##### Table of Contents



FORM 10-Q
 
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 28, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 1-7872
 
 BREEZE-EASTERN CORPORATION
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    95-4062211
(I.R.S. employer
identification no.)700 Liberty Avenue 
Union, New Jersey
(Address of principal executive offices)
    
    07083
(Zip Code)
  þ o
 o þ
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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##### 



INDEX
 PageNo.PART 1
    
    Financial InformationItem 1.
    
    Condensed Financial Statements (Unaudited)
    
    
    3Condensed Statements of Consolidated Operations Three Month Period
Ended June 28, 2009 and June 29, 2008 (Unaudited)
    
    
    4Condensed Consolidated Balance Sheets
June 28, 2009 (Unaudited) and March 31, 2009
    
    
    5Condensed Statements of Consolidated Cash Flows Three Month Period Ended
June 28, 2009 and June 29, 2008 (Unaudited)
    
    
    6Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    7-17Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    17-27Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    28Item 4.
    
    Controls and Procedures
    
    
    28PART II.
    
    Other InformationItem 1.
    
    Legal Proceedings
    
    
    29Item 1A.
    
    Risk Factors
    
    
    29Item 2.
    
    Unregistered Sale of Equity Securities and Use of Proceeds
    
    
    29Item 3.
    
    Defaults Upon Senior Securities
    
    
    29Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    29Item 5.
    
    Other Information
    
    
    29Item 6.
    
    Exhibits
    
    
    29SIGNATURES
    
    
    30EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32EX-31.1EX-31.2EX-32
  2




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PART I. FINANCIAL INFORMATION
 
 Item 1. CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
   3




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BREEZE-EASTERN CORPORATION
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(UNAUDITED)
(In Thousands of Dollars, Except Share and Per Share Data)
 Three Months EndedJune 28, 2009
    
    
    June 29, 2008Net sales
    
    $
    13,362
    
    
    $
    13,968Cost of sales
    
    
    8,128
    
    
    
    7,946Gross profit
    
    
    5,234
    
    
    
    6,022General, administrative and selling expenses
    
    
    4,210
    
    
    
    4,227Relocation expense
    
    
    138
    
    
    
    Interest expense
    
    
    208
    
    
    
    439Other expense  net
    
    
    61
    
    
    
    37Income before income taxes
    
    
    617
    
    
    
    1,319Income tax provision
    
    
    259
    
    
    
    554Net income
    
    $
    358
    
    
    $
    765Earnings per share:Basic:Net income per share:
    
    $
    0.04
    
    
    $
    0.08Diluted:Net income per share:
    
    $
    0.04
    
    
    $
    0.08Weighted  average basic shares outstanding
    
    
    9,365,000
    
    
    
    9,340,000Weighted  average diluted shares outstanding
    
    
    9,382,000
    
    
    
    9,409,000
 See notes to consolidated financial statements.
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##### Table of Contents



BREEZE-EASTERN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 (Unaudited)June 28, 2009
    
    March 31, 2009ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    2,204
    
    
    $
    2,667Accounts receivable (net of allowance for doubtful accounts of
$32 at June 28, 2009 and $30 at March 31, 2009)
    
    
    15,187
    
    
    
    20,238Inventories
    
    
    24,326
    
    
    
    19,635Prepaid expenses and other current assets
    
    
    634
    
    
    
    377Deferred income taxes
    
    
    6,915
    
    
    
    6,988Total current assets
    
    
    49,266
    
    
    
    49,905PROPERTY:Property and equipment
    
    
    14,705
    
    
    
    13,230Less accumulated depreciation and amortization
    
    
    9,724
    
    
    
    9,371Property  net
    
    
    4,981
    
    
    
    3,859OTHER ASSETS:Deferred income taxes
    
    
    10,965
    
    
    
    11,114Goodwill
    
    
    402
    
    
    
    402Real estate held for sale
    
    
    4,000
    
    
    
    4,000Other
    
    
    6,949
    
    
    
    7,425Total other assets
    
    
    22,316
    
    
    
    22,941TOTAL
    
    $
    76,563
    
    
    $
    76,705LIABILITIES AND STOCKHOLDERS EQUITY:CURRENT LIABILITIES:Revolving credit facility
    
    $
    
    
    
    $
    Current portion of long-term debt
    
    
    3,286
    
    
    
    3,286Accounts payable  trade
    
    
    6,330
    
    
    
    6,311Accrued compensation
    
    
    2,223
    
    
    
    2,144Accrued income taxes
    
    
    203
    
    
    
    253Other current liabilities
    
    
    5,297
    
    
    
    5,589Total current liabilities
    
    
    17,339
    
    
    
