[X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 46-3891989 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
Non-accelerated filer | q (Do not check if a smaller reporting company) | Smaller reporting company | x |
• | the benefits of the Business Combination (as defined herein); |
• | the future financial performance of the Company; |
• | changes in the market for Blue Bird products; and |
• | expansion plans and opportunities. |
• | the risk that the anticipated benefits of the Business Combination may not be realized, which may be affected by, among other things, competition and the ability of management to grow the combined business and manage growth profitably; |
• | the outcome of any legal proceedings that may be instituted against us; |
• | the risk that the Business Combination disrupts current plans and operations as a result of the consummation of the transactions contemplated thereby; |
• | changes in applicable laws or regulations; and |
• | the possibility that we may be adversely affected by other economic, business, and/or competitive factors. |
(in thousands except for share data) | As of January 2, 2016 | As of October 3, 2015 | |||||
(unaudited) | (unaudited) | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 16,632 | $ | 52,861 | |||
Accounts receivable, net | 12,406 | 13,746 | |||||
Inventories | 71,488 | 49,180 | |||||
Other current assets | 3,683 | 3,960 | |||||
Deferred tax asset | 9,315 | 9,150 | |||||
Total current assets | $ | 113,524 | $ | 128,897 | |||
Property, plant and equipment, net | 28,471 | 28,933 | |||||
Goodwill | 18,825 | 18,825 | |||||
Intangible assets, net | 59,911 | 60,378 | |||||
Equity investment in affiliate | 12,926 | 12,505 | |||||
Deferred tax asset | 14,970 | 15,466 | |||||
Other assets | 2,342 | 1,721 | |||||
Total assets | $ | 250,969 | $ | 266,725 | |||
Liabilities and Stockholders' Deficit | |||||||
Current liabilities | |||||||
Accounts payable | $ | 66,406 | $ | 79,333 | |||
Accrued warranty costs | 6,799 | 7,418 | |||||
Accrued expenses | 15,017 | 22,980 | |||||
Deferred warranty income | 4,899 | 4,862 | |||||
Other current liabilities | 7,113 | 7,072 | |||||
Current portion of senior term debt | 11,750 | 11,750 | |||||
Total current liabilities | $ | 111,984 | $ | 133,415 | |||
Long-term liabilities | |||||||
Revolving senior credit facility | $ | 10,000 | $ | — | |||
Long-term debt | 173,150 | 175,418 | |||||
Accrued warranty costs | 9,784 | 10,243 | |||||
Deferred warranty income | 9,183 | 9,283 | |||||
Other liabilities | 13,324 | 13,169 | |||||
Pension liability | 45,074 | 46,427 | |||||
Total long-term liabilities | $ | 260,515 | $ | 254,540 | |||
Guarantees, commitments and contingencies (Note 5) | |||||||
Stockholders' deficit | |||||||
Series A preferred stock , $0.0001 par value, 10,000,000 shares authorized, 500,000 issued and outstanding at January 2, 2016 and October 3, 2015; liquidation preference of $50,000 | $ | 50,000 | $ | 50,000 | |||
Common stock, $0.0001 par value, 100,000,000 shares authorized, 20,983,777 and 20,874,882 issued and outstanding at January 2, 2016 and October 3, 2015, respectively | 2 | 2 | |||||
Additional paid-in capital | 17,146 | 15,887 | |||||
Accumulated deficit | (137,682 | ) | (135,345 | ) | |||
Accumulated other comprehensive loss | (50,996 | ) | (51,774 | ) | |||
Total stockholders' deficit | $ | (121,530 | ) | $ | (121,230 | ) | |
Total liabilities and stockholders' deficit | $ | 250,969 | $ | 266,725 |
(in thousands except for share data) | Three Months Ended January 2, 2016 | Three Months Ended January 3, 2015 | |||||
(unaudited) | (unaudited) | ||||||
Net sales | $ | 131,333 | $ | 165,833 | |||
Cost of goods sold | 112,580 | 146,355 | |||||
Gross profit | $ | 18,753 | $ | 19,478 | |||
Operating expenses | |||||||
Selling, general and administrative expenses | 17,079 | 15,459 | |||||
Operating income | $ | 1,674 | $ | 4,019 | |||
Interest expense | (4,243 | ) | (5,135 | ) | |||
Interest income | 22 | 32 | |||||
Other income, net | 16 | 11 | |||||
Loss before income taxes | $ | (2,531 | ) | $ | (1,073 | ) | |
Income tax (expense) benefit | (209 | ) | 421 | ||||
Equity in net income of non-consolidated affiliate | 421 | 28 | |||||
Loss from continuing operations | $ | (2,319 | ) | $ | (624 | ) | |
Loss from discontinued operations, net of tax | (18 | ) | (4 | ) | |||
Net loss | $ | (2,337 | ) | $ | (628 | ) | |
Defined benefit pension plan, net of tax of $419 and $319, respectively | 778 | 594 | |||||
Comprehensive loss | $ | (1,559 | ) | $ | (34 | ) | |
Net loss (from above) | $ | (2,337 | ) | $ | (628 | ) | |
Preferred stock dividend | $ | 998 | $ | — | |||
Net loss available to common stockholders | $ | (3,335 | ) | $ | (628 | ) | |
Earnings per share: | |||||||
Basic and diluted weighted average shares outstanding | 20,897,789 | 22,000,000 | |||||
Basic and diluted loss per share | $ | (0.16 | ) | $ | (0.03 | ) |
(in thousands of dollars) | Three Months Ended January 2, 2016 | Three Months Ended January 3, 2015 | |||||
(unaudited) | (unaudited) | ||||||
Cash flows from operating activities | |||||||
Net loss | $ | (2,337 | ) | $ | (628 | ) | |
Loss from discontinued operations, net of tax | 18 | 4 | |||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation and amortization | 1,994 | 2,263 | |||||
Amortization of debt costs | 719 | 809 | |||||
Share-based compensation | 1,120 | — | |||||
Equity in net income of affiliate | (421 | ) | (28 | ) | |||
Loss on disposal of fixed assets | — | 469 | |||||
Deferred taxes | (88 | ) | (11 | ) | |||
Provision for bad debt | (5 | ) | (33 | ) | |||
Amortization of deferred actuarial pension losses | 1,197 | 913 | |||||
Changes in assets and liabilities | |||||||
Accounts receivable | 1,345 | 6,952 | |||||
Inventories | (22,308 | ) | 2,384 | ||||
Other assets | (392 | ) | 684 | ||||
Accounts payable | (12,322 | ) | (25,452 | ) | |||
Accrued expenses, pension and other liabilities | (10,068 | ) | (19,276 | ) | |||
Total adjustments | $ | (39,229 | ) | $ | (30,326 | ) | |
Net cash used in continuing operations | $ | (41,548 | ) | $ | (30,950 | ) | |
Net cash used in discontinued operations | (18 | ) | (4 | ) | |||
Total cash used in operating activities | $ | (41,566 | ) | $ | (30,954 | ) | |
Cash flows from investing activities | |||||||
Cash paid for fixed assets | (1,671 | ) | (861 | ) | |||
Total cash used in investing activities | $ | (1,671 | ) | $ | (861 | ) | |
Cash flows from financing activities | |||||||
Net borrowings under the senior credit facility | $ | 10,000 | $ | — | |||
Repayments under the senior term loan | (2,938 | ) | (2,938 | ) | |||
Cash paid for capital leases | (54 | ) | (27 | ) | |||
Cash paid for debt costs | — | (2,872 | ) | ||||
Total cash provided by/(used in) financing activities | $ | 7,008 | $ | (5,837 | ) | ||
Change in cash and cash equivalents | (36,229 | ) | (37,652 | ) | |||
Cash and cash equivalents at beginning of period | 52,861 | 61,137 | |||||
Cash and cash equivalents at end of period | $ | 16,632 | $ | 23,485 | |||
Non-cash investing and financing activity | |||||||
Change in accounts payable for capital additions to property, plant and equipment | 618 | 224 | |||||
Common stock dividend on Series A preferred stock (market value of common shares) | 998 | — |
2. | Supplemental Financial Information |
(in thousands of dollars) | As of January 2, 2016 | As of October 3, 2015 | |||||
Raw materials | $ | 47,122 | $ | 43,471 | |||
Work in process | 20,414 | 2,658 | |||||
Finished goods | 3,952 | 3,051 | |||||
Total inventory | $ | 71,488 | $ | 49,180 |
(in thousands of dollars) | Three Months Ended January 2, 2016 | Three Months Ended January 3, 2015 | |||||
Balance at beginning of period | $ | 17,661 | $ | 15,559 | |||
Add: current period accruals | 1,385 | 1,849 | |||||
Less: current period reductions of accrual | (2,463 | ) | (2,182 | ) | |||
Balance at end of period | $ | 16,583 | $ | 15,226 |
(in thousands of dollars) | Three Months Ended January 2, 2016 | Three Months Ended January 3, 2015 | |||||
Balance at beginning of period | $ | 14,145 | $ | 12,003 | |||
Add: current period deferred income | 1,186 | 1,167 | |||||
Less: current period recognition of income | (1,249 | ) | (1,095 | ) | |||
Balance at end of period | $ | 14,082 | $ | 12,075 |
(in thousands of dollars) | As of January 2, 2016 | As of October 3, 2015 | |||||
Current portion | $ | 3,275 | $ | 3,534 | |||
Long-term portion | 2,755 | 2,786 | |||||
Total accrued self-insurance | $ | 6,030 | $ | 6,320 |
(in thousands of dollars) | Three Months Ended January 2, 2016 | Three Months Ended January 3, 2015 | |||||
Interest cost | $ | 1,411 | $ | 1,427 | |||
Expected return on plan assets | (1,528 | ) | (1,599 | ) | |||
Amortization of prior loss | 1,197 | 913 | |||||
Net periodic benefit cost | $ | 1,080 | $ | 741 | |||
Amortization of prior loss, recognized in other comprehensive income | 1,197 | 913 | |||||
Total recognized in net periodic pension benefit cost and other comprehensive income | $ | (117 | ) | $ | (172 | ) |
3. | Debt |
(in thousands of dollars) | As of January 2, 2016 | As of October 3, 2015 | |||||
2020 senior term loan, net of discount of $10,412 and $11,082 | $ | 184,900 | $ | 187,168 | |||
Less: current portion of long-term debt | 11,750 | 11,750 | |||||
Long-term debt, net of current portion | $ | 173,150 | $ | 175,418 |
(in thousands of dollars) | |||
Year | Amount | ||
2016 | $ | 8,812 | |
2017 | 11,750 | ||
2018 | 11,750 | ||
2019 | 11,750 | ||
2020 | 161,250 | ||
$ | 205,312 |
4. | Income Taxes |
5. | Guarantees, Commitments and Contingencies |
6. | Segment Information |
(in thousands of dollars) | Three Months Ended January 2, 2016 | Three Months Ended January 3, 2015 | |||||
Bus | $ | 118,479 | $ | 151,984 | |||
Parts | 12,854 | 13,849 | |||||
Segment net sales | $ | 131,333 | $ | 165,833 |
