<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 1, 1995
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-8884
BUSH INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 16-0837346
- -------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation of organization) Identification No.)
One Mason Drive
P.O. Box 460
Jamestown, New York 14702-0460
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(Address of principal executive offices)
(Zip Code)
(716) 665-2000
---------------------------------------------------------
(Registrant's telephone number, including area code)
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
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Number of shares of Common Stock outstanding as of July 1, 1995: 6,273,303
shares of Class A Common Stock and 2,570,247 shares of Class B Common Stock.
<PAGE>
BUSH INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JULY 1, DECEMBER 31,
1995 1994
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(Unaudited)
(In thousands)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 2,421 $ 4,151
Accounts receivable 22,066 27,967
Inventories 27,546 28,865
Prepaid expenses and other current assets 3,744 3,729
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Total Current Assets 55,777 64,712
Property, Plant and Equipment, Net 37,254 34,417
Other Assets 1,883 1,829
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TOTAL ASSETS $94,914 $100,958
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 2,668 $ 2,595
Accounts payable 4,552 9,431
Income taxes 0 186
Other accrued liabilities 12,186 14,436
Current portion of long-term debt 3,108 3,643
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Total Current Liabilities 22,514 30,291
Deferred Income Taxes 1,548 1,628
Long-term Debt 15,358 16,774
Stockholders' Equity:
Common Stock:
Class A, $.10 par, 20,000,000 shares authorized,
6,273,303 and 6,264,710 shares issued 627 626
Class B, $.10 par, 6,000,000 shares authorized,
2,570,247 shares issued 257 257
Paid-in capital 6,834 6,714
Retained earnings 48,707 44,668
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56,425 52,265
Less treasury stock, 80,000 shares and 0 shares 931 0
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Total Stockholders' Equity 55,494 52,265
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TOTAL LIABILITIES & STOCKHOLDERS' $94,914 $100,958
EQUITY ======= ========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
BUSH INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
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JULY 1, JULY 2,
1995 1994
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<S> <C> <C>
(In thousands except shares
and per share data)
Net Sales $ 45,008 $ 51,451
Costs and Expenses:
Cost of sales 31,593 36,264
Selling, general and administrative 9,818 10,007
Interest 541 454
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41,952 46,725
Earnings Before Income Taxes 3,056 4,726
Income Taxes 1,208 1,858
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Net Earnings $ 1,848 $ 2,868
========== ==========
Earnings per Share $0.21 $0.31
========== ==========
Weighted Average Shares Outstanding 8,846,604 9,388,851
</TABLE>
The July 2, 1994 earnings per share and the number of weighted average Class A
and Class B shares of Common Stock outstanding have been adjusted to reflect the
5-for-4 stock split effectuated in the form of a twenty five percent dividend
paid on January 20, 1995 to stockholders of record as of January 6, 1995.
See notes to condensed consolidated financial statements.
3
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BUSH INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
---------------------------
JULY 1, JULY 2,
1995 1994
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<S> <C> <C>
(In thousands except shares
and per share data)
Net Sales $ 95,181 $ 102,465
Costs and Expenses:
Cost of sales 66,876 71,880
Selling, general and administrative 19,788 20,508
Interest 1,107 775
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87,771 93,163
Earnings Before Income Taxes 7,410 9,302
Income Taxes 2,929 3,689
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Net Earnings $ 4,481 $ 5,613
========== ==========
Earnings per Share $0.51 $0.60
========== ==========
Weighted Average Shares Outstanding 8,853,211 9,332,703
</TABLE>
The July 2, 1994 earnings per share and the number of weighted average Class A
and Class B shares of Common Stock outstanding have been adjusted to reflect the
5-for-4 stock split effectuated in the form of a twenty five percent dividend
paid on January 20, 1995 to stockholders of record as of January 6, 1995.
See notes to condensed consolidated financial statements.