    17,583LONG-TERM DEBT PAYABLE TO BANKS
    
    
    17,250
    
    
    
    18,071OTHER LONG-TERM LIABILITIES
    
    
    8,113
    
    
    
    7,724COMMITMENTS AND CONTINGENCIES (Note 10)STOCKHOLDERS EQUITYPreferred stock  authorized, 300,000 shares; none issued
    
    
    
    
    
    
    Common stock  authorized, 14,700,000 shares of $.01 par value; issued,
9,778,097 at June 28, 2009 and March 31, 2009
    
    
    98
    
    
    
    98Additional paid-in capital
    
    
    93,954
    
    
    
    93,778Accumulated deficit
    
    
    (53,462
    )
    
    
    (53,820
    )Accumulated other comprehensive loss
    
    
    (25
    )
    
    
    (25
    )40,565
    
    
    
    40,031Less
treasury stock, at cost - 412,731 at June 28, 2009 and March 31, 2009
    
    
    (6,704
    )
    
    
    (6,704
    )Total stockholders equity
    
    
    33,861
    
    
    
    33,327TOTAL
    
    $
    76,563
    
    
    $
    76,705
 See notes to consolidated financial statements.
 5




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BREEZE-EASTERN CORPORATION
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
 Three months endedJune 28, 2009
    
    
    June 29, 2008Cash flows from operating activities:Net income
    
    $
    358
    
    
    $
    765Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    385
    
    
    
    328Noncash interest expense, net
    
    
    15
    
    
    
    21Stock based compensation
    
    
    176
    
    
    
    160Provision for losses on accounts receivable
    
    
    1
    
    
    
    1Deferred taxes-net
    
    
    222
    
    
    
    438Changes in assets and liabilities :Decrease in accounts receivable and other receivables
    
    
    5,050
    
    
    
    5,957Increase in inventories
    
    
    (4,691
    )
    
    
    (2,832
    )(Increase) decrease in other assets
    
    
    (328
    )
    
    
    113(Decrease) increase in accounts payable
    
    
    (122
    )
    
    
    1,200Increase (decrease) in accrued compensation
    
    
    79
    
    
    
    (863
    )Decrease in accrued income taxes
    
    
    (50
    )
    
    
    (223
    )Increase (decrease) in other liabilities
    
    
    79
    
    
    
    (611
    )Net cash provided by operating activities
    
    
    1,174
    
    
    
    4,454Cash flows from investing activities:Capital expenditures
    
    
    (691
    )
    
    
    (677
    )Capitalized project costs
    
    
    (125
    )
    
    
    (175
    )Net cash used in investing activities
    
    
    (816
    )
    
    
    (852
    )Cash flows from financing activities:Payments on long-term debt
    
    
    (821
    )
    
    
    (764
    )Net (repayments) borrowings of other debt
    
    
    
    
    
    
    (2,920
    )Exercise of stock options
    
    
    
    
    
    
    7Net cash used in financing activities
    
    
    (821
    )
    
    
    (3,677
    )Decrease in cash and cash equivalents
    
    
    (463
    )
    
    
    (75
    )Cash and cash equivalents at beginning of period
    
    
    2,667
    
    
    
    1,876Cash and cash equivalents at end of period
    
    $
    2,204
    
    
    $
    1,801Supplemental information:Interest payments
    
    $
    198
    
    
    $
    444Income tax payments
    
    $
    87
    
    
    $
    343Non-cash investing activity for capitalized project costs
    
    $
    14
    
    
    $
    31Non-cash investing activity for additions to property and equipment
    
    $
    853
    
    
    $
    30
 See notes to consolidated financial statements.
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 Earnings Per Share
   Three Months EndedJune 28,
    
    
    June 29,2009
    
    
    2008Basic Earnings per
Common Share:Weighted-average common
stock outstanding for basic
earnings per share calculation
    
    
    9,365,000
    
    
    
    9,340,000Diluted Earnings per
Common Share:Weighted-average common
shares outstanding
    
    
    9,365,000
    
    
    
    9,340,000Stock options*
    
    
    17,000
    
    
    
    69,000Weighted-average common
stock outstanding for diluted
earnings per share calculation
    
    
    9,382,000
    
    
    
    9,409,000
 
 *
    
    During the three month periods ended June 28, 2009 and June 29, 2008, options to purchase
382,000 and 165,000 shares of common stock, respectively, were not included in the computation
of diluted earnings per share because the exercise prices of the options were greater than the
average market price of the common share. Stock-Based Compensation
    7