(in thousands of dollars) | Three Months Ended January 2, 2016 | Three Months Ended January 3, 2015 | |||||
Bus | $ | 13,746 | $ | 14,302 | |||
Parts | 5,007 | 5,176 | |||||
Segment gross profit | $ | 18,753 | $ | 19,478 |
(in thousands of dollars) | Three Months Ended January 2, 2016 | Three Months Ended January 3, 2015 | |||||
Segment gross profit | $ | 18,753 | $ | 19,478 | |||
Adjustments: | |||||||
Selling, general and administrative expenses | (17,079 | ) | (15,459 | ) | |||
Interest expense | (4,243 | ) | (5,135 | ) | |||
Interest income | 22 | 32 | |||||
Other income, net | 16 | 11 | |||||
Operating loss before income taxes | $ | (2,531 | ) | $ | (1,073 | ) |
(in thousands of dollars) | Three Months Ended January 2, 2016 | Three Months Ended January 3, 2015 | |||||
United States | $ | 126,802 | $ | 155,951 | |||
Canada | 3,088 | 9,159 | |||||
Rest of world | 1,443 | 723 | |||||
Total net sales | $ | 131,333 | $ | 165,833 |
• | Property tax revenues. Property tax revenues are one of the major sources of funding for new school buses. Property tax revenues are a function of land and building prices, relying on assessments of property value by state or county assessors and millage rates voted by the local electorate. |
• | Student enrollment. Increases or decreases in the number of school bus riders has a direct impact on school district demand. |
• | Revenue mix. We are able to charge more for certain of our products (e.g., Type C propane-powered school buses, Type D buses and buses with higher option content) than other products. The mix of products sold in any fiscal period can directly impact our revenues for the period. |
• | Strength of the dealer network. We rely on our dealers, as well as a small number of major fleet operators, to be the direct point of contact with school districts and their purchasing agents. An effective dealer is capable of expanding revenues within a given school district by matching that district’s needs to our capabilities, offering options that would not otherwise be provided to the district. |
• | Pricing. Our products are sold to school districts throughout the United States and Canada. Each state and each Canadian province has its own set of regulations that govern the purchase of products, including school buses, by their school districts. We and our dealers must navigate these regulations, purchasing procedures and the districts’ specifications in order to reach mutually acceptable price terms. Pricing may or may not be favorable to us, depending upon a number of factors impacting purchasing decisions. |
• | Buying patterns of major fleets. Major fleets regularly compete against one another for existing accounts. Fleets are also continuously trying to win the business of school districts that operate their own transportation services. These activities can have either a positive or negative impact on our sales, depending on the brand preference of the fleet that wins the business. Major fleets also periodically review their fleet sizes and replacement patterns due to funding availability as well as the profitability of existing routes. These actions can impact total purchases by fleets in a given year. |
• | Seasonality. Our sales are subject to seasonal variation based on the school calendar. The peak season has historically been during our third and fourth fiscal quarters. Sales during the third and fourth fiscal quarters are typically greater than the first and second fiscal quarters due to the desire of municipalities to have any new buses that they order available to them at the beginning of the new school year. There are, however, variations in the seasonal demands from year to year depending in large part upon municipal budgets, distinct replacement cycles and student enrollment. This seasonality and annual variations of this seasonality could impact the ability to compare results between time periods. |
• | Cost of goods sold. The components of our cost of goods sold consist of material costs (principally powertrain components, steel and rubber, as well as aluminum and copper), labor expense and overhead. Our cost of goods sold may vary from period to period in part due to changes in sales volume and in part due to efforts by certain suppliers to pass through the economics associated with key commodities, design changes with respect to specific components, design changes with respect to specific bus models, wage increases for plant labor, the productivity of plant labor, delays in receiving materials and other logistical problems and the impact of overhead items such as utilities. |
• | Selling, general and administrative expenses. Our selling, general and administrative expenses include costs associated with our selling and marketing efforts, engineering, centralized finance, human resources, purchasing and information technology services, as well as other administrative matters and functions. In most instances, other than direct costs associated with sales and marketing programs, the principal component of these costs is salary expense. Changes from period to period are typically driven by the number of our employees, as well as by merit increases provided to experienced personnel. |
• | Interest expense. Our interest expense relates to costs associated with our debt instruments and reflects both the amount of indebtedness and the interest rate that we are required to pay on our debt. Blue Bird refinanced its senior debt in June 2014, entering into a $235.0 million first lien credit agreement and a $60.0 million revolving credit agreement. Proceeds of the refinancing were used to repay existing indebtedness and to finance a dividend payment to our sole stockholder. |
• | Income taxes. We make estimates of the amounts to recognize for income taxes in each tax jurisdiction in which we operate. In addition, provisions are established for withholding taxes related to the transfer of cash between jurisdictions and for uncertain tax positions taken. |
• | Equity in net income of non-consolidated affiliate. We include in this line item our share of income or loss from our investment in Micro Bird, our unconsolidated 50/50 Canadian joint venture. |
(in thousands of dollars) | Three Months Ended January 2, 2016 | $ and % Increase (Decrease) | Three Months Ended January 3, 2015 | |||||||||||
Net sales | $ | 131,333 | $ | (34,500 | ) | (20.8 | )% | $ | 165,833 | |||||
Cost of goods sold | 112,580 | (33,775 | ) | (23.1 | )% | 146,355 | ||||||||
Gross profit | $ | 18,753 | $ | (725 | ) | (3.7 | )% | $ | 19,478 | |||||
Operating expenses | ||||||||||||||
Selling, general and administrative expenses | 17,079 | 1,620 | 10.5 | % | 15,459 | |||||||||
Operating profit | $ | 1,674 | $ | (2,345 | ) | (58.3 | )% | $ | 4,019 | |||||
Interest expense | (4,243 | ) | (892 | ) | 17.4 | % | (5,135 | ) | ||||||
Interest income | 22 | (10 | ) | (31.3 | )% | 32 | ||||||||
Other income, net | 16 | 5 | 45.5 | % | 11 | |||||||||
Operating loss before income taxes | $ | (2,531 | ) | $ | (1,458 | ) | N.M. | $ | (1,073 | ) | ||||
Income tax (expense) benefit | (209 | ) | 630 | N.M. | 421 | |||||||||
Equity in net income of non-consolidated affiliate | 421 | 393 | N.M. | 28 | ||||||||||
Loss from continuing operations | $ | (2,319 | ) | $ | (1,695 | ) | N.M. | $ | (624 | ) | ||||
Loss from discontinued operations, net of tax | (18 | ) | (14 | ) | N.M. | (4 | ) | |||||||
Net loss | $ | (2,337 | ) | $ | (1,709 | ) | N.M. | $ | (628 | ) | ||||
Other financial data: | ||||||||||||||
Adjusted EBITDA | $ | 5,243 | $ | (2,344 | ) | (30.9 | )% | $ | 7,587 | |||||
Adjusted EBITDA margin | 4.0 | % | 4.6 | % | ||||||||||
Net Sales by Segment | Three Months Ended January 2, 2016 | $ and % Increase (Decrease) | Three Months Ended January 3, 2015 | |||||||||||
Bus | $ | 118,479 | $ | (33,505 | ) | (22.0 | )% | $ | 151,984 | |||||
Parts | 12,854 | (995 | ) | (7.2 | )% | 13,849 | ||||||||
Total | $ | 131,333 | $ | (34,500 | ) | (20.8 | )% | $ | 165,833 | |||||
Gross Profit by Segment: | Three Months Ended January 2, 2016 | $ and % Increase (Decrease) | Three Months Ended January 3, 2015 | |||||||||||
Bus | $ | 13,746 | $ | (556 | ) | (3.9 | )% | $ | 14,302 | |||||
Parts | 5,007 | (169 | ) | (3.3 | )% | 5,176 | ||||||||
Total | $ | 18,753 | $ | (725 | ) | (3.7 | )% | $ | 19,478 |
(in thousands of dollars) | Three Months Ended January 2, 2016 | Three Months Ended January 3, 2015 | |||||
Net loss | $ | (2,337 | ) | $ | (628 | ) | |
Loss from discontinued operations, net of tax | (18 | ) | (4 | ) | |||
Loss from continuing operations | $ | (2,319 | ) | $ | (624 | ) | |
Interest expense, net | 4,221 | 5,103 | |||||
Income tax expense | 209 | (421 | ) | ||||
Depreciation and amortization | 1,994 | 2,263 | |||||
Business combination expenses | — | 609 | |||||
Share based compensation | 1,138 | — | |||||
Public company expenses | $ | — | 188 | ||||
Loss on disposal of fixed assets | $ | — | 469 | ||||
Adjusted EBITDA | $ | 5,243 | $ | 7,587 | |||
Adjusted EBITDA margin (percentage of net sales) | 4.0 | % | 4.6 | % |
Test Period | Maximum Total Net Leverage Ratio | |
October 3, 2015 through July 2, 2016 | 4.50:1.00 | |
October 1, 2016 | 4.00:1.00 | |
December 31, 2016 through June 30, 2018 | 3.50:1.00 | |
September 29, 2018 through June 29, 2019 | 3.00:1.00 | |
September 28, 2019 and thereafter | 2.75:1.00 |
(in thousands of dollars) | As of January 2, 2016 | As of October 3, 2015 | |||||
Accounts receivable, net | $ | 12,406 | $ | 13,746 | |||
Inventories | 71,488 | 49,180 | |||||
Accounts payable | (66,406 | ) | (79,333 | ) | |||
NOWC | $ | 17,488 | $ | (16,407 | ) |
(in thousands of dollars) | Three Months Ended January 2, 2016 | Increase (Decrease) | Three Months Ended January 3, 2015 | ||||||||
Total cash used in operating activities | $ | (41,566 | ) | $ | 10,612 | $ | (30,954 | ) | |||
Total cash used in investing activities | (1,671 | ) | 810 | (861 | ) | ||||||
