-----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, Feb9Sm6no9DHmXOQfO4Fu5JBc6zcod7m0STRncuaAH7rPqVBd8HmhaGZcudDTj3K rs+vt8JrfN5pE3/RFkKS6w== 0001007171-97-000012.txt : 19970918 0001007171-97-000012.hdr.sgml : 19970918 ACCESSION NUMBER: 0001007171-97-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970802 FILED AS OF DATE: 19970916 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLUE BIRD CORP CENTRAL INDEX KEY: 0000889469 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLES & PASSENGER CAR BODIES [3711] IRS NUMBER: 133638126 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-49544-01 FILM NUMBER: 97680812 BUSINESS ADDRESS: STREET 1: 3920 ARKWRIGHT ROAD CITY: MACON STATE: GA ZIP: 31210 BUSINESS PHONE: 9127577100 MAIL ADDRESS: STREET 2: 3920 ARKWRIGHT RD STE 275 CITY: MACON STATE: GA ZIP: 31210 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLUE BIRD BODY CO CENTRAL INDEX KEY: 0000889468 STANDARD INDUSTRIAL CLASSIFICATION: TRUCK & BUS BODIES [3713] IRS NUMBER: 580813156 STATE OF INCORPORATION: GA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-49544 FILM NUMBER: 97680813 BUSINESS ADDRESS: STREET 1: 3920 ARKWRIGHT ROAD STREET 2: SUITE 275 CITY: MACON STATE: GA ZIP: 31210 BUSINESS PHONE: 9127577100 MAIL ADDRESS: STREET 1: 3920 ARKWRIGHT ROAD STREET 2: SUITE 275 CITY: MACON STATE: GA ZIP: 31210 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) /x/ JOINT QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the period ended August 2, 1997 / / 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 33-49544-01 Commission File Number 33-49544 Blue Bird Corporation Blue Bird Body Company (Exact name of registrant as (Exact name of registrant as specified in its charter) specified in its charter) Delaware Georgia (State or other jurisdiction of (State or other jurisdiction of incorporation or organization) incorporation or organization) 13-3638126 58-0813156 (I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.) 3920 Arkwright Road 3920 Arkwright Road Macon, Georgia 31210 Macon, Georgia 31210 (Address of principal executive (Address of principal executive offices, including zip code) offices, including zip code) (912) 757-7100 (912) 757-7100 (Registrant's telephone number, (Registrant's telephone number, including area code) including area code) Indicate by check mark whether the registrants (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes /X/ No / / As of September 1, 1997, 8,444,778 shares of Blue Bird Corporation's common stock and 10 shares of Blue Bird Body Company's common stock were outstanding. BLUE BIRD BODY COMPANY ("BLUE BIRD" OR THE "COMPANY") IS A WHOLLY- OWNED SUBSIDIARY OF BLUE BIRD CORPORATION ("BBC"). BLUE BIRD MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1) (a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING CERTAIN PORTIONS OF THIS FORM 10-Q APPLICABLE TO IT WITH THE REDUCED DISCLOSURE FORMAT PERMITTED BY SUCH GENERAL INSTRUCTION. BLUE BIRD CORPORATION BLUE BIRD BODY COMPANY Quarterly Report on Form 10-Q For the Three-Month and Nine-Month Periods Ended August 2, 1997 Table of Contents Page PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Condensed Consolidated Balance Sheets as of August 2, 1997 and November 2, 1996 ..................................... 1 Condensed Consolidated Statements of Income for the three-month and nine-month periods ended August 2, 1997 and July 27, 1996 ........................................ 2 Condensed Consolidated Statements of Cash Flows for the nine-month periods ended August 2, 1997 and July 27, 1996 .................................... 3 Notes to Condensed Consolidated Financial Statements ................................. 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ........................................... 6 Item 3. Quantitative and Qualitative Disclosures about Market Risk .................................... 8 PART II. OTHER INFORMATION Item 1. Legal Proceedings ...................................... 8 Item 6. Exhibits and Reports on Form 8-K ....................... 8 Signatures ............................................. 10 BLUE BIRD CORPORATION AND SUBSIDIARIES BLUE BIRD BODY COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS AUGUST 2, 1997 AND NOVEMBER 2, 1996 ($ IN THOUSANDS)
