-----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, ABjHnZqebsmV0p3zwp8TRHvRWrapwIQVFr1kVFcWGPaa2tyJFws1AyCnROX+AKLm hJiGc3qQw16X8qwzvJdxkQ== 0001007171-98-000011.txt : 19980617 0001007171-98-000011.hdr.sgml : 19980617 ACCESSION NUMBER: 0001007171-98-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980502 FILED AS OF DATE: 19980616 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: 98648779 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: 98648780 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 May 2, 1998 / / 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 June 1, 1998, 8,434,778 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 Six-Month Periods Ended May 2, 1998 Table of Contents Page PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Condensed Consolidated Balance Sheets as of May 2, 1998 and November 1, 1997 ..................................... 1 Condensed Consolidated Statements of Income for the three-month and six-month periods ended May 2, 1998 and May 3, 1997 ......................................... 2 Condensed Consolidated Statements of Cash Flows for the six-month periods ended May 2, 1998 and May 3, 1997 ...................................... 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 ............................................. 9 BLUE BIRD CORPORATION AND SUBSIDIARIES BLUE BIRD BODY COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS MAY 2, 1998 AND NOVEMBER 1, 1997 ($ IN THOUSANDS)
MAY 2, NOVEMBER 1, 1998 1997 --------- ---------- (UNAUDITED) ASSETS CURRENT ASSETS Cash and cash equivalents $ 3,979 $ 31,031 Trade receivables 15,522 16,515 Leases receivable 44,399 43,116 Inventories 172,659 76,385 Prepaid expenses 2,449 1,611 Other current assets 2,320 1,703 -------- -------- Total current assets 241,328 170,361 LEASES RECEIVABLE, NONCURRENT 58,058 59,207 PROPERTY, PLANT, AND EQUIPMENT 69,498 68,604 Less accumulated depreciation (33,260) (30,503) -------- -------- Property, plant, and equipment, net 36,238 38,101 GOODWILL AND DEBT ISSUE COSTS 162,463 162,463 Less accumulated amortization (25,047) (22,494) -------- -------- Goodwill & debt issue costs, net 137,416 139,969 -------- -------- OTHER ASSETS 4,729 4,862 -------- -------- Total assets $ 477,769 $ 412,500 ======== ======== LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY CURRENT LIABILITIES: Revolving credit facilities $ 33,200 $ 0 Current portion of long-term debt 13,750 12,750 Accounts payable 51,057 21,708 Income taxes payable 78 42 Deferred income taxes 2,615 4,474 Other current liabilities 43,553 32,116 -------- -------- Total current liabilities 144,253 71,090 LONG-TERM DEBT 331,098 339,563 DEFERRED INCOME TAXES 5,772 4,612 OTHER LIABILITIES 22,028 21,678 REDEEMABLE COMMON STOCK, NET 18,526 20,676 -------- -------- Total liabilities 521,677 457,619 -------- -------- STOCKHOLDERS' (DEFICIT) EQUITY: Common stock, $.01 par value; 25,000,000 shares authorized; 7,704,778 shares outstanding 77 77 Additional paid-in capital 77,023 77,023 Retained earnings (deficit) (117,772) (119,206) Other stockholders' (deficit) equity (3,236) (3,013) -------- -------- Total stockholders' (deficit) equity (43,908) (45,119) -------- -------- Total liabilities and stockholders' (deficit) equity $ 477,769 $ 412,500 ======== ========
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 SIX-MONTH PERIODS MAY 2, 1998 AND MAY 3, 1997 ($ IN THOUSANDS)
THREE MONTHS ENDED SIX MONTHS ENDED MAY 2, MAY 3, MAY 2, MAY 3, 1998 1997 1998 1997 ---------- ---------- --------- ---------- (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) Net sales $ 102,713 $ 94,808 $ 193,614 $ 178,915 Cost of goods sold 82,553 76,700 157,168 146,260 -------- -------- --------- ---------- Gross profit 20,160 18,108 36,446 32,655 Selling, general and administrative expense 11,474 11,558 22,701 22,348 Amortization of goodwill and other intangibles 960 960 1,920 1,920 Nonrecurring items 0 0 0 16,506 -------- -------- -------- -------- Operating (loss) income 7,726 5,590 11,825 (8,119) Interest income 1,690 1,408 3,629 2,942 Interest and debt issue expense (8,636) (8,595) (17,098) (16,149) Other income (expense) 307 568 605 805 -------- -------- -------- -------- (Loss) income before income taxes 1,087 (1,029) (1,039) (20,521) (Benefit) provision from income taxes 300 (256) (322) (13,248) -------- -------- -------- -------- Net (loss) income before extraordinary items 787 (773) (717) (7,273) Extraordinary item - loss on early extinguishment of debt 0 0 0 (2,986) -------- -------- -------- -------- Net (loss) income $ 787 $ (773) $ (717) $ (10,259) ======== ======== ======== ========
