primarily due to the aforementioned weak remodeling market. The Company's cost of sales from continuing operations compared to the same period in the prior year decreased 66.9% from $114,813,000 to $37,961,000 for the nine months of 1995. The decline was primarily a result of the sale of the Company's distribution and vinyl products business units. Cost of sales for the roofing business decreased 16.5% or $5,564,000 due primarily to decreased manufacturing costs related to a decrease in sales volume. Although the Company experienced raw material price increases in glass mat and dry felt, the cost of asphalt, along with related freight was reduced significantly as a result of the newly constructed asphalt oxidizer which produces asphalt saturant and coatings. The oxidizer became operational in the first quarter of 1995. The Company's cost of sales from continuing operations for the third quarter of 1995 compared to the same period in the prior year decreased 72.1% from $37,077,000 to $10,353,000. Cost of sales for the roofing business decreased 23.8% due primarily to the reasons previously stated. For the nine months ended September 30, 1995, the roofing 16 18 BIRD CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- (continued) manufacturing business cost of sales as a percentage of sales decreased 1.3% as compared to the same period in the prior year. For the three months ended September 30, 1995 the percentage of cost of sales to sales as compared to the same period in the prior year increased 2.5%. Selling, general and administrative ("SG&A") expenses for the three months ended September 30, 1995 decreased 65.7% from $6,724,000 to $2,308,000 and decreased 61.6% for the nine month comparative period from $23,990,000 to $9,221,000. The decrease was primarily attributable to the sale of the Company's distribution and vinyl products business units. However, SG&A expenses (expressed as a percentage of sales) increased approximately 4% for the three month and the nine month comparative periods. The increase was due primarily to the amortized refinancing costs associated with the 1994 refinancing of an earlier credit agreement, additional charges related to environmental remediation and estimated costs associated with closing the corporate office recorded during the first quarter of 1995. Interest expense decreased approximately 93.5% from $1,612,000 to $105,000 for the third quarter of 1995 compared to the third quarter of 1994. For the nine months ended September 30, 1995, interest expense decreased approximately 78.5% or $3,247,000 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 distribution business units. On March 8, 1995, the Company sold its vinyl manufacturing business to Jannock, Inc. for $47.5 million subject to adjustment. The resulting gain of $20,579,000 has been recorded as discontinued business activities. This gain was reduced by a charge of $1,500,000 for the estimated cost to terminate the qualified and unqualified unfunded employee benefit plans and future product liability claims related to former roofing operations. On June 2, 1995, the Company sold its window fabrication business to Jannock for $2,780,000 resulting in a loss of $1,959,000 which was recorded as discontinued business activities. Effective February 28, 1995, the Company's ownership in Kensington was permanently fixed at 90% resulting in a change in financial reporting from the equity method to consolidation. Therefore, the equity losses for 1995 reflect the results of two months versus three months in 1994. In connection with the Board of Director's 1994 decision to sell BEGCI and the Company's agreement on June 18, 1994 to sell its shares 17 19 BIRD CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --------------------------------------------- (continued) in BEGCI to the minority stockholders, subject to financing, the Company reclassified BEGCI results as a discontinued operation as of June 30, 1994 and adjusted its book value resulting in an aggregate charge for the nine months ended September 30, 1994 of $11,226,000. In addition, excess costs of $3,861,000 related to the "on-site" environmental remediation business and charged to results of operations in 1993 had been reversed and were recorded as discontinued operations in the consolidated statement of operations for the nine months ending September 30, 1994. The Company had intended to operate the San Leon Facility owned by BEGCI until the sale of its interest in BEGCI was consummated. Efforts to sell the facility had been unsuccessful through the second quarter of 1995 and the facility continued to incur losses. Consequently, on July 18, 1995 the Company's Board of Directors voted to suspend further funding of the facility. As a result of this action, the Company wrote-off its $7.5 million investment and established a $3 million reserve for potential costs such as the potential buy-out of minority shareholders and cleanup expenses associated with the closure of the facility. For the nine month period ended September 30, 1995, the Company invested $1,104,000 which was deemed non-recoverable