AUGUST 2, NOVEMBER 2, 1997 1996 --------- ---------- (UNAUDITED) ASSETS CURRENT ASSETS Cash and cash equivalents $ 3,614 $ 46,253 Trade receivables 33,167 13,443 Leases receivable 40,652 32,215 Inventories 151,285 69,776 Prepaid expenses 2,917 2,137 Other current assets 13,855 3,167 -------- -------- Total current assets 245,490 166,991 LEASES RECEIVABLE, NONCURRENT 46,666 41,862 PROPERTY, PLANT, AND EQUIPMENT 68,177 64,599 Less accumulated depreciation (29,551) (25,710) -------- -------- Property, plant, and equipment, net 38,626 38,889 GOODWILL AND DEBT ISSUE COSTS 162,460 162,849 Less accumulated amortization (21,238) (26,131) -------- -------- Goodwill & debt issue costs, net 141,222 136,718 -------- -------- OTHER ASSETS 6,624 6,571 -------- -------- Total assets $ 478,628 $ 391,031 ======== ======== LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY CURRENT LIABILITIES: Revolving credit facilities $ 41,900 $ 0 Current portions of long-term debt 13,938 16,000 Accounts payable 52,754 27,704 Income taxes payable 56 9,270 Deferred income taxes 7,885 9,080 Other current liabilities 43,094 24,519 -------- -------- Total current liabilities 159,627 86,573 LONG-TERM DEBT 329,047 131,350 DEFERRED INCOME TAXES 5,296 5,306 OTHER LIABILITIES 20,839 20,309 REDEEMABLE COMMON STOCK, NET 14,586 29,305 -------- -------- Total liabilities 529,395 272,843 -------- -------- STOCKHOLDERS' EQUITY: Common stock, $.01 par value; 25,000,000 shares authorized; 7,704,778 and 7,704,778 outstanding respectively 77 77 Additional paid-in capital 77,023 77,023 Retained (deficit) earnings (125,312) 43,228 Other stockholders' (deficit) equity (2,555) (2,140) -------- -------- Total stockholders' equity (50,767) 118,188 -------- -------- Total liabilities and stockholders' (deficit) equity $ 478,628 $ 391,031 ======== ========
The accompanying notes are an integral part of these condensed consolidated statements. 1 BLUE BIRD CORPORATION AND SUBSIDIARIES BLUE BIRD BODY COMPANY AND SUBIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTH AND NINE MONTH PERIODS ENDED AUGUST 2, 1997 AND JULY 27, 1996 ($ IN THOUSANDS)
THREE MONTHS ENDED NINE MONTHS ENDED AUGUST 2, JULY 27, AUGUST 2 JULY 27, 1997 1996 1997 1996 --------- ---------- --------- --------- (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) Net sales $ 193,672 $ 146,788 $ 372,587 $ 346,115 Cost of goods sold 160,162 122,141 306,422 287,427 -------- -------- -------- -------- Gross profit 33,510 24,647 66,165 58,688 Selling, general and administrative expense 11,703 10,612 34,051 31,501 Amortization of goodwill and other intangibles 960 940 2,880 2,820 Nonrecurring items 0 0 16,506 0 -------- -------- -------- -------- Operating income 20,847 13,095 12,728 24,367 Interest income 1,440 1,845 4,382 5,353 Interest and debt issue expense (9,371) (4,425) (25,520) (12,796) Other income (expense) 369 110 1,174 543 -------- -------- -------- -------- Income (loss) before income taxes 13,285 10,625 (7,236) 17,467 (Benefit) provision for income taxes 4,920 4,049 (8,328) 6,835 -------- -------- -------- -------- Net income before extraordinary items 8,365 6,576 1,092 10,632 Extraordinary item - loss on early extinguishment of debt 0 0 (2,986) (1,416) -------- -------- -------- -------- Net income (loss) $ 8,365 $ 6,576 $ (1,894) $ 9,216 ======== ======== ======== ========
The accompanying notes are an integral part of these consolidated statements. 2 BLUE BIRD CORPORATION AND SUBSIDIARIES BLUE BIRD BODY COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE-MONTH PERIODS ENDED AUGUST 2, 1997 AND JULY 27, 1996 ($ IN THOUSANDS)
NINE MONTHS ENDED AUGUST 2, JULY 27, 1997 1996 --------- --------- (UNAUDITED) (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (1,894) $ 9,216 ------- ------- Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Extraordinary loss on extinguishment of debt 4,755 2,254 Depreciation and amortization 8,488 8,694 Increase (decrease) in cash surrender value of life insurance (109) (47) Deferred income taxes (1,205) (1,441) Changes in operating assets and liabilities: (Increase) decrease in trade receivables (19,724) (1,201) (Increase) decrease in inventories (81,509) (73,410) (Increase) decrease in prepaid expenses (780) (559) Increase (decrease) in accounts payable 25,050 32,857 Increase (decrease) in income taxes payable (9,214) (5,162) Other 8,823 10,220 ------- ------- Total adjustments (65,425) (27,795) ------- ------- Net cash used in operating activities (67,319) (18,579) ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant, and equipment acquisitions (4,759) (2,587) Increase in leases receivable (13,241) (9,557) ------- ------- Net cash used in investing activities (18,000) (12,144) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowing on working capital