4
<PAGE>
BUSH INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
July 1, July 2,
1995 1994
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<S> <C> <C>
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 4,481 $ 5,613
Adjustment to reconcile:
Depreciation and amortization 3,056 2,824
Deferred income taxes (235) (111)
Change in assets and liabilities affecting cash flows:
Accounts receivable 5,901 (5,519)
Inventories 1,319 (5,917)
Prepaid expenses and other current assets 439 (533)
Accounts payable (4,879) (1,497)
Income taxes (474) (657)
Other accrued liabilities (2,250) (816)
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Net cash flow provided by (used in) operating 7,358 (6,613)
activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (5,770) (4,047)
Increase in other assets (177) (23)
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Net cash used in investing activities (5,947) (4,070)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowing on line of credit 73 5,833
Repayment of long-term debt (1,951) (2,339)
Purchase of Class A stock for treasury (931) 0
Exercise of stock options by employees 110 175
Dividends paid (442) (282)
Decrease in notes receivable 0 144
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Net cash provided by (used in) financing activities (3,141) 3,531
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NET DECREASE IN CASH (1,730) (7,152)
CASH AT BEGINNING OF PERIOD 4,151 9,381
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CASH AT END OF PERIOD $ 2,421 $ 2,229
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
BUSH INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Twenty six weeks ended July 1, 1995
1. The accounting policies used in preparing these statements are the same as
those used in preparing the Company's consolidated financial statements for
the year ended December 31, 1994. These condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's annual report to
stockholders for the year ended December 31, 1994.
The foregoing financial information reflects all adjustments which are, in
the opinion of management, of normal recurring nature and necessary for a
fair presentation. The interim results are not necessarily indicative of
the results which may be expected for a full year.
2. Inventories consist of the following:
<TABLE>
<CAPTION>
JULY 1, DECEMBER 31,
1995 1994
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<S> <C> <C>
(In thousands)
Raw material $ 5,827 $ 7,403
Work in progress 2,309 3,598
Finished goods 19,410 17,864
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$27,546 $28,865
======= =======
</TABLE>
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
Second quarter sales for the 13 week period ended July 1, 1995 were
$45,008,000 and first half sales for the 26 week period ended July 1, 1995 were
$95,181,000. This represents a decrease of $6,443,000, or approximately 12.5%,
compared to net sales of $51,451,000 for the 13 week period ended July 2, 1994
and a first half decrease of $7,284,000, or approximately 7.1%, compared to net
sales of $102,465,000 for the 26 week period ended July 2, 1994. The second
quarter and first half decreases in net sales reflect the widely reported
general softness at the retail level and a temporary over-inventory position at
several key accounts.
Cost of sales decreased $4,671,000 for the 13 week period ended July 1, 1995,
compared to the 13 week period ended July 2, 1994. Cost of sales as an
approximate percentage of net sales decreased by 0.3% from 70.5% in the second
quarter of 1994 to 70.2% in the second quarter of 1995, and correspondingly
gross profit as an approximate percentage of net sales increased by 0.3% from
29.5% in the second quarter of 1994 to 29.8% in the second quarter of 1995. The
decrease in cost of sales was primarily due to lower sales volumes. The cost of
sales as a percentage of net sales and the corresponding gross margin percentage
were positively impacted by manufacturing performance improvements, partially
offset by continuing increases in the cost of raw materials.
Cost of sales decreased by $5,004,000 for the 26 week period ended July 1,
1995, compared to the 26 week period ended July 2, 1994. Cost of sales as an
approximate percentage of net sales increased by 0.1% from 70.2% in the first
half of 1994 to 70.3% in the first half of 1995, and correspondingly gross
profit as an approximate percentage of net sales decreased by 0.1% from 29.8% in
the first half of 1994 to 29.7% in the first half of 1995. The decrease in cost
of sales was primarily due to lower sales volumes. The cost of sales as a
percentage of net sales and the corresponding gross margin percentage were
negatively impacted, particularly in the first quarter of 1995, as
manufacturing performance improvements were more than offset by continuing
increases in the cost of raw materials.
Selling, general and administrative expenses decreased $189,000 for the 13
week period ended July 1, 1995, compared to the 13 week period ended July 2,
1994. Selling, general and administrative expenses as an approximate percentage
of net sales increased by 2.4% from 19.4% in the second quarter of 1994 to 21.8%
in the second quarter of 1995. For the 26 week period ending July 1, 1995
selling, general and administrative expenses declined by $720,000 as compared to
the 26 week period ending July 2, 1994. Selling, general and administrative
expenses as an approximate percentage of net sales increased by 0.8% from 20.0%
in the first half of 1994 to 20.8% in the first half of 1995. Selling, general
and administrative expenses for the 13 and 26 week periods decreased as a result
of lower operating costs and decreases in variable selling expenses such as
commissions, marketing and promotional incentives. However, for both the 13
week and 26 week periods ending July 1, 1995, sales volume declined by a
greater percentage than selling, general and administrative expenses, and as a
result, selling, general and
7
<PAGE>
administrative expenses as a percentage of net sales increased.
Interest expense for the 13 week period ended July 1, 1995 increased to
$541,000 (or approximately 1.2% of net sales) from $454,000 (or approximately
0.9% of net sales) for the period ended July 2, 1994. Interest expense for the
26 week period ended July 1, 1995 increased to $1,107,000 (or approximately 1.2%
of net sales) from $775,000 (or approximately 0.8% of net sales) for the period
ended July 2, 1994. The increase in interest expense was primarily due to
increases in the prime rate and LIBOR.
