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Securities and Exchange Commission
Washington, DC 20549
FORM 10-K
(Mark One)
[ X ] Annual report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 (Fee Required)
For the fiscal year ended October 31, 1999 or
[ ] Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 (No Fee Required)
For the transition period from _________ to ___________
Commission file number 0-12619
Collins Industries, Inc.
(Exact name of registrant as specified in its charter)
Missouri
(State or other jurisdiction of incorporation)
43-0985160
(I.R.S. Employer Identification Number)
15 Compound Drive
Hutchinson, Kansas 67502-4349
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code
316-663-5551
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None N/A
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.10 per share
(Title of class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the registrant's
knowledge, in definitive proxy of information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. (X )
The aggregate market value of voting stock held by non-affiliates
of the registrant was $ 30,401,729 as of January 10, 2000.
The number of shares of Common Stock outstanding on January 10, 2000
was 7,475,406.
Documents Incorporated by Reference
The following are the documents incorporated by reference and the
part of the Form 10-K into which the document is incorporated:
Document: Part of Form 10-K
Proxy Statement for Annual Meeting
of Shareholders on February 25, 2000 Part III
PART I
Item 1. BUSINESS
General Development of Business
Collins Industries, Inc. was founded in 1971 as a manufacturer of
small school buses and ambulances built from modified cargo vans.
The Company's initial product was the first "Type A" school bus,
designed to carry 16 to 20 passengers. Today the Company
manufactures specialty vehicles and accessories for various basic
service niches of the transportation industry. The Company's
products include ambulances, small school buses, shuttle and mid-
size commercial buses, terminal trucks, and commercial bus
chassis. From its inception, Collins' stated goal has been to
become the largest manufacturer of specialty vehicles in the U.S.
The Company has grown primarily through the internal development
of new products and the acquisition of complementary product
lines.
In the U.S., Collins is the largest manufacturer of ambulances,
the second largest manufacturer of terminal trucks and a leading
manufacturer of small school buses, shuttle and mid-size
commercial buses and commercial bus chassis. The Company sells
its products under several well-known trade names, including
Wheeled Coach (ambulances), Collins Bus and Mid Bus (small school
buses), World Trans (commercial buses), and Capacity (terminal
trucks).
Most Collins products are built to customer specifications from a
wide range of options offered by the Company. Collins sells to
niche markets which demand manufacturing processes too
sophisticated for small job shop assemblers, but is not the
highly automated assembly line operations of mass production
vehicle manufacturers. The Company emphasizes specialty
engineering and product innovation. In the last few years, it
has introduced new products and product improvements, which
include the Moduvan ambulance, the first ambulance of its size
with advanced life-support system capability, the Dura-Ride
suspension system, the first frame-isolating suspension system
for terminal trucks, and the innovation of a larger seating
capacity, Type A Super Bantam school bus capable of carrying up
to 24 passengers, the largest Type A in the industry.
Description of Business
The Company principally manufactures and markets Specialty
Vehicles.
See "Note 7 to Consolidated Financial Statements" for
quantitative segment information.
Ambulances. The Company manufactures both modular and van-type
ambulances at its Hutchinson, Kansas and Orlando, Florida plants.
Modular ambulances are produced by attaching an all-aluminum, box-
type, patient compartment to either a dual rear-wheel cab chassis
("Type I") ambulance or a dual rear-wheel, van-type, cutaway
chassis ("Type III") ambulance or to a single rear-wheel cutaway
chassis ("Moduvan") ambulance. A cutaway chassis consists of
only the front portion of the driver's compartment, engine, drive
train, frame, axle and wheels. Van ("Type II") ambulances are
cargo vans modified to include a patient compartment and a raised
fiberglass roof. Type II ambulances are smaller and less
expensive than modular ambulances.
The Company also produces a limited number of medical support
vans designed to transport medical and life-support equipment.
Medical support vans are modified commercial vehicles which do
not have a patient compartment for advanced life support systems.
Buses. The Company manufactures small school buses, commercial
and shuttle buses at its Bluffton, Ohio facility and at its
Hutchinson and South Hutchinson, Kansas facilities.
School Buses. The Company manufactures small Type A school
buses which carry from 16 to 24 passengers. The majority of
Type A school buses currently built by the Company are
produced by fabricating the body and mounting it on a vendor-
supplied, dual rear-wheel or single rear-wheel, cutaway
chassis. The Company was the first manufacturer to produce a
Type A school bus on this type of chassis, which permits
greater seating capacity than a van chassis. School buses are
produced in compliance with Federal, state and local laws
regarding school transportation vehicles.
Commercial and Shuttle Buses. The Company produces shuttle and
transit buses for car rental agencies, transit authorities,
hotels and resorts, retirement centers, nursing homes and
similar users. These buses are built to customer
specifications and are designed to transport 14 to 30
passengers over short distances.
Collins offers commercial bus products in various price ranges.
The Diplomat is a steel body bus built on a vendor-supplied,
cutaway chassis that carries 17 to 25 passengers and targets a
low- to mid-price range market. The World Trans 3000,
introduced in early 1993, is an aluminum body bus built on the
Company's rear-engine, rail-type chassis. This product is
designed for the medium duty segment of the transit and shuttle
markets.
Terminal Trucks. The Company produces two basic models of
terminal trucks at its Longview, Texas facility, the Trailer
Jockey and the Yardmaster. Terminal trucks are designed and
built to withstand heavy-duty use by moving trailers and
containers at warehouses, rail yards, rail terminals and shipping
ports. Most terminal trucks manufactured by the Company are
built to customer specifications. The Company manufactures the
entire truck except for major drivetrain components which are
purchased from outside suppliers.
Bus Chassis. The Company produces a rear-engine bus chassis
for use by the Company and for sale to other manufacturers.
This chassis is suitable for both commercial and large school
buses. To date, the Company has produced and sold limited
quantities of these chassis. The Company plans to continue
manufacturing bus chassis suitable for its own products and for
sale to other manufacturers.
Manufacturing
Manufacturing consists of the assembly of component parts either
purchased from others or fabricated internally. With the
exception of chassis, chassis components and certain terminal
truck components which are purchased from outside suppliers, the
Company fabricates the principal components of its products.
Collins' internal capabilities include CNC punching and forming
of sheet metal, metal stamping, tooling, molding of fiberglass
components, mechanical and electrical component assembly,
upholstery, painting and finishing and Computer-Aided-Design and
Manufacturing (CAD/CAM) systems.
Collins intends to continue to improve its manufacturing
facilities from time-to-time through the selective upgrading of
equipment and the mechanization or automation of appropriate
portions of the manufacturing process. Management believes the
Company's manufacturing facilities are in good condition and are
adequate for the purposes for which they currently are used. The
capacity of the Company's current facilities, particularly if
operated on a multiple shift basis, is considered adequate to
meet current needs and anticipated sales volumes.
New Products
The Company is not presently engaged in activities which would
require a significant amount of expenditures or use of material
amounts of assets for development of products in the planning
stage or otherwise for the foreseeable future.
Suppliers
In order to ensure that it has a readily available supply of
chassis for ambulance and bus production, the Company has entered
into consignment agreements with General Motors Corporation
("GMC") and Ford Motor Company ("Ford"). Under those agreements,
chassis are kept at Company production facilities at no cost to
the Company other than chassis storage costs. When an individual
chassis is selected from the Company's consignment pool for use
in vehicle production, title to the chassis passes to the Company
and the Company becomes liable to the consignor for the cost of
the chassis. Chassis currently in the consignment pool are
supplied by Ford and GMC. While an interruption in supply from
one source may cause a temporary slowdown in production, the
Company believes that it could obtain adequate numbers of chassis
from alternate sources of supply.