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 SIX-MONTH PERIODS ENDED MAY 2, 1998 AND MAY 3, 1997 ($ IN THOUSANDS)
SIX MONTHS ENDED MAY 2, MAY 3, 1998 1997 --------- --------- (UNAUDITED) (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (717) $ (10,259) ------- ------- Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Extraordinary loss on extinguishment of debt 0 4,755 Depreciation and amortization 5,782 5,668 Increase (decrease) in cash surrender value of life insurance 11 (10) Deferred income taxes (699) (17) Changes in operating assets and liabilities: (Increase) decrease in trade receivables 993 (3,386) (Increase) decrease in inventories (96,274) (83,031) (Increase) decrease in prepaid expenses (838) (1,610) Increase (decrease) in accounts payable 29,349 25,074 Increase (decrease) in income taxes payable 36 (9,227) Other 11,239 (4,721) ------- ------- Total adjustments (50,401) (66,505) ------- ------- Net cash used in operating activities (51,118) (76,764) ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant, and equipment acquisitions (1,303) (3,126) (Increase) decrease in leases receivable (134) (7,744) ------- ------- Net cash used in investing activities (1,437) (10,870) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowing on working capital revolvers 31,100 49,500 Borrowing on long-term debt 0 274,699 Repayment of long-term debt (5,375) (86,000) Dividends paid 0 (185,345) Debt prepayment premium 0 (3,369) Debt issuance costs 0 (9,693) Proceeds from management notes 0 3,800 ------- ------- Net cash provided by financing activities 25,725 43,592 ------- ------- EFFECT OF EXCHANGE RATE FLUCTUATIONS (222) (713) ------- ------- NET DECREASE IN CASH AND CASH EQUIVALENTS (27,052) (44,755) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 31,031 46,253 ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,979 $ 1,498 ======= ======= SUPPLEMENTAL INFORMATION: Cash interest paid $ 16,554 $ 10,438 ======= ======= Cash income taxes paid $ 312 $ 9,850 ======= =======
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 on Form 10-K for the fiscal year ended November 1, 1997. 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 years 1998 and 1997 each contain 52 weeks. 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 $3,500,000 higher at May 2, 1998 and approximately $2,900,000 higher at November 1, 1997. The components of inventory consist of the following at May 2, 1998 and November 1, 1997 (dollars in thousands):
1998 1997 ---- ---- Raw materials $ 37,496 $22,251 Work in process 71,785 26,792 Finished goods 63,378 27,342 ------ ------ $172,659 $76,385 ======== =======
3. CONTINGENCIES PENDING LITIGATION AND INSURANCE PROGRAM As of May 2, 1998, 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 then-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. 5. REDEEMABLE COMMON STOCK 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. 5 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THREE MONTHS ENDED MAY 2, 1998 COMPARED TO THREE MONTHS ENDED MAY 3, 1997 Net sales for the quarter ended May 2, 1998, were $102.7 million, an increase of $7.9 million or 8.3% compared to the corresponding period in 1997. This increase was due to more deliveries during the current reporting period as compared to the 1997 period as well as a higher average selling price per unit in 1998. Gross profit increased to $20.2 million in the second quarter of 1998 from $18.1 million in the second quarter of 1997, an increase of $2.1 million or 11.6% as a result of higher sales volume. Gross margin increased to 19.6% compared to 19.1% in the 1997 period, due to the mix of units delivered having higher