and charged to discontinued operations. The Company's effective income tax rate from continuing operations was 65.3% for the nine month period ended September 30, 1995 and zero for the same period in the prior year. No tax benefit was recorded for the period ending September 30, 1994 as there was no reasonable assurance that related deferred tax assets would be realized in future taxable years. For the same period during the current year, the estimated annual effective tax rate reflects an increase of approximately $2,951,000 in the valuation allowance to $7,951,000 due primarily to the loss on the window fabrication business and charges to discontinued business activities related to former roofing operations where there is no assurance that any tax benefit would be realized from these losses in the future. However, the Company expects the roofing business to be a contributor to future taxable income. 18 20 PART II - OTHER INFORMATION --------------------------- Item 2. Changes in Securities - ------------------------------- The Loan and Security Agreement dated as of November 30, 1994 ("Loan Agreement") by and among Bird Incorporated and Shawmut Capital imposes restrictions on the Company with respect to the purchase, redemption, or other retirement of, or any other distribution on or in respect of any shares of any class of capital stock of the Company with the exception of payments of dividends on the Company's 5% cumulative preferred stock ("Preferred Stock"). Dividends on the Preferred Stock may not exceed $35,000 in any fiscal year. The Company is in arrears in the payment of dividends on its $1.85 cumulative preference stock ("Preference Stock"). (See Item 3 (b), below). The Articles of Organization of the Company provide that in the event that full cumulative dividends on the Preference Stock have not been declared and paid, the Company may not declare or pay any dividends or make any distributions on, or make payment on its Common Stock, until full cumulative dividends on the Preference Stock are declared and paid or set aside for payment. Item 3. Defaults Upon Senior Securities - ---------------------------------------- (b) Dividends are in arrears on the Preference Stock in the aggregate amount of $1,506,000 for the four quarterly periods ended February 15, 1995. The quarterly dividend on the Preference Stock due August 15, 1995 and one dividend in arrears have been paid in full. The quarterly dividend on the Preference Stock due November 15, 1995 was, with the consent of Bank, declared on September 29, 1995 and is expected to be paid when due. Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- (a) Exhibit 10(u) - Employment Agreement dated as of July 31, 1995 between the Company and Frank S. Anthony. Exhibit 10(v) - Amended Employment Agreement dated August 21, 1995 between the Company and Richard C. Maloof. Exhibit 11 - Statement Regarding Computation of per Share Earnings (b) Reports on Form 8-K - No reports on Form 8-K were filed during the quarter for which this report is filed. 19 21 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: November 9, 1995 ---------------------------------- Richard C. Maloof President and COO ---------------------------------- Donald L. Sloper, Jr. Corporate Controller and Principal Accounting Officer 22 BIRD CORPORATION EXHIBIT INDEX -------------
Sequential Exhibit No. Page No. - ----------- ---------- 10(u) Employment Agreement dated as of July 31, 1995 between the Company and Frank S. Anthony. 10(v) Amended Employment Agreement dated August 21, 1995 between the Company and Richard C. Maloof. 11 Statement Regarding Computation of per Share Earnings
EX-10.(U) 2 EMPLOYMENT AGREEMENT WITH FRANK S. ANTHONY 1 EXHIBIT 10(u) EMPLOYMENT AGREEMENT -------------------- AGREEMENT made as of the 31st day of July, 1995, by and between Bird Corporation, a Massachusetts corporation having its principal offices at 980 Washington Street, Suite 120, Dedham, Massachusetts 02026 (the "Corporation"), and Frank S. Anthony of Norfolk, Massachusetts (the "Executive"). WITNESSETH: WHEREAS, the Executive is presently employed by the Corporation as its Vice President and General Counsel; WHEREAS, under the terms of the existing letter agreement dated October 15, 1984 (as amended) between the Executive and the Corporation (the "Severance Agreement"), the Executive would be entitled to certain benefits if his employment were to be terminated by the Corporation (other than for disability or cause) or by the Executive voluntarily; WHEREAS, the Executive is willing to continue in the employment of the Corporation and to defer his right to receive benefits under the Severance Agreement, and the Corporation wishes to continue the employment of the Executive, on the terms and conditions hereinafter set forth; NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows: 1. EMPLOYMENT PERIOD. The Corporation hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Corporation, for the Employment Period. Unless sooner terminated pursuant to Section 4, the Employment Period shall be the period beginning on April 1, 1995 