Blue Bird CorpBLBD
Blue Bird Corp Commitments Disclosure
10. Guarantees, Commitments and Contingencies
Litigation
At September 28, 2024, 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 impact 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. Our environmental liability, included in on the Consolidated Balance Sheets, was $0.5 million and $0.3 million at September 28, 2024 and September 30, 2023, respectively. Cash flows over the next five years are expected to be immaterial each year, with no material difference between total cash flows and our accrued balance.
Lease Commitments
We have operating leases for office and warehouse space and finance leases for equipment. Our leases have remaining lease terms ranging from 0.2 years to 5.7 years with the option to extend certain leases for up to 1 year.
The components of lease costs included on the Consolidated Statements of Operations are as follows:
| (in thousands) | Fiscal Years Ended | |||||||||||||||||||
| Lease cost | Classification | 2024 | 2023 | |||||||||||||||||
| Operating leases | Selling, general and administrative expenses | $ | 2,031 | $ | 2,188 | |||||||||||||||
| Finance leases | ||||||||||||||||||||
| Amortization of lease assets | Cost of goods sold | 702 | 702 | |||||||||||||||||
| Interest on lease liabilities | Interest expense | 40 | 60 | |||||||||||||||||
| Short-term leases (1) | Cost of goods sold or selling, general and administrative expenses | 1,720 | 1,993 | |||||||||||||||||
| Total lease cost | $ | 4,493 | $ | 4,943 | ||||||||||||||||
(1) Short-term lease cost includes both leases and rentals with initial terms of one year or less. Classification depends on the purpose of the underlying lease.
The following table summarizes the lease amounts included on the Consolidated Balance Sheets as follows:
| (in thousands) | Balance Sheet Location | September 28, 2024 | September 30, 2023 | |||||||||||||||||
| Assets | ||||||||||||||||||||
| Operating | $ | 4,353 | $ | 4,298 | ||||||||||||||||
| Finance (1) | Finance lease right-of-use | 332 | 1,034 | |||||||||||||||||
| Total lease assets | $ | 4,685 | $ | 5,332 | ||||||||||||||||
| Liabilities | ||||||||||||||||||||
| Current | ||||||||||||||||||||
| Operating | $ | 1,873 | $ | 1,593 | ||||||||||||||||
| Finance | Finance lease obligations | 975 | 583 | |||||||||||||||||
| Long-term | ||||||||||||||||||||
| Operating | 2,971 | 3,608 | ||||||||||||||||||
| Finance | Finance lease obligations | 6 | 987 | |||||||||||||||||
| Total lease liabilities | $ | 5,825 | $ | 6,771 | ||||||||||||||||
(1) Net of accumulated amortization of $3.2 million and $2.5 million, respectively.
The financing and operating leases recorded do not assume renewal based on our analysis of those leases and their contractual terms.
Lease liability maturities are presented in the following table:
| (in thousands) | September 28, 2024 | |||||||||||||||||||
| Fiscal Years Ended | Operating | Finance | Total | |||||||||||||||||
| 2025 | $ | 2,149 | $ | 994 | $ | 3,143 | ||||||||||||||
| 2026 | 1,852 | — | 1,852 | |||||||||||||||||
| 2027 | 866 | — | 866 | |||||||||||||||||
| 2028 | 301 | — | 301 | |||||||||||||||||
| 2029 | 184 | — | 184 | |||||||||||||||||
| Thereafter | 65 | — | 65 | |||||||||||||||||
| Total future minimum lease payments | 5,417 | 994 | 6,411 | |||||||||||||||||
| Less: imputed interest | 573 | 13 | 586 | |||||||||||||||||
| Total lease liabilities | $ | 4,844 | $ | 981 | $ | 5,825 | ||||||||||||||
Lease terms and discount rates are presented in the following table:
| September 28, 2024 | ||||||||||||||
| Operating | Finance | |||||||||||||
| Weighted average remaining lease term | 2.8 | 0.5 | ||||||||||||
| Weighted average discount rate | 6.0 | % | 3.2 | % | ||||||||||
Supplemental cash flow information is presented in the following table:
| Fiscal Years Ended | ||||||||||||||
| (in thousands) | 2024 | 2023 | ||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||||||||
| Operating cash flows - operating leases | $ | 2,442 | $ | 2,688 | ||||||||||
| Operating cash flows - finance leases | 40 | 60 | ||||||||||||
| Financing cash flows - finance leases | 589 | 570 | ||||||||||||
| Right-of-use assets exchanged for lease liabilities | ||||||||||||||
| Operating leases | $ | 1,682 | $ | 626 | ||||||||||
Purchase Commitments
In the ordinary course of business, the Company enters into short-term contractual purchase orders for manufacturing inventory and capital assets. The amount of these commitments is expected to be as follows:
| (in thousands) | ||||||||
| Fiscal Years Ended | Amount | |||||||
| 2025 | $ | 134,121 | ||||||
| 2026 | 1,953 | |||||||
| Total purchase commitments | $ | 136,074 | ||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Nov 25, 2024 | Showing above |
| 2023 | Dec 11, 2023 | |
| 2022 | Dec 12, 2022 | |
| 2021 | Dec 15, 2021 | |
| 2020 | Dec 17, 2020 | |
| 2019 | Dec 12, 2019 | |
| 2018 | Dec 12, 2018 | |
| 2017 | Dec 8, 2017 | |
| 2016 | Dec 15, 2016 | |
| 2015 | Dec 15, 2015 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.