LIQUIDITY AND CAPITAL RESOURCES:
The Company believes that current unused balances under existing credit
agreements, along with net cash flow generated from operating activities, will
be adequate to fund the Company's operations in 1995, including capital
expenditures for 1995 which are currently forecasted in the $20.0 to $25.0
million range. Capital expenditures in 1995 include the first phase of a two
phase expansion program which will ultimately include a new one million square
foot manufacturing and distribution facility. The first phase of the project,
the construction of a 500,000 square foot building, is scheduled for completion
early in 1996, and will replace the leased distribution center that the Company
currently operates in Saybrook, Ohio.
On July 26, 1995, the Company refinanced its asset based loan facility. The
new loan facility consists of an unsecured $75,000,000 revolving line of credit
with Mellon Bank, N.A. and other lending institutions that expires on July 31,
2000. The credit agreement provides for tangible net worth, total funded debt to
capital, and total funded debt to EBIT requirements, and limits certain
additional debt, guarantees, asset sales, loans, investments, acquisitions,
capital expenditures and new leases.
8
<PAGE>
Part II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A. At the Annual Meeting of Stockholders held on May 18, 1995, the
following matters were submitted to a vote of the stockholders, and
the results of their vote is noted. The Class A Directors were
elected solely by the Class A stockholders, and the Class B
Directors were elected solely by the Class B stockholders. With
respect to other matters, each share of Class A Common Stock has
one-tenth vote per share, and each share of Class B Common Stock
has one vote per share.
1. Class A Directors Elected.
Paul A. Benke: 4,884,332 shares for; 86,376 shares withheld
Jerald D. Bidlack: 4,899,011 shares for; 71,697 shares withheld
Robert E. Hallagan: 4,882,598 shares for; 88,110 shares withheld
Mr. Paul A. Benke, Mr. Jerald D. Bidlack and Mr. Robert E.
Hallagan are incumbent Class A Directors.
2. Class B Directors Elected.
Paul S. Bush
Robert L. Ayres
Lewis H. Aronson
Gregory P. Bush
Donald F. Hauck
David G. Messinger
For all of the above: 2,566,940 shares for; 0 shares withheld
Mr. Paul S. Bush, Mr. Robert L. Ayres, Mr. Lewis H. Aronson, Mr.
Gregory P. Bush, Mr. Donald F. Hauck and Mr. David G. Messinger
are incumbent Class B Directors.
3. Approval of the proposal to adopt the Company's 1995 Stock Plan.
3,012,235 votes for; 45,387 votes against; 6,389 votes abstain
9
<PAGE>
4. Ratification of the appointment by the Board of Directors of
Deloitte & Touche LLP, as the Company's independent accountants
for the fiscal year ending December 30, 1995.
3,059,625 votes for; 823 votes against; 3,563 votes abstain
ITEM 6. EXHIBITS AND REPORTS ON 8-K
(a) Exhibits: None
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the quarter (13
weeks) ended July 1, 1995.
10
<PAGE>
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.
BUSH INDUSTRIES, INC.
----------------------------
(Registrant)
Date: August 2, 1995 By: /s/Robert L. Ayres
----------------------------
(Signature)
Robert L. Ayres
Executive Vice President,
Chief Operating Officer
and Chief Financial Officer
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BUSH
INDUSTRIES FORM 10-Q FOR THE PERIOD ENDED APRIL 01, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000758604
<NAME> BUSH INDUSTRIES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> APR-01-1995
<CASH> 5,231
<SECURITIES> 0
<RECEIVABLES> 22,645
<ALLOWANCES> 622
<INVENTORY> 28,600
<CURRENT-ASSETS> 59,009
<PP&E> 66,235
<DEPRECIATION> 31,886
<TOTAL-ASSETS> 95,226
<CURRENT-LIABILITIES> 22,781
<BONDS> 16,067
<COMMON> 884
0
0
<OTHER-SE> 53,906
<TOTAL-LIABILITY-AND-EQUITY> 95,226
<SALES> 50,173
<TOTAL-REVENUES> 50,173
<CGS> 35,283
<TOTAL-COSTS> 35,283
<OTHER-EXPENSES> 9,940
<LOSS-PROVISION> 30
<INTEREST-EXPENSE> 566
<INCOME-PRETAX> 4,354
<INCOME-TAX> 1,721
<INCOME-CONTINUING> 2,633
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,633
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>