and ending on March 31, 1996. At any time within 90 days prior to the end of the initial or any subsequent Employment Period, the Executive and the Corporation may mutually agree in writing to extend the Employment Period for one year so as to terminate on March 31 of the next year. 2. POSITION AND DUTIES. (a) During the Employment Period, the Executive shall serve as Vice President and General Counsel of the Corporation. In that capacity the Executive shall continue to perform duties substantially similar to those he has performed for the Corporation in the past and to perform such additional duties as the Board of Directors of the Corporation (the "Board") may from time to time prescribe. (b) Excluding periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote substantially all of his attention and time during normal business hours to the business and affairs of the Corporation and, to the extent necessary to discharge the responsibilities assigned to the 2 Executive hereunder, to use reasonable best efforts to perform faithfully and efficiently such responsibilities. The Executive may serve on corporate, civic, or charitable boards or committees and manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities hereunder. 3. COMPENSATION. (a) BASE SALARY. During the Employment Period, the Executive shall receive a base salary ("Base Salary") at an annual rate of $135,000, or at such higher rate as shall from time to time be fixed by the Board. The Base Salary shall be paid at such times and in such amounts as shall be consistent with the customary payroll practices of the Corporation for its key executives. (b) INCENTIVE, SAVINGS, AND RETIREMENT PLANS. In addition to the Base Salary payable as hereinabove provided, the Executive shall be entitled to participate, during the Employment Period, in all savings and retirement plans and programs through the qualified plans of the Corporation or through nonqualified substitutes in which the Executive has agreed to participate in lieu of the qualified plans, and all short and long-term incentive plans and programs applicable to other key executives, including without limitation the Management Incentive Compensation Plan ("MICP") as in effect from time to time. (c) WELFARE BENEFIT PLANS. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under each welfare benefit plan of the Corporation, including, without limitation, all medical, dental, disability, life, group life, accidental death, and travel accident insurance plans and programs of the Corporation and its affiliated companies, as in effect at any time during the Employment Period with respect to other key executives. (d) EXPENSES. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the policies and procedures of the Corporation as in effect at any time during the Employment Period with respect to other key executives. (e) FRINGE BENEFITS. During the Employment Period, the Executive shall be entitled to fringe benefits, including without limitation the use of an automobile and payment of related expenses and the continued maintenance (without any further Company matching contributions) of the existing rabbi trust for the Executive's benefit, of which LaSalle National Trust, N.A. is Trustee, in accordance with the policies of the Corporation as in 0effect at any time during the Employment Period with respect to other key executives. At the end of the Employment Period, the Executive agrees to purchase and the Corporation agrees to sell the Company-provided automobile then used by the Executive at a -2- 3 price equal to the buy-out amount under the Company's lease of such automobile. (f) VACATION. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the policies of the Corporation as in effect at any time during the Employment Period with respect to other key executives. (g) SEVERANCE BENEFITS. Under the terms of the Severance Agreement, if the employment of the Executive were to be terminated as of the date of this Agreement either by the Corporation (other than for disability or for cause) or by the Executive voluntarily for any reason (other than death), he would be entitled to receive a severance benefit in an amount equal to the sum of $377,800 plus the benefit payable under paragraph (C) of Section 4(iii) of the Severance Agreement, determined as of the applicable Date of Termination (the "Old Severance Benefit"). If the Executive shall remain in the employment of the Corporation until the end of the Employment Period on March 31, 1996 (regardless of whether the Employment Period shall then be extended), the Executive shall be entitled to receive a severance benefit in an amount equal to the sum of the benefits payable under paragraphs (B) and (C) of Section 4(iii) of the Severance Agreement, determined as of March 31, 1996 (the "New Severance Benefit"). Upon execution of this Agreement, the Company shall, as an advance against the New Severance Benefit, (i) pay the sum of $135,000 to the Executive in cash (less any amounts required to be withheld in accordance with applicable tax withholding laws and regulations) and (ii) deliver the sum of $15,000 to LaSalle National Trust, N.A., as Trustee of the Trust Agreement dated as of June 24, 1991 by and between Bird Incorporated and such Bank as Trustee, to be held as part of the Trust Fund thereunder. The sum of $150,000 shall thereafter be offset against the amount of the New Severance Benefit due on March 31, 1996. Payment of the New Severance Benefit shall satisfy in full the obligation of the Corporation to pay the Old Severance Benefit and all other obligations of the Corporation to the Executive under the Severance Agreement. 