The Company uses substantial amounts of steel in the production
of its terminal truck products and purchases certain other major
components (primarily engines, transmissions and axles). Collins
also uses large amounts of aluminum, steel, fiberglass and glass
in the production of ambulances and buses. There is substantial
competition among suppliers of such raw materials and components,
and the Company does not believe that a loss of a single source
of supply would have a material adverse effect on its business.
Patents, Trademarks and Licenses
The Company owns federal registrations for most of the trademarks
which it uses on its products. The Company also owns patents on
its bus body design, ambulance design, Dura-Ride air suspension
system, ambulance warning light system and air-activated bus
door. The Company believes that its patents are helpful, because
they may force competitors to do more extensive design work to
produce a competitive product. The Company believes that its
production techniques and skills are as important as product
design, and, therefore, in management's opinion, any lack of
patent protection would not adversely affect the Company's
business.
Seasonality of Business
Historically a major portion of the Company's net income has been
earned in the second and third fiscal quarters ending April 30
and July 31, respectively. The purchasing patterns of school
districts are typically strongest in the spring and summer months
which accounts for typically stronger sales of small school buses
in the quarters ending April 30 and July 31. Generally, the
Company's sales tend to be lower in the fall and winter months
due to the purchasing patterns of the Company's customers in
general and purchasing activities are normally lower near the end
of the calendar year.
Sales Terms
The Company produces the majority of its products on an order-
only basis. Most products are delivered on a cash basis.
Products sold on a direct basis (not through dealers) are sold on
trade terms common to the respective industry. Finished goods
that are reflected on the financial statements are generally
completed units that are ready for customer delivery. Sales to
dealers have generally been financed through an unrelated third
party for the dealers, resulting in payment generally within days
of the sale.
Customer Concentration
The Company has no single customer whose loss would have a
material adverse effect on the Company as a whole.
Sales Backlog
The sales backlog at October 31, 1999 was approximately $59.6
million. This compares to $33.6 million at October 31, 1998. In
the opinion of management, the majority of this sales backlog
will be shipped during the coming year.
Governmental Sales
The Company has pursued, and will continue to pursue,
opportunities in government sales as they occur. No material
portion of the Company's business, however, is subject to
renegotiation of profits or termination of contracts or
subcontracts at the election of the government.
Marketing and Distribution
The Company, through its wholly owned subsidiaries, markets its
products throughout the U.S. and, to a limited extent, abroad,
through independent dealers and distributors, Company-owned
stores and the direct sales efforts of Company personnel. Each
of the Company's product groups is responsible for its own
marketing activities and maintains independent relationships with
dealers and distributors. Support is provided to dealers and
distributors in bidding specification writing and customer
service.
The Company regularly advertises in consumer and trade magazines
and other print media and actively participates in national,
regional and local trade shows. In addition, Company
representatives attend a number of national conventions and
regional meetings of important constituent groups such as school
boards and emergency medical groups.
Competition
The markets for most of the Company's product lines are very
competitive, and the Company currently has several direct
competitors in most markets. Some of these competitors may have
greater relative resources. The Company believes it can compete
successfully (i) in the ambulance market on the basis of the
quality and price of its products, its design engineering and
product innovation capabilities and the strength of the Wheeled
Coach brand name, (ii) in the small school bus market on the
basis of its product price and quality and favorable recognition
of its Collins Bus and Mid Bus brand names and (iii) in the
commercial bus market on the basis of its various product models,
product quality, price and distribution network.
In the terminal truck market, the Company competes primarily with
one larger domestic competitor, Ottawa Truck which is owned by
Kalmar Industries. Kalmar has international distribution channels
and may have greater relative resources than the Company. The
Company believes it can compete successfully in this market on
the basis of its Capacity brand name, price, product quality and
customer demand for its exclusive Dura-Ride suspension system.
Research and Development Costs
1999 1998 1997
Research and Development Expenses $154,688 $185,982 $162,002
This table cites the level of research and development costs the
Company incurred the past three fiscal years. It should be noted
the Company does significant research and development work on the
production line and, therefore, the major costs of new programs
are recorded as cost of sales and are expensed as prototypes.
Regulation
The Company is subject to various laws and regulations with
respect to employees' health and safety and the protection of the
environment. In addition, all of the Company's on-road vehicles
must satisfy certain standards applicable to such vehicles
established by the United States Department of Transportation.
Certain of its products must also satisfy specifications
established by other federal, state and local regulatory
agencies, primarily dealing with safety and performance
standards. In management's opinion, the Company and its products
are in compliance in all material respects with all applicable
governmental regulations. A substantial change in any such
regulation could have a significant impact on the business of the
Company.
Employees
The Company employs approximately 1,000 persons full time,
including officers and administrative personnel. The Company has
not experienced any strikes or work stoppages due to labor
problems and considers its relations with its employees to be
satisfactory.
Export Sales
See "Note 7 to the Consolidated Financial Statements".
Item 2. PROPERTIES
The following table sets forth certain information with respect
to the Company's manufacturing and office facilities. The
Company owns all properties listed below in fee simple, except as
otherwise noted.
Approximate
Location Use Size (sq ft)
Hutchinson, Kansas Corporate headquarters 5,000
Hutchinson, Kansas Ambulance production; Wheelchair 216,000
lifts and accessories production;
Office space
So Hutchinson, Kansas(1),(2) Small school bus and commercial 247,000
bus production; Office space
Orlando, Florida (1) Ambulance production; Office space 309,000
Longview, Texas (3) Terminal truck production; Chassis 150,000
production; Office space
Mansfield, Texas (1) Ambulance sales, service and 25,000
distribution center
Bluffton, Ohio (4) Small school bus and commercial 186,000
bus production; Office space
___________________
(1) This property is pledged as collateral to secure payment of
the Company's debt obligations. See "Note 2 to Consolidated Financial
Statements."
(2) This facility and certain related equipment are financed by
industrial revenue bonds in the original principal amounts of
$1,250,000 in 1999 and $3,500,000 in 1998 issued by the city of South
Hutchinson under lease purchase agreements.
(3) This facility and certain related equipment are financed by
industrial revenue bonds in the original principal amount of
$4,200,000 in 1999 issued by the Longview Industrial Corporation,
Longview, Texas.
(4) This property is leased until December 31, 2004, with an
option to renew for two additional five year terms or purchase
after January 1, 2001.
The Company leases several facilities throughout the U.S. for the
sale and distribution of ambulances. Although the Company evaluates
opportunities to acquire additional properties at favorable prices as
they arise, it believes that its facilities are well maintained and
will be adequate to serve its needs in the foreseeable future. Several
Company facilities have room to expand in existing buildings and
others have land upon which additional buildings can be
constructed.
Item 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than
ordinary routine litigation incidental to the business, to which
the Company is a party or of which any of its property is
subject.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matter to a vote of security
holders during the fourth quarter of the fiscal year ended
October 31, 1999.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
Collins Industries, Inc. common stock is quoted on the Nasdaq
Stock Market under the symbol COLL. The following table sets
forth the high and low sales prices per share of the common stock
as reported by the Nasdaq Stock Market. The Company's common
stock had 594 shareholders of record at October 31, 1999.
FISCAL 1999
Volume
Quarter High Low (000s)
First 4-5/8 3-5/16 546
Second 5-1/4 3-3/4 544
Third 6-7/8 4 710
Fourth 7-3/16 4-1/2 918
FISCAL 1998
Volume
Quarter High Low (000s)
First 7-3/4 6-1/4 382
Second 7 5-3/4 857
Third 6 4-1/4 710
Fourth 5-5/32 2-7/8 564
During the period covered by this Report, the Company did not
sell any equity securities that were not registered under the
Securities Act.