gross margin compared to the prior year. Selling, general and administrative expenses decreased to $11.5 million from $11.6 million in the 1997 period, a decrease of $.1 million or .9%. This decrease was due primarily to lower warranty costs. Interest and debt issue expense of $8.6 million in the current period was the same as the prior year period. The provision for income taxes was $.3 million in the current period compared to a benefit of $.3 million in the 1997 period. The benefit in 1997 resulted from the net loss incurred for the period. SIX MONTHS ENDED MAY 2, 1998 COMPARED TO SIX MONTHS ENDED MAY 3, 1997 Net sales for the six months ended May 2, 1998, were $193.6 million, an increase of $14.7 million or 8.2% compared to the corresponding period in 1997. This increase was due to more deliveries during the current reporting period as compared to the 1997 period as well as a higher average selling price per unit in 1998. Gross profit increased to $36.4 million in the current period as compared to $32.6 million in the 1997 period. This was an increase of $3.8 million or 11.7% was due to higher sales volume. Gross margin increased to 18.8% compared to 18.3% in the 1997 period due to the mix of units delivered having a higher gross margin compared to the prior year. Selling, general and administrative expenses increased to $22.7 million from $22.3 million in the 1997 period, an increase of $.4 million or 1.8%. The increase was due primarily to increased engineering and selling expenses. Nonrecurring general and administrative charges of $16.5 million were taken in the prior year at the time of the recapitalization. Interest and debt issue expense increased to $17.1 million in the current period from $16.1 million in the prior year period due to the increased average debt in the current period as compared to the prior period. 6 The benefit for income taxes was $.3 million in the current period compared to $13.2 million in the 1997 period which reflected the tax effects of the recapitalization. The higher benefit and effective tax rate for 1997 were a result of the combined effect of certain tax benefits, in particular, the tax benefit related to a portion of the dividend paid to shareholders in the recapitalization being deductible for tax purposes as well as the tax benefit related to the ordinary loss and the nonrecurring charge. 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. 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. The Company 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 six month period of fiscal 1998 was $51.1 million. This amount reflects the customary seasonal increase in inventory, offset in part by a related increase in accounts payable. Scheduled repayments of the term debt used additional funds of $5.4 million. The Company's principal sources of funds during this period were cash and cash equivalents on hand at the beginning of the year and borrowings on the Bankers Trust revolving line of credit to date. One of the Company's subsidiaries, Blue Bird Capital Corporation, has extended its revolving credit agreement with LaSalle National Bank until March 31, 2001, thereby extending the maturity date on the LaSalle revolving debt until the same date. During November 1996, Blue Bird was recapitalized, resulting in the repayment of the then 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 7 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 1, 1997 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 (b) Reports on Form 8-K. There were no reports on Form 8-K filed by the Registrants during the quarter ended May 2, 1998. 8 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: June 16, 1998 Date: June 16, 1998 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: June 16, 1998 Date: June 16, 1998 9 EX-27 2 FINANCIAL DATA SCHEDULE
5 0000889468 Blue Bird Body Company 1,000 6-MOS OCT-31-1998 NOV-02-1997 MAY-02-1998 3,979 0 59,921 0 172,659 241,328 69,498 (33,260) 477,769 144,253 331,098 18,603 0 0 (43,985) 477,769 193,614 193,614 157,168 24,621 (4,234) 0 17,098 (1,039) (322) (717) 0 0 0 (717) 0 0
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