4. TERMINATION. (a) DEATH OR DISABILITY. This Agreement shall terminate automatically upon the Executive's death. The Corporation may terminate this Agreement, after having established the Executive's Disability (pursuant to the definition of "Disability" set forth below), by giving to the Executive written notice of its intention to terminate the Executive's employment. In such case, the Executive' s employment with the Corporation shall terminate effective 30 days after receipt of such notice (the "Disability Effective Date"), unless the Executive has previously returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" means physical or mental disability which, after the expiration of more than six months after its commencement, is determined to be total and permanent by a physician selected by the Corporation or its insurers and acceptable to the Executive or the Executive's legal -3- 4 representative (such agreement to acceptability not to be unreasonably withheld). (b) CAUSE. The Corporation may terminate the Executive's employment for "Cause". For purposes of this Agreement, "Cause" means (i) the Executive's willful and continued failure to substantially perform assigned duties with the Corporation (other than any such failure resulting from incapacity due to physical or mental illness), after a demand for substantial performance is delivered to the Executive by the Board, specifically identifying the manner in which the Board believes that the duties have not been substantially performed; or (ii) the Executive's willful or unlawful conduct which is demonstrably and materially injurious to the Company. For purposes of this paragraph (b), no act, or failure to act, shall be considered "willful" unless done, or omitted to be done, not in good faith and without reasonable belief that such action or omission was in the best interest of the Corporation. (c) NOTICE OF TERMINATION. Any termination by the Corporation for Cause shall be effected by Notice of Termination to the Executive given in accordance with Section 10(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 15 days after the giving of such notice). In the case of termination for Cause, the Notice of Termination shall not be effective unless it takes the form of a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for the purpose, after reasonable notice and an opportunity for the Executive, together with counsel, to be heard before the Board, which resolution shall state that the Executive has given "Cause" within the meaning set forth above in clause (i) or (ii) of the second sentence of paragraph (b) above, and specifying the particulars thereof in detail. (d) DATE OF TERMINATION. "Date of Termination" means the date of the Executive's Death, the Disability Effective Date, or the date of receipt of an effective Notice of Termination or any later date specified therein, as the case may be. If the Executive's employment is terminated by the Corporation in breach of this Agreement, the Date of Termination shall be the date on which the Corporation notifies the Executive of such termination. 5. OBLIGATIONS OF THE CORPORATION UPON TERMINATION. (a)DEATH. If the Executive's employment is terminated by reason of the Executive's death, this Agreement shall terminate without further obligations to the Executive's legal representatives under -4- 5 this Agreement other than those obligations accrued hereunder at the date of the Executive's death and the obligation to pay a severance benefit as provided in Section 5(d), below. Anything in this Agreement to the contrary notwithstanding, the Executive's family shall be entitled to receive benefits at least equal to those provided by the Corporation to surviving families of executives of the Corporation under such plans, programs, and policies relating to family death benefits, if any, as in effect at the time of the Executive's death with respect to other key executives and their families. (b) DISABILITY. If the Executive's employment is terminated by reason of the Executive's Disability, the Executive shall be entitled after the Disability Effective Date to receive disability and other benefits at least equal to those provided by the Corporation to disabled employees and/or their families in accordance with such plans, programs, and policies relating to disability, if any, as in effect on the Disability Effective Date with respect to other key executives and their families. (c) CAUSE. If the Executive's employment shall be terminated for Cause, the Corporation shall pay the Executive