Item 6. SELECTED FINANCIAL DATA
Operating History
(In thousands except share and per-share data)
Fiscal years ended
October 31, 1999(a) 1998 1997 1996 1995
Sales $196,398 $156,445 $157,522 $151,879 $140,725
Cost of sales 165,978 134,427 131,807 129,652 123,911
Gross profit 30,420 22,018 25,715 22,227 16,814
Selling, general and
administrative
(includes research &
development) 20,046 16,124 15,379 15,236 13,925
Income from operations 10,373 5,894 10,336 6,991 2,889
Other income (expenses):
Interest, net (1,820) (1,400) (1,643) (2,241) (2,783)
Other, net 316 243 150 262 (27)
Income from continuing
operations before
provision for income taxes
and extraordinary items 8,870 4,737 8,843 5,012 79
Provision for income taxes 3,460 1,710 1,600 - -
Income before extraordinary
items 5,410 3,027 7,243 5,012 79
Extraordinary items - - - - (420)
Net income (loss) $5,410 $3,027 $7,243 $5,012 $ (341)
Earnings (loss) per share-diluted:
Income before extraordinary
items $ .72 $ .39 $ .94 $ .66 $ .01
Extraordinary items - - - - (.06)
Net income (loss) .72 .39 .94 .66 (.05)
Dividends per share $ .10 $ .23 $ .075 $ - $ -
Weighted average shares
outstanding - diluted 7,551,247 7,685,267 7,711,221 7,621,403 7,240,926
Depreciation and
amortization $2,568 $1,795 $1,782 $2,128 $3,040
(a) 1999 includes results from Mid Bus acquisition.
Financial Position
(In thousands except share and per-share data)
Fiscal years ended
October 31, 1999 1998 1997 1996 1995
Current assets $ 42,803 $ 31,747 $ 34,002 $ 32,640 $ 32,086
Current liabilities 26,658 16,072 18,959 18,436 18,670
Working capital 16,145 15,675 15,043 14,204 13,416
Total assets 66,421 49,076 47,163 45,744 46,881
Long-term debt and
capitalized leases
(less current
maturities) 15,803 12,733 8,362 13,418 19,406
Shareholders' investment 23,960 20,271 19,842 13,891 8,805
Book value per share 3.21 2.73 2.69 1.91 1.21
Financial Comparisons
Fiscal years ended
October 31, 1999 1998 1997 1996 1995
Gross profit margin 15.5% 14.0% 16.3% 14.6% 11.9%
Net profit margin 2.8% 1.9% 4.6% 3.3% NA
Selling, general and
administrative
(including R&D) as
percent of sales 10.2% 10.3% 9.8% 10.0% 9.9%
Current ratio 1.6:1 2.0:1 1.8:1 1.8:1 1.7:1
Long-term debt and
capitalized leases
to shareholders'
investment 0.7:1 0.6:1 0.4:1 1.0:1 2.2:1
Manufacturing space
(000's square feet) 1,014 988 898 898 978
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provides information which
management believes is relevant to an assessment and
understanding of the Company's consolidated results of operations
and financial condition. The discussion should be read in
conjunction with the consolidated financial statements and notes
thereto.
RESULTS OF OPERATIONS
Fiscal 1999 Compared to Fiscal 1998. Sales for fiscal 1999
increased 25.5% to $196.4 million compared to $156.4 million in
fiscal 1998. This increase was principally due to increased
sales of bus and ambulances products. The sales increase in bus
products principally resulted from the impact of nonconforming
vans being replaced with small Type A school buses and the
acquisition of Mid Bus, Inc. in December, 1998.
At October 31, 1999, the Company's consolidated sales backlog
increased 77% to $59.6 million compared to $33.6 million at
October 31, 1998. This increase was across all product lines.
Including the Mid Bus acquisition, the backlog of bus product
lines increased by 33%, ambulances by 131% and terminal trucks by
53%. The significant increase in backlog is principally
attributable to additional sales and marketing expenditures and
higher market demand related to the replacement of non-conforming
vans. The Company believes a majority of its consolidated sales
backlog will be shipped in fiscal 2000.
Cost of sales for fiscal 1999 was 84.5% of sales compared to
85.9% of sales in fiscal 1998. The percentage decrease was
principally due to increased efficiencies in labor and material
usage achieved from mechanization, partially offset by an
increase in manufacturing overhead.
Selling, general and administrative expenses for fiscal 1999 were
flat at $19.9 million or 10.1% of sales compared to $15.9 million
or 10.2% of sales in fiscal 1998.
Interest expense increased principally due to additional
borrowings from the Company's lead bank and from additional
Industrial Revenue Bond (IRB) debt which was principally used to
fund the acquisition of Mid Bus, Inc. and capital expenditures.
Income tax expense in fiscal 1999 was $3.5 million. Income tax
expense as a percentage of pretax income was 39% in fiscal 1999
compared to 36% in fiscal 1998. Income tax expense as a percent
of pretax income increased principally as a result of higher
state taxes resulting from the Mid Bus acquisition.
The Company's net income in fiscal 1999 increased to $5.4 million
($.72 per share-diluted) compared to $3.0 million ($.39 per share-
diluted) in fiscal 1998. This increase was principally
attributable to stronger operating results from bus products
including those of the newly acquired Mid Bus, Inc., partially
offset by higher tax rates and lower profit on ambulances.
Fiscal 1998 Compared to Fiscal 1997. Sales for fiscal 1998
decreased slightly to $156.4 million compared to $157.5 million
in fiscal 1997. This decrease was principally due to lower sales
of ambulances and terminal trucks and was partially offset by
higher sales of bus products.
At October 31, 1998, the Company's consolidated sales backlog was
$33.6 million compared to $45.5 million at October 31, 1997.
Cost of sales for fiscal 1998 was 86.0% of sales compared to
83.7% of sales in fiscal 1997. The percentage increase was
principally due to the impact of higher program discounts and
sales incentives in fiscal 1998 on closing out 1997 models, wage
increases in fiscal 1998 at rates higher than inflation due to
work force shortages in all geographic areas, and a one-time $1.2
million gain from the sale of the Company's UVLr product line in
fiscal 1997 which was recorded as a reduction of cost of sales.
Selling, general and administrative expenses for fiscal 1998 were
$15.9 million or 10.2% of sales compared to $15.2 million or 9.6%
of sales in fiscal 1997. These increases principally resulted
from higher marketing expenses associated with direct sales
personnel and advertising.
Interest expense decreased principally due to negotiation of
lower interest rates with the Company's lead bank. This decrease
was partially offset by additional borrowings from the Company's
lead bank and from additional IRB debt which were principally
used to fund capital expenditures.
Income tax expense in fiscal 1998 was $1.7 million. Income tax
expense as a percentage of pretax income was 36% in fiscal 1998
compared to 18% in fiscal 1997. Income tax expense as a percent
of pretax income increased principally as a result of the
utilization of net operating loss carryforwards and general
business tax credits in fiscal 1997. All net operating loss
carryforwards and business tax credits were utilized in fiscal
1997.
The Company's net income in fiscal 1998 decreased to $3.0 million
($.39 per share-diluted) compared to $7.2 million ($.94 per share-
diluted) in fiscal 1997. This decrease principally resulted from
profit declines from ambulance and terminal truck products,
higher income taxes and the one-time gain from the sale of the
UVL product line recorded in fiscal 1997. These decreases were
partially offset by higher profit contributions from bus products
and lower interest costs.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has principally relied on internally
generated funds, supplier financing, bank borrowings and
industrial revenue bonds to finance its operations and capital
expenditures. The Company's working capital requirements vary
from period to period depending on the production volume, the
timing of vehicle deliveries and the payment terms offered to its
customers.
Cash provided by operations was $10.2 million in fiscal 1999
compared to $4.1 million in fiscal 1998. Principal sources of
the 1999 cash provided by operations were from Company profits
and increases in accounts payable, reductions of accounts
receivable and accrued expenses. These sources of cash from
operations were offset by increase in inventories.