revolvers 52,200 49,539 Borrowing on long-term debt 274,699 0 Repayment of long-term debt (89,375) (33,000) Dividends paid (185,345) 0 Debt prepayment premium (3,369) (1,625) Debt issuance costs (9,695) 0 Proceeds from management notes 3,800 0 Other 180 (192) ------- ------- Net cash provided by financing activities 43,095 14,722 ------- ------- EFFECT OF EXCHANGE RATE FLUCTUATIONS (415) (191) ------- ------- NET DECREASE IN CASH AND CASH EQUIVALENTS (42,639) (16,192) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 46,253 21,452 ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,614 $ 5,260 ======= ======= SUPPLEMENTAL INFORMATION: Cash interest paid $ 22,232 $ 10,790 ======= ======= Cash income taxes paid $ 10,044 $ 8,351 ======= =======
The accompanying notes are an integral part of these condensed statements. 3 BLUE BIRD CORPORATION AND SUBSIDIARIES BLUE BIRD BODY COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF FINANCIAL STATEMENTS AND FORMATION AND ORGANIZATION The accompanying unaudited condensed consolidated financial statements of Blue Bird Corporation and subsidiaries ("BBC") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the joint annual report of BBC and Blue Bird Body Company (the "Predecessor") (see "Acquisition" below) on Form 10-K for the fiscal year ended November 2, 1996. The accompanying unaudited financial statements include, in the opinion of management, all adjustments, which are of a normal recurring nature, necessary for a fair presentation for the periods presented. Results for the interim periods presented are not necessarily indicative of results that may be expected for a full fiscal year. FISCAL YEAR BBC's fiscal year ends on the Saturday nearest October 31 of each year, generally referred to as a "52-/53-week year." Fiscal year 1997 contains 52 weeks and fiscal year 1996 contains 53 weeks. ACQUISITION On April 15, 1992, BBC (formerly B B Holding Corp.) acquired all of the outstanding capital stock of the Predecessor through the merger of B B Acquisition Corp., a wholly owned subsidiary of BBC, with and into the Predecessor (the "Acquisition"), with the Predecessor as the surviving corporation. The Acquisition was accounted for as a purchase. 4 2. INVENTORIES Inventories are valued at the lower of cost or market, cost being determined on the last-in, first-out basis. If the first-in, first-out method had been used, inventories would have been approximately $3,000,000 higher at August 2, 1997 and approximately $2,100,000 higher at November 2, 1996. The components of inventory consist of the following at August 2, 1997 and November 2, 1996 (dollars in thousands):
1997 1996 ------ ------ Raw materials $ 29,827 $18,848 Work in process 46,563 22,916 Finished goods 74,895 28,012 ------- ------ $151,285 $69,776 ======== =======
3. CONTINGENCIES PENDING LITIGATION AND INSURANCE PROGRAM As of August 2, 1997, a number of product liability cases were pending against a subsidiary of BBC. Neither the outcome of certain cases nor the amounts of any liabilities related to these certain cases are known; however, management believes that the ultimate resolution of these matters will not have a material adverse impact on BBC's financial position or results of operations. 4. RECAPITALIZATION During November 1996, Blue Bird was recapitalized, resulting in the repayment of the existing $86 million of debt, the issuance of new debt in the amount of $275 million and a distribution paid to shareholders and holders of options for BBC common stock of $185.3 million and $16.5 million, respectively. The existing Subordinated Notes were repurchased at a premium of $3.4 million. Debt issuance costs related to the recapitalization were $9.7 million. A nonrecurring recapitalization charge was taken in November to recognize the $3.4 million premium cost, $1.4 million of original debt issue costs written off and $16.5 million General and Administrative expenses related to the distribution payment to option holders for a total of $21.3 million. The Company quarterly records an adjustment to the redeemable common stock based on an estimated Company valuation net of outstanding debt in accordance with the formula in the stockholders' agreement. The $14.7 million decrease in the redeemable common stock since the beginning of the fiscal year is primarily the result of the increased debt arising from the recapitalization. 