Total cash provided by/(used in) financing activities | 7,008 | 12,845 | (5,837 | ) | |||||||
Change in cash and cash equivalents | (36,229 | ) | 1,423 | (37,652 | ) | ||||||
Cash and cash equivalents at beginning of period | 52,861 | (8,276 | ) | 61,137 | |||||||
Cash and cash equivalents at end of period | 16,632 | (6,853 | ) | 23,485 | |||||||
Depreciation and amortization | 1,994 | (269 | ) | 2,263 | |||||||
Capital expenditures | 1,671 | 810 | 861 |
(in thousands of dollars) | Three Months Ended January 2, 2016 | Three Months Ended January 3, 2015 | |||||
Net cash used in continuing operations | $ | (41,548 | ) | $ | (30,950 | ) | |
Cash paid for fixed assets | (1,671 | ) | (861 | ) | |||
Free cash flow | $ | (43,219 | ) | $ | (31,811 | ) |
2.1† | Purchase Agreement, dated as of September 21, 2014, by and among the registrant, Hennessy Capital Partners I LLC (solely for purposes of Section 10.01(a) thereof) and The Traxis Group B.V. (incorporated by reference to Exhibit 2.1 to the registrant’s Current Report on Form 8-K, filed by the registrant with the SEC on September 24, 2014). |
2.2 | Amendment No. 1 to Purchase Agreement, dated as of February 10, 2015, by and among the registrant, Hennessy Capital Partners I LLC (solely for purposes of Section 10.01(a) thereof) and The Traxis Group B.V. (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K, filed by the registrant with the SEC on February 11, 2015). |
2.3 | Amendment No. 2 to Purchase Agreement, dated as of February 18, 2015, by and among the registrant, Hennessy Capital Partners I LLC (solely for purposes of Section 10.01(a) thereof) and The Traxis Group B.V. (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K, filed by the registrant with the SEC on February 19, 2015). |
3.1 | The registrant’s Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K, filed by the registrant with the SEC on February 26, 2015). |
3.2 | The registrant’s Certificate of Designations establishing its Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to the registrant’s Current Report on Form 8-K, filed by the registrant with the SEC on February 26, 2015). |
3.3 | Bylaws of Blue Bird Corporation (incorporated by reference to the Company’s Form S-1, filed with the SEC on December 20, 2013). |
4.1 | Specimen stock certificate for the registrant’s Series A Convertible Preferred Stock (incorporated by reference to Exhibit 4.2 to the registrant’s Current Report on Form 8-K, filed by the registrant with the SEC on March 2, 2015). |
4.2 | The registrant’s Certificate of Designations establishing its Series A Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to the registrant’s Current Report on Form 8-K, filed by the registrant with the SEC on February 26, 2015). |
4.3 | Credit agreement, dated as of June 27, 2014, by and among Blue Bird Body Company, as borrower, School Bus Holdings Inc., certain other subsidiaries of School Bus Holdings Inc., the joint book runners and joint lead arrangers parties thereto, the co-syndication agents parties thereto and Societe General, as administrative agent (incorporated by reference to Exhibit 10.5 to the registrant’s Current Report on Form 8-K, filed by the registrant with the SEC on March 2, 2015). |
4.4 | First Amendment to Credit agreement, dated as of September 28, 2015, by and among Blue Bird Body Company, as borrower, School Bus Holdings Inc., certain other subsidiaries of School Bus Holdings Inc., the joint book runners and joint lead arrangers parties thereto, the co-syndication agents parties thereto and Societe General, as administrative agent (incorporated by reference to Exhibit 4.6 to the registrant's 2015Annual Report on Form 10-K filed by the registrant on December 15, 2015). |
31.2* | Chief Financial Officer’s Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934. |
32* | Certifications Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS*^ | XBRL Instance Document. |
101.SCH*^ | XBRL Taxonomy Extension Schema Document. |
101.CAL*^ | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF*^ | XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB*^ | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE*^ | XBRL Taxonomy Extension Presentation Linkbase Document. |
* | Filed herewith. |
^ | In accordance with Regulation S-T, XBRL (Extensible Business Reporting Language) related information in Exhibit No. (101) to this Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific preference in such filing. |
Blue Bird Corporation | |||
Dated: February 9, 2015 | By: /s/ Philip Horlock | ||
Philip Horlock Chief Executive Officer (Principal executive officer) |
Dated: February 9, 2015 | By: /s/ Phillip Tighe | ||
Phillip Tighe Chief Financial Officer (Principal Financial and Accounting Officer) |
Date: | February 9, 2016 | /s/ Philip Horlock |
Philip Horlock | ||
Chief Executive Officer | ||
(principal executive officer) | ||
Date: | February 9, 2016 | /s/ Phillip Tighe |
Phillip Tighe | ||
Chief Financial Officer | ||
(principal financial officer) | ||
Date: | February 9, 2016 | /s/ Philip Horlock | |
Philip Horlock | |||
Chief Executive Officer | |||
(principal executive officer) | |||
Date: | February 9, 2016 | /s/ Phillip Tighe | |
Phillip Tighe | |||
Chief Financial Officer | |||
(principal financial officer) | |||
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Jan. 02, 2016 |
Feb. 05, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Blue Bird Corp | |
Entity Central Index Key | 0001589526 | |
Current Fiscal Year End Date | --10-01 | |
Entity Filer Category | Smaller Reporting Company | |
Document Type | 10-Q | |
Document Period End Date | Jan. 02, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 20,986,531 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) |
Jan. 02, 2016 |
Oct. 03, 2015 |
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Statement of Financial Position [Abstract] | ||
Preferred Stock, Par Value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Shares Issued | 500,000 | 500,000 |
Preferred Stock, Liquidation Preference, Value | $ 50,000,000 | $ 50,000,000 |
Common Stock, Par Value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock, Shares Issued | 20,983,777 | 20,874,882 |
Common Stock, Shares Outstanding | 20,983,777 | 20,874,882 |
Condensed Consolidated Statements of Operations and Comprehensive Loss (Parentheticals) - USD ($) $ in Thousands |
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Jan. 02, 2016 |
Jan. 03, 2015 |
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Income Statement [Abstract] | ||
Defined benefit pension plan, tax | $ 419 | $ 319 |
Condensed Consolidated Statement of Stockholders Deficit (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
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Jan. 02, 2016 |
Jan. 03, 2015 |
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Statement of Stockholders' Equity [Abstract] | ||
Minimum pension liability, tax | $ 419 | $ 319 |
Nature of Business and Basis of Presentation |
3 Months Ended |
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Jan. 02, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business and Basis of Presentation | Nature of Business and Basis of Presentation Nature of Business On February 24, 2015, Hennessy Capital Acquisition Corp. ("HCAC") consummated its business combination (the “Business Combination”), pursuant to which HCAC acquired all of the outstanding capital stock of School Bus Holdings, Inc. (“SBH”) from The Traxis Group B.V. (the “Seller”). SBH operates its business of designing and manufacturing school buses through subsidiaries and under the Blue Bird Corporation (“Blue Bird”) name. In the Business Combination, the total purchase price was paid in a combination of cash ($100 million) and in shares of HCAC’s Common Stock (12,000,000 shares valued at a total of $120 million). In connection with the closing of the Business Combination, we changed our name from Hennessy Capital Acquisition Corp. to Blue Bird Corporation. Upon consummation of the Business Combination, SBH became a wholly-owned subsidiary of Blue Bird Corporation and SBH’s direct and indirect subsidiaries became indirect subsidiaries of our parent corporation. Blue Bird Body Company, a wholly-owned subsidiary of Blue Bird, was incorporated in 1958 and has manufactured, assembled and sold school buses to a variety of municipal, federal and commercial customers since 1927. The majority of Blue Bird’s sales are made to an independent distributor network, which in turn sells buses to ultimate end users. We are headquartered in Fort Valley, Georgia. References in these notes to financial statements to “Blue Bird”, the “Company,” “we,” “our,” or “us” refer to Blue Bird Corporation and its wholly-owned subsidiaries, unless the context specifically indicates otherwise. Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company transactions and accounts have been eliminated in consolidation. The Company uses the equity method to account for its investment in an entity that is not controlled, and where the Company has the ability to exercise significant influence over operating and financial policies. Consolidated net loss includes the Company’s share of net (loss) income in this entity. The difference between consolidation and the equity method impacts certain of the Company’s financial ratios because of the presentation of the detailed line items reported in the condensed consolidated financial statements for consolidated entities, compared to a two-line presentation of “Equity investment in affiliate” on the Consolidated Balance Sheets and “Equity in net income of non-consolidated affiliate” on the Consolidated Statements of Operations and Comprehensive Loss. The first quarter 2015 presentation of Equity in net income of non-consolidated affiliate on the Consolidated Statement of Operations and Comprehensive Loss has been reclassified from the previous presentation to conform to the current year presentation. The previous presentation showed the amounts in the first quarter of 2015 net of tax expense of $10.0 thousand. Those tax amounts are now included within the Income tax (expense) benefit line on our Consolidated Statement of Operations and Comprehensive Loss. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and Article 10 of Regulation S-X. The Company’s fiscal year ends on the Saturday closest to September 30 with its quarters consisting of 13 weeks in most years. In fiscal year 2016 there are a total of 52 weeks. Our first quarter in fiscal year 2016 had 13 weeks. Our first quarter in fiscal year 2015 had 14 weeks. In the opinion of management, all adjustments considered necessary for a fair presentation of financial results have been made. Such adjustments consist of only those of a normal recurring nature. Operating results for any interim period are not necessarily indicative of the results that may be expected for the entire year. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The Condensed Consolidated Balance Sheet data as of October 3, 2015 was derived from the Company’s audited financial statements but do not include all disclosures required by generally accepted accounting principles. For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes for the fiscal year ended October 3, 2015 as set forth in the Company's 2015 Form 10-K filed on December 15, 2015. The Business Combination was accounted for as a reverse acquisition since immediately following completion of the transaction the sole stockholder of SBH immediately prior to the Business Combination maintained effective control of Blue Bird Corporation, the post-combination company. For accounting purposes, SBH is deemed the accounting acquirer in the transaction and, consequently, the transaction is treated as a recapitalization of SBH (i.e., a capital transaction involving the issuance of stock and payment of cash by HCAC for the stock of SBH). Accordingly, the consolidated assets, liabilities and results of operations of SBH are the historical financial statements of Blue Bird Corporation, and HCAC assets, liabilities and results of operations are consolidated with SBH beginning on the acquisition date. No step-up in basis of intangible assets or goodwill was recorded in this transaction. We have effected this treatment through opening stockholders' deficit by adjusting the number of our common shares outstanding. Other than transaction costs paid and a contribution from our majority stockholder for payment of management incentive compensation related to the transaction, the transaction was primarily non-cash and involved exchanges of consideration and equity between our majority stockholder and HCAC and its related entities. Use of Estimates and Assumptions The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions. At the date of the financial statements, these estimates and assumptions affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities, and during the reporting period, these estimates and assumptions affect the reported amounts of revenues and expenses. For example, significant management judgments are required in determining excess, obsolete, or unsalable inventory, allowance for doubtful accounts, potential impairment of long-lived assets, goodwill and intangibles, the accounting for self-insurance reserves, warranty reserves, pension obligations, income taxes, environmental liabilities and contingencies. Future events and their effects cannot be predicted with certainty, and, accordingly, the Company’s accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the Company’s condensed consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. The Company evaluates and updates its assumptions and estimates on an ongoing basis and may employ outside experts to assist in the Company’s evaluations. Actual results could differ from the estimates that the Company has used. Recently Adopted Accounting Standards In April 2015, the Financial Accounting Standards Board (“FASB) issued Accounting Standards Update (“ASU”) 2015-03, “Simplifying the Presentation of Debt Issuance Costs”, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. During the first quarter of 2016, the Company adopted ASU 2015-03 and as a result reclassified $1.2 million of debt issuance costs, net, from Other assets to Long- term debt on our consolidated balance sheets as of October 3, 2015. Long-term debt as of October 3, 2015 was previously presented as $176.6 million. Due to the retrospective application of ASU 2015-03, Long-term debt is now presented as $175.4 million as of October 3, 2015. Recently Issued Accounting Standards In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes". ASU 2015-17 simplifies the presentation of deferred taxes by requiring deferred tax assets and liabilities to be classified as non-current on the balance sheet. ASU 2015-17 is effective for public companies for annual reporting periods beginning after December 15, 2016, and interim periods within those fiscal years. The guidance may be adopted prospectively or retrospectively and early adoption is permitted. As of January 2, 2016, the adoption of this ASU would result in the reclassification of approximately $9.3 million from current assets to non-current assets. Future impact will be driven by the composition of our deferred tax accounts. In April 2015, the FASB issued Accounting Standards Update ("ASU") No. 2015-04, "Compensation-Retirement Benefits" ("Topic 715"). This ASU is based on the "Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets". The guidance applies to employers that provide pension or other post-retirement benefits as part of a special termination benefit or special or contractual termination benefits not otherwise addressed in other Subtopics (for example, benefits paid at or before retirement and not paid out of a pension or other post-retirement plan). The ASU also applies to settlement of all or a part of an employer's pension or other post-retirement benefit obligation or curtailment of a pension or other post-retirement benefit plan. This new guidance is effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Earlier adoption is permitted. We plan to adopt this standard as of the end of our 2016 fiscal year, and do not expect the adoption of this ASU to have a material impact on our consolidated financial statements. |
Supplemental Financial Information |
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Condensed Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Financial Information | Supplemental Financial Information Inventory The Company values inventories at the lower of cost or market value. The Company uses a standard costing methodology, which approximates cost on a first-in, first-out basis. The Company reviews the standard costs of raw materials, work-in-process and finished goods inventory on a periodic basis to ensure that its inventories approximate current actual costs. Manufacturing cost includes raw materials, direct labor and manufacturing overhead. Inventory consists of the following:
Product Warranties The Company’s products are generally warranted against defects in material and workmanship for a period of one to five years. A provision for estimated warranty costs is recorded in the year the unit is sold. The methodology to determine warranty reserve calculates average expected warranty claims using warranty claims by body type, by month, over the life of the bus, which is then multiplied by remaining months under warranty, by warranty type. Management believes the methodology provides for accuracy in addressing reserve requirements. Management believes the warranty reserve is appropriate; however, actual claims incurred could differ from the original estimates, requiring future adjustments. The Company also sells extended warranties related to its products. Revenue related to these contracts is recognized on a straight-line basis over the contract period and costs thereunder are expensed as incurred. All warranty expenses are recorded in the cost of goods sold line in the Consolidated Statements of Operations and Comprehensive Loss. The methodology to determine our short-term extended warranty income reserve is based on twelve months of the remaining warranty value for each effective extended warranty at the balance sheet date. Activity in accrued warranty cost (current and long-term portion combined) was as follows for the three months ended January 2, 2016 and January 3, 2015:
Extended Warranty Income Activity in deferred warranty income, for the sale of extended warranties of two to five years, was as follows for the three months ended January 2, 2016 and January 3, 2015:
Self-Insurance Our accrued self-insurance liability, comprised of workers compensation and health insurance related claims, was as follows:
The current and long-term portions of the accrued self-insurance liability are reflected in accrued expenses and other liabilities, respectively, on the balance sheet. Shipping and Handling Revenue Shipping and handling revenues represent costs billed to customers and are presented as net sales. Shipping and handling costs incurred are included in cost of goods sold. Shipping and handling revenues were $2.5 million and $3.6 million for the three months ended January 2, 2016 and January 3, 2015, respectively. The related cost of goods sold was $2.0 million and $3.2 million for the three months ended January 2, 2016 and January 3, 2015, respectively. Pension Expense Components of net periodic pension benefit cost for the three months ended January 2, 2016 and January 3, 2015 were as follows:
Earnings per Share For the three months ended January 2, 2016, due to the net loss attributable to our common stockholders, potential common shares that would cause dilution, such as warrants, employee stock options and restricted stock units, have been excluded from the diluted share count because their effect would have been anti-dilutive. For the three months ended January 2, 2016, the fully diluted shares would have been 4,328,729. There were no dilutive securities outstanding for the three months ended January 3, 2015. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Long-term debt consists of the following:
In June 2014, Blue Bird Body Company executed a new $235.0 million six year senior term loan provided by Societe Generale (the “Senior Credit Facility”), which acts as the administrative agent, SG Americas Securities LLC, Macquarie Capital (USA) INC., and Fifth Third Bank as joint book runners and Joint Lead Arrangers. The Senior Credit Facility amortizes at 5% per annum payable quarterly beginning January 3, 2015. The interest rate on the Senior Credit Facility is an election of either base rate plus 450 basis points or LIBOR (floor of 1 point) plus 550 basis points, and is 6.5% at both January 2, 2016 and October 3, 2015. Blue Bird also has access to a $60.0 million revolving senior credit facility provided by Societe Generale (the “Senior Revolving Credit Facility”), which acts as the administrative agent, SG Americas Securities LLC and Macquarie Capital (USA) INC. The Senior Revolving Credit Facility carries an elective rate of either the base rate plus 450 basis points or LIBOR plus 550 basis points. Blue Bird may request letters of credit through its Senior Revolving Credit Facility up to a $15.0 million sub limit. There were $5.1 million of Letters of Credit outstanding on January 2, 2016. The commitment fee on unused amounts of the Senior Revolving Credit Facility is 0.5%. The Senior Credit Facility and the Senior Revolving Credit Facility were executed on June 27, 2014 and further amended on September 28, 2015. The Senior Credit Facility has a six year term and the Senior Revolving Credit Facility originally had a five year term but was amended to a six year term. The Senior Credit Facility was also amended to permit the Company to pay its preferred share dividends in cash, to permit the Company to tender cash for its existing warrants from available amounts (as further defined in the credit agreement), to amend the definition of consolidated EBITDA to allow an add back of third party expenses related to being a public company, to add Blue Bird Corporation as a guarantor, and to otherwise amend various restricted payment requirements. As of January 2, 2016 and October 3, 2015, $195.3 million and $198.3 million, respectively, were outstanding on this indebtedness. Approximately $12.7 million in fees was netted out of the proceeds of the Senior Credit Facility and paid directly to the lenders. An additional $1.6 million in fees was paid to third parties and are recorded as a reduction in the carrying value of debt on our Condensed Consolidated Balance Sheets. Our term loan is recognized on the Company’s balance sheet at its unpaid principal balance, and is not subject to fair value measurement. However, given that the loan carries a variable rate, the Company estimates that the unpaid principal balance of the term loan would approximate its fair value. If measured at fair value in the financial statements, the Company’s term loan would be classified as Level 2 in the fair value hierarchy. As of January 2, 2016 and October 3, 2015, the weighted-average annual effective interest rate was 8% and 7.8%, respectively. There was $10.0 million and $0 million of borrowings outstanding on the Senior Revolving Credit Facility as of January 2, 2016 and October 3, 2015, respectively. Interest expense for the three months ended January 2, 2016 and January 3, 2015 was approximately $4.2 million and $5.1 million, respectively. The schedules of remaining principal maturity for the Senior Credit Facility and the Senior Revolving Credit Facility for the next five fiscal years are as follows:
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Income Taxes |
3 Months Ended |
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Jan. 02, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax provisions for interim periods are based on estimated annual income tax rates, adjusted to reflect the effects of any significant infrequent or unusual items which are required to be discretely recognized within the current interim period. The effective tax rates in the periods presented are largely based upon the forecast pre-tax earnings mix and allocation of certain expenses in various taxing jurisdictions where the Company conducts its business, primarily the United States. As a result of the Business Combination a change in the ownership of the Company occurred which, pursuant to The Internal Revenue Code, will limit on an annual basis the Company's ability to utilize its U.S. Federal NOLs and U.S. Federal tax credits. The Company's NOLs and credits will continue to be available to offset taxable income and tax liabilities (until such NOLs and credits are either used or expire) subject to the Section 382 annual limitation. If the annual limitation amount is not fully utilized in a particular tax year, then the unused portion from that particular tax year will be added to the annual limitation in subsequent years. The effective tax rates for the three month periods ended January 2, 2016 and January 3, 2015 were (8.3)% and 39.2%, respectively. The effective tax rate for the three month period ended January 2, 2016 differed from the statutory federal income tax rate of 35% primarily as a result of the benefit from current period operating losses and recording the impact of new tax legislation, offset by discrete items increasing tax expense this period, including: a change in investor tax on our non-consolidated affiliate income, the application of tax credits claimed as offsets against our payroll tax liabilities, and interest and penalties on uncertain tax positions. In totality when applied against our reported pre-tax loss this period, these items result in a negative tax rate. The effective tax rate for the three month period ended January 3, 2015 differed from the statutory federal income tax rate of 35%, primarily as a result of the benefit from the domestic production activities deduction and a discrete tax benefit from the extension of the U.S Federal Research and Development Tax Credit of 2014, offset in part by interest and penalties. Of the total amount of gross unrecognized tax benefits as of January 2, 2016, $6.4 million would affect the Company’s effective tax rate if realized. The Company’s liability arising from uncertain tax positions is recorded in other non-current liabilities in the Condensed Consolidated Balance Sheets. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. The accrued interest and penalties as of January 2, 2016 was $1.4 million. |
Guarantees, Commitments and Contingencies |
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Jan. 02, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Guarantees, Commitments and Contingencies | Guarantees, Commitments and Contingencies Litigation As of January 2, 2016, the Company had a number of product liability and other cases pending. Management believes that, considering the Company’s insurance coverage and its intention to vigorously defend its positions, the ultimate resolution of these matters will not have a material adverse effect on the Company’s financial statements. Environmental The Company is subject to a variety of environmental regulations relating to the use, storage, discharge and disposal of hazardous materials used in its manufacturing processes. Failure by the Company to comply with present and future regulations could subject it to future liabilities. In addition, such regulations could require the Company to acquire costly equipment or to incur other significant expenses to comply with environmental regulations. The Company is currently not involved in any material environmental proceedings and therefore management believes that the resolution of environmental matters will not have a material adverse effect on the Company’s financial statements. |
Segment Information |
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Segment Information | Segment Information We manage our business in two operating segments, which are also our reportable segments. The Bus segment includes the manufacturing and assembly of school buses to be sold to a variety of customers across the United States, Canada and in international markets. The Parts segment consists primarily of the purchase of parts from third parties to be sold to dealers within the Company’s network. Financial information is reported on the basis that it is used internally by the chief operating decision maker (the “CODM”) in evaluating segment performance and deciding how to allocate resources. The Chief Executive Officer of the Company has been identified as the CODM. Management evaluates the segments based primarily upon revenues and gross profit. A measure of assets is not applicable, as segment assets are not regularly reviewed by the CODM for evaluating performance or allocating resources. The tables below present segment net sales and gross profit for the three months ended January 2, 2016 and January 3, 2015: Net sales
Gross profit
The following table is a reconciliation of segment gross profit to consolidated loss before income taxes for the three months ended January 2, 2016 and January 3, 2015:
Sales are attributable to geographic areas based on customer location and were as follows for the three months ended January 2, 2016 and January 3, 2015:
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Business Combination |
3 Months Ended |
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Jan. 02, 2016 | |
Business Combinations [Abstract] | |
Business Combination | Business Combination Background and Summary The Company was originally formed in September 2013 as a special purpose acquisition company, or SPAC, under the name Hennessy Capital Acquisition Corp. (“HCAC” or “Hennessy Capital”) for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving HCAC and one or more businesses. As a SPAC, HCAC was a shell (blank check) company that had no operations and whose purpose was to go public with the intention of merging with or acquiring a company with the proceeds of the SPAC’s initial public offering (IPO). Until the consummation of the Business Combination, HCAC’s securities were traded on The NASDAQ Stock Market (“NASDAQ”) under the ticker symbols “HCAC,” “HCACU” and “HCACW”. On September 21, 2014, Hennessy Capital Partners I LLC (the “HCAC Sponsor”) signed a purchase agreement (the “Purchase Agreement”) with the Seller to acquire all outstanding stock of SBH. The material terms and conditions of the Purchase Agreement were described in Hennessy Capital’s definitive proxy statement filed with the SEC on January 20, 2015, which was supplemented in additional proxy statement materials filed with the SEC on February 10, 2015. On February 24, 2015, HCAC consummated its Business Combination, pursuant to which HCAC acquired all of the outstanding capital stock of SBH from the Seller. SBH operates its business of designing and manufacturing school buses through subsidiaries and under the “Blue Bird” name. In the Business Combination, the total purchase price was paid in a combination of cash ($100 million) and in shares of HCAC’s Common Stock (12,000,000 shares valued at a total of $120 million). In connection with the closing of the Business Combination, we changed our name from Hennessy Capital Acquisition Corp. to Blue Bird Corporation. The cash purchase price in the Business Combination was funded through amounts that remained in HCAC’s trust after the redemption of all shares that were offered for redemption pursuant to HCAC’s certificate of incorporation, together with $75 million of funds invested through private placements of Common Stock and Series A Convertible Preferred Stock that occurred simultaneously with the consummation of the Business Combination. Preferred Stock Subscription Agreement In our preferred stock subscription agreement, an investor agreed to purchase from Hennessy Capital, concurrent with the consummation of the closing of the Business Combination, 400,000 shares of Series A Convertible Preferred Stock for gross proceeds of approximately $40 million, subject to a possible increase to up to 500,000 shares or approximately $50 million (the “PIPE Investment”). On February 18, 2015, Hennessy Capital entered into a subscription agreement with four funds managed by Coliseum Capital Management, LLC (the “Common/Preferred Investor”) pursuant to which the Common/Preferred Investor agreed to purchase $25 million worth of shares of Hennessy Capital common stock, through (i) open market or privately negotiated transactions with third parties, at a purchase price of up to $10.00 per share, (ii) a private placement with consummation to occur concurrently with that of the Business Combination at a purchase price of $10.00 per share, or (iii) a combination thereof, and further agreed to purchase 100,000 shares of Series A Convertible Preferred Stock pursuant to a private placement for gross proceeds of approximately $10.0 million to occur concurrently with that of the Business Combination. Business Combination Approval and Consummation On February 23, 2015, the Business Combination was approved by Hennessy Capital’s stockholders. On February 24, 2015, the parties consummated the Business Combination. The total purchase price was paid in a combination of cash ($100 million) and in shares of the registrant’s common stock (12,000,000 shares valued at a total of $120 million). In connection with the closing of the Business Combination, the Company redeemed a total of 7,494,700 shares of its common stock pursuant to the terms of the Company’s amended and restated certificate of incorporation, resulting in a total cash payment from Hennessy Capital’s trust account to redeeming stockholders of $75 million. On February 24, 2015, at the closing of the Business Combination, the PIPE Investment investor purchased 400,000 shares of the Company’s Series A Convertible Preferred Stock from the Company for aggregate gross proceeds of approximately $40 million and the Common/Preferred Investor purchased 100,000 shares of the Company’s Series A Convertible Preferred Stock from the Company for aggregate gross proceeds of approximately $10 million. In addition, at the closing, the Company issued to another investor 102,750 shares referenced in the Purchase Agreement as “Utilization Fee Shares”, and the Common/Preferred Investor purchased 2,500,000 shares of the Company’s common stock from the Company for aggregate gross proceeds of $25 million. Registration Rights Agreement On February 24, 2015, the Company entered into a registration rights agreement with the Seller and other investors (the “Registration Rights Agreement”). The parties were granted registration rights that obligate Blue Bird Corporation to register for resale, among other shares, all or any portion of the shares of the Company’s capital stock that were issued by the Company in connection with the Business Combination (including the shares of common stock underlying the Series A Preferred Stock). On April 27, 2015, a registration statement on Form S-3 filed by the Company in connection with, among other things, its obligations under the Registration Rights Agreement, was declared effective by the SEC. Under the Registration Rights Agreement, the parties also hold “piggyback” registration rights exercisable at any time that allow them to include the shares of Blue Bird Corporation common stock that they own in any public offering of equity securities initiated by us (other than those public offerings pursuant to registration statements on forms that do not permit registration for resale by them). The “piggyback” registration rights are subject to proportional cutbacks based on the manner of such offering and the identity of the party initiating such offering. Blue Bird Corporation will pay all expenses incidental to its obligations under the Registration Rights Agreement, including any underwriting discounts and commissions payable by the parties to that agreement in connection with the sale of their shares under the Registration Rights Agreement. |
Stockholders' Deficit |
3 Months Ended |
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Jan. 02, 2016 | |
Equity [Abstract] | |
Stockholders' Deficit | Stockholders’ Deficit Authorized and Outstanding Stock Our charter authorizes the issuance of 110 million shares, consisting of 100 million shares of common stock, $0.0001 par value per share, and 10 million shares of preferred stock, $0.0001 par value, 2 million of which have been designated as Series A Convertible Preferred Stock (“Preferred” or "Convertible Preferred Stock") and the remaining 8 million of which are undesignated. The outstanding shares of our Series A Convertible Preferred Stock and common stock are duly authorized, validly issued, fully paid and non-assessable. Common Stock On February 24, 2015, we sold 2,500,000 shares of common stock at $10.00 per share in a private placement. Proceeds from the sale were part of the consideration received by our majority owner as part of a recapitalization and reverse acquisition completed in the Business Combination. We also issued (i) 12,000,000 shares of common stock to the Seller upon consummation of the Business Combination, and (ii) 102,750 shares of common stock as a utilization fee to another investor. Please see Note 7 for a further discussion of these transactions. At January 2, 2016, there were 20,983,777 shares of our common stock issued and outstanding. Convertible Preferred Stock By the filing of a Certificate of Designations (the “Certificate of Designations”) on February 24, 2015, we have designated 2.0 million shares of preferred stock as Series A Convertible Preferred Stock and, on February 24, 2015, we issued 500,000 shares of such series. Proceeds from the sale were part of the consideration received by our majority owner as part of a recapitalization and reverse acquisition completed in the Business Combination. Please see Note 7 for a further discussion of the transaction. Each share of Series A Convertible Preferred Stock is convertible, at the holder’s option at any time, initially into 8.6 shares of our common stock (which is equivalent to an initial conversion price of approximately $11.59 per share), subject to specified adjustments as set forth in the Certificate of Designations. In addition, beginning on or after the third anniversary of the initial issuance date, we have the right, at our option, to cause all outstanding shares of the Series A Convertible Preferred Stock to be automatically converted into shares of common stock under certain circumstances and, if our Company undergoes certain fundamental changes, the Series A Convertible Preferred Stock will automatically be converted into common stock on the effective date of such fundamental change. Holders of Series A Convertible Preferred Stock are entitled to receive when, as and if declared by the Board, dividends which are payable at a rate of 7.625% per annum. Unless prohibited by applicable law, the Board shall not fail to declare such dividends on the Series A Convertible Preferred Stock. Dividends accrue for all fiscal periods the Series A Convertible Preferred Stock is outstanding. The dividends are payable in cash, common shares, preferred shares, or any combination thereof. The form of dividend payment is in the sole discretion of the Company. Since the issuance of the Series A Convertible Preferred Stock, we have paid three dividends in the form of 278,022 shares of common stock to the holders of our Series A Convertible Preferred Stock. As we are in an accumulated deficit position, we reduce Additional paid-in capital for dividend payments at the same amount that we record Additional paid-in capital for the issuance of the common stock, which results in no net change to our Stockholders' Deficit. The fair value of this dividend is reflected as a deduction from net loss to calculate net loss available to common stockholders in our Condensed Consolidated Statement of Operations. In the event of any liquidation, winding-up or dissolution of the Company, whether voluntary or involuntary, each holder of shares of Series A Convertible Preferred Stock shall be entitled to receive and to be paid out of the assets of the Company available for distribution to its stockholders the Liquidation Preference ($100.00 per share) plus all accumulated and unpaid dividends in respect of the Series A Convertible Preferred Stock (whether or not declared) to the date fixed for liquidation, winding-up or dissolution in preference to the holders of, and before any payment or distribution is made on any other class of stock. Warrants Public Warrants The Company has issued warrants to purchase its common stock which were originally issued as part of units in Hennessy Capital’s initial public offering (the “Public Warrants”). There are currently 8,809,538 Public Warrants outstanding. Each Public Warrant entitles the registered holder to purchase one-half of one share of our common stock at a price of $5.75 per one-half of one share ($11.50 per whole share), subject to adjustment. Public Warrants may be exercised only for a whole number of shares of our Common Stock. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will expire on February 24, 2020, five years after the completion of the Business Combination, or earlier upon redemption or liquidation. We may call the Public Warrants for redemption if, and only if, the reported last sale price of our common stock equals or exceeds $24.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date we send the notice of redemption to the Warrant holders. The Public Warrants are listed on the OTCQB market under the symbol "BLBDW." Placement Warrants The Company issued warrants to purchase its common stock in connection with a private placement which occurred concurrently with Hennessy Capital’s initial public offering (the “Placement Warrants”). There were initially 12,125,000 Placement Warrants purchased at a price of $0.50 per unit for an aggregate purchase price of $6.1 million. The Placement Warrants are identical to the Public Warrants sold in the initial public offering, except that, if held by the HCAC Sponsor or its permitted assignees, they (a) may be exercised for cash or on a cashless basis; and (b) are not subject to being called for redemption. There were 2,690,462 Placement Warrants outstanding as of January 2, 2016. Each such warrant entitles the holder to purchase one-half of one share of our Common Stock at a price of $5.75 per one-half of one share ($11.50 per whole share), subject to adjustment. |
Nature of Business and Basis of Presentation (Policies) |
3 Months Ended |
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Jan. 02, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company transactions and accounts have been eliminated in consolidation. The Company uses the equity method to account for its investment in an entity that is not controlled, and where the Company has the ability to exercise significant influence over operating and financial policies. Consolidated net loss includes the Company’s share of net (loss) income in this entity. The difference between consolidation and the equity method impacts certain of the Company’s financial ratios because of the presentation of the detailed line items reported in the condensed consolidated financial statements for consolidated entities, compared to a two-line presentation of “Equity investment in affiliate” on the Consolidated Balance Sheets and “Equity in net income of non-consolidated affiliate” on the Consolidated Statements of Operations and Comprehensive Loss. The first quarter 2015 presentation of Equity in net income of non-consolidated affiliate on the Consolidated Statement of Operations and Comprehensive Loss has been reclassified from the previous presentation to conform to the current year presentation. The previous presentation showed the amounts in the first quarter of 2015 net of tax expense of $10.0 thousand. Those tax amounts are now included within the Income tax (expense) benefit line on our Consolidated Statement of Operations and Comprehensive Loss. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and Article 10 of Regulation S-X. The Company’s fiscal year ends on the Saturday closest to September 30 with its quarters consisting of 13 weeks in most years. In fiscal year 2016 there are a total of 52 weeks. Our first quarter in fiscal year 2016 had 13 weeks. Our first quarter in fiscal year 2015 had 14 weeks. In the opinion of management, all adjustments considered necessary for a fair presentation of financial results have been made. Such adjustments consist of only those of a normal recurring nature. Operating results for any interim period are not necessarily indicative of the results that may be expected for the entire year. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The Condensed Consolidated Balance Sheet data as of October 3, 2015 was derived from the Company’s audited financial statements but do not include all disclosures required by generally accepted accounting principles. For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes for the fiscal year ended October 3, 2015 as set forth in the Company's 2015 Form 10-K filed on December 15, 2015. The Business Combination was accounted for as a reverse acquisition since immediately following completion of the transaction the sole stockholder of SBH immediately prior to the Business Combination maintained effective control of Blue Bird Corporation, the post-combination company. For accounting purposes, SBH is deemed the accounting acquirer in the transaction and, consequently, the transaction is treated as a recapitalization of SBH (i.e., a capital transaction involving the issuance of stock and payment of cash by HCAC for the stock of SBH). Accordingly, the consolidated assets, liabilities and results of operations of SBH are the historical financial statements of Blue Bird Corporation, and HCAC assets, liabilities and results of operations are consolidated with SBH beginning on the acquisition date. No step-up in basis of intangible assets or goodwill was recorded in this transaction. We have effected this treatment through opening stockholders' deficit by adjusting the number of our common shares outstanding. Other than transaction costs paid and a contribution from our majority stockholder for payment of management incentive compensation related to the transaction, the transaction was primarily non-cash and involved exchanges of consideration and equity between our majority stockholder and HCAC and its related entities. |
Use of Estimates and Assumptions | Use of Estimates and Assumptions The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions. At the date of the financial statements, these estimates and assumptions affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities, and during the reporting period, these estimates and assumptions affect the reported amounts of revenues and expenses. For example, significant management judgments are required in determining excess, obsolete, or unsalable inventory, allowance for doubtful accounts, potential impairment of long-lived assets, goodwill and intangibles, the accounting for self-insurance reserves, warranty reserves, pension obligations, income taxes, environmental liabilities and contingencies. Future events and their effects cannot be predicted with certainty, and, accordingly, the Company’s accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the Company’s condensed consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. The Company evaluates and updates its assumptions and estimates on an ongoing basis and may employ outside experts to assist in the Company’s evaluations. Actual results could differ from the estimates that the Company has used. |
Recently Adopted Accounting Standards and Recently Issued Accounting Standards | Recently Adopted Accounting Standards In April 2015, the Financial Accounting Standards Board (“FASB) issued Accounting Standards Update (“ASU”) 2015-03, “Simplifying the Presentation of Debt Issuance Costs”, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. During the first quarter of 2016, the Company adopted ASU 2015-03 and as a result reclassified $1.2 million of debt issuance costs, net, from Other assets to Long- term debt on our consolidated balance sheets as of October 3, 2015. Long-term debt as of October 3, 2015 was previously presented as $176.6 million. Due to the retrospective application of ASU 2015-03, Long-term debt is now presented as $175.4 million as of October 3, 2015. Recently Issued Accounting Standards In November 2015, the FASB issued ASU 2015-17, "Balance Sheet Classification of Deferred Taxes". ASU 2015-17 simplifies the presentation of deferred taxes by requiring deferred tax assets and liabilities to be classified as non-current on the balance sheet. ASU 2015-17 is effective for public companies for annual reporting periods beginning after December 15, 2016, and interim periods within those fiscal years. The guidance may be adopted prospectively or retrospectively and early adoption is permitted. As of January 2, 2016, the adoption of this ASU would result in the reclassification of approximately $9.3 million from current assets to non-current assets. Future impact will be driven by the composition of our deferred tax accounts. In April 2015, the FASB issued Accounting Standards Update ("ASU") No. 2015-04, "Compensation-Retirement Benefits" ("Topic 715"). This ASU is based on the "Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets". The guidance applies to employers that provide pension or other post-retirement benefits as part of a special termination benefit or special or contractual termination benefits not otherwise addressed in other Subtopics (for example, benefits paid at or before retirement and not paid out of a pension or other post-retirement plan). The ASU also applies to settlement of all or a part of an employer's pension or other post-retirement benefit obligation or curtailment of a pension or other post-retirement benefit plan. This new guidance is effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Earlier adoption is permitted. We plan to adopt this standard as of the end of our 2016 fiscal year, and do not expect the adoption of this ASU to have a material impact on our consolidated financial statements. |