Cash provided by operations was $4.1 million in fiscal 1998
compared to $8.1 million in fiscal 1997. Principal sources of
the 1998 cash provided by operations were from Company profits
and reductions of accounts receivable, inventories and prepaid
expenses. These sources of cash from operations were offset by
reductions in accounts payable and accrued expenses.
Cash provided by operations was $8.1 million in fiscal 1997
compared to $5.8 million in fiscal 1996. Primary sources of the
1997 cash provided by operations related to the Company's
improved profit levels and reductions in accounts receivable.
The sources of cash from operations were partially offset by
increased income taxes paid and increases in inventories and a
prepaid expense.
Cash used in investing activities was $7.6 million in fiscal 1999
compared to $5.8 million in fiscal 1998. In fiscal 1999 the
principal use of cash for investing purposes was for the
acquisition of Mid Bus, Inc., and capital expenditures related
to the Company's expansion of its bus and terminal truck
production facilities. Cash used in investing activities was $5.8
million in fiscal 1998 compared to $1.8 million in fiscal 1997.
In fiscal 1998 the principal use of cash for investing purposes
was for the acquisition of new property and equipment.
Approximately $3.8 million of fiscal 1998 capital expenditures
related to the Company's expansion of its bus production
facilities. Cash used in investing activities was $1.8 million in
fiscal 1997 compared to $.3 million in fiscal 1996. In fiscal
1997 the principal use of cash for investing activities related
to the acquisition of property and equipment and certain other
assets.
Cash used in financing activities was $2.4 million in fiscal 1999
compared to cash provided by financing activities of $1.7 million
in fiscal 1998. In fiscal 1999, the Company made additional long-
term borrowings of $5.6 million and used cash of $6.1 million to
reduce other long-term debt, $1.2 million to purchase and retire
common stock and $.7 million to pay cash dividends. Cash
provided by financing activities was $1.7 million in fiscal 1998
compared to cash used in financing activities of $6.4 million in
fiscal 1997. In fiscal 1998, the Company made additional long-
term borrowings of $6.4 million and used cash of $2.2 million to
reduce other long-term debt, $.9 million to purchase and retire
common stock and $1.7 million to pay cash dividends. Cash used
in financing activities was $6.4 million in fiscal 1997 compared
to $6.0 million in fiscal 1996. In fiscal 1997 the Company used
cash to reduce its long-term borrowings by $5.1 million, to
purchase and retire common stock of $.8 million and to pay cash
dividends totaling $.6 million.
The Company believes that its cash flows from operations and its
credit facility with its lead bank will be sufficient to satisfy
its future working capital, capital expenditure requirements and
anticipated dividends.
At October 31, 1999 there were no significant or unusual
contractual commitments or capital expenditure commitments.
On December 1, 1998, the Company completed the purchase of all of
the common stock of Mid Bus, Inc., a manufacturer of Type A-I and
A-II school buses. The purchase was financed through borrowings
on the Company's revolving credit facility.
Recently Issued Accounting Standards
Statement of Financial Account Standards (SFAS) No. 133,
"Accounting for Derivative Investments and Hedging Activities"
as amended by (SFAS) No. 137, are effective for the Company's
2001 fiscal year and, based on the companies current
understanding, are not expected to have a material effect on the
Company's financial position or results of operations.
Year 2000 Issue
The Year 2000 ("Y2K") issue is the result of computer programs
being written using two digits rather than four to define the
applicable year. Computer equipment and software and devices
with imbedded technology that are time-sensitive may recognize a
date using "00" as the year 1900 rather than the year 2000. This
could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a
temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
The Company has implemented a plan intended to ensure that its
computer equipment and software will function properly with
respect to dates in the year 2000 and thereafter. For this
purpose, the term "computer equipment and software" includes
systems that are commonly thought of as information technology
("IT") systems, including accounting, data processing and
telephone/PBX systems, hand-held terminals, scanning equipment,
and other miscellaneous systems, as well as systems that are not
commonly thought of as IT systems, such as alarm systems, fax
machines, or other miscellaneous systems. Both IT and non-IT
systems may contain imbedded technology, which complicates the
Company's Y2K identification, assessment, remediation, and
testing efforts. A substantial portion of the Company's software
relates to prepackaged, copyrighted software written by Mapicsr,
Actionware and American Viking. The Company has fully
converted to Y2K compliant versions of these software packages.
Additionally, in the ordinary course of replacing computer
equipment and software, the Company attempts to obtain
replacements that are Y2K compliant. The Company is not aware of
any Y2K failure of its computer equipment and software that would
have a maerial impact on the Company, and believes that a
contingency plan is unnecessary.
Significant suppliers have implemented plans to help ensure the
uninterrupted supply of goods to their customers, and have
undertaken efforts to evaluate the status of products using
embedded technology.
The cost of the Y2K issue is not expected to have a materially
adverse impact on the Company's results of operation or adversely
affect the Company's relationships with customers, vendors or
others. However, until the further passage of time, there can be
no assurance that the Y2K issues of other entities will not have
a material adverse impact on the Company results of operations.
Cautionary Statement Regarding Risks and Uncertainties That May
Affect Future Results
This annual report and other written reports and oral statements
made from time to time by the Company may contain so-called
"forward-looking statements" about the business, financial
conditions, prospects of the Company and year 2000 issues, all of
which are subject to risks and uncertainties. One can identify
these forward-looking statements by their use of words such as
"expects", "plans", "will", "estimates", "forecasts", "projects",
and other words of similar meaning. One can also identify them
by the fact that they do not relate strictly to historical or
current facts. One should understand that it is not possible to
predict or identify all factors which involve risks and
uncertainties. Consequently, the reader should not consider any
such list or listing to be a complete statement of all potential
risks or uncertainties.
No forward-looking statement can be guaranteed and actual future
results may vary materially. The actual results of the Company
could differ materially from those indicated by the forward-
looking statements because of various risks and uncertainties
including without limitation, changes in product demand, the
availability of vehicle chassis, adequate direct labor pools,
changes in competition, interest rate fluctuations, development
of new products, various inventory risks due to changes in market
conditions, changes in tax and other governmental rules and
regulations applicable to the Company, substantial dependence on
third parties for product quality, reliability and timely
fulfillment of orders and other risks indicated in the Company's
filings with the Securities and Exchange Commission.
The Company does not assume the obligation to update any forward-
looking statement. One should carefully evaluate such statements
in light of factors described in the Company's filings with the
Securities and Exchange Commission, especially on Forms 10-K, 10-
Q and 8-K (if any).
Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk relating to interest rates
on its fixed rate debt. Interest rate risk is not material to
the Company's consolidated financial position or results of
operations.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
For the years ended October 31,
1999 1998 1997
Sales $196,398,056 $156,445,451 $157,522,016
Cost of sales 165,978,436 134,427,383 131,807,121
Gross profit 30,419,620 22,018,095 25,714,895
Selling, general and
administrative expenses 19,891,803 15,937,649 15,216,609
Research and development
expenses 154,688 185,982 162,002
Income from operations 10,373,129 5,894,437 10,336,284
Other income (expense):
Interest, net (1,819,986) (1,399,984) (1,642,573)
Other, net 316,358 242,647 149,505
(1,503,628) (1,157,337) (1,493,068)
Income before provision
for income taxes 8,869,501 4,737,100 8,843,216
Provision for income taxes 3,460,000 1,710,000 1,600,000
Net income $ 5,409,501 $ 3,027,100 $ 7,243,216
Earnings per share
Basic $ .74 $ .40 $ .99
Diluted $ .72 $ .39 $ .94
Dividends per share $ .10 $ .23 $ .075
The accompanying notes are an integral part of these consolidated
statements.
