<PAGE>
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 3, 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 June 1, 1997, 8,424,778 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.
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<PAGE>
BLUE BIRD CORPORATION
BLUE BIRD BODY COMPANY
Quarterly Report on Form 10-Q
For the Three-Month and Six-Month Periods
Ended May 3, 1997
Table of Contents
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets
as of May 3, 1997 and
November 2, 1996 ..................................... 1
Condensed Consolidated Statements of
Income for the three-month and six-month
periods ended May 3, 1997 and
April 27, 1996 ....................................... 2
Condensed Consolidated Statements of
Cash Flows for the six-month
periods ended May 3, 1996
and April 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
<PAGE>
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
BLUE BIRD BODY COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MAY 3, 1997 AND NOVEMBER 2, 1996
($ IN THOUSANDS)
<TABLE>
<CAPTION>
MAY 3, NOVEMBER 2,
1997 1996
--------- ----------
( UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,498 $ 46,253
Trade receivables 16,829 13,443
Leases receivable 38,384 32,215
Inventories 152,807 69,776
Prepaid expenses 3,747 2,137
Other current assets 17,075 3,167
-------- --------
Total current assets 230,340 166,991
LEASES RECEIVABLE, NONCURRENT 43,437 41,862
PROPERTY, PLANT, AND EQUIPMENT 67,139 64,599
Less accumulated depreciation (28,556) (25,710)
-------- --------
Property, plant, and equipment, net 38,583 38,889
GOODWILL AND DEBT ISSUE COSTS 162,458 162,849
Less accumulated amortization (19,992) (26,131)
-------- --------
Goodwill & Debt Issue Costs, net 142,466 136,718
-------- --------
OTHER ASSETS 6,532 6,571
-------- --------
Total assets $ 461,358 $ 391,031
======== ========
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
Revolving credit facilities $ 44,000 $ 0
Current portions of long-term debt 14,125 16,000
Accounts payable 52,778 27,704
Income taxes payable 43 9,270
Deferred income taxes 8,627 9,080
Other current liabilities 32,963 24,519
-------- --------
Total current liabilities 152,536 86,573
LONG-TERM DEBT 327,429 131,350
DEFERRED INCOME TAXES 5,742 5,306
OTHER LIABILITIES 20,675 20,309
REDEEMABLE COMMON STOCK, NET 9,405 29,305
-------- --------
Total liabilities 515,787 272,843
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 (128,676) 43,228
Other stockholders' (deficit) equity (2,853) (2,140)
-------- --------
Total stockholder's equity (54,429) 118,188
-------- --------
Total liabilities and
stockholders' (deficit) equity $ 461,358 $ 391,031
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated statements.
1
<PAGE>
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
BLUE BIRD BODY COMPANY AND SUBIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTH AND SIX MONTH PERIODS
ENDED MAY 3, 1997 AND APRIL 27, 1996
($ IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MAY 3, APRIL 27, MAY 3, APRIL 27,
1997 1996 1997 1996
--------- ---------- --------- ---------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S>
<C> <C> <C> <C>
Net sales $ 94,808 $ 106,501 $ 178,915 $ 199,327
Cost of goods sold 76,700 88,101 146,260 165,286
-------- -------- -------- --------
Gross profit 18,108 18,400 32,655 34,041
Selling, general and
administrative expense 11,558 10,774 22,348 20,889
Amortization of goodwill
and other intangibles 960 940 1,920 1,880
Nonrecurring items 0 0 16,506 0
-------- -------- -------- --------
Operating (loss) income 5,590 6,686 (8,119) 11,272
Interest income 1,408 1,706 2,942 3,508
Interest and debt issue
expense (8,595) (4,229) (16,149) (8,371)
Other income (expense) 568 237 805 433
-------- -------- -------- --------
(Loss) income before
income taxes (1,029) 4,400 (20,521) 6,842
(Benefit) provision
for income taxes (256) 1,811 (13,248) 2,786
-------- -------- -------- --------
Net (loss) income before
extraordinary items (773) 2,589 (7,273) 4,056
Extraordinary item - loss on
early extinguishment of debt 0 0 (2,986) (1,416)
-------- -------- -------- --------
Net (loss) income $ (773) $ 2,589 $ (10,259) $ 2,640
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
statements.
2
<PAGE>
<PAGE>
BLUE BIRD CORPORATION AND SUBSIDIARIES
BLUE BIRD BODY COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX-MONTH PERIODS ENDED MAY 3, 1997 AND APRIL 27, 1996
($ IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MAY 3, APRIL 27,
1997 1996
--------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(10,259) $ 2,640
------- -------
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 5,668 5,790
Increase (decrease) in cash surrender value
of life insurance (10) 52
Deferred income taxes (17) (945)
Changes in operating assets and liabilities:
(Increase) decrease in trade receivables (3,386) 3,591
(Increase) decrease in inventories (83,031) (43,553)
(Increase) decrease in prepaid expenses (1,610) (1,032)
Increase (decrease) in accounts payable 25,074 6,384
Increase (decrease) in income taxes payable (9,227) (5,292)
Other (4,721) 4,656
------- -------
Total adjustments (66,505) (28,095)
------- -------
Net cash used in operating activities (76,764) (25,455)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant, and equipment acquisitions (3,126) (1,663)
Increase in leases receivable (7,744) (9,219)
------- -------
Net cash used in investing activities (10,870) (10,882)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowing on working capital revolvers 49,500 49,646
Borrowing on long-term debt 274,699 0
Repayment of long-term debt (86,000) (30,000)
Dividends paid (185,345) 0
Debt prepayment premium (3,369) (1,625)
Debt issuance costs (9,693) 0
Proceeds from management notes 3,800 0
Other 0 (192)
------- -------
Net cash (used in) provided by
financing activities 43,592 17,829
------- -------
EFFECT OF EXCHANGE RATE FLUCTUATIONS (713) 105
------- -------
NET DECREASE IN CASH AND CASH EQUIVALENTS (44,755) (18,403)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 46,253 21,452
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,498 $ 3,049
======= =======
SUPPLEMENTAL INFORMATION:
Cash interest paid $ 10,438 $ 4,821
======= =======
Cash income taxes paid $ 9,850 $ 3,978
======= =======
</TABLE>
The accompanying notes are an integral part of these condensed
statements.