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2010
    
    
    2009Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Volatility
    
    
    34.0
    %
    
    
    33.5
    %Risk-free interest rate
    
    
    3.4
    %
    
    
    3.6
    %Expected term of options (in years)
    
    
    7.0
    
    
    
    7.0
  Aggregate
    
    
    Approximate
    
    
    Weighted-Intrinsic
    
    
    Remaining
    
    
    AverageNumber
    
    
    Value
    
    
    Contractual
    
    
    Exerciseof Shares
    
    
    (in thousands)
    
    
    Term (Years)
    
    
    PriceOutstanding at March 31, 2009
    
    
    454,911
    
    
    $
    28
    
    
    
    6
    
    
    $
    10.00Granted
    
    
    86,000
    
    
    
    
    
    
    
    
    
    
    $
    6.20Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Canceled or expired
    
    
    (26,000
    )
    
    
    
    
    
    
    
    
    
    $
    19.38Outstanding at June 28, 2009
    
    
    514,911
    
    
    $
    22
    
    
    
    7
    
    
    $
    8.90Options exercisable at June 28, 2009
    
    
    301,077
    
    
    $
    19
    
    
    
    5
    
    
    $
    8.76Unvested options expected to become
exercisable after June 28, 2009
    
    
    213,834
    
    
    $
    3
    
    
    
    9
    
    
    $
    9.10Shares available for future option
grants at June 28, 2009 (a)
    
    
    270,936
 8




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(a)
    
    May be decreased by restricted stock grants.     WeightedAverage GrantNumber of
    
    DateShares
    
    Fair ValueNon-vested at March 31, 2009
    
    
    31,904
    
    
    $
    10.80Granted
    
    
    
    
    
    
    Vested
    
    
    ( 5,625
    )
    
    $
    11.20Cancelled
    
    
    ( 
    )
    
    $
    Non-vested at June 28, 2009
    
    
    26,279
    
    
    $
    10.72
   9




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Inventories
  June 28,
    
    
    March 31,2009
    
    
    2009Finished goods
    
    $
    
    
    
    $
    Work in process
    
    
    5,850
    
    
    
    4,742Purchased and manufactured parts
    
    
    18,476
    
    
    
    14,893Total
    
    $
    24,326
    
    
    $
    19,635
 Property and Related Depreciation
    Machinery and equipment
    
    3 to 10 yearsFurniture and fixtures
    
    3 to 10 yearsComputer hardware and software
    
    3 to 5 years
 Product Warranty Costs
  Balance at March 31, 2009
    
    $
    238Warranty costs incurred
    
    
    ( 26
    )Change in estimates to pre-existing warranties
    
    
    Product warranty accrual
    
    
    16Balance at June 28, 2009
    
    $
    228
 Income Taxes
  10




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Debt
  June 28, 2009
    
    
    March 31, 2009Senior Credit Facility
    
    $
    20,536
    
    
    $
    21,357Less current maturities
    
    
    3,286
    
    
    
    3,286Total long-term debt
    
    $
    17,250
    
    
    $
    18,071
 Senior Credit Facility -
  11




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Interest Rate Swap-
 Former Senior Credit Facility -
 Employee Benefit Plans
    12




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Postretirement Benefits
    
    
    Pension PlanThree Months Ended
    
    
    Three Months EndedJune 28,
    
    
    June 29,
    
    
    June 28,
    
    
    June 29,2009
    
    
    2008
    
    
    2009
    
    
    2008Interest cost
    
    $
    9
    
    
    $
    11
    
    
    $
    
    
    
    $
    55Amortization of net (gain) loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net periodic cost
    
    $
    9
    
    
    $
    11
    
    
    $
    
    
    
    $
    55
 New Accounting Standards
    13




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14




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Contingencies
 Environmental Matters
    15




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Litigation
 Segment, Geographic Location and Customer Information
   Three Months EndedJune 28, 2009
    
    
    June 29, 2008Hoist and Winch
    
    $
    9,128
    
    
    $
    8,559Cargo Hooks
    
    
    2,511
    
    
    
    3,791Weapons Handling
    
    
    242
    
    
    
    538Other Sales
    
    
    1,481
    
    
    
    1,080Total
    
    $
    13,362
    
    
    $
    13,968
  16




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Three Months EndedJune 28, 2009
    
    
    June 29, 008Location:United States
    
    $
    6,295
    
    
    $
    9,221England
    
    
    279
    
    
    
    382Italy
    
    
    2,220
    
    
    
    1,262Other European Countries
    
    
    1,229
    
    
    
    966Pacific and Far East
    
    
    1,592
    
    
    
    498Other non-United States
    
    
    1,747
    
    
    