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
October 31,
ASSETS 1999 1998
Current assets:
Cash $ 344,948 $ 143,995
Receivables 5,146,834 5,346,051
Inventories 36,218,152 25,271,242
Prepaid expenses and other current
assets 1,092,872 985,420
Total current assets 42,802,806 31,746,708
Property and equipment, at cost:
Land and improvements 2,812,804 2,538,457
Buildings and improvements 17,337,826 17,466,615
Machinery and equipment 17,380,252 14,498,992
Office furniture and fixtures 3,704,020 3,279,853
41,234,902 37,783,917
Less - accumulated depreciation 22,895,341 21,038,717
18,339,561 16,745,200
Other assets 5,279,028 584,141
$66,421,395 $49,076,049
LIABILITIES & SHAREHOLDERS' INVESTMENT
Current liabilities:
Current maturities of long-term debt
and capitalized leases $ 1,460,113 $ 1,108,750
Accounts payable 19,321,738 12,017,444
Accrued expenses 5,875,654 2,946,167
Total current liabilities 26,657,505 16,072,361
Long-term debt and capitalized leases 15,803,399 12,733,085
Commitments and contingencies
Shareholders' investment:
Preferred stock, $.10 par value
Authorized - 750,000 shares
Outstanding - No shares outstanding
Capital stock, $.10 par value
Authorized - 3,000,000 shares
Outstanding - No shares outstanding
Common stock, $.10 par value
Authorized - 17,000,000 shares
Issued - 7,465,406 shares in 1999;
and 7,430,881 in 1998 746,541 743,088
Paid-in capital 18,094,900 18,051,859
Deferred compensation (1,033,521) -
Retained earnings 6,152,571 1,475,656
Total shareholders' investment 23,960,491 20,270,603
$66,421,395 $49,076,049
The accompanying notes are an integral part of these consolidated
balance sheets.
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended October 31,
1999 1998 1997
Cash flow from operations:
Cash received from customers $ 197,889,320 $ 157,845,373 $ 159,086,052
Cash paid to suppliers and
employees (183,319,810) (150,697,953) (147,534,561)
Interest paid, net (1,813,342) (1,456,095) (1,759,087)
Income taxes paid (2,561,370) (1,628,444) (1,650,700)
Cash provided by operations 10,194,798 4,062,881 8,141,704
Cash flow from investing activities:
Capital expenditures and
acquisition (7,939,070) (5,958,283) (1,731,543)
Proceeds from sale of
property and equipment 994,263 478,150 16,500
Expenditures for other assets (643,526) (284,849) (97,995)
Cash used in investing
activities (7,588,333) (5,764,982) (1,813,038)
Cash flow from financing activities:
Principal payments of long-term
debt and capitalized leases (6,121,542) (2,168,041) (5,087,017)
Addition to long-term debt
and capitalized leases 5,603,872 6,423,421 -
Purchase of common stock and
other capital transactions (1,155,256) (862,525) (754,230)
Payment of dividends (732,586) (1,735,911) (553,672)
Cash provided by (used in)
financing activities (2,405,512) 1,656,944 (6,394,919)
Net increase (decrease) in
cash 200,953 (45,157) (66,253)
Cash at beginning of year 143,995 189,152 255,405
Cash at end of year $ 344,948 $ 143,995 $ 189,152
Reconciliation of net income to net
Cash provided by operations:
Net income $ 5,409,501 $ 3,027,100 $ 7,243,216
Depreciation and
amortization 2,567,718 1,795,336 1,781,740
Changes in assets net of Mid
Bus acquisition
Decrease in receivables 1,491,264 1,399,922 1,564,036
Decrease (increase) in
inventories (5,924,122) 414,780 (2,070,863)
Decrease (increase) in
prepaid expenses (76,850) 395,578 (921,723)
Increase (decrease) in
accounts payable 5,735,682 (2,183,531) 471,931
Increase (decrease) in
accrued expenses 1,077,970 (717,215) 82,651
Gain on sale of property
and equipment (86,365) (69,089) (9,284)
Cash provided by
operations $ 10,194,798 $ 4,062,881 $ 8,141,704
The accompanying notes are an integral part of these consolidated
statements.
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT
For the years ended October 31,
Common Stock Paid-In
Shares Amount Capital
Balance October 31, 1996 7,274,110 $727,411 $19,701,491
Stock issued under Stock
Option Plans 275,196 27,520 (86,097)
Amortization of deferred
Compensation - - 15,799
Net income - - -
Cash dividends paid - - -
Purchase and retirement
of treasury stock (163,625) (16,363) (934,825)
Tax benefit from exercise of
Stock options - - 222,535
Balance October 31, 1997 7,385,681 738,568 18,918,903
Stock issued under Stock
Option Plans 228,500 22,850 75,028
Net income - - -
Cash dividends paid - - -
Purchase and retirement of
treasury stock (183,300) (18,330) (955,729)
Tax benefit from exercise of
Stock options - - 13,657
Balance October 31, 1998 7,430,881 $743,088 $18,051,859
Stock issued under Stock
Option Plans 26,320 2,632 90,138
Issuance of restricted
stock awards 253,000 25,300 1,176,450
Amortization of restricted
stock awards - - -
Net income - - -
Cash dividends paid - - -
Purchase and retirement of
treasury stock (244,795) (24,479) (1,236,465)
Tax benefit from exercise of
stock options - - 12,918
Balance October 31, 1999 7,465,406 $746,541 $18,094,900
Collins Industries, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' INVESTMENT - CON'T
For the years ended October 31,
Retained
Earnings Deferred
(Deficit) Compensation
Balance October 31, 1996 $(6,505,077) -
Stock issued under Stock
Option Plans - -
Amortization of deferred
Compensation - -
Net income 7,243,216 -
Cash dividens paid (553,672) -
Purchase and retirement
of treasury stock - -
Tax benefit from exercise of
Stock options - -
Balance October 31, 1997 184,467 -
Stock issued under Stock
Option Plans - -
Net income 3,027,100 -
Cash dividends paid (1,735,911) -
Purchase and retirement of
treasury stock - -
Tax benefit from exercise of
Stock options - -
Balance October 31, 1998 $1,475,656 -
Stock issued under Stock
Options Plans - -
Issuance of restricted
stock awards - (1,201,750)
Amortization of restricted
stock awards - 168,229
Net income 5,409,501 -
Cash dividends paid (732,586) -
Purchase and retirement of
treasury stock - -
Tax benefit from exercise of
stock options - -
Balance October 31, 1999 $6,152,571 ($1,033,521)
The accompanying notes are an integral part of these consolidated
statements.
Collins Industries, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three years ended October 31, 1999
(1) Summary of Significant Accounting Policies
(a) Consolidation and Operations - The consolidated financial
statements include the accounts of Collins Industries, Inc. (the
Company) and its wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
The Company primarily operates in the bus, ambulance and terminal
truck segments. Manufacturing activities are carried on solely
in the United States. However, the Company does market its
products in other countries. Revenues derived from export sales
to unaffiliated customers were less than 10% of consolidated
sales in fiscal 1999, 1998, and 1997.
(b) Cash and Cash Management - Cash includes checking accounts
and funds invested in overnight and other short-term, interest-
bearing accounts of three months or less.
The Company maintains controlled disbursement accounts with its
lead bank under an arrangement whereby all cash receipts and
checks are centralized and presented to the bank daily. All
deposits are applied directly against the Company's revolving
credit line and all checks presented for payment in the
controlled disbursement accounts are funded through borrowings
under the Company's revolving credit facility. At October 31,
1999 and 1998 accounts payable included outstanding checks drawn
on controlled disbursement accounts of $4,302,671 and $3,122,255,
respectively.