3<PAGE>
<PAGE>
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<PAGE>
<PAGE>
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 $2,700,000 higher at May 3,
1997 and approximately $2,100,000 higher at November 2, 1996.
The components of inventory consist of the following at May 3, 1997 and
November 2, 1996 (dollars in thousands):
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Raw materials $ 30,504 $ 18,848
Work in process 52,451 22,916
Finished goods 69,852 28,012
-------- --------
$152,807 $ 69,776
======== ========
</TABLE>
3. CONTINGENCIES
PENDING LITIGATION AND INSURANCE PROGRAM
As of May 3, 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 $19.9 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<PAGE>
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED MAY 3, 1997 COMPARED TO THREE MONTHS ENDED APRIL 27, 1996
Net sales for the quarter ended May 3, 1997, were $94.8 million, a decrease of
$11.7 million or 11.0% compared to the corresponding period in 1996. This
decrease was due to fewer deliveries during the current reporting period as
compared to the 1996 period. As of the end of the second quarter, 1997, the
backlog of units for delivery in fiscal 1997 was approximately 800 units
higher than the backlog at the end of the second quarter, 1996.
Gross profit decreased to $18.1 million in the second quarter of 1997 from
$18.4 million in the second quarter of 1996, a decrease of $.3 million or 1.6%
due to lower sales volume partially offset by higher gross margins. The gross
margin increased to 19.1% compared to 17.3% in the 1996 period due primarily
to lower delivery of buses with GM chassis which have lower gross margins.
Selling, general and administrative expenses increased to $11.6 million from
$10.8 million in the 1996 period, an increase of $.8 million or 7.3%. This
increase was related to increased engineering and marketing costs associated
with new product development and introduction.
Interest and debt issue expense increased to $8.6 million in the current
period from $4.2 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 $.3 million in the current period compared
to a provision of $1.8 million in the 1996 period. The 1997 period reflected
a loss.
SIX MONTHS ENDED MAY 3, 1997 COMPARED TO SIX MONTHS ENDED APRIL 27, 1996
Net sales for the six months ended May 3, 1997, were $178.9 million, a
decrease of $20.4 million or 10.2% compared to the corresponding period in
1996. This decrease was due to fewer deliveries during the current reporting
period as compared to the 1996 period. As of the end of the second quarter,
1997, the backlog of units for delivery in fiscal 1997 was approximately 800
units higher than the backlog at the end of the second quarter, 1996.
Gross profit decreased to $32.6 million in the current period as compared to
$34.0 million in the 1996 period. This was a decrease of $1.4 million or 4.1%
due to lower sales volume partially offset by higher gross margins. The gross
margin increased to 18.3% compared to 17.1% in the 1996 period due primarily
to lower delivery of buses with GM chassis which have lower gross margins.
6<PAGE>
<PAGE>
Selling, general and administrative expenses increased to $22.4 million from
$20.9 million in the 1996 period, an increase of $1.5 million or 7.0%. This
increase was related to increased engineering and marketing costs associated
with new product development and introduction. 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 $16.1 million in the current
period from $8.4 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 benefit for income taxes was $13.2 million in the current period compared
to a provision of $2.8 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 six month period was $76.8
million. A sizeable portion of this amount resulted from the Company's net
loss which was mostly attributable to 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 increase in
inventory 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.
7 <PAGE>
<PAGE>
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<PAGE>
<PAGE>
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed by the Registrants during the quarter
ended May 3, 1997.
9<PAGE>
<PAGE>
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, 1997 Date: June 16, 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: June 16, 1997 Date: June 16, 1997
10 <PAGE>
<PAGE>
Exhibit Index
-------------
Exhibit
No. Description
------- -----------
27 Financial data schedule
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000889468
<NAME> Blue Bird Body Company
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-01-1997
<PERIOD-START> NOV-03-1996
<PERIOD-END> MAY-03-1997
<CASH> 1,498
<SECURITIES> 0
<RECEIVABLES> 55,213
<ALLOWANCES> 0
<INVENTORY> 152,807
<CURRENT-ASSETS> 230,340
<PP&E> 67,139
<DEPRECIATION> (28,556)
<TOTAL-ASSETS> 461,358
<CURRENT-LIABILITIES> 152,536
<BONDS> 327,429
<COMMON> 9,482
0
0
<OTHER-SE> (54,506)
<TOTAL-LIABILITY-AND-EQUITY> 461,358
<SALES> 178,915
<TOTAL-REVENUES> 178,915
<CGS> 146,260
<TOTAL-COSTS> 40,774
<OTHER-EXPENSES> (3,747)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,149
<INCOME-PRETAX> (20,521)
<INCOME-TAX> (13,248)
<INCOME-CONTINUING> (7,273)
<DISCONTINUED> 0
<EXTRAORDINARY> (2,986)
<CHANGES> 0
<NET-INCOME> (10,259)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