his full Base Salary through the Date of Termination at the rate in effect at the time Notice of Termination is given and shall have no further obligations to the Executive under this Agreement. (d) SEVERANCE BENEFITS. If, during the Employment Period ending March 31, 1996, the Executive's employment is terminated by reason of his death or Disability or the Corporation shall terminate the Executive's employment for any reason other than for Cause, the Corporation shall pay to the Executive an amount equal to the sum of the benefits payable under paragraphs (B) and (C) of Section 4(iii) of the Severance Agreement, determined as of the applicable Date of Termination, less the sum of $150,000 paid to him or for his account pursuant to Section 3(g) hereof. If, during the Employment Period ending March 31, 1996, the Executive shall voluntarily terminate his employment for any reason, the Corporation shall pay to the Executive the Old Severance Benefit, less the sum of $150,000 paid to him or for his account pursuant to Section 3(g) hereof, and the Corporation shall have no further obligation to pay the New Severance Benefit to the Executive. (e) LEGAL FEES AND EXPENSES. The Company shall pay to the Executive all legal fees and expenses reasonably incurred by him as a result of the termination of his employment hereunder, including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement. 6. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive, or other plan or program provided by the Corporation or any of its affiliated -5- 6 companies and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any stock option or other agreements (other than the Severance Agreement, which is expressly superseded by this Agreement to the extent set forth herein) with the Corporation or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Corporation or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program. 7. NONCOMPETITION AND CONFIDENTIAL INFORMATION. (a) During the Employment Period, and during a one-year period following any termination of his employment, the Executive shall not directly or indirectly compete with the Corporation (which shall be deemed as including any subsidiary or affiliate of the Corporation), whether as an individual proprietor or entrepreneur or as an officer, employee, partner, stockholder, or in any capacity connected with any enterprise, in any business in which the Corporation is engaged at the time of the termination of the Executive's employment, within any state or possession of the United States of America or any foreign country within which such business is then being conducted, or within which business is then specifically planned by the Corporation to be conducted. For the purpose of the preceding sentence, conducting business, doing business, or engaging in business shall be deemed to embrace sales to customers or performance of services for customers who are within a relevant geographical area, without any necessity of any presence of the Corporation therein. Nothing herein, however, shall prohibit the Executive from acquiring or holding any issue of stock or securities of any corporation which has any securities listed on a national securities exchange or quoted in the daily listing of over-the-counter market securities; provided that at any one time he and members of his immediate family do not own more than five (5%) percent of the voting securities of any such corporation. (b) The Executive shall hold in a fiduciary capacity for the benefit of the Corporation all secret or confidential information, knowledge, or data relating to the Corporation or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive's employment by the Corporation or any of its affiliated companies and which shall not be public knowledge (other than by acts by the Executive or his representatives in violation of this Agreement). After termination of the Executive's employment with the Corporation, the Executive shall not, without the prior written consent of the Corporation, communicate or divulge any such information, knowledge, or data to anyone other than the Corporation and those designated by it. 8. SUCCESSORS. (a) This Agreement is personal to the Executive and without the prior written consent of the Corporation shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure -6- 7 to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Corporation and its successors. Any successor to the Corporation shall, by an agreement in form and substance satisfactory to the Executive, expressly assume and agree to perform this Agreement in the same manner and to the same extent as the Corporation would have been required to perform. 9. INDEMNIFICATION. The Executive shall be entitled to be indemnified by the Corporation against all liabilities, costs, and expenses reasonably incurred by or imposed upon him in connection with or resulting from his actions as an officer or employee of the Corporation to the full extent provided in the Articles of Organization and By-Laws of the Corporation as presently in effect, and no amendment to or repeal of such provisions of the Articles or By-Laws shall apply or have any effect on the right of the Executive to be indemnified for or with respect to any acts or omissions of the Executive occurring prior to such amendment or repeal. 