(c) Inventories - Inventories are stated at the lower of cost
(first-in, first-out) or market. Major classes of inventories
which include material, labor, and manufacturing overhead
required in production of Company products consisted of the
following as of October 31, 1999 and 1998:
1999 1998
Chassis $ 9,969,754 $ 7,916,058
Raw materials & componenst 11,066,127 8,871,980
Work-in-process 5,329,627 3,408,167
Finished goods 9,852,644 5,075,037
$36,218,152 $25,271,242
(d) Depreciation and Maintenance - Depreciation is provided
using the straight-line method for financial reporting purposes
and accelerated methods for income tax purposes. The estimated
useful lives of property are as follows:
Land improvements 10 to 20 years
Buildings and improvements 10 to 30 years
Machinery and equipment 3 to 15 years
Office furniture and fixtures 3 to 10 years
Goodwill 20 years
Maintenance and repairs are charged to expense as incurred. The
cost of additions and betterments are capitalized. The cost and
related depreciation of property retired or sold are removed from
the applicable accounts and any gain or loss is taken into
income.
(e) Goodwill - Other assets include goodwill of $3.6 million in
fiscal 1999, and $0 in 1998.
(f) Revenue Recognition - The Company records vehicle sales at
the earlier of completion of the vehicle and receipt of full
payment or shipment or delivery to the customer as specified by
the customer purchase order. Customer deposits for partial
payment of vehicles are deferred and treated as current
liabilities until the vehicle is completed and recognized as
revenue.
(g) Earnings Per Share - Basic earnings per share are computed
based on the weighted average number of common shares
outstanding. Potentially dilutive shares, calculated using the
treasury stock method, consist of stock options and restricted
stock grants.
The following is a reconciliation of shares used to calculate
basic and diluted earnings per share:
1999 1998 1997
Average share outstanding for basic 7,305,310 7,498,751 7,347,751
Effect of potentially dilutive
options and restricted stock grants 245,937 186,516 363,470
Average shares outstanding 7,551,247 7,685,267 7,711,221
(h) Cost of Sales - Cost of sales for the year ended October 31,
1997 has been reduced by the $1.2 million gain from the sale of
the Company's UVL product line which was completed in May, 1997.
(i) Reclassification of Financial Statements - Certain amounts
reported for prior years have been reclassified to conform to the
1999 presentation.
(2) Long-term Debt and Capitalized Leases
Long-term debt and capitalized leases at October 31, 1999 and
1998 consist of the following:
1999 1998
Bank credit facility:
Revolving credit borrowings $ 7,628,818 $ 7,873,921
Term Loan A
Monthly principal payments of $49,167 2,065,516 2,655,517
Term Loan B
Monthly principal payments of $9,833 560,501 -
Term Loan C
Monthly principal payments of $27,192 1,495,540 -
Capitalized leases:
City of South Hutchinson, Kansas, 4.75%-11%.
Annual principal and sinking fund payments
range from $304,000 in 2000 to $323,000
in 2007 2,809,445 3,312,397
City of South Hutchinson, Kansas, 4.80%-5.90%
Annual principal and sinking fund payments
range from $100,000 in 2000 to $150,000
in 2009 680,480 -
Longview Industrial Corporation, Longview,
Texas Variable Rate Demand Revenue Bonds -
Principal and sinking fund payments beginning
in 2002 at $500,000 to $700,000 in 2009 1,861,891 -
Other notes payable: 161,321 -
17,263,512 13,841,835
Less - current maturities 1,460,113 1,108,750
$15,803,399 $12,733,085
On April 1, 1999, the Company amended the original Loan Agreement
dated July 31, 1998, with Bank of America, formerly NationsBank
of Georgia, N.A., Atlanta, Georgia (the "Bank"). This amendment
increased the Company's total credit facility to $37.3 million.
The Agreement provides for a revolving credit facility of $22.0
million, and a long-term credit facility (Term Loans A, B, and C)
of $10.3 million, and an acquisition credit facility of $5.0
million. The credit facilities bear interest based on a
combination of Eurodollar (LIBOR plus 1.75%) and the Bank's prime
lending rate (8.25% at October 31, 1999) and mature May 31, 2002.
The revolving credit facility also provides for a maximum of $3.0
million in letters of credit, of which $1.2 million were
outstanding at October 31, 1999. The total amount of unused
revolving credit available to the Company was $10.1 million at
October 31, 1999. At October 31, 1999 no borrowings were
outstanding under the $5.0 million acquisition credit facility.
The credit facility is collateralized by receivables,
inventories, equipment and certain real property. Under the
terms of the Agreement, the Company is required to maintain
certain financial ratios and other financial conditions. The
Agreement also prohibits the Company from incurring certain
additional indebtedness, limits certain investments, advances or
loans and restricts substantial asset sales and capital
expenditures. At October 31, 1999 and 1998 the Company was in
compliance with all loan covenants.
Certain of the Company's manufacturing facilities were financed
from the proceeds of industrial revenue bonds. Lease purchase
agreements with the respective cities provide that the Company
may purchase the manufacturing facilities at any time during the
lease terms by paying the outstanding principal amount of the
bonds plus a nominal amount.
At October 31, 1999, the net book value of manufacturing
facilities subject to these lease purchase agreements was
approximately $5,405,987.
The carrying amount of the Company's long-term obligations does
not differ materially from fair value based on current market
rates available to the Company.
The aggregate maturities of capitalized leases and long-term debt
for the years subsequent to October 31, 1999 are as follows:
2000 1,460,113
2001 1,788,860
2002 10,668,171
2003 988,469
2004 1,002,000
2005 and thereafter 1,355,899
(3) Income Taxes
The provision for income taxes consists of the following:
For the year ended October 31, 1999 1998 1997
Current 3,368,000 1,424,000 1,954,000
Deferred 92,000 286,000 354,000
The Company accounts for income taxes in accordance with the
liability method. Deferred income taxes are determined based
upon the difference between the book and tax basis of the
Company's assets and liabilities. Deferred taxes are provided at
the enacted tax rates expected to be in effect when the
differences reverse. The income tax effect of temporary
differences comprising the deferred tax assets and deferred tax
liabilities are included net in current assets on the
accompanying consolidated balance sheet and result from:
1999 1998
Deferred tax assets:
Self-insurance reserves $ 241,000 $ 88,000
Vacation 201,000 172,000
Warranty 266,000 82,000
Doubtful accounts 19,000 10,000
Inventories 357,000 265,000
Amortization 182,000 198,000
Revenue recognition 204,000 40,000
1,470,000 855,000
Deferred tax liabilities:
Accelerated depreciation (946,000) (765,000)
Other (24,000) (22,000)
(970,000) (787,000)
Net deferred tax assets $ 500,000 $ 68,000
A reconciliation between the statutory federal income tax rate
(34%) and the effective rate of income tax expense for each of
the three years during the period ended October 31, 1999 follows:
1999 1998 1997
Statutory federal income tax rate 34% 34% 34%
Increase (decrease) in taxes
Resulting from:
State tax, net of federal benefit 4 3 4
Utilization of net operating loss
Carryforwards - - (14)
Decrease in tax asset valuation
Allowance - - (9)
Other 1 (1) 3
Effective tax rate 39% 36% 18%
(4) Capital Stock
Preferred Stock - On March 28, 1995 the Company's Board of
Directors adopted a stockholders rights plan (Plan) and declared
a dividend distribution of one right (Right) for each outstanding
share of common stock to stockholders of record on April 20,
1995. Under the terms of the Plan each Right entitles the holder
to purchase one one-hundredth of a share of Series A
Participating Preferred Stock (Unit) at an exercise price of
$7.44 per Unit. The Rights are exercisable a specified number of
days following (i) the acquisition by a person or group of
persons of 20% or more of the Company's common stock or (ii) the
commencement of a tender offer or an exchange offer for 20% or
more of the Company's common stock or (iii) when a majority of
the Company's unaffiliated directors (as defined) declares that a
person is deemed to be an adverse person (as defined) upon
determination that such adverse person has become the beneficial
owner of at least 10% of the Company's common stock. The Company
has authorized and reserved 750,000 shares of preferred stock,
$.10 par value, for issuance upon the exercise of the Rights.
The Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right in accordance with the provisions of the
plan. Rights expire on April 1, 2005 unless redeemed by the
Company.
Stock-Based Compensation Plans - The Company has two shareholder-
approved stock plans, the 1997 Omnibus Incentive Plan (the "1997
Plan") and 1995 Stock Option Plan (the "1995 Plan"). Under the
1997 Plan, directors, officers and key employees may be granted
stock options, restricted stock grants and other stock-based
awards. A total of 2,000,000 shares may be granted under the
1997 Plan.
Under the 1997 Ominbus Incentive Plan, the Company issued
253,000 shares of common stock on May 14, 1999, in the form of
restricted stock awards. Shares were issued as an incentive to
retain key employees, officers and directors. Of these shares,
4,000 and 249,000 will vest on May 14, 2001 and May 14, 2002,
respectively. At October 31, 1999, options for 837,500 shares
were outstanding under the 1997 Plan.
Under the 1995 Plan, a total of 1,000,000 shares of the Company's
common stock were available for grant to officers, directors and
key employees. As of October 31, 1999, all of these shares had
been granted and options for 210,800 shares were outstanding
under the 1995 Plan.
Under both plans, the exercise price of all options granted
through October 31, 1999 equaled the stock's market price on the
date of grant and fully vested six months after the date of
grant. The expiration dates of the options range from 5 to 10
years. Options outstanding at October 31, 1999 had a weighted
average contractual life of seven years, eight months and
exercise prices ranged from $1.75 to $5.13.
A summary of the Company's two stock option plans at October 31,
1999, 1998 and 1997 and changes during the years then ended are
presented in the table following:
1999 1998 1997
Per Per Per
Shares Share(a) Shares Share(a) Shares Share(a)
Beginning of
year 923,200 $4.11 1,072,400 $3.57 814,500 $1.89
Granted 195,000 3.99 182,500 4.33 677,300 4.55
Exercised (40,800) 4.40 (318,000) 1.82 (411,400) 1.84
Forfeited (29,100) 4.53 (13,700) 6.26 (8,000) 4.81
Outstanding at
end of year 1,048,300 $4.07 923,200 $4.11 1,072,400 $3.57
Exercisable at
end of year 1,048,300 $4.07 748,200 $4.08 1,069,900 $3.56
(a) Weighted average exercise price per share.
Weighted
average
fair value
of options
granted $1.99 $2.08 $1.50
The fair value of each option grant is estimated using the Black-
Scholes option pricing model with the following assumptions used
for grants:
For the year ended October 31, 1999 1998 1997
Expected dividend yield 1.5% 1.5% 1.5%
Expected life in years 4 4 4
Expected volatility 45.8% 47.5% 50.5%
Risk free interest rate ranging from 4.63% to 6.76% for the 1997
Plan options and ranging from 5.36% to 7.37% for the 1995 Plan
options.
The Company applies Accounting Principles Board Opinion No. 25,
accounting for Stock Issued to Employees, in accounting for its
Plans. Accordingly, no compensation expense has been recognized
for its stock options.
Had compensation cost for the Company's stock options been
determined consistent with the methodology prescribed under FASB
Statement No. 123, "Accounting for Stock-Based Compensation", the
Company's net income and income per share would have been reduced
to the following pro forma amounts:
1999 1998 1997
Net income:
As reported $5,409,501 $3,027,100 $7,243,216
Pro forma 5,028,189 2,675,035 6,993,318
Diluted earnings per share
As reported $ .72 $ .39 $ .94
Pro forma .67 .35 .91
(5) Tax Deferred Savings Plan and Trust
In 1985, the Company made available to all eligible employees the
opportunity to participate in the Company's Tax Deferred Savings
Plan and Trust. The Company provides a 50% matching contribution
in the form of cash or unregistered common stock of the Company
on the eligible amount invested by participants in the plan to
purchase common stock of the Company. The Company's contribution
to this plan was $138,881 in 1999, $75,269 in 1998, and $71,130
in 1997. This plan held 461,101 shares of the Company's common
stock at October 31, 1999 and 425,279 shares at October 31, 1998.
(6) Commitments and Contingencies
(a) General - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
(b) Letters of Credit - The Company has outstanding letters of
credit as more fully described in Note 2.
(c) Operating Leases - The Company has operating leases
principally for certain vehicles and equipment. Operating lease
expense was $593,584 in 1999, $351,435 in 1998, and $184,813 in
1997.
The following schedule details operating lease commitments for
the years subsequent to October 31, 1999:
2000 528,730
2001 494,802
2002 426,113
2003 372,141
2004 328,571
2005 and thereafter 47,500
(d) Litigation - At October 31, 1999 the Company has litigation
pending which arose in the ordinary course of business.
Litigation is subject to many uncertainties and the outcome of
the individual matters is not presently determinable. It is
management's opinion that this litigation will not result in
liabilities that would have a material adverse effect on the
Company's financial position or results of operations.
(e) Self-insurance Reserves - The Company is self-insured for
workers compensation, health insurance, general liability and
product liability claims, subject to specific retention and
reinsurance levels.
(f) Chassis Contingent Liabilities - The Company obtains certain
vehicle chassis from two automotive manufacturers under
agreements that do not transfer the vehicle's certificate of
origin to the Company and, accordingly, the Company accounts for
the chassis as consigned inventory. Chassis are typically
converted and delivered to customers within 90 days.
(7) Segment Information
Collins Industries, Inc., has three reportable segments:
Ambulances, buses, and terminal trucks. The ambulance segment
produces modular and van type ambulances for sale to hospitals,
ambulance services, fire departments and other governmental
agencies. The bus segment produces small school buses,
commercial buses and shuttle buses for sale to schools, hotel
shuttle services, airports, and other governmental agencies. The
terminal truck segment produces off road trucks designed to move
trailers and containers for sale to warehouses, rail yards, rail
terminals, and shipping ports.
The accounting policies of the segments are the same as those
described in the summary of significant accounting policies. The
Company evaluates performance based on profit or loss from
operations before income taxes not including nonrecurring gains
and losses.
The company accounts for intersegment sales and transfers as if
the sales or transfers were to third parties, with all
intercompany sales eliminated in consolidation.
The Company's reportable segments are strategic business units
that offer different products and services. They are managed
separately because each business requires different technology
and marketing strategies. Most of the businesses were acquired
as a unit.
The following table contains segment information for the years
ended October 31, 1999, 1998, and 1997. All amounts in thousands
of dollars.
Terminal
Ambulance Buses Trucks
Revenues from external 1999 $81,805 $85,372 $29,221
customers: 1998 77,265 46,988 32,392
1997 84,725 32,600 40,197
Intersegment revenues: 1999 1,458 2,578 1,026
1998 9 40 2,162
1997 13 312 2,038
Interest income/ 1999 (599) (1,036) (334)
(expense) net: 1998 (593) (600) (36)
1997 (872) (65) (88)
Depreciation and 1999 (562) (1,155) (280)
amortization: 1998 (684) (521) (203)
1997 (668) (427) (222)
Segment profit 1999 2,992 7,756 1,483
(pre tax): 1998 3,374 3,032 880
1997 7,276 1,431 3,003
Segment assets: 1999 26,996 26,713 10,197
1998 21,900 15,598 8,274
1997 23,826 10,050 9,598
Segment expenditures 1999 841 1,129 1,046
for capital assets: 1998 438 3,880 1,131
1997 549 397 242
The following table contains segment information for the years
ended October 31, 1999, 1998, and 1997. All amounts in thousands
of dollars. - Con't
Other Consolidated Total
Revenues from external 1999 $ - $196,398
customers: 1998 - 156,445
1997 - 157,522
Intersegment revenues: 1999 - 5,062
1998 - 2,211
1997 - 2,363
Interest income/ 1999 149 (1,820)
(expense) net: 1998 153 (1,400)
1997 (33) (1,643)
Depreciation and 1999 (571) (2,568)
amortization: 1998 (388) (1,796)
1997 (465) (1,782)
Segment profit 1999 (3,361) 8,870
(pre tax): 1998 (2,549) 4,737
1997 (2,867) 8,843
Segment assets: 1999 2,515 66,421
1998 3,304 49,076
1997 3,689 47,163
Segment expenditures 1999 124 3,140
for capital assets: 1998 509 5,958
1997 544 1,732
Other includes the elimination of intersegment transactions and
expenses generated to support corporate activities not directly
attributable to any specific organization within the enterprise.
