<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 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 1-8884
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BUSH INDUSTRIES, INC.
----------------------------------------------------
(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
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(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 September 30, 1995: 6,193,674
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>
SEPTEMBER 30, DECEMBER 31,
1995 1994
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(Unaudited)
(In thousands)
<S> <C> <C>
ASSETS
- - ------
Current Assets:
Cash $1,957 $4,151
Accounts receivable 27,417 27,967
Inventories 21,948 28,865
Prepaid expenses and other current assets 3,726 3,729
------- --------
Total Current Assets 55,048 64,712
Property, Plant and Equipment, Net 39,088 34,417
Other Assets 2,120 1,829
------- --------
TOTAL ASSETS $96,256 $100,958
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- - ------------------------------------
Current Liabilities:
Notes payable $0 $2,595
Accounts payable 7,382 9,431
Income taxes 1,273 186
Other accrued liabilities 16,203 14,436
Current portion of long-term debt 444 3,643
------- --------
Total Current Liabilities 25,302 30,291
Deferred Income Taxes 1,507 1,628
Long-term Debt 11,012 16,774
Stockholders' Equity:
Common Stock:
Class A, $.10 par, 20,000,000 shares authorized,
6,273,674 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 6,838 6,714
Retained earnings 51,644 44,668
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59,366 52,265
Less treasury stock, 80,000 shares and 0 shares 931 0
------- --------
Total Stockholders' Equity 58,435 52,265
------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $96,256 $100,958
======= ========
</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
---------------------------
SEPTEMBER 30, OCTOBER 1,
1995 1994
-------------- -----------
(In thousands except shares
and per share data)
<S> <C> <C>
Net Sales $59,521 $55,273
Costs and Expenses:
Cost of sales 42,034 39,022
Selling, general and administrative 11,835 10,531
Interest 440 556
------ ------
54,309 50,109
Earnings Before Income Taxes 5,212 5,164
Income Taxes 2,056 2,031
----- -----
Net Earnings $3,156 $3,133
====== ======
Earnings per Share $0.36 $0.33
===== =====
Weighted Average Shares Outstanding 8,780,210 9,423,640
</TABLE>
The October 1, 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
<PAGE>
BUSH INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
---------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
THIRTY-NINE WEEKS ENDED
---------------------------
SEPTEMBER 30, OCTOBER 1,
1995 1994
-------------- -----------
(In thousands except shares
and per share data)
<S> <C> <C>
Net Sales $154,702 $157,738
Costs and Expenses:
Cost of sales 108,910 110,902
Selling, general and administrative 31,623 31,039
Interest 1,547 1,331
------- -------
142,080 143,272
Earnings Before Income Taxes 12,622 14,466
Income Taxes 4,985 5,720
------ ------
Net Earnings $7,637 $8,746
====== ======
Earnings per Share $0.87 $0.93
===== =====
Weighted Average Shares Outstanding 8,828,721 9,364,020
</TABLE>
The October 1, 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>
THIRTY-NINE WEEKS ENDED
-----------------------------
SEPTEMBER 30, OCTOBER 1,
1995 1994
------------- ----------
<S> <C> <C>
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
- - -------------------------------------
Net earnings $7,637 $8,746
Adjustment to reconcile:
Depreciation and amortization 4,551 4,285
Deferred income taxes (401) 287
Change in assets and liabilities affecting
cash flows:
Accounts receivable 550 (9,099)
Inventories 6,917 (7,019)
Prepaid expenses and other current assets 284 (383)
Accounts payable (2,049) 2,008
Income taxes 1,100 (657)
Other accrued liabilities 1,767 554
------ ------
Net cash flow provided by (used in)
operating activities 20,356 (1,278)
CASH FLOWS FROM INVESTING ACTIVITIES:
- - -------------------------------------
Capital expenditures (9,044) (8,215)
Increase in other assets (470) (137)
------ ------
Net cash used in investing activities (9,514) (8,352)
CASH FLOWS FROM FINANCING ACTIVITIES:
- - -------------------------------------
Borrowing on (pay down of) line of credit (2,595) 538
Repayment of long-term debt (8,961) (2,981)
Proceeds from long term debt 0 4,732
Purchase of Class A stock for treasury (931) 0
Exercise of stock options by employees 112 180
Dividends paid (661) (424)
Decrease in notes receivable 0 144
------ ------
Net cash provided by (used in) financing
activities (13,036) 2,189
------- ------
NET DECREASE IN CASH (2,194) (7,441)
CASH AT BEGINNING OF PERIOD 4,151 9,381
----- -----
CASH AT END OF PERIOD $1,957 $1,940
====== ======
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
BUSH INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
Thirty nine weeks ended September 30, 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>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
(In thousands)
<S> <C> <C>
Raw material $5,246 $7,403
Work in progress 3,264 3,598
Finished goods 13,438 17,864
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$21,948 $28,865
======= =======
</TABLE>
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- - ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
RESULTS OF OPERATIONS:
- - ----------------------
Third quarter sales for the 13 week period ended September 30 , 1995 were
$59,521,000 and sales for the 39 week period ended September 30, 1995 were
$154,702,000. This represents an increase of $4,248,000, or approximately 7.7%,
compared to net sales of $55,273,000 for the 13 week period ended October 1,
1994 and a 39 week decrease of $3,036,000, or approximately 1.9%, compared to
net sales of $157,738,000 for the 39 week period ended October 1, 1994. The
third quarter increase resulted from strong new product acceptance by many
customers and an improvement in the overall retail climate as compared to the
first half of the fiscal year. Sales for the 39 week period in 1995 were lower
than for the 39 week period in 1994 as the widely reported general softness at
the retail level experienced in the first half of 1995 more than offset the
third quarter sales increase.