10. MISCELLANEOUS. (a) This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: -------------------- Frank S. Anthony 3 Hoover Road Norfolk, Massachusetts 02056 If to the Corporation: ---------------------- Bird Corporation 1077 Pleasant Street Norwood, MA 02062 Attention: President or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. -7- 8 (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (d) The Corporation may withhold from any amounts payable under this Agreement such Federal, state, or local taxes as required to be withheld pursuant to any applicable law or regulation. (e) Except as provided in Section 6 hereof, this Agreement contains the entire understanding of the Corporation and the Executive with respect to the subject matter hereof and supersedes all prior agreements between them with respect thereto. (f) Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void, and of no effect. (g) As used in this Agreement, the term "affiliated companies" includes any company controlling, controlled by, or under common control with the Corporation. IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to the authorization from its Board of Directors, the Corporation has caused these presents to be executed in its name on its behalf, all as of the day and year first above written. /s/ Frank S. Anthony ---------------------------------------- Frank S. Anthony BIRD CORPORATION By: /s/ Joseph D. Vecchiolla ------------------------------------- Title: Chairman -8- EX-10.(V) 3 AMENDED EMPLOYMENT AGREEMENT W/ RICHARD C. MALOOF 1 EXHIBIT 10(v) [LOGO] BIRD ROOFING DIVISION________________________________________________________________ Joseph D. Vecchiolla Chairman BIRD CORPORATION August 21, 1995 Mr. Richard C. Maloof Nine Donnelly Drive Dover, Massachusetts 02030 Dear Mr. Maloof: With respect to your letter agreement with Bird Incorporated dated October 15, 1984, as amended April 1, 1986 and May 24, 1990 (as so amended, the "Agreement"), the Company agrees that the Agreement shall continue until terminated either by you or by the Company by written notice. Both parties acknowledge that the position you now hold is President and Chief Operating Officer of Bird Corporation. The Company acknowledges that there has been a Change in Control as that term is defined in Section 2(i), and you acknowledge that as of the date of this letter, no event has occurred which would constitute "Good Reason" as that term is defined in Section 3(iii). Consequently, in the event that you hereafter terminate your employment for Good Reason or the Company terminates the Agreement other than for Cause, Retirement, or Disability, as those terms are defined in Section 3 thereof, the benefits due thereunder, as set forth in Section 4(iii), in an amount not less than the amount which would be payable if the termination occurred in calendar year 1996 (the "Severance Benefits"), shall become due and payable. Moreover, the Company acknowledges that in the event that either substantially all of the Company's roofing manufacturing assets or substantially all of the shares of the common stock of the Company are sold to any person, as that term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, or company, the nature and/or status of your responsibilities in effect immediately prior thereto will have been substantially altered. A substantial alteration in your responsibilities constitutes Good Reason under Section 3(iii) thereof. In such event, you will be entitled to the Severance Benefits were you to terminate your employment. Such person or company, however, may wish to continue your employment with the Company or to employ you, either permanently or for a period, to provide continuity in management of such roofing business. If such person or company wished to employ you, the Company might benefit if you entertained an offer of employment and you might benefit from such employment; ________________________________________________________________________________ 1077 Pleasant Street, Norwood, MA 02062 Phone 617-551-0656 Fax 617-762-6586 2 [LOGO] BIRD ROOFING DIVISION Mr. Richard C. Maloof August 21, 1995 Page 2 provided only that your entitlement to the Severance Benefits was assured whether you continued in the employ of the Company or such person or company or not. Consequently, in consideration of your convenant to negotiate in good faith with such person or company with respect to an employment agreement providing for your employment (either by the Company or by such person or company) commencing upon the date of such sale on terms and conditions, including salary, incentive compensation, benefits (including future severance benefits from the prospective employer at least equal to that which would be payable under Bird's general severance policy for non-executive employees based upon years of service, including years of service with the