Non-domestic sales were $11.3 million, $15.3 million, and $6.4
million for fiscal years 1999, 1998, and 1997 respectively.
All assets are held by companies operating in the United States.
During 1999, 1998 and 1997, sales to any one customer were not in
excess of 10% of consolidated sales.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and
Shareholders of Collins Industries, Inc.,
We have audited the accompanying consolidated balance sheets of
Collins Industries, Inc. (a Missouri corporation) and
Subsidiaries as of October 31, 1999 and 1998, and the related
consolidated statements of income, shareholders' investment and
cash flows for each of the three years in the period ended
October 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Collins Industries, Inc. and Subsidiaries as of October 31,
1999 and 1998, and the results of their operations and their cash
flows for each of the three years in the period ended October 31,
1999, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Kansas City, Missouri
November 19, 1999
Item 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to Directors and Executive Officers is
contained in the section entitled "Management" in the Proxy
Statement for the Annual Meeting of Shareholders to be held
February 25, 2000, and is incorporated herein by reference.
Item 11. EXECUTIVE COMPENSATION
Information with respect to executive compensation is contained
in the section entitled "Executive Compensation" in the Company's
Proxy Statement for the Annual Meeting of Shareholders to be held
on February 25, 2000, and is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information with respect to security ownership of certain
beneficial owners and management is contained in the section
entitled "Security Ownership of Certain Beneficial Owners and
Management" in the Company's Proxy Statement for the Annual
Meeting of Shareholders to be held on February 25, 2000, and is
incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, REPORTS
ON FORM 8-K
(a) The following documents are filed as a part of this Report:
(1) Financial Statements:
All financial statements and notes thereto as set
forth under Item 8 of this Report on Form 10-K:
Report of Independent Public Accountants
Consolidated Statements of Income for
the Three Years Ended October 31, 1999
Consolidated Statements of Shareholders' Investment
for the Three Years Ended October 31, 1999
Consolidated Statements of Cash Flows for
the Three Years Ended October 31, 1999
Consolidated Balance Sheets--October 31, 1999
and 1998
(2) Financial Statement Schedules:
All schedules have been omitted as not applicable
or not required under the instructions contained in
Regulation S-X or the information is included in the
financial statements or notes thereto.
(3) Exhibits:
Exhibit Number Document
3.1 - Certificate of Incorporation of Registrant,
as amended (included as Exhibit 3.1 of the
Company's Amendment No. 2 to Form S-1,
No. 2-93247 and incorporated herein
by reference).
3.2 - Amendment to Certificate of Incorporation of
Registrant (included as Exhibit 3.3 of the
Company's Amendment No. 1 to Form S-1,
No. 2-93247 and incorporated herein
by reference).
3.3 - Amendment to Certificate of Incorporation of
Registrant (included as Exhibit 3.3(c) of
the Company's Amendment No. 1 to Form S-1,
No. 33-48323 and incorporated herein
by reference).
3.4 - By-Laws of the Registrant, as amended
(included as Exhibit 3.4 of
the Company's S-1, No. 33-48323 and
incorporated herein by reference).
4.1 - Rights Agreement dated as of March 28,
1995 between the Registrant and Mellon
Bank, N.A. (included as Exhibit 1 to
Form 8-A filed with the SEC as of
March 28, 1995).
4.2 - First Amendment to the Rights Agreement
dated as of April 25, 1995 (included as
Exhibit 4 to Form 8-A/A filed with the SEC
as of May 8, 1995).
10.1 - Various bailment and consignment
agreements between the Registrant and
Automotive manufacturers (included
as Exhibit 10.2 to the Company's
Registration Statement on Form S-1,
No. 33-48323 and incorporated herein
by reference).
10.2 - Form of Indemnification Agreement
between Registrant and its directors.
(Incorporated herein by reference to
Exhibit 10.21 to the Registrant's
Report on Form 10-K for the fiscal
year ended October 31, 1991.)
10.3 - Amended and Restated Lease dated
November 15, 1997, between the Registrant
and the city of South Hutchinson, Kansas.
(Incorporated herein by reference to
Exhibit 10.4 to the Registrant's
Report on Form 10-K for the fiscal
year ended October 31, 1998.)
10.4 - 1999 Supplemental Lease dated June 1, 1999,
by and between the City of South
Hutchinson, Kansas and Collins Bus
Corporation. Original Lease dated
August 1, 1984 and a November 15,
1997, Amended and Restated Lease between
the same parties.
(Incorporated herein by reference to
exhibit
10.1 to the Registrant's Report on
Form 10-Q for the quarterly period
ended July 31, 1999.)
10.5 - Amended and Restated Loan and
Security Agreement for credit
facility dated July 31, 1998, between
Registrant and NationsBank, N.A.
(Incorporated herein by reference to
Exhibit 10.3 to the Registrant's
Report on Form 10-K for the fiscal
year ended October 31, 1998.)
10.6 - Amendment No. 1. dated as of April 1,
1999, to the Amended and Restated Loan and
Security Agreement dated as of July 31, 1998,
by and between Collins Industries, Inc., and
NationsBank, N.A. (Incorporated herein by
reference to exhibit 10.3 to the Registrant's
Report on Form 10-Q for the quarterly
period ended April 30, 1999.)
10.7 - Loan Agreement dated April 1, 1999, between
Longview Industrial Corporation and Collins
Industries, Inc. (Incorporated herein
by reference to exhibit 10.2 to the
Registrant's Report on Form 10-Q for
the quarterly period ended July 31, 1999.)
22.1 - The following are the names and
jurisdiction of incorporation of
the subsidiaries of the Company:
Jurisdiction
Names of Incorporation
Collins Bus Corporation Kansas
Capacity of Texas, Inc. Texas
Mid Bus, Inc. Ohio
Wheeled Coach
Industries, Inc. Florida
Collins Ambulance
Corporation Kansas
Collins Financial
Services, Inc. Kansas
Global Captive Casualty
and Surety Company Kansas
Mobile-Tech Corporation Kansas
World Trans, Inc. Kansas
27.0 - EDGAR Financial Data Schedule
(b) Reports on Form 8-K
There were no reports filed on Form 8-K by the Company
during the fourth quarter ended October 31, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
COLLINS INDUSTRIES, INC.
By /s/ Donald Lynn Collins
Donald Lynn Collins, President
and Chief Executive Officer
Dated: January 11, 2000
By /s/Larry W. Sayre
Larry W. Sayre, Vice President
Finance and Chief Financial Officer
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on
behalf of the Registrant, in their capacities as Directors of the
Registrant, and on the dates indicated.
Dated: January 11, 2000 /s/ Don L. Collins
Don L. Collins
Dated: January 11, 2000 /s/ Donald Lynn Collins
Donald Lynn Collins
Dated: January 11, 2000 /s/ Lewis W. Ediger
Lewis W. Ediger
Dated: January 11, 2000 /s/ Robert E. Lind
Robert E. Lind