    1,639Total
    
    $
    13,362
    
    
    $
    13,968
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 and Section 21E of
the Securities Exchange Act of 1934:
  Forward Looking Statements
    17




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General
   Results of Operations
 Three Months Ended June 28, 2009 Compared with Three Months Ended June 29, 2008 (in thousands)
 Three Months Ended
    
    Increase (decrease)June 28,
    
    June 29,2009
    
    2008
    
    $
    
    %New Equipment
    
    $
    5,547
    
    
    $
    6,279
    
    
    $
    ( 732
    )
    
    
    (11.7
    )Spare Parts
    
    
    2,641
    
    
    
    2,929
    
    
    
    ( 288
    )
    
    
    (9.8
    )Overhaul and Repair
    
    
    4,004
    
    
    
    3,809
    
    
    
    195
    
    
    
    5.1Engineering Services
    
    
    1,170
    
    
    
    951
    
    
    
    219
    
    
    
    23.0Net Sales
    
    
    13,362
    
    
    
    13,968
    
    
    
    ( 606
    )
    
    
    (  4.3
    )Cost of Sales
    
    
    8,128
    
    
    
    7,946
    
    
    
    182
    
    
    
    2.3Gross Profit
    
    
    5,234
    
    
    
    6,022
    
    
    
    ( 788
    )
    
    
    (13.1
    )General,
administrative and
selling expenses
    
    
    4,210
    
    
    
    4,227
    
    
    
    ( 17
    )
    
    
    (0.4
    )Relocation expense
    
    
    138
    
    
    
    
    
    
    
    138
    
    
    
    100.0Interest expense
    
    
    208
    
    
    
    439
    
    
    
    ( 231
    )
    
    
    ( 52.6
    )Net income
    
    $
    358
    
    
    $
    765
    
    
    $
    ( 407
    )
    
    
    (53.2
    )
 Net Sales
   18




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Cost of Sales.
 Gross Profit
 General, administrative and selling expenses
 19




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Interest expense
 Net Income
  New orders
   Backlog
  20




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Liquidity and Capital Resources
      Working Capital
   21




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Capital Expenditures
   Senior Credit Facility
   22




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Interest Rate Swap-
 Former Senior Credit Facility
  Tax Benefits from Net Operating Losses
   23




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Summary Disclosure About Contractual Obligations and Commercial Commitments
   Less Than
    
    
    
    
    
    
    
    
    
    More ThanTotal
    
    1 Year
    
    1-3 Years
    
    3-5 Years
    
    5 YearsDebt principal
repayments (a)
    
    $
    20,536
    
    
    $
    3,286
    
    
    $
    6,572
    
    
    $
    10,678
    
    
    $
    Estimated interest
payments on
long-term debt (b)
    
    
    1,961
    
    
    
    655
    
    
    
    962
    
    
    
    344
    
    
    
    Operating leases (c)
    
    
    8,879
    
    
    
    549
    
    
    
    1,689
    
    
    
    1,616
    
    
    
    5,025Purchase
Obligations (d)
    
    
    966
    
    
    
    966
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    32,342
    
    
    $
    5,456
    
    
    $
    9,223
    
    
    $
    12,638
    
    
    $
    5,025
 
 (a)
    
    Obligations for long-term debt reflect the requirements of the term loan under the Senior
Credit Facility. See Note 7 of Notes to Unaudited Consolidated Financial Statements included
elsewhere in this Report.(b)
    
    Estimated interest payments on long-term debt reflect the scheduled interest payments of the
term loan under the Senior Credit Facility and assume an effective weighted average interest
rate of 3.5%, the Companys blended interest rate at June 28, 2009.(c)
    
    Included is an $8.7 million lease obligation for our new facility in Whippany, New Jersey.
We expect to initiate the relocation to this facility in the third quarter, and complete it in
the fourth quarter, of fiscal 2010. See Liquidity and Capital Resources included elsewhere in
this Report for lease terms.(d)
    
    Obligations for capital equipment and fit-out of the facility for our new location in
Whippany, New Jersey.  Inflation
  Environmental Matters
  24




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25




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Litigation
  Recently Issued Accounting Standards
     26




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27




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Item 3. Quantitative and Qualitative Disclosures about Market Risk
     
 Item 4. Controls and Procedures
    28




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PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 31.1
31.2
32
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 29




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SIGNATURES
  BREEZE-EASTERN CORPORATION
(Registrant)Dated:  July 27, 2009
    By:
    /s/  Joseph F. SpanierJoseph F. Spanier, Executive Vice President,Chief Financial Officer and Treasurer * 
 *
    
    On behalf of the Registrant and as Principal Financial and Accounting Officer. 30