5 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Three Months Ended August 2, 1997 Compared to Three Months Ended July 27, 1996 Net sales for the quarter ended August 2, 1997, were $193.7 million compared to $146.8 million for the corresponding period in 1996. The increase was due to delivering more units in the current year period. Distributors scheduled more units for third quarter delivery this year as compared to the third quarter of 1996. Type C chassis manufacturers were able to deliver chassis to our assembly facilities earlier this year than in 1996 which also permitted earlier delivery of units. Gross profit increased to $33.5 million in the third quarter of 1997 from $24.6 million in the third quarter of 1996, an increase of $8.9 million or 36.0% due to higher sales volume and higher gross margins. The gross margin increased to 17.3% compared to 16.8% in the 1996 period due to the mix of product delivered in the 1997 quarter containing more of the higher margin Type C units. Selling, general and administrative expenses increased to $11.7 million from $10.6 million in the 1996 period, an increase of $1.1 million. This increase was related to increased engineering and marketing costs associated with new product development and introduction as well as a negotiated settlement in a product liability case. Interest and debt issue expense increased to $9.4 million in the current period from $4.4 million in the prior year period due to the increase in the aggregate principal amount of debt outstanding and the higher interest rate payable thereon as a result of the recapitalization. The provision for income taxes was $4.9 million in the current period compared to a provision of $4.0 million in the 1996 period. The increase was due to increased taxable income. Nine Months Ended August 2, 1997 Compared to Nine Months Ended July 27, 1996 Net sales for the nine months ended August 2, 1997, were $372.6 million, an increase of $26.5 million or 7.6% compared to the corresponding period in 1996. This increase was due to more deliveries during the current reporting period as compared to the 1996 period. Distributors scheduled more units for third quarter delivery this year as compared to third quarter 1996. Based on current scheduled deliveries, fourth quarter unit deliveries should be below fourth quarter of 1996 because of the high delivery volume in the third quarter of 1997. The total number of units delivered in 1997 is expected to be comparable to the total units delivered in 1996. Gross profit increased to $66.2 million in the current period compared to $58.7 million in the 1996 period. This was an increase of $7.5 million or 12.7% due to higher sales volume and higher gross margins. The gross margin increased to 17.8% compared to 17.0% in the 1996 period due primarily to the mix of product delivered in 1997 containing more of the higher margin Type C units. 6 Selling, general and administrative expenses increased to $34.1 million from $31.5 million in the 1996 period, an increase of $2.6 million or 8.1%. This increase was related to increased engineering and marketing costs associated with new product development and introduction as well as a negotiated settlement in a product liability case. Nonrecurring General and Administrative charges of $16.5 million were taken in the current year due to the recapitalization described in note 4 to the condensed consolidated financial statements and below. See "Financial Condition - Liquidity and Capital Resources." Interest and debt issue expense increased to $25.5 million in the current period from $12.8 million in the prior year period due to the increase in the aggregate principal amount of debt outstanding and the higher interest rate payable thereon as a result of the recapitalization. The benefit for income taxes was $8.3 million in the current period compared to a provision of $6.8 million in the 1996 period. The 1997 period reflected a loss. The higher effective tax rate for 1997 was a result of the combined effect of certain tax benefits, in particular, the tax benefit related to a portion of the distribution paid to shareholders in the recapitalization being deductible for tax purposes. The extraordinary loss of $3.0 million, net of a tax benefit of $1.8 million, occurring in the 1997 period was due to the early extinguishment of $50 million of Subordinated Notes as part of the recapitalization. Similarly, during the corresponding period in 1996, the early extinguishment of $25 million of Subordinated Notes resulted in an extraordinary loss of $1.4 million, net of a tax benefit of $.8 million. FINANCIAL CONDITION WORKING CAPITAL The Company's