Company prior to such sale, but without regard to your parachute agreement) not less generous than those on which you are then employed by the Company, the Company hereby agrees that the Severance Benefits shall be due and payable upon the date upon which such sale occurs as if your employment had been terminated by the Company without cause or by you for Good Reason without the necessity of termination of your employment by the Company or by you, whether or not you continue in the employ of the Company or are employed by such person or company. Very truly yours, BIRD CORPORATION By: /s/ Joseph D. Vecchiolla --------------------------------- Name: Title: Chairman Agreed to this 21 day -- of August 1995 /s/ Richard C. Maloof - -------------------------- Richard C. Maloof EX-11 4 STATEMENT REGARDING COMPUTATION OF PER SHARE 1 EXHIBIT 11 BIRD CORPORATION COMPUTATION OF EARNINGS PER COMMON SHARE (1) (Thousands of dollars, except share and per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1995 1994 1995 1994 ---------- ---------- ---------- ---------- Primary earnings per share - -------------------------- Net earnings (loss) from continuing operations $ (596) $ 3,304 $ 4,374 $ (1,574) Deduct dividend requirements: Preferred stock (7) (7) (22) (22) Convertible preference stock (377) (377) (1,130) (1,130) ---------- ---------- ---------- ---------- Net earnings (loss) from continuing operations (980) 2,920 3,222 (2,726) Net loss from discontinued operations 0 (907) (11,604) (7,365) ---------- ---------- ---------- ---------- Net loss applicable to common stock $ (980) $ 2,013 $ (8,382) $ (10,091) ---------- ---------- ---------- ---------- Weighted average number of common shares outstanding (1) 4,113,136 3,822,763 4,100,751 4,051,050 Assuming exercise of options reduced by the number of shares which could have been purchased with the proceeds from exercise of such options (3) 0 18,103 0 0 ---------- ---------- ---------- ---------- Weighted average number of common shares outstanding as adjusted 4,113,136 3,840,866 4,100,751 4,051,050 ---------- ---------- ---------- ---------- Primary earnings (loss) per common share: Continuing operations $ (0.24) $ 0.76 $ 0.79 $ (0.67) Discontinued operation $ 0.00 $ (0.24) $ (2.83) $ (1.82) ---------- ---------- ---------- ---------- Net earnings (loss) $ (0.24) $ 0.52 $ (2.04) $ (2.49) ========== ========== ========== ==========
2 EXHIBIT 11 BIRD CORPORATION COMPUTATION OF EARNINGS PER COMMON SHARE (1) (Thousands of dollars, except share and per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1995 1994 1995 1994 ---------- ---------- ---------- ---------- Fully diluted earnings per share (2) - ------------------------------------ Net earnings (loss) from continuing operations $ (596) $ 3,304 $ 4,374 $ (1,574) Deduct dividend requirements of preferred stock (7) (7) (22) (22) ---------- ---------- ---------- ---------- Net earnings (loss) from continuing operations $ (603) $ 3,297 $ 4,352 $ (1,596) Net loss from discontinued operations 0 (907) (11,604) (7,365) ---------- ---------- ---------- ---------- Net loss applicable to common stock $ (603) $ 2,390 $ (7,252) $ (8,961) ---------- ---------- ---------- ---------- Weighted average number of common shares outstanding (1) 4,113,136 3,822,763 4,100,751 4,051,050 Assuming exercise of options reduced by the number of shares which could have been purchased with the proceeds from exercise of such options (3) 0 18,103 0 0 Assuming conversion of convertible preference stock 731,955 731,955 731,955 731,955 ---------- ---------- ---------- ---------- Weighted average number of common shares outstanding as adjusted 4,845,091 4,572,821 4,832,706 4,783,005 ---------- ---------- ---------- ---------- Fully diluted earnings (loss) per common share applicable to common stock: Continuing operations $ (0.12) $ 0.72 $ 0.90 $ (0.33) Discontinued operation $ 0.00 $ (0.20) $ (2.40) $ (1.54) ---------- ---------- ---------- ---------- $ (0.12) $ 0.52 $ (1.50) $ (1.87) ========== ========== ========== ========== (1) See Note 1 of Notes to Consolidated Financial Statements. (2) These calculations are submitted in accordance with Securities Exchange Act of 1934, Release No. 9083, although in certain instances, it is contrary to paragraph 40 of APB Opinion No. 15 because it produces an anti-dilutive result. (3) APB 15 paragraph 30 indicates computation of primary earnings per share should not give effect to common stock equivalents if their inclusion has the effect of decreasing the loss per share amount otherwise computed or is anti-dilutive.
EX-27 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEPTEMBER 30, 1995 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q. 1 U.S. DOLLARS 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 1 2,137,000 0 11,109,000 2,064,000 6,398,000 19,725,000 39,747,000 15,714,000 51,820,000 13,664,000 5,196,000 4,391,000 0 1,396,000 26,414,000 51,820,000 43,931,000 43,931,000 37,961,000 37,961,000 0 0 891,000 12,606,000 8,232,000 4,374,000 (11,604,000) 0 0 (7,230,000) (2.04) (2.04)
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