Fire at Bus Production Facility

9 Months Ended

Apr. 30, 2011

Fire at Bus Production Facility [Abstract]

Fire at Bus Production Facility

16. Fire at Bus Production Facility

On February 14, 2010, a fire occurred at the northern production facility (the “Facility”) at the Company’s manufacturing site located near Imlay City, Michigan. The Facility is one of the Company’s principal manufacturing locations for its Champion and General Coach America bus lines. The fire resulted in the destruction of a significant portion of the work in process, raw materials and equipment contained in the Facility. There were no reported injuries and the origin of the fire is undetermined. The southern production plant, paint facility and other buildings at the site were not affected by the fire and remained intact. Shortly after the fire, the Company resumed limited production activities for its Champion and General Coach America buses in the southern manufacturing facility, and the Company addressed equipment and staffing reallocation. Many employees continued to work out of the southern manufacturing facility and an office building on this site on a temporary basis.

The Company maintains a property and business interruption insurance policy that provided substantial coverage for the losses arising from this incident, less the first $5,000 representing the Company’s deductible per the policy.

During the nine months ended April 30, 2011, the Company received and recognized $9,566 of insurance proceeds which included $5,378 for business interruption. For the nine months ended April 30, 2011, a gain on involuntary conversion of $8,651 was reported in the Company’s Condensed Consolidated Statement of Operations as follows:

Gain on Involuntary Conversion:

				Nine Months Ended			Cumulative Total
	FY 2010			April 30, 2011			Since Fire
Insurance recoveries recognized	$	18,079		$	9,566		$	27,645
Deductible		(5,000	)		—			(5,000	)
Work in process and raw material destroyed		(4,305	)		—			(4,305	)
Property and equipment destroyed		(578	)		(165	)		(743	)
Clean-up and other costs		(603	)		(750	)		(1,353	)
Gain on Involuntary Conversion	$	7,593		$	8,651		$	16,244

The costs incurred to date of reconstructing the Facility and replacing inventory have been accounted for in the normal course of business. The costs incurred as of April 30, 2011 to reconstruct the Facility totaled $6,943 (approximately $5,500 was incurred in fiscal year 2011, with the difference having been incurred in fiscal year 2010). The Facility was substantially completed and operational as of September 28, 2010. The replacement cost of the property and equipment has substantially exceeded the previous carrying costs and the lost profits covered under business interruption and clean-up and related costs are being reimbursed under the policy.