working capital needs are seasonal. Working capital and related bank borrowings are lowest immediately after heavy school bus deliveries late in the fourth fiscal quarter. Beginning in December or January, working capital and related bank borrowings typically start to increase as parts are purchased or manufactured and distributed to the assembly plants for assembly into buses. Management tries to build buses as close to expected delivery time as possible. Inventory is at its highest during May, June and July prior to heavy seasonal deliveries. LIQUIDITY AND CAPITAL RESOURCES Net cash used in operating activities during the nine month period was $67.3 million. A portion of this amount resulted from the Company's expenses associated with the recapitalization, in particular, the $16.5 million payment to the option holders and the $3.4 million premium payment to redeem the Subordinated Notes. Other items attributing to the cash use were the seasonal 7 increase in inventory and accounts receivable and the payment of income taxes, partially offset by an increase in accounts payable, the extraordinary loss on the extinguishment of debt, depreciation and amortization. During November 1996, Blue Bird was recapitalized, resulting in the repayment of the existing $86 million of debt, the issuance of new debt in the amount of $275 million and a distribution paid to shareholders and holders of options for BBC common stock of $185.3 million and $16.5 million, respectively. The existing Subordinated Notes were repurchased at a premium of $3.4 million. Debt issuance costs related to the recapitalization were $9.7 million. A nonrecurring recapitalization charge was taken in November to recognize the $3.4 million premium cost, $1.4 million of original debt issue costs written off and $16.5 million General and Administrative expenses related to the distribution payment to option holders for a total of $21.3 million. FORWARD-LOOKING STATEMENTS Any statements contained in this Form 10-Q which are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The Company cautions readers that there can be no assurance that the actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors, including, but not limited to, the degree to which the Company is leveraged and the Company's significant debt service obligations, the restrictive covenants contained in and the asset encumbrances resulting from certain of the Company's credit agreements, product liability claims for personal injuries and other matters, the availability of insurance coverage with respect to such claims and matters, governmental regulation of the Company's business, the limited number of chassis suppliers, the control of the Company by Merrill Lynch Capital Partners, Inc. and the consequences arising under the Company's credit agreements in the event of a change of control. Item 3. Quantitative and Qualitative Disclosures about Market Risk. Not applicable. Part II. OTHER INFORMATION Item 1. Legal Proceedings. Reference is made to BBC's and the Predecessor's Joint Annual Report on Form 10-K for the fiscal year ended November 2, 1996 for a description of certain legal proceedings to which BBC or the Predecessor is a party. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. 27.1 Financial Data Schedule. 8 (b) Reports on Form 8-K. There were no reports on Form 8-K filed by the Registrants during the quarter ended August 2, 1997. 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BLUE BIRD CORPORATION BLUE BIRD BODY COMPANY By /s/ Paul E. Glaske By /s/ Paul E. Glaske Paul E. Glaske Paul E. Glaske Chairman of the Board and Chairman of the Board and President and Director President and Director (Principal Executive (Principal Executive Officer) Officer) Date: September 15, 1997 Date: September 15, 1997 By /s/ Bobby G. Wallace By /s/ Bobby G. Wallace Bobby G. Wallace Bobby G. Wallace Vice President, Treasurer and Vice President - Finance Secretary and Director and Administration, (Principal Financial and Treasurer and Secretary Accounting Officer) and Director (Principal Financial and Accounting Officer) Date: September 15, 1997 Date: September 15, 1997 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 0000889468 Blue Bird Body Company 1,000 9-MOS NOV-01-1997 NOV-03-1996 AUG-02-1997 3,614 0 73,819 0 151,285 245,490 68,177 (29,551) 478,628 159,627 329,047 14,663 0 0 (50,844) 478,628 372,587 372,587 306,422 53,437 (5,556) 0 25,520 (7,236) (8,328) 1,092 0 (2,986) 0 (1,894) 0 0
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