Although cost of sales increased $3,012,000 for the 13 week period ended
September 30, 1995, compared to the 13 week period ended October 1, 1994, cost
of sales as an approximate percentage of net sales remained constant for both
periods. Cost of sales as an approximate percentage of net sales was 70.6% in
the third quarter of both 1994 and 1995, and correspondingly gross profit as an
approximate percentage of net sales was 29.4% in the third quarter of both 1994
and 1995. The increase in cost of sales was primarily due to higher sales
volumes.
Cost of sales decreased by $1,992,000 for the 39 week period ended
September 30, 1995, compared to the 39 week period ended October 1, 1994. Cost
of sales as an approximate percentage of net sales increased by 0.1% from 70.3%
for the thirty nine week period of 1994 to 70.4% for the thirty nine week period
of 1995, and correspondingly gross profit as an approximate percentage of net
sales decreased by 0.1% from 29.7% for the thirty nine week period of 1994 to
29.6% for the thirty nine week period of 1995. The modest 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
slightly impacted, as manufacturing performance improvements were not able to
completely offset raw material cost impacts.
Selling, general and administrative expenses increased $1,304,000 for the
13 week period ended September 30, 1995, compared to the 13 week period ended
October 1, 1994. Selling, general and administrative expenses as an approximate
percentage of net sales increased by 0.8% from 19.1% in the third quarter of
1994 to 19.9% in the third quarter of 1995. For the 39 week period ending
September 30, 1995 selling, general and administrative expenses increased by
$584,000 as compared to the 39 week period ending October 1, 1994. Selling,
general and administrative expenses as an approximate percentage of net sales
increased by 0.7% from 19.7% for the thirty nine week period of 1994 to 20.4%
for the thirty nine week period of 1995. Selling, general and administrative
expenses (in both absolute dollars and as a percentage of net sales) for the
thirteen and thirty nine week periods, increased as a result of higher operating
costs.
7
<PAGE>
Interest expense for the thirteen week period ended September 30, 1995
decreased to $440,000 (or approximately 0.7% of net sales) from $556,000 (or
approximately 1.0% of net sales) for the period ended October 1, 1994. The
decrease in interest expense for the thirteen week period was primarily due to a
decrease in average debt and a reduction in the Company's LIBOR based borrowing
rate to LIBOR plus 0.50%. Interest expense for the thirty nine week period
ended September 30, 1995 increased to $1,547,000 (or approximately 1.0% of net
sales) from $1,331,000 (or approximately 0.8% of net sales) for the period ended
October 1, 1994. The increase in interest expense for the thirty nine week
period 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 6. EXHIBITS AND REPORTS ON 8-K
- - ------- ---------------------------
(a) Exhibits: None
(b) Reports on Form 8-K:
An 8-K dated July 26, 1995 was filed regarding a Credit Agreement
entered into with Mellon Bank and other lending institutions
during the third quarter (13 weeks) ended September 30, 1995.
9
<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: November 10, 1995 By: /s/Robert L. Ayres
---------------------- ----------------------------
(Signature)
Robert L. Ayres
Executive Vice President,
Chief Operating Officer
and Chief Financial Officer
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BUSH
INDUSTRIES, INC.'S INCOME STATEMENT AND BALANCE SHEET 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> JUL-02-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,957
<SECURITIES> 0
<RECEIVABLES> 28,052
<ALLOWANCES> 635
<INVENTORY> 21,948
<CURRENT-ASSETS> 55,048
<PP&E> 73,859
<DEPRECIATION> 34,771
<TOTAL-ASSETS> 96,256
<CURRENT-LIABILITIES> 25,302
<BONDS> 11,012
<COMMON> 884
0
0
<OTHER-SE> 57,551
<TOTAL-LIABILITY-AND-EQUITY> 96,256
<SALES> 59,521
<TOTAL-REVENUES> 59,521
<CGS> 42,034
<TOTAL-COSTS> 42,034
<OTHER-EXPENSES> 11,715
<LOSS-PROVISION> 120
<INTEREST-EXPENSE> 440
<INCOME-PRETAX> 5,212
<INCOME-TAX> 2,056
<INCOME-CONTINUING> 3,156
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,156
<EPS-PRIMARY> .36
<EPS-DILUTED> .36
</TABLE>