Supplemental Financial Information (Tables) |
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Condensed Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory, Current | Manufacturing cost includes raw materials, direct labor and manufacturing overhead. Inventory consists of the following:
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Schedule of Product Warranty Liability | Activity in accrued warranty cost (current and long-term portion combined) was as follows for the three months ended January 2, 2016 and January 3, 2015:
Extended Warranty Income Activity in deferred warranty income, for the sale of extended warranties of two to five years, was as follows for the three months ended January 2, 2016 and January 3, 2015:
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Schedule of Self Insurance Reserve | accrued self-insurance liability, comprised of workers compensation and health insurance related claims, was as follows:
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Schedule of Defined Benefit Plans Disclosures | Components of net periodic pension benefit cost for the three months ended January 2, 2016 and January 3, 2015 were as follows:
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | Long-term debt consists of the following:
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Schedule of Maturities of Long-term Debt | The schedules of remaining principal maturity for the Senior Credit Facility and the Senior Revolving Credit Facility for the next five fiscal years are as follows:
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Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The tables below present segment net sales and gross profit for the three months ended January 2, 2016 and January 3, 2015: Net sales
Gross profit
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Reconciliation of Operating Profit (Loss) from Segments to Consolidated | The following table is a reconciliation of segment gross profit to consolidated loss before income taxes for the three months ended January 2, 2016 and January 3, 2015:
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Revenue from External Customers by Geographic Areas | Sales are attributable to geographic areas based on customer location and were as follows for the three months ended January 2, 2016 and January 3, 2015:
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Supplemental Financial Information - Inventory (Details) - USD ($) $ in Thousands |
Jan. 02, 2016 |
Oct. 03, 2015 |
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Condensed Financial Information [Abstract] | ||
Raw materials | $ 47,122 | $ 43,471 |
Work in process | 20,414 | 2,658 |
Finished goods | 3,952 | 3,051 |
Total inventory | $ 71,488 | $ 49,180 |
Supplemental Financial Information - Product Warranty Rollforward (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Jan. 02, 2016 |
Jan. 03, 2015 |
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Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Balance at beginning of period | $ 15,559 | $ 17,661 |
Add: current period accruals | 1,385 | 1,849 |
Less: current period reductions of accrual | (2,463) | (2,182) |
Balance at end of period | $ 16,583 | $ 15,226 |
Supplemental Financial Information - Extended Warranty Income (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Jan. 02, 2016 |
Jan. 03, 2015 |
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Movement in Extended Product Warranty Accrual [Roll Forward] | ||
Balance at beginning of period | $ 14,145 | $ 12,003 |
Add: current period deferred income | 1,186 | 1,167 |
Less: current period recognition of income | (1,249) | (1,095) |
Balance at end of period | $ 14,082 | $ 12,075 |
Supplemental Financial Information - Self Insurance (Details) - USD ($) $ in Thousands |
Jan. 02, 2016 |
Oct. 03, 2015 |
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Condensed Financial Information [Abstract] | ||
Current portion | $ 3,275 | $ 3,534 |
Long-term portion | 2,755 | 2,786 |
Total accrued self-insurance | $ 6,030 | $ 6,320 |
Supplemental Financial Information - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
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Jan. 02, 2016 |
Jan. 03, 2015 |
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Product Warranty Liability [Line Items] | ||
Shipping and handling revenue | $ 2.5 | $ 3.6 |
Shipping and handling costs | $ 2.0 | $ 3.2 |
Anti-dilutive Shares excluded from computation of earnings per share (in shares) | 4,328,729 | 0 |
Minimum | ||
Product Warranty Liability [Line Items] | ||
Standard product warranty, period | 1 year | |
Extended product warranty, period | 2 years | |
Maximum | ||
Product Warranty Liability [Line Items] | ||
Standard product warranty, period | 5 years | |
Extended product warranty, period | 5 years |
Supplemental Financial Information - Pension Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Jan. 02, 2016 |
Jan. 03, 2015 |
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Condensed Financial Information [Abstract] | ||
Interest cost | $ 1,411 | $ 1,427 |
Expected return on plan assets | (1,528) | (1,599) |
Amortization of prior loss | 1,197 | 913 |
Net periodic benefit cost | 1,080 | 741 |
Amortization of prior loss, recognized in other comprehensive income | 1,197 | 913 |
Total recognized in net periodic pension benefit cost and other comprehensive income | $ (117) | $ (172) |
Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands |
Jan. 02, 2016 |
Oct. 03, 2015 |
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Debt Instrument [Line Items] | ||
Less: current portion of long-term debt | $ 11,750 | $ 11,750 |
Long-term debt, net of current portion | 173,150 | 175,418 |
Senior Term Loan | 2020 Senior Term Loan | ||
Debt Instrument [Line Items] | ||
2020 senior term loan, net of discount of $10,412 and $11,082 | 184,900 | 187,168 |
2020 senior term loan, discount | $ 10,412 | $ 11,458 |
Debt - Maturity Schedule (Details) $ in Thousands |
Jan. 02, 2016
USD ($)
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Long-term Debt, Fiscal Year Maturity | |
2016 | $ 8,812 |
2017 | 11,750 |
2018 | 11,750 |
2019 | 11,750 |
2020 | 161,250 |
Total debt | $ 205,312 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | |
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Jan. 02, 2016 |
Jan. 03, 2015 |
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Income Tax Disclosure [Abstract] | ||
Effective tax rate (as a percent) | (8.30%) | 39.20% |
Statutory Federal income tax rate (as a percent) | 35.00% | 35.00% |
Unrecognized tax benefits | $ 6.4 | |
Accrued interest and penalties | $ 1.4 |
Segment Information (Details) $ in Thousands |
3 Months Ended | |
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Jan. 02, 2016
USD ($)
segment
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Jan. 03, 2015
USD ($)
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Segment Reporting Information [Line Items] | ||
Number of operating segments (in segments) | segment | 2 | |
Net sales | $ 131,333 | $ 165,833 |
Gross profit | 18,753 | 19,478 |
United States | ||
Segment Reporting Information [Line Items] | ||
Net sales | 126,802 | 155,951 |
Canada | ||
Segment Reporting Information [Line Items] | ||
Net sales | 3,088 | 9,159 |
Rest of world | ||
Segment Reporting Information [Line Items] | ||
Net sales | 1,443 | 723 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Gross profit | 18,753 | 19,478 |
Operating Segments | Bus | ||
Segment Reporting Information [Line Items] | ||
Net sales | 118,479 | 151,984 |
Gross profit | 13,746 | 14,302 |
Operating Segments | Parts | ||
Segment Reporting Information [Line Items] | ||
Net sales | 12,854 | 13,849 |
Gross profit | $ 5,007 | $ 5,176 |
Segment Information - Reconciliation of Segment Gross Profit (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Jan. 02, 2016 |
Jan. 03, 2015 |
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Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Segment gross profit | $ 18,753 | $ 19,478 |
Selling, general and administrative expenses | (17,079) | (15,459) |
Interest expense | (4,243) | (5,135) |
Interest income | 22 | 32 |
Other income, net | 16 | 11 |
Operating loss before income taxes | (2,531) | (1,073) |
Operating Segments | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Segment gross profit | 18,753 | 19,478 |
Segment Reconciling Items | ||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||
Selling, general and administrative expenses | (17,079) | (15,459) |
Interest expense | (4,243) | (5,135) |
Interest income | 22 | 32 |
Other income, net